Commons Sitting of 17 July 1984

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  SHREWSBURY AND ATCHAM BOROUGH COUNCIL BILL [Lords]
  Read the Third time, and passed with amendments.
  GREATER LONDON COUNCIL (GENERAL POWERS) BILL
  Considered; to be read the Third time.
  AYLESBURY VALE DISTRICT COUNCIL BILL [Lords]
  Read a Second time, and committed.

  MERSEYSIDE DEVELOPMENT CORPORATION BILL (By Order)
  Order for Third reading read.
  To be read the Third time upon Thursday 19 July.

Oral Answers to Questions
  EDUCATION AND SCIENCE

    Open University
    Mr. Yeoasked the Secretary of State for Education and Science how many representations he has received about his Department's grant to the Open University.
    Mr. Campbell-Savoursasked the Secretary of State for Education and Science what representations he has received from west Cumbria on the funding of the Open University.
    Mr. Strangasked the Secretary of State for Education and Science what representations he has received regarding the proposed cut in grant for the Open University.
    The Secretary of State for Education and Science (Sir Keith Joseph): We have received over 700 such representations. No record has been kept of their geographical distribution.
    Mr. Yeo: Does my right hon. Friend agree that the existence of the Open University is a tangible demonstration of our commitment to equality of opportunity? Is he aware that there is widespread dismay about the possible reduction in student places that may result from the proposed cut in real terms in the Department's grant?
    Sir Keith Joseph: The Government have a high regard for the work and functions of the Open University. However, we do not accept that the constraint on finance will necessarily lead to any diminution in its activities.
    Mr. Campbell-Savours: Is the Secretary of State aware of the sense of outrage among many of my constituents in west Cumberland, who have historically supported that institution since its inception under a Labour Government? Does he realise that if he strangles this institution, as he has strangled so many other public services, he will be denying many people in my area, who have lost their jobs under this Government, the right to retrain and to be educated in the new skills that they will need if they are to secure employment in future? Will he see sense and rescind his stupid decision?
    Sir Keith Joseph: The hon. Gentleman would he more effective if he were not so strident and did not exaggerate. There is a difference of calculation between the Government and the Open University. We are asking the university to make savings of about £4·5 million in the second of two years. The university claims that it is being asked to make savings of £13·5 million in the second of two years. We do not understand that, and we have asked the university to send us the basis of its calculations.
    Mr. Strang: Why have the Government singled out this institution—one of the finest in the country — for such savage cuts in expenditure? If the Secretary of State does not recognise the unique importance of allowing those who left school early to acquire a university education from this unique educational institution, does he at least recognise this it is the most cost-effective way to provide higher education?
    Sir Keith Joseph: The Government have not picked out this institution for special treatment. We are proposing levels of financial constraints of the same order of magnitude as those for other institutions of higher education.
    Mr. Forman: I strongly endorse what my right hon. Friend said about the necessity to get the best value for money from the large sums made available to the Open University. However, will he consider appointing an independent third party to examine the discrepency between the two figures, otherwise it may not be possible to reconcile them?
    Sir Keith Joseph: We intend to study carefully the figures for which we have asked, when we receive them. The Open University is setting up an efficiency study in the near future and the Government have invited the visiting committee to discuss the proposed finances with the Open University, after which the visiting committee will report to me.
    Mr. Wallace: Will the Secretary of State acknowledge that in rural areas, such as the one that I represent, the Open University represents one of the few opportunities that people have for further education and retraining? Does he appreciate that great fear is being expressed in those areas that if the cuts go through there will be a serious diminution in that service, particularly in terms of the loss of part-time tutors? Will he bear that in mind and have a rethink about his proposals?
    Sir Keith Joseph: I accept the first part of the hon. Gentleman's supplementary question.

    155
    The answer to the second part is that I do not believe that the fears being stoked up by the figures distributed by the Open University are justified, but I await the basis of its calculations.
    Mr. Greenway: If the Open University raises money externally, will my right hon. Friend's Department reduce its grant proportionately, or will the university be allowed to keep the money that it raises in that way?
    Sir Keith Joseph: We have told the universities that we shall not deduct from their grants money that they raise from the private sector, and that applies to the Open University.
    Mr. Flannery: Is it not a fact that this morning the Select Committee thought this question so important that it devoted over a quarter of the two hours it spent with the Secretary of State to this subject? Is it not also a fact that the Open University, at a time of unemployment, has increased by 10 per cent. its intake of students and received a cut of 4 per cent? Does the right hon. Gentleman feel that the Open University has conveyed the impression that, if the proposed cuts take place, the whole character of the university will change? What is he doing to ensure that its character does not change?
    Sir Keith Joseph: I am not the least convinced that its character need change. I do not believe that the Open University is the only institution in this country which cannot find economies while still maintaining its activities. The hon. Gentleman failed to add that the Government have provided a significant extra sum to the Open University to enable it to give additional subsidies to students, such as the unemployed or disabled, as it thinks fit.
    Mr. Hirst: Does my right hon. Friend agree that the Open University represents a ladder of opportunity for people who did not go to university as teenagers and therefore deserve to be encouraged? Will he publish the report of the visiting committee, which has been asked to look at the future options for the operations of the Open University, so that the House may judge for itself whether the grant allocations for 1985 and 1986 represent any impairment in the operations of the Open University?
    Sir Keith Joseph: I regard the Open University as a ladder of opportunity, as were the grammar and direct grant schools before the Labour Government abolished them. I shall consult the chairman of the visiting committee about the publication of the report that I expect from him.
    Rev. Martin Smyth: Does the Secretary of State acknowledge that, while some public money may be saved by reducing the allocation to the Open University, it may need other sums for retraining purposes?
    Sir Keith Joseph: There is generally a case for more money for almost everything, but the Government want to reduce the conditions which have helped to create the high unemployment that we have, and constraint on public spending is one of the imperatives.
    Mr. Harris: While rejecting completely the wilder allegations that have been made by Opposition Members about the cuts in allocation to the Open University, may I ask my right hon. Friend whether his mind is completely closed on the matter? If it is shown that the Government's figures are, to a degree, wrong, may we be assured that he will consider the matter again?
    Sir Keith Joseph: I would find it hard to say that the Government would in no circumstances think again in a case such as this. However, I have decided, and told the Open University, what its allocation from the taxpayer will be over the next two years, and it is most unlikely that that will be changed.
    Mr. Radice: But is not the Secretary of State planning to give the Open University a smaller recurrent grant in 1986 than it gets now, not taking into account inflation and the cuts that have been made in the past? It is these problems which should be concerning him — he described the Open University this morning as "very remarkable" — not what is taught on a particlar Open University course. Does he recognise that, in a democracy, it is the business of Ministers and civil servants to discuss resources and to listen to what is said to them, not to meddle in what is taught at universities and polytechnics?
    Sir Keith Joseph: The figures that I have announced take account of inflation——
    Mr. Andrew F. Bennett: That is not true.
    Sir Keith Joseph: Once again the hon. Gentleman is misinforming himself. The Department has received a significant though relatively small number of complaints——
    Mr. Radice: How many?
    Sir Keith Joseph: About seven. These have been received during a time when we have received no complaints about other university courses. When we asked the Open University to consider the complaints, it replied that its rules prevented it from considering complaints without evidence. It implied that it would consider the complaints with evidence. The Department asked for a professional judgment of the course concerned and forwarded it to the university. The Department made no judgment itself. It simply passed on the judgment of others, and that judgment is in the Library for hon. Members to study.
    Mr. Campbell-Savours: On a point of order, Mr. Speaker. In view of the totally unsatisfactory nature of that reply, I shall seek to raise the matter on the Adjournment at the earliest possible moment.

    New Examination System
    Mr. Madelasked the Secretary of State for Education and Science whether, following his announcement of the new system of examinations at 16 years of age, he has received any representations from local education authorities as to the staffing implications of the new system; and if he will make a statement.
    Sir Keith Joseph: I have received no such representations. Implementation of the national criteria will require some in-service training of teachers; but I do not foresee any increase in the total requirement for classroom teachers.
    Mr. Madel: As the new system of examinations will result in more emphasis on the practical side of school work, does my right hon. Friend agree that it will provide new opportunities for those seeking jobs in the teaching profession? Does he accept that this will provide an additional incentive to restructure teachers' salaries to attract more people of quality into the profession?
    Sir Keith Joseph: The answer to the first part of my hon. Friend's supplementary question is yes. There are severe shortages already emerging in the craft, design and technology areas. The Government hope that the present negotiations on the restructuring of teachers' salaries will be successful.
    Mr. Sheerman: Will the Secretary of State take on board the fact that the shortages to which he has referred underline what the Open University and other universities could do to meet the shortage of scientists? Will the right hon. Gentleman address himself to a problem that is worrying many experts, namely, that his demand for more practical tests will not be met for the 16-plus examinations because one fifth of our secondary schools are under-resourced for science and do not have the laboratories to carry out the necessary tests? That is what has happened under this Administration.
    Sir Keith Joseph: The shortage of laboratories goes back a long time, but it does not affect anything like one fifth of the schools. There is scope for a practical element in tests in almost every subject. For instance, the new examinations will give more marks for oral, as opposed to literary, mastery of foreign languages. Opposition Members should not think that "practical" applies only to engineering and science subjects.

    Truancy
    Mr. Heddleasked the Secretary of State for Education and Science what steps he is taking to monitor truancy levels.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke): Monitoring the incidence of absences from school is essentially a local responsibility. At national level there is evidence enough that truancy is a cause for concern; and we propose to issue a circular on the part that education welfare services can play in reducing it.
    Mr. Heddle: I welcome my hon. Friend's announcement. Does he agree that there is a direct relationship between hard-core truancy and teenage crime, especially in the inner cities, and that that is a serious matter? Will he engage in discussions with our right hon. and learned Friend the Home Secretary to ascertain what can be done to make parents stand by their obligations and duties to ensure that their children attend school?
    Mr. Brooke: I believe that there is a link between truancy and juvenile crime, but the connections are not firmly established. Whatever the interaction, both problems must be tackled vigorously. Parents have an important role to play. Where parents display an interest in their children's education and show that they regard it as important, truancy is less likely to occur. Unfortunately, not all parents regard their children's schooling as important. Some parents condone or even cause absence by keeping a child at home to look after a sick relative.
    Mr. Fatchett: To what extent is there a link between high levels of truancy and unemployment among young people? Is not the reality that many young people who attend school live in a no-prospect society led by a no-hope Government, and for them truancy is one alternative?
    Mr. Brooke: There is a closer link between truancy and the curriculum. Teaching needs to be lively and absorbing, and the curriculum needs to be seen by pupils and parents as relevant to the demands of adult life.

    Undergraduate Income and Expenditure
    Sir William van Straubenzeeasked the Secretary of State for Education and Science what representations he has received from the National Union of Students in relation to its survey of undergraduate income and expenditure.
    Mr. Brooke: I received a copy of the full report of the NUS survey of undergraduate income and expenditure from the president of the NUS on 6 July. I have received no other representations on the contents of the full survey report.
    Sir William van Straubenzee: I appreciate that my hon. Friend will need appropriate time to consider the report. In the meantime, does he accept that the report is a competent and important contribution to our knowledge? Should it reveal certain weaknesses in any particular aspect of student grant, will he give appropriate and careful attention to its message?
    Mr. Brooke: The survey is a weighty document. It will require careful consideration and we shall, of course, examine it as a matter of urgency. I have written to the president of the NUS suggesting that we have an early meeting.
    Mr. Wilson: Will the Under-Secretary of State look at a parliamentary reply that he recently gave to me showing that since 1979 there has been a progressive reduction in student grant, now amounting to 7 per cent. in real terms? Would not the simplest course, regardless of the documents sent to him by the NUS, be to increase the grant to a level comparable with the level when the Conservative Government came to power?
    Mr. Brooke: Some reduction in central Government expenditure on education was necessary if total expenditure was to be kept within bounds. It was judged preferable to make the necessary savings by a modest drop in the value of the full award rather than, for example, by reductions in the provision available for science in the universities.
    Mr. Marlow: Will my hon. Friend take up with the European Court of Human Rights — that institution which seems to make so many of the laws of England—the fact that many students who have reached the age of majority have their grants reduced according to the circumstances of their parents?
    Mr. Brooke: That is probably more a matter for my right hon. Friend the Secretary of State than for me.
    Mr. Andrew F. Bennett: When the Under-Secretary of State meets the president of the NUS, will he assure him that the Government are not trying to introduce back-door loans? Is the hon. Gentleman aware that the survey shows the increasing hardship caused to students, even before the situation has deteriorated for many of them because of the new regulations on student travel? When will the hon. Gentleman lay the regulations before the House so that we can debate them? Last year the hon. Gentleman promised

    159
    that he would lay them down earlier. He has about six days left in which to lay the regulations so that that is done earlier than last year.
    Mr. Brooke: As the hon. Gentleman knows, the survey shows that at the time of interview only 10 per cent. of students had overdrafts. I hope it can be said that students are generally able to live within their means. I take the hon. Gentleman's point about laying the regulations.

    Hearing-impaired Children
    Mr. Boyesasked the Secretary of State for Education and Science if he will make a statement on the recommendations of the Advisory Committee on the Supply and Education of Teachers that the specialist qualification to teach hearing-impaired children should be withdrawn.
    Sir Keith Joseph: My right hon. Friend the Secretary of State for Wales and I are considering the proposals in the committee's report. We intend to consult interested organisations before reaching decisions on the recommendations.
    Mr. Boyes: Is the Secretary of State aware that all professional organisations concerned with deaf people are united against the recommendation to withdraw the specialist qualification and regard it as a cynical attack on a group of people with a unique disability? Is it not shameful that any Government should consider accepting such a recommendation? Is the right hon. Gentleman aware that if the legal requirement for additional qualifications for those teaching the deaf is abandoned, the standard of teaching for those pupils is bound to fall?
    Sir Keith Joseph: The Government will consider the views of all interested parties and will take into account the reasons set out by ACSET in support of its recommendations. There are generally two sides even to a question of this kind. The Government will certainly consider the arguments of interested parties very carefully.
    Mr. Favell: I welcome my right hon. Friend's assurance that the views of all interested parties will be considered, but will he confirm that not one member of ACSET has first-hand experience of teaching the deaf or children with impaired hearing?
    Sir Keith Joseph: That is probably true, but I am sure that its members took advice and considered all the arguments.
    Mr. Ashley: The Secretary of State says that there are two sides to every question. Does he appreciate that on this occasion the side recommending dropping the specialist qualification is grossly misinformed? Is he aware that it is vital that teachers of deaf children should have special skills—for example, in audiology, lip-reading and sign language — and the ability to assess the extent of disability? Therefore, will he give full weight to the teachers' views, because if the recommendation is accepted those skills will be lost for ever?
    Sir Keith Joseph: I accept much of what the right hon. Gentleman says. On the other hand, ACSET was looking to a time when more children with handicaps would attend ordinary schools and recommending a series of qualifications for teachers in ordinary schools to enable
    160
    them to help handicapped children. There are indeed arguments to be considered on both sides, and we shall consider them all very carefully.
    Mr. Nicholas Winterton: Does my right hon. Friend accept from a member of his own party that many of us do not agree that there are two sides to this argument, because we believe that special expertise is required by those who teach pupils who are deaf or whose sight or hearing is impaired? Is he aware that we could not support any decision by the Government to remove the qualification required for those teaching the deaf, and that we speak from experience in local government and as members of the Select Committee on Social Services? Does he accept that the problems faced by handicapped people in the community are already severe enough?
    Sir Keith Joseph: There is no question of removing qualifications. There is a quesion of possibly ceasing to require qualifications. [Interruption.] Before hon. Members laugh too riotously, they should appreciate that a significant minority of teachers in the special schools do not possess those qualifications. Our object is to ensure that more teachers in main line schools have a qualification to teach handicapped children.

    Inner London Education Authority
    Mr. Tom Coxasked the Secretary of State for Education and Science what recent discussions he has had with the leader of the Inner London education authority as to future funding of the authority.
    Sir Keith Joseph: None, Sir.
    Mr. Cox: Is the Secretary of State aware that that is a deplorable reply? Is he completely unaware that the effects of the rate-capping legislation on ILEA will be fewer teachers, fewer school allowances and a reduction in building work? Is he further aware that the present Tory Government have never received any mandate from the people of London for any reduction in our education service? Why does he not face his responsibilities to the children and adults of London in regard to education?
    Sir Keith Joseph: Any decision about how to spend the money that is available for education in inner London will fall to ILEA. It has not asked to see me about that and I have not sought a meeting with it. It seems to me that there are several areas in which there is scope for economy without inner London's education being damaged in any way. For example, ILEA charges less for school meals than any other authority in the country and its charges for adult education courses are little more than half the average. I could give several other examples, spending on which could be reduced without there being any damage to the quality to education in inner London.
    Mr. Mark Carlisle: Now that the Government have taken what I believe to be the right decision and are going for a directly elected membership of ILEA, would my right hon. Friend care to emphasise to its potential members that the problem of education in inner London is not one of inadequacy of resources but rather one of the need to motivate pupils in schools?
    Sir Keith Joseph: I entirely agree with my right hon. and learned Friend. ILEA has some extremely zealous teachers and has pioneered much in education. However,

    161
    it seems unable to justify, either in terms of effectiveness or in terms of results, a vast amount of the money that it spends.
    Mr. Corbyn: Is the Secretary of State aware that the disgraceful statement that he has just made about the school meals service in London and the funding of ILEA will cause a great deal of hardship throughout London? Is he further aware that if school meal prices are raised, children will go hungry and school meals workers will be sacked, just to starve the children? Is he further aware that ILEA is the only education authority that receives no Government funding? Conservative Members could not give a damn——
    Mr. Speaker: Order. The hon. Gentleman has had three bites already.
    Sir Keith Joseph: There are free school meals.[Interruption.]
    Mr. Corbyn rose——
    Mr. Speaker: Order. Has the Secretary of State finished?
    Sir Keith Joseph: Yes.
    Mr. Corbyn: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. I shall take points of order afterwards.
    Mr. Corbyn rose——
    Mr. Speaker: Order. I asked the Secretary of State whether he had finished answering the hon. Gentleman's question and he indicated that he had.
    Mrs. Rumbold: As my right hon. Friend has rightly agreed that the new ILEA should be directly elected, and as that authority will be the only education authority that will not have the constraints of other service committees to contend with when it examines its budget, how will constraints be put on the new directly elected authority to contain its budget?
    Sir Keith Joseph: It has yet to be decided and announced to which authorities rate capping will be applied. There could conceivably be a decision to apply it to ILEA, in which case there would be constraints additional to those that are normally applied to all local authorities.
    Mr. Radice: Perhaps the Secretary of State can answer this question. As a democrat, can he not understand that the combination of rate capping, the three-year control of ILEA's budget and manpower by his Department and, from last night, the prospect of an immediate power over contracts worth more than £100,000, amounts to an utterly unacceptable interference by the Government in the running of inner London education?
    Sir Keith Joseph: No, because present spending by ILEA is at the expense, to some extent, of jobs for Londoners——
    Mr. Radice: Prove it.
    Sir Keith Joseph: I can prove that by the general proposition that the money must come from somewhere. It comes largely from business, which is driven out of London, so the number of jobs dwindles. Secondly, high-spending local authorities which, exceptionally these
    162
    days, refuse to comply with the elected Government's general economic strategy are still subject to the rule of law by Parliament. That is why it is legitimate to apply some constraints.

    School Meals
    Mr. Dobsonasked the Secretary of State for Education and Science if he will list those education authorities no longer providing school meals for all children who choose to have them.
    Mr. Brooke: School meals are available in all local education authorities, but in Merton they are provided through a contractor; in some schools in Hereford and Worcester through self-help groups based on the schools; and in primary schools in Dorset and Lincolnshire only packed meals are provided and only to those entitled to free meals.
    Mr. Dobson: Will the Minister confirm that since 1979 the percentage of children taking school meals has declined from more than two thirds to under a half? Will he also confirm that this is damaging the diet and health of many of the worst-off children?
    Mr. Brooke: I confirm the first figure given by the hon. Gentleman, but not the second.
    Mr. Greenway: Have not school meals contained far too much stodge and involved far too much waste for many years, and does my hon. Friend agree that the most expensive food is not necessarily the best for children? Is it not now time to take a careful look at the nutritional content of food provided to schoolchildren, whether it is provided publicly or by private contract?
    Mr. Brooke: The DHSS has undertaken the schoolchildren's dietary survey, and I understand that the results will be available later this year.
    Mr. Canavan: Will the Minister issue a directive to all education authorities to follow the good example of those Labour-controlled education authorities which are offering free school meals to all the children of miners on strike, or will the Department of Education and Science follow the bad example of the Prime Minister and the DHSS and use starving children as political pawns in an industrial dispute?
    Mr. Brooke: No.

    Head Teachers
    Mr. Haselhurstasked the Secretary of State for Education and Science whether, in his proposals for school government, he will lay down clear criteria according to which governing bodies may procure the removal or redeployment of unsatisfactory head teachers.
    Sir Keith Joseph: The Green Paper on school government proposes, inter alia, that an LEA would have a duty to consider a governing body's recommendation for the dismissal of the head teacher or any other member of staff. The final decision on dismissal or redeployment must, however, continue to rest with the authority as employer.
    Mr. Haselhurst: Can the governing body be guaranteed greater leverage with the local education authority where it feels that a head is unsuitable on grounds

    163
    of competence and general performance, as opposed to the common belief at present that only by committing a gross breach of discipline can a head be moved on?
    Sir Keith Joseph: I think the answer is yes. The views of the governing body must in certain circumstances be considered by the local education authority, but that authority retains the final decision.
    Mr. Alton: Is the Secretary of State not concerned that some managing bodies are now being stacked with people purely because of their political affiliation rather than because of any interest in education? In cities such as Liverpool, all the places have been taken purely on a political basis, which could lead to head teachers and deputy heads being appointed and dismissed purely on the basis of political spite. What does he intend to do about that?
    Sir Keith Joseph: I deplore such political stacking where it occurs. Indeed, the Government's proposals will reduce the number of places in the gift of the local education authority.

    Maintained Sector (Results)
    Mr. Patrick Thompsonasked the Secretary of State for Education and Science what further research he proposes to undertake into the relationship between money spent on education in the maintained sector, and the results achieved, and into the other non-financial factors which may affect the results achieved.
    Sir Keith Joseph: I announced in March that I had asked the Department to undertake further studies into the factors affecting examination results in schools so that I could assess the potential value of further research. These studies will be completed soon and I expect to make a further statement in the autumn.
    Mr. Thompson: I hope that my right hon. Friend will take advice on this from those—supported by the recent evidence—who believe that good results in schools flow directly from good staff morale and—as we heard in the previous question—from a high standard of leadership from headmasters, and not from outside interference. Do not our schools already suffer from over-administration and from those who confuse education with indoctrination?
    Sir Keith Joseph: I agree that the curriculum, quality of teaching and the vitality and the skill of the head teachers are crucial.

    Inner London Education Authority
    Mr. Dubsasked the Secretary of State for Education and Science if he has any plans to meet the leaders of the Inner London education authority to discuss the future of education in London.
    Sir Keith Joseph: I have no plans to do so; nor have I been approached for such a meeting.
    Mr. Dubs: Given the Secretary of State's recent decision, as exemplified in the amendments in the other place to the paving Bill, should he not discuss with the leaders of ILEA, and explain to the House, his reasons for seeking extraordinary powers over such ILEA activities as building work, maintenance and contracts, when these
    164
    powers are matters of detail and are contradicted by the Government's statement on the Rates Bill that they would not seek to interfere in the minutiae of decisions?
    Sir Keith Joseph: There is no reason to exempt ILEA from the powers that the Government are writing into legislation to ensure that such legislation is effective.
    Mr. Peter Bottomley: Does my right hon. Friend agree that one of the reasons for taking the transitory powers is that ILEA leaders cannot be trusted to run ILEA effectively? Is not the fact that ILEA spent 50 per cent. more per pupil on heating and lighting than other authorities just one small example of its financial profligacy, which should be stopped? Should not ILEA wake up to its responsibilities?
    Sir Keith Joseph: Yes, on all counts. If ILEA wishes to do so, economies can be made that would not harm education and would help Londoners.

    Open University
    Ms. Clare Shortasked the Secretary of State for Education and Science if he will make a statement on the future of the Open University.
    Sir Keith Joseph: The Open University has an important part to play in the Government's strategy for higher education, both in its role as a "second chance" institution which offers adults the opportunity to study at degree level, and increasingly as a provider of continuing education and updating courses relevant to our economic needs.
    Ms. Short: Is it not time that the Secretary of State visited the Open University, planned for expansion of its provisions instead of the cuts about which we have heard, and stopped interfering in the curriculum of this immensely popular institution?
    Sir Keith Joseph: We do not believe that the constraints of finance that were proposed should diminish the activities or the quality of the Open University.
    Mr. Nicholas Winterton: Has my right hon. Friend seen the early-day motion that I have tabled on the Open University, which has been signed by hon. Members of all parties? Will he accept that there are some Conservative Members who feel that the Open University offers a unique opportunity for those young people who were not able to take advantage of higher education when they left their secondary schools? Therefore, will my right hon. Friend treat the Open University as a special case?
    Sir Keith Joseph: My hon. Friend is swallowing the Open University's assertion that its grant is being cut by 20 per cent. We have not had any calculations to support that. We believe that the proposed cut is very much less.
    Dr. Marek: Does the Secretary of State realise that there is great concern about his dabbling in the courses of the Open University, particularly in the sociology department? Will he stand up for academic principles and either drop those investigations or, for the sake of balance, look into the extremist courses being taught at the school of economics in Liverpool university?
    Sir Keith Joseph: I shall take seriously, and I hope that any vice-chancellor will take seriously, any complaints that reach him or me. In the Library there is a copy of the

    165
    comments on the particular course, which I hope the hon. Gentleman will read. The preoccupation of the Government is only with the quality and balance of the courses about which there are complaints, not about bias.
    Dr. M. S. Miller: What does the right hon. Gentleman mean by the bland statement "relevant to our economic needs'?
    Sir Keith Joseph: The Government have publicly announced that we are asking higher education to carry out a switch of 2 per cent. of places from the arts and humanities to science, engineering and technology.

  PRIME MINISTER

    Engagements
    Mr. Blairasked the Prime Minister if she will list her official engagements for Tuesday 17 July.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.
    Mr. Blair: Does not the Prime Minister now wish that she had consulted the trade unions over GCHQ? Does not her refusal to consult bear the stamp and style of her entire way of government? When will she learn, quite apart from GCHQ, which is the subject of her statement later, that the British people prefer democrats to autocrats?[Interruption.]
    Mr. Speaker: Order.
    The Prime Minister: I shall be making a statement on GCHQ later, and I should prefer to deal with the matter in detail then. The hon. Gentleman will be able to hear what I have to say.
    Mr. Onslow: If an agreement that is extorted under duress can have no legal or moral force, is it not monstrous that the dockers' leaders should be trying to hold the country to ransom to secure the perpetuation of the dock labour scheme?
    The Prime Minister: With regard to the dock labour scheme, as my hon. Friend knows, my right hon. Friend the Secretary of State for Transport has made it clear that the Government have no plans to change or abolish the scheme. My hon. Friend will also be aware that ACAS is meeting the unions this afternoon and that it met the port employers last evening. It is best to let ACAS complete its task of conciliation. If there is very little to this strike I am sure that ACAS will soon find that out.
    Mr. Wilsonasked the Prime Minister if she will list her official engagements for Tuesday 17 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Wilson: If the Prime Minister wishes to give up her current addiction to wearing sackcloth and ashes, will she turn her attention to another decision that requires to be made and issue to the House now a complete undertaking that Locate in Scotland, which has the support of all Scottish Members of Parliament including members of her own party, will not be abolished, with the investment and opportunities taken with it, by the Department of Trade and Industry?
    The Prime Minister: The hon. Gentleman is aware that that matter has been raised more than once in the House. My right hon. Friend the Secretary of State for Scotland will be dealing with it.
    Mr. Michael Howard: Has my right hon. Friend had drawn to her attention reports of the disgraceful conduct of those who have roamed the streets of Bolsover to intimidate coal miners who wish to work? Will she condemn this behaviour, in the name of the people of Britain, in contrast to the support given by the Leader of the Opposition to those who condone and encourage it?
    The Prime Minister: The mass picketing that has given rise to violence and intimidation is one of the worst features of this strike. I notice that the Leader of the Opposition is reported as having said at the weekend that there is no alternative but to fight—all other roads are shut off. I hope, nevertheless, that he will agree to the NUM negotiations tomorrow.
    Mr. Mason: When will the Prime Minister settle the miners' dispute?
    The Prime Minister: There are negotiations tomorrow where they should be — between the NUM and the NCB. I hope that the right hon. Gentleman will support those negotiations, which will be held round the table between management and work force.
    Sir William Clark: Does my right hon. Friend agree that it is a disgrace that the NUM, with £32 million of assets, will not give strike pay to striking miners yet gives pay to flying pickets, which are causing so much violence not only in Bolsover but all over the country?
    The Prime Minister: I am not responsible for the NUM, but it is an astonishing way for it to treat its loyal members.
    Mr. Skinner: Is the Prime Minister aware that Mr. MacGregor and the NUM were so near to agreement that they got out Roget's "Thesaurus" to find the appropriate words, but that at the moment when agreement seemed imminent Mr. MacGregor was seen to go to a payphone, and when asked whom he had called, given all the telephones available in the suite, he said "I've been phoning my sister in America''? Is she further aware that Scargill was heard to say to him, "I didn't know your sister's name was Margaret."? Can the Prime Minister confirm that she mucked up those negotiations, just as she has mucked them up throughout the dispute?
    The Prime Minister: That question was rather below the hon. Gentleman's usual standard. I make it absolutely clear that whomsoever Mr. MacGregor was telephoning — if he was telephoning — it was not me. I have not seen or spoken to him since 3 July.
    Mr. Flanneryasked the Prime Minister if she will list her official engagements for Tuesday 17 July.
    The Prime Minister: I refer the hon. Gentleman to the. reply that I gave some moments ago.
    Mr. Flannery: When will the Prime Minister realise that, now that the Falklands jingoism has worn off, her real policies have come to light and are plunging this country into total chaos? [Interruption.] Furthermore, when will she realise that her draconian anti-trade union laws are quite unworkable and that, as I said some time ago when she was in Fontainebleau, the inexorable march to a

    167
    general strike has begun and that more and more sections of the working people will be on the streets struggling against this appalling Government?
    The Prime Minister: It is strikes that are destroying jobs and businesses faster than anything else, and so much so that I believe that the Labour party has become the party that wants unemployment.
    Mr. Sayeed: Can my right hon. Friend suggest any reason for a national dock strike apart from Mr. Connolly's wish to join the Leader of the Opposition as one of Mr. Scargill's lackeys?
    The Prime Minister: I can see no reason whatever for a national dock strike. There is a well-established disputes procedure under the national docks labour scheme, and it should be used. If it was used, the strike would soon be at an end, provided that Opposition Members want it to end as much as we do. That strike will do immense damage to the ordinary working people of this country.
    Dr. Owen: In as much as the docks dispute has much to do with the genuine grievances of dockers, does not the Prime Minister think it wiser to state clearly that the Government have no intention of legislating during the lifetime of this Parliament on the National Dock Labour Board, and that if she wished to do so she would include that in her manifesto and win a mandate for it?
    The Prime Minister: The right hon. Gentleman will have heard what my right hon. Friend the Secretary of State said yesterday. It is astonishing that the Opposition should claim that the strike is to try to stop something that the Government have no plans to do. If that is all that it is about, ACAS, which is meeting the unions now, will have a very easy job to do to end the strike.
    Mr. Temple-Morrisasked the Prime Minister if she will list her official engagements for Tuesday 17 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Temple-Morris: Does my right hon. Friend agree that there are serious constitutional aspects about the fact that the Leader of the Opposition appears——
    Mr. Speaker: Order. I could not quite hear the hon. Member, but I hope that he was asking a question for which the Prime Minister has ministerial responsibility.
    Mr. Temple-Morris: Is my right hon. Friend not extremely worried about the future of the country when a certain person allies himself to the trade union movement? That means the end of Her Majesty's Opposition, because that is what they stand for. Having been Leader of the Opposition, does my right hon. Friend not consider it serious that a person puts himself on that side of the fence and ends his own future with his party and the country?
    The Prime Minister: My hon. Friend is right. Some people wish to circumvent the processes of parliamentary democracy and impose their wishes upon the rest. —[Interruption.]
    Mr. Speaker: Order. The Prime Minister has a right to be heard.
    The Prime Minister: I thank you, Mr. Speaker, but I had finished my reply.
    Mr. Spearing: With reference to circumventing parliamentary democracy, will the Prime Minister go into the Library today and look at the Adjournment debate of 22 October 1971? Does she remember that she refused point blank to obey the law and carry out the instructions of sections 4 and 5 of the Education Act 1944? Does she also recall that her only reason was that the background had changed? By what democratic or moral right does she expect others to obey the law when she does not do so herself?
    The Prime Minister: I do not think that I was ever taken to task for refusing to obey the law in the Education Act 1944.
    Mr. Spearing: Yes the right hon. Lady was — by me.
    Mr. Kinnock: When the Prime Minister broke the law by not consulting the unions at GCHQ Cheltenham, did she do so by herself or on the advice of the Attorney-General?
    The Prime Minister: Every Prime Minister and every Minister is within the law, must be seen to be within the law and must be subject to the law. I wholly accept that every Minister in taking action does so in the belief that he or she is within the law and acting on the best of advice.
    Mr. Favellasked the Prime Minister if she will list her official engagements for Tuesday 17 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Favell: Will my right hon. Friend take time today to remind Mr. MacGregor, before the resumption of negotiations tomorrow, that many thousands of jobs depend on competitive energy costs, and that, if the coal industry was allowed to be inefficient while other industries were expected to be efficient, there would be widespread anger?
    The Prime Minister: It is important to have a cheaper supply of coal, because we derive so much electricity from it. France can offer us electricity from nuclear energy at a lower price than we can generate it from coal. It is important for the whole of industry that we produce cheaper coal for electricity. That means getting rid of uneconomic pits.
    Mr. Redmond: Will the Prime Minister join me in condemning Fascist Governments who use the police and the military to suppress trade union activities?
    The Prime Minister: I am sorry, but I could not hear precisely what the hon. Gentleman said.
    Mr. Speaker: Order. I call Mr. Redmond.
    Mr. Redmond: Will the Prime Minister join me in condemning Fascist Governments who use jointly the police and the military to suppress trade union activities?
    The Prime Minister: In this country the police are always there to uphold the law.
    Mr. Ashleyasked the Prime Minister if she will list her official engagements for 17 July.
    The Prime Minister: I refer the right hon. Gentleman to the reply that I gave some moments ago.
    Mr. Ashley: The Prime Minister is to make a statement at 3.30 pm about what action she proposes to take on GCHQ. Can she now make a statement on what she is doing about the Foreign Secretary?
    The Prime Minister: The Foreign Secretary is doing an excellent job and will continue to do so.

GCHQ
3.30 pm
The Prime Minister (Mrs. Margaret Thatcher)rose——[Interruption.]
Mr. Speaker: Order. The House will want to hear what the Prime Minister has to say.
The Prime Minister: Mr. Speaker, with permission I should like to make a statement on GCHQ.
Following the judicial review of the Government's action in respect of GCHQ, Mr. Justice Glidewell, in giving his judgment yesterday in the High Court, on four of the five grounds on which the Council of Civil Service Unions had based its case found in favour of the Government.
The judge confirmed that the Minister for the Civil Service has the right to vary the terms and conditions of service of civil servants so as to exclude membership of trade unions and that an instruction may be given under article 4 of the Civil Service Order in Council 1982 to this effect. Nevertheless, the judge concluded that, because of the lack of prior consultation with the unions concerned, the instruction given in this instance was invalid. His finding did not affect the certificates issued by my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs under the Employment Protection Acts.
In view of the implications of this judgment in the field of national security, the Government are appealing against it and are applying to the court later this afternoon for an early hearing of the appeal.
The judge indicated that the status quo should be maintained at GCHQ pending consideration of an appeal.
As the Government will be lodging an appeal later today, it would be inappropriate for me to make any further comment.
Mr. Neil Kinnock: The Prime Minister evaded my question earlier, but the Government have been found guilty of breaking the law. Will the Prime Minister now admit that the judgment of the High Court makes it clear that responsibility for this major breach of natural justice and offence against civil rights rests with her and her alone? Was it not she and she alone who issued instructions—[Interruption.]
Mr. Speaker: Order.
Mr. Kinnock: —for the compulsory removal of trade union membership rights without consultation with the trade unions? Why did she let a month elapse during which time consultations could have taken place before leaving the Secretary of State for Foreign and Commonwealth Affairs as a punch bag to try to cover up her trail of guilt? Will she further admit to the House and the country that she compounded her mischief by refusing, against the advice of her colleagues, to accept guarantees of continuous operations at GCHQ given by the trade unions way back in early February? Why has she spurned the opportunity afforded her by Mr. Justice Glidewell for a period of reflection and, instead, rushed off to appeal and thus prevent further consideration by this forum of Parliament? In an attempt to explain the reason for going to appeal—[Interruption.]
Mr. Speaker: Order. In the same way as I indicated that the Prime Minister has the right to be heard, so has the Leader of the Opposition.
Mr. Kinnock: Conservative Members illustrate their own discomfort and guilt by the noise that they make.
In an effort to explain the reason for going to appeal, the Prime Minister speaks of concern for national security. Since we share that concern, may I ask her whether that is sufficient ground for preaching natural justice, and how can she defend this country when she is so obviously prepared to make such breaches of natural justice? Will she now conclude this £5 million farce at GCHQ by apologising to loyal civil servants for insulting their integrity, and will she instruct the Government's lawyers in the Court of Appeal to withdraw the appeal this afternoon and inform the court that the decision of the High Court will be followed by the Government? In the light of this experience—[Interruption.]
Mr. Speaker: Order.
Mr. Kinnock: If Conservative Members give more, Mr. Speaker, they are going to get more. In the light of this experience, willl the Prime Minister just for once permit humility and reason to replace her extremism and prejudice?
The Prime Minister: The right hon. Gentleman is right in saying, although he did not quite use those words, that Mr. Justice Glidewell found the order invalid. "Invalid" was the word. I do not think that the right hon. Gentleman will find the words that he used within the judgment. May I remind him that during the last Labour Government four Ministers had their actions declared invalid by the courts? The right hon. Member for Glasgow, Hillhead (Mr. Jenkins), when Home Secretary, was told by the Court of Appeal that his attempt to revoke television licences was unlawful, invalid and — [Interruption.]
Mr. Speaker: Order. The Leader of the Opposition put his case in some detail, and the Prime Minister has a right to respond.
The Prime Minister: Mr. Sam Silkin, when Attorney-General, was told by the Master of the Rolls that he had no prerogative to suspend or dispense with the laws of England; and, of course, I could go on giving some of the details of other cases.
It is quite right that every member of the Executive must be subject to the law of the land. That is totally accepted. Every Minister would wish to have his actions subject to the law of the land, and takes them in the belief that they are subject to the law of the land. When one has a judgment of the kind that we have had, one uses the law, as one has a right to do, to take it to the Court of Appeal. I do not think that anyone would wish to deny the right to go to the Court of Appeal to get this matter satisfactorily settled by further hearing, and to see what that further hearing produces. Of course, Ministers are subject to the final finding of the courts of law.
The right hon. Gentleman asks, why today? Our advice is that an appeal should be lodged today if there is to be any prospect of the case being heard before the courts rise for the summer recess. It is clearly in the interests of GCHQ staff themselves as well as of national security to remove uncertainty as soon as possible.

173
The right hon. Gentleman referred to a no-strike agreement. The Civil Service unions made a number of alternative proposals. As Mr. McCall said before the Select Committee on employment, they undertook that they would not ask their members to take industrial action of any kind in essential intelligence and security services. I note, however, that such an agreement has already been repudiated by the conferences of the two largest Civil Service unions.
Mr. Norman St. John-Stevas: Will my right hon. Friend accept that Conservative Members appreciate her courage and her respect for the House in postponing the lodging of an appeal until later this afternoon so that the House may have an opportunity to express its mind on the issue? Does she agree that if others, including the Leader of the Opposition, were to follow her example, instead of making common cause with those who seek to deprive the law-abiding citizens of this country of their constitutional rights by intimidation and violence, it would be a better thing for the country and the House?
The Prime Minister: I am grateful to my right hon. Friend, and I agree with him. The Government are exercising their legitimate right to appeal. It is an important case involving national security, and that is why we are lodging an appeal.
Mr. J. Enoch Powell: In a matter of this great importance, is it not essential, and the Government's duty, to ensure that the present law is clarified and defined at the highest judicial instance that is available?
The Prime Minister: I am sure that the right hon. Gentleman heard me say that the judgment has substantial implications for national security. Therefore, we are exercising our right of appeal, as we believe that the case must be heard by a higher court.
Mr. John Gorst: Will my right hon. Friend make it abundantly clear that there is no incompatibility between the concept of natural justice and national seurity? Irrespective of the outcome of any appeal and whatever happens hereafter, will the negotiations between the Government and the unions be conducted on the basis of natural justice?
The Prime Minister: I think that my hon. Friend was using some of the words in the judgment. I think that it would be better if I did not go into the judgment, for the obvious and good reason that it is the subject of an appeal to a higher court. Hon. Members are rightly asking me why we took the decision in the first place, and I am fully prepared to answer that.
Mr. John Morris: What is the real reason for the Prime Minister's persistence in trying to overturn a decision of the courts and ignoring the decision of the International Labour Organisation? Is it because she is too stubborn to reconsider the offer made by the unions? If more judges hold against her in the Court of Appeal, will she then call it a day and not go to the House of Lords?
The Prime Minister: As the right hon. and learned Gentleman is aware, I, rightly, cannot overturn the decision of a court, and I would not wish to do so. I believe that people should be subject to a court of law. I also believe that, being subject to a court of law, they are entitled to use their right to go to appeal, especially on a
174
very important matter such as this, which involves national security. I wish to make it clear that at the end of the judicial process Governments, of course, accept the courts' final ruling. That is what the rule of law is all about.
Sir John Biggs-Davison: Has not there been industrial action in the public service intended to hamper defence effectiveness? Has not there been industrial action at GCHQ in times of emergency? Has not Mr. Peter Jones of the trade union side denied that no-strike agreements were offered? Therefore, had the Government any alternative to taking the action that they did?
The Prime Minister: I believe that it was Mr. Jones who made some comments on the radio this morning about what the unions had offered. I do not have a transcript of precisely what he said. I have repeated to the House what Mr. McCall said to the Select Committee. I am aware that two of the main Civil Service unions overturned any offer of no-strike agreements. That seems to me to be very significant.
With regard to the reason that led to our taking the decision, my hon. Friend was right to refer to the fact that during one of the many strikes and industrial disputes in which GCHQ took part the Council of Civil Service Unions reported:
"48 hours walkouts have severely hit secret monitoring stations belonging to the Composite Signals Organisation. The Government is clearly worried and will be subject to huge pressure from NATO allies."
It is because of that sort of industrial disruption and a duly to maintain the national security of this country that we took action. The judge found that we were fully entitled to use the powers, but that they were invalid in that instance for one reason, and one reason only—because of the absence of prior consultation.
Dr. David Owen: Is not the Prime Minister aware that by her oral decision of 22 December she not only damaged national security but besmirched the office of Prime Minister? Furthermore, she dragged the Secretary of the Cabinet, in a letter to the Civil Service unions in January, seriously to mislead those trade unions about her capacity to enter into serious negotiations with the trade unions.
Why has not the Prime Minister informed the House that the secretary of the Civil Service unions had written to the Cabinet Secretary and offered to open negotiations and that the Council of Civil Service Unions is entitled to negotiate a no-strike agreement on behalf of all the Civil Service unions?
Why has the Prime Minister said that the status quo remains in Cheltenham when trade unionists are, at this moment, eligible to rejoin their trade union? Why has the right hon. Lady not told us whether Lord Donaldson will make the decision on the Government's appeal? Why is the right hon. Lady hiding behind the sub judice rule" Why has the Leader of the House not made provision for a debate in the House this afternoon?
The Prime Minister: The right hon. Gentleman is well aware that it is not for me to say who shall hear the appeal. He knows that it is impossible, and would be quite wrong, for a Prime Minister to attempt to interfere in the decision as to who should hear an appeal.
The judge indicated that the status quo should be maintained pending consideration of an appeal. I was

175
quoting what I believe the judge said after the hearing. The Government will, of course, honour precisely what that means.
Has the right hon. Gentleman forgotten that it was the first leader of the Social Democratic party, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), who, when he was Home Secretary, was told by the Court of Appeal that his attempt to revoke television licences was unlawful, invalid and of no effect. I did not hear the right hon. Gentleman protest then.
Mr. Patrick Nicholls: The reaction on the Opposition Benches shows that the Labour party is, after all, in favour of obeying decisions made by judges. Does my right hon. Friend think that there will come a time when the Leader of the Opposition will advise his supporters to condemn secondary picketing if there is ever an order to that effect in the courts—[Interruption.] When the case finally goes for appeal, if — [Interruption.]
Mr. Speaker: Order. Hon. Members must confine questions to the matter before the House and not go too wide of that.
Mr. Nicholls: If, in the end, the present decision is reversed, does my right hon. Friend think that Opposition Members will be as vocal in support of that final decision as they have been in favour of the interim decision?
The Prime Minister: I want to make it clear that the Government, like any person or citizen, must and will accept the court's final ruling. That is not in doubt. I hope that it is not in doubt anywhere in this land.
Mr. Merlyn Rees: Is it not likely that, whatever happens in the Court of Appeal, this case will end up before the Law Lords in another place and that this process will take a long time? Why does not the Prime Minister in the meantime consult the trade unions at Cheltenham about the matter, which would be a reasonable thing to do, and find an appropriate way through the problems at Cheltenham?
The Prime Minister: For reasons which I have given, and which the right hon. Gentleman perhaps heard, this case has considerable implications for national security. I hope that the right hon. Gentleman, who was once Home Secretary, will not object to a Minister or anyone taking up the right to have a case heard by the Court of Appeal.
Sir Anthony Kershaw: Does my right hon. Friend agree that broken promises about strikes in the past and the rejection of strikes in the future do not command much confidence in relation to what can be arranged in consultation about our vital intelligence services?
The Prime Minister: I quoted from what Mr. McCall said to the Select Committee. I also noted that a no-strike agreement had already been repudiated by the conferences of the two largest Civil Service unions. I do not wish to go any further. The case will go before the Court of Appeal. I repeat that the Government will, of course, accept the judgment at the end of the judicial process.
Mr. Ron Leighton: Is the Prime Minister aware that, had she accepted the report of the Select Committee, she would not be in this mess? The key passage in the judgment was to the effect that there
176
should be a pause for reflection. Is the right hon. Lady capable of pausing for reflection? Is she capable of thinking that she might have been wrong? Is she capable of thinking that she might have been in error? Instead of rushing immediately to appeal, which could lead to an even bigger fiasco, will she take the course of negotiating an agreeable settlement, one which is acceptable to both sides, rather than proceeding by authoritarian diktat?
The Prime Minister: I am surprised that the hon. Gentleman should refer to appealing to the Court of Appeal as diktat. It is a due process of law, and he is well aware of that. I have already said that this is a very important case because it has implications for national security. At the end of the judgment, the judge indicated that the status quo should be maintained pending consideration of an appeal. It is clearly in the interests of the GCHQ staff and of national security that uncertainty should be removed as quickly as possible. If that is to be done, the case before the Court of Appeal must be heard as soon as possible, and therefore the application had to be made as soon as possible.
Mr. Patrick Cormack: Is my right hon. Friend aware that even those who questioned the wisdom of the original decision will find her unequivocal acceptance of the rule of law in stark and refreshing contrast to the empty posturings of the Leader of the Opposition?
The Prime Minister: I am grateful to my hon. Friend for his remarks. I hope that the ultimate decision of the court, whatever it may be—whether injunctions, fines or some other decision concerning Ministers of the Crown—and all decision of courts of law will always be upheld.
Mr. Tam Dalyell: Will the Prime Minister shed light on the reported puzzlement of Mr. Justice Glidewell on why the instructions were given to officials orally on 22 December? What precise event prompted the Prime Minister, three days before Christmas, to give those oral instructions? Does she recollect that on 19 December she answered two parliamentary questions from me—[Interruption.] —about GCHQ Cheltenham? As she knew well that those questions were prompted by information that had come to me, not from trade union activists—[Interruption] —but from——
Mr. Speaker: Order.
Mr. Dalyell: For over five hours messages in relation to the instructions ordering the Belgrano — [Interruption.]
Mr. Speaker: Order. The hon. Gentleman must not go into overmuch detail. He is asking a question of the Prime Minister.
Mr. Dalyell: It is on the detail that we discover that the Prime Minister acted unlawfully and has misled the House.
The Prime Minister: As the hon. Gentleman is aware, I have answered many questions on that issue. I did not notice that that matter featured in the judgment on Mr. Justice Glidewell.
Mr. Ian Lloyd: Is there not a most singular and conspicuous difference between the Leader of the Opposition's sudden passion for and overwhelming conversion to the rule of law and that of St. Paul on the

177
road to Damascus in that the right hon. Gentleman's conviction will vanish with the speed of a tropical sunset the moment——
Mr. Speaker: Order. The hon. Gentleman must put his question to the Prime Minister and not address himself to the Leader of the Opposition.
Mr. Lloyd: Does my right hon. Friend agree that the right hon. Gentleman's conviction will disappear the moment that the courts issue a ruling which condemns the violence and mayhem which is being orchestrated by leaders of the National Union of Mineworkers and the Transport and General Workers Union on our streets and at our docks?
The Prime Minister: I agree with my hon. Friend. Perhaps the Leader of the Opposition will insist on allying himself only with those who say quite clearly that they will accept and uphold the law.
Mr. A. J. Beith: Is the Prime Minister seriously telling the House that she will continue to exact a penalty from employees at GCHQ who have stood firm in their decision to remain members of trade unions or from any who have joined them during the interim period? Does she think that GCHQ's capacity to contribute to our intelligence and security is in better shape now than it was before she started all this?
The Prime Minister: As I have made clear several times in recent weeks, the service provided by GCHQ is excellent. I believe that the GCHQ employees to whom the hon. Gentleman referred are fully covered by the judge's remark that the status quo should be maintained pending consideration of an appeal. We had that much in mind when we began the judicial review.
Mr. Michael Morris: Is my right hon. Friend aware that this issue has nothing to do with civil rights and that the key issue remains national security, when over about 18 months 10,000 working days were lost and when on 9 March 1981 parts of GCHQ came to a halt? Is my right hon. Friend aware that she was right to take the action she took and that she was right to lodge an appeal immediately after the proceedings?
The Prime Minister: Those were the reasons that we gave for taking the action in the first place. The judge at first instance found that we had all the powers to take the action that we took. We had every one of the powers necessary to take that action. However, he considered that had we had prior consultation we might have taken a different course, and so he found that instance invalid, but not the general powers themselves.
Mr. Frank Cook: The Prime Minister has placed stress on 48-hour disputes within the security establishment. Perhaps she will tell us of which unions Philby, Vassall, Maclean and Roger Hollis were members. How does she equate her accusations that are based on union membership with fallibility within our national security? She is totally wrong.
The Prime Minister: The quote which I used about 48 hours came from the Council of Civil Service Unions' campaign report No. 5. I could quote many more passages. We took action because national security and GCHQ are extremely important and we must have continuous coverage. The quotation which I used — I could give many more—shows that the Civil Service unions were
178
prepared selectively to strike at GCHQ and to damage communications — [Interruption.] I shall quote from campaign report No. 1 of the Council of Civil Service Unions, which states:
"The use of selective strike action by members in sensitive areas is a key part of our campaign."
That is what the council, not I, said.
Mrs. Edwina Currie: Will my right hon. Friend view with alarm the advice of trade unions leaders to get in and start recruiting? Does she not agree——
Hon. Members: Reading.
Mr. Speaker: Order. The hon. Lady must not read.
Mrs. Currie: Does not my right hon. Friend feel that that action will re-establish the conflict of GCHQ employees between loyalty to their employer and the nation and loyalty to their trade union?
The Prime Minister: I believe that the actions of both sides are covered by the judge's statement that the status quo should be maintained. Everything that my hon. Friend said shows the wisdom of entering an appeal quickly, so that it can be heard as quickly as possible by a court of appeal of three judges. This is an important case, because it involves national security. What my hon. Friend said lends powerful support to the need for a quick appeal and a quick hearing.
Mr. David Winnick: Does the Prime Minister recognise that the court's decision was a sharp rebuke for the arbitrary and dictatorial way in which the Government, and the right hon. Lady in particular, make decisions? Is the right hon. Lady aware that the decision taken yesterday by the court will be warmly welcomed by all who believe in protecting the rights of working people?
The Prime Minister: A Minister in the Labour Government did not hesitate to appeal to the High Court and the Court of Appeal on a fundamental matter when it suited him. I am taking precisely the same course of action.
Mr. Robert Atkins: Is it not the case that the last Labour Government took action under this very law believing that that was in the national interest? Does my right hon. Friend find it slightly ironical that the Labour party is always against certain matters when it is in opposition? Does my right hon. Friend find this cant and hypocrisy typical of where the Labour party stands at the moment?
The Prime Minister: I believe that my hon. Friend is referring to certificates issued under the Employment Protection Act 1975, which were given by the Labour Government and by us. The use of such a certificate in this case was not found to be invalid in any way.
Mrs. Ann Clwyd: Will the Prime Minister estimate how many Conservative Members share the view of the hon. Member for Hendon, North (Mr. Gorst), who believes that the Government, having made a bad judgment, should now accept their mistake? How should the trade unions at Cheltenham be compensated after the Court of Appeal finds in their favour?
The Prime Minister: The hon. Lady is going into what will be argued before the Court of Appeal. Because the Government are entering an appeal before the Court of

179
Appeal, it would be best if I did not enter into the arguments to go before that court. I hope that the appeal will be heard quickly. We shall accept the final results of the judicial process.
Mr. Robert Adley: Because Labour Members and trade union leaders are stalking the country seeking to encourage people to go on strike but denying those people the right to be consulted, I ask my right hon. Friend one simple question: can she think of any greater humbug than Opposition Members using the word "consult"?
The Prime Minister: I hope that every person who carries any authority in any strike—I believe that this is what my hon. Friend is talking about—must say that he or she will accept the judicial process, as I have said from the Dispatch Box.
Mr. Eddie Loyden: Is it not a fact that, in spite of the Prime Minister's attempts to mask the intentions of the Government, the Government's actions towards GCHQ and their other actions stem from a blind hatred of the trade union movement by the right hon. Lady, her right hon. Friends and other members of the Tory party.
The Prime Minister: No. As we said right at the beginning, there has always been special provision for certain intelligence services. GCHQ was regarded as an intelligence service and agency. It has been subject to several severe industrial disputes. Selective action was deliberately taken. We used powers which, according to the court of first instance, were valid powers to use. The only reason why those powers were not valid in the particular instance was the lack of prior consultation. That is the point. Because this matter affects national security, the case has been referred to the Court of Appeal for higher consideration.
Mr. Eldon Griffiths: Does my right hon. Friend accept that no amount of litigation, wherever it takes place, will overcome the dilemma that national security means no strikes at GCHQ, but civil liberties require that the civil servants there shall be properly represented? Will my right hon. Friend therefore urge the Foreign Secretary and other Ministers to listen to some of the suggestions that have been made to bridge this problem so that during the judicial process sensible negotiations are conducted to resolve the essential problem?
The Prime Minister: As the judge stated, it would not be right to take any action that could hinder the process in any way. Action was, of course, taken to get a staff association going. Clearly, any move in that direction must now be halted, as it may or may not be necessary according to the court's decision.
Mr. Kevin Barron: Notwithstanding the question of the appeal, will the Prime Minister and the Government take notice of what was said yesterday in the High Court—that there have been some guilty dealings in the lack of prior consultation with the relevant trade unions at GCHQ? Will the right hon. Lady and the Government consult throughout the public sector and replace the confrontational politics in the past five years in the Government's actions with the trade unions? Will
180
the Government try some consultations and stop bringing the public sector, the Prime Minister and the Government into disrepute, as the right hon. Lady is doing?
The Prime Minister: I have carefully not intervened to confront Mr. Scargill.
Mr. Richard Hickmet: Does my right hon. Friend agree that, whereas the Government are prepared to subject themselves to the judicial process, the leader of the National Union of Mineworkers, supported by his poodle, the Leader of the Opposition——
Mr. Speaker: Order. The same rules apply to every hon. Member. Questions must be confined to the statement. The Prime Minister's statement was not about the miners.
Mr. Hickmet: The Government do not consider themselves above the law, whereas the NUM does.
The Prime Minister: I believe that everyone in this country must accept the final judgment of the legal process, and that is precisely what I intend to do.
Mr. Robert C. Brown: Does the right hon. Lady recall that the last time I caught Mr. Speaker's eye during Prime Minister's Questions—more than two years ago—I accused her of being the worst form of vandal, in so far as she was tearing away at the fabric of our society? As it now seems that a High Court judge shares my opinion of the right hon. Lady, will she give the country an assurance that she will seek to honour her policies? Will the right hon. Lady answer the question asked by my right hon. and learned Friend the Member for Aberavon (Mr. Morris)? If the High Court decision goes against her, will she call it a day and not appeal to the House of Lords?
The Prime Minister: I believe that violence and intimidation are tearing their way through the fabric of our society — not the judgment in this case about prior consultation, which is being appealed against. The result of the final judicial process will, of course, be wholeheartedly accepted, whatever it is.
Mr. Nicholas Winterton: Does my right hon. Friend accept that the vast majority of people on this side of the House and in the country fully accept the principle and purpose behind the Government's decision on GCHQ and expect no less than that Her Majesty's Government will uphold the law and use the law in the national interest and to protect national security in the way that she has described?
The Prime Minister: I am grateful to my hon. Friend.
Mr. Bryan Gould: In deciding to pursue an appeal, is it the Prime Minister's contention that the principles of natural justice were observed, which is flatly contradicted by the facts, or— something much more consistent with her general attitude—that in depriving trade unionists of their rights the principles of natural justice are irrelevant?
The Prime Minister: As the hon. Gentleman knows, this is a matter for the court. The judgment will have substantial implications for national security. That is why it is being appealed before the court. It would not be right for me to start to argue the case at the Dispatch Box, because the House of Commons is not a court of law.
Mr. Kenneth Carlisle: Does my right hon. Friend agree that we must uphold the principle that the Government are ultimately responsible for national security? As 25 per cent. of GCHQ staff were involved in industrial action in 1981, does my right hon. Friend agree that any Government would have had to take action to ensure that that situation could not recur?
The Prime Minister: I am grateful to my hon. Friend. As I understand the judgment, we had all the powers that we took. The use of the powers was not found to be invalid. In this particular instance, it was found to be invalid on one point—that the use of the powers was not preceded by consultation. Had there been prior consultation followed by a decision nevertheless to use the identical powers, I understand that there would have been no ground for the court's decision.
Mr. John Fraser: As the two QCs sitting beside the Prime Minister presumably have the grounds for appeal in their pockets or folders, may we be told whether those grounds contain a statement that the Prime Minister may ignore the rules of natural justice?
The Prime Minister: This House, however distinguished—and it is the most distinguished representative Chamber—is not a court of law. Therefore, the point should be argued before the Court of Appeal.
Mr. Geoffrey Dickens: As the Opposition are constantly calling for civil liberties and Conservative Members are constantly calling for national security, will my right hon. Friend remind the Opposition that without national security there can be no liberty for anyone in this country?
The Prime Minister: Yes, it is that aspect of the case and its implications for national security that led us to take the matter to the Court of Appeal. Because we believe that it is in everyone's interests to have the case settled quickly, we have decided to appeal this afternoon so that the case can be heard as quickly as possible.
Mr. Dennis Skinner: As the whole thing began because the Prime Minister was prepared to bribe trade unionists to forgo their union activities when she took action against GCHQ, and as the stakes are now extremely high because if the matter went the wrong way in the Court of Appeal it could lead to her resignation as Prime Minister, how can we be sure that she will not go to the extent of bribing the judges who are to take the decision?
Mr. Speaker: Order. Every hon. Member must take responsibility for his questions, but that one was out of order.
The Prime Minister: I must ask that that allegation be totally and unreservedly withdrawn.
Mr. Speaker: Order. I gave the hon. Gentleman the opportunity to do that. Will he now withdraw it?
Mr. Skinner: No. The Prime Minister is quite capable of doing that to save her own neck.
Mr. Speaker: Order. I put the hon. Gentleman on warning that unless he is prepared to withdraw the allegation I shall be forced to take extreme action.
Mr. Allan Rogers: On a point of order, Mr. Speaker.
Mr. Speaker: No point of order can arise. I am asking the hon. Member for Bolsover (Mr. Skinner) immediately to withdraw his allegation.
Mr. Skinner: I have no intention of withdrawing the allegation because the Prime Minister would do anything to save her own neck.
Mr. Speaker: Order. I name Mr. Dennis Skinner for persistent disobedience of the Chair.
Motion made, and Question put,
That Mr. Dennis Skinner be suspended from the service of the House.—[Mr. Biffen.]
The House proceeded to a Division—
Dr. M. S. Miller: On a point of order, Mr. Speaker. Surely the point rests on the meaning of the word "bribe". When my hon. Friend the Member for Bolsover (Mr. Skinner) used the word in respect of the payments made by the Government to trade union members at GCHQ there was no objection. It was when he used the same word in relation to the Prime Minister that the problem arose. It seems that using the word to denote an indirect influence is all right but using it to refer to a direct payment is not all right. I ask you, Mr. Speaker, to reflect on the fact that my hon. Friend used exactly the same word to describe the Prime Minister's behaviour towards the trade union members and the behaviour alleged to be possible in relation to the judiciary.
Mr. Speaker: I took the action that I did because the hon. Member for Bolsover refused to obey an order from the Chair. That is the fact of the matter. I think that the whole House will agree.
The Tellers having been named and the Question having again been put—
Mr. Rogers: On a point of order, Mr. Speaker. When my hon. Friend the Member for Bolsover (Mr. Skinner) originally made the remark, you saw fit merely to admonish him. You asked him to withdraw it only on the prompting of the Prime Minister. Is the Prime Minister now to dictate the rules under which the House operates?
Mr. Speaker: The hon. Gentleman misunderstood me if that is what he thought. I used the words, "That is out of order" and I gave the hon. Member for Bolsover the opportunity to withdraw what he had said, but he did not do so.
Mr. Nigel Spearing: Further to the point of order, Mr. Speaker. Notwithstanding your remarks, Mr. Speaker, can I put it to you, first, that a question to the Prime Minister does not necessarily include an allegation if it is in the form of a question—which was the form of words used by my hon. Friend — and, secondly, although you ruled my hon. Friend's question out of order, if the Prime Minister had not replied, which I suspect is prima facie out of order, we should have proceeded to the next question and the matter would not have arisen. Might I therefore suggest that my hon. Friend's use of the word "allegation" is not in accordance with the words recorded in Hansard?
Mr. Speaker: Whatever the hon. Gentleman may say, the fact remains that I asked the hon. Member for Bolsover to withdraw his remark. He persistently refused to do so. The whole House knows that and it heard what was said.
The House having divided: Ayes 218, Noes 84.

Division No. 411]

[4.20 pm

AYES

Adley, Robert

Harris, David

Alison, Rt Hon Michael

Harrison, Rt Hon Walter

Alton, David

Haselhurst, Alan

Amery, Rt Hon Julian

Havers, Rt Hon Sir Michael

Ancram, Michael

Hawkins, C. (High Peak)

Arnold, Tom

Hawkins, Sir Paul (SW N'folk)

Ashby, David

Hayes, J.

Ashdown, Paddy

Hayward, Robert

Aspinwall, Jack

Heathcoat-Amory, David

Atkins, Robert (South Ribble)

Hickmet, Richard

Atkinson, David (B'm'th E)

Holland, Sir Philip (Gedling)

Baker, Rt Hon K. (Mole Vall'y)

Holt, Richard

Baldry, Anthony

Hooson, Tom

Banks, Robert (Harrogate)

Howard, Michael

Beith, A. J.

Howarth, Alan (Stratf'd-on-A)

Best, Keith

Howe, Rt Hon Sir Geoffrey

Biffen, Rt Hon John

Howells, Geraint

Biggs-Davison, Sir John

Hughes, Simon (Southwark)

Blaker, Rt Hon Sir Peter

Hunt, David (Wirral)

Bottomley, Peter

Hunter, Andrew

Bottomley, Mrs Virginia

Hurd, Rt Hon Douglas

Bowden, A. (Brighton K'to'n)

Irving, Charles

Bowden, Gerald (Dulwich)

Jackson, Robert

Boyson, Dr Rhodes

Johnson Smith, Sir Geoffrey

Braine, Sir Bernard

Jones, Robert (W Herts)

Brinton, Tim

Kershaw, Sir Anthony

Brittan, Rt Hon Leon

Key, Robert

Bruce, Malcolm

Kilfedder, James A.

Bruinvels, Peter

King, Rt Hon Tom

Buck, Sir Antony

Kirkwood, Archy

Budgen, Nick

Knight, Gregory (Derby N)

Carlisle, John (N Luton)

Knight, Mrs Jill (Edgbaston)

Carlisle, Kenneth (Lincoln)

Knox, David

Carlisle, Rt Hon M. (W'ton S)

Lamont, Norman

Chapman, Sydney

Lawler, Geoffrey

Chope, Christopher

Lawrence, Ivan

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

Lawson, Rt Hon Nigel

Clark, Dr Michael (Rochford)

Lennox-Boyd, Hon Mark

Clark, Sir W. (Croydon S)

Lewis, Sir Kenneth (Stamf'd)

Clarke, Rt Hon K. (Rushcliffe)

Lilley, Peter

Colvin, Michael

Lloyd, Ian (Havant)

Coombs, Simon

Lloyd, Peter, (Fareham)

Cranborne, Viscount

Luce, Richard

Dickens, Geoffrey

MacKay, Andrew (Berkshire)

Dicks, Terry

MacKay, John (Argyll & Bute)

Derail, Stephen

Maclennan, Robert

Douglas-Hamilton, Lord J.

McQuarrie, Albert

Durant, Tony

Major, John

Dykes, Hugh

Malins, Humfrey

Eggar, Tim

Malone, Gerald

Emery, Sir Peter

Maples, John

Eyre, Sir Reginald

Marlow, Antony

Fallon, Michael

Maude, Hon Francis

Favell, Anthony

Maxwell-Hyslop, Robin

Forman, Nigel

Meadowcroft, Michael

Forth, Eric

Mellor, David

Fowler, Rt Hon Norman

Merchant, Piers

Fox, Marcus

Meyer, Sir Anthony

Franks, Cecil

Miller, Hal (B'grove)

Fraser, Peter (Angus East)

Mills, lain (Meriden)

Freud, Clement

Mills, Sir Peter (West Devon)

Galley, Roy

Moate, Roger

Gardiner, George (Reigate)

Molyneaux, Rt Hon James

Goodhart, Sir Philip

Monro, Sir Hector

Goodlad, Alastair

Montgomery, Fergus

Gorst, John

Morris, M. (N'hampton, S)

Gower, Sir Raymond

Morrison, Hon C. (Devizes)

Greenway, Harry

Murphy, Christopher

Gregory, Conal

Neale, Gerrard

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

Needham, Richard

Grist, Ian

Nicholls, Patrick

Grylls, Michael

Ottaway, Richard

Gummer, John Selwyn

Owen, Rt Hon Dr David

Hamilton, Hon A. (Epsom)

Page, Sir John (Harrow W)

Hamilton, Neil (Tatton)

Pawsey, James

Hancock, Mr. Michael

Penhaligon, David

Hanley, Jeremy

Pollock, Alexander

Hargreaves, Kenneth

Porter, Barry

184

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

Thompson, Patrick (N'ich N)

Price, Sir David

Thornton, Malcolm

Rathbone, Tim

Thurnham, Peter

Rees, Rt Hon Peter (Dover)

Townsend, Cyril D. (B'heath)

Renton, Tim

Tracey, Richard

Ridley, Rt Hon Nicholas

Trotter, Neville

Roe, Mrs Marion

Twinn, Dr Ian

Rost, Peter

Wakeham, Rt Hon John

Rumbold, Mrs Angela

Walden, George

Ryder, Richard

Walker, Cecil (Belfast N)

Sainsbury, Hon Timothy

Wallace, James

St. John-Stevas, Rt Hon N.

Waller, Gary

Sayeed, Jonathan

Walters, Dennis

Shaw, Sir Michael (Scarb')

Wardle, C. (Bexhill)

Shelton, William (Streatham)

Warren, Kenneth

Shepherd, Richard (Aldridge)

Watson, John

Silvester, Fred

Wells, Bowen (Hertford)

Skeet, T. H. H.

Wheeler, John

Smith, Sir Dudley (Warwick)

Whitney, Raymond

Smith, Tim (Beaconsfield)

Wiggin, Jerry

Smyth, Rev W. M. (Belfast S)

Winterton, Mrs Ann

Soames, Hon Nicholas

Winterton, Nicholas

Stanbrook, Ivor

Wolfson, Mark

Stewart, Allan (Eastwood)

Wood, Timothy

Stewart, Andrew (Sherwood)

Woodcock, Michael

Stradling Thomas, J.

Wrigglesworth, Ian

Sumberg, David

Yeo, Tim

Taylor, John (Solihull)

Young, Sir George (Acton)

Tebbit, Rt Hon Norman

Younger, Rt Hon George

Temple-Morris, Peter

Thatcher, Rt Hon Mrs M.

Tellers for the Ayes:

Thomas, Rt Hon Peter

Mr. Ian Lang and Mr. Tristan Garel-Jones.

Thompson, Donald (Calder V)

NOES

Ashley, Rt Hon Jack

Lewis, Terence (Worsley)

Ashton, Joe

Litherland, Robert

Atkinson, N. (Tottenham)

Lloyd, Tony (Stretford)

Banks, Tony (Newham NW)

Lofthouse, Geoffrey

Barron, Kevin

Loyden, Edward

Bennett, A. (Dent'n & Red'sh)

McNamara, Kevin

Bermingham, Gerald

McTaggart, Robert

Bidwell, Sydney

Marek, Dr John

Boyes, Roland

Marshall, David (Shettleston)

Buchan, Norman

Maxton, John

Canavan, Dennis

Maynard, Miss Joan

Carter-Jones, Lewis

Michie, William

Clarke, Thomas

Mikardo, Ian

Clwyd, Mrs Ann

Miller, Dr M. S. (E Kilbride)

Cohen, Harry

Morris, Rt Hon A. (W'shawe)

Cook, Frank (Stockton North)

O'Brien, William

Corbett, Robin

Orme, Rt Hon Stanley

Cowans, Harry

Park, George

Cox, Thomas (Tooting)

Patchett, Terry

Cunliffe, Lawrence

Pike, Peter

Dalyell, Tam

Powell, Raymond (Ogmore)

Davies, Ronald (Caerphilly)

Redmond, M.

Dobson, Frank

Roberts, Allan (Bootle)

Eadie, Alex

Robinson, G. (Coventry NW)

Eastham, Ken

Rogers, Allan

Edwards, Bob (W'h'mpfn SE)

Rooker, J. W.

Evans, John (St. Helens N)

Ross, Ernest (Dundee W)

Fatchett, Derek

Sheerman, Barry

Field, Frank (Birkenhead)

Short, Ms Clare (Ladywood)

Fields, T. (L'pool Broad Gn)

Smith, C. (Isl'ton S & F'bury)

Foulkes, George

Soley, Clive

George, Bruce

Strang, Gavin

Godman, Dr Norman

Thorne, Stan (Preston)

Hamilton, James (M'well N)

Wardell, Gareth (Gower)

Hamilton, W. W. (Central Fife)

Wareing, Robert

Harman, Ms Harriet

Welsh, Michael

Hart, Rt Hon Dame Judith

Wigley, Dafydd

Heffer, Eric S.

Williams, Rt Hon A.

Holland, Stuart (Vauxhall)

Wilson, Gordon

Hughes, Dr. Mark (Durham)

Winnick, David

Hughes, Roy (Newport East)

Kilroy-Silk, Robert

Tellers for the Noes:

Lamond, James

Mr. Jeremy Corbyn and Mr. Bob Clay.

Leighton, Ronald

Question accordingly agreed to.
Ordered,
That Mr. Dennis Skinner be suspended from the service of the House.
Mr. Speaker: I call Mr. Secretary Younger to make his statement.
Mr. Andrew Faulds: On a point of order, Mr. Speaker. Because of this unfortunate interruption of service, and because the Prime Minister saw and grabbed an opportunity to change the press reportage of the GCHQ issue, could some more of us be called who wanted to ask a question on this grave matter?
Mr. Speaker: The House has had a very good run on this.
Mr. Faulds: I did not.
Mr. Speaker: Order. The House has had a good run. We have another statement and an important Back-Bench Members' debate ahead of us in which many right hon. and hon. Members wish to take part.
Dr. Owen: On a point of order, Mr. Speaker. We have heard from only one side in this dispute about the interpretation of the High Court's judgment. The Prime Minister has consistently claimed that the status quo will be maintained. One of the parties to the dispute has already said that it greatly resents the Government's attempt to misrepresent the High Court's meaning. The judgment is not available to right hon. and hon. Members. It is clear from the interpretation of one party to the dispute—after all, the Prime Minister is a party to it — that the judgment restores the status quo at GCHQ; it does not maintain the status quo. May we have the judgment in full placed immediately in the Library because at the moment it is not available to hon. Members? It is presumably being made available only to one party to the dispute.
Mr. Speaker: The judgment has been reported widely. The right hon. Gentleman's question is not a matter for me.
Dr. Owen: It certainly is a matter for the House. A party to the dispute has come to the House and given one interpretation. The Council of Civil Service Unions, which is another party to the dispute, has no doubt written to right hon. and hon. Members claiming that the former interpretation is black propaganda. Hon. Members have every right to see that interpretation. In the past 24 hours the rights of the House have been trampled on, and many of us are getting extremely annoyed about the way in which the Government have behaved.
The Attorney-General (Sir Michael Havers): Further to that point of order, Mr. Speaker. It was in the discussion between counsel and the learned judge afterwards that the judge recommended in open court that the status quo should be maintained. I have ordered a copy of the transcript. The moment that I have received it, I shall, of course, place it in the Library.
Mr. Dalyell: Further to that point of order, Mr. Speaker. Wanting for greater accuracy to see the full judgment rather than the report in The Times this morning, I went to the ever-helpful Dr. Menhennet, the Librarian, and asked him, together with his assistants, to get hold of the full judgment. I understand that the Library of the House of Commons has difficulty getting hold of these judgments because apparently they are done by a private firm which is unwilling to yield them up. As Mr. Speaker, can you look into this question of private firms which apparently prevent the Library of the House of Commons from getting hold of judgments?
Mr. Speaker: The hon. Gentleman has just heard the statement by the Attorney-General, who has told the House that as soon as it is available to him the judgment will be placed in the Library.
Mr. Tony Baldry: On a point of order, Mr. Speaker. Will you be so kind as to study a transcript of today's Hansard, because in his question to my right hon. Friend the Prime Minister the right hon. Member for Plymouth, Devonport (Dr. Owen) sought by implication to impugn the impartiality and integrity of the Master of the Rolls? If that is the case, I am quite sure that the hon. Gentleman would wish to withdraw.
Mr. Speaker: I was listening carefully but did not hear that accusation, and I have not had time to study the record of today's Hansard.
Later——
Mr. Nicholas Winterton: On a point of order, Mr. Speaker. I understood that it was the decision of the House that the hon. Member for Bolsover (Mr. Skinner) should leave the precincts of the House immediately. Am I permitted to say that he still remains within the precincts of the House in the Lobby, giving a statement to the press? I should be obliged, Mr. Speaker, if you would give instructions for your decision, and that of the House, to be implemented forthwith.
Mr. Speaker: I shall look into the matter.

Rate Support Grant (Scotland)
4.32 pm
The Secretary of State for Scotland (Mr. George Younger): With permission, Mr. Speaker. I wish to make an announcement about local authority expenditure and rate support grant in Scotland.
Scottish local authorities are planning expenditure in 1984–85 which is some £114 million, or 4·2 per cent. above the current expenditure guidelines that I issued to them. When I met the Convention of Scottish Local Authorities on 22 June, I said that I was disappointed that authorities were not much closer to the expenditure provision made in the rate support grant settlement. Having considered the budget returns of authorities I said that I had decided not to take selective action to reduce the rates of any individual local authority this year, although I will not hesitate to use the power again if an individual authority plans excessive and unreasonable expenditure.
However, since there was only marginal improvement on last year in the general level of expenditure I made it clear that there would have to be a substantial general abatement of rate support grant. It is apparent that the abatement which I imposed last year was not sufficient to impress upon authorities the very real need to bring their spending into line with Government guidelines.
In my consideration of the level of abatement required I was very aware of two arguments which the convention and individual authorities had raised with me.
The first was the distribution of the abatement. Previously grant reductions for excess over guidelines bore no relation to the level of excess over guideline. Authorities were penalised in proportion to their share of grant rather than on the basis of their degree of overspend. This, I acknowledge, was not fair. During the parliamentary proceedings on the Rating and Valuation (Amendment) (Scotland) Act 1984 it was made clear that I intended to use my powers under the Act to ensure that the amount of reduction for each authority was directly related to the extent of its overspend.
Secondly, COSLA has for a number of years represented to me the unfairness of a system which did not recognise reductions in overspend at outturn and thus gave no incentive to respond to an abatement by economies in the current year. This year, I have decided that the amount of the grant reduction will be adjusted when information is available about actual expenditure in 1984–85. Any authority whose expenditure at outturn is below guidelines will have its grant penalty cancelled. An authority which while still above guideline reduces its expenditure at outturn will have its penalty reduced. Conversely, of course, an authority which increases its excess will find its penalty on outturn increased.
In the light of these two significant improvements to the system, which have removed the basic unfairnesses which have previously existed, I have had to consider whether to seek a grant reduction equal to the full amount of the overspending of £114 million.
I have decided, however, that a penalty of this scale would be too steep an increase on last year's total penalty of £64 million. I have decided that for 1984–85 the appropriate reduction would be £90 million. I will lay the necessary rate support grant order shortly, and grant reductions will start on 1 August I have today placed in the
188
Library a paper showing how the abatement will affect each local authority, and letters of notification to them are being posted today.
I accept that this penalty will be regarded as severe. At the same time the new system will allow authorities to reduce their penalty in part or in entirety by taking positive action now to bring their spending down. The solution lies in their hands. In the interests of their ratepayers and of the economy as a whole, I hope that this opportunity will not be missed.
Mr. Donald Dewar: I begin by welcoming one feature, and one feature only, of an otherwise deplorable statement. It is right that those authorities whose outturn is less than the budgeted expenditure on which the penalty was calculated should have a reduction in that penalty. But if there are to be such reductions—and that seems likely—I assume that that will mean a reduction in the total of £90 million which is to be clawed back and that it will not mean an increase in the burden to be shouldered by other authorities. It is important that that should be made clear.
The Secretary of State is right on only one other thing —that this abatement will be seen as severe. It is clear that the clawback is punitive and that there is no justice, no sign of social conscience and no appreciation of the damage that will be done to basic services by the announcement. A clawback of £90 million on an excess of £114 million means that the Government will be taking back 79 per cent. of the total overspend.
My understanding is that the equivalent percentage in England was 66 per cent., and in Wales 54 per cent. In 1982–83 there was an excess of £203 million and the penalty was £57 million. I am fairly including the individual hit lists—the section 5 procedures—as well. In 1983–84, the excess was £121 million and the penalty was £64 million.
When put in that context, it seems that the present figure of £90 million on an excess of £114 million is vindictive, unreasonable and unreasoning. The consequences will be further cuts in services, fewer teachers and home helps, a less effective social work service and a poorer transport service. The only way in which that can be avoided — surely the Secretary of State recognises this—will be an increase in rates.
I understand, and will the right hon. Gentleman confirm, that the £90 million clawback is the equivalent of about 7·5p on the rates across the board in Scotland? How does he expect Strathclyde to find £39 million half-way through the year, Lothian £12·5 million, and Edinburgh—which under a Tory Administration had the largest excess over guidelines—£3·9 million?
Is it not sadly inevitable that this will mean a continuation of the tension between central and local Government which has marked the last few years — a tension which has degenerated to confrontation and for which the Secretary of State and his policies bear a heavy responsibility? In view of his party's humiliating reverses in the district council election, which show what the people of Scotland think of the policy lines that he is pursuing, will he reconsider his policy? Will he recognise that his insensitivity and prejudice are doing real damage to everyone in Scotland?
Is not the Secretary of State ashamed of the fact that, despite the obvious and genuine need to improve, not cut, services, if he takes the whole £90 million in the cuts in

189
this financial year the grant table in 1984–85 will be £20 million less in cash terms than it was two years ago? Is that not a recipe for disaster, and something that he should undo before the damage becomes irreversible?
Mr. Younger: The hon. Gentleman, I know, has not had a great deal of time to study my statement, but he has greatly underestimated the effect of the two major changes that I have made in how the grants will be applied. They introduce a wholly new principle, and councils will now have a direct incentive, and one from which they can profit, to reduce expenditure in their budgets. I confirm that if, as I hope, local authorities reduce their excess over guidelines, and therefore get reduced penalty, that does not adversely affect any other authority as it is a reduction in the total amount that is recovered.
Secondly, as to the comparison between Scotland and England and Wales, I make it clear that it is impossible to compare two wholly different systems. For instance, a large number of English authorities—about one third—have penalties that are over 100 per cent. of their excess. We have always set our face against that in Scotland, and the one thing that COSLA does not wish is to have the English system. The English penalty for 1984–85 has gone up 63 per cent. from the 1983–84 figure, whereas the Scottish penalty that I announced this afternoon has gone up by only 40 per cent., so it cannot be said that this is unfair to Scotland.
As to the effect on rates, I would be most astonished if Scottish local authorities took the view that the way to achieve their budgets was to go ahead, irrespective, and put the increase on the rates. There is a direct incentive to make the savings people want to see and thereby get recompense through reduced penalties.
It is the case that this announcement comes part way through the year, and that makes it more difficult for local authorities to make savings. We all know that, but I remind the hon. Gentleman that I clearly and positively reminded local authorities as long ago as June that there would be a large abatement, and that they would do well to start looking for economies then. The more sensible of them did so, and about one quarter of all our authorities are in any case well within the guidelines and will not suffer penalties.
Sir Hector Monro: I warmly welcome my right hon. Friend's continuing efforts to keep extravagant authorities within bounds in the interests of ratepayers. What positive incentive is there to local authorities, such as Dumfries and Galloway and the four districts within it, who keep their expenditure within guidelines? Will my right hon. Friend switch resources from extravagant authorities to those who deserve an incentive to keep within the guidelines?
Mr. Younger: I can appreciate my hon. Friend's point, and I am grateful for his comments. The main incentive for authorities such as Dumfries and Galloway — to whom I pay a warm tribute for the way that it has successfully achieved the difficult task of getting its spending down—is that they, unlike other authorities, can go ahead with their plans, secure in the knowledge that no penalty applies to them.
Mr. Gordon Wilson: Will the Secretary of State accept that this craven surrender to the Treasury leads many of us to believe that he wishes
190
promotion, and there is no sacrifice that he would make to achieve that? Secondly, as it has been shown that the increase in penalty in Scotland is far greater than it is in England and Wales, will he come clean and confirm that as part of the Treasury's instruction, there is a progressive reduction in the amount of money available to the Scottish Office, and that that is one of the reasons why these impositions are placed on our constituents year after year?
Mr. Younger: I am sorry to say so, but the hon. Gentleman is wrong on both counts. First, it is expected that there will be a smaller increase in the general abatement this year in Scotland than the equivalent English amount, which is 63 per cent. as against 40 per cent. for Scotland. As to general abatement, I thought that the hon. Gentleman knew that Scottish expenditure en bloc is worked out by a formula, which has not changed.
Mr. Albert McQuarrie: I congratulate my right hon Friend on penalising those authorities that have overspent on guidelines. Will he assure me that it is not his intention to penalise the Grampian region, which has kept within the guidelines despite the problems that it had with snow clearing and so on during last winter? Will he also assure me that Banff and Buchan district, which has done its best to keep within the guidelines, will not be penalised?
Mr. Younger: I am grateful for my hon. Friend's comments. I can confirm that Grampian regional council, which has done extremely well in getting its expenditure down, is not subject to penalty as it is well within the guidelines. Unfortunately, I cannot say the same about Banff and Buchan, which has an excess this year, and will therefore have a penalty to pay. However, that penalty will now be fair, which it was not this time last year.
Mr. Bruce Millan: Is not today's statement part of the Secretary of State's continued vendetta against Scotland's local authorities? Deny it as he will, are not these penalties more savage than in the past two years, and considerably more savage than those being imposed in England? At the moment, the total penalty there is £450 million, while that for Scotland at £90 million is proportionately much higher.
If the local authorities were to carry out the reductions in services that these penalties will impose on them—I am confident that they will not because they have too much concern for the ratepayers of Scotland and the people for whom they provide services—there would be savage reductions in many social services in Scotland. Is that rot the kind of measure that the Secretary of State is trying to enforce on Scottish local authorities?
Mr. Younger: The right hon. Gentleman is exactly the person to ask that question. The last year when he had responsibility as Secretary of State was 1978–79, and local authority budgets this year are still 2·6 per cent. in real terms above what he allowed in that year. That is the complete answer to the nonsense that he has just put out about wholesale cuts in services, because the services that he approved would be 2·6 per cent. below what local authorities are proposing in their budgets this year. Secondly, as to grant reductions, the right hon. Gentleman has a bit of a cheek. We all remember an article in The Scotsman that he wrote, in which he strongly recommended to me that the way to control local

191
government expenditure was to make reductions in grant. If that was his advice, I do not not know why he is complaining now that I have to do it.
Mr. Gerald Malone: My hon. Friend will be aware of the relief felt by Conservative Members that he is at last able to reduce local authority spending across the board and does not have to penalise councils that keep within budgets. I reiterate that Grampian regional council is a good example. Will he remind Labour Members that in the case of councils such as Aberdeen district council, which I suspect will be overspending, there are two solutions? One would be to reduce the budget, and the second would be to proceed with policies initiated by this Government, such as the sale of council houses, which will increase their receipts and improve services at reduced cost, while allowing them still to come within their budget? Is it not a fact that there is no necessity to reduce services as a result of my right hon. Friend's statement?
Mr. Younger: My hon. Friend is right. In particular, he will remember very well that Aberdeen council forwent a considerable sum of money that it could have had for its housing if it had wished.
Mr. James Wallace: Does the Secretary of State agree that, because of the abatement, the level of rate support grant will be cut in cash as well as real terms from what it was in 1982–83? Is he not surprised that councils are still overspending? Is that not because many councils have cut away all the fat there is to cut and cannot eat into the muscle and the bone?
Does he not accept that it must be very galling to councils such as the Shetland islands council, which will suffer an abatement of almost £500,000 when it has cut expenditure responsibly as and where it can and maintained basic services, that the Government are giving money to Liverpool council in spite of its irresponsible militant action?
Mr. Younger: The hon. Gentleman's latter point is not true, as he ought to know. He might have found a word of good to say about Orkney, in his constituency. The council is well within guidelines and will not suffer penalties. In the absence of the hon. Gentleman's congratulation, I congratulate the council.
Lord James Douglas-Hamilton: Is my right hon. Friend aware that there will be much interest in his decision that the reduction should be limited to overspend? How will Edinburgh and Lothian region be affected?
Mr. Younger: Both Edinburgh and Lothian region are considerably over budget and they will undoubtedly have to pay large penalties.
Mr. Alexander Eadie: The right hon. Gentleman must be aware that he came to the Dispatch Box to make a statement this afternoon with much-weakened political authority, in the light of the local government elections in Scotland in which his party was soundly trounced.
Will he be a little more forthcoming than in his rather ominous statement to his hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) that Lothian region has overspent? Will he translate that in
192
terms of teachers' and home helps jobs and other local authority services? The right hon. Gentleman owes it to the House to tell us what redundancies may be expected in services in Lothian region.
Mr. Younger: I appreciate the hon. Gentleman's point, but if Lothian region had not had such high levels of expenditure in the past, it would be easier to reduce spending. I recall that three years ago, when the previous administration in Lothian region was faced with a penalty for the first time, it declared that at least 15,000 redundancies would result. I understand that no compulsory redundancies resulted from the imposition of that penalty.
Now that the system is fair, I hope that that will be an incentive to Edinburgh, Lothian region and other authorities. Reductions in budgets will be reflected in a lower penalty. I hope that authorities will respond to that incentive.
Mr. George Foulkes: Will not the Secretary of State admit that this is an artificial accounting exercise and that the guidelines are artificial? Will he give examples of the profligacy of Cumnock and Doon Valley district council, which has low overheads? Is it burying too many people or cleaning the streets too much? Will the Secretary of State give examples of the profligacy on which he is encouraging the council to cut down?
Mr. Younger: The general answer to the hon. Gentleman's question is that if local authority expenditure as a whole is in real terms 2·6 per cent. above its level of five years ago, all the talk about slashing services wholesale is just a load of rubbish.
Services are better and bigger than five years ago. We must all face the fact — with respect, the hon. Gentleman would need to do so if he was likely to be in government—that only a certain amount of money is available for all services. If local authority expenditure is allowed to run ahead of what the country can afford, other services would be reduced. Hon. Gentlemen would resent that, too.
Mr. Robert Maclennan: Will not the Secretary of State acknowledge that the real increase in expenditure of 2·6 per cent. since he took office, to which he referred in his answer to the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), is minuscule against a background of deindustrialisation and social despair, which puts much greater responsibilities onto local authorities than when the right hon. Gentleman took office? Will he accept that much of the difficulty faced by local authorities flows from his constant changing of the guidelines, which have been changed about seven times since he took office? It is all very well for him to sit in his ivory tower re-jigging the formulae and increasing abatements, but local authorities on the ground have to translate his paper work into cancelled programmes.
Mr. Younger: With respect, the hon. Gentleman is not right. The guidelines are built up with much care and generosity, and many allowances are written in for special needs.
The hon. Gentleman might be interested to know that Sutherland district council will have a small penalty of about £3,800 to pay for its overspend, which I hope it will manage to reduce.

193
On industrialisation, our businesses and industries in Scotland have found the going so tough partly because of high rate increases. That case has been made clear in many areas of Scotland.
Mr. David Lambie: It is no wonder that so few Tory Back Benchers from Scottish constituencies are present to support the Secretary of State for Scotland in this further attack on the people of Scotland because they continue to vote Labour.
Before the Secretary of State imposes penalties on local authorities, will he take into account areas such as Cunninghame, where every fourth man is unemployed and we have a serious problem of long-term unemployment with people out of work for two, three or four years? Those factors create social problems needing more money. Is the Secretary of State prepared to receive representations from areas such as Cunninghame, with its high unemployment rate, before he imposes penalties on that district?
Mr. Younger: The hon. Gentleman has not examined the picture that he tries to describe. The result of the Government's policy has been substantially to reduce the level of rate increases in the past five years. They have been reduced from a peak of about 35 per cent. at their highest level to about 5 per cent. last year.
Services are higher in real terms, than five years ago. The hon. Gentleman's description does not tie up with the figures.
Mr. Harry Ewing: Does not the Secretary of State appreciate that he is left without credibility, in Scotland, as the ratepayers and electors demonstrated in two recent elections? Does the Secretary of State not accept some small responsibility for creating an additional 300,000 unemployed during his time as Secretary of State and agree that teachers and home helps are fewer?
Does the Secretary of State not believe that he has the responsibility to feed in additional resources to help to deal with the problem? Does he not accept that we should be talking not about abatements and reductions in Scottish authorities, but about the allocation of additional resources to every district, region and island authority in Scotland?
Mr. Younger: I am trying to put over the point that additional resources are being allocated right now and that services are 2·6 per cent. higher in real terms than five years ago.
There are slightly fewer staff working for Scottish local authorities than there were five years ago, but considerably more staff per head of population than south of the border. I believe, also, that there are more home helps than there were five years ago, so the hon. Gentleman's song makes no sense on any count.
Mr. Norman Buchan: The tenor of the Secretary of State's remarks is that he would prefer to have more rather then less unemployment in Scotland. When will he realise that his policy is cruel and stupid and that he will force local authorities into confrontation with the Government? He is imposing a legal obligation upon authorities by means of his punitive policy, while they have a statutory duty to carry out services. The Secetary of State will create conflict. We are dealing with real hardship and real poverty, and he is increasing the gravity of the situation.
Will he take it from us that, if he were to be promoted, the whole of Scotland would be delighted to see him go?
Mr. Younger: The hon. Gentleman's conclusions do not meet his facts. I would understand the hon. Gentleman's point if local authorities had been forced successfully to slash expenditure in the past five years, were spending much less now, and if many services had been slashed beyond recognition as a result. As none of his conclusion are true, his whole case falls.
Several Hon. Members rose——
Mr. Speaker: Order. I shall call all those hon. Members who have been standing in their places, but I remind them again that there is an important Back-Bench debate to follow. May I ask for brief questions, please?
Mr. John Maxton: Given that the Secretary of State's party has been rejected in election after election and twice within the past three months, how can he continue to impose his extremist political philosophy on the people of Scotland? Does he agree that he has no mandate or moral authority to do that? How can local authorities make these savings without creating massive unemployment in Scotland?
Mr. Younger: The answer is simple. A quarter of local authorities have already made the savings and will consequently suffer no penalty. A further five or six local authorities — making about one third in all — face no penalty or a very small penalty. That is the answer—if they can do it, why cannot all the others?
Mr. William McKelvey: Will not the Secretary of State for once come clean and accept that this thinly disguised and vicious attack on the democratic rights of the people of Scotland has been carried out because Scottish people have consistently elected Labour-controlled authorities? As I have asked before, why does not the Secretary of State throw off the shackles of the lunatic monetarist policies that he follows so slavishly in accordance with the Prime Minister's diktat? Will he——
Mr. Speaker: The hon. Gentleman must be brief.
Mr. McKelvey: Will the Secretary of State not sober up, throw off the opiate of monetarism, and agree that he is making nothing more than a vicious attack on those people in Scotland who have consistently voted Labour?
Mr. Younger: The only point that I should answer is the hon. Gentleman's suggestion that I am picking on people because they vote Labour. I suppose that Opposition Members will agree that Glasgow is the best example of a consistently and thoroughly Labour-controlled authority. This Government have poured money into that city. I need name only the exhibition centre, the St. Enoch's centre, job dispersal into the centre of Glasgow, new buildings for the courthouse and the Royal Scottish Academy of Music and half the cost of the Burrell gallery. Glasgow is a Labour-controlled authority, but there is not much evidence there for what the hon. Gentleman has suggested.
Mr. Archy Kirkwood: Is the right hon. Gentleman aware that for the Borders, this dose of agony is more palatable as it affects only one district council? I think that he will confirm that Berwickshire district council is being penalised to the tune of £26,000. Is it not a mark of his policy's failure that Berwickshire district council, which is Conservative-controlled, which is labouring under the great difficulties

195
involved in having a rural area to administer, and which has in the past adopted progressive policies, should be penalised by the Government in this way?
Mr. Younger: The hon. Gentleman has fairly raised a very good point. I shall use the broadest definition of the Borders. With the exception of Berwickshire, I can say that Borders regional council, Dumfries and Galloway regional council, Ettrick and Lauderdale district, Roxburgh district, Tweeddale district and Nithsdale district face no penalty as they have kept within the guidelines. If they can do it, why cannot the rest of Scotland?
Mr. Tam Dalyell: May I contrast the statement made this afternoon with what was happening 24 hours ago in this House in the debate on the Gower committee report, when we discussed the Stock Exchange, the bullion market——
Mr. Speaker: Order. Does the hon. Gentleman's question have anything to do with the statement on rate support grant? I called him to ask a question on that, but if he is raising a point of order I shall call him later.
Mr. Dalyell: It is a question.
Mr. Speaker: Very well.
Mr. Dalyell: May I contrast the huge amount of money that the City operates on with the comparatively small amounts needed in Scotland. The £12·5 million for Lothian means redundancies for roughly 800 teachers and 1,200 home helps. Does the Secretary of State or his officials have any calculation of how much it costs in terms of unemployment benefit to render those people unemployed? What is the very lowest cost of that to the Government?
Mr. Younger: If the hon. Gentleman wants to ask me specifically about the figures, I can try to discover the answer. In general, however, his case does not stand up to analysis. In 1978–79, Scottish local authorities spent £2,684 million, and in 1984–85 they will spend £2,754 million. Those are huge sums by any standard, and of course they have to be to maintain the vast range of services provided by Scottish local government. However, the burden of paying more than that is more than Scottish ratepayers and the Scottish people can manage at the same time as keeping Scottish industries going.
Mr. Ernie Ross: In 1981, the Secretary of State took £975,000 away from Dundee district council by order of the House because he alleged that it was being excessive and unreasonable. However, he made no effort to claw back any more money from the council until this statement. How can we encourage local authorities to be reasonable if they still suffer when they are reasonable? How can the right hon. Gentleman explain the £5 million penalty on Tayside region when, since coming into being, it has bent over backwards to do what both Labour and Tory Governments have suggested? Local authorities will have to make 20,000 people redundant if they are to keep within the new guidelines for the last five months of the year. Which one of his own family would he like to see made redundant?
Mr. Younger: The hon. Gentleman was not correct in his first statement. Like all other Scottish local authorities, Dundee has paid a share of the general abatement each year. In the past year and previous years it has paid a share of an unfair general abatement. From now on, it will pay a share of a fair general abatement, under which the amount of money that it has to pay in penalty is directly related to the amount of its overspend. The hon. Gentleman should welcome that. Of course, I hope that savings can be made with the maximum care for economy while at the same time making no more redundancies than necessary. However, the ordinary ratepayers and taxpayers have to pay for those services and so they must be entitled to obtain them at the lowest possible cost.
Dr. Norman A. Godman: I readily acknowledge that there are major differences between the English and Scottish systems of local government, and that that may make comparisons difficult, but why is the Secretary of State aiming so much higher in his penalties than is his English counterpart?
Mr. Younger: It is not quite like that. I shall explain briefly. The penalty systems north and south of the border are entirely different. The objective is the same—to bring expenditure down—but the approaches to it are different and comparisons cannot be made easily. In England and Wales a penalty tariff is announced in advance. For substantial numbers of authorities—about a third of English authorities—the loss of grant under that tariff is over 100 per cent. of their overspend, and for some authorities it is over 200 per cent. of their overspend. Some authorities receive no grant. No Scottish authority is in that position. In addition, the English penalty has increased by 63 per cent., whereas the Scottish penalty has increased by only 40 per cent.
Mr. Dewar: As the Secretary of State is obviously so well briefed on the situation in England, perhaps he will give us the total English penalty figure, as that is the comparison for which we are looking. Will he give an assurance that as the subject is obviously of great interest to hon. Members— many of my hon. Friends have tried to make points already— the debate on the order will not be confined to one and a half hours late at night?
Mr. Younger: The hon. Gentleman's latter point is a matter for my right hon. Friend the Leader of the House, and I shall draw his attention to the hon. Gentleman's remarks. If the hon. Gentleman wishes to know any of the figures for England, I shall be happy to write to him.

Statutory Instruments, &c.
Mr. Speaker: With the leave of the House, I shall put together the two motions relating to statutory instruments.
Ordered,
That the draft Insolvency Proceedings (Increase of Monetary Limits) Regulations 1984 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Cosmetic Products (Safety) Regulations 1984 be referred to a Standing Committee on Statutory Instruments, &c. —[Mr. Lang.]

Visiting Forces etc. (Amendment)
5.9 pm
Mr. Paddy Ashdown: I beg to move,
That leave be given to bring in a Bill to amend certain provisions of the Visiting Forces Act 1952 and the International Headquarters and Defence Organisations Act 1964, so as to restrict their application to persons attached to or working at locations specified by Order in Council and their dependants.
What with one thing and another, immunities have been much in the news recently. The British public, and hon. Members in this House, have been justifiably concerned about whether it is right to offer immunities to diplomats, which allow them to commit crimes against British law, offend the standards of civilised behaviour and then avoid the consequences of their actions. However, it appears that it is not only diplomats who enjoy immunities from British law for unlawful acts committed in this country.
The Visiting Forces Act 1952 and the International Headquarters and Defence Organisations Act 1964 offer visiting forces in Britain a form of immunity from appearing before British courts in respect of nations committed against British law on British territory, so long as they can claim to be on duty at the time, or if the acts involve only visiting forces personnel or property.
It is the view of the Home Office, judging by a recent parliamentary answer which I received, that the rights enjoyed by visiting forces are not, technically, immunities as such. I am grateful to the Under-Secretary of State for the Home Department for being present. The Home Office argues that service courts of a visiting force are allowed by the Act to have primacy over British courts in cases which fall under the Act. One can accept that this is not the same form of total immunity as that enjoyed by diplomats, but it is a kind of immunity nevertheless—if not from some jurisdiction, then at least from the jurisdiction of British courts for acts committed in Britain.
I can understand why such provisions may be required by visiting forces helping to defend Britain in time of war. Indeed, there seems little doubt that the two Acts were instituted to regularise the position as a result of the de facto immunities enjoyed by visiting forces in Britain during the second world war.
In that sense the Acts are a leftover from 40 years ago. There can be no justification for the continuation of those anachronisms today. Indeed, the immunities, far from fostering good relations between visiting forces and the people of Britain, have instead in some instances proved a source of provocation and resentment, which has inevitably damaged those relations.
I acknowledge that visiting forces in Britain, by and large, appear to have exercised some restraint in seeking to make use of the provisions of the Acts. However, there have been disturbing individual examples of foreign service men avoiding the consequences of British law because of the Acts.
Since obtaining this ten-minute Bill, I have been informed by several hon. Members of a number of individual cases of that sort, some of which are serious and some relatively trivial.
Perhaps the most disturbing case in recent years was that involving Mathew Cheshire, a 17-year-old RAF technician at St. Mawgan in Cornwall, who was killed in a road accident on the base by a United States service man driving a jeep on the wrong side of the road. Using the provisions of the Act, the United States Navy interrupted
198
a local inquest on Mathew Cheshire, and prohibited the coroner, Mr. Alan Harvey, from continuing. Six months later the United States Navy tried the marine concerned at a court martial in London. They fined him one dollar.
The attitude of the United States authorities in that case and in others infuriated not only Mr. Cheshire's parents, but local journalists and police officers. After Mathew Cheshire's death, local police were prevented for three hours from entering the base to investigate the accident. A local journalist, covering the case, was misled by a United States official in an attempt to prevent him from attending the court martial
In a similar earlier case a British judge expressed his anger about the immunities offered under the Act in the following terms:
"It did seem rather unfortunate if visiting sailors or airmen could leave the country and leave an action of this kind to proceed in their absence. One would have thought that … the responsible authorities would attend to the material results of the judgment. There is nothing I could do about it. There did seem to be a large lacuna and a loophole if visiting service men could drive cars all about the country and then leave before a civil action came to trial".
I should make it clear that United States visiting forces do not uniquely make use of these provisions. It merely happens that, since there are more United States forces stationed in Britain, there are, naturally, more cases which relate to them. It will not be lost on those who follow these matters that this subject has been elevated in importance because of the stationing of cruise missiles in Britain. They have already caused conflicts between United States forces and civilians. But those conflicts will be as nothing to those which may occur not only with British civilians, but with British forces, because British people have no de facto physical control over the firing of the missiles through a dual-key system.
This anxiety has received yet further impetus as a result of an answer recently given by the Secretary of State to the right hon. Member for South Down (Mr. Powell), who asked the Government what the legal provisions were, under which American service men had the right to arrest British citizens, for instance, at Greenham common. The right hon. Member received, at the end of last week, a reply—which I understand is to be published in the Official Report tomorrow — which stated that United States service men had citizen's rights of arrest in such circumstances, similar to those enjoyed by British service men, because of the provisions of the Visiting Forces Act 1952. The position, therefore, seems to be that United States forces have the same powers of arrest and detention as British forces as a result of these Acts; however, whereas British forces can be taken to court if they use excessive force or abuse these powers, American forces could, under the very same Act, escape from such legal redress. The same Act which confers powers on United States forces to arrest British citizens also, it seems, provides the means by which United States forces can escape British law if those powers are abused. Surely that cannot be correct.
We know that in 1980–81, the last year for which figures are available, no fewer than 1,123 offences committed by foreign service men in Britain could have been subject under the Act primarily or exclusively to foreign jurisdiction. What is extraordinary, however, is that, according to a parliamentary answer given to me on 5 April, we do not know how many times the immunities under the Act were claimed, because the Home Office

199
does not think it important to keep such figures. It seems remarkable, to say the least, that the Home Office does not regard it as important to keep a record of how many times those who have committed offences on British soil against British law were able to remove themselves from British justice in favour of foreign jurisdiction.
Visiting forces in Britain enjoy a greater degree of immunity than in other NATO states. Even in West Germany, where the legacy of post-war occupation still gives allied forces unusual powers, the police have the right to decide whether cases involving the interests of German citizens should be heard in German courts rather than under the law of the military forces concerned. In 1980, a secret document leaked to the press revealed that certain NATO countries would have to sign an emergency agreement to give local United States commanders certain immunities from their law before United States reinforcements could be deployed in Europe. Britain was the only major NATO power not required to give such an undertaking, presumably because it was considered that the Visiting Forces Act 1952 and the International Headquarters and Defence Organisations Act 1964 already gave such immunities.
It is not my purpose with this ten-minute Bill either to seek to remove those so-called immunities or to withdraw those two Acts, although there will doubtless be many hon. Members who believe that that is what should happen. But before any Secretary of State can grant immunities to visiting forces in Britain, he should bring the matter before Parliament for approval. It is not the Secretary of State, or even the Government, who make the laws of this country; it is Parliament itself. The granting of immunities from jurisdiction under the laws which Parliament makes, should be in the gift not of the Secretary of State, but of Parliament. In the hope of bringing about that position, I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Paddy Ashdown, Mr. Russell Johnston, Mr. Dafydd Wigley, Mr. Alex Carlile, Mr. Gavin Strang and Mr. James Tinn.

Visiting Forces etc. (Amendment)
  VISITING FORCES ETC. (AMENDMENT)
  Mr. Paddy Ashdown accordingly presented a Bill to amend certain provisions of the Visiting Forces Act 1952 and the International Headquarters and Defence Organisations Act 1964, so as to restrict their application to persons attached to or working at locations specified by Order in Council and their dependants: And the same was read the First time; and ordered to be read a Second time upon Friday 26 October and to be printed. [Bill 218.]
ESTIMATES DAY
[3RD ALLOTTED DAY]—considered
ESTIMATES DAY
  Estimates 1984–85

    Class II, Votes 1 and 8
    Motion made, and Question proposed,
    That a further sum not exceeding £363,123,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1985 for expenditure by the Foreign and Commonwealth Office on Salaries (Subhead Al of Vote 1), Loans: allocated (Subhead C1 of Vote 8), Grants: allocated (Subhead C2 of Vote 8), and service overseas and regional technical co-operation programmes (Caribbean and Pacific) (Subhead D1(5) of Vote 8).—[Mr. Whitney.]
    Mr. Deputy Speaker (Mr. Paul Dean): Before I call the right hon. and learned Member for Hendon, South (Mr. Thomas), the House will wish to know that this debate must end at 7.30 pm, so time is limited.
    5.19 pm
    Mr. Peter Thomas: This debate arises out of the report of the Foreign Affairs Committee on Grenada, which was published in early April, and the Government's observations on and reply to the report, published towards the end of the last month. The "tag" on today's Order Paper relates to the Committee's report on the Foreign and Commonwealth Office and Overseas Development Administration Supply Estimates 1984–85, which was published yesterday, which includes a certain amount of evidence and comment on the aid Estimates for Grenada and recent cuts in FCO and ODA manpower.
    The House may be wondering why a debate on what appears to be a largely political subject is masquerading as an Estimates debate. Perhaps I should make it clear at once that a large part of the report on Grenada dealt with the quality of information reaching British Ministers from our diplomatic staff in the Caribbean and the effectiveness of the ODA in responding to the urgent needs of Grenada after the United States intervention last October. In other words, we were interested in the efficiency of the United Kingdom's relatively large missions in the eastern Caribbean and the value for money that the country was receiving from its relatively large investment in the region.
    We have not tabled any amendment because the report reflects the anxiety, expressed yesterday, about the potential danger of further cuts in diplomatic service manpower.
    The Committee, in paragraph 19 of its conclusions, states that
    "the squeeze on the Diplomatic Service manpower has probably gone far enough and that additional significant reductions would only be made at the cost of accepting a reduced level of quality of service."
    I have been asked to open this debate because the Chairman of the Foreign Affairs Committee, my hon. Friend the Member for Stroud (Sir A. Kershaw), was unhappily unable to participate in the Committee's visit to the Caribbean in January. It therefore fell to me to lead the team.
    I have no doubt that other members of the Committee will wish to take part in the debate. Therefore, I propose to limit my remarks to what seem to be the key issues raised during our inquiry.

    201
    The House will be fully aware of the background and the history. Grenada is a truly lovely and relatively prosperous east Caribbean island of 133 square miles. It has a population of about 110,000 attractive people. For nearly 200 years it was a British colony. In 1967 it became an associated state, with Great Britain retaining responsibility for defence and external affairs.
    In 1974, under the premiership of Sir Eric Gairy, and without the wholehearted enthusiasm of the populace, Grenada was granted independence. In March 1979, the Gairy regime was overthrown in an almost bloodless coup by Maurice Bishop's New Jewel movement. Until October 1983 Grenada was governed by a people's revolutionary Government which aligned itself with Cuba, Russia and the Eastern bloc countries, and pursued certain policies which caused increased alarm to its neighbours and, in particular, it seems, to the United States of America.
    In October 1983, following dissension within the revolutionary Government, Maurice Bishop was overthrown. On Wednesday 19 October he was summarily executed together with three of his former Ministers and two trade union leaders, and the revolutionary military council took over Grenada and imposed a curfew upon its inhabitants.
    What is relevant is that, throughout all these events, Grenada was a member of the Commonwealth and, despite the suspension by the revolutionary council of its independence constitution and in strange contrast to its revolutionary movement in the Bolshevik mould, it retained the Governor-General, representing Her Majesty the Queen as Head of State. The Governor-General was, of course, wholly independent of Her Majesty's Government here.
    In the early morning of Tuesday 25 October the United States, with Jamaica and Barbados and with the support of five members of the Organisation of East Caribbean States, invaded Grenada and within three days secured all significant military objectives and restored Grenada to peaceful order.
    The "joint rescue mission", as the United States Administration likes to call it, was overwhelmingly welcomed in Grenada, in particular by the Governor-General, Sir Paul Scoon, who, on 31 October, announced his intention to appoint an interim advisory council to run Grenada until elections could be held. That council was proclaimed formally a fortnight later, and, with the Governor-General, now forms the present Government of Grenada.
    That, in brief, was the background against which the Foreign Affairs Committee, immediately after its reappointment in December last year, decided to investigate. Our terms of reference were to investigate
    "the political crisis in Grenada, progress towards the restoration of civilian democratic government, and the aid and development needs of the Island."
    Two matters particularly interested us. The first was the widespread allegation in the Caribbean that the United Kingdom had failed its friends in the region by failing to participate in the military intervention of 25 October. Naturally, those allegations gave rise to worries about the effects of the intervention on Great Britain's close and long-standing links with the region.
    The second matter was that there had been many suggestions that the British Government had been kept deliberately in the dark about American and Caribbean plans for military action. Those suggestions had inevitably
    202
    been fuelled by the denial of my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs in the House, only a few hours before the troops moved in, that he knew of any intention of American military action.
    If those suggestions were proved to be well-founded, further questions were bound to follow about the health of the special relationship and the efficiency of our information and intelligence gathering in Washington and the Caribbean.
    The difficulty which the Committee faced in seeking to answer the key questions — about the nature of any request for United Kingdom military assistance and the quality of information available to the Government at the time—was, of course, that the answers could be found only in the files and collective memories of the traditionally and understandably secretive diplomatic services not just of the United Kingdom, but of the United States and of the Governments of the eastern Caribbean.
    If the Committee were to do its job properly, therefore, there was no chance of doing so through the normal process of evidence taking, even if the evidence had been taken in private. No foreign Government would submit to formal interrogation by a British Select Committee, but foreign Governments possessed much of the relevant information.
    Although we were able to take useful evidence from our own Ministers, particularly on aid matters, much of our report had to be based on information given to us in private, and strictly off the record, by the representatives of foreign Governments and our own diplomatic representatives overseas.
    For obvious reasons, we had to respect the confidentiality of our sources and could not disclose much of the fascinating detail of the events of last October revealed to us by those sources.
    The House, therefore, has before it a report which lacks many of the footnote references that it would normally expect to find, and which, in places, is necessarily and deliberately opaque. Far from indicating any uncertainty or unreliability in our account of the events of last October, these features in our report reflect our awareness of the delicacy with which a public parliamentary Committee must tread when entering a world as closed as the diplomatic world, and our respect for the openness and frankness of the Ministers, diplomats and other Government officials who agreed to talk to us in Bridgetown, Port of Spain and St. Georges.
    In paragraph 24 of the report we state:
    "We are confident … that our account accurately reflects the information given to us during these conversations."
    The Government, in reply to our report, have chosen to describe our description of events as "oversimplified" and relying "too much on hindsight". But, with respect, I submit that nothing in the Government's reply, nor any subsequent information which has become available, suggests that in any detailed respect the Committee's account is wrong or its conclusions false.
    The Committee's report is broadly divided into three parts. The first part deals with the events leading up to the overthrow of Maurice Bishop, the United States Caribbean intervention and an assessment of the consequences of Britain's non-involvement. The second part comments on the political and economic situation in Grenada after the intervention. The third part, which I hope will be referred to in more detail by some of my Committee colleagues,

    203
    discusses Grenada's need for assistance from overseas, and in particular from the United Kingdom. Some final comments are added on the security implications of the Grenada crisis and the United Kingdom's further relations with the Commonwealth Caribbean.
    I turn first, and briefly, to our assessment of the intervention and of Britain's so-called failure to take part. Our account of these events makes several points absolutely clear. First, for reasons of their own, the United States Government did not want the United Kingdom to be involved in the military intervention on 25 October.
    Secondly, as the Committee puts it in paragraph 39 of the report,
    "the timing, nature and extent of the information provided to the United Kingdom Government by the United States Government were consistent with that position."
    Those were carefully chosen words, but the point was made to us more bluntly by one prominent American, who said, "If we had consulted the United Kingdom, you would have tried to persuade us not to go in." Indeed, as the Foreign Secretary told us in evidence at question 11 in the report, not only the United Kingdom Government but the United States State Department was not in full possession of the facts. Our investigations in the Caribbean pointed strongly to the conclusion that this was deliberate, not accidental.
    In addition, the information reaching the British Government from the Caribbean was confused and ultimately misleading. Whether this was deliberate or not is less easy to say. Certainly the decision of CARICOM on Sunday 23 October to go for economic and other sanctions rather than military action—and the deputy high commissioner's famous walk on the same day in the garden with the Governor-General, who did not ask for any help, together with the failure of the Organisation of East Caribbean States to deliver its promised written request for assistance — seems to have dissuaded the British Government from believing that a military operation was imminent, and therefore the need for urgent action to discourage such an operation, if that was their intention, was less obvious.
    At the time of the publication of our report, the press made much of a phrase in that report implying, as it was interpreted, criticism of the Foreign Secretary for "a somwhat lethargic approach" in relying solely on what was described as "normal diplomatic channels". On reflection, I think that they were unfortunate words, and I regret that most press reports used them out of context. I have known and admired my right hon. and learned Friend for many more years than he has been in the House, and he would be the last person whom I would accuse of lethargy. The phrase, in its context, was not a personal criticism of my right hon. and learned Friend, but a reflection of the Committee's genuine concern that insufficient appreciation was being given to the development of the crisis in Grenada by Ministers and officials.
    In their reply to our report, the Government have sought to refute this charge by detailing the large number of communications between London and the Caribbean and Washington during the critical period, and the number of telegrams copied to Ministers, including my right hon. Friend the Prime Minister, during the weekend. But, with respect, the reply is not overwhelmingly convincing. It seems evident that operations consisted largely of the FCO
    204
    duty officer, out of normal hours, passing telegrams on to others as part of the normal out-of-hours routine. Our concern is that, even if the signals from Washington and the Caribbean were misleading, there should, by the weekend of 22 and 23 October, have been sufficient awareness of the political temperature in the Caribbean to justify greater alertness, if not alarm, in Whitehall.
    When all has been said, and the events of October raked over, what were the consequences of Britain's non-involvement in the military intervention?
    Mr. Ivan Lawrence: Before my hon. and learned Friend leaves that important point. Is it not a fact that a large amount of the criticism that was levied against the Government was due to a misunderstanding about the role of the Governor-General in relation to the United Kingdom? Is not the Committee correct, in paragraph 38 of the report, in drawing particular attention to this problem, and in saying that there is no question of the Governor-General being in any special relationship with or under any duty to inform the British Government of events in Grenada? His obligation was only to Her Majesty the Queen and to the Government of Grenada. When that fact is known, does not much of the criticism made at the time about the Government's turpitude and ineptitude fall away, and does that not justify what my hon. and learned Friend has been saying in denial of the criticisms levelled at the Government?
    Mr. Thomas: I am obliged to my hon. and learned Friend for that helpful intervention. As he will recollect, when I referred to the fact that Grenada retained a Governor-General, I said emphatically that he had no responsibility for, and was totally independent of, Her Majesty's Government here in London. I am sure that the House will find the intervention of my hon. and learned Friend helpful.
    What were the consequences of Britain's non-involvement in the military intervention? First, a slight strain on United States-United Kingdom relations certainly occurred, but the United States Government appear to have come as close to making a direct apology to the United Kingdom Government as could be expected. Secondly, despite the public utterances of some Caribbean politicians, no great or lasting damage appears to have been done to the United Kingdom's relations with the Caribbean.
    Speaking personally, I am not among those who believe that United Kingdom involvement in the operation would have been beneficial. My impression on leaving the Caribbean was that the allegations that Britain had failed its friends were much more convenient public rhetoric than genuinely held sentiment.
    The Caribbean and the wider Commonwealth were deeply divided over the issue, as was made abundantly clear at the Delhi summit. It is really only by not being directly involved that the British Government have been able to help in the process of healing the wounds. Moreover, as our report makes clear, the promptness of the British Government's subsequent offers of aid to Grenada has done much to dispel fears of a lack of British concern for the problems of the country and the region.
    The problems of Grenada are undoubtedly immense. Its agriculture and infrastructure need urgent support and repair. Its civil service has been gravely weakened by the revolution and its dramatic end. Its political community is

    205
    disorganised and vulnerable to the attractive power of individuals whose democratic credentials must be regarded as questionable.
    We are told that the preparation of a new electoral roll is complete. However, despite the drawbacks of the unelected interim Administration, I hope that undue pressure will not be brought to bear by other countries to force the holding of elections too quickly, before the political parties have revived sufficiently to be able to fight on fair and equal terms.
    Our report made a number of specific suggestions about the areas in which British aid to Grenada could be most usefully concentrated. The Government, in their reply, say that while they are willing to consider any requests for assistance,
    "The initiative should, however, properly come from Grenada: the Government do not believe that it would be right for Britain to press unsolicited advice or help on an independent sovereign state within the Commonwealth."
    That is undoubtedly a proper and desirable approach, and not one to be lightly abandoned. However, it was clear during our visit to Grenada that the interim Advisory Council's resources of skill and time are so stretched that its ability to meet the ODA's normal requirements of project analysis and detailed specification may be severely circumscribed.
    We should welcome an assurance from my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs, who is to reply, that, while not pressing unsolicited aid on the Grenadian Administration, the ODA and the High Commission are doing everything possible to ensure that help is provided in the formulation of requests for aid, as well as in the provision of aid that has been specifically requested.
    One possibly serious and long-term consequence of the Grenada crisis could be that some, if not all, Caribbean Commonwealth countries may be further persuaded that their interests, particularly their security interests, lie wholly in the fostering of relations with the United States, because they believe that the United Kingdom is turning its back on them. Certainly, if one were to regard as typical the recent statements of Prime Minister Eugenia Charles of Dominica, that process seems well advanced.
    Relations between the Caribbean and the United States are bound to become closer, and Britain's ability to react swiftly to assist in the maintenance of the security of the region is bound to be circumscribed by cost and distance.
    However, what I found most striking during our visit to the Caribbean was the strong desire for the region's economic, social and cultural links with the United Kingdom to be maintained and strengthened. If there is a feeling that Britain has turned its back on the Caribbean, it is a feeling of regret rather than anger. I do not believe that the Government's policies are moving in that direction, and I accept what the Government have said about the volume and quality of British aid.
    I particularly welcome the Government's firm commitment, in paragraph 33 of their reply, that they attach importance to the region, and I am pleased that they are
    "currently reviewing the effectiveness of their activities in the light of British interests in the area and will take full account of the Committee's conclusions as part of this process."
    It is important that the Government should recognise the strength of pro-British sentiment in the region and regard as a priority the need to strengthen the dialogue with
    206
    the Governments of the region, as equals. However, as the Committee's report says, all improved dialogue must be a two-way process which
    "will not be assisted by a failure on the part of Caribbean politicians to appreciate the difficulties which confronted the United Kingdom Government last October or by public denunciations of the United Kingdom for the particular stance it adopted in respect of the Grenada crisis."
    I agree with the part of the Foreign Secretary's reply that says that what is important now is to look to the future on Grenada, rather than to rake over the past. He is right to say that Britain's links with the Commonwealth Caribbean are deeply rooted in history and span a wide range of political, social, commercial, sporting and cultural activities and interests. It is a unique relationship, and it is in the interests of the Caribbean, of the United States and of Britain that our concern for, and involvement in, the welfare and security of the area should never wane.
    5.45 pm
    Mr. Stuart Holland: I intervene now, though this is essentially a Back Benchers' debate. The report illustrates the importance of a Committee system in which serious consideration can be given to issues of great importance to this and other countries.
    I pay tribute to the work done by members of the Select Committee in preparing the report. They will make a major contribution to the debate. However, I am sure that the House also will wish to remember the key contribution made to the understanding of the Caribbean and the issues involved by my good friend loan Evans, the former hon. Member for Cynon Valley, now tragically deceased.
    What was the background to the invasion of Grenada and what inadequacies were involved? The Committee's report sought to unravel the true story of the events leading up to the invasion. Some Caribbean leaders have alleged that Britain was invited to participate in the invasion and that the invitation took the form of an oral request. The Foreign Office maintains that it was not kept fully informed of developments and did not have a chance to make a serious response to the request, which it expected to receive in writing before the invasion took place.
    The conclusion has to be drawn that Britain was not kept abreast of how advanced the invasion plans were, and officials in London were not fully briefed by their Washington counterparts.
    Ironically, it appears that when the Foreign Office first heard that the use of force was being mooted by certain figures in the Organisation of Eastern Caribbean States, the Foreign Secretary contacted the Reagan Administration
    "to warn them of these ideas."
    In subsequent transatlantic exchanges, the Foreign and Commonwealth Office was assured that further consultations would precede any action or change of view. Such consultation did not take place. The Foreign Office also maintains that Sir Paul Scoon did not invite Britain to rescue Grenada—a crucial point in our deliberations.
    However, the Prime Minister of Barbados insisted that, through emissaries, he received a clear call for help from Sir Paul Scoon. This is a crucial matter, because much of the justification for the invasion turns on whether the Governor-General requested armed support. Regrettably, despite the work of the Committee, the matter remains "shrouded in mystery". Rarely in diplomatic history can

    207
    such simple signals have been so stunningly misrepresented, both within the Caribbean and between this country, the Caribbean and the United States.
    The section in the report on the economy and aid is significant because it spells out that the Foreign Office took the view that the completion of the Point Salines airport represented an
    "essential precondition for the expansion of the tourist industry."
    Even the Reagan Administration had a change of heart about the airport. They used to regard it as a possible threat to United States security, but, in the words of Mr. George Shultz:
    "now the regime is different."
    Therefore, the threat has been removed.
    The need for an urgent transfusion of aid into the island is stressed on all sides. The United States intends to provide a total of $18 million by the end of this year, though it has been less than generous in meeting compensation claims arising from the hostilities.
    British aid has been renewed, initially to the tune of £750,000. It is interesting to examine the composition of that sum. As some of us stressed in November, about £300,000 of that £750,000 has been for capital projects and current expenditure concerning the police and policing rather than for development.
    If we examine the background to the invasion and the aid contribution at that time, we find a staggering imbalance between the recipient countries in the region. The figures for 1982 of the total aid allocated show that the Turks and Caicos Islands received more than £5 million in aid, with a per capita contribution of £788. Jamaica also received more than £5 million but, with a larger population it had a lower per capita contribution of £2·40. Grenada, with a population of 110,000, had a per capita contribution of only 71p. I appreciate that the figures can be influenced by particular events concerning mediterranean clubs on certain islands, but it is clear that Grenada has had significantly less assistance from the Government than have other countries. Indeed, British aid to Dominica was more than £23 per head, and to Anguilla £160 per head.
    The lamentations of some hon. Members that the previous Bishop regime was aligned with other powers and super-powers in its aid programme is little less than two-faced given the unreadiness of our Government to give aid for specific projects—including the airport project. An application was made to the Government and turned down.
    It also is unrealistic of the Government to say that they cannot substantially increase aid within the Caribbean, as well as for Grenada, in the coming years. In a parliamentary reply to me last month, the Minister for Overseas Development made it plain that official development assistance as a proportion of gross national product is now 0·35 per cent. —precisely half of the well-established and recommended target of the United Nations and the Brandt commission. Rather than the aid level bottoming out as the Minister claims, we are moving further and further away from the possibility of the 0·72 per cent. target, dropping from 0·44 per cent. in 1981, to 0·37 per cent. in 1982, to the present figure of 0·35 per cent.
    If the Government recognise that they have responsibility in that region, and do not want to leave matters entirely to the United States, they must come
    208
    forward with significant development proposals that go beyond anything that the House has heard to date. They should be aimed not only at infrastructure. Although infrastructure is a necessary condition for development, it is not a sufficient condition. We recognise that in such matters as water supply, power generation and other basic provisions, the island desperately needs infrastructure. But if we cannot go beyond that, Grenada will continue to be essentially dependent for its development prospects on tourism. Despite the airport, tourism is not enough.
    I quote not from any centre of radical research, but from Latin American and Caribbean, which states about tourism:
    "There is a dilemma, however, facing those islands which have concentrated on the luxury market. Such installations give little possibility for any equitable distribution of benefits, consume few local products, are capital and import-intensive and otherwise form isolated ghettoes away from population centres. There is no doubt that this market is a very durable and growing one and therefore profitable. But it is also very fickle and can bring problems of its own."
    The complementary framework within which it is feasible that development could be promoted in the Caribbean is the CARICOM framework. But CARICOM itself has been fundamentally hindered rather than helped in its work and its potential because of the invasion. A report by Canute James in the Financial Times of 4 July, stated:
    "Planned as a framework for the integration of the region's small and weak economies, based on free trade between the Caribbean Economic Community … has foundered on policies implemented by individual Governments … the region will inevitably be conditioned by one political factor which will not be on their agenda—"
    but will not go away—
    "the fallout from last October's U.S. invasion of Grenada."
    The real difficulty is the long-term financing of development and trade. The right hon. and learned Member for Hendon, South (Mr. Thomas) was sanguine about the prospects resulting from Government policies. In a more recent report on 9 July, on the recent CARICOM discussions, it emerges not only that the individual countries cannot cope in their development agendas, but that that they also must run to the IMF. The community has agreed in principle to proposals from the Caribbean Development Bank for the "structural adjustment" of their economies.
    The formula in such a package implies not only a greater role for the private sector—to which the IMF, the Reagan Administration and this Government are committed—but changes in exchange rates, which is a euphemism for devaluation, moves to reduce import bills and to cut domestic consumption, and an increasing focus on exports.
    That, in practice, means the old IMF formula for domestic deflation and for cuts in social and welfare expenditure in islands with a low per capita income, which desperately need such expenditure if there is to be any increase in the welfare on which political stability over the medium term relies. It is a monetarist solution that will not bring welfare to the region. That solution should be opposed by the Government if they have the long-term development interests of the region at heart. It is an unpromising prospect in both the short and long term.
    Two main themes emerged from the invasion. The North-South development issues have been overwhelmed in the Caribbean, and in Central America, by the concern of the United States Administration with East-West global

    209
    super-power relations. If the United Kingdom Government are serious about their commitment not only to Grenada but to the Caribbean—indeed if they wish to continue to play a role in the Caribbean — they must show the House and member Commonwealth countries in the Caribbean area that they have not handed over their influence to the United States. They must show that they have not handed over their basic responsibilities either for the economy or for defence in the region. If they cannot do that, they will follow their remarkable dereliction of duty about the invasion with a failure to achieve the comprehensive, balanced development plan for the region as a whole that is so desperately needed.
    5.59 pm
    Mr. Bowen Wells: I rise to make my contribution more in sorrow than in anger and with the hope that we can do more to help and support positively the security of Grenada and other small dependent states by our debate today, and by the conclusions brought to the attention of the House by the Select Committee report and the Government's reply.
    I begin by sketching a little background to the current position, in addition to that already given by my right hon. and learned Friend the Member for Hendon, South (Mr. Thomas). I take the House futher back in this saga, to the period when associated statehood was established for the six island territories in the eastern Caribbean, in the Windward and Leeward Islands. Fundamentally, those associated states were set up in answer to a call for decolonisation by the United Nations and the world community at large, with pressure on the British Government by the Committee of 24 and public opinion throughout the world to bring their existing colonies to independence.
    The solution arrived at—after the failure of the West Indies federation, of the proposal to set up a smaller federation, called "The Little Eight," based on Barbados, and an attempt to join Grenada with the state of Trinidad and Tobago in a unitary state — by the British Government was associated statehood. We reached that solution in consultation with the countries of the Caribbean.
    Associated statehood could be ended in two ways. First, it could be ended by the state itself asking the British Government to give it independence. Secondly, it could be ended if it secured a Bill through its legislature by a two-thirds majority and obtained, by a referendum of the country at large, a two-thirds majority in favour. The state could then proceed to independence without further British Government interference. That was the agreement and that secured the approval of the Committee of 24 to that form of substantive decolonisation.
    Special considerations were taken into account. These islands are small and vulnerable and they are often monocultures—not Grenada, but all the other islands—and they are dependent not only on the fickleness of the tourist trade but also on the weather in the West Indies, which has a great effect on their agriculture. They are also affected by the long distances to their markets, which lie many thousands of miles away by sea.
    They had two peculiar problems which associated statehood tried to redress. One was to secure their external defence, giving them security from interference from outside bodies of whatever kind. The second was to secure
    210
    political stability within those small island states, so enabling their people to develop their economies in peace to the best of their ability.
    The United Kingdom undertook, responsibly, to provide defence for the islands under the associated statehood agreement, and that provided a degree of political stability in the islands. However, the Britsh Government then connived — I cannot use any other word — with other independent Governments of those states to come to a mutual agreement to end associated statehood.
    The British Government must bear some responsibility for bringing about that mutual agreement, for we must consider the result of operating the second option under the West Indies Act 1967. By that option, the British Government could give six months notice of their desire to end their association with any of the states.
    It was not envisaged at the time of the passage of that Act that Her Majesty's Government would undertake that step lightly or irresponsibly. It was envisaged, however, that circumstances could arise—perhaps resulting from the domestic political scene in the islands or from actions which they might take overseas—which would make it impossible for the British Government to continue to operate within the agreement.
    In the event, the British Government reached an agreement in the first place with the Grenada Government, who were led by a premier, Mr. Eric Gairy, who was well known to the British Government as having conducted his Government in what I can only describe, and what has been described elsewhere, as a corrupt manner. The British Government told Mr. Gairy that if he held an election in which the issue of independence was put to the electorate, the British Government would agree to give notice of the ending of associated statehood by giving six months' notice of Britain's intent to end it, thereby eliminating the checks and balances built into the 1967 Act. That measure required the people to be consulted and to be told, through the political process, of the implications of independence.
    That, therefore, undermined the whole principle of a democratic state. The idea was that the people should understand what was being done and should be in a position to vote in accordance with the ideas being put to them. The peoples of the associated states have never had the opportunity to decide how they should be governed, under what constitution they should be governed, the way in which their relationships with their neighbours should be conducted and the relationship they would like to have with the much larger states with which they trade and on which, to some degree, they are dependent.
    By short-circuiting the political process in that way, the British Government abdicated their responsibility for the Leeward and Windward Islands. The Government can say what they like about their legal right to operate the West Indies Act 1967 in the way in which it was operated, but what would have been the position if their actions had been put to a court of law? Consider, for example, what happened in the Supreme Court in Canada when the then Prime Minister intended to apply to this House to change the constitution of Canada without the support of eight out of 10 of the provinces. The Supreme Court of Canada ruled that that, under British constitutional practice, was unconstitutional.
    In my view, the mutual agreement was arrived at by connivance with Governments some of whom were elected

    211
    fraudulently, and in the case of Grenada there is great doubt about the legality of the 1972 election, which led to independence. All of that provided the means by which the islands became independent unconstitutionally and without the people concerned being consulted. That laid the seed bed for revolution and tyranny and for invitations to evil-minded people to undermine the security and stability of the islands.
    We in this House cannot evade some responsibility for what occurred. Grenada is the most recent and dramatic example of what occurred, and as my right hon. and learned Friend the Member for Hendon, South (Mr. Thomas) went into what happened, I shall not go over that ground.
    However, we must consider the stability of the other islands. Dominica followed into independence. There were two attempts there at overturning the Government by outside sources, one launched from a neighbouring island and the other from the mainland of the United States. British civil servants, trained in the Colonial Service, operating, as they had been trained, within the British political system, were given responsibility for the conduct of affairs in Dominica, the only island in which the then Governor-General was given responsibility for conducting, through an electoral commission, the electoral process. That was achieved in the teeth of opposition from the legal adviser to the Foreign and Commonwealth Office — who took a rather ignominious part in the recent Grenada affair. As the electoral process was isolated, Mrs. Eugenia Charles was able to come to power in Dominica through a properly conducted election. That saved Dominica from revolutionary tyranny which would have ground the faces of its people into the earth.
    I could cite other examples in the West Indies. Many of the islands are in grave danger of suffering what has happened in Grenada. The vacuum created by the abdication of Britain, the lack of ability to defend themselves and the political instability that arose as a consequence attracted others. Cuba and Russia filled the vacuum in Grenada. Grenada took a revoluntary Government who were never elected. They never submitted themselves to the electorate. Mr. Maurice Bishop was an extremely personable, kind and generous man, despite his political beliefs with which I disagreed fundamentally. He made a grave mistake in not holding an election soon after he came to power. In my view he would be in power now and ruling a much happier island than Grenada was under the people's revolutionary Government if he had taken that course. Unfortunately his Government were led and bullied by Cuba and Russia, which both had enormous embassies on the island although they had never had a presence there previously. The Cubans had an embassy staff of about 38 on the tiny island of Grenada and the Russian embassy and staff were slightly larger.
    There was no doubt about the intention of the Russians and Cubans on Grenada. They were there to disrupt and threaten the stability of Grenada and that of its neighbours. There were rubber boats among the supplies that were found on Grenada during the American intervention. They would have been ideally suited for taking small and heavily armed groups to neighbouring islands to take over their Governments. It would not take much to do that because the islands are virtually defenceless as we have
    212
    left them. The disruption that would have been caused would have seriously undermined the security of the United States because 40 per cent. of its oil supplies pass through Caribbean waters. In addition, the islands provide an obvious political springboard.
    The United States was naturally concerned about its internal security, and it became increasingly worried at events occurring in the West Indies.
    It is all very well for Ministers to excuse themselves before the Select Committee on Foreign Affairs by saying that they could not have been expected to foresee the events of 25 October. My right hon. and learned Friend the Foreign Secretary made a statement on 24 October 1983 and answered the questions of several right hon. and hon. Members on both sides of the House. The final part of the question of the right hon. Member for Leeds, East was as follows:
    "Can the Foreign Secretary assure us that there is no question of American military intervention on the island? It could only make the position worse."
    My right hon. and learned Friend replied:
    "I know of no such contention." —[Official Report, 24 October 1983; Vol. 47, c. 27.]
    My right hon. and learned Friend made his statement at 4 pm and he must have answered the right hon. Member for Leeds, East at about five minutes past four o'clock. As my right hon. and learned Friend the Member for Hendon, South said, that answer led to grave misgivings about the way in which the information, whether it was gathered in the first place—which we assured ourselves it was—and whether it was transmitted—we assured ourselves it was—had been presented. It seems that the problem arose in the Foreign Office and in its assessment by Ministers. There can be no evasion and Ministers have not tried to introduce it.
    The Foreign Secretary was put into bat in the House at four o'clock when American bombers and helicopters were landing on the airstrip at Grantley Adams airport, Barbados. Indeed, they had been doing so for the previous four hours. Against that background some humility should have appeared in the Minister's answers when questioned by members of the Select Committee on Foreign Affairs. However, I can find no vestige of humility in the report of the Committee's proceedings for having put the Foreign Secretary in that position and there is nothing to highlight the degree to which he was in touch with the United States and understood what was happening in the Caribbean during the debates that took place on the following day and subsequently. Anyone who was really listening, who was alert and capable of understanding, could have had no doubt that military intervention was intended.
    Intervention was invited and begged for by the Organisation of East Caribbean States. It was asked for by the other islands that were most vulnerable to the Cuban, Russian and Grenadian menace in their midst. Jamaica had been subjected to Cuban intervention and had been rescued by Prime Minister Seaga not more than three years ago. The surrounding islands were frightened for their own security and they needed help. They turned to Britain and to the United States. They could not intervene in Grenada by force in the light of the reported stocks of arms and ammunition available to the Grenadian Government. They had to get outside help, and that was appreciated by the British Government.
    The Government said that they were against military intervention. What were the British Government in favour

    213
    of doing? That has never been spelt out. They have never explained the exact nature of their misgivings and how they tried to present them to the Prime Ministers of the other five small states plus the Governments of Barbados and Jamaica. In fact, those Prime Ministers and Governments were all in favour of intervention.
    In what company did the Government find themselves when they decided that they would not join the intervention and would not go to the rescue of the people of Grenada? The proof of the pudding is in the eating because the intervention was welcomed by over 90 per cent. of the people of Grenada. It was applauded by all the people of Barbados and Jamaica.
    I would say that it was similarly applauded by Trinidad and Tobago, although that Government had misgivings which they have elucidated to us. They did not wish military intervention to take place at that stage, but even they were conscious of the threat and understood that all parts of the Caribbean must join in a combined effort to change the balance in a neighbouring sister island. There was a situation that could not be tolerated within what they regarded as the bounds of human relationships, deep trading concerns and the security of the islands. They bound themselves together to intervene in Grenada to save their brothers and sisters from the tyranny that had overtaken them following the assassination of Maurice Bishop. The fear gripped tighter and with greater intensity following his assassination and that of his Ministers. There was no federal constitution which bound the islands together, but they chose to be so in the name of human relationships. Unfortunately the British Government did not make themselves clear, and even now they have not said what they would have done or what they should have done.
    The Government should have been more active in trying to find ways of providing support and assistance and involving themselves in discussions in an effort to arrive at the right solution. There might not have been intervention if the Government had played a part, but they chose not to do so. They exchanged messages and the high commissioners listened and reported, but with what response did they meet? We know only that the Government had misgivings. I submit that this is an insufficient response to a friendly neighbouring island which has depended on Britain for 400 years, as has the whole archipelago.
    Britain has benefited enormously from that relationship. We find invariably that the money that built the great houses of the 18th century in this country came from the jewels in the crown of the British king at that time, the West Indian islands. We owe them and they owe us and we must live in friendship. I hope that that lesson has been driven home and that we shall not abdicate our responsibility further. There is much in the reply to the Select Committee's report to suggest that the lesson has been learnt.
    I shall hurry, because other hon. Members wish to speak. I shall make some points about aid administration. In trying to give development assistance to islands whose Ministries are low in managerial and administrative talent, one must go much further than simply sitting back on one's seat in Barbados, 120 or 140 miles away, in a development division, saying, "We shall await an application from the Government of Grenada or its electricity services which we can say is in the correct ODA form, to be digested by the ODA machine, to go through the full panoply of
    214
    tendering, and so on." Anyone with experience in this matter realises that tendering must be done in a co-operative spirit with the hard-pressed administrative officials, whose workload its usually too heavy because there are few people in those Governments with the talent necessary to undertake the administration. Those co-operative arrangements might mean that an ODA official goes down to the office and writes up the form. What is wrong with that? Is that neo-colonialism, or is it an attempt to assist?
    In one case, a spare parts list was needed for a generator in Grenada that had gone bust. The list was urgently needed for the electricity services power station to ensure that electric power and light was available. Those facilities were crucial in an island that was fundamentally insecure. I said that, instead of waiting for that list, it would have been a good idea for the aid director to secure the spare parts list and write it out. His office had an engineer in the development division who could have provided the advice, or someone could have gone to the manufacturers in Peterborough, Rushton and Hornsby to ask for a spare parts list. That list could have been tacked on to the form required by ODA and the project could have got under way. That plan was described to me as neo-colonialism, and my submission that the ODA might like to help Grenada during its difficult circumstances after the revolution was dismissed.
    The aid administration cannot possibly get away with such actions. I know that it has helped and that its officials have gone to Grenada on many missions. In many respects, they have done a good job, but the process is slow and tedious. We supply a great deal of aid to the Commonwealth Caribbean countries, but we are not recognised as being especially helpful. We are not believed to be particularly supportive of those Governments, because the procedure is so tied with red tape they cannot obtain the necessary money and do what they want with it.
    Let us take the example of St. Vincent, to which we gave a £10 million independence gift—half in loan and half in grant. They have used up the grants, but want £5 million in loans to extend the Amos Vale airport on St. Vincent, thereby providing the basis for the increased tourism and small industrialisation that would enable them to trade generally and revive their economy, which is in serious trouble because of the failure of the arrowroot market.
    Recently, the ODA told me that St. Vincent can have £5 million on agreed projects over an extended period. That money will be given lump by lump, as it fits into the ODA' s budgetary regime. Is that calculated to enthuse the Prime Minister and Deputy Prime Minister of St. Vincent with the generosity of the aid given by the British development division? I submit that it will do the reverse and make them angry. That is part of the explanation why the Caribbean Governments believe we have turned our backs on them, do not care arid do not want to help them. The problem is easily rectified, and I am glad that the Government have accepted our recommendation, in spite of rejecting it in the first part of one sentence. At the end of the sentence, the Government say that they will put the high commissioner in charge of the political aspects, and. therefore, the hastening aspects and political implications of our aid programme in that region. I welcome that change.

    215
    I have a few other examples, but I shall not go on at great length. Grenada's economy needs our support in many serious ways, including the provision of infrastructure and education. It is important to provide assistance with education, because its structure has, sadly, been undermined by the revolution.
    Support is needed in the provision of power supplies and water. All the pipes used are made in Britain. The pipes used in Grenada have the same type of thread as British pipes, so they cannot be replaced by types from other countries. If we are to be supportive, we must supply those pipes to Grenada. We found on visiting Grenada that the roads could not be surfaced as the Americans wanted, because the British development division had not thought it appropriate to approve the provision of pipes unless it was part of a larger water supply project. A change in that provision has been achieved.
    Unemployment is a major problem in Grenada. I am glad that the Americans have temporarily met that problem by agreeing to complete the much maligned airport which was to be built for military purposes. Of course, that airport can be used for military purposes — it was beautifully used for those purposes by the Americans when they intervened; so that use has been proven. The basic purpose of that airport is to promote tourism. In 1961, I undertook to do an economic feasibility study of that airport. The conclusion was that the Grenada tourist industry could not expand without an airport in that position. The trouble was that it was not economically viable. I am glad that, following the intervention, Grenada will get such an airport.
    Mr. Jeremy Corbyn: It was there before.
    Mr. Wells: There was no airport at Point Salines. The airport we are discussing was only partly completed and was of sufficient length to enable the intervention to take place. The airport was not there until Maurice Bishop took steps to have it built by the Cubans. That airport will now be finished. There will be a new road to St. George's. The Plessey contract has been reinstated, so the British will play their part in the project. The road will be completed on 25 October. I welcome that development.
    We must ensure that the tourist infrastructure of hotels follows the airport project. In addition, some of the foods eaten in those hotels must be provided. That includes vegetables—Grenada is good at vegetable production, because it is a fertile land—and fish, which can be produced in the fishponds and caught at sea. We must ensure that there is sufficient power and water to supply those hotels.
    The future of Grenada and the other islands in the area will be much brighter if we learn lessons from the intervention. We must somehow find our way back to helping those people to provide — this must be done through them—the constitutional changes necessary to produce political stability. That means checks and balances and security. I beg the Government to emphasise those two aspects and to produce them positively—not to sit back and say, "We are listening to you, but you are independent and we must not interfere." We should say, "How can we help? Let us discuss the matter and examine the possibilities." We should not, as my right hon. and learned Friend the Member for Hendon, South (Mr.
    216
    Thomas) said, push Grenada into early elections—that would be disastrous—before the shock of revolution has been overcome and the internal security position has been better divined. We should not return to the same old story with which I began my speech—the instability due to the Government's tyranny, corruption and dissent.
    Let us hope that Grenada can return to greater stability in which the economy is supported positively and constructively by Britain in association with the United States — there is no competition between the two countries—the French, the European Community, the Caribbean Development Bank and its neighbours. Let us hope therefore that, in spite of the difficulties, there is a change of heart in Britain, that we understand the problems and will be seen to be constructively helping the stability and security of Grenada and the Caribbean.
    6.29 pm
    Dame Judith Hart: I shall be as brief as possible as I know that many hon. Members wish to take part in this important debate. I agree with a great deal of what was said by the hon. Member for Hertford and Stortford (Mr. Wells), although I disagree vehemently with some parts of his speech. I should also express my appreciation of the Select Committee report, which I have read extremely carefully.
    I agree with the hon. Gentleman's description of the history of the matter from the West Indies Act onwards. The House may recall that I was the Minister who introduced that legislation incorporating associated statehood and so on. I agree with the hon. Gentleman, too, that it was a disastrous mistake to push the associated states into independence without the security involved in associated statehood. The vacuum thus caused has been a source of problems ever since.
    I wish to deal with a matter of which I have great personal knowledge but of which there is little awareness in this country. I refer to British support in 1978–79 for the Commonwealth Caribbean, including the Windward Islands and the eastern Caribbean states as well as Jamaica and other countries then in great need. It should be recalled that by 1978 all the Caribbean countries, which were almost although not entirely oil dependent, had taken a tremendous knock due to the increase in oil prices and an equally great knock due to the fall in commodity prices for their crops—bauxite and sugar in Jamaica, and sugar in several other states—as well as the escalating cost of manufactures imports essential for development. In view of that tremendous economic knock, it was clear that any responsible Government concerned about the Commonwealth Caribbean should make every effort to assist.
    In 1978, President Carter had taken a new interest in both Latin American and Caribbean development problems. He had made some visits and Rosalind Carter had made others. To put it in a nutshell, there was an American initiative to ask the World Bank to set up a Caribbean economic conference in Washington. The conference duly took place. By then, however, this was partly due to British enthusiasm for it as President Carter and the State Department had changed tack and lost interest. The conference took place with the participation of the World Bank and all the aid donors, including the United Kingdom, France, Germany, Japan, the Netherlands, the EEC and Venezuela which, interestingly,

    217
    seemed to be responsible for OPEC aid in that part of the world at a time when OPEC aid generally was very substantial.
    The conference was attended in some cases by the Prime Ministers and in other cases by the Finance Ministers of all the Caribbean states, and, despite the lack of commitment or enthusiasm by the United States, a commitment was secured before the end of 1978 to try to raise about £150 million from among all the donor countries. In the six months from the end of 1978 the British contribution amounted to about £40 million, a large chunk of which went to Jamaica which was then in deep economic difficulties. At constant prices, that would now be about £72 million, which gives the House an idea of the significance and substance of what we were trying to do. After the conference, it was agreed that working groups of donors and recipients would deal with specific projects and countries. For example, Venuzuela and the United Kingdom were extremely interested in putting together an assistance package for commodity transport in the eastern Caribbean.
    I say all this because I believe that a political ethos was involved. Given their situation, the Caribbean states were bound to look somewhere for friendship, support and allies. Were they to look entirely towards Cuba or their nearest neighbour, the United States, or could they look to the countries of central America and the northern part of Latin America, such as Venezuela and Mexico, thus making the Caribbean basin a meaningful political concept while still maintaining a relationship with the Commonwealth? That was the theoretical motivation for my own enthusiasm for that Caribbean economic initiative.
    Following the general election in 1979, however, the whole concept dropped into the deep waters of the Caribbean and no more was heard of it. In the meantime, there had been the revolution in Grenada. Here I should put the record straight. It is often suggested that Britain cut off aid to Grenada after the revolution which brought Bishop to power. That is not so. I cannot vouch for what happened after the general election, but until then we continued our normal aid relationship with Grenada.
    After 1979, it became clear that there were problems in the relationship between Britain and Grenada. My hon. Friend the Member for Vauxhall (Mr. Holland) has given the exact figures for aid to Grenada in recent years compared with our aid to other Caribbean states. In this context, one must make a fundamental criticism of the Government. It is always a great mistake to abandon a small, non-viable state which has hitherto enjoyed economic assistance and protection from Britain because it is hound to look somewhere else for help. In the circumstances, Grenada could look only to Cuba and later, in my view unwisely, towards the Soviet Union. Apart from the military implications, I believe that the Cubans have a certain understanding of the economic development of that part of the world. The Government made a very great mistake — I believe that the Select Committee report sustains this thesis—when they abandoned their Commonwealth responsibilities in the Caribbean. I am sure that that was done in deference and acquiescence to President Reagan's strategic plan for hegemony in the Caribbean and central America as there is no other logic in it.
    That was followed by the developments leading up to the terrible events of 18 and 19 October in Grenada. I was
    218
    there briefly in March and I can vouch for the disastrous consequences. I have copies of the committee minutes of the administration from August to October, showing the discord between the Coard faction and the Bishop faction and all the other factors that led up to those events. I can also confirm that the people of Grenada were so disastrously affected by those events that they welcomed the American invasion. I think that they would have welcomed someone else a great deal more, but there is no doubt that they welcomed any rescue from the situation.
    The people of Grenada suffered a long trauma as a result. In March, they were already impatient of the occupation by American and Jamaican troops. I think that they minded the Jamaicans more than the Americans. They also minded that they had not been able to mourn their dead. I know of one woman who lost her two schoolboy sons in the square on 19 October. She never knew exactly what happened to them. She knew only that they were dead and had never been able to have a funeral for them. There had been no mourning for the people who had been lost. In a tiny close-knit island of only 110,000 people, that is a terrible thing, and people felt it.
    The people of Grenada felt tremendous anger against the people who were responsible. Some of us have been deeply anxious about the right to fair trials in Grenada. People have been accused, and, even with technical assistance from Britain, it has taken a long time for charges to be levelled against some of those who have been in prison. They may not be guilty, but whoever is guilty bears a terrible burden of responsibility for what happened. It is nevertheless important that there should be free and fair trials, proper defence and no ill treatment of prisoners. I know that there has been some ill treatment. That is infinitely regrettable and should not happen.
    The most important issue is what happens from here on. The hon. Member for Hertford and Stortford and the right hon. and learned Member for Hendon, South (Mr. Thomas) spoke of the development needs of Grenada. I agreed with much of what the hon. Member for Hertford and Stortford said about greater flexibility and assisting them to ask for aid. However, Britain's political role in the Commonwealth Caribbean must be examined in much greater depth than the Government's reply to the Select Committee report implies that it has received. Either we are abandoning the Caribbean, to the Americans or we are retaining our Commonwealth involvement with it. That is a clear choice and there is no evading it. That does not mean that we must be the enemies of the Americans in the region or that we cannot co-operate with them.
    Are we merely saying that we have no further interest or responsibility for Commonwealth Caribbean countries? I think that that is what we are doing because the Government, the Foreign Secretary and the Prime Minister are rolling over themselves to support anything that President Reagan takes it into his mind to do in that regard. It is essential that hon. Members should debate this issue in a far better attended House. It should be regarded as a supreme issue of foreign policy because of the historical and pragmatic reasons and because the Commonwealth Caribbean has been deeply and gravely split by what happened in Grenada.
    I came back from a conference in Colombia through Trinidad, Grenada and Barbados. The repercussions of Grenada, the machinations during the weekend between Caribbean countries, the little deceits, the not tellings and the lack of honesty have deeply divided the Caribbean.

    219
    After the CARECOM conference that ended a couple of days ago, the Trinidad Guardian said that it was clear that the wounds had not yet healed. The parties to that conference got on all right, but only just. I could quote what has been said, even by people such as Seaga, with whom I have deep differences of opinion. What happened in Grenada was considerably the result of the closeness between Seaga and Washington. that led to the staging of the American intervention.
    Nevertheless, there seems to be universal agreement among Commonwealth Caribbean countries that they need a stable world economy, development assistance so that their people can prosper and, above all, the assurance of freedom from the exercise of power politics by the United States and the Soviet Union. The only way in which they can be given that freedom is by Britain again exerting its Commonwealth role with the assistance of all members of the Commonwealth. We should say that it is our duty to give them that freedom and make it clear that they need not be dependent on the United States or the Soviet Union and that they can be free to exercise their own choice. That involves the type of security, involvement and assistance that only Britain, with the rest of the Commonwealth, can provide.
    6.46 pm
    Mr. Richard Shepherd: It must be a matter of grave concern to people such as us, who are responsible for having a view on foreign affairs, that the Foreign Office is so denigrated by our fellow citizens. That must be a matter of public concern for foreign policy, and it was never better reflected than in the responses, or lack of them, over the Grenada incident. That week in October was the nadir of the conduct and direction of our foreign policy. It was unsatisfactory because, for one horrible week, which started with the stance of the Foreign Secretary on the Monday, we did not know the Government's position or response, in respect of the events in Grenada. It was by courtesy of the world service and "Weekend World" that we learnt of the British Government's position the following Sunday.
    As the Select Committee report says, the reaction was confused. What worries me is why it was confused. What does that betray in our foreign policy thought processes? The first thing that it illustrates is that there was clearly no thought-through response to a situation such as that arising in Grenada. It betrays a disturbing lack of interest in a region that, like some hon. Members and the right hon. Member for Clydesdale (Dame J. Hart), I believe is of considerable importance to our well-being. It seems incredible that those responsible at the Foreign Office had not thought through a response and had not countenanced the possibility of events in Grenada reaching a point at which other nations in the Caribbean would expect a response. It is extraordinary that a British Foreign Secretary had to wait for nearly a week to announce, on a television programme, our nation's policy.
    The confusion also betrays something about the inadequacies of consultation and of evaluating the advice of our friends. Who are our friends in that region? The Government ought to be fully aware of them. We have representation in Barbados, and we are closely allied to the United States. I am conscious of the way in which the advice of our friends in the Caribbean split. We should
    220
    examine perhaps the most immediate record of how people feel about an incident—public opinion. Those of us who were in touch with friends and contacts in Trinidad and Tobago were well aware that the majority of people, contrary to the stance of the Government there, supported the invasion of Grenada. There is no question about that, although the Foreign Office response says that it is only too well aware of the divisions in the eastern Caribbean community. I believe that, having identified them, we must listen to the advice of friends. That response showed that the Foreign Office had not thought through who our friends were and what advice we should take.
    Perhaps the most important point concerns our lack of appreciation of who we are and what Britain is. That is a dangerous lack of appreciation.
    I am sorry that the right hon. Member for Clydesdale made a distinction about the Commonwealth, of which I am a great supporter. Last November I asked the Library for a breakdown of citizens in this country who came from those Caribbean islands. In a sense, the figures were fairly startling, inasmuch as the proportion of the populations of those countries living here is considerable.
    Of those born in the Caribbean, excluding their children, who were returned in the 1981 census, 25,000 come from Barbados—7 per cent. to 8 per cent. of the resident Barbadan population. Each of those Barbadans has families and relatives, and their children have grandparents, cousins, and so on. It means that citizens of the United Kingdom have intimate and immediate relations with the citizens of Caribbean countries. Therefore, what happens to those countries is of vital importance to British citizens, who have a right to know that the British Government have a thought-out position on the well-being of those countries.
    Jamaica has 164,000 people recorded as living here, excluding children born here. That is between 8 per cent. and 9 per cent. of the population of Jamaica. Similarly, Trinidad and Tobago has 16,000 people recorded as living here.
    About 300,000 people were confident enough to fill in their census returns stating that they had been born in the Caribbean. We know that that is an understatement, and we also know that that figure does not record the number of their children born here. In fact a significant proportion of the population of the Caribbean live in this country. If we are to maintain our position in the world, we must have regard to who our citizens are and who we are. That is why to me the events in Grenada in that awful week in October were shaming, because the Caribbean had slipped from our consciousness and we had not taken the trouble to think the matter out. There may be many reasons for that. Perhaps the long retreat into Europe has vitiated our view of the world.
    According to the report, our trade with the Caribbean in 1983 amounted to £463 million. Trinidad is our fourth largest trading partner in the western hemisphere. It is probably now the third largest, because Brazil's imports fell dramatically last year. This only reinforces why I am deeply concerned that we did not have a view of who our friends are in the region. We do not have a sufficient view of ourselves or sufficient consultation within our own community. This turning of our back on who we are and where we stand in the world gradually erodes our trading and contact points with these countries, which are vital to the well-being of ourselves, our constituents and most of our fellow citizens.

    221
    I have already said that this was a shaming experience. Sometimes I almost wish that I could get into the Foreign Office with a broom, because South America and the Caribbean have been unhappy experiences. I recently visitied Brazil and saw how we have retreated into the far distance in the perception of those who run countries elsewhere. That should not have happened in the Caribbean. Indeed, it should not be allowed to happen — and I do not hang on the initiatives of the United States, which I regard as a great friend and ally — because our foreign policy represents what is solely our responsibility to the families and brethren of our own citizens. In this context the response to events in Grenada was shaming for the Foreign Office.
    However, out of this incident I would like to think that we have learnt something. We should have learnt that what we often think of as peripheral problems of that nature are those that sink us and that the Caribbean is central to our interests in the Americas. After all, it is not so many years ago that a former ambassador to the United States, who was Governor of the Bank of England, tried to apply to join the Organisation of American States. That was how important we perceived our presence in the Caribbean.
    We cannot turn our backs on this situation. Increasingly, if we want to pull our own community together, we must have regard to the interests of our own citizens who have a direct and important interest in the Caribbean.
    6.54 pm
    Mr. Paddy Ashdown: This report covers both the invasion of Grenada and the needs and prospects of that country. Although we must do everything we reasonably can to ensure that Grenada becomes a prosperous and democratic member of the Commonwealth, in the main I wish to concentrate on the more global questions which the invasion raises.
    The background to the invasion is well known and has been well articulated by other hon. Members. As other hon. Members have said, there are lessons to be learnt from what happened. First, the British Government should have taken the lead in pressing the Gairy regime to moderate its approach and to respect civil liberties before the coup in 1979. Secondly, we should also have pressed the United States not to cut off aid to Grenada, because by doing so they pushed the New Jewel movement quickly into the hands of the Cubans and the Soviets.
    The central period under consideration is that between 19 and 23 October. This was a crucial time both for United States-United Kingdom relations and for the Foreign Office. On this I am in agreement with the report, which states:
    "The evident lack of consultation between the United States and its allies in the days preceding the intervention in Grenada must, however, be a cause of concern to all members of the North Atlantic Alliance and has inevitably worrying implications for United Kingdom-United States and wider NATO-United States relations on other matters in the future".
    In other words, the report points towards an extension beyond the rather narrow confines of Grenada, important though that is.
    In answer to that statement in the report one might reply, "Indeed it does," because on 12 May 1983 the Prime Minister announced that no nuclear weapon would be fired or launched from British territory without the agreement of the British Prime Minister. Had she been pressed, she would no doubt have made a similar assertion about the
    222
    possibility of the Government's principal ally invading one of their terroritories without even informing, let alone consulting, either Her Majesty or the Government.
    The Foreign Secretary told the Select Committee, as set out in paragraph 21:
    "the extent of the consultation with us was regrettably less than we would have wished".
    Indeed, were the United States Government to invade every country whose regime does not meet the highest tests of democracy, at this moment the marines would be invading Chile and establishing a bridgehead at Johannesburg rather than training Nicaraguan contras.
    For those who believe in NATO, Grenada clearly shows the need for a strong, balanced alliance with Europe to provide a counterweight for the bellicosity of the present United States Administration. More than 20 years ago President Kennedy set out his vision of the "twin pillars" of NATO, with Europe an equal partner with the United States. So far that vision has proved illusory, and it is the duty of the European leaders to create it. Grenada should force us to recognise that the United States should not be allowed to dictate NATO policy, nor should the wildest flights of this President's imagination be allowed to go unchecked.
    On a more domestic note, Grenada shows the narrow-mindedness of the British Government's refusal to insist on a dual key for cruise. If the events of last October showed nothing else, they showed that one key — an American one—together with some outdated agreements stitched together by Attlee and Truman is one key too few.
    There is no doubt that in invading Grenada the Americans acted illegally. The invasion is in clear violation of the United Nations charter and of articles 18 and 20 of the charter of the Organisation of American States. Equally, there is little doubt that the Americans were less than zealous in keeping Britain informed of their invasion plans, despite Britain's special Commonwealth relationship with Grenada and the supposed special relationship which exists between Britain and the United States.
    The key question which needs to be answered is whether, given this, the Foreign Office did enough to keep abreast of American intentions after 19 October. It appears from the report that the short and brutal answer is, "Definitely not."
    It is not as if the Reagan Administration had not signposted its intentions well in advance. Mr. Reagan was elected President partly on the basis of his robust criticisms of President Carter's policy in Latin America. When elected, he essentially resurrected the Monroe doctrine, intervening in Nicaragua and El Salvador, and making warlike noises about Grenada becoming another Cuba, largely on the basis of the Port Salines airport, which President Reagan had managed to convince himself was part of a plot to turn Grenada into
    "a Soviet-Cuban colony being readied as a major military bastion to export terror and undermine democracy".
    Of course it was nothing of the sort.
    Mr. Bowen Wells: Oh?
    Mr. Ashdown: I draw the hon. Gentleman's attention to the fact that President Reagan considered it a major bastion. The hon. Gentleman quoted some figures which showed that it may have been growing into a bastion, but at all events that process was a t best just beginning. A few rubber boats do not make a major bastion. However, that was President Reagan's view.

    223
    Plessey had a considerable stake in the original construction of the airport, and testified that it lacked many of the essential features of a military airport. No doubt it could have been used as a staging post for a short-term military occupation such as that which the Americans undertook.
    Most significantly of all, in 1981 the United States carried out military exercises simulating the invasion of Amber and the Amberines, with the purpose of displacing the imaginary island's Marxist ruler. Commentators were in no doubt that this was a flimsily disguised Grenada and the Grenadines. It is inconceivable that the Foreign Office did not realise the true significance of this military exercise.
    This should be added to the evidence cited in paragraph 32 of the report that, on 23 October, the British high commissioner in Barbados was told that he would probably receive a formal request for British participation in an invasion of Grenada later that day. This point has been covered by other right hon. and hon. Members. The request was never received because:
    "According to the Prime Minister of Barbados, as far as the United Kingdom was concerned, 'our attitude was that the formal request in writing would go when the oral request had been answered. And since the oral request was never answered … the formal written request was overtaken by the operation itself'."
    However, even such a verbal message, of which, according to paragraph 35, the British Government were perfectly well aware, should, given the overall aspects of what happened previously, have started alarm bells ringing. Instead, it appears that the Foreign Secretary was taken in by United States blandishments to the effect that
    "the United States was proceeding 'very cautiously', and that HM Government would be 'consulted immediately if the United States decided to take any action' or 'before any further steps were taken'."
    The report continues:
    "The Foreign Secretary told us that 'there was certainly a hesitation to embark on telephone calls on necessarily an open line' to the Caribbean, and that HM Government had therefore relied on normal diplomatic channels to convey their point of view. This seems to us a somewhat lethargic approach."
    That comment has been referred to. An increased telephone bill to the Caribbean or whatever it was that put the Foreign Secretary off the "open line" would have been a small price to pay for proper information and a chance to influence world events. The Foreign Secretary's political career has been characterised by a certain laid-back approach, but here he seems to have surpassed his own worst standards.
    The foreign policy implications of the Grenada incident are clear. We need a strong European component of NATO, a strengthening of the United Nations, a more alert Foreign Office and, above all, a more alert Foreign Secretary. What about the people of Grenada? Here we must endorse whole-heartedly the sections of the report that deal with the political and economic future of the island. The need is for a steady transition from the advisory council to democracy, coupled with a determined effort to rebuild and diversify the Grenadian economy.
    The report sets out a wholly sensible set of priorities, of which three need to be highlighted. Other right hon. and hon. Members have already referred to the building of the Point Salines airport, which as well as encouraging the tourist trade would safeguard Plessey's contract for the
    224
    work on the airport, and the rebuilding of Grenada's infrastructure — roads, water, power and so on — is essential. As well as helping to encourage tourism, that provides a sine qua non of a sustainable economy. Grenada should not be lumbered with prestige projects such as the airport without such basic necessities as a good road structure. Thirdly, it is important to strengthen the private sector of the Grenadian economy after the ravages of the past 10 years. No doubt the various public investment measures that the report outlines will help the private sector, but I believe, with the report, that more direct measures may be needed in the end.
    Grenada should have taught everyone who is interested in NATO and United Kingdom-United States relations an important lesson. Luckily, the invasion, illegal and precipitate as it was, has turned out reasonably well. The people of Grenada have the prospect of an orderly and reasonably prosperous future. No major super-power incident has resulted from the invasion. There have been serious costs—the fragile harmony of the Caribbean has been strained almost to breaking point, as other hon. Members have said, the United States has lost much of its moral authority to condemn Soviet adventurism elsewhere, and international law has been blatantly flouted. However, things could have been immeasurably worse. Sparks such as Grenada could land in the tinder of fragile super-power relationships and set off a confrontation of truly apocalyptic proportions. We must learn the lessons of Grenada well—we may not have a second chance.
    7.5 pm
    Mr. Tom Clarke: I shall try to be brief, in the hope that at least one of my hon. Friends may catch your eye, Mr. Deputy Speaker.
    This has been an interesting debate, although not as long as most of us would have wished. A number of lessons have clearly been learnt, certainly by the House, if not by the Government. My concern is that we are facing an unhelpful and unhealthy rigidity. That was highlighted by the view of my hon. Friend the Member for Vauxhall (Mr. Holland) that we seem at times to be more concerned about East-West dialogue than about the North-South problem.
    I fear that, in spite of the fact that the Foreign Office and the British Government, on all the evidence, were treated abominably, they have, in the time that has passed since the invasion, allowed themselves to be associated with the rigid approach of the Reagan Administration. As evidence of that, I refer to the background briefing issued by the Foreign Office on Grenada entitled, "The Activities of the New Jewel Movement". I note that this document refers to
    "the intervention of the United States forces supported by those of several Caribbean states."
    I understood that it was an invasion — not an intervention—and all the evidence given to the Select Committee points to that.
    The document says:
    "Cuba provided major assistance in the form of equipment, materials and construction workers. Other contributors to the airport project included Libya, Venezuela, Algeria, OPEC and the European Community."
    The European Community is mentioned last.
    I join with my hon. Friend the Member for Vauxhall, who expressed his grave worries about the Government's aid policy. The tone and attitude of this document is

    225
    reflected in Government policies. In any graph on foreign and overseas affairs we see that defence expenditure has gone way up since 1979, but there has been a considerable drop in the amount of aid. We are also being extremely selective. Is there any doubt that Bishop was driven to Cuba and the Soviet Union in the vacuum that was thus created, as my right hon. Friend the Member for Clydesdale (Dame J. Hart) said? We are almost sitting it out, even with Commonwealth countries, despite the almost unhealthy American interest in that part of the world.
    I draw to the Minister's attention my concern, and that expressed by Conservative Members—notably the hon. Members for Hertford and Stortford (Mr. Wells) and for Aldridge-Brownhills (Mr. Shepherd), in refreshing speeches—about stability in other parts of the Caribbean arising from this episode and the lessons that we are trying to learn.
    I also draw to the Minister's attention the problem of Belize. I visited Belize recently with my hon. Friend the Member for Stretford (Mr. Lloyd) and other hon. Members. I hope that any suggestion that the case for a British presence has fallen by the wayside is one that the Minister would repudiate, and that our aid policy will give every assistance to George Price, the Prime Minister of Belize. If we fail to do that, the message of Grenada is simple. There will be an almighty struggle between the United States and perhaps Cuba, and, on all the evidence, we should avoid that.
    7.10 pm
    Mr. Donald Anderson: I shall be as brief as I can.
    The Select Committee report was clearly valuable. Important points have been made in the debate about the nature and quantity of aid directed to the island of Grenada, as well as about Britain's relationship with the Caribbean and whether the area should be consigned to the United States.
    I shall move on to broader foreign policy considerations, some of which have been touched on already. The question of the security of small states has been raised as a result of the events in Grenada. We know that two studies are under way by the Commonwealth Secretariat and by the David Davies Institute, under the chairmanship of the hon. and learned Member for Blackpool, South (Sir P. Blaker). It would therefore probably be prudent to avoid saying anything of substance until the reports are available and we can debate them.
    I have only one word of caution at this stage. There is real danger in our talking of threats to small states, as threats can often be defined in a subjective way, according to the strategic considerations of one or other of the superpowers. The Prime Minister appeared to be aware of that danger when she said in the Sunday broadcast on the world service, after the invasion, that
    "Western democracies should not use force to walk into other people's countries."
    The Foreign Secretary, in his evidence to the Select Committee, on page 15, said something fairly similar.
    I have two further points to raise. First, I should like to refer to the quality of advice to the Foreign Office from our missions in the field and to the quality of the Foreign Office's response, as set out in the report. My second point relates to the effect of the invasion and the events immediately surrounding it on the bilateral relations
    226
    between ourselves and the United States, and the nature of the special relationship which still persists, or not, after those events.
    With regard to the events preceding the invasion, the New York Times reported on 30 October that Administration officials were then briefing journalists that the United States began discussing the use of force in Grenada with friendly Caribbean Governments on 15 October. Between 15 October and 25 October events moved very quickly.
    Apparently, plausible legal cover was provided by the OECS appeal under a treaty article that required an external threat, which certainly did not exist. There was increasing military activity in the region during the Saturday and Sunday, and C130 transports and heavy-lift helicopters were active around Bridgetown. The flight paths to Grenada had been tested, and the Caribbean was bristling with air and sea activity to the extent that both Caribbean and United States journalists were talking openly of the certainty of an invasion. It seems clear from the accounts given in the United States press — and, indeed, from the helpful account that was published in The Economist on 10 March—that the "Go" order had been effectively given in the United States by the joint chiefs of staff on the Saturday.
    There was sufficient evidence for those who wished to see what was happening to report back to Whitehall what was going on. Indeed, it is significant that the Governor of Grenada, whose appeal is used now as justification in part for the invasion, told the BBC that he did not think that intervention was necessary until "late Sunday evening." Even then, as he told the BBC, he asked not for an invasion, but for "help" — undefined — "from outside". That proves that the decision to invade had been made before requests for help from the Governor.
    In any event, the account shows that there was massive evidence on the spot available to those who wished to see it. It is remarkable that the diplomatic advice available to the Government and to our joint intelligence committee did not sense the vibrations of invasion. Yet our Government were happy to take at face value what Larry Speakes, the White House press officer, and others in Washington were telling them: that the United States was adopting a cautious approach and that we would be consulted before anything happened.
    There are lessons to be learnt from the invasion. The Select Committee talked about the lethargic response of the Foreign Secretary and of the need for the Foreign Office to have taken the initiative at that time and found out what was going on on the spot. Certainly it is clear that the Foreign Office was allowing things to drift.
    The Foreign Secretary was clearly put in an extremely embarrassing position on the Monday, when he reported to the House that he knew of no intention for an invasion. At the time of the famous telephone message from President Reagan to the Prime Minister on the Monday evening, the fleet had been diverted, on 20 October, the joint chiefs of staff had been on countdown to invasion, and United States troops had arrived in Barbados. Whoever was to blame—the Foreign Secretary or the men in the field—it was a very embarrassing few days for the Government.
    The Foreign Secretary was able to tell the House on Tuesday that it was "a matter for regret" that there had

    227
    been an invasion. That is a truly Palmerstonian response to the invasion of an independent Commonwealth country by an ally with whom we have a special relationship.
    Clearly, neither the United States President nor the Secretary of State thought it proper, worth while or necessary to consult this country before the invasion, or to consider United Kingdom participation as an essential part of the operation. Therefore, there are clear implications for our bilateral relations.
    Is the Prime Minister still examining the implications of that unilateral United States action, with token local assistance, and total lack of real consultation with us? What guarantees do we have, for example, that our interests will be taken into account in actions by the United States outside the European theatre, in sensitive areas such as the Gulf? What implications are there for strengthening the European voice—the European pillar within NATO? What implications are there for dual control of cruise missiles and for a European voice in the "Star Wars" strategy?
    Traditional British and Commonwealth interests were planned out of the operation from the very start. There are implications for consultation and crisis management procedures. However much the Foreign Office suggests that we look to the future, and tries to stifle a post mortem and a longer-term analysis, it is clear that in Washington at that time our voice counted for very little. As part of a European grouping, we would have been allowed a stronger voice. The special relationship was exposed as an illusion by the incident. If it proved nothing else, that was one of the hard lessons for us from the Grenada incident.
    7.20 pm
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Ray Whitney): The debate has been very interesting and useful, and I am particularly grateful to my right hon. and learned Friend the Member for Hendon, South (Mr. Thomas) for the balanced way in which he introduced it. He got us off to a very good start. The debate has added to the very significant work done by the Select Committee on an area that is clearly of great importance to this country, as well as being of great interest to the Government and the House.
    As the hon. Member for Swansea, East (Mr. Anderson) has just said, there are dangers in looking back too much. It is certainly not the Government's intention to stifle, as he suggested, a post mortem. It can be seen from the debate that there is a danger in rewriting history and in indulging in the pastime of hindsight, which is a temptation to us all. I should say to my right hon. and learned Friend the Member for Hendon, South that the terminology used in the Foreign Office reply applied to the Committee's description of the process rather than to a consideration of the Committee's deliberations.
    I should like to go rapidly over the history of the issue in something like chronological order and to offer some element of corrective, and a somewhat different viewpoint from that which has so far been heard in the debate. My hon. Friend the Member for Hertford and Stortford (Mr. Wells) is a great expert on these affairs and has long experience of this part of the world. He and the right hon. Member for Clydesdale (Dame J. Hart) took quite a bit of time to tell us that we should have handled the issue
    228
    differently in the 1960s and early 1970s. That may well be so, but the right hon. Lady will know better than anyone that she was a leading member of the Labour Government for a significant part of that time. For example, between 1974 and 1979 Dominica and St. Lucia were among those states that achieved independence under the procedure that was also followed in the case of Grenada. The Governments of all the Associated States that requested termination of association had recently won elections after having advocated independence. There were opportunities for each island to engage in public discussion of the proposal for independence, and the constitutional conference was open to the opposition parties.
    Mr. Nigel Spearing rose——
    Mr. Whitney: I am sorry, but I shall not give way. I have allowed hon. Members as much time as possible in which to speak, and have left myself only 10 minutes in which to conclude the debate. If I do not give the Government's point of view, I shall once again be accused of not indulging in the post mortem that many hon. Members seem to want.
    Therefore, whatever the view is now, I must suggest that it was the carefully considered policy of Governments of both complexions to grant those states independence. Many of the problems were foreseen, but perhaps some were not. However, I accept that those problems exist, and we are determined to help the Caribbean states with them. That is why, for example, we are co-operating so positively with the study that has now been launched, under the aegis of the Commonwealth Secretary-General, on the security of small states.
    There was discussion as to what we might or might not have done about the Bishop regime. That regime was turning away from this country, towards Cuba. We were considering a new tranche of aid in 1979 when those unhappy developments began. It was a very difficult dilemma, but with hindsight I do not believe that this Government or any other Government would have handled the matter significantly differently.
    I come to the events of last October. The Government's response contained in the White Paper sets out clearly what was happening. It is wrong to suggest a shortage of information or a lack of analysis. With respect, I must firmly reject the quite unprincipled — forgive me, the quite unjustified—attack of my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) on the capability of the diplomatic service. We are well represented in the Caribbean in terms of both numbers and quality, and it is wrong to talk about a shortage of information reaching Ministers, or indeed, my right hon. Friend the Prime Minister.
    The tale is told in the White Paper. It is not a question of how many telegrams were sent, but rather a matter of judgment. That judgment was reached on a sound basis, and as many hon. Members have recognised, many states in the Caribbean came to a similar conclusion to us. There was an honest and entirely understandable difference of view as to how to treat a particularly difficult problem. Thus, it is not profitable at this stage to take the matter further.
    The difference that arose with the United States is, again, well-trodden ground. There is no doubt that we and the United States regret that we got out of kilter at that time. However, hon. Members must understand how that

    229
    arose and should not indulge in the very cheap anti-Americanism of the hon. Member for Yeovil (Mr. Ashdown), who seemed to be riding the Liberal horse of anti-European policy——
    Mr. Ashdown: We are not anti-European.
    Mr. Whitney: I should have said riding the Liberal horse of anti-American policy. The hon. Gentleman sought in some way to suggest that was a link between our different readings of the situation in Grenada and our very satisfactory relationships with the United States over the use of nuclear weapons in this country.
    Mr. Ashdown rose——
    Mr. Whitney: The hon. Gentleman knows very well that that is a complete red herring.
    Many hon. Members complained about the swiftness of aid dispensation once we had moved in after the intervention in Grenada. The Overseas Development Administration has a record of which it is justly proud. About 97 per cent. of that £750,000 was agreed by the end of January. As the right hon. Member for Clydesdale knows, by any standards that is very fast going. We must, of course, go through certain procedures — as hon. Members will understand—as public money is involved.
    Mr. Corbyn rose——
    Mr. Whitney: Of course I shall not give way at this stage.
    We certainly take into consideration the need to help members of the Caribbean to fill in the forms and all the rest of it. As my hon. Friend the Member for Hertford and Stortford knows, we have looked very closely into the complaints made about aid administration. Although, of course, nothing is perfect, I am satisfied that there is little substance to them. There has been very effective aid disbursement, and that continues. The efforts of the development division and the better input by the high commission will improve still further the aid administration.
    I must emphasise that there is no question of the Government turning their back on the Caribbean. Far from it. As I have said, we take a very close interest in what we can do to help security and that is precisely why—to pick up the point of the hon. Member for Vauxhall (Mr. Holland)—we provided £300,000 of police training in Grenada. The Grenadians asked for that. We take a close interest in their security and in the economic development of the Caribbean as a whole. In response to a point made by the hon. Member for Clydesdale, I should add that in every year since 1980 British aid to the Caribbean commonwealth countries has averaged £27·5 million. That gives that area one of the highest per capita rates for aid in the world.
    Mr. Holland rose——
    Mr. Whitney: It is about four times the amount per capita that we give to the African countries and perhaps 40 times what we give to the Asian sub-continent. In addition, we contribute to a whole raft of multilateral agencies. Overall, aid from Western sources has increased from $75 million to $298 million. That is a token and strong manifestation of our interest in Grenada and the Caribbean, and of our commitment to the 5 million people in those states, who are linked to the United Kingdom in the many ways to which many hon. Members referred. I
    230
    rededicate and reaffirm the Government's commitment to the development of Grenada and the Commonwealth states of the Caribbean.
    It being half-past Seven o'clock, the Question was deferred, pursuant to paragraph (2)(c) of Standing Order No. 19 (Consideration of Estimates).
    Mr. Spearing: On a point of order, Mr. Deputy Speaker. The rubric in italics on the Order Paper refers to the debate, to two reports of the Foreign Affairs Committee, House of Commons Papers Nos. 421 and 226, and also to the Government's reply in Cmnd. 9267. I draw it to your attention, as the Estimates days are an experiment, that no member of the Select Committee was called from this side of the House during the debate.
    Mr. Deputy Speaker (Mr. Harold Walker): I am not sure that that is a point of order, but I understand the hon. Member's resentment and will bear it in mind.
    Mr. Tom Clarke: On a point of order, Mr. Deputy Speaker. I seek your guidance. I understand that the Minister did not have as much time as he would have wished to reply to the debate. I raised the important question of Belize. Is it normal practice for the Minister to write to the hon. Member when he does not have time to answer the hon. Member's question?
    Mr. Deputy Speaker: That is not a question for me. I understand the resentment of hon. Members, but the debate, for reasons that are well understood, started late. If some hon. Members took a disproportionate amount of time, I hope that they will bear it in mind during similar debates in future.

    Class XIV, Votes 1 and 2
    Motion made, and Question proposed,
    That a further sum not exceeding £496,708,000 be granted to Her Majesty out of the Consolidated Fund to defray the charge which will come in course of payment during the year ending on 31st March 1985 for expenditure by the Department of the Environment (Property Services Agency) on maintenance and running costs (Subhead A3 of Vote 1), acquisitions and new works costing over £100,000 (Subhead C1 of Vote 1), and general administrative expenses (Subhead A2 of Vote 2).—[Sir George Young.]
    7.31 pm
    Sir Hugh Rossi: I beg to move,
    That Class XIV, Vote 1 be reduced by £20 million in respect of Subhead C1 (Acquisitions and new works costing over £100,000).
    Estimates and accounts are not the most riveting of subjects for debate. At first sight they present little to excite and stir the imagination. However, the Environment Select Committee was appointed by the House to examine the expenditure of the Department of the Environment. That obliges us to examine pages of detailed accounts and to report on our findings.
    The Votes on the Order Paper are the subject matter of the third report of the Environment Committee. We asked for the debate because during our examination of Class XIV, Votes 1 and 2, which contain the Property Services Agency estimates, we came across matters hidden away amongst the mass of figures, which worry us. We sought to highlight the seriousness of our anxiety by placing on the Order Paper a motion to reduce by £20 million the provision for acquisition and new works which cost more than £100,000. Whether this motion is pressed to a

    231
    Division at 10 o'clock will depend upon the way in which the Minister replies to our criticisms and on the assurances he can give to the House.
    The Committee has serious reservations as to whether the proper value will be obtained for the financial provision being sought by the PSA under three Sub-heads within the Votes. That is quite apart from the even more serious matters, which are the subject of the Wardale report, recently considered by the Public Accounts Committee. I have no doubt that this will be raised by the Chairman of that Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), if he catches your eye, Mr. Deputy Speaker.
    In considering the three Sub-heads the Environment Committee had the advantage of reading the Comptroller and Auditor General's report on "The PSA: Building Maintenance Expenditure in the United Kingdom." Although that report is for the PAC's consideration, we could not overlook its findings and recommendations when considering the PSA's Vote provision for maintenance and running costs. This is a further example of co-operation between our two Committees, to which my hon. Friend the Member for Scarborough (Sir M. Shaw) drew attention on 4 July during the debate on the Department of the Environment's Estimates for 1984–85. We await with interest the report from the PAC on building maintenance by the PSA.
    Regarding the three Sub-heads, I ask the House to consider Class XIV, Vote 1 on civil accommodation services. Our examination of Sub-head A3 on maintenance and running costs shows that an extra £11·6 million was being provided for maintenance works—an increase of 18 per cent. over the previous year. However, we also discovered that the maintenance of the civil estate had fallen below its proper level. A shortage of funds was said to be the reason for a backlog of maintenance from past years, provisionally estimated at £90 million.
    This year's provision will not enable that backlog to be overtaken. It will merely restore expenditure part way towards the level needed to maintain the estate in good condition. Obviously, another year's delay in dealing with the backlog will lead to a much heavier maintenance bill next year.
    It is difficult to reconcile the PSA's two explanations for the backlog of maintenace of £90 million, which it gave the Committee in evidence. On the one hand, it gave the reason as being a shortage of funds—that is found in its answer to question 2 of our report—and on the other, it said that the backlog was of recent origin,
    "over the last few months"—
    that is found in its reply to question 7.
    When the Minister replies will he tell the House what volume of backlog was planned for when the 1983–84 Estimates were presented? The House also needs to be told whether the backlog results from under-estimating. In that case, who is to blame? Is it the Treasury or the PSA? Alternatively, does the fault lie in inadequate agency methods of gathering information? If it is the fault of the information gathering methods, there remains a real risk that additional financial provision may not be allocated where the need is greatest. It is clear that the PSA needs to lay down central guidance on maintenance priorities and
    232
    to ensure that regional directors are using common standards in making their assessments for maintenance programmes. We await its response.
    The Committee also awaits the outcome of the PAC's inquiry into the Comptroller and Auditor General's report on "The PSA: Building Maintenance Expenditure in the United Kingdom". That inquiry may offer greater scope for the issues I have raised to be fully examined.
    It should be good news that the discretionary limit of expenditure which client departments may incur on local offices is being doubled this year. But the new limit is only £1,000. That is insufficient. It will simply redecorate a fair-sized room. According to the report, a more realistic level would be helpful,
    "both in averting new arrears of maintenance of the kind that have arisen and in putting into decent condition some of the local public offices, in particular DHSS offices, whose appearance and atmosphere are at present deplorable".
    My hon. Friend the Minister will remember that when we both served in the Department of Health and Social Security, and I had personal responsibility for social security matters, the conditions of the social security offices in which the staff of the Department had to work and in which their clients had to wait, sometimes for many hours, were a matter of deep anxiety for me. When one tried to discover why the conditions could not be brought up to an acceptable level one found that it was not within the right level of priorities for the PSA. On inquiry, one found that if the local managers of those offices were given a discretion to approach local builders, the work could be done rapidly and at far less than apparently it cost the PSA to carry out required work from time to time in those offices. That is a matter upon which I would press the Minister strongly — the level of expenditure at local discretion should be considered and reviewed substantially.
    In the same class, Vote 1, I should like to draw the attention of the House to Subhead C1 "Acquisitions and new work costing over £100,000." That is the subject of the motion on the Order Paper that I have just moved. The provision sought is £172·5 million compared with a provision of £131·1 million in 1983–84 of which, in practice, only £114·8 million was spent. The increase in the Estimate provision is thus £57·7 million, or about 50 per cent., above the previous year's expenditure. Although the PSA expects a large number of projects to reach peak spending in 1984–85, the planned expenditure is extremely ambitious when viewed against past performance.
    Our assessment of the probabilities was made much more difficult when we learned that important errors had been made in supporting tables 1 and 2 of pages 67–76 of the Estimate. The technical explanation for the errors will be found in paragraph 11 on pages vi and vii of our report.
    At the same time, we wanted to question the PSA about four projects where the estimated cost was being exceeded so substantially as to suggest that they were running out of control and a glance at tables 1 and 2 to which I have referred will show how we came to that assumption. Liverpool Crown court, on page 72, appears to be 40 per cent. in excess of estimated cost; the Houses of Parliament heating modernisation, on page 74, 30 per cent. in excess; Park Lane fourth special hospital, on page 74, 65 per cent. in excess; and Wymott prison, on page 72, 45 per cent. in excess.
    The figures presented to Parliament were wrong anyway—for example, in the case of Liverpool Crown

    233
    court, the original estimate of costs at current prices was not £37·3 million as printed but £50·338 million. Probable expenditure to March 1984, also at current prices, was not £50·242 million as printed but £55·301 million. That is a cumulative figure and not last year's expenditure.
    We were also puzzled as to why further financial provision was needed in 1984–85, and after 31 March 1985 when the building had been completed and had been opened by Her Majesty. No explanation was given during the oral examination of PSA witnesses, but the position has been clarified in additional written evidence as will be seen from the footnote to question 49 of our report.
    The published Estimates are important public documents provided for the information of Parliament and other interested parties. We considered it wholly unsatisfactory that they should have been permitted to be issued with significant errors throughout ten pages of the Estimates. It is surely even more unsatisfactory that neither the Department of the Environment nor the Treasury discovered those mistakes in their examinations of the Estimates, which must have been perfunctory to a degree.
    We insisted that corrected tables should be provided, and that has been done in the revised Estimates. When I tell the House that, in cash, the Liverpool Crown court cost £43 million and that the figure does not merit a mention in the Estimates or the revised Estimates, right hon. and hon. Members will understand why we so readily accepted the PSA offer to discuss a better format or an explanatory note for the tables in next year's Estimate.
    I have explained our difficulties as a Committee in assessing the financial provision under this subhead, and, given the inaccurate statistics throughout the ten pages of the Estimates, we had no confidence in a bid for funds which represented a 50 per cent. increase over the previous year's expenditure. We therefore recommended a reduction in the Vote provision of £20 million. Even so, the reduced provision will allow for a 33 per cent. increase over last year's expenditure. That £20 million is the subject of the motion.
    I come now to Class XIV, Vote 2 "Administration and Miscellaneous Services". We were interested in the provision under Subhead A2 "General administrative expenses". Even after allowing for a supplementary provision last year, the provision this year has increased by almost £39 million, nearly two thirds of which is attributed to the increase in consultants' fees.
    We were told that the increase was needed to meet an expanded programme of work, coupled with a policy of switching from in-house resources to the use of professional design consultants. On the first point, we were assured by the PSA that the projects in the expanded programme of work could be expected to mature in two or three years' time. We were pleased to hear that, because it means that the expansion of the employment of out-house consultants does not seem to be running unduly ahead of the planned programme of work.
    We noted the steady reduction in staff for in-house major design work in recent years as well as the increase in the proportion of design work, in value terms, put out to private contractors over the past seven years with even larger increase forecast. We were less certain about the somewhat imprecise nature of the approach to allocating schemes between in-house and out-house. Normally the PSA is interested in obtaining the best financial deal, and in arriving at that assessment we have been told that it had
    234
    to be assumed that it would be financially disadvantageous to have in-house staff sitting around doing nothing, simply to pursue an out-house consultant's policy. Given that the professionals available in-house, both type and number, can hardly be expected to match the project requirements, it would seem that in many cases schemes are allocated not on the basis of an assessment of the relative costs of the two methods, but rather on the basis of what professional expertise is for the time being available in the PSA's territorial organisation or in headquarters. Perhaps the Minister can say whether suitable staff can be moved temporarily between headquarters and the territorial organisation to ensure the full use of in-house staff. We thought that it might be preferable to maintain a staffing level sufficient only to meet the lowest troughs in demand and, therefore, not have excess staff against a possibility of there being peaks. The out-house people can deal with that situation.
    Our main recommendation is that a proper assessment be made of the relative costs of designing different types of scheme by different methods, and that the agency staffing and design practices be actively managed to minimise costs.
    The Committee welcomed the opportunity to examine the agency's estimates. Despite the illustrious parentage of the format of the tables on the cost of projects, we have found them wanting, as I have demonstrated, and we look forward to seeing them improved after further consultation. We look forward also to continuing the estimates dialogue next year with the added advantage of the forthcoming report of the Committee of Public Accounts on building maintenance expenditure.
    Finally, I express the fervent hope of the Committee that the Department of the Environment and Treasury officials will not again allow so many errors in the Estimates to slip through unnoticed during their examination so that the Committee had to pick them up.
    7.52 pm
    Mr. Robert Sheldon: The House will be grateful to the hon. Member for Hornsey and Wood Green (Sir H. Rossi) for his examination of the Property Services Agency, and the third report upon it. I congratulate the hon. Gentleman not only on his speech but on the report and on the way in which the investigation was conducted, the estimates were made and the errors were discovered.
    The hon. Gentleman mentioned the way in which the presentation of financial documents was made, and he made one or two criticisms. He may be aware that it was only at the end of last week that Mr. Likierman presented a report on the presentation of Government financial documents and how they might be improved, so this matter is very much in the centre of thinking at present. I am sure that the wise comments he made will be part of the argument that is just beginning upon the publication of that report.
    As the hon. Gentleman foresaw, I wish to deal with the Wardale report, and in particular the twenty-sixth report from the Committee of Public Accounts on systems controls and fraud in the Property Services Agency. The Committee report dealt with an examination of the Wardale report which had been produced by Sir Geoffrey Wardale, assisted by Mr. Herron. The report examined a number of cases of corruption in the PSA. I believe that this question of corruption and dishonesty in the public

    235
    service is the most important matter to come before the Committee of Public Accounts. We have had matters involving substantial sums of money, matters where a number of errors were made, such as the De Lorean affair, and matters concerning the size of defence contracts.
    The integrity of the Civil Service, its reputation for incorruptibility and its dedication is one of the great treasures of our constitution. If we observe any decline in those standards, we need to act urgently, immediately and thoroughly. Isolated examples of corruption when they occur must be dealt with immediately and thoroughly. Dishonesty has a number of the characteristics of a malignancy. It can spread, if unchecked, and it can take over the organism in which it intrudes. At the early stages of such corruption, fellow workers will disdain involvement in fraud, and the threat of disclosure will effectively deter many from taking part in such practices. But there can come a time when bribery is so widespread in a department or part of a department that it becomes part of the system, and when that happens eradication becomes very hard. We know many countries where this has happened. The examples are, sadly, all too numerous.
    The threat of increased fraud and corruption in the public service is a very real one. We are presently faced with a situation in which Civil Service morale is unhappily rather low, there are questions of pay, and there is a feeling among many civil servants that they are seen as failures who were unable to get a job in the real world of competitive finance and industry. The idealism which prompted so many of our leading civil servants to engage in the public service for the good of the people of this country is declining as a result of attitudes being taken towards civil servants.
    The very ethos of the Civil Service is under threat. We know that some of our leading young figures — for example, a number of principals—some of the brightest people in the Civil Service, are leaving the Treasury for other areas of activity, and we have to be careful about the decline in the standards and abilities of the people employed in the Civil Service and in the public service generally. I happen to believe that there has been a general decline in standards in the country as a whole. The patterns of honesty are changing, unfortunately frequently for the worse, as we become a more competitive economy, which is after all the aim of the Government. However, a more competitive climate, as an unfortunate by-product, leads to a number of corners being cut, and these are matters that we also have to consider. At the same time as this is happening, opportunities for corruption are greater in the public service as hard-pressed industries struggle for contracts by Government Departments. Thus there is a need for continual surveillance, and that need will remain with us for some time.
    The Wardale report examined 61 cases of corruption. That Committee and the Committee of Public Accounts accepted that those 61 cases were the tip of an iceberg. How big the iceberg is we are obviously unable to say. What the Comptroller and Auditor-General found particularly disturbing—he repeated it in his memorandum—is the extent of collusion, collusion within the Department and collusion with contractors. Particularly disturbing was the deliberate swindling of the PSA by
    236
    contractors. The attitude to this, about which we heard, is best expressed by a reply of Sir Geoffrey Wardale to a question that I put to him. I said:
    "you make some strong comments about the complacency and failures of management in the PSA. In your view, how deep-rooted are these weaknesses of attitude—are they widespread across the country, and do they exist at all levels of management"?
    Sir Geoffrey replied:
    "The simple answer to that is yes, to all the questions. We found that this attitude which we have described as complacent—and we have tried to define in the course of the report what exactly we mean by complacent, because it is rather a loaded word used on its own—was a deep-seated attitude. It showed itself in people's attitudes almost without them knowing it. Although I would not like to give you the impression that everyone was tarred with the same brush, because of course there were people in the organisation we saw who were doing a good and efficient management job, nevertheless I think I have to say that I regard these attitudes almost as the attitudes of the organisation; they are the ethos of the organisation."
    Later, it was put to him:
    "You say in your report that there is a degree of complacency on the part of management which is reflected in its attitude towards dishonesty and fraud."
    Sir Geoffrey replied, "Yes."
    There is only one interpretation of those replies: there was a certain amount of corruption and those in many parts of the areas concerned felt that it was a problem which they had to live with. When that happens, certain serious consequences follow for us, because we have to ensure that that state of affairs is brought to an end. If it remained unchecked, it would spread, bit by bit. The eradication of corruption is one of the most difficult tasks that many countries have tried, often unsuccessfully, to achieve.
    Sir Geoffrey pointed out that when contracts went out to an individual jobbing contractor, there was a "field for bribery". He added:
    "this field in our view was made worse in the PSA because often only one officer dealt with all the stages of letting the contract, saying the work had been completed and authorising the payment. We did not regard that as a very satisfactory arrangement. Finally of course there is the direct works with which you would not want to be concerned. As to how it compares with the outside world, perhaps before I turn to Mr. Herron on this I should say that when we started on this enquiry I took it on under the impression that I would find the systems and controls in the PSA would be, like they are in most Government organisations I have had any acquaintance with, somewhat elaborate, rather more elaborate than perhaps you would get in the private sector as a rule, and that the kind of cases we would have to deal with would be those that would escape through any system of control, however elaborate. I am bound to say that I was rather taken aback to find that the controls were nothing like as elaborate as I would have expected in any organisation. In fact the conclusion we came to was that both on the preventive controls, the controls where work is authorised and at the other stages while work is being carried out and authorised they were weak and the detective controls that find out irregularities later in the day after the work had been completed, by spot checks and so on, were weak also. I am bound to say that I found myself surprised at this."
    Inspection teams were set up to discover errors and frauds. Sir Geoffrey was asked:
    "You perhaps in your mind drew an analogy, or I did in mine, with banks where fraud is always a risk and where they have outside inspection teams who drop in on a bank unannounced and within ten minutes are going through the books. You made a recommendation that there should be what you called regional management inspection. Had you something similar in mind?"
    Sir Geoffrey replied:
    "It was of the same nature."
    The next question was:
    "Were you surprised when the PSA did not accept that recommendation?"

    237
    Sir Geoffrey replied:
    "Yes is the short answer to that."
    There were not even the inspection teams that one would regard as a minimum requirement, knowing that there had been fraud.
    We understood initially that the 5 per cent. sample that was subject to check was a means of checking on fraud within the PSA. Mr. Herron, who advised Sir Geoffrey, said:
    "This 5 per cent. check as it is, is the management's day-to-day control of the business; it is nothing more than that. It is not an independent check as such. That is our view and therefore if you wish to set up an independent check you cannot use the 5 per cent. checks as being that, it must be something superimposed over and above; hence our recommendations on an inspection team."
    Against that argument, Mr. Montague Alfred said that the aims of the PSA were, first, to satisfy clients, secondly, to spend the voted funds and thirdly, to obtain value for money. The Committee's objectives were different. They were that if there is corruption, public money must be safeguarded. Even if that leads to unpleasant consequences, it must be our first priority, given the pressures to which, as I said earlier, the Civil Service is subject.
    We made a number of recommendations. We were pleased to receive the Secretary of State's assurances of determination to root out corruption in the PSA. That was unqualified and we welcomed it. The right hon. Gentleman also said that he intended to press forward the Wardale recommendations. We shared the Comptroller and Auditor-General's concern about examples of deliberate swindling by contractors and we asked PSA to sharpen its staff's alertness to the risks, whether or not there was collusion.
    We recommended that, quite apart from the ordinary judicial penalties, which would be incurred anyway, dishonesty should normally entail dismissal for staff and loss of orders for contractors, and that sharp practice falling short of dishonesty should also be penalised. We recommended that the PSA should re-examine with the Director of Public Prosecutions how disciplinary action against staff might be speeded up.
    We recommended that the PSA should take prompt action against unsatisfactory contractors and publicise it among its regular contractors, so that they knew the risks that they were taking if they indulged in the practices to which I have referred.
    We said:
    "We shall expect next year to see evidence of significant improvements in attitudes and performance."
    When we examined the new chief executive of the PSA, we were given assurances on those matters.
    The most important aspects are the attitudes and the seriousness with which Government Departments deal with and anticipate dishonesty among employees. It must be at the pinnacle of our priorities for the public service that its reputation is protected. The Government hold the Civil Service in trust, not just for themselves, but for all Administrations to come. It is that trust which we must fulfil.
    8.10 pm
    Mr. Sydney Chapman: It is a great pleasure to follow the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who speaks with immense
    238
    authority on public finance. I hope that he will excuse me if, on this occasion, I do not follow him in his remarks about the Wardale report.
    I want to take this opportunity to support the motion tabled by my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi), following the third report of the Environment Committee on the Property Services Agency's main Estimates for the current financial year. I reiterate what my hon. Friend said on Class XIV, Vote 1 about civil accommodation services.
    As I understand it, the maintenance of civil estates has fallen below an adequate level. My hon. Friend said that there was a backlog of £90 million maintenance work which will not be tackled in the current financial year. I believe that, all things being equal, the present time is ideal to step up maintenance and repair work.
    I shall give the House one construction statistic, which is revealing. It was given to me some time ago by the director-general of what was then the National Federation of Building Trades Employers, now known as the Building Employers Confederation. He said that, although between 1979 and 1982 building costs had increased by 40 per cent., tender prices had increased by only 11 per cent.
    The director-general's point was that that gave some indication of the construction industry's contribution to the battle against inflation. I do not believe that the position has materially changed since then. Now is the best time to obtain value for money and to get work done at less than the estimated cost of a project at the time of its conception. It is absolutely essential that the estates under the responsibility of the PSA should be kept in good repair. I join my hon. Friend in asking for an assurance that the House will be told about the Government's plans to dispose of the backlog of work. Does the deficiency result from under-estimating at a time when, if anything, the tendency would be to over-estimate contract prices, or was it a result of the inadequate PSA methods of what I call property intelligence?
    I wish to give an example that is rather close to home. Across the road, in St. Stephen's house, room 404 is used by an assistant clerk to the Select Committee on Social Services. Not long ago the ceiling fell into a state of damage and disrepair, as did the walls, because of a leak from above—whether it was from defective plumbing or because of a leak in the roof, I do not know. Several hundreds of pounds were spent on repairs lasting a full week, including replastering and repainting the ceiling and repapering the walls. However, after last week's rainfall, the ceiling is again bulging, the carpet must be dried out and the occupant has again been moved. Surely this is a classic case of its being absolutely essential to have a tight grip on management control of those properties. We should not try to save a penny now when it will cost an additional pound next week.
    I am not suggesting that that is endemic and widespread throughout the service—I hope that it is an exception. But that sort of instance cannot be tolerated with the large and important estate of the PSA, for the cost could be hundreds of thousands, even millions, in wasted pounds.
    I want to underline another point made by my hon. Friend about the provision for acquisition and new works of more than £100,000. He said that, in reality, the provision was 50 per cent. more than the amount spent in 1983–84. One reason for that may be the uneven flow of

    239
    projects and contracts at different stages. Even so, there is a need for better management control to ensure a smoother and steadier flow of work.
    I wish to refer to the errors in tables 1 and 2 on pages 67 to 76 of the Estimates. My hon. Friend mentioned the Liverpool Crown court. Other instances were given which, frankly, show that the figures were badly wrong. I described them as gobbledegook in the Committee proceedings and that is no exaggeration. More importantly, they emphasise that if the figures are not correct, and if the information given to us was inaccurate, it makes a mockery of the purpose of Select Committees watching the work of Departments.
    A wider issue is involved, in addition to over-estimating or under-estimating on projects, be they a Crown court, a hospital, a prison or any other building. Evidence presented to me shows that far too regularly the costs of contracts rise significantly, not primarily because of inflation but because the plans of the buildings and schemes are changed.
    It may be prudent for me to declare a possible interest as a non-practising architect and a non-executive director of a construction company. To my knowledge, there are NHS hospital buildings where the costs are much higher than the estimates simply because design and construction works have been changed—not only after the contract has begun, but even after it has been completed.
    Mr. Chris Smith: Will the hon. Gentleman include in his analysis a comparison with the very stringent rules that the Department of the Environment places upon housing associations that are constructing housing projects with funding from the housing association grant system? Any additional costs, additions to the contract and changes in the plans once the contract has begun are pored over by the Department in excruciating detail. The housing association is forced to justify every item. Will the hon. Gentleman contrast that exercise with what appears to be happening to the PSA?
    Mr. Chapman: The hon. Member for Islington, South and Finsbury (Mr. Smith) does not need me to make that comparison. He made it eloquently himself. I am not arguing whether the regime of the Department of the Environment vis-a-vis housing associations is too rigid or harsh, but certainly a better element of discipline in hospital and prison building programmes should be a first priority.
    After all the plans have been designed, the working details drawn up and the contracts let — remembering that committee-itis runs rampant in the NHS — DHSS officials, consultants, nurses' representatives or somebody else may have a change of mind. If that happens when the construction is proceeding, the added expense is unwarranted and significant.
    I know of a case in the building of a prison where the warders demanded changes after a prison extension had been completed. I am not against warders being consulted, any more than I am against nurses or consultants being consulted in matters of hospital building. I am simply saying that the consultation period should occur before the design details are drawn up and not after the work has started, which is apparently the norm, or even, as happens in exceptional cases, when the project has been completed.
    Mr. John Mark Taylor: Is not the conclusion which the hon. Member for Islington, South and Finsbury (Mr. Smith) was seeking that the further one gets from direct public ownership the more scrupulous would appear to be the regime? He compared the PSA with housing associations, which have private input, and said that the latter was the better-run regime. Are we not forced to the conclusion that we should move these activities away from public ownership?
    Mr. Chapman: My hon. Friend makes an important point, but I do not want to get involved in an ideological battle. On balance, I agree with my hon. Friend. Public authorities must take extra care to ensure cost-effectiveness and efficient management systems because they are spending taxpayers' money. When private money is being spent, there is a natural mechanism of efficiency because the company would go out of business if it did not order its business in an efficient way.
    Mr. David Alton: Would the hon. Gentleman extend the analogy in the public sector to a comparison between the PSA and local government? Does he agree that if local government overspent by 30 to 40 per cent., as have some of the contracts and companies listed in the PSA accounts, it would be subjected to massive financial penalties, including rate capping, yet the PSA has been able to get away with it scot-free?
    Mr. Chapman: The hon. Gentleman is correct. Indeed, all of those who have intervened in my remarks have underlined the importance of the PSA management getting a grip on the efficient execution of the building work entrusted to it.
    My hon. Friend the Member for Hornsey and Wood Green referred to Class XIV, Vote 2, and the whole question of in-house services and the use of outside consultants. The provision on this aspect has been vastly increased, by at least £39 million over last year, and probably two thirds of that is due to the increase in consultants' fees. I understand that that has occurred because, in giving outside consultants responsibility for certain jobs the fees in the early stage, before construction and completion, are relatively high.
    I am satisfied that that increase is due to the expanded programme of work, though it must include an increase in the proportion of design work — and, as I say, consultants' fees—partially offset by a steady reduction in the work of in-house staff. We should not be dogmatic about this, but I believe that there is a case for more work going to consultants outside rather than to in-house staff. I say that because, particularly with large contracts, there is greater opportunity, for example, to get the best architect for the type of building, and the fee can be negotiated or be at a standard rate.
    I hope, therefore, that more serious consideration will be given to comparing the cost of each contract so that we adopt the most effective way of using the resources, in-house or outside, that are available. Clearly on some work it is better to have the in-house specialists deal with the contract, whereas on others it is best to go out of house. I am told that at present the proportion is about 50:50. I would welcome a commitment on the part of the Government to go to a 60:40 split for design work, using 60 per cent. outside consultants. The key should be excellence of design, cost-effectiveness and value for money of design work.

    241
    The PSA is a large and important enterprise of Government. Much needs to be done, as our inquiries have underlined only too well. I hope that its leading personnnel and the new chief executive will take to heart the perhaps overdue but constructive criticisms of the Select Committee. I am happy to be associated with the motion of my hon. Friend the Member for Hornsey and Wood Green.
    8.26 pm
    Mr. David Alton: When the hon. Member for Chipping Barnet (Mr. Chapman), in his opening remarks, said that he intended to tell us something about leaks, I thought at first that he proposed to reveal inside information about some forthcoming story in The Guardian, or that he would provide some inside information about some of his hon. Friends on the wetter fringe of the Conservative party.
    Instead, the hon. Gentleman gave the House an accurate account of the inadequacies of the PSA accounts and mentioned some remedies, with which I wish to be associated. Those remedies would prevent the sort of problems that the Select Committee has highlighted.
    The hon. Member for Hornsey and Wood Green (Sir H. Rossi), the Chairman of the Select Committee, in a characteristic speech, gave an authoritative, competent and eloquent account of many of the problems that the PSA has been facing. He spoke of the concern, which will be shared by hon. Members on both sides of the House, about the need to get value for public money. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon), when referring to the Wardale report, spoke about some of the problems that have bedevilled the PSA, and he suggested some remedies that might be applied.
    The hon. Member for Hornsey and Wood Green, who put his remarks under three headings, referred to civil accommodation services, acquisitions and new works. I shall deal with new works later, but I should underline at the outset that the Select Committees, acting as watchdogs have been most valuable in putting forward suggestions and remedies.
    They have demonstrated that the Estimates which were submitted to the Environment Committee were a farrago of errors and deceit and that, without the Committee's careful scrutiny, the figures would have slipped through unchallenged. I am glad, therefore, that a proper assessment of the schemes was made, and I hope that, as a result of this debate and a possible reduction of £20 million in the funds made available to the PSA, change will be stimulated in the way in which that body is organised.
    I shall mention now the two reports that are before the House, beginning with the report of the Committee of Public Accounts, which looked at the Wardale report and at fraud in the PSA. There are many theories in politics about the motives. There are some who talk about the cock-up theory and others who talk about the conspiracy theory. It is clear that the corruption theory also has a part to play when one considers the way in which the PSA has been operating. Sir Geoffrey Wardale's report is a formidable indictment of the PSA, and I shall refer briefly to some of the comments that appear in it. Those who read the report of this debate should be aware of the gravity of the situation.
    Paragraph 5 deals with the extent of fraud in the PSA. Sir Geoffrey
    242
    "emphasised his view that known cases represented only the tip of the iceberg; and PSA accepted that the full extent of fraud could never be known and that they could not be confident that no major frauds were still going on."
    That is a matter of major public concern. It seems that what has been discovered so far is only a small fraction of the corruption that Sir Geoffrey Wardale believes is taking place in the PSA; that it extends a great deal further, and that much of it has yet to be uncovered.
    In paragraph 7, Sir Geoffrey talks about the remedies that are open to the PSA arid to the House. He says:
    "dishonesty should normally entail dismissal for staff and loss of orders for contractors".
    In paragraph 8 he reports that nearly 200 staff have been disciplined for irregularities. It appears that 66 members of staff have been dismissed — 21 in 1983. I ask the Minister to tell us rather more about those cases. Can he say in which schemes those staff were involved, what action was taken against those who were not dismissed, and whether he will consider further the way in which we deal with those who have their fingers in the till? The action that has been taken so far has not been effective enough to ensure that the problem is tackled adequately.
    Paragraph 11, which deals with delays, states:
    "We were also concerned about delays in taking action against dishonest contractors, and about the adequacy of the action itself."
    This is also a matter of great concern. If this really is only the tip of the iceberg and if there is much greater corruption in the PSA, why have there been delays? What are the Minister and the Government doing to ensure that there are no delays in future?
    Paragraph 12 of this excellent report, which directs itself to the uncommercial attitudes of the PSA, reads:
    "The Wardale team thought that PSA's attitude to contractors was uncommercial, and that firms should not be employed if they could not be relied upon to perform services in accordance with prescribed contractual terms."
    It is clear that some of those who have been running the PSA should not have been put in charge of running a whelk stall. I am worried that people of such low calibre should have been in charge of such vast sums of public money.
    Paragraph 13 deals with the lack of vigour that has been shown in trying to root out the corruption, which the right hon. Member for Ashton-under-Lyne described as an insidious process that undermines the respect and integrity with which public servants are normally regarded. Paragraph 13 states.
    "its lack of vigour in handling them when identified, indicated a degree of complacency which was reflected in its attitude towards dishonesty and fraud."
    That is unacceptable, as is the complacency that is mentioned in paragraph 14, where it is reported that
    "complacent attitudes were deep-rooted, widespread and existed at all levels of PSA management."
    It is clear that complacency and corruption are not confined to the man who simply pushes a wheelbarrow on a building site somewhere in the north of England. It exists at all levels of the PSA. It is an organisation that appears to be riddled with corruption.
    In paragraph 15 the report refers to arrogance and incompetence within the PS A. Sir Geoffrey commented:
    "First, he was concerned and surprised that PSA had rejected his proposal for a form of regional management inspection."
    If it rejected that recommendation, what is the Minister doing to ensure that the PSA is made to accept it? The paragraph goes on:
    "The second point concerned the DWOs'"—
    the direct works organisations—

    243
    "spot checks of transactions … which Sir Geoffrey considered were unsatisfactory in both conception and execution."
    What is being done to change that system?
    I refer the House to paragraph 19, which states:
    "It is plainly useless for PSA to set great store by checks which do not meet the proper objectives or are not carried out consistently well."
    In other words, the PSA has indulged in self-delusion about the solutions which it has introduced to try to tackle the problems. The solutions have clearly been inadequate. I should like to know what action the Minister is taking.
    In paragraph 21 the strongest possible indictment is levelled at the PSA. The report states:
    "Our enquiries have confirmed that an unsatisfactory state of affairs still exists in PSA. The very serious frauds which have come to light in recent years would be cause for concern in any organisation, but they are intolerable in a government department."
    Paragraph 23 adds:
    "we are not convinced that PSA's detailed proposals for action are sufficient."
    In other words, nothing has changed. It seems that everyone is at it. What someone cannot carry away, he drags behind him. It is clear that some members of the PSA would sell their own grandmothers. The place is riddled with incompetence, corruption, lethargy and laziness, and it is apparent that there is total disregard for the protection of public funds. The remedies that the PSA is considering introducing are entirely inadequate.
    I shall address the second part of my remarks to the evidence of the Select Committee on the Environment. I refer the House to page 11 of the evidence. Hon. Members will observe that when the witnesses from the PSA appeared before the Select Committee, I, along with other Members, questioned them about a number of schemes, but two especially—the Liverpool Crown court and the House of Commons heating scheme. Both projects provided examples of the problems to which I have been alluding. If local government operated in the same way as the PSA, councillors would be called up before the district auditor and surcharged. If local councils behaved in the same way as the PSA, they could expect to have the most punitive measures taken against them, including a considerable measure of rate capping.
    I put it to PSA witnesses that the Liverpool Crown court scheme had increased in cost by about 40 per cent. during the course of its construction and that the costs of the House of Commons heating scheme had increased by about 30 per cent. At page 12 of the evidence one witness from the PSA, Mr. Johnston, said:
    "The Liverpool courts are shown on page 72 at an original estimate of £37 million but a probable expenditure of £52 million."
    That is an extraordinary way to go about accounting. First, it is said that it will cost about £37 million to build the Crown court complex, and then a probable estimate of £52 million is submitted. If the target is not met, it can be covered up by a much greater figure. When it is said later in the evidence that it has cost only £43 million, that is regarded as some sort of triumph, despite the fact that originally the scheme was supposed to cost only £37 million. It is revealed that supply services — for example, furnishing and the like—were not included in the original estimates, but were included in the final figure, and that an adjustment to the contract had to be
    244
    made. Why are furnishings not included in the cost of a building? The idea of building a shell without including furnishings strikes me as crazy.
    I put it to Mr. Johnston, in question 48, that the cost of the Crown court started at £37 million and that the figure is now £43 million. I asked him whether that looked like being the final figure, and he replied:
    "The final figure is a firm one because we have agreed the final bill with the contractor."
    I was unhappy about the evidence that was given on the Liverpool Crown court and later on the Palace of Westminster heating modernisation scheme. I pressed for further information. The information appears on pages 40 and 41 in annexes B and C. Some new figures emerge in the cost of the Liverpool Crown court. The original estimate of the project in 1976 now appears as £21·5 million, not £37 million. Annex B lists how the increase occurred. There was a variation of price payments of £14·8 million—that sounds like confetti money. Next, the cost of fitted furniture had to be added to the bill, at a cost of more than £900,000.
    Justice is no better dispensed because of palatial surroundings. A figure of £900,000 to provide something along the lines of the Savoy lounge is totally unnecessary. The Crown court complex, which I visited, is a fine building, but it should not have cost as much as it has. If the original estimate was £21 million, why did it increase to £37 million, then to £43 million and eventually to £52 million?
    The story does not end even there, because paragraph 5 of annex B, giving the Supply Estimates figures, shows that the original estimate of £37 million and the current estimate of £52 million were both to increase further. Paragraph 6 states that there was a revised version because of the pressures placed on the PSA to do its sums again. I suspect that someone in the PSA should learn how to add up, or perhaps a calculator should be bought. The new final revised version of the original estimate was £50·3 million, and the revised version of the current estimate was £57·5 million. Having begun at £21·5 million in 1976, the final jackpot figure was £57·5 million—an increase of £36 million, or nearly three times as much as the original estimate.
    We can compare that with what would happen in local government. As most people know, during the past few weeks the Liverpool city council has been in conflict with the Government about the £30 million additional rate support grant for which it asked. Contrast that £30 million with the £36 million required to make up the difference between the original estimate for the Crown court project and the final estimate. The cavalier approach adopted by the PSA, whereby it treats money as though it were confetti, and zip go the millions, smacks more of squandermania than of any logical system of accounting. We began with a steamer and ended up with a Queen Mary.
    The same is true when we note the information in annex C about the Palace of Westminster heating system. Some might say that there is sufficient hot air in the building without improving the heating system. In 1978, the original cost of the modernisation project was put at £2·5 million. Paragraph 2 includes a figure for inflation—that is reasonable—and a figure of £850,000 for under-estimation and other causes. No one has given any indication of what those other causes and under-estimation are. Yet they involve a considerable sum. The final figures

    245
    are cited in paragraph 4. The first version of the original estimate is shown as £4·5 million and the current estimate is £5·8 million. The final revised version gives figures of £5·03 million for the original estimate and £6·7 million for the current estimate—an increase of 33 per cent. That is outrageous. We are throwing money around like a man with three arms. The PSA seems to have no idea how these figures have been arrived at. The evidence of witnesses was hopelessly inadequate. The Committee Chairman, the hon. Member for Hornsey and Wood Green, put it like this:
    "If you wanted to set out to confuse everybody as to what you were up to, you could not have gone about it in a better way."
    So say all of us. The hon. Member for Chipping Barnet was right when he described those figures as sheer "gobbledegook".
    That is not an adequate way to run our affairs or a proper way to deal with large sums of public money. The people who have been running the PSA should be dismissed. The Government should do that immediately. It is clear from the two reports we are considering that all is not right in the PSA. First, we have heard charge after charge of corruption. Secondly, we have heard charge after charge of sheer incompetence. That is why my name is added to this motion and why my right hon. and hon. Friends will support the motion to deduct £20 million from the Vote. I hope that the Government will act to ensure that a proper performance review and financial control mechanism are developed to ensure that money is not frittered away or wasted and I hope that they will implement the excellent recommendations of the Wardale report.
    8.45 pm
    Mr. Richard Alexander: I add my support to the remarks of my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi). I am a signatory to the motion that stands in his name. The discretionary limit of expenditure on what we call client departments of the PSA can now be doubled. I agree with my hon. Friend that that is a small figure of only £1,000. I should like to underline what my hon. Friend said about the conditions under which many of our DHSS officers have to live and operate.
    A few months ago, I visited the DHSS office in my constituency. The hard part of winter was just over, and I was appalled at the grim, tight, cramped, dingy conditions in which our civil servants must work. Sometimes I think that we under-estimate what we ask of our civil servants. I was especially appalled that during working hours male and female officers had to use an outside loo. I do not believe anyone in private business would be allowed to oblige their female and male staff to trudge through the snow to a brick loo. Admittedly, that loo is attached to the building, but it is outside the main building. Frankly, that is disgraceful. I support my hon. Friend the Member for Hornsey and Wood Green when he said that the appearance and atmosphere of some of our DHSS offices are deplorable.
    Mr. Chapman: Does my hon. Friend recognise the fact that, if a private employer offered those inadequate facilities to his employees, he would be in contravention of the Offices, Shops and Railways Premises Act 1963?
    Mr. Alexander: I am obliged to my hon. Friend. Had he allowed me to pursue my speech, I would have made that point. He has properly underlined that aspect.
    246
    The Select Committee was unhappy with the PSA's evidence and these Estimates. We had an unhappy afternoon, as I believe all hon. Members who served on the Committee would agree. Despite all the expertise at its command, the PSA had failed to notice certain enormous discrepancies. I shall repeat the figures, although I know that my hon. Friend the Member for Hornsey and Wood Green cited them. The figures are startling.
    Liverpool Crown court will cost 40 per cent. above estimate, the Palace of Westminster heating modernisation 30 per cent. above estimate, the Park Lane fourth special hospital 65 per cent. above estimate and Wymott prison 45 per cent. above estimate.
    If the Select Committee had not raised the matter no one at PSA would have bothered to check whether the figures being put out were correct. Indeed, when the Select Committee checked, the figures turned out to be wrong. In other words, the arithmetic was apparently not checked by the PSA and when it was checked by someone else it turned out to be wrong. One is bound to ask whether PSA figures are checked before they come out. If they were properly checked, the major discrepancies identified by the Committee could not have occurred. If it turns out that the figures are indeed checked within the PSA, I strongly recommend that the gentleman or lady concerned be transferred to a less expensive occupation.
    Equally, one is bound to ask whether anyone at the Treasury checked the figures that the Select Committee discussed that day. The House is entitled to know whether anyone checked those figures. If someone at the Treasury is supposed to have checked those figures, I suggest that that person, too, would be less expensively employed making tea for the rest of his or her professional life. Ten pages of the estimates presented to us contained significant howlers and had to be revised after we had gone through them.
    It was left to a Committee of politicians, assisted by their advisers, to spot instances where professional statisticians and accountants had boobed. That is highly unsatisfactory and gives us little confidence in the accuracy of the remaining estimates. I am in no position to make such allegations stick, but I must say that I regard the remaining figures with little confidence and I concur with all that my hon. Friend the Chairman of the Select Committee has said about the unhappy experience that we had in going through these highly unsatisfactory figures.
    8.52 pm
    Mr. Tam Dalyell: Those of us who are not on Select Committees owe a debt of gratitude to colleagues on both sides who carry out that work. Having served for five years under three Chairmen of the Public Accounts Committee — Lord Wilson, Lord Houghton and Lord Boyd-Carpenter — I know how much work, often unsung, is carried out by such Members.
    As my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) used to say, "Chacun à son goŭt," but my experience of the PSA in Scotland has been of very efficient people apparently doing a good management job. In the light of what has been said by some colleagues, I wish to make it clear that my experience as a constituency Member in Scotland has been very favourable to the PSA. In this context, I draw attention to question 2179, in which Sir Geoffrey Wardale said:

    247
    "It showed itself in people's attitudes almost without them knowing it. Although I would not like to give you the impression that everyone was tarred with the same brush, because of course there were people in the organisation we saw who were doing a good and efficient management job".
    I seem to have come across just such people and I should not like the message to go out from the House that everyone in PSA is tarred with the brush of inefficiency, let alone corruption. Some of us have very good experiences of the PSA and have found the people working there helpful and efficient.
    That being so, if I ask the Minister about certain aspects of the PSA's work I am not suggesting that there has been inefficiency, corruption or slapdash attitudes of any kind. Nevertheless, I am concerned about the estimates for certain projects.
    The first is a matter on which I have approached the Minister before in written questions. To what extent is the PSA and British money involved in the construction of a £26 million hospital at Lakenheath in Suffolk? I attended a political meeting at Bury St. Edmunds last week and was taken to Lakenheath. The Bury St. Edmunds Labour party was convinced that the hospital, which will be mostly underground, would cost £26 million and was to be constructed by the PSA. Perhaps the Minister can tell us more about this. Exactly what are the terms of the contract under which, rightly or wrongly, justifiably or not, this work is carried out for the Americans? Does the PSA take a percentage profit? How much of the cost of that hospital is borne by the British taxpayer and how much by the American Government? I do not think that the Minister is being deliberately evasive. Reticence about projects for the Americans seems to be standard practice and the Labour Government, too, were unwilling to reveal figures. Nevertheless, we are entitled to know how much the British taxpayer is paying for the hospital at Lakenheath. Will the Minister give us that figure?
    Secondly — again I do not allege incompetence — I should like to know more about the PSA's role in the building of the airport in the Falkland Islands known in common parlance as the Margaret Thatcher international airport. Is the £215 million estimate to be adhered to? What is the truth about the 6,600 tonnes of aggregate and rock mined near Bristol and Oxford which have had to be taken from the northern hemisphere to the southern hemisphere because the tillite and quartzite mined in the Falklands was too full of impurities, clay and sand having integrated themselves to such an extent that the apron would not be smooth and Tristars would not be able to land? Was the PSA in any way responsible for the original information given to the Laing Amey Mowlem consortium that the rock and aggregate to be found in the Falklands would not be suitable? What tests were done? What extra costs—
    Mr. Deputy Speaker (Mr. Harold Walker): Order. I am sorry to interrupt the hon. Gentleman, but it is difficult to see anything in the motion which would cover the matter that he now raises. If he can tell us under which subhead it arises, that would be most helpful.
    Mr. Dalyell: I thought that we were talking about the PAC's systems of financial control. That is also highly relevant to the next topic on which I wish to ask the Minister questions.
    Mr. Deputy Speaker: Order. The motion before the House relates to Class XIV, Votes 1 and 2 of the Estimates.
    Mr. Dalyell: Are we not discussing the general issue of the financial control of PSA projects, because in that case it is highly relevant to ask how——
    Mr. Deputy Speaker: Order. We are not discussing a general question but the motion on the Order Paper and I am finding it extremely difficult to relate the point that the hon. Gentleman is making to the motion.
    Mr. Jack Straw: On a point of order, Mr. Deputy Speaker. Perhaps I might offer some advice. Page 5400 of the Order Paper makes it clear that we are also discussing the reports of the Environment Select Committeee and of the Committe of Public Accounts. Therefore, the discussion necessarily goes wider than the relevant Votes. My hon. Friend seemed to me to be discussing financial control in the context of those reports.
    Mr. Deputy Speaker: If the hon. Gentleman draws to my attention the parts of those reports which refer to the matters that he is discussing, I shall accept that he is in order, but I find it difficult to find such references.
    Mr. Dalyell: I thought that we were discussing the general issue of financial control. However, I promised the right hon. Member for Worthing (Mr. Higgins) that I should sit down at 9 pm. I think that it is in order for me to ask the Minister how the £133,000 Brewster houses have got to such an expense and how it is that 26 of them are still unoccupied. Surely that is a matter of financial control. What is the PSA's reaction to the situation imposed by the dock strike and the fact that supplies in the form of the Orepesa, which is shortly to leave Avonmouth, are not likely to get through? Will that create problems for the PSA? I could go into the issue of the squalid conditions but I shall merely ask, is the PSA in any way involved in the allegations of the squalid conditions in the building of that airport and in the condition of Ascension Island? I gave my word to the right hon. Member for Worthing that I should not go over time, so I shall leave it at that.
    9.1 pm
    Mr. Terence Higgins: The hon. Member for Linlithgow (Mr. Dalyell) has done even better than he said and I do not wish to detain the House too long.
    It is worth observing that, at the conclusion of this debate, we shall have completed the first round of Estimates days under the new procedures. In the previous Parliament, we had just one Estimates day when we debated the Stationery Office and investment in the Turks and Caicos Islands. Since the general election, we have had all three debates that were promised to the House by the Government. We had some satisfactory debates on Department of Health and Social Security redundancy arrangements and National Coal Board allowances for subsidence. Only a few days ago we had a further set of debates on prison education and the vexed issue of dog licences, on which at long last we got some action. Whether hon. Members agree that the action was the right one is perhaps a matter for consideration.
    After today's debates on Grenada and the Property Services Agency, it seems that the new system is beginning to run satisfactorily. It reflects what people at school have always been told—that Parliament controls the Executive by controlling the purse strings. Only in the

    249
    past couple of years have we finally begun to re-exert that historic role. That is important and it is possible only if we have the type of hard work that has been put in by the Select Committees, the reports on which we are debating. My hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) and his Committee should be congratulated on their work as the report reveals some important points.
    It should be stressed that it is much easier for Select Committees to pick up what has gone wrong when they scrutinise a Supplementary Estimate as by definition, in those circumstances, something unusual has happened. That is much easier than scrutinising the main Estimates. The items that were brought to the attention of the Liaison Committee show a wide range of interests in the scrutiny of public expenditure arrangements. One of the weaknesses that have emerged following the establishment of the departmentally related Select Committees is the short time that is given to debate reports on the Floor of the House. On financial arrangements, we have a specific allocation of time, albeit only three days. I am glad that Committees such as that chaired by my hon. Friend the Member for Hornsey and Wood Green have taken the opportunity to raise broader issues in the context of financial arrangements. That gives us considerable scope as many of the issues with which Select Committees are concerned involve money.
    I wish to refer briefly and specifically to some of the other points that have been made, because I know that the hon. Member for Blackburn (Mr. Straw) wants to intervene. The reports that we are now considering give considerable cause for concern. As the hon. Member for Linlithgow said, we must not exaggerate the extent to which they give cause for concern, but at least three aspects ought to be considered carefully.
    The report clearly shows that in the presentation of the Estimates there were some simple, straightforward arithmetical errors. That is not satisfactory. Even if the Department could not get its arithmetic right, the Treasury most certainly should have picked up such a mistake. While we are fulfilling our watchdog function as the guardian of the public purse and can point out when such errors need to be corrected, it is not good enough that such errors should occur.
    Until the new procedure was introduced, this kind of thing was not picked up, except in particular cases by the Public Accounts Committee. In that context, it is pleasing that the work of the Departmentally-related Select Committees is becoming satisfactorily integrated with the work of the PAC under the expert and excellent chairmanship of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). That far from ineffective combination gives us more scope.
    The disadvantage of the usual annual debate on the PAC was always that it was related to a huge range of subjects on which the Committee had done an immense amount of work. However, it was not always possible to pin down and, if necessary, vote on a particular issue.
    The report that we are now discussing contains some interesting statistics. On page V of the third report from the Environment Committee, we are told that maintenance and running costs have increased by 18 per cent. over 1983–84. That is a substantial increase which raises the question of priorities. At present I do not think that we have got right the allocation of priorities between different items of public expenditure.
    250
    I accept that broad issues are involved, where huge sums of money are allocated to defence, housing and so on. However, on more specific issues we must question why maintenance and running costs have increased 18 per cent. We must look at some of the items of expenditure, where quite substantial sums have been expended by the PSA. Attention has been drawn to a number of those individual items.
    Page VIII of the third report, states:
    "The most noticeable feature is a £41 million increase in general administration expenses. This stems mainly from a … (30 per cent.)"
    increase
    "in consultants' fees and a £4·5 million (31 per cent.) increase in travel and subsistence."
    These are substantial figures against a background in which the House has voted on difficult policy decisions to curtail the provision of NHS spectacles to pensioners at a saving of £14 million. We must therefore consider whether our mechanism for assessing priorities — say, between £41 million for an increase in general administration expenses in the PSA as against a £14 million cut for pensioners' spectacles—is right.
    These broad issues are brought out by the report. However, I wish to comment on a couple of more detailed issues. I refer in particular to the revisions in tables 1 and 2, which were eventually provided by the PSA in the light of the inquiry to which the Select Committee referred. It says:
    "When PSA was scrutinising the initial draft of the 1984–85 Estimates it concluded that some of the proposed provisions in that financial year were too large because the work was not likely to proceed as fast as had previously been forecast. A number of the provisions for 1984–85 were therefore reduced. There should have been a corresponding increase in the amount shown as needing to be spent in later years to finish the work but due to an oversight this adjustment was not made."
    I could read on, but hon. Members have the report in front of them. It is not good enough that the PSA is apparently incapable of getting the figures right and not only comes to the Select Committee in the first instance and gives inadequate evidence, but has to provide a revised Estimate and an explanation of things that should have been put right in the first place. Again, the House is fulfilling an important operation through it watchdog function.
    Finally, I come to the point made by the right hon. Member for Ashton-under-Lyne about the conclusions of the Wardale report, which are important. Paragraph 21 of the report says:
    "Our enquiries have confirmed an unsatisfactory state of affairs still exists in the PSA."
    It goes on to refer to the various frauds. This country has a deserved reputation for having a system of financial accountability unmatched anywhere in the world. I agree with the hon. Member for Liverpool, Mossley Hill (Mr. Alton) that it would be wrong sensationally to exaggerate the points that have rightly been brought to the attention of the House. Unless the House fulfils its proper function, we shall not maintain our standards, and we should do everything possible to ensure that they continue in the future. Therefore, it has been a worthwhile exercise to debate this matter, through the motion tabled by my right hon. Friend the Member for Hornsey and Wood Green. I hope that it will become a permanent and useful feature of our procedures.
    9.12 pm
    Mr. Jack Straw: I commend the speech of the right hon. Member for Worthing (Mr. Higgins). I

    251
    pay tribute to the hon. Member for Hornsey and Wood Green (Sir H. Rossi) and to my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), the Chairman of the Public Accounts Committee, and its members. As the right hon. Member for Worthing said, the approval and granting of Supply is central to the proper role of the House. If Parliament is to re-exert its proper authority over the Executive, the machinery for scrutinising and granting Supply has to be improved and made more effective. The attendance and interest shown in these debates by hon. Members on both sides of the House must increase. We are slowly moving towards a re-assertion of Parliament's historic role, and I hope that I am as enthusiastic in support of that move if and when I ever sit on the Treasury Bench as I am now. I hope that if I am not, my words will be held against me.
    Some changes are still needed. In particular, it is high time that the accounting conventions of the Supply Estimates were brought into line with those of the public expenditure survey committee and the national accounts. We have three sets of conventions and therefore three sets of numbers, which makes comparison difficult. I hope that there will come a time when in these debates dealing with specific aspects of Supply, we are able to discuss not only accounting questions but the economic impact of the Supply with which we are concerned.
    For example, through its orders, the PSA has an important impact on the building industry, and through that on the economy as a whole. When its orders are cut, the building industry suffers, as we shall discover tomorrow when the Government announce cuts in capital expenditure on local authorities through the moratorium that they are planning. That will have a serious effect not only on local authorities but on the building industry as a whole.
    Before coming to the main part of my remarks, I shall bring into the debate the question raised by my hon. Friend the Member for Linlithgow (Mr. Dalyell). With respect, we are discussing financial controls on the PSA, which seem to be germane to both of the reports, in relation to the hospital at Lakenheath and to the airport on the Falklands and the amount of aggregates that had to be imported to the Falklands from this country. He wanted to know whether the additional costs had been incurred as a result of the failure of the financial controls that we are discussing here, or as a result of political decisions.
    The PSA is a large organisation by any standards. Any of us who has ever had any dealings with maintenance organisations — I know that the hon. Member for Huntingdon (Mr. Major) and the Under-Secretary, who are adorning the Front Bench, had such dealings when they were councillors in Lambeth, as I did when I was a councillor in Islington—knows that there are problems of management and control inherent in the nature of the work. We need think only of the problems that all of us have when dealing with small builders who provide maintenance in our homes. Some of us have experienced those problems and we can imagine their magnification and the difficulties that are caused. These problems are not confined to the public sector. Every large firm finds that its maintenance operation is difficult to control. It is not a neat and tidy area of paper administration.
    The difficulties inherent in the nature of the work are made more difficult because large sums of money are
    252
    involved. Transfers take place between the public sector and individuals in the private sector. Some individuals make large sums of money for themselves as a result of these transfers. The opportunities and incentives for corruption are greater than in almost any other area of public service.
    We must also recognise the reality that the culture of the private building industry is one in which a blind eye is turned to financial practices that would be wholly unacceptable in other industries, involving back-handers or "drinks", as I believe they are called in the trade. That leads to tax evasion and petty corruption and, in some cases, corruption on a grand scale is endemic. The PSA has to work against that background. I echo the remarks of many hon. Members this evening, from my not inconsiderable experience, that the majority of staff in the PSA have always acted in the highest traditions of public service and have been efficient and wholly incorruptible. If we are to ensure that the House roots out corruption efficiently we should do so in a way that does not wreck the service and morale of the PSA, that has served the public well for many years.
    There are obvious and serious shortcomings in the administration of the PSA, which are well documented in the reports. That is so particularly at the crucial level of the delivery of the service, at middle management level — the regional and district offices from which the services are delivered. That level forms the interface, as it were, between the public service and private contractors. The opportunity and temptation for petty corruption and inefficiency is at its greatest there.
    I was in a position to observe at least one aspect of the management of the PSA when I acted as adviser to my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) when he was Secretary of State for the Environment in 1976–77. I also worked on the staff of "World in Action" when we made a film of the book by Leslie Chapman, "Your Disobedient Servant". That disaffected former civil servant made serious allegations of inefficiency, rather than corruption, against the PSA, his former employer. From both those standpoints, I believe that the complacency in senior and middle management that was identified by Wardale and the Public Accounts Committee was reflected in the organisation. It is a matter of great regret that, despite the clear allegations and warnings then, the organisation's response was continually defensive, and it has taken the enormous force of these two highly critical reports to enable serious change.
    In the brief time available to me I shall direct a few remarks at this Government, as they specifically bear some responsibility for the PSA's present difficulties. There are criticisms that I could make of the previous Labour Administration, and of the Conservative Administration of which the right hon. Member for Worthing was a member, and of their respective activities between 1970 and 1979. Neither Administration got things exactly right in deciding to hive off the PSA as a separate agency or in the way that they administered it. But both of those Administrations were at least fired by one concern alone—to ensure the most efficient use of resources by an organisation that, by definition, must be in the public sector, as long as there is such a sector.
    However, I am afraid that the same cannot be said about this Government. Their concern for efficiency in the public sector has become mixed up with an ideological

    253
    vendetta against that sector. Thus their judgment as to what management decisions to take in relation to the PSA has been tainted by their instinctive response to any problem in the public sector, which is to privatise. The result, as I shall explain, has been demoralisation of the service, a reduction in efficiency and, consequently, a climate in which corruption and collusion of the type mentioned could increase.
    There is no better illustration of that than the sorry saga of the appointment and subsequent service and dismissal of Mr. Montague Alfred as chief executive of the PSA. That matter is referred to in some detail in the PAC's report.
    Mr. John Mark Taylor: The hon. Gentleman spoke about the possibility of transferring resources, property and activities from the public to the private sector. He purported to give us a universal rule that in such circumstances staff became demoralised and so began to under-perform. But will he not accept that in the important cases of British Airways and British Telecom the threat of privatisation has worked wonders in making those organisations begin to work extremely efficiently and well?
    Mr. Straw: With your ever-watchful eye on order, Mr. Deputy Speaker, I am sure you would not wish me to extend my remarks to a debate about privatisation. Time will tell whether British Airways will benefit from privatisation and telecommunications will be debated later tonight.
    I am making a specific point about the management decisions made by this Government about the PSA. My criticism of the Government is not that they have judged that it would be sensible to bring in someone from outside but that their Pavlovian reaction is to believe that only people from the private sector have the management skills necessary to run such a large organisation. They thus denigrate the skills of those in that sector with rather disastrous and, indeed, palpable results.
    Mr. Alfred was appointed on 1 January 1982 by the then Secretary of State for the Environment, the present Secretary of State for Defence. A great song and dance was made about it, and it was said that his appointment and salary level, and the arrangements made in relation to that, although exceptional, were — to quote from the deposited paper—
    "considered necessary to attract the right man from the private sector with skills and experience not available within the Civil Service."
    It was an insult to people of Sir Geoffrey Wardale's capability and to his former colleagues to say that they did not have the experience and skill necessary to run the PSA. Although that appointment was made by the former Secretary of State, it was confirmed by the present Secretary of State on 5 October 1983. In a press notice he said:
    "We have appointed a Chief Executive from the private sector who is bringing a new perspective to the Agency's work."
    He can say that again. The new Chief Executive indeed brought a new perspective.
    The Times of 14 March 1984 states:
    "His departure came as no surprise. If you alienate each and every audience you are playing to, your immediate colleagues, the other permanent secretaries, the Cabinet Office, and then the Prime Minister, it is bound to happen".
    Within 15 months Mr. Alfred was summarily sacked by the Secretary of State, who explained his reasons on 13
    254
    March. Mr. Alfred's departure was directly connected with the questioning of my right hon. Friend the Member for Ashton-under-Lyne and other members of the PAC. It is of importance to the House that it is now possible through the PAC to hold a temporary public servant to account and, in some circumstances, to have his employment terminated.
    He was fired not because he introduced new ideas and reorganised the operation to make it more efficient, but because he seemed to be infected with the complacency of the private sector and his answers conflicted with those given by officials from the Department of the Environment. I hope that his experience and service at the DOE is a lesson to the Prime Minister and the Secretary of State for the Environment that bringing people in from outside—Mr. Alfred had worked for the British Printing Corporation, and, given its record, that should have been warning enough—is not necessarily the best way to get efficiency from the service.
    My right hon. Friend the Member for Ashton-under-Lyne referred to a climate of collusion and an acceptance of corruption. The Government should recognise that they bear responsibility for lowering standards. Mr. Alfred was paid £50,000 a year—£20,000 a year more than if he had been appointed from the Civil Service. Secondly, the payment for Mr. Alfred's services, £50,000 per annum, was not made to him as an individual. The deposited paper states:
    "It is made to a private company, Masa Management Services Limited, who provide Mr. Alfred's services, and are responsible for his superannuation and national insurance provision."
    Value added tax was paid on top of that £50,000.
    The Government were colluding with Mr. Alfred in a mucky, greedy scheme of tax avoidance. A man who was already being paid £50,000 thought to save a few more pounds by setting up a management services company. The Government are supposed to be the keepers of high standards of public service, yet they felt it appropriate to pay him £20,000 more than a civil servant would have been paid and to collude with a scheme which was at best tax avoidance and whose probity could have been questioned by the Inland Revenue. The Government must recognise that, by lowering standards, they have contributed to that climate.
    The hon. Member for Liverpool, Mossley Hill (Mr. Alton) referred to the Government's double standards. I made a similar point in the House last week. There is case after case of ineffeciency for which Ministers are responsible. Had that taken place in local government, and had those Ministers been councillors, they would have been surcharged, disqualified and, in all probability, bankrupted. That would have happened in respect of some of the instances documented in the PAC report and the report of the Select Committee. It would also have been the case in respect of another matter which was the subject of inquiry by the PAC relating to the Hamilton college of education, where it turned out that the Under-Secretary of State for Trade and Industry, who was then a junior Minister in the Scottish Office, wasted about £4 million by his decision to sell that college of education to the private sector at an inopportune moment. If he had been a councillor, he would have been hounded by Ministers, surcharged and disqualified. ft is time that the Government adopted a single standard for financial probity.
    My last point picks up the general issue of ministerial accountability and whether, after 12 years, the experiment

    255
    of hiving off the PSA into the demi-monde of not being a separate corporation with relatively clear lines of communication but not the responsibility of one Ministry, has been a success. I doubt it. I believe that it was sensible to establish the PSA as a separate trading fund and that because of the nature of the PSA's work it should continue. I make no criticism of the Under-Secretary. By having the PSA as a separate agency, but not a separate national corporation—it could not be that—we have the worst of all possible worlds. The Secretary of State is responsible for it, but he is also responsible for a vast Department.
    If the experience of the past five years is anything like the five years of the previous Labour Government that I watched, the truth is that no Secretary of State, however hard-working, will be able to devote his full energies and attention to the PSA. He will be happiest when it is causing no ripples. Whoever he is, his political career will be dependent upon much bigger political issues — what happens in local government, housing and planning — than what happens in the PSA. As a result, day-to-day responsibility for the PSA is delegated to an Under-Secretary who, however good, has other responsibilities and is not identified as the Minister whose reputation stands or falls with the reputation of that agency.
    I believe that we should reconsider appointing a Minister responsible for the PSA, with the PSA as a separate Department. It would entail no internal reorganisation of the PSA. If it is said that would make the Department too small, I remind the Secretary of State that there are other examples — the Office of Arts and Libraries — where small Departments have separate Ministers, and that greatly enhances accountability to the House. The debate is devoted to improving the accountability of the agency to the House and, through it, to the country.
    9.33 pm
    The Parliamentary Under-Secretary of State for the Environment (Sir George Young): This debate has arisen from the Environment Committee report on the PSA's 1984–85 Estimates. I intend, therefore, to deal first with the comments and recommendations in the report, concentrating upon the points that I know caused anxiety to members of the Committee and those hon. Members who have spoken this evening. In particular, I should like to mention the presentation of the new works programme and how we shall do that more comprehensibly. I hope to reassure the House of the PSA's ability to spend this year's provision. If I can do that, I hope to be able to persuade the House that we can spend the £20 million in question.
    I will also, of course, deal as best I can with the PAC report on fraud in the PSA and the Wardale report, and outline the action Ministers and senior staff are taking to bring about the change of attitude and the tighter management control of the PSA which is needed. As the PAC report was published only last Thursday, this will be an initial response. I hope to deal in writing with some of the questions that were raised during the debate if I do not have time to deal with them in my remarks.
    The Environment Committee took evidence on a number of aspects of the PSA's expenditure, and I very much welcome the interest that it has shown under the chairmanship of my hon. Friend the Member for Hornsey
    256
    and Wood Green (Sir H. Rossi), and its willingness to look into the details of the PSA's work and the effort that it has put into the examination of witnesses, its report, and its helpful recommendations.
    I deal first with the level of expenditure on maintenance. As PSA witnesses told the Committee, the Government are concerned about the low level of maintenance spending on the civil estate. This is the familiar problem of constraints on public expenditure which has been with us for many years, starting in December 1976, when I believe the hon. Member for Blackburn (Mr. Straw) was helping the Department, and, indeed, mentioned in two White Papers published by the last Labour Government.
    Fortunately, when the Government reviewed their public expenditure plans last year, they were able to allocate extra money for maintenance amounting to about £18 million in 1984–85, with slightly higher amounts in subsequent years.
    However, we have not been able to get back to the level of spending that we would like to see, and I acknowledge that there is a big problem still to be tackled of the backlog of work which has been building up over the years. But at least a start has now been made. In the expectation that we can continue to make progress on this front, the PSA is developing a three-year forward look at maintenance requirements, the first version of which was produced early this year and quoted to the Committee. This will be further refined to incorporate the work that the PSA is doing to set priorities, which my hon. Friend the Member for Hornsey and Wood Green rightly mentioned, and to measure standards.
    Dealing next with the client departments role, which several hon. Members mentioned, we made a significant change in financial responsibilities in 1983–84, by asking the PSA to charge other Departments for their occupation of the civil estate. As part of this, they were given complete responsibility for small routine works which they now order themselves on local contractors instead of going through the PSA. This arrangement covers works costing less than £1,000—about a quarter of all the spending on maintenance work on the PSA's civil estate. The reason why we have stopped at this level for the moment is that, whilst it is relatively easy to get a simple quotation from a builder and place an order for a small job without bureaucracy and documentation, this ceases to be the case as the jobs get bigger and more time and effort and technical expertise is required to handle them. However, I note that the Committee has proposed that client departments should have more power to decide what work should be done in local offices. We have already doubled the powers of Departments since 1983–84; this was increased to £1,000 in April this year.
    We are also studying other ways in which the system might be developed in the light of experience. I can tell the House that we will certainly be looking at the idea of increasing the role of client Departments in a way which would allow them to decide how much of their own money should be spent on improving conditions in local offices. As a former DHSS Minister, I end on what my hon. Friend the Member for Hornsey and Wood Green said about the conditions of some local offices. We will look at this when we assess our priorities for next year.
    I would like, before considering the actual expenditure provisions in the Estimates, to deal with the details of individual projects shown in the tables attached to the

    257
    Estimates. Until 1983–84, these tables merely showed how the total provision was broken down between the major new construction projects and other works concerned, together with figures for past and future expenditure at difference prices.
    Obviously there is a need to monitor the handling of these projects, and in particular to direct scrutiny to any increases in their cost which occur during their life. In 1983–84, following investigations by the Procedure (Finance) Committee, the Estimates tables were altered so that the Select Committees dealing with particular Departments, in our case the Environment Committee, could scrutinise the projects. The tables now show both the original estimated cost of projects and past, current and future expenditure, all at current Estimate prices, the objective being to show the real changes in cost of projects by putting out the figures on a common price basis.
    As has been said in the debate, I am afraid that the PSA did not manage to get the new procedure off the ground satisfactorily, and I deeply regret the fact that, as a result, the figures printed were confusing and severely handicapped and retarded the work of the Committee in examining the Estimates. The basic problem lay in the treatment of inflation.
    The PSA's method of correcting for price changes since the original estimate of cost was prepared — based on changes in tender prices—gave a substantially different answer in practice from the method used to bring past expenditure on projects up to Estimates prices, which was an essential part of establishing the current estimate of cost at this price basis. The comparisons in the original Estimates tables were, therefore, defective.
    I do not want to take the House through the technical details of the revaluation, particularly as the figures were also affected by some other distortions that crept into the process. They have been set out by the agency in a note which is reproduced as an appendix to the Environment Committee's report supplementing the oral evidence given to the Committee on 14 May.
    The officials concerned have already offered their apologies, to which I add my own, for the fact that the figures originally put before Parliament were unsatisfactory. I hope that we have now put it right and will not have that difficulty again.
    I should, however, stress, since this is important for what is said about the Vote as a whole, that these problems related to the comparison between original and current estimates of total cost and not to the forecasts of what will be spent in 1984–85. Indeed, as was explained to the Committee, one of the sources of the misleading totals was action taken by PSA to reduce the 1984–85 figures to fully realistic levels before the Estimates were presented to Parliament.
    We are considering with the Treasury the scope for improving the information shown in the tables. However, since it follows a standard format for such tables across all Departments' Estimates, and it would in any case be difficult to give in these tables enough information to provide a complete analysis of changes in cost, it may be more satisfactory to supply the Committee instead with a supplementary note. We are anxious to be as helpful as possible on this score and to make the Committee's task of looking at the Estimates as easy as we can and, with that in mind, we suggested to the Committee that PSA officials should explore this suggestion with their advisers.
    258
    I understand that those discussions will start this Thursday, and I assure the House that I shall take a close personal interest in them.
    The Committee recommended that the 1984–85 provision should be reduced by £20 million in respect of major new works, because it did not believe that expenditure on them could rise to £172 million in that year, in large part because this would represent a 50 per cent. increase on the outturn in 1983–84. Of course, a Government committed to reducing public expenditure have to take extremely seriously the suggestion by Environment Committee that £20 million might be deducted from estimates.
    Let me explain what the £172 million is spent on. Broadly speaking, £62 million is for offices and general accommodation suitable for a miscellany of Government Departments; the balance of £110 million is to meet the specialised requirements of a variety of civil departments, listed in the Estimates.
    The first claim on the funds is to allow completion or continuation of work already started. Of the £172 million, £152 million is for projects that are in progress. Hon. Members will have seen for themselves the work that is going on at Richmond terrace and in Broad Sanctuary for the international conference centre. The balance of £20 million is for projects that are due to start in the rest of the year. The implications of a £20 million cut are therefore clear; no new starts could be accepted for the remainder of this financial year.
    Mr. Chapman: Is not my hon. Friend forgetting that the outturn expenditure last year was almost £20 million less than the forecast? Surely the Committee was making the point that this year's forecast might be an overestimate?
    Sir George Young: I hope to come to that valid point. I have asked my officials for the latest information on spending in the current year to satisfy myself on the point made by my hon. Friend, which is whether the £152 million is still a fully realistic assessment. They have confirmed that it is, and expenditure in the first three months of this year is well over 50 per cent. higher than in the first three months of 1983–84.
    Faced with the reduction that is suggested, I should have no option but to place no more new contracts. The consequences of such a decision would be grave. For example, the programme to computerise PAYE, which the Government expect will bring major savings in the administration of taxation, would have to be deferred. Two computer centres and one training centre, which are due to start later this year, would have to be put off.
    The court building programme for the Lord Chancellor's department would be delayed. Twelve new projects to provide 53 courtrooms are due to start in the remainder of the current year, but they would be postponed and the backlog of outstanding cases for trial, and difficult working conditions for all involved, would continue to arise.
    The prison building programme would be affected. My right hon. and learned Friend the Home Secretary has declared the Government's intention of starting two new prisons a year. A cut of £20 million on the major works subhead would mean that Garth and Swaleside prison—due to start this year—would have to be deferred.

    259
    Overcrowding in existing prisons, from which prison officers suffer as much as prisoners, would thus be perpetuated.
    That illustrates the effects on the main programmes, but there are many individual schemes of importance to the efficient operation of government that would also be affected. Many rationalisation measures included in the new starts would bring savings in the operation of the civil estate as a whole. All that would, of course, have a damaging effect on the construction industry.
    In practice, it is doubtful if it would be safe to rely entirely on abandoning all the new starts as a small increase in spending on works in progress due, for example, to contractors making faster progress than expected, would then jeopardise the cash limit. For prudence, it would be desirable in addition to provide some safety margin by slowing down some work in progress. Hon. Members who are familiar with the construction process will know that any attempt to slow down the rate of progress on work where there are existing commitments would lead to claims from contractors that might well outweigh any saving in the present year. I have already mentioned two examples of continuing work, the international conference centre and the Richmond yard project in Whitehall.
    Those, with the major office building in Glasgow to take the Ministry of Defence, require in total £27 million in the current year. Slowing down or stopping any of those would have a very major impact on the Government's programmes. I could not commend any such action to the House.
    In response to what my hon. Friend for Chipping Barnet (Mr. Chapman) said, there are good reasons for believing that the planned spend this year of £172 million is both realistic and attainable. As I have already explained, there is a very high proportion of expenditure on work in progress where the risk of failing to spend is considerably reduced compared with new starts. Secondly, allowance has already been made for some slippage in drawing up the details of the programme. In other words, if every project spent according to the expectations of the project manager, there would be an overspend. Nor should there be any argument about inherent limitations of the PSA capacity. All the works in question are being carried out by private contractors, and many of them are designed by private consultants.
    I direct the attention of the House to the possible wider implications of a cut in this subhead for other elements of the Vote—which include maintenance, rents and other services that go towards the provision of accommodation.
    The Committee has rightly recognised the need for more expenditure on maintenance, but a cut in major new works, which could not be fully met from that source, would inevitably mean a cut in maintenance. If, contrary to present expectations, some leeway were to emerge on new works for reasons outside the PSA's control, there would be every reason to direct the balance towards maintenance.
    I hope that my hon. Friend and other hon. Members, having weighed the serious implications that a £20 million cut in provision would have for urgent and important programmes of work, will accept that the PSA should be allowed the money it needs to fulfil its services to
    260
    Government as a whole. I will be keeping the position under personal review during the remainder of the year in the light of monthly reports on the progress of expenditure.
    Finally, on the report of the Environment Committee, I come to the PSA's administration costs, mentioned by my right hon. Friend the Member for Worthing (Mr. Higgins). The Committee's report draws attention to the design staff savings of 39 per cent. made since 1979, and to the fact that we are moving from a position where only one third of the major new works designs was done by consultants to one where the proportion has increased to about 50 per cent. already and will approach two thirds. The report very properly asks that an assessment be made of the relative costs of design methods, and I can say that the need to monitor these costs on a continuing basis is accepted, as is the need to ensure that the agency's practice is managed in the most economic way.
    Studies have been made of relative costs in past years, and the report of a working party on design costs was placed in the Library in July 1983. Naturally, we now have to assess what they will be in future at a time when there are considerable changes in circumstances in prospect, including the abandonment by the consultants of mandatory fee scales. It is also essential to ensure that the quality of work done is reflected in the assessment and not just its price, and the PSA practice in choosing between consultants will be based on getting the best overall results.
    The Environment Committee's examination was the first it has made of the PSA's Estimates, and I am afraid that the difficulty over the tables, for which I have accepted entire responsibility, has meant that it was rather heavy going. I hope, however, that this will be the beginning of a more fruitful relationship in the future, and I assure the House that the PSA, for its part, will work towards that end.
    In coming to the PAC report on fraud, I endorse what the hon. Member for Blackburn said in commending the work of his right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and his Committee on the report that is before us. We shall be studying carefully all 12 recommendations and will be putting in a full reply in a Treasury minute this autumn. Ministers are determined to see that the highest possible standards of conduct of our staff, and fair dealings by our suppliers, are enforced.
    Indeed, the PAC report welcomes the assurances which we have given that we need to root out corruption and that pressing forward action on the Wardale recommendations is a top priority task. I reaffirm that that remains the policy and intention of all three DOE Ministers who look after the PSA, and of the top PSA management.
    As part of our actions on fraud, not only is every case notified immediately to Ministers, but we have established new procedures for reporting cases of theft, fraud and irregularity, and a central record of all cases involving staff or contractors, or both, has been set up. There is now a single focal point covering industrial and non-industrial staff and contractors.
    The pooling of information will assist higher management to ensure that any developing patterns of irregularity are recognised from the outset, that vigorous and even-handed justice is meted out to offenders — whether staff or contractors, or both — and that the lessons learned from one case are applied throughout the system.

    261
    In an organisation as large as the PSA — spending over £0·5 billion a year on maintenance — with a widespread and complex net of relations with the construction industry, irregularity can take many forms. The cases which we put to Sir Geoffrey Wardale—the PSA commissioned the Wardale report, and then published it; there are few organisations which would do that—and on which the PAC has reported, pinpointed certain danger areas, for example, awarding jobbing contracts with personal interests in mind, the authorisation of the payment of bills to jobbers by the person who ordered the work in the first place without any check by a second person, and the payment of bills on measured term contracts without proper measurement of the work.
    We have taken specific action in these and similar cases — for example, making it clear that patronage of any sort will not be tolerated, requiring second signatures for the authorisation of payment in jobbing cases and instituting better arrangements for checking measurement on measured term contracts. But the most effective way in which we can ensure that we stop irregularities from taking place, or catch them when they do, is, first, by having keen and effective managers operating sensible and tight procedures; secondly, by being tough with any contracor or consultant who tries to defraud us in any way; and thirdly, by disciplining severely any of our staff who are implicated in them.
    Mr. Eddie Loyden: If there is to be a reduction in so-called bureaucracy, how will the degree of control necessary to eliminate the practices which the Minister has outlined take place if there is not control of a bureaucratic nature?
    Sir George Young: The hon. Gentleman makes a valid point. When it comes to the integrity of the public service, we cannot afford the sort of economies that might be accepted in the private sector. My right hon. Friend has made it clear that we are prepared to pay costs which would not be accepted in the private sector so as to set higher standards in the public sector.
    Not only will the actions I have outlined help us control irregularities, but they tie in with the wider sphere of the Wardale recommendations which cover financial controls and value for money recommendations generally. From this point of view, they link in closely with the National Audit Office report on building maintenance, which was considered by the PAC on 21 May and on which it will, no doubt, soon be reporting, as it will on other work, particularly the 1982 Rayner study on resource control in district works offices.
    These two reports were concerned basically not with fraud but with getting value for money, and they show, as does Wardale-Touche Ross, that we need to work very hard to get it. The reports show that PSA needs some review of its policies, procedures and management practices affecting the work of the United Kingdom territorial organisation. In some instances changes are needed to make it more difficult for the kind of irregularities that led to the WTR investigation to take place. In other cases they are needed to improve performance generally and to give a better assurance that value for money is being achieved.
    Mr. Alton: Why are the Government treating the PSA differently from the Crown Agents and why has not the
    262
    hon. Gentleman dealt with the substantive issues that I raised about the Liverpool Crown court and the House of Commons heating scheme?
    Sir George Young: I have no responsibility for the Crown Agents, and I hesitate to intervene in that relationship. To my knowledge the responsibility does not come within the Department of the Environment. The hon. Gentleman must direct his question to the appropriate Minister. I hope to deal with some of the matters that have been raised in the debate and not only those raised by the hon. Gentleman. If I fail to deal with the matters that he raised, I shall write to him. His questions were rather technical ones about two specific contracts.
    We have already done a great deal of work on the reports. For example, 42 of the 62 accepted recommendations of the Rayner report have been implemented. Many of the recommendations that run through all reports—for example, better management information systems, better training and use of staff and better budgeting systems—are taking time to implement and must be co-ordinated so that we can implement them with the resources that we have available.
    The heart of the matter, as many hon. Members have recognised, is to change attitudes and to make it quite clear that certain conduct will not be tolerated. We must restore a pride in the public service, which sets itself the highest standards. We must not confine ourselves to individual changes of systems and procedures. Attitudes can be changed only by personal conviction. It is necessary to convince managers at all levels in the relevant area of work throughout the PSA that the criticism might, and to some degree probably did, apply to them. We are trying to do this by ministerial statements and by personal visits by all the senior staff of the PSA to regional, area and district offices throughout the United Kingdom. It is too early to assess their success but I believe that at least one fundamental criticism of WTR—that management is out of touch with what happens on the ground — is now being answered.
    Mr. Straw rose——
    Sir George Young: With respect, I must try to deal with some of the questions posed by the hon. Gentleman's hon. Friends. I was asked about RAF Lakenheath. I can only confirm that no detailed instructions have been received by the PSA for the design and construction of a new hospital at that station. As for the effect of the dock strike, the closure of Avonmouth could well affect an important and difficult project. The contractor and the PSA are reviewing the procedure.
    The hon. Member for Liverpool, Mossley Hill (Mr. Alton) talked about penalties. I agree that dishonesty should normally entail dismissal as well as any judicial penalties. That is the agency's stated policy and it is being made known to all the staff through a variety of notices dealing with general policy and precepts. It is publicising the disciplinary action that is taken. Regional directors are now required in all cases to report before taking disciplinary action even when the action contemplated falls within their delegated powers.
    I shall conclude by taking up a matter that was raised by the hon. Member for Linlithgow (Mr. Dalyell). In doing so I hope that I shall not be accused of complacency. There are 27,000 staff who work for the PSA and who know that the agency has some fine achievements to its

    263
    credit. Hon. Members will have seen the stone restoration programme at the Palace of Westminster and I hope will shortly see the ceiling of the House of Lords. I hope that many hon. Members will find time to visit the Cabinet war rooms. In putting right the problems which my right hon. Friend and I acknowledge, I hope that the solid achievements of the PSA, of which it can rightly be proud, will not be forgotten.
    Sir Hugh Rossi: I am grateful to my hon. Friend the Under-Secretary of State for the way in which he ahs responded to the debate, the regrets that he has expressed and the assurances that he has given. Bearing in mind what he has said about the effect that the £20 million will have on new contracts in the construction industry, I beg to ask leave to withdraw the motion.
    Motion by leave, withdrawn.
    It being Ten o'clock, the original Question was deferred, pursuant to paragraph (2)(c) of Standing Order No. 19 (Consideration of Estimates).
    MR. SPEAKER then proceeded to put forthwith the deferred Questions necessary to dispose of the proceedings on Estimates, 1984–85, Class II, Votes 1 and 8 and Class XIV, Votes 1 and 2.

    Class II, Votes 1 and 8
    Resolved,
    That a further sum not exceeding £363,123,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1985 for expenditure by the Foreign and Commonwealth Office on Salaries (Subhead A1 of Vote 1), Loans: allocated (Subhead C1 of Vote 8), Grants: allocated (Subhead C2 of Vote 8), and service overseas and regional technical co-operation programmes (Caribbean and Pacific) (Subhead D1(5) of Vote 8).

    Class XIV, Votes 1 and 2
    Resolved,
    That a further sum not exceeding £496,708,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1985 for expenditure by the Department of the Environment (Property Services Agency) on maintenance and running costs (Subhead A3 of Vote 1), acquisitions and new works costing over £100,000 (Subhead C1 of Vote 1), and general adminstrative expenses (Subhead A2 of Vote 2).
    MR. SPEAKER then proceeded to put forthwith the Question which he was directed to put pursuant to paragraph (7) of Standing Order No. 19 (Consideration of Estimates).

    Estimates, 1984–85
    Resolved,
    That a further sum not exceeding £49,076,176,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges for the service of the year ending on 31st March 1985, as set out in House of Commons Papers Nos. 292, 293, 294, 470 and 471.
    Bill ordered to be brought in upon the foregoing Resolutions and upon the Resolutions [4 July] relating to Estimates 1984–85 by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Peter Rees, Mr. John Moore, Mr. Barney Hayhoe and Mr. Ian Stewart.

    CONSOLIDATED FUND (APPROPRIATION) (No. 2)
    Mr. John Moore accordingly presented a Bill to apply a sum out of the Consolidation Fund to the service of the year ending on 31 March 1985 to appropriate the supplies granted in this Session of Parliament, and to repeal certain Consolidated Fund and Appropriation Acts: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 180.]

  Telecommunications
  10.2 pm
  Mr. Harry Ewing: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Public Telecommunication System Designation (British Telecommunications) Order 1984 (S.I., 1984, No. 855), dated 26th June 1984, a copy of which was laid before this House on 26th June, be annulled.
  Mr. Speaker: With this it will be convenient to discuss also the next motion:
  That an humble Address be presented to Her Majesty, praying that the Public Telecommunication System Designation (Kingston upon Hull) Order 1984 (S.I., 1984, No. 856), dated 26th June 1984, a copy of which was laid before this House on 26th June, be annulled.
  Mr. Ewing: I should make it clear that it is not the Opposition's intention to oppose the statutory instrument relating to the Kingston upon Hull Order 1984. It must be obvious to the Minister of State that the Kingston upon Hull telecommunications system has been in existence for many years. It is a system of which the Opposition, including my hon. Friends who represent Kingston upon Hull constituencies, are especially proud. The Opposition are not critical either of the licence for that system. We do not intend to vote against that statutory instrument.
  We intend—I must make this clear at the outset of this brief debate—to divide the House on the order on the British Telecommunications licence, which was published on 13 July but which comes into operation on 5 August 1984. We wish to record our displeasure at the conditions contained in the licence. The Opposition recognise that it is a different form of licence. If the British Telecommunications unions — the Post Office Engineering Union and the Union of Communication Workers—and my right hon. and hon. Friends had not campaigned so vigorously during the Government's privatisation proposals, there is no doubt—I am sure that the Minister of State in his most generous moods would accept this—that the conditions contained in the British Telecom licence would have been different.
  It is significant that although an opinion poll taken at the beginning of the legislative process on this measure about 18 months ago showed that people were in favour of privatisation — I do not shift from that view — a subsequent poll by the same firm well into the campaign to which I referred showed that pubic opinion had completely changed. Thus, by the time the Telecommunications Act became law, the majority of people in this country opposed privatisation and I believe that the licence reflects that change in public opinion.
  Mr. John Powley: If public opinion has changed so quickly in one direction, does the hon. Gentleman accept that, when privatisation proves successful, public opinion will move equally rapidly in the opposite direction?
  Mr. Ewing: I am not arguing that the change took place quickly. We had the advantage of a general election between the 1982 Bill and the 1983 Bill and about 18 months to argue the case. Public opinion was not changed in a short time but as a result of a lengthy debate about the value of BT as a co-ordinated unit. This debate is not about whether privatisation will be successful, although I should expect Conservative Members to have serious reservations
  266
  in view of their experience with Enterprise Oil, Wytch Farm, Amersham International and certain other privatisation ventures which could scarcely be described as outstanding successes. I shall be happy to take part in that debate when the time comes, but on this occasion, having made it clear that we do not dispute the entire licence, I wish to concentrate on certain aspects of the BT licence and leave my hon. Friends to deal with other aspects which give cause for concern.
  When we considered the legislation in Committee we were given one assurance after another that the rural services would be protected, but condition 11 of the licence shows that those assurances were not worth the paper that they were written on. We were told that everything would be different and that rural services would be far more secure with privatisation, but we now find that as from 5 August the conditions laid down will allow the closing of up to 5,000 telephone kiosks in rural areas. I cite that figure because the break-even figure for takings is defined as £185 per annum whereas recent evidence shows that for kiosks in rural areas the average take is only about £140. On the Minister's information, it is clear that 5,000 telephone kiosks in rural areas will be affected.
  I do not know how Conservative Members will be able to repeat to their constituents the assurances that they gave during the passage of the Bill, as those assurances are not to be found in the licence. Early in the operation of BT plc, many rural telephone kiosks will be closed. I am not scaremongering; I am merely trying to be factual. I know that the Minister will say that clause 83 of the Telecommunications Act 1984 gives local authorities power to contribute to what are described as uneconomic services. The Secretary of State, who is on his weary walk from the Chamber——
  The Secretary of State for Trade and Industry (Mr. Norman Tebbit): Wrong again.
  Mr. Ewing: The Secretary of State has now taken his proper seat below the Gangway. I am glad to see him go there at long last.
  Hon. Members who write to the Secretary of State or the Minister will be told that they ought to have urged their local authority to contribute to the cost of keeping rural telephone kiosks open. We should bear it in mind that we shall tomorrow discuss the English and Welsh rate support grant supplementary reports, which will seriously restrict the ability of local authorities to spend on anything, let alone telephone kiosks. Only today the Secretary of State for Scotland told Scottish local authorities that he will claw back £94 million from them It is beyond me how local authorities in any part of the United Kingdom are to contribute to keeping open uneconomic but socially essential telephone kiosks.
  The Secretary of State has now assumed the seat of the Chief Whip. He is a man of many guises.
  It is beyond me how local authorities will keep the services open.
  Mr. Tebbit: It is not difficult.
  Mr. Ewing: The Secretary of State should be careful, because he will soon have to sign the letters that close the telephone kiosks. I hope that, in his usual generous way, the Minister will explain how, in Committee, on Report, on Second Reading and on Third Reading he could assure rural communities that their telephone service would be

  267
  preserved, when the first thing that stands out from the licence like a sore thumb is the fact that 5,000 rural telephone kiosks are almost guaranteed to be closed.
  Mr. A. J. Beith: I agree with the hon. Gentleman's contention that it is impossible to land local authorities with the bill. Will he be careful in his use of the word "uneconomic", as many of the telephone boxes that do not make £180 a year are used widely by people who put only 10p in the box to get someone to ring them back. I refer to travellers and lorry drivers who go around the countryside. The true economic contribution of those telephone boxes is often not recorded in the accounting figures and they might be quite wrongly condemned.
  Mr. Ewing: That is a fair point. I and, I am sure, the House would like the Minister to explain the principle on which BT plc has been instructed to give a 20 per cent. rebate to the Mercury company on the end-user rates. If ever I heard of a direct subsidy being given to a competitor company, that is it.
  The Minister will correct me if I am wrong, but I understand that BT plc is under pressure from the Government to give a 20 per cent. discount to Mercury. That was widely reported in the daily press on Friday 22 June, when Tom Rowland said:
  "Details are emerging of the agreement between BT and the government which helped to break the deadlock in negotiations over the BT licence".
  That article went on to explain the 20 per cent. rebate on end-user rates which has been given to Mercury by BT and said that the 20 per cent. rebate would reduce as Mercury's turnover and profitability increased. If that report is wrong, and if there is no possibility of that happening, the Minister will have to explain the relationship between BT plc and Mercury, specifically in relation to any rebates or discounts which BT plc has been pressurised into giving to Mercury.
  The Minister for Information Technology (Mr. Kenneth Baker): Perhaps I can answer some points as they arise. The terms of interconnect between BT and Mercury have been freely negotiated between those two companies. It took a long series of negotiations, because this is an immensely complicated subject. Those terms were freely negotiated and the companies came to a private agreement which they have signed and initialled. Neither party wishes to make that agreement public, but I should make it absolutely clear that at no time did I or the Government put pressure on BT. The agreement was freely negotiated between two independent operations.
  Mr. Ewing: I am grateful to the Minister. If he is saying that the report from which I quoted is inaccurate and that at no time did the Goverment apply pressure or use any other form of influence on BT plc in its negotiations with Mercury on interconnect rates, I accept what he says. But I do not accept that the details of the negotiations should be kept secret. After all, BT plc will be floated in the not-too-distant future, and the House ought to know the details of that agreement on interconnect rates.
  This is an important aspect of our debate. It will not be acceptable to the House if the Minister says that he does not want to give details and that BT plc and Mercury do not want to reveal them.
  268
  Under the licence, BT plc is under an obligation to provide Mercury with all the connecting facilities for which it asks. I have heard nothing so ridiculous in my life. A competitor company—Mercury—has been given the right to use the facilities of BT plc. As Bryan Stanley of the Post Office Engineering Union said last week, it is like privatising British Rail and giving a competitor the right to use its track and rolling stock. Although that may seem a ludicrous proposition, that is exactly what we are faced with in telecommunications.
  Operator services directly affect the Union of Communication Workers—I declare my interest as a member of that union. There is great concern that BT plc will continue to apply pressure to be allowed to charge for operator services. It will be an outrage if the company were, for instance, allowed to charge for directory inquiry services. The largest users of that service are usually the blind, those who cannot read telephone directories and those who normally need help to make a telephone call. After all the assurances given by the Minister, it would be an outrage if BT plc were allowed to charge for directory services.
  I hope that the Minister can give the House an absolute assurance on this. We do not want any nonsense, with the Minister saying that the matter is out of his hands, and that BT plc is a private company and makes its own commercial judgment. The Minister and his junior Ministers were quick to give us assurances in Committee that there would not be any charges for the operator services. Kim McKinlay of the Union of Communication Workers, who represents this grade of worker, is concerned that BT plc will eventually be allowed to charge for operator services.
  I have highlighted a few points, and my hon. Friends will highlight others. I hope that I have laid the foundation for opposition to some of the conditions in the licence granted to BT plc. I shall end where I began. I recognise that the licence is different from that which would have appeared had the Opposition and the British Telecom Unions Committee not conducted vigorous opposition to this Bill in Committee. We claim the credit for that; let there be no doubt about it.
  Despite the improvements that we have forced in the licence, there is still sufficient in it to give us concern about the operator services, the rural services and the commercial agreements that have been made between Mercury and BT plc. That will take us into the Lobby tonight to vote against the first order.
  10.22 pm
  Mr. Gerrard Neale: It epitomises the way in which the debates on the Bill have taken place over this Parliament and the last that the hon. Member for Falkirk, East (Mr. Ewing) put his arguments on behalf of his party in a manner lacking in the vindictiveness that we often hear in many other debates. That has meant that the debates on telecommunications have been all the better.
  The hon. Gentleman spoke about the effects of pressure to change from the various unions on my right hon. Friend the Minister for Information Technology. I declare my interest in the industry. It is only fair to say that there has been pressure from a whole range of interests within that industry, as my right hon. Friend will agree, all of which have led to various changes. Despite the fact that my right hon. Friend has been criticised at various stages for not coming to the House with a Bill in a sufficiently finite

  269
  form, he has shown that he is always ready to listen to constructive points, whether they have come from Labour or Conservative Members, and he has accommodated them wherever possible.
  I still nurse a fundamental misgiving about the way in which we have indulged in the privatisation process. My right hon. Friend knows full well that for a long time I said that we should have had a far clearer policy of separating the supply and attachment end of the market within BT from the network. In leaving it all in one, we have left a large monopolistic enterprise, which we are floating on to the market.
  I am further disturbed, with those in the industry, that there is no express condition in the licence as it stands to set up an arm's length Companies Act company to deal with the supply of business systems. It is fair to say that a range of conditions in the licence refer to its various elements, but there is no set condition that requires it to set up a separate Companies Act licence.
  Condition 17.2 states:
  "The Licensee may be deemed to have shown undue preference … if it unfairly favours to a material extent a business carried on by it … so as to place at a significant competitive disadvantage persons competing with that business."
  In that condition, the words "fairly", "material" and "significant" are all subjective. What might be insignificant to the licensee—in this case BT, with its massive turnover—might be very significant to a small competitor who was trying to enter the market.
  I have a nagging doubt about the continuation of the arrangement. I fear that before very long, in terms of the development of telecommunications, the House will need to reconsider the size and nature of BT within the telecommunications market, with a view to breaking it down still further to a form that is seen in the United States.
  There are two other important points that I should like to make in the time that I have available. They relate to licences.
  The first deals with intellectual property rights. A licence condition of critical importance to the home telecommunications industry relates to the prohibition of certain exclusive dealing arrangements, especially the requirement in condition 31(c). It says that:
  "The Licensee shall not, except with the written consent of the Director make the acquisition … of any telecommunications apparatus … conditional upon agreement … to transfer to the Licensee … any interest in Industrial or Intellectual Property with a view to restricting unreasonably the freedom of the supplier … to exploit his Industrial or Intellectual Property in order to confer on the Licensee … an unfair competitive advantage."
  If that condition were left as it is, many in the private sector of the telecommunication industry would have been desperate. Unfortunately, condition 36.4 lists a number of qualifying circumstances to that condition which tend to nullify it. I am left with the strong belief that the exclusions in 36.4 totally negate the prohibition in paragraph 36.1(c).
  I know that my hon. Friend has received representations on the matter and that he is aware that counsel's opinion has been obtained. They make it clear that the Government's intention in relation to the retention of the ownership of intellectual property rights is safeguarded. I know also that he made attempts, belatedly, before the publication of the licence, to make a further amendment.
  270
  Even since then, attempts have been made in correspondence to clarify it further. The view remains that BT's position in the case is far too powerful.
  If the Minister makes the point that individual owners of intellectual property rights are safeguarded and if, as I understand it, BT is of the view that they are safeguarded and both believe that they have accommodated the fears of the private sector, surely the Minister should deal with the Director-General of Oftel immediately that he is in post. The Minister should ask him to make an agreed change to the licence to ensure that that doubt does riot continue.
  My other concern relates to BT's right to go into apparatus production. One could make several points about that, but suffice it to say that, although the licence requires the setting up of an arm's length Companies Act company, it still falls short of the sort of protection that the private sector would wish to see. It does not impose any suitable conditions on BT until 1986. Furthermore, there is no mention of making clear what the apportionment of overheads should be between the rest of BT and the production company, and no mention of the restraints on hidden subsidies or the transfer price to supply companies. I must emphasise that all those points should be referred immediately to the Director-General of Oftel.
  I am surprised that the Opposition should pray against the order. I can assume only that Opposition Members are relaxed about it because they know full well that the Government will defeat them tonight in the Lobby. I cannot imagine a worse recipe for the future of BT's union members or for the future of the members of any union in telecommunications than that of further delaying the licence. As my right hon. Friend the Minister knows, major reservations have been expressed by the private sector and by trade unions. However, it would be the worst thing possible for the industry to continue with the present doubt-ridden interregnum.
  I served on the Committee that discussed the Bill in 1980–81. My right hon. Friend the Minister was appointed to his post in the middle of our proceedings on that Bill, having made a speech on Second Reading that I would have been proud to make. I should like to thank him for accommodating various requests for change. I congratulate him on the way that he has dealt with allcomers throughout the Bill's long passage. It certainly made things far easier for those of us who wanted to see competition introduced in its fairest form. I hope that he will continue to apply just as much zest and energy to ensuring that Oftel polices the Act and all the provisions relating to BT and telecommunications as a whole, so that there is no unfair competition and so that his aspirations for the telecommunications environment are achieved.
  10.32 pm
  Mr. John McWilliam: At the outset I should like to declare my interest as a sponsored member of the Post Office Engineering Union. As such, I speak for the other members of the British Telecom Unions Committee as well, which means that I represent tonight 250,000 people who depend for their future on the success of BT. I believe that the Government have put that success seriously at risk.
  At the end of more than 600 hours of debate we are left with the hon. Member for Cornwall, North (Mr. Neale) still complaining about the conditions in the licence and

  271
  about the fact that the Minister has, as he would say, let loose upon our society a monopolistic monster. I agree with him, but it is the Minister's fault. If he had accepted our advice all those hours ago, he would never have resorted to such a measure. The United States has opted for a system of very detailed statutory controls over private monopolies within the telecommunications system. Like most of the world, we have traditionally opted for our monopoly to be constrained by the state, and therefore directly controlled by the democratic process. The hybrid that the Minister lets loose tonight is neither flesh nor fowl and does not satisfy either side.
  Many hon. Members wish to speak, so I shall briefly outline my main objections—and those of the BTUC—to the licence as it now stands.
  Our first objection is that there is no guarantee that a service will be available at as a fair price to rural users as to users in more urban areas. Secondly, there is no requirement that directory information will remain available free of charge to all customers, especially to disabled customers. The Minister must take that point on board. My hon. Friend the Member for Falkirk, East (Mr. Ewing) made it clear that the closure of many thousands of telephone kiosks will be permitted. It is nonsense for the Minister to say that local government can pay for that. It cannot. His right hon. Friend the Secretary of State for the Environment is making sure of that. British Telecom will be forced to allow rival operators to interconnect with the public network. There is no guarantee that, if they do, the access charges will be levied, and even if they are levied, there is no guarantee that the charges will be at such a level as to enable BT to meet the uneconomic services which it must supply to rural areas.
  The Minister is placing restraints unfairly on the manufacturing role of BT, and I object to that. The formula for regulating BT traffic is seriously defective and needs further consideration. Protection charges for the introduction of certain exchange lines are too weak. Research and development on aids for the disabled is not being ensured, and the detailed, delicate and helpful work which many employees at BT have undertaken voluntarily and free of charge over the years to help the disabled is not underpinned by the licence.
  BT's marketing and promotion operations are to be restricted. The Minister is, in part, helping his hon. Friend the Member for Cornwall, North because "restricted" does not mean impaired entirely. We want to know what that restriction will mean in a practical sense. Will BT be asked regularly to lay off the big boys and to eat up the small fry, or will it be the other way round? It is not clear and we want to know. There is no real commitment within the licence to the universal provision of non-voice services.
  I could continue, but time marches on. We will have spent about 600 hours on the Bill. It is not a geat deal better whan it was when we started. The degree to which it is better is largely due to the activities of my colleagues and of British Telecom Unions Committee, who have pressurised the Minister and others to think carefully about the nonsense that the Government were perpetrating. I urge the House to reject the measure out of hand.
  10.38 pm
  Sir John Farr: I shall speak briefly about the provisions for the granting of the licence, especially in relation to the safeguards which may not be sufficiently strong for those who live in remote areas.
  I spoke in two Second Reading debates—the first one and then the resumed Second Reading. On both occasions I was assured by the Minister that no rural kiosk would be shut where there was a proven need. Moreover, I was told that the cash take by a rural kiosk would stay fairly low and that a director would be in control and ensure that possibly marginal kiosks were not closed on a wholesale basis. With those assurances my hon. Friends and I felt it right to welcome the Bill. Indeed, we fully support all its other provisions.
  However, hon. Members with responsibility for rural areas are a little worried. We do not want an arbitrary limit of, say, a £185 take for a call box below which it is under serious threat.
  The point has been made in the House for years, and ignored consistently by the drafters of the Bill, that one cannot judge the value of a call box solely on the cash intake per annum. I am not just thinking of the great value of call boxes to those who live alone and the elderly and their value for emergency purposes, but there is evidence that many remote kiosks serve as staging posts for long distance lorry drivers. Many long distance hauliers make a practice of calling a driver at a key point at a certain time so that he can receive the latest instructions. There is no record in the annual take of the use of the call box, but it forms a vital and important link.
  I hope that my right hon. Friend is listening because that has been said in the House several times during the past two or three years and has been completely ignored. I should hate to think that it will be ignored again.
  Can my right hon. Friend tell the House whether it is in the Government's intention eventually to draw up guidelines in accordance with which the director should act when considering whether to close a rural kiosk? We are worried about closures in the country. We do not want the future of a kiosk which is a lifeline in a remote hamlet to be subject to the whim of a director in London who is solely going on whatever figure is decided. The director should have the benefit of the best advice, and he should heed it, but guidelines should be laid down as to when a kiosk should remain open. It should be possible for the House to debate and approve such guidelines because the provisions for rural kiosks is the one part of the Act that causes me a great deal of anxiety.
  I wanted to ask my right hon. Friend some questions particularly in relation to condition 24, the restriction on prices for certain services. As the House is aware, it has been agreed that trunk call charges may not increase by more than the RPI minus 3 per cent. before July 1989. We are worried that call box charges have been left out of the basket of services whose prices will be controlled. Those who rely upon the call box services are often the less well-off and they are worried about that.
  The other point that I wish to make involves people who are at the end of their own telephone line, which may be long and remote and which goes through woods and over difficult terrain. At the moment, such people do not pay for the repair of a telephone line if it is carried out in normal working hours. Apparently, that will change under the conditions that we are considering. Condition 23

  273
  allows BT to charge for the maintenance and repair of a consumer's telephone line. Many people who have such lines, which ar subject to torrential rain and strong winds, are worried that they will be faced with horrifying bills for the damage to their lines unless something is included in the condition which will ensure the averaging of the maintenance costs to all consumers by means of the rental charge.
  I want also to ask about condition 3 in schedule 4. It is the requirement that BT wherever possible should install new lines underground rather than overhead. One would have hoped that condition 11 of the schedule would have contained the suitable minimum depth at which such underground lines are installed for safety reasons.
  While reminding my right hon. Friend again that many of us are concerned about the position of scarce and valuable rural kiosks, I welcome the order.
  10.45 pm
  Mr. Ian Wrigglesworth: I am sure that all hon. Members will share the anxieties that have been expressed by the hon. Member for Harborough (Sir J. Farr) and other hon. Members. I do not want to pursue that debate in the course of my brief remarks.
  The licence before the House is central to the future development of British Telecom and, as that is one of the most important industries for the future of the country, it is in that context that we should predominantly consider it.
  I and my hon. Friends have not regarded the question of ownership of BT as the most important issue in the debate. We consider that liberalisation for the consumer is by far the most important issue for the future. In our view, either one should have retained the public monopoly where it can be properly regulated, or one should have a much fuller and fairer competition than will be the case under the existing regime, as spelt out in the licence. I therefore wish to mention some of the reservations that we have about the terms of the licence, and how the new regime will operate.
  First, while other methods of telecommunications are coming down the track, on the major provision of telecommunications, Mercury will be the only serious competitor to BT in the foreseeable future, and it will have 3 per cent. of the market only, so what we are doing is changing a public monopoly into a private monopoly.
  In a number of areas covered by the licence, the public have good cause to be anxious about how the new system will operate. It is not clear that BT plc will be able to demonstrate that the separation of the systems of supply and production will be adequate and clean enough to prevent predatory pricing. That the BT accounts will not be capable of differentiating between those areas for at least three years shows the dangers facing consumers and potential competitors as a result of that lack of clarity. How can Oftel regulate BT if its accounts for the next three years will not be clear enough to show that there is proper separation of the systems of supply and production? I hope that the Minister will explain that.
  Many parts of the licence depend heavily for effective operation upon Oftel. I and my hon. Friends think that the resources and the qualifications of the people in the Office of Telecommunications are central to whether that office will be able to do its job on behalf of the consumer in order effectively to ensure fair competition. All that we have
  274
  seen from the Government so far gives little reassurance that Oftel will have adequate resources and a staff sufficiently qualified to do the job properly.
  This task will be made more difficult because of some of the woolly drafting that Oftel will have to interpret in the licence—phrases such as
  "at a significant competitive disadvantage."
  What is significant, and how does one judge that? As to the phrase
  "if it unfairly favours to a material extent",
  who will interpret what that means? Such phrases are unexplained in many parts of the licence. We are not convinced that the Office of Telecommunications will be adequate to the task that it has to carry out on behalf of consumers and in the interests of competitors to BT who wish to compete fairly with it.
  I shall be interested to hear the Minister's justification for the proposed RPI minus 3 per cent. pricing formula. Unless there is proper competition, it is difficult to know what the right price should be, but, in view of the productivity progress in the industry, not only here but in other countries, does the Minister regard the formula as an adequate yardstick by which to judge the operation of BT?
  As a result of the fiasco over the recent sale of Enterprise Oil and its effect on the market, some terrible asset stripping is likely to occur if BT is brought to the market later this year. In the light of that and of the rise in interest rates and its repercussions on the market, I appeal to the Minister to consider delaying the sale of BT, certainly beyond the end of this year, and to consider selling it in smaller tranches than is proposed.
  Whatever methods the Government may adopt for selling BT to subscribers, I am sure that many hon. Members feel that the Government will not obtain a fair price for BT, which has many assets and much experience and has made a tremendous contribution to this country over the years, if it goes to the market at the time the Government propose.
  For those reasons, we shall join other Opposition Members in opposing the licence.
  10.52 pm
  Mr. Richard Shepherd: It is always amusing to see the antics of the SDP as it moves in to take over the position of the many Conservative Members who have tried arduously to persuade my right hon. Friend the Minister for Information Technology to respond to some of our anxieties. The SDP is slowly trying to identify consumers and their interests as its central theme. I am sorry that Conservative Members have not been more rigorous in our defence of that position.
  I shall forgo the usual encomium of the Minister and his assistance on this issue. One can argue that the licence is a substantial improvement on previous intimations, but grave reservations remain. I hope that I shall be forgiven if I refer closely to my notes, because I wish to make a number of points that I think are of value and may influence the game plan that we shall have with BT.
  Under the licence, the success of regulation will depend entirely on the expertise and dedication of the Director General of Telecommunications. For that reason, I wish him well, but it is disturbing Ito note that BT has obtained several changes in wording that release it from, for instance, bearing the burden of proof and place the onus for action on the director.

  275
  The change is most apparent in condition 18. In the section dealing with prohibition on cross-subsidies, the draft licence provided:
  "The licensee shall, except where the Director agrees otherwise, not transfer capital from monopoly to competitive operations for a consideration which is less than full cost."
  The new licence provides:
  "where it appears to the Director that the licensee is unfairly cross-subsidizing … it shall take such steps as the Director may direct for the purpose of remedying the situation".
  Not only is the standard of unfair cross-subsidy potentially more vague than the previous injunction against transfers at less than full cost, but the licence no longer directly prohibits anti-competitive conduct by BT. Instead, it requires the director to make a finding of cross-subsidy and to direct unspecified remedial steps.
  Condition 39, relating to the potentially anti-competitive use of BT's patent library, is similarly contingent on action by the director. Condition 24, regarding the RPI-X formula places an even more formidable burden on the Director General. If BT adopts a potentially predatory pricing policy by lowering only those "relevant prices" that face competition, the licence immunises BT from any remedial action unless the Director General finds that "undue advantage is being taken" within 28 days. The RPI-X formula has been weakened by the carry-over provision that allows BT to increase prices in excess of the ceiling if it did not take the full allowance of increases in the previous years.
  These provisions reflect a complete inversion of one of the most basic principles of civil procedure—that the person who has exclusive access to the evidence needed to establish a fact in dispute should bear the burden of proof. BT should have the incentive to maintain the records and accounting systems necessary to establish that it is behaving in a proper fashion in avoiding anti-competitive practice.
  When price differences appear among similar services for a particular service among different regions or classes of customers, BT should bear the burden of disproving the prima facie case of discrimination. In that context, it is especially disturbing to note language in the licence that I believe to be meaningless. It attempts to limit even the access of the Director General to information.
  Condition 52.2 provides that BT need not produce information that would not usually be available unless the Director General considers a particular report essential for him to exercise his functions. If competition is to become a reality, the Director General will have to proceed aggressively, have adequate staff and be willing to make findings of undue preference or discrimination where his knowledge is incomplete and BT is unwilling or unable to provide the additional information required.
  The powers of an aggressive Director General are extremely broad, as is best illustrated by condition 17.3 that allows him to make determination of undue preference whenever BT favours an affiliated business
  "So as to place"
  its competitors
  "at a significant competitive advantage."
  Apart from the general authority to prevent anti-competitive behaviour, the licence is short on specific provisions relating to those areas where BT is most capable of achieving an anti-competitive advantage. This lack of specifics illustrates the obvious—that the civil servants
  276
  and the negotiators for the Government are considerably less knowledgeable about the business than the negotiators for BT.
  There are three areas of conspicuous omission—the right to approve the capitalisation plan, the control of network information flow and the use of customer specific proprietary information. The explanatory notes—this is extraordinary — congratulate the drafters of the new licence on "greatly strengthening" condition 18 in the 25 October draft
  "which failed to deal with capital transfers."
  I refer to the congratulatory note that the Minister's advisers put together.
  Although condition 18.4(c) clarifies that the licence prohibits capital transfusions at below market interest rates, the requirement to document those transfers does not become effective until 1 April 1987, almost three years away. It seems that the rationale is that BT's current book-keeping procedures preclude any accurate attribution of costs. The effect is to provide a strong incentive for BT to capitalise its competitive subsidiaries on a non-compensatory basis without subjecting its initial financing to the approval of the Director General.
  Another issue relates to the use of information about the network by BT's affiliates that produce and supply apparatus. That has been a matter of considerable concern to my hon. Friends. Changes in the network may require modifications to apparatus for transmission facilities, so advanced knowledge of potential alterations would give affiliated manufacturers an anti-competitive advantage. The licence recognises that problem in several places. Condition 21.5 requires BT to publish specifications for equipment it procures, but only at the time of tender.
  Condition 23 requires the disclosure of reasonably anticipated changes to the BT network or its protocols from time to time. Information about changes in the network should be made available for inspection by leading manufacturers at the same time that it is disclosed to the engineers at BT's manufacturing affiliates.
  The licence appears to tolerate a similar preferential flow of customer specific information. The restrictions of condition 38 are aimed exclusively at the problem of disclosure without the prior consent of customers. If information about the telecommunication needs of customers is passed to suppliers affiliated with BT, it should also be made available—on identical terms—to competing suppliers.
  These omissions demonstrate a lack of wisdom in the Government's decision to lay this licence before Parliament on a take-it-or-leave-it basis. The licence requires significant refinement in a number of highly technical areas, and the Secretary of State should take proper account of the parliamentary debate, which is the first real opportunity to understand interests other than those of BT.
  The new licence reflects substantial changes from the draft of 25 October 1983. It seems slightly undemocratic to allow the document to emerge in final form after extended negotiations with BT, from which all other parties including Parliament, were excluded.
  Another basic flaw in the licence is the difficulty in obtaining modifications within its 25-year term. Any modification requires either the consent of BT or the invocation of a cumbersome process involving the Monopolies and Mergers Commission. The purpose of this inflexibility seems to be to maximise the Exchequer's

  277
  return by assuring the investment community that BT can never be regulated more strictly than the licence currently provides. Moreover, if BT violates the licence, the director has no power to assess penalties other than complete revocation, a sanction that he is never likely to impose.
  The risk to the public interest is obvious. In an area of rapidly changing technology, where the prospects for truly competitive conditions are most uncertain, the requirements of the national economy and the interest of consumers may require significant changes in the way in which BT is regulated. It seems extraordinarily unwise, for example, to provide in condition 24 that all price controls will expire in 1988. It is also disturbing that the Government have attempted to embed in the licence their prohibition of simple resale until July 1989, although resale may prove to be essential to achieve the control of prices through competitive market forces. I am particularly mindful of Mr. Solomons' advice to the Department on the shape of telecommunications through to the next century.
  What should have been in the licence? BT should always bear the burden of proof. It has the information, but the consumer does not know what it is, and that is the real problem. Parliament should have set national telecommunications policy. We should know the answers to certain basic questions which our constituents will ask. For instance, what is the definition of "local versus trunk"? What does "discrimination" mean? The statute does not tell me and the licence tells me only in part. Is it discrimination mile by mile? For instance, if I live in Scotland, where a 100-mile call costs more than the same call in England, can one describe that as discrimination?
  The Director General should have been made to interpret and adjudicate, not to set policy. That is the problem; we have given over the policy options to the Director General. That is highly unsatisfactory and, in my view, unconstitutional. I said that BT should bear the burden of proof. Any pleading before the Director General should be in public, the licence should prescribe BT's behaviour, and it should not be contingent on the Director General taking steps.
  The licence for 25 years is too long, because in five years the price controls run out and we do not know what will happen then. Perhaps there will be no competition within three years. What, then, will happen after five years? A seven-year ban on resale is written into the licence. In five years from now there might be almost no competition. We have an inconsistency in dates. What evidence is there that duopoly acts differently from monopoly?
  I have shortened my comments, but I have tried to put the thrust of my argument as concisely as possible. There are grave doubts about a licence being presented to the House in a fully completed form which we are unable to amend or to discuss in detail. That is unsatisfactory constitutionally and it shows a misunderstanding of how a complex, great industry moves forward and how sometimes one must fine-tune. I deeply regret and resent the fact that we in Parliament have had no real role in determining telecommunications policy. After those remarks, I can only wish the Director General well.
  11.5 pm
  Mr. John Golding: The debate has summed up the general attitude towards the
  278
  British Telecommunications Bill. Only the Minister for Information Technology will have spoken in support of the Bill and the licence. He will be their sole supporter. Member after Member from the Tory Benches have been most critical of the licence. The Secretary of State showed his interest by walking out of the Chamber. Even the Under-Secretary of State has abandoned the Minister in his hour of need. Why is this? The answer is that the House has come to realise increasingly that privatisation is a flop.
  The privatisation of telecommunications is not in the interests of the consumer, the manufacturing industry or the staff. I am sorry that my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) could not lend his considerable weight to the condemnation of the selling of BT shares, on which he is an expert. We all know that that sale will be a scandal like all the other privatisation sales, for it will represent the giving away of public assets.
  As Tory Members have said, the licence is a mixed bag. The Opposition will be voting against the principle of privatisation. However, the licence is better from our view, as the hon. Member for Aldridge-Brownhills (Mr. Shepherd) underlined, than the one that was presented to us two years ago. It is better because of the campaigning of the trade unions outside the House and the intense parliamentary opposition within it. There have been changes in the Government's attitude which have brought criticism from Tory Members. The Government have accepted that serious competition will not be in the interests of the development of telecommunications. British Telecom will become almost a private monopoly for outside Hull it will faced only by the irritants of Mercury and cellular radio.
  I know that many Conservative Members dislike that fact. The hon. Members for Aldridge-Brownhills and far Cornwall, North (Mr. Neale) have illustrated the antagonism that they feel. They wanted more competition and the break-up of BT, but they do not have that in the licence. I must congratulate the Minister on facing reality and ensuring that his hon. Friends' wishes have not been met. I would prefer a public monopoly to a private monopoly, but I think that it would have been disastrous for telecommunications had we gone along the road advocated by Conservative Back Bench Members.
  British manufacturers are acting against their own interests in supporting the weakening of BT. It is in their interests to have a strong British telecommunications system. British manufacturers should be concentrating on preventing the excessive telecommunication imports that will be arriving as a result of privatisation rather than trying to undermine the strength of British telecommunications. The licence is far superior, because of what the Opposition have campaigned for in terms of rural areas and the disabled and protection for the vesting subscriber. There are safeguards that would not have been included had we not argued day in, day out, night in, night out. The justification for our intense opposition to the Bill is to be found in an improved licence.
  I promised to finish my speech at 11.10 pm, and I shall keep my word. Much still needs to be done to improve the licence. It is still unsatisfactory—not in its provision of sufficient competition and sufficient 19th century laissez-fair, but in its provision of sufficient safeguards for the weakest people in our society. We shall be voting against the measure.
  11.10 pm
  The Minister for Information Technology (Mr. Kenneth Baker): This debate has been similar to other debates in the long process of this measure passing on to the statute book. When my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) said that he would spare passing his encomium upon me, I thought that that was a self-denying ordinance that he observes at the beginning of our debates, because I did not notice him scattering encomiums upon me.
  My hon. Friend's contribution — I say this with genuine feeling — to the competitive balance in a deregulated telecommunications network has been significant. My hon. Friend has consistently taken a different view from the Government. He has had a considerable impact upon the shape of the licence and the legislation. He may believe that his contribution is not as great as he would have liked, but I pay tribute to him for the fact that his thinking has changed significant parts of the licence and the framework of regulation and has led to greater competition. I have noted what he said tonight. I shall read carefully his points, and I am sure that the Director-General of Oftel will do so as well.
  There has been little mention of the Hull licence. It is almost identical to the BT licence, both in the protection that it gives consumers and in its provisions to ensure fair competition. Its 25-year term creates adequate confidence in the further development of the telecommunications system which has served the people of Hull well for many years.
  The licences granted to British Telecom and Hull must be granted before the appointed day when the legislation comes into force — 5 August. That is clearly foreshadowed in section 7 of the Act. Unless the BT licence is in place when the licensing provisions of the Act come into effect, BT would be committing the offence of running an unlicensed system. It would be unable, for example, to place its telegraph poles along the highway, because its present powers to do so under the Telegraph Acts will be repealed on 5 August. The same consideration applies to Hull.
  In addition to the licences for BT and Hull, a series of other licences will need to be in place by 5 August. In addition to the licences under the order we are debating, BT will require separate licences for its mobile radio, value added and cable television systems. These will place BT on a level footing with its competitors so that it will enjoy no unfair competitive advantage over them. Hull will also require a value added services licence.
  Apart from this, a considerable number of private systems are currently run under BT's exclusive privilege and have not required licences. Now that BT is to be licensed, they will need licences as well, and the Department will be consulting those concerned about the text of the necessary licences.
  I shall deal with a specific point raised by my hon. Friend the Member for Cornwall, North (Mr. Neale) about intellectual property. I apologise for the complexity of these sentences, but my hon. Friend made an important point. He questioned whether the new safeguards in the licence were adequate to ensure that BT is not able to require the transfer to it of intellectual property — possibly a patent—in such a way that it gains an unfair competitive advantage. The doubts that have been expressed relate to condition 36 of the licence which
  280
  places a clear prohibition on BT making it a condition of the acquisition of any telecommunication apparatus that any interest in intellectual property — the patterns and design—should be transferred
  "with a view to restricting unreasonably the freedom of the supplier … to exploit his Industrial or Intellectual Property in order to confer on the Licensee or some other person an unfair competitive advantage."
  In other words, there is anxiety that when BT buys a piece of telephonic equipment it could insist that the supplier transfer the patents, which BT could then exploit.
  A number of specific qualifications in condition 36.4 disapply the prohibition in certain circumstances — for example, where the transfer is necessary or desirable
  "to facilitate the running of any of the Applicable Systems"
  or to the extent that it is "reasonably necessary" for the purpose of enabling the licensee to secure an alternative source of supply.
  As I understand it, my hon. Friend's concern is that that would enable BT to require the assignment to it of intellectual property rights. I do not accept that that is so, because the provisions refer specifically to transfers which the director must agree are necessary or desirable or which are reasonably necessary. In one case, BT would have to obtain the specific authority of the director before any such transfer could be made and in the other case any disagreement about what is reasonably necessary would naturally fall to the director to determine. I regard it as highly unlikely that the director, acting in accordance with his duties under section 3 of the Act, would ever decide that the acquisition of industrial or intellectual property was necessary or desirable for the purposes that I have mentioned.
  I appreciate that concern has been expressed by others as well as my hon. Friend about the drafting of the condition, but I hope that they will be reassured that there are adequate safeguards to ensure that BT does not behave in an anti-competitive fashion in relation to industrial or intellectual property. If they are not sufficient, the Act provides clear mechanisms for the Director General to amend licences and no doubt representations will be made to him in due course.
  Several hon. Members raised the not unfamiliar question of the provision of public call boxes after liberalisation following privatisation. My hon. Friend the Member for Harborough (Sir J. Fan) has raised the matter on several occasions, as have the hon. Members for Falkirk, East (Mr. Ewing) and for Blaydon (Mr. McWilliam). Perhaps I may explain how the Act and the licence improve the situation. I assure my hon. Friend the Member for Harborough that I am just as concerned about this as he is. When I started taking the legislation through the House four years ago I represented an urban seat. I now represent a rural seat, with many remote kiosks, and my constituents put the same points to me as my hon. Friend's constituents put to him. I hope that my hon. Friend will be reassured by what I have to say.
  For the first time, there is a positive obligation on BT to continue to provide call boxes. Under the present arrangement, no such obligation exists. Secondly, at present there is a voluntary agreement between BT and POUNC which has worked very satisfactorily. The licence ensures that that arrangement will continue, but the safeguards will be stronger in that the arrangement is at present only voluntary whereas in future it will be obligatory and enforced by the director.

  281
  Several hon. Members mentioned the guideline figure of £185, which is the trigger level at which the director may consider whether a kiosk should be closed. It has been claimed that this will lead to the wholesale closure of kiosks in rural areas. I wish to take this opportunity to allay that concern. First, BT has always behaved responsibly in the past. For example, in 1982–83 only 66 call boxes were withdrawn on account of low takings, of which 29 were in rural areas, out of a total of more than 70,000 kiosks. There is no reason to expect any significant change in BT's behaviour. Indeed, BT has publicly committed itself to maintain and improve services in the rural areas. Moreover, certain parts of the licence oblige BT to continue specifically to continue the provision of those services to the rural areas.
  Secondly, I draw attention to the role of the Director-General in this respect. Section 3 of the statute obliges not just the director but the Secretary of State to exercise his functions in the way that he considers best calculated to secure the provision throughout the United Kingdom of
  "such telecommunication services as satisfy all reasonable demands for them including, in particular … public call box services."
  I do not believe that there could be a clearer obligation.
  Perhaps I might discuss the constituent parts of the £185 as I know that it worries hon. Members, especially the hon. Member for Berwick-upon-Tweed (Mr. Beith), as he has raised the matter several times. The figure is not new as it was agreed between BT and POUNC in 1981. Revenue to a call box cannot be measured just by the number of coins that drop into it as there are transfer calls and credit charge calls and someone can make a short 5p or lop call and ask the other person to ring back. We have said that, in additon to the £185, there must be taken into account an allowance of 25 per cent. of takings. The call box's takings therefore need amount to only £138·75 a year to meet the £185 minimum. If we assume that each call costs 10p, a call box has to take only about 26 calls a week — or fewer than four a day — to meet the minimum figure. If we use the more realistic assumption of a 20p call, the box has to be used only 13 times a week — or less than twice a day — to be kept in business. Even in those circumstances, representations can be made. In condition 11 there are the most elaborate arrangements by which the Director-General must advise the parish council, put up a notice and receive representations. That does not exist under present arrangements in the United Kingdom.
  Mr. Ashdown: Why are call boxes excluded from the constraints of condition 24 on the restriction of prices?
  Mr. Baker: We made up the basket on the restriction of prices on the guidance of the recommendations of Professor Littlechild. We have included in the basket the area of substantial monopoly that will continue and have excluded certain others. The one that the hon. Gentleman mentioned is one of those which we have excluded. I do not think that the House need feel too much anxiety on that account.
  I should like to deal with the promotion of competition and what the hon. Member for Stockton, South (Mr. Wrigglesworth) and my hon. Friend the Member for Aldridge-Brownhills said. We have tried to increase substantially competition in this market. I shall not go through the history of the provision of services and apparatus. Conditions 13 and 14 promote competition.
  282
  Perhaps I might add to what has been said about resale. I want to announce an extension of competition. In my statement of 17 November 1983 in Standing Committee A on the Telecommunications Bill, I set out the Government's intention in regard to competition in telecommunications. I discussed the principles of the Government's approach towards the various forms of resale of private circuits. I said that, although the Government did not intend to introduce resale before July 1989, we would examine the scope for the relaxation of existing rules in several specific areas. The Government have made several decisions that will provide a distinctly more liberal regime for users. These issues are complex, and I believe that I should strain the patience of the House if I went into the details of schemes for lease circuits and interconnect.
  Mr. Golding: No, go on.
  Mr. Baker: I think that my judgment might be better than that of the hon. Member for Newcastle-under-Lyme (Mr. Golding) in this respect. The details run to about seven pages of close typing. If I may, I shall arrange, in the next two days, to answer a written question. I shall set out the principles now. The Government have decided to introduce specific liberalisation measures for the group use of inland lease circuits, the interconnection of leased circuits and public switched networks and the use by BT or Mercury of spare capacity on privately owned networks.
  These measures will, on the one hand, stimulate greater availability and improved use of telecommunications services, but, on the other, they are aimed at avoiding the financial threat to the services provided by public telecommunications operators which could arise from the early introduction of simple resale capacity on private circuits. When the House and the various interested parties in the country have had time to consider these, as they will, I hope that they will find them a significant increase in liberalisation.
  Several hon. Members touched on the flotation of BT. I have consistently argued that the privatisation of BT is not an act of dogma but a logical extension of liberalisation of a monopoly. BT will certainly benefit by being removed from a web of public control; the taxpayers will benefit by receiving the receipts from the sale of BT; and the consumers will benefit from better services from BT.
  I am glad to say that we are moving down the path to privatisation and are holding the course well. The Act received Royal Assent on 12 April. The capital structure on the RPI minus 3 formula was announced on 2 May. The BT licence was issued on 22 June. The Director-General of Oftel took up his post on 1 July. BT will become a plc on 6 August. The legislation is all in place, and the machine is running. BT will be privatised in the late autumn, and all the signs are that it will be extremely successful.
  The sale of BT represents the greatest opportunity we have ever had to increase the ownership of shares by ordinary people in Britain. If all the 240,000 BT employees take up their free allocation of shares, BT will have the largest number of shareholders in the country, second only to ICI. However, this is only the beginning. We want to do much better than that.
  First, we intend to set the minimum application level at around £250 worth of shares. Less than half of this—

  283
  in the region of £100—will be payable at the time of flotation, and the balance in instalments over a set period. The exact duration of the instalments period will be firmed up closer to the flotation.
  I announced on 25 May that we intended to offer telephone subscribers who buy shares a set of vouchers which can be set in part payment of their quarterly telephone bills for a period of up to three years. The vouchers will be of a fixed monetary amount and will be usable one at a time over the period of the scheme. The number of vouchers which investors can receive will be related to the number of shares which they buy at the time of the flotation and which they keep until the vouchers are sent out.
  This scheme is designed to encourage telephone subscribers to invest in BT, and also to reward their loyalty by keeping the shares during the period of the voucher scheme. The first set of vouchers is likely to be sent out six or seven months after the flotation.
  Mr. Peter Shore: On a point of order, Mr. Deputy Speaker. This all too short debate, lasting one and a half hours, is on the licence of BT. It has nothing whatever to do with privatisation. It is a gross abuse of the House for the Minister now to make a statement on the details of that.
  Mr. Deputy Speaker (Mr. Paul Dean): We have had a fairly wide debate from both sides of the House.
  Mr. Baker: The right hon. Gentleman is a little too peevish. He has not been present for most of the debate. Had he been, he would know that the question of flotation was raised. However, I can understand why he is so peevish, because the scheme that I have outlined will be attractive to many of the telephone subscribers of Britain and will represent an enormous opportunity to increase share ownership. The Opposition do not like that, but that is what will happen.
  We want to take every opportunity to ensure that, with the sale of BT, we extend ownership not just through the City institutions but to many ordinary people. That is why we shall be introducing the scheme, and why the flotation of BT will be a great success later this year. I am glad to say that we have already set in train a series of measures involving the promotion and sale of BT which the public will see over the next few months. It will culminate in the issue of a shortened prospectus as well as a full prospectus in November, and I am sure——
  It being half-past Eleven o'clock, Mr. Deputy Speaker put the Question pursuant to Standing Order No. 4 (Prayers against statutory instruments, &c. (negative procedure)).
  The House divided: Ayes 186, Noes 247.

  Division No. 412]

  [11.30 pm

  AYES

  Alton, David

  Bell, Stuart

  Anderson, Donald

  Bennett, A. (Dent'n & Red'sh)

  Archer, Rt Hon Peter

  Bermingham, Gerald

  Ashdown, Paddy

  Bidwell, Sydney

  Ashton, Joe

  Blair, Anthony

  Atkinson, N. (Tottenham)

  Boothroyd, Miss Betty

  Barnett, Guy

  Boyes, Roland

  Barron, Kevin

  Bray, Dr Jeremy

  Beckett, Mrs Margaret

  Brown, N. (N'c'tle-u-Tyne E)

  Beggs, Roy

  Brown, R. (N'c'tle-u-Tyne N)

  Beith, A. J.

  Brown, Ron (E'burgh, Leith)

  284

  Bruce, Malcolm

  Lamond, James

  Callaghan, Jim (Heyw'd & M)

  Leadbitter, Ted

  Campbell, Ian

  Leighton, Ronald

  Campbell-Savours, Dale

  Lewis, Ron (Carlisle)

  Canavan, Dennis

  Lewis, Terence (Worsley)

  Carter-Jones, Lewis

  Litherland, Robert

  Clark, Dr David (S Shields)

  Lloyd, Tony (Stretford)

  Clarke, Thomas

  Lofthouse, Geoffrey

  Clay, Robert

  Loyden, Edward

  Clwyd, Mrs Ann

  McCartney, Hugh

  Cocks, Rt Hon M. (Bristol S.)

  McDonald, Dr Oonagh

  Cohen, Harry

  McKay, Allen (Penistone)

  Coleman, Donald

  McKelvey, William

  Conlan, Bernard

  Mackenzie, Rt Hon Gregor

  Cook, Frank (Stockton North)

  McNamara, Kevin

  Cook, Robin F. (Livingston)

  McTaggart, Robert

  Corbett, Robin

  Madden, Max

  Corbyn, Jeremy

  Maginnis, Ken

  Cowans, Harry

  Marek, Dr John

  Cox, Thomas (Tooting)

  Marshall, David (Shettleston)

  Craigen, J. M.

  Maxton, John

  Crowther, Stan

  Maynard, Miss Joan

  Cunliffe, Lawrence

  Meacher, Michael

  Dalyell, Tam

  Meadowcroft, Michael

  Davies, Rt Hon Denzil (L'lli)

  Michie, William

  Davies, Ronald (Caerphilly)

  Mikardo, Ian

  Davis, Terry (B'ham, H'ge H'l)

  Millan, Rt Hon Bruce

  Deakins, Eric

  Miller, Dr M. S. (E Kilbride)

  Dewar, Donald

  Mitchell, Austin (G't Grimsby)

  Dobson, Frank

  Morris, Rt Hon A. (W'shawe)

  Dormand, Jack

  Morris, Rt Hon J. (Aberavon)

  Dubs, Alfred

  Nellist, David

  Dunwoody, Hon Mrs G.

  Nicholson, J.

  Eadie, Alex

  Oakes, Rt Hon Gordon

  Eastham, Ken

  O'Brien, William

  Evans, John (St. Helens N)

  O'Neill, Martin

  Ewing, Harry

  Orme, Rt Hon Stanley

  Fatchett, Derek

  Park, George

  Faulds, Andrew

  Patchett, Terry

  Field, Frank (Birkenhead)

  Pavitt, Laurie

  Fields, T. (L'pool Broad Gn)

  Penhaligon, David

  Fisher, Mark

  Pike, Peter

  Flannery, Martin

  Powell, Raymond (Ogmore)

  Foot, Rt Hon Michael

  Prescott, John

  Forrester, John

  Randall, Stuart

  Forsythe, Clifford (S Antrim)

  Redmond, M.

  Foster, Derek

  Rees, Rt Hon M. (Leeds S)

  Foulkes, George

  Roberts, Allan (Bootle)

  Fraser, J. (Norwood)

  Roberts, Ernest (Hackney N)

  Freeson, Rt Hon Reginald

  Robertson, George

  George, Bruce

  Robinson, G. (Coventry NW)

  Gilbert, Rt Hon Dr John

  Rogers, Allan

  Godman, Dr Norman

  Rooker, J. W.

  Golding, John

  Ross, Ernest (Dundee W)

  Gould, Bryan

  Ross, Stephen (Isle of Wight)

  Gourlay, Harry

  Rowlands, Ted

  Hamilton, James (M'well N)

  Sedgemore, Brian

  Hamilton, W. W. (Central Fife)

  Sheerman, Barry

  Hancock, Mr. Michael

  Sheldon, Rt Hon R.

  Harrison, Rt Hon Walter

  Shore, Rt Hon Peter

  Hart, Rt Hon Dame Judith

  Short, Ms Clare (Ladywood)

  Haynes, Frank

  Short, Mrs R.(W'hampt'n NE)

  Healey, Rt Hon Denis

  Silkin, Rt Hon J.

  Heffer, Eric S.

  Smith, C,(Isl'ton S & F'bury)

  Hogg, N. (C'nauld & Kilsyth)

  Smith, Rt Hon J. (M'kl'ds E)

  Holland, Stuart (Vauxhall)

  Snape, Peter

  Howell, Rt Hon D. (S'heath)

  Soley, Clive

  Howells, Geraint

  Strang, Gavin

  Hoyle, Douglas

  Straw, Jack

  Hughes, Dr. Mark (Durham)

  Thome, Stan (Preston)

  Hughes, Robert (Aberdeen N)

  Tinn, James

  Hughes, Roy (Newport East)

  Torney, Tom

  Hughes, Sean (Knowsley S)

  Wallace, James

  Hughes, Simon (Southwark)

  Wardell, Gareth (Gower)

  Janner, Hon Greville

  Wareing, Robert

  John, Brynmor

  Welsh, Michael

  Jones, Barry (Alyn & Deeside)

  White, James

  Kilroy-Silk, Robert

  Wigley, Dafydd

  Kirkwood, Archy

  Williams, Rt Hon A.

  Lambie, David

  Wilson, Gordon

  285

  Winnick, David

  Woodall, Alec

  Tellers for the Ayes:

  Wrigglesworth, Ian

  Mr. John McWilliam and Mr. Don Dixon.

  Young, David (Bolton SE)

  NOES

  Adley, Robert

  Edwards, Rt Hon N. (P'broke)

  Aitken, Jonathan

  Eggar, Tim

  Alexander, Richard

  Evennett, David

  Amess, David

  Fairbairn, Nicholas

  Ancram, Michael

  Fallon, Michael

  Arnold, Tom

  Farr, Sir John

  Ashby, David

  Favell, Anthony

  Aspinwall, Jack

  Fenner, Mrs Peggy

  Atkins, Rt Hon Sir H.

  Finsberg, Sir Geoffrey

  Atkins, Robert (South Ribble)

  Fletcher, Alexander

  Atkinson, David (B'm'th E)

  Fookes, Miss Janet

  Baker, Rt Hon K. (Mole Vall'y)

  Forman, Nigel

  Baker, Nicholas (N Dorset)

  Forsyth, Michael (Stirling)

  Baldry, Anthony

  Forth, Eric

  Banks, Robert (Harrogate)

  Fowler, Rt Hon Norman

  Batiste, Spencer

  Fox, Marcus

  Beaumont-Dark, Anthony

  Fraser, Peter (Angus East)

  Bendall, Vivian

  Freeman, Roger

  Berry, Sir Anthony

  Fry, Peter

  Biggs-Davison, Sir John

  Gale, Roger

  Body, Richard

  Galley, Roy

  Bonsor, Sir Nicholas

  Gardiner, George (Reigate)

  Boscawen, Hon Robert

  Gardner, Sir Edward (Fylde)

  Bottomley, Peter

  Garel-Jones, Tristan

  Bottomley, Mrs Virginia

  Glyn, Dr Alan

  Bowden, A. (Brighton K'to'n)

  Goodhart, Sir Philip

  Brandon-Bravo, Martin

  Goodlad, Alastair

  Brinton, Tim

  Gow, Ian

  Brittan, Rt Hon Leon

  Greenway, Harry

  Brooke, Hon Peter

  Gregory, Conal

  Brown, M. (Brigg & Cl'thpes)

  Griffiths, Peter (Portsm'th N)

  Bruinvels, Peter

  Grist, Ian

  Buchanan-Smith, Rt Hon A.

  Ground, Patrick

  Buck, Sir Antony

  Grylls, Michael

  Budgen, Nick

  Gummer, John Selwyn

  Bulmer, Esmond

  Hamilton, Hon A. (Epsom)

  Burt, Alistair

  Hamilton, Neil (Tatton)

  Butcher, John

  Hanley, Jeremy

  Butterfill, John

  Hannam, John

  Carlisle, John (N Luton)

  Hargreaves, Kenneth

  Carlisle, Kenneth (Lincoln)

  Harris, David

  Carlisle, Rt Hon M. (W'ton S)

  Harvey, Robert

  Carttiss, Michael

  Haselhurst, Alan

  Cash, William

  Havers, Rt Hon Sir Michael

  Chalker, Mrs Lynda

  Hawkins, C. (High Peak)

  Channon, Rt Hon Paul

  Hawkins, Sir Paul (SW N'folk)

  Chapman, Sydney

  Hayes, J.

  Chope, Christopher

  Hayhoe, Barney

  Churchill, W. S.

  Hayward, Robert

  Clark, Sir W. (Croydon S)

  Heathcoat-Amory, David

  Clarke, Rt Hon K. (Rushcliffe)

  Hickmet, Richard

  Clegg, Sir Walter

  Higgins, Rt Hon Terence L.

  Cockeram, Eric

  Hind, Kenneth

  Colvin, Michael

  Hirst, Michael

  Conway, Derek

  Hogg, Hon Douglas (Gr'th'm)

  Coombs, Simon

  Holland, Sir Philip (Gedling)

  Cope, John

  Holt, Richard

  Corrie, John

  Hooson, Tom

  Couchman, James

  Howard, Michael

  Cranborne, Viscount

  Howarth, Alan (Stratf'd-on-A)

  Critchley, Julian

  Howarth, Gerald (Cannock)

  Crouch, David

  Howell, Ralph (N Norfolk)

  Dicks, Terry

  Hubbard-Miles, Peter

  Dorrell, Stephen

  Hunter, Andrew

  Douglas-Hamilton, Lord J.

  Hurd, Rt Hon Douglas

  Dover, Den

  Jackson, Robert

  Durant, Tony

  Jenkin, Rt Hon Patrick

  Dykes, Hugh

  Johnson Smith, Sir Geoffrey

  286

  Jones, Robert (W Herts)

  Spencer, Derek

  Joseph, Rt Hon Sir Keith

  Spicer, Michael (S Worcs)

  Kershaw, Sir Anthony

  Squire, Robin

  Key, Robert

  Stanbrook, Ivor

  King, Roger (B'ham N'field)

  Steen, Anthony

  King, Rt Hon Tom

  Stern, Michael

  Knight, Gregory (Derby N)

  Stevens, Lewis (Nuneaton)

  Knight, Mrs Jill (Edgbaston)

  Stevens, Martin (Fulham)

  Knowles, Michael

  Stewart, Allan (Eastwood)

  Knox, David

  Stewart, Andrew (Sherwood)

  Lamont, Norman

  Stokes, John

  Lang, Ian

  Stradling Thomas, J.

  Lawler, Geoffrey

  Sumberg, David

  Lawrence, Ivan

  Taylor, Teddy (S'end E)

  Lee, John (Pendle)

  Tebbit, Rt Hon Norman

  Leigh, Edward (Gainsbor'gh)

  Temple-Morris, Peter

  Lennox-Boyd, Hon Mark

  Thomas, Rt Hon Peter

  Lester, Jim

  Thompson, Donald (Calder V)

  Lilley, Peter

  Thompson, Patrick (N'ich N)

  Lloyd, Ian (Havant)

  Thome, Neil (Ilford S)

  Lord, Michael

  Thornton, Malcolm

  McQuarrie, Albert

  Thurnham, Peter

  Malins, Humfrey

  Townend, John (Bridlington)

  Maples, John

  Tracey, Richard

  Mather, Carol

  Trippier, David

  Miller, Hal (B'grove)

  Trotter, Neville

  Monro, Sir Hector

  Twinn, Dr Ian

  Moore, John

  van Straubenzee, Sir W.

  Murphy, Christopher

  Vaughan, Sir Gerard

  Neale, Gerrard

  Viggers, Peter

  Neubert, Michael

  Waddington, David

  Nicholls, Patrick

  Wakeham, Rt Hon John

  Norris, Steven

  Walden, George

  Oppenheim, Philip

  Wall, Sir Patrick

  Page, Sir John (Harrow W)

  Waller, Gary

  Peacock, Mrs Elizabeth

  Ward, John

  Porter, Barry

  Wardle, C. (Bexhill)

  Powley, John

  Warren, Kenneth

  Roberts, Wyn (Conwy)

  Watson, John

  Robinson, Mark (N'port W)

  Watts, John

  Roe, Mrs Marion

  Wells, Bowen (Hertford)

  Rossi, Sir Hugh

  Wells, Sir John (Maidstone)

  Rost, Peter

  Wheeler, John

  Rowe, Andrew

  Whitfield, John

  Rumbold, Mrs Angela

  Whitney, Raymond

  Sainsbury, Hon Timothy

  Winterton, Mrs Ann

  Sayeed, Jonathan

  Winterton, Nicholas

  Scott, Nicholas

  Wolfson, Mark

  Shaw, Giles (Pudsey)

  Wood, Timothy

  Shaw, Sir Michael (Scarb')

  Woodcock, Michael

  Shelton, William (Streatham)

  Yeo, Tim

  Shepherd, Colin (Hereford)

  Young, Sir George (Acton)

  Shersby, Michael

  Vounger, Rt Hon George

  Silvester, Fred

  Sims, Roger

  Tellers for the Noes:

  Smith, Sir Dudley (Warwick)

  Mr. David Hunt and Mr. John Major.

  Smith, Tim (Beaconsfield)

  Soames, Hon Nicholas

  Question accordingly negatived.

  Telecommunications

    BUSINESS OF THE HOUSE
    Ordered,
    That, at the sitting on Wednesday 18th July, notwithstanding the provisions of paragraph (1)(b) of Standing Order No. 3 (Exempted Business), the Motions relating to Food may be proceeded with, though opposed, for three hours after the first Motion has been entered upon, and Mr. Speaker shall then put any Questions necessary to dispose of proceedings on those Motions, if not previously concluded. — [Mr. Archie Hamilton.]

  Road and Rail Communications (North-east Lancashire)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Archie Hamilton.]
  11.43 pm
  Mr. Jack Straw: I am glad to have this opportunity to debate the subject of road and rail communications in north-east Lancashire. I am pleased that I am joined in the Chamber by my hon. Friend the Member for Burnley (Mr. Pike). With your agreement, Mr. Deputy Speaker, and that of the Minister, it may be possible for him to speak if I sit down at about 11.54 pm.
  I am also pleased to see the hon. Member for Pendle (Mr. Lee), the Parliamentary Under-Secretary of State for Defence Procurement, in the Chamber, who is also concerned about this issue, as well as the hon. Member for Hyndburn (Mr. Hargreaves).
  The general title of this debate relates to the transport infrastructure of north-east Lancashire. I shall mention two issues — the public bus and railway services, and the completion of the M65 motorway from Blackburn to the M6 and M61 south of Samlesbury. That is a major issue of contention in the area.
  The buses White Paper which was published last week shows that just under four out of 10 households in the country as a whole lack access to a motor car. In north-east Lancashire that proportion is higher. In Blackburn and Burnley, for example, exactly half the households do not have access to a car, and in Hyndburn, Pendle and Rossendale the proportion is only a little smaller.
  I hope that the buses White Paper is reconsidered for the folly that it is. It will spell a serious curtailment of bus services in rural areas. That is evidenced by the appendix to the White Paper, which shows that in the experimental areas of Hereford, Devon and Norfolk, the privatisation and liberalisation had led to a curtailment of rural services. It will disrupt the municipal undertakings in the area. Each borough, with Pendle and Burnley combined, runs effective municipal undertakings. The White Paper will also pose serious difficulties for bus and coach builders, including the east Lancashire coach builders in my constituency. They have already had to shed 30 jobs and their future is difficult.
  My second massive worry is about the railway service. East Lancashire is intersected by two railway services—one runs from Preston through Blackburn to Colne, and the other is a connecting service from Blackburn to Manchester. Both are vital commuter links and social services. They still use diesel multiple units, which were first introduced in 1959. Anyone who travels on them regularly knows that it feels as if they are 25 or 30 years old and they are well passed their useful life. Because they are clapped out, the timing of the services on those routes must be extended. That means, for example, that, whereas before the new timetable was introduced in May, 17 of the daily services from Manchester connected at Blackburn with trains to Accrington, Burnley and Colne, now only 10 do and the other seven arrive often two or three minutes after the train from Blackburn has gone.
  We will no longer accept it if the problem is shuffled off to British Railways. The Minister holds the purse strings for British Railways. We need urgent decisions to replace those diesel multiple units, and a pledge from the
  288
  Government—they also control this decision—that those two vital lines will have a long future and will not be subject to serpell cuts.
  An even more controversial issue is the full completion of the M65 motorway. The promise to build a motorway along the east Lancashire corridor from Colne through Nelson, Burnley, Accrington and Blackburn to connect with the M6 and M61 south of Preston was made in the late 1960s in response to deep anxiety that that sub-region would suffer if and when the central Lancashire new town, based on Preston, Leyland and Chorley was built. There was also anxiety that because other areas in the north-west had their transport systems improved, if north-east Lancashire lagged behind, it would be at a disadvantage. It was agreed that the M65 should be built from Colne to the M6 and M61. There was a great debate about which route it should take, especially whether it should go north through the centre of or south of Blackburn. That was finally resolved by a decision to route it through the south of Blackburn. It was announced by the then Secretary of State for Transport, Mr. Bill Rodgers, in 1977.
  I was present at a meeting between all the Lancashire Members of Parliament on 4 July 1979 and a junior transport Minister, now the Minister for Health. The Minister was pressed to pledge to continue the construction of the M64 through to the M6–M61 south of Preston. The Minister told us, as was repeated in a press statement issued after the meeting, that
  "The previous Government had given the M65 a high priority and he would continue to give it the same priority."
  At that meeting there was no suggestion that the route would be curtailed just east of Blackburn. In April 1980, in answer to a question from me, the Secretary of State for Transport, now the Secretary of State for Health and Social Security, announced that the section between Blackburn and the M65 and the M6–M61 would be cancelled. That caused, and has continued to cause, great consternation throughout north-east Lancashire, but no more than within my constituency. It means that the key link in the chain connecting that motorway to the national motorway network has been cut. That has serious implications for industry in the area. They are so serious that the north-east Lancashire development association has received well over 100 letters from major industrialists complaining about the disadvantage that would accrue to the area if the link continued to be cancelled.
  My constituents face the prospect that within a few months the motorway will finish at Whitebirk just to the east of Blackburn and all the motorway traffic not just from east Lancashire but coming down the A59 from north and west Yorkshire will pour into residential areas of Blackburn and through the Brownhill roundabout, which is already inadequate, and will then have to make the journey between the Moat house, formerly the Saxon and the Trafalgar inn at Samlesbury on a wholly inadequate, dangerous single carriageway road.
  The residents of Blackburn and north-east Lancashire felt betrayed by the former Secretary of State, given his colleague's pledge to treat the route as a high priority. No one in north-east Lancashire has accepted the decision. Everyone agrees that it is unacceptable that the motorway scheme should be cancelled, and believes that it must go ahead.
  We have had numerous meetings with the Minister of State, and I commend the fact that she has taken a considerable interest in the scheme. We look forward to

  289
  a positive response as a conclusion to her interest. The Minister was good enough to come to Lancashire in December 1982. I believe that she was deeply impressed by the case that was then put forward. That was followed by a detailed inquiry by Harold Yeadon, the Lancashire county surveyor. His report, which I have and which runs ino many pages, suggested that overall it would be more costly for the Government to go ahead with the cancelled scheme than it would be to include the motorway. The sum involved is £4 million, the difference between £56 million and £60 million. That takes account of the fact that if the motorway scheme does not proceed many more roads would need improvement than would otherwise be the case. It showed also that the level of traffic on the residential and main roads in the Blackburn area would be intolerable.
  Since 1 December 1982 there have been further meetings. The Minister has met further deputations and she has said on a number of occasions that she hoped to make a decision soon. I shall not embarrass her by giving the number of times on which she has said that, and the number of times that the deadlines have passed.
  In a recent reply in the House, the Minister rather ominously said that other areas in north-east Lancashire had a higher proportion of motorways than the country as a whole. That may be true, but it is no comfort to north-east Lancashire. If it is true, it places north-east Lancashire at a greater disadvantage than would otherwise be the case.
  We need the road. It was promised 15 years ago. It was re-pledged by this Conservative Administration in July 1979. The case for the scheme is overwhelming. It is needed for industry, for jobs, and to prevent misery, unhappiness and danger to the residents in my constituency. I urge the Minister to give a positive pledge to ensure that the scheme is built, and built soon.
  11.55 pm
  Mr. Peter Pike: I thank my hon. Friend the Member for Blackburn (Mr. Straw) for calling for the debate, and for giving me a few minutes in which to support the case that he so ably made.
  The two aspects on which I want to concentrate are the rail service and the M65. I am sure that the bus issue is one that the House will debate fully over a period of time because of the controversy that will arise from the proposal announced in the House last week.
  It must be remembered at all times that the proposal for the M65 to be linked to the M6 and to the M61 has the full support of all local councils in the area, and is not a matter of political division. The fact that not only two hon. Members on this side of the House support the case, but that the hon. Members for Pendle (Mr. Lee) and for Hyndburn (Mr. Hargreaves) are present for the debate is indicative of the support that the measure has. I know that my predecessor, Mr. Dan Jones, fought for improved road links to Burnley long before the suggested motorway when the proposal to construct the road was originally made in 1969–70. I am aware that the time schedule proposed for that motorway link has run out. It was originally evisaged that a motorway from Colne to the M6 would be completed by 1978; and, of course, that time has long since passed.
  This proposal is supported not only by the political parties and the local councils but by industry and the north-east Lancashire development association. In north-east Lancashire, communications are vital to our economic and industrial survival. We ask the Minister to take that vital
  290
  factor into account when reaching a decision. We are out on a limb in north-east Lancashire. The people in that area, who led the industrial revolution and played such a vital part in the country in the last century, have shown adaptability in transferring to new industries and, indeed, in transferring from the new industries that came in in the 1950s to yet another phase of new industries. We need the motorway if the new industries are to continue to come in and provide the employment that we so badly need.
  Another important aspect is the enterprise zone project which is supported by a number of councils in the area, including Pendle, Hyndburn and Rossendale, a project which is based on the concept of the motorway. That is an important factor to take into account.
  There is a great need for an improvement in the railway network in north-east Lancashire. From Burnley, the service to Preston is only one train an hour which takes over an hour, and it is a difficult journey. I am sure that no Minister of Transport with a choice would ever travel the last 20-odd miles to Burnley by rail if that could be avoided. We have one slight disadvantage as against my hon. Friend the Member for Blackburn in that from Burnley there is no direct service to Manchester, so that one must change at Blackburn. In the middle of the day, some trains take over two hours to travel the 20-odd miles from Burnley to what is the regional capital of Lancashire, which is deplorable. There needs to be an improvement in the rail service, and completion of the M65. I hope that, when the decision is reached—and we keep hearing that this will come very soon—it will be a favourable one.
  11.59 pm
  The Minister of State, Department of Transport (Mrs. Lynda Chalker): I am grateful to the hon. Members for Blackburn (Mr. Straw) and for Burnley (Mr. Pike) for their contributions to this important debate. I think that they both know already that I regard this as an important subject.
  The hon. Members mentioned buses and, although I do not wish to dwell on that aspect, I should point out that in recent years there has been a continuation of policies that have led to increased fares, reduced services and increased subsidies. That policy cannot go on.
  Experience in trial areas is that deregulation has not led to major cuts in rural services. On the contrary, those areas have done rather better than comparable rural communities outside the trial areas. New initiatives come forward when buses are freed from regulation. Enough of buses for tonight.
  The hon. Members for Blackburn and for Burnley mentioned the problems of rail travel. The hon. Member for Burnley told us how difficult it was to get from Burnley to Preston and Manchester. We fully accept that many of British Rail's diesel multiple units are approaching the end of their working lives. However, BR has plans to renew the entire fleet over the next few years and is working on that investment. Since the beginning of the year, we have approved investment in 150 lightweight rail buses and 100 medium-weight DMUs, together worth nearly £50 million.
  Those vehicles are for BR's provincial services, though it will be for BR to decide where they will be used. I know that BR is concentrating such vehicles on the sort of provincial lines of which the hon. Members have spoken.

  291
  I know that BR wishes to have further DMUs built in the near future. I assure the hon. Member for Blackburn that the Government will do their bit to help to create the modern and efficient railway that our people want.
  Talking of efficiency brings me to timetabling. I do not deny that there have been problems since the new timetable was introduced on the east Lancashire line, in changing at Blackburn for services to Manchester. British Rail has received a number of complaints about those connections and has made adjustments to the timetable to overcome the problem. Revised times have been publicised in the local press and will be included in the October supplementary timetable. British Rail has already responded to an unsatisfactory state of affairs.
  British Rail has recognised that the connections to Preston are not good enough and the 1985 timetable will include a number of adjustments designed to improve those connections for people using local services to and from Preston and wishing to change there to the west coast main line. Neither BR nor the Government intend to excuse the operational difficulties that have occurred, but BR is putting them right.
  I should say to the hon. Members for Blackburn and for Burnley and to my hon. Friends the Members for Pendle (Mr. Lee) and for Hyndburn (Mr. Hargreaves), who are also present, that since 1982 much time has been spent on considering links from Blackburn to the M6 and the M61. I have been listening to the arguments of hon. Members on both sides of the House that the construction of the green route would confer great benefits on north-east Lancashire. I am sorry that I cannot give the House a decision tonight. I do not think that the hon. Member for Blackburn expected that, but he wanted a progress report and hoped that my "soon" might have arrived. I know the importance of the timing.
  We know that completing the connection to the national motorway network, fostering the expansion of existing industry and encouraging the development of new industry has merits. However, there is a contrary view of the link with the motorway system. A decision is needed without further delay to remove the uncertainty and the understandable local concern. I apologise, but it is an important matter and the decision either way has far-reaching consequences.
  The alternatives are rather more finely balanced than the hon. Member for Blackburn gave us to understand. The many representations to me, both for and against, show a finer balance of the argument. That is why the discussion of the elements involved is taking longer than the hon. Gentleman would wish.
  The case for the green route rests upon a number of factors, which have been expounded. It also stands or falls on the justification for it in terms of the traffic that it will attract away from other routes and the economic benefits that it will confer. The study of traffic and economic considerations has involved a great deal of work. We have had to go back to the county council to obtain an explanation of some of the figures in its excellent report. It has had to amplify some of the work. Those results are being carefully considered.
  My Department has done all it can to speed up the process. I do not hold my officials in any way responsible for the time that it is taking. I genuinely feel that we should take a little extra time now and ensure that we reach the
  292
  right decision. I think that that is what the hon. Gentleman wants. The green route, as I am sure he accepts, is an expensive proposition involving a massive injection of capital into an area that has already benfited considerably from roads investment—even if that part of Lancashire does not have the road it wants yet. I cannot make any decision lightly.
  I welcome the debate because it allows me to say a word about the future. I accept that the construction work on the Department's final four-mile section of the M65 Calder valley motorway between Whitebirk and Hyndburn is going extremely well. It is scheduled for completion in the middle of next year. I am sure that my hon. Friend the Member for Hyndburn will welcome that.
  The construction of the Accrington easterly bypass, southern section, is also proceeding and will complete the final stage in the construction of a high standard north-south route between the Calder valley towns and Greater Manchester conurbation and the M62 motorway. Already, plenty is happening, but what is not happening is the decision about Blackburn going westwards towards the M6.
  The opening of the 5·5 mile Hyndburn to Burnley section of the M65 and the extension of the Lancashire county council's section of the M65 between Brierfield and Nelson means that there is considerably easier traffic in those areas. It highlights the difference when we reach Blackburn. That investment must be borne in mind, especially now that the north-south link is going ahead in relation to the total amount of resources available. That has not made me cease to look at what needs to be done. I would be failing in my task if I did not tell the hon. Member for Blackburn that the Brownhill roundabout will have to have attention, whatever the decision on the green route, but how it is done must be decided in conjunction with the decision that must be made.
  I know that there is anxiety about the forward plan for the A677–A6119 improvement. I want to set the record straight. There is no doubt that if the green route goes ahead, we would need to reassess our plans for the northern route between the M65 and the M6 at Samlesbury. We are convinced that improvements will be needed at the roundabout junction at Brownhill. There are serious present-day problems, which have existed for many years, and we cannot expect the traffic just to go away, especially after the M65 to Whitebirk opens next year.
  My Department has been discussing the appropriate answer with Lancashire county council. We have also involved Blackburn borough council. I hope that, for that roundabout, we can find a mutually agreed solution. We want to publish some firm proposals as soon as possible so that we can test public opinion, have a local inquiry and take a final decision about the form of the urgently needed improvement at that junction.
  As for any doubts that remain locally, I confirm that for Brownhill we are thinking in terms of a single-level junction. The plans which were around some time ago to build a flyover have been scrapped. I can give the hon. Member for Blackburn that assurance, which he will welcome.
  I have mentioned the timing of the Brownhill improvement. I hope that, with the local councils, we can get on with the statutory procedures and complete the public inquiry by 1986. If the green route is to go ahead, it will be necessary to review the proposals that we have

  293
  recently been developing for comprehensive improvements to the remainder of the A677–A6119 route. We shall, however, wish to look at other junctions on that route to see whether we can do something modest to enhance their use and reduce accident spots. In particular, we need to look at Samlesbury.
  The Lancashire county council report on the green route, which we have been studying, compares the Department's present proposals to upgrade the existing road with the proposal to construct a new road along the lines of the green B route. We are grateful for that assessment, as I have already said. It has highlighted the environmental problems associated with the Department's current northern strategy and its implications for consequential work on both trunk and county roads.
  294
  The report is a well-argued and well-presented document, and in coming to our decision I shall take into account the county council's case, the case that the hon. Members have made tonight—and the points that have been made by several of my hon. Friends, two of them present tonight—about the the importance of getting better links from Blackburn across to the M6. I do not want anyone to think for a moment that we shall not be considering every aspect of that, including all the traffic implications in that part of Lancashire. That is what we are doing now, and I hope very shortly to reach a conclusion.
  Question put and agreed to.
  Adjourned accordingly at twelve minutes past Twelve o'clock.