Commons Sitting of 18 July 1984

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

  Housing Associations (Sales)
  Mr. McQuarrieasked the Secretary of State for Scotland if he will take steps to ensure that persons occupying houses built by housing associations who wish to purchase their houses under the Tenants' Rights, Etc. (Scotland) Act will be able to do so at district valuers' valuation.
  The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): Where a housing association disposes of a house to a sitting tenant under the existing voluntary arrangements, the market value of the house already falls to be determined by the district valuer.
  Mr. McQuarrie: With respect to my hon. Friend, that is not a satisfactory answer. Should not people who are in housing association houses have the same right as council tenants to purchase their houses, because the building of those houses was funded by public money? They should not be in a disadvantageous position compared with council tenants.
  Mr. Ancram: I am sorry that my original answer was unsatisfactory, but I answered the question that my hon. Friend asked me. I shall now attempt to answer his second question.
  I agree with my hon. Friend that where public money has been used to build the houses the tenants should be able to buy their houses at a discount. As my hon. Friend knows, that right was excluded from the original tenants' rights legislation because of the nature of the housing associations at that time. A voluntary code of sales was introduced instead. I have been concerned for some time that that voluntary code is not operating satisfactorily, and I have now asked the Housing Corporation to require all associations which have not confirmed their willingness to sell to their tenants with discounts to reconsider their policies.
  Mr. Eadie: Surely the Minister must be aware that if the test of the district valuer's figures is applied to housing associations the taxpayer—and, of course, the tenant—may suffer.
  The Minister must be aware of the situation at Newtongrange, where there is a crying need for redeveloped housing, and where a housing association was compelled, on the district valuer's figure, to give the Lothian estate £210,000 because the owner had the good fortune to inherit buildings and lands when the lease from the National Coal Board expired. Is that not to some extent a robbers' paradise?
  Mr. Ancram: I find the implications of the hon. Gentleman's question concerning the district valuer's
  296
  judgment rather strange, because, as I said to my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) in answer to the original question—and in an answer on the same point concerning Newtongrange at the last Scottish Question Time — the district valuer made a valuation, and I believe that valuation to be proper.

  1986 Commonwealth Games
  Mr. Strangasked the Secretary of State for Scotland if he will meet representatives of the Edinburgh district council to discuss the facilities and arrangements for mounting the 1986 Commonwealth Games.
  The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): In the course of my recent visit to the headquarters of the Commonwealth Games organisation and several of the venues for the games. I met informally members of Edinburgh district council who are members of the games organising committee. I see no reason to arrange a formal meeting with the district council.
  Mr. Strang: I am grateful to the Minister for that answer. I am sure he will recognise that the success of the games is important to Edinburgh, and also of great importance to Scotland as a whole.
  Now that there is a very good agreement between the games organising committee and the new administration in the district council, will the Government give all the support they can to the games? In particular, can the Minister help in any way to achieve an early solution to the problem of finding a venue for the cycling events?
  Mr. Stewart: I entirely agree—and I am sure the whole House will agree—about the importance of the games to Scotland as well as to Edinburgh. I agree with the hon. Gentleman also in expressing delight and pleasure at the agreement with the district council.
  I did, as it happens, visit the velodrome. I have no doubt that there are several options, and that Edinburgh district council and the games organisers will reach an acceptable solution.
  Lord James Douglas-Hamilton: Is my hon. Friend aware that there is enormous enthusiasm for the games in Edinburgh? Is he satisfied with the arrangements for bowling at Balgreen in my constituency? Throughout Scotland those who engage in bowling are extremely interested in having satisfactory arrangements made.
  Mr. Stewart: As my hon. Friend will know, there is indeed great enthusiasm, not only among the games organisers, but among a wide range of people who are assisting the organisers in any number of ways. I visited Balgreen and, while I am no expert on bowling facilities, I have no doubt that the facilities there will be excellent.
  Mr. Ewing: Talking about games and athletics, and in view of the abysmal failure of the Minister and of his right hon. Friend in Scotland, does the hon. Gentleman think that he will be for the high jump in the autumn?
  Mr. Stewart: I doubt whether that question needs a serious answer.
  Sir Hector Monro: Will my hon. Friend ensure that the facilities that are required for the games in Edinburgh are of a high standard? As has been rightly said, we look upon them as the games for Scotland. Will he not be put

  297
  off by those who think that there could be boycotts by certain countries because of contact by other countries with South Africa? In practice, I do not think that that will take place.
  Mr. Stewart: I am sure that the Commonwealth Games in Edinburgh will be an outstanding success.
  Mr. Dalyell: At the main organising committee of the games the week before last, which I attended, as I attended each one before, two problems were expressed. First, can the games be certain that everything will be done to prevent the embarrassment of Rugby Union football tours, which could have a terrible effect on the games at Edinburgh? Secondly, is it not embarrassing that Queensland, British Columbia and the federal Governments of Canada and Australia coughed up quite a lot of money for their games? Cannot the Government at least give a token sum to ours?
  Mr. Stewart: As the hon. Gentleman will know, the Government have consistently reiterated their support for the Gleneagles agreement. I am happy to assure the hon. Gentleman that the organisers are confident that they will achieve all the finance that they need. As the hon. Gentleman may be aware, a number of events are being assisted through the Scottish Sports Council.

  Housing Finance (Strathclyde)
  Mr. McKelveyasked the Secretary of State for Scotland if he has studied the report "A Strategic Review of Public Sector Housing Finance in Strathclyde (1979–84)"; and if he will make a statement.
  Mr. Ancram: Strathclyde regional council has not yet submitted that report to my right hon. Friend.
  Mr. McKelvey: That is a pity. In that report the Minister would have read that there is a great needs element for finance for public housing in Scotland. Will he ask his right hon. Friend the Secretary of State for Scotland to consider releasing his stranglehold on expenditure in Scotland? If he does not, ultimately it can only lead to a drastic lowering of the quality of life for tenants in Scotland. How long will he preside over an area that can only lead to a massive new generation of slums?
  Mr. Ancram: Taking the hon. Gentleman's word for what is in the report, I must remind him that there was a considerable provision for the housing authorities in Strathclyde this year — about £97·075 million. It is equally well worth noting that, of that capital allocation, £15·5 million was forfeited by decisions of housing authorities within the Strathclyde region on the rate fund contribution. That £15·5 million could have bought solutions to many of the problems that exist in the housing estates in those authorities.

  New Towns
  Mr. Robin Cookasked the Secretary of State for Scotland if he will make a statement on the future assisted area status of the Scottish new towns.
  Mr. Allan Stewart: The future assisted area status of the Scottish new towns will be considered in the forthcoming review of the assisted area map. The review will take account of the views which have been expressed
  298
  by the new town development corporations in their responses to the White Paper on regional industrial development.
  Mr. Cook: Will the Minister take this opportunity of removing the uncertainty raised by his speech three weeks ago? Does he not appreciate that that uncertainty must limit the effectiveness of the new towns in attracting investment to Scotland, which they have done effectively over recent years? Is he aware that Livingston new town is in the same travel-to-work area as Bathgate? In view of the repeated statements by himself and his right hon. Friend about their concern for the rocketing unemployment of that area, does he not realise that those expressions will ring hollow if the development area status of Livingston is downgraded?
  Mr. Stewart: I am fully aware of the position at Bathgate. My right hon. Friend and I met Lothian regional council and West Lothian district council to discuss that subject earlier this week. Livingston, as the hon. Gentleman says, has been a tremendous success as a new town, with over 1,000 new jobs in the past year. I am happy to assure the hon. Gentleman that any suggestion in various speculative articles in the press that a decision has been taken to single out the new towns to bear heavy cuts in regional assistance is absolute nonsense.
  Mr. Norman Hogg: Will the Minister reiterate the view, which he has expressed before, that Scotland's new towns have led the field since the war in the attraction of inward investment? In view of that, will he give an assurance that no adverse decisions will be taken about the future development area status of the new towns, because of the damage that that would do to Scotland's economy as a whole and to the new towns in particular?
  Mr. Stewart: I am happy to assure the hon. Gentleman that the Government will take into account the distinctive contribution that the new towns have made and are making, not just to the regional and sub-regional economies, but to Scotland as a whole. The hon. Gentleman knows that Cumbernauld has shown an increase of 1,000 jobs in the past year.
  Mr. Lambie: Is the Minister aware that Irvine new town is an unemployment black spot, not only in Scotland, but in the United Kingdom, and has an overall unemployment rate of just under 23 per cent. and a male unemployment rate of about one in four? Against that background, would it not be criminal if any future formula for allocating regional aids to new towns in Scotland downgraded Irvine? Will the hon. Gentleman assure us that the Secretary of State will stand up for the Scottish new towns, will resist the demands of the Treasury and will give some protection to Scottish new towns, instead of killing them?
  Mr. Stewart: The hon. Gentleman is a renowned devotee of conspiracy theories. I assure him that we are aware not only of the contribution made by Irvine new town but of the problems to which he has referred. He will know that Irvine attracted 700 new jobs in 1983–84.
  Mr. Dewar: The Minister referred to press speculation, but does he not realise that our anxieties are based on his speech, which was circulated in the Scottish Grand Committee, in which he referred to the support given to the Scottish new towns and said that it was only to acknowledge reality to say that continued assistance to

  299
  the new towns would have to be considered? Surely those comments are open to the interpretation that the new towns are under threat.
  Will the hon. Gentleman give an assurance that large parts of Scotland will not be downgraded and lose their status in respect of regional and industrial incentives? Does he accept that if that happens in Livingston, my hon. Friend the Member for Livingston (Mr. Cook) will have been right to say that that gives the lie to the concern expressed by Ministers about unemployment at Bathgate and suggests that that was no more than hollow hypocrisy?
  Mr. Stewart: I have already told the hon. Member for Livingston (Mr. Cook) that the Government acknowledge the problems at Bathgate. I said:
  "It is only to acknowledge reality to say that the case for continued assistance to the special development areas will have to be considered against the claims of other parts of the country."
  That is virtually a statement of the obvious.

  Health Services (Privatisation)
  Mr. Ewingasked the Secretary of State for Scotland if he will make a statement on his circular to health boards instructing them to put out to private tender their catering, cleaning and laundry services.
  Mr. Willie W. Hamiltonasked the Secretary of State for Scotland if he will make a statement on his recent circular to health boards concerning the privatisation of the catering, cleaning, and laundry services of National Health Service hospitals.
  Dr. M. S. Millerasked the Secretary of State for Scotland what provision he has made for increases in administrative staff in Scottish hospitals consequent upon privatisation proposals.
  The Parliamentary Under-Secretary of State for Scotland (Mr. John MacKay): The circular of 22 June confirms our policy of testing the cost-effectiveness of support services to enable health boards to secure savings which will be available for patient care. The circular sets out short and long-term timetables for action by health boards and the Common Services Agency. It is part of their continuing duty to identify and secure efficiency savings, and I see no need for additional staff.
  Mr. Ewing: In view of the Minister's failure yesterday to clear up the status of the document that he has sent to the health authorities in Scotland, will he clarify the status of that document and make clear what action he would take if any of the health boards — rightly, in the view of Labour Members — sensibly ignored the Minister's document?
  Mr. MacKay: The document that I have sent to the health boards has the same status as the many circulars and documents which the hon. Member sent to health boards in his time in office. The document suggests a course of action that health boards should take. I fully expect them to take that action, as they are appointed by my right hon. Friend. — [Interruption.] That is a fact. They are appointed by my right hon. Friend and are answerable to him and to Parliament.
  Mr. Hamilton: Will the Minister give a categorical assurance that he will give in writing to all the health boards an undertaking that if they wish to retain in-house services they will not be compelled by him to accept
  300
  private contractors? Will he also declare in writing that private contractors must observe all National Health Service conditions of service and all its statutory responsibilities?
  Mr. MacKay: I have made it clear on a number of occasions that health boards will be expected to judge private tenders on the basis of competence and efficiency. Private contractors must be able to do the jobs that the health boards expect them to do. I expect the health boards to take the lowest tenders, all other considerations being equal.
  Dr. Miller: Surely extra administrative staff will be needed for sending out tenders and assessing their value. May we have an assurance that if and when tenders prove to be more expensive than the cost of work done at present the Minister will come to the House to explain the exact position?
  Mr. MacKay: The position in relation to my short-term request to the health boards will be clear at the year's end. I shall then be happy to answer questions about the tenders. The administrative staff of the Health Service should already be monitoring in-house services. It will not add much to the work load to ask staff to prepare tenders for work which is already supervised and known well.
  Mr. Malone: Will my hon. Friend dispel the rumour put about by Opposition Members that there will be redundancies in the nationalised sector? If that sector can provide the same service as the private sector at competitive prices, will it not have an equal opportunity to tender?
  Mr. MacKay: My hon. Friend is right. I have said time and again that if the in-house cost is lower than that of outside contractors, the health boards will sensibly accept the in-house tender. I expect that in some cases that will happen. Whether in-house tenderers or outside contractors are the winners, money will be saved to be used for direct patient care.
  Sir Hector Monro: Can my hon. Friend confirm that if tenders are comparable and on exactly the same terms, he will leave it to the health boards to decide which to accept, bearing in mind value for money and cash saved for the health care of patients?
  Mr. MacKay: I confirm that I shall expect health boards to work out the pros and cons of tenders and attempt to balance the advantage to the health board in the money that can be saved. That will be at their discretion. I know that the health boards wilt act sensibly and not be politically motivated, because they wish to use the money for patient care if any savings are to be made.
  Mr. Kirkwood: Does the Minister accept that by requiring the health boards to undertake a tendering process the Government are delivering a kick in the teeth to the many loyal and dedicated staff in the catering and ancillary services? What advice has he for the management boards which will have to cope with irreparable damage to industrial relations?
  Mr. MacKay: Perhaps the alliance has some relationship with the trade unions in the Health Service. The Government's motive is to achieve the best value for money for the taxpayer and the patient. We shall achieve that through contracting out, if the tenders are available.

  301
  I do not think that loyalty has anything to do with the matter. If the in-house tender is the most economic, the health boards are free to accept it.
  Mr. Maxton: Has the Minister read the response of the Greater Glasgow health board to the earlier circular on privatisation? Is he aware that that response was agreed unanimously by a board made up of either medical experts or appointees of the Secretary of State and that it includes Lady Goold, the wife of the chairman of the Scottish Conservative party?
  Mr. MacKay: Yes, I read the original remarks by Greater Glasgow health board; but, after discussion with the chairmen of the health boards, including the chairman of the Greater Glasgow health board, I sent them a new circular, and there was no suggestion in my meeting with them that they would not go along the road that I was requesting.
  Mr. Canavan: When will something be done about the activities of certain Tory Members, such as my own Member of Parliament, who is moonlighting as the head of Michael Forsyth Associates and seems to be using his parliamentary position to further the interests of his own company, which is up to its neck in this aspect of the privatisation of the Health Service, which, anywhere it has been tried, has been shown to mean dirty linen, dirty sheets—
  Mr. Speaker: Order. I hope that the hon. Gentleman is not seeking to impugn the honour of the hon. Member for Stirling (Mr. Forsyth).
  Mr. MacKay: It is clear that the hon. Member for Falkirk, West (Mr. Canavan) will not withdraw his remarks about my hon. Friend, which are totally unjustified. Hon. Members have their interests declared in the Register of Members' Interests. It is up to them to defend their position, which they can do perfectly well. I have no doubt that the hon. Member for Falkirk, West has his trade union interests to defend.
  Mr. Michael Forsyth: Does my hon. Friend not find it astonishing that the official Opposition seem to confine themselves to personal attacks on hon. Members on a matter which has already saved the Health Service many millions of pounds, mainly where in-house direct labour organisations have cut their costs and no outside contractors have been involved?
  Mr. MacKay: My hon. Friend is perfectly correct. It is amazing that the Opposition do not seem interested in getting value for money in the cash spending of the Health Service. As I told the Scottish Grand Committee yesterday, already by in-house tendering being looked at seriously and critically, Tayside health board has saved £250,000 in the cleaning costs at Ninewells alone.
  Mr. O'Neill: Will the Minister confirm clearly and simply that, in the event of any health board refusing to comply with his suggestions of 22 June, it is liable to be sacked? Will he answer that yes or no?
  Mr. MacKay: As I said at the outset, the circulars have the same strength as they have had in the past.
  Mr. O'Neill: Yes or no?
  Mr. MacKay: These are my requests to the health boards. I have had no indication that any board will refuse to go along that road. Until that day comes, I refuse to speculate.

  Council House Sales
  Mr. Knoxasked the Secretary of State for Scotland whether he is satisfied with the progress being made with the sale of council houses in Scotland.
  Mr. Ancram: Over 50,000 sales have been completed so far and many more applications are with councils. But my Department is writing to five councils which still appear to be taking oer 12 months to process sales—Aberdeen, Dumbarton, Monklands, Renfrew and Stirling — to stress the serious consequences for their own housing programmes.
  Mr. Knox: Can my hon. Friend say what percentage of the stock of council houses in Scotland has been sold?
  Mr. Ancram: The percentage of the whole public sector, including the new towns and the SSHA, which has been sold is about 5·8 per cent. Taking only council houses, sales amount to some 3·6 per cent. The first figure compares with more than 10 per cent. over the whole of the public sector in England, and it shows that a vigorous sales campaign of the kind that we are seeking in Scotland will produce not only more sales but additional resources for councils to spend on problems in their housing areas.
  Mr. Tom Clarke: Is it not significant that the Minister named my authority, Monklands, in reply to a question from an hon. Member representing an English constituency? Is the Minister aware that people in Monklands still take local government seriously? So long as we have the number of damp, rotten houses that we have and the council is denied the capital that it needs, the district council in Monklands will set the housing priorities that it does at present.
  Mr. Ancram: I am sure the hon. Gentleman is aware that, because of the delay in selling council houses in Monklands, that council will forgo £749,000 this year. The council has estimated that the cost of treatment of condensation and dampness would be about £100,000. Therefore, if it had sold its houses it could have dealt with the problems.
  Mr. Hirst: Is my hon. Friend aware that some councils are insisting, before modernisation programmes take place, that tenants give an undertaking not to apply to purchase their houses? Does he agree that it is an unreasonable interference in the statutory rights of tenants, bearing in mind that the capital cost of the house will be accordingly higher after modernisation?
  Will my hon. Friend urge non-housing authorities such as Strathclyde, which are disposing of their surplus stock, to pay due regard to the SDD circular, which recommends that such authorities should offer the same discounts on homes to sitting tenants who want to buy them?
  Mr. Ancram: I shall deal with my hon. Friend's second point first. I am concerned that there is inconsistency in the way that regional councils across Scotland are selling their surplus houses. I am seriously studying the matter. Secondly, I understand that Glasgow district council has asked tenants to sign an agreement that they will not apply for purchase within 10 years of modernisation. I have made it clear that that agreement would have no validity and in no way undermines the right to buy.

  303
  It is worth reminding tenants that such councils would have gained more than £1 million if they had sold their council houses, which would have been sufficient to provide 32 sheltered dwellings for the elderly.
  Mr. Kennedy: As a firm supporter of the right to buy, may I ask the Minister to have due regard to the Highland local authorities, especially those in areas such as Ullapool and Kyle of Lochalsh, where the cost of construction of council houses is becoming increasingly high because of the additional expenditure incurred in the costs involved in transporting timber and construction materials? Will the Minister give preferential treatment to those councils which, in a non-dogmatic way, are implementing the Government's policies?
  Mr. Ancram: Obviously, we look at the bids from housing authorities in the autumn before we decide the allocation. I appreciate that the hon. Gentleman is a supporter of the right-to-buy policy, but there is no evidence to suggest that the sale of council houses diminishes the total stock. In most cases, those who buy would not have bought a home if they had not had the opportunity to buy their council homes.
  Lord James Douglas-Hamilton: If a miner who has moved from a National Coal Board house to a council house wishes to purchase that house, would it not be possible for the time that he spent in the NCB house to be taken into account? Will my hon. Friend consider that point?
  Mr. Ancram: I shall bear in mind what my hon. Friend said.
  Mr. Foulkes: Can the Minister confirm that in some cases local authorities are having to take back houses which they have sold to tenants because the owners are defaulting on payments and, in some cases, doing moonlight flits? Does he agree that that position will become worse because of the huge increase in mortgage interest rates? Does not the Minister have a guilty conscience about forcing people to take on huge debts and are now having to meet a substantial increase in the repayments?
  Mr. Ancram: The hon. Gentleman is taking a different line from that usually taken by Opposition Members, who usually complain about the level of discounts and claim that we are giving away council houses. There is nothing to suggest that the houses sold with discounts do not offer a good investment for the tenant. We would be interested to know whether the Opposition have yet made up their mind on whether they believe in the right to buy.

  North British Steel Foundry, Bathgate
  Mr. Dalyellasked the Secretary of State for Scotland if he will make a statement on his discussions with the North British Steel foundry, Bathgate.
  The Secretary of State for Scotland (Mr. George Younger): My officials in the Industry Department for Scotland have had discussions with the company about the proposal to concentrate production at Armadale, and have drawn attention to the Government's willingness to assist with any investment proposals designed to ensure the firm's long-term viability. I understand that the company is also having discussions with the SDA.
  Mr. Dalyell: All credit to the late Ian Menzies for the reinvestment policies of MacBeth Menzies. Is there a more modern technical casting plant in the whole of Europe? Will the Secretary of State use his influence as a Cabinet Minister to obtain a favourable outcome to the meeting between George House, AUEW representatives, members of the company and his ministerial trade colleagues at 11.15 am on Monday?
  Mr. Younger: I am well aware of the importance of this matter. I am also well aware of the meeting, and I very much hope that it will be successful. I shall draw the matter to the attention of my hon. Friend.
  Mr. Ewing: Is the Secretary of State aware that it would be very helpful to the North British Steel foundry in Bathgate and, indeed, to the whole of the steel foundry and the iron foundry industry, if he would make representations to his right hon. Friend the Secretary of State for Trade and Industry insisting that export quotas should be applied to the export of scrap steel? Is the Secretary of State aware that the cost of scrap steel to the North British Steel foundry at Bathgate and, indeed, to all the foundries, has risen from £30 to £80 per tonne during the course of this year because his right hon. Friend refuses to apply extra quotas?
  Mr. Younger: I am aware that that is one of the problems that the company has been considering. I have no doubt that this will be covered in the coming discussions.

  Locate in Scotland
  Mr. George Robertsonasked the Secretary of State for Scotland when he expects to receive the report on the operations of Locate in Scotland's overseas offices.
  Mr. Younger: As hon. Members are aware, a review of United Kingdom inward investment promotion, not just the operations of Locate in Scotland's overseas offices, is currently taking place. The Government expect to receive a report shortly from a working group of officials upon which the Scottish Office is represented.
  Mr. Robertson: Is it not tame for the Secretary of State to say unambiguously that Locate in Scotland will he able to continue its vital and unique role in attracting industry to Scotland? Could he not today make it absolutely clear that, if he is still in that post by the time the report comes out, he will resign if the Secretary of State for Trade arid Industry gets away with butchering Locate in Scotland's jobs?
  Mr. Younger: I must say that there is a great deal of speculation in that. I have always made it clear that I have the greatest admiration for the, work of Locate in Scotland. Until I receive the report, I do not know what will be proposed. I very much doubt whether anyone would be likely to propose abolishing Locate in Scotland, which has been outstandingly successful.
  Mr. McQuarrie: I am grateful to my right hon. Friend for his comments. I am sure that I speak for Conservative Members and indeed for Opposition Members when I say that we shall give him total support in any fight that he has to retain Locate in Scotland in Scotland. As the hon. Member for Hamilton (Mr. Robertson) has said, we will not tolerate the removal of Locate in Scotland, and we give a guarantee of our support in that regard.
  Mr. Younger: I am grateful to my hon. Friend for what he has said, and for his offer of support. I am sure that he will be as encouraged as I am to find that, surprisingly, right hon. and hon. Gentlemen who have done nothing but moan about this in the past have now suddenly become great supporters.
  Mr. Milan: Is it not a fact that, when the Select Committee on Scottish Affairs investigated this matter, the Under-Secretary, the hon. Member for Eastwood (Mr. Stewart), not to mention the hon. Member for Banff and Buchan (Mr. McQuarrie), resisted any independent role for Scottish representation overseas? That is the historical fact of the matter. Is the Secretary of State aware that it is an open secret that the Department of Trade and Industry has never liked that independent role overseas? We are referring not only to abolition, but to the maintenance of the independent role of Locate in Scotland, because, without that independence, it will be very much less effective than it is at present. That is what we are pledged to defend, and we hope that he, too, is pledged to defend it.
  Mr. Younger: I make no apology for my defence of Locate in Scotland, although I do not agree with the right hon. Gentleman's interpretation of history. What he will have to recall, whether he likes to or not, is that, on every occasion when new investments have been successfully achieved by Locate in Scotland, the Opposition have done nothing but criticise them and say that they are not worth having.
  Mr. Hirst: Does my right hon. Friend agree that the reason why Locate in Scotland is so successful is that it operates a one-door policy, in contrast with the English authorities, who go in multiplicity to the United States? Will he impress upon his colleagues at the Department of Trade and Industry that the important thing for us in Scotland is not that Locate in Scotland takes jobs from other parts of the United Kingdom, but rather that it wins jobs that might otherwise go to Ireland, Germany and other places in the world?
  Mr. Younger: I agree with my hon. Friend. One of the most important achievements of Locate in Scotland is that it broadly has the confidence of all the institutions, local authorities, new towns, and so on in Scotland, which are supporting it and working with it. That is one of the most important features.
  Mr. Wilson: As the leak to the Glasgow Herald was caused by alarm either within the Scottish Office or the Scottish Development Agency about the drift of the report, will the right hon. Gentleman now indulge in another preemptive strike by saying categorically that Locate in Scotland will remain or that he or his successor in office as Secretary of State for Scotland will not?
  Mr. Younger: I am always happy to indulge in preemptive strikes, but first I like to know which target I must hit. Therefore, I shall wait to see what the report says.
  Mr. MacKenzie: Has the Secretary of State's attention been drawn to a statement by the chairman of the Welsh Development Agency this morning to the effect that Wales is now attracting more foreign investment than any other part of the United Kingdom? While I wish the Welsh no harm, will the right hon. Gentleman find out how many representatives and offices in America and Europe the Northern Ireland Office, the Welsh Office and the
  306
  Department of Trade and Industry have, and then tell the Secretary of State for Trade and Industry that we will have no messing about with Locate in Scotland or with any other form of representation that we have in Europe or America?
  Mr. Younger: I am not aware of the figures that lie behind the statement to which the hon. Gentleman referred concerning the Welsh situation. I welcome any new jobs that come to Wales. The only thing that I prefer to new jobs coming to Wales is new jobs coming to Scotland. Since it started, the Locate in Scotland operation has been involved in the investment of no less than £800 million in Scotland, with the association of 23,000 jobs. I doubt whether any other part can beat that record.
  Mr. Maclennan: When the Prime Minister answered a question on this subject yesterday from the hon. Member for Dundee, East (Mr. Wilson) she said that the Secretary of State for Scotland would be dealing with the matter. Does the final responsibility for the future of Locate in Scotland rest with the right hon. Gentleman?
  Mr. Younger: I heard my right hon. Friend say that, but I think that she was referring to the matter of the question that we were being asked. The situation is that any decisions that are made will be the decisions of the Government as a whole and I expect to be very much involved in them.
  Lord James Douglas-Hamilton: Is it not the case that Locate in Scotland is well along the road to announcing further successes?
  Mr. Younger: My hon. Friend is correct. It is expected that there will be a considerable number of announcements from Locate in Scotland in the next few weeks and months, as it is doing extremely well.
  Mr. Bruce: Has the Secretary of State not basically said to the House today that, because it is so successful, there is absolutely no case whatever for dismantling Locate in Scotland? If those south of the border think that it has been successful, they should not seek to dismantle it and set up some operation of their own for other parts of the United Kingdom. Is the right hon. Gentleman aware that, regrettably, he has not told the House that he is prepared to resign if the decision — which, he has already said, would be againt the interests of Scotland—were to go ahead against his wishes?
  Mr. Younger: I appreciate what the hon. Gentleman says, but as a general rule it is wise to wait until somebody proposes something before expressing one's views against it, and that is what I propose to do.
  Mr. James Hamilton: Bearing in mind the number of liquidations that have occurred since the Conservatives took office, and the deterioration that has taken place in the Scottish economy, may I ask the right hon. Gentleman, at the risk of being repetitive, to say that if he finds that the official report recommends that Scotland should lose this body he and his right hon. Friend the Under-Secretary will resign, in the interests of Scotland?
  Mr. Younger: I have nothing to add to the answers that I have given to that question.
  Mr. Roy Jenkins: Why, in view of the strongly supportive statements of Locate in Scotland which the

  307
  right hon. Gentleman has, rightly, made today, has he been a party to the setting up of a committee of inquiry, which inevitably casts a shadow over its future?
  Mr. Younger: I do not agree with the right hon. Gentleman's interpretation. He may recall that when Locate in Scotland was originally set up it was made clear that the operation would be reviewed in the middle of 1984. There is, therefore, nothing new about this review. That is why I do not regard it as anything sinister. It is a sensible step for Government to be taking.
  Mr. Dewar: Does the Secretary of State not recognise that the Opposition strongly support Locate in Scotland and that we fought hard for it at the time of the original Select Committee report? Our only reservations are over Ministers childishly and pathetically trying to use the scheme's undoubted success as an alibi for their total economic failure in the general sense. Does the right hon. Gentleman recognise that well-founded and well-informed rumours are circulating to the effect that the axemen in the Department of Trade and Industry are implacably opposed to the continued independence of Locate in Scotland, and that the loss of its independence will be a tragedy and deeply resented? Does he not recognise that any such effort to inhibit or restrict the agency's success would be a piece of insensitive vandalism? We expect the right hon. Gentleman, when the matter reaches ministerial level, to put that view energetically.
  Mr. Younger: I have been putting points of view on this matter for a long time. I note what the hon. Gentleman said. The happiest outcome of this controversy is the warm support that the hon. Gentleman has at long last given to something that was introduced by this Government. He has never before been prepared to acknowledge any of its good points.

  Lowlands Airport Policy
  Mr. Hirstasked the Secretary of State for Scotland if he will make a statement about the review of Scottish lowland airports policy.
  Mr. Ancram: The terms of reference and arrangements for conducting the review have been announced and a consultation document has now been issued. I hope that interested parties will take full opportunity to make their views known.
  Mr. Hirst: Is my hon. Friend aware that the consultation paper on Scottish lowland airports policy, issued by the Department of Transport, specifies that representations on that document must be made by 21 September? Bearing in mind that July and August are holiday months in Scotland, does my hon. Friend agree with me that that period is inadequate? In view of the importance of this matter to my constituents, will my hon. Friend vigorously press his colleagues in the Department of Transport to extend the period so that there is the widest possible consultation in Scotland on this important matter?
  Mr. Ancram: Although I appreciate that a time scale of a full two months may be short of the period that some people desire, I believe that it is adequate, especially in the light of the need to avoid any undesirable delay, because of the uncertainties that might arise out of that review. It is in the interests of all parties that the review is concluded reasonably soon.
  Mr. Foulkes: Is this review not as big an embarrassment to the Secretary of State for Scotland as the review of Locate in Scotland? The Department of Transport has set up a review that could undermine an airport in Scotland, in the constituency of the Secretary of State. Why is it that the decision will be taken by the Department of Transport, not by the Secretary of State for Scotland? How can the right hon. Gentleman continue in office if a decision is taken by the Department of Transport that would undermine the future of Prestwick airport? Should he not resign, not only as the Secretary of State for Scotland, but as the right hon. Member for Ayr?
  Mr. Ancram: The hon. Gentleman's interest in Prestwick airport is well known. Allegations of the kind that he is making can only damage the airport. I make it clear to the House that this is a joint Department of Transport-Scottish Office review. My right hon. Friend the Secretary of State will be fully involved in the considerations of its conclusions and subsequent decisions on the future of the policy.

  Scottish Economy
  Mr. Wilsonasked the Secretary of State for Scotland if he will make a statement on the Scottish economy.
  Mr. Younger: I expect overall activity to rise faster this year than last year. An outstanding feature of recent performance has been the expansion of the electronics industry, where output rose by more than one fifth last year. Investment currently under way in the industry suggests that further advances in electronics output are in prospect.
  Mr. Wilson: While I am hardly surprised that the Secretary of State keeps to his philosophy about hope springing eternal in relation to the Scottish economy, will he take into account the fact that production has fallen and that there is a weak labour market in Scotland, in that vacancies have fallen disproportionately compared with the United Kingdom as a whole? Set against that background, will he do two things: first, persuade the Chancellor of the Exchequer to change his economic policies; and, secondly, tell the Secretary of State for Trade and Industry to make no attack on regional policy in Scotland, because that policy is badly needed for the introduction of jobs?
  Mr. Younger: The hon. Gentleman's assessment of the Scottish economy is fatally flawed, because he is ignoring the fact that during the most difficult recession that anyone can remember the Scottish economy has performed better than the rest of the United Kingdom. What is more, he may have noticed that during the last quarter of last year employment in Scotland rose. That is a sign that things are improving in Scotland, and we should welcome that.
  Mr. Malone: Is my right hon. Friend aware that it is estimated that some £4·5 billion will be invested in the oil industry between now and 1990 and that a substantial amount of that will accrue to Scottish companies and provide a great opportunity for increased jobs in Scotland?
  Mr. Younger: My hon. Friend is right. The new developments that we are seeing all the time in the oil industry picked up substantially as a result of the measures

  309
  introduced by my right hon. and learned Friend the Foreign Secretary when he was Chancellor a year ago. We are insisting that a larger content is given to local British industry. I am glad to say that that figure is now generally speaking; well above 70 per cent.

SOLICITOR GENERAL FOR SCOTLAND

  Crown Office (Administration)
  Mr. Martinasked the Solicitor-General for Scotland if he will make a statement about the cases which have been deserted at recent High Court circuits because of a failure to serve the indictment with 29 days' clear notice in terms of section 111 of the Criminal Procedure (Scotland) Act 1975 as amended by paragraph 31 of schedule 7 to the Criminal Justice (Scotland) Act 1980.
  Mr. Ewingasked the Solicitor-General for Scotland if he will make a statement on the disruption of courts as a result of adequate notice of trial not being given by the Crown Office to accused persons.
  The Solicitor-General for Scotland (Mr. Peter Fraser): As a result of the High Court decision of 20 June 1984 that a trial could not proceed because the requirements of sections 75 and 111A of the Criminal Procedure (Scotland) Act 1975 had not been met, which decision was subsequently reversed on appeal, 40 High Court cases involving 67 accused had to be put off. In the sheriff court 23 cases involving 40 accused were similarly put off. These cases will proceed to trial in the near future on fresh indictments.
  Mr. Martin: Is the Solicitor-General aware that there is a great deal of disquiet in the country about the fact that trials such as those for homicide and drug offences had to be delayed until a decision was made about the matter? Surely the Solicitor-General's Department should try to get its act together and ensure that things are done properly. If incompetence continues in his Department he should do what his predecessor did, and that is resign.
  The Solicitor-General for Scotland: That question was plainly carefully rehearsed before the decision of the five judges in the High Court in Edinburgh had been announced. In their judgment the judges said:
  "We have no hesitation in holding that the learned Lord Advocate's criticisms of the decision taken on 20 June are well founded and must receive effect."
  In view of the fact that a decision had been made by judges in Glasgow, it may seem extraordinary to the hon. Gentleman that Conservatives believe that the appropriate way to deal with that matter is to go to the Appeal Court and have the matter satisfactorily resolved. The decision which was originally made by the court has now been unanimously overturned by the Appeal Court in Edinburgh. As I said in my first answer, although that means that it will be a difficult job for the prosecution services to deal with all these cases, they will in fact go to trial.
  Mr. Ewing: Is the Solicitor-General saying that as a result of the decision reached by the five judges yesterday the Crown Office will continue in the future as it has in the past? What on earth happened in the Crown Office on this occasion? Will the Solicitor-General tell us, because he must know, what this fiasco has cost public funds? The cost must be enormous. Who is responsible for that?
  The Solicitor-General for Scotland: Once again, the hon. Gentleman has not considered the result of the appeal. The Appeal Court said that the attitude struck by the Crown in relation to the original decision was correct. The trials should have gone ahead on that day. If those trials had gone ahead then there would have been no additional cost, but there has been some additional cost. That I regret. However, I do not accept that the additional cost is the responsibility of the Crown. The decisions taken and the attitude adopted by the prosecution has been confirmed by the Appeal Court in Edinburgh, whether the hon. Gentleman likes it or not, to be correct.
  Mr. Wallace: Does the Solicitor-General accept that, notwithstanding the court's decision, the court really decided that, despite the defect in citation, that defect had been cured? None the less, there was a defect in citation and that was the responsibility of the Crown Office. What was the cost to public funds of these trials being discharged? The public should decide who was responsible.
  The Solicitor-General for Scotland: Although the hon. Gentleman is a member of the faculty, he clearly has not bothered to see what the court's decision was. If he had bothered, he would have seen that the judges said:
  "We should add, also, that it was not and could not be suggested"—
  by those representing the accused—
  "that the notice given had in any way prejudiced the respondents in the exercise of their rights … or in the preparation of their defence."
  Mr. Millan: The Appeal Court judges have said that the trials could stand, despite the errors that have been made. We are worried that the errors were made. They are part of a series of errors made recently by the Crown Office. They call into question the efficiency of that office, for which the hon. and learned Gentleman bears responsibility.
  Why is he saying complacently that there is nothing to worry about? There is a good deal to worry about when, in another recent case, some persons on very serious charges were not prosecuted as a result of simple errors by the Crown Office. We want these errors to be put right, and not to happen again.
  Mr. Fraser: The right hon. Gentleman is clearly unhappy that what he hoped would be a cause celebre has not occurred. My noble and learned Friend the Lord Advocate and I have said that there was a misconstruction of one section of the Criminal Justice (Scotland) Act, by the prosecution as well as by all the defence lawyers in Scotland who were involved. [Interruption.] The right hon. Gentleman can mutter as much as he likes. The Appeal Court in Edinburgh said clearly and unanimously that the Crown's attitude was correct and that we should have been entitled to take those cases to trial earlier last month. If that had happened, there would not have been problems of relocating the trials, or additional expense.
  Mr. Wilson: Will the Solicitor-General accept that his attitude to the matter is incomprehensible to us? Has he not stated that a defect was involved, which led to the breaking of the trials? Whether or not the Appeal Court said that it was a curable defect, there was maladministration in the hon. and learned Gentleman's Department. If there is maladministration there, does he or does he not accept the responsibility?
  Mr. Fraser: What was said, and what is accepted, is that an additional day should have been granted, as a matter of citation. According to the criminal procedure of Scotland, any consequence flowing from that must be taken before the trial. No one made any effort to take that point. The Appeal Court has said unanimously that we should have been allowed to proceed to trial. It was not a matter of fundamental nullity, which were the words first used.
  Mr. Dewar: Does the Solicitor-General accept that, although the matter is not a cause celebre, it is a bad case of continuing incompetence? The reason for the shambles is that the Crown Office, which is primarily responsible for the serving of indictments in High Court cases, lamentably failed to interpret properly the plain words of the statute. It is no defence for the Crown office to say that the relevant point was not picked up later by defence solicitors. The responsibility lies with the hon. and learned Gentleman and with his staff at the Crown office. Is it not deplorable that we have had a long list of abandoned cases, and much public expense and inconvenience? Does it not reflect much discredit on the hon. and learned Gentleman's stewardship of the Crown Office? What steps will he take to rehabilitate his battered credit, especially as it has been badly damaged by the fact that the prosecution of serious embezzlement charges had to be abandoned because of further incompetence in serving an indictment from his office? Was that not very unfair to the accused in that case, and bad for the administration of justice?
  Mr. Fraser: I regret that the hon. Gentleman has such an inflexibility of mind that he anticipated that an appeal decision would go against the Crown Office. The circumstances are completely different. I have said to the hon. Gentleman before that there was a misconstruction of the relevant provision of the Criminal Justice (Scotland) Act. I thought that the hon. Gentleman, alone among Scottish Opposition Members, would understand that it is important to consider the consequences flowing from the case. The hon. Gentleman should look to what the Appeal Court said unanimously, namely, that the trial should have been allowed to proceed in the High Court. If that had happened, no inconvenience would have been caused to the prosecution or the defence; nor would there have been additional cost. It is unfortunate for the hon. Gentleman that the Appeal Court in Edinburgh took that decision.

  Prosecutions (Aberdeen)
  Mr. Maloneasked the Solicitor-General for Scotland if he is satisfied with the arrangements for prosecuting criminal offenders in Aberdeen.
  The Solicitor-General for Scotland: I am satisfied with the arrangements for prosecuting offenders in Aberdeen.
  Mr. Malone: Is my hon. and learned Friend aware that there is considerable disquiet in Aberdeen district council, which has to provide court facilities for prosecution in Aberdeen district court, that those court facilities are becoming extended, particularly because the terms of the Civic Government (Scotland) Act 1982 must be implemented? Will my hon. and learned Friend urge the Under-Secretary, our hon. Friend the Member for Edinburgh, South (Mr. Ancram), who is presently conducting talks with Aberdeen district council about the provision of those new facilities, to take a constructive view of the representations that are being made to him so that the prosecution of criminal offenders at district level is not impaired?
  The Solicitor-General for Scotland: I am aware that at present several physical difficulties confront those involved in conducting sittings of district courts, sheriff courts or the High Court. With regard to the High Court, as I think my hon. Friend appreciates, because of improvements that are being made and because of modernisation, several sittings have had to be transferred to Peterhead and Stonehaven. I hope that as soon as possible we shall be able to return to the regular practice of sittings in Aberdeen.

  Questions to Ministers
  Mr. Harry Ewing: On a point of order, Mr. Speaker. I should like to draw your attention to the decision by the Parliamentary Under-Secretary of State for Scotland responsible for health to answer questions Nos. 5, 8 and 12 together and the intimation from the Solicitor-General for Scotland that he would answer questions Nos. 37 and 41 together. Over the years it has been the practice of Ministers to give notice to hon. Members when their questions were linked with others. There is a suspicion that the Scottish Office, today of all days, sought to avoid answering questions on the Health Service. It appears that, for that reason, no notice was given to those whose questions were linked. I ask you, Mr. Speaker, to give a direction to Ministers that, when they propose to link questions, they must advise hon. Members.
  Mr. Speaker: Order. That is not a matter for me. It is up to the Departments to tell hon. Members when questions are linked. I believe that it is a courtesy that they should do so—and I believe that it is normally done.

Sealink UK Ltd.
3.32 pm
The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I should like to make a statement about Sealink.
I have today given my consent under section 1(2) of the Transport Act 1981, to the sale of Sealink UK Ltd., by British Rail to a subsidiary of Sea Containers Ltd. — British Ferries.
The British Railways Board invited tenders, through its advisers Morgan Grenfell and Co. Ltd. for the purchase of the whole of the board's interest in Sealink UK Ltd. Three proposals were received with conditions attached.
The chosen purchaser submitted the bid with the highest value, of some £66 million. The British Railways Board has been advised by Morgan Grenfell and Co. Ltd. that the price fairly reflects the value of the business, and this view is supported by my own advisers, Hill Samuel & Co. Ltd.
Sea Containers, an international seafreight company with its headquarters in London, has wide experience in freight shipping. It has made a number of constructive proposals for improving Sealink's business. It has agreed on firm contractual commitments to maintain rail-linked passenger services. The parties are already in negotiation on new long-term freight contracts for train-ferry and Freightliner services.
Sea Containers has said, first, that it intends to maintain the existing business and to safeguard the rights of employees, including their pension entitlements, which will be protected. It further plans additional capital expenditure to expand the business and increase its profitability. I know that the company will be seeking early discussions with Sealink's trades unions.
Sea Containers has stated its intention to obtain a listing for the company on the Stock Exchange in due course, and that it would expect at that time to give employees an opportunity to purchase shares on favourable terms. Meanwhile, it is planning profit-sharing schemes for all employees.
Arrangements have been made to ensure that the contribution of the Sealink fleet to national defence will not be prejudiced by the sale.
This sale is a successful end to the policy transferring Sealink to the private sector which we agreed with the British Railways Board in 1980, and debated in the House in 1981. The price is good, and the sale makes good industrial logic. Customers and passengers of Sealink will benefit from the continuation of competition in the ferry market. Above all, it will be good for those who work in Sealink, who will now join a progressive and expanding group with the substantial resources necessary to make a real success of this important enterprise.
Mr. John Prescott: The right hon. Gentleman has a remarkable record, because this is the fourth statement that he has made in the past two weeks. He has had to explain to the House how he did not mean what he said about abolishing the National Dock Labour Board scheme. He then had to explain how his Beeching bus policy would not mean the end of rural bus services. He now seeks to explain how selling Sealink at an unfavourable time at a knockdown price to a foreign company with an appalling record of operating under flags of convenience is in the interests of the consumer and the nation.
314
Only last week the Secretary of State told the House:
"I would not agree to a sale at a price that did not reflect the value of the assets being sold." — [Official Report 9 July 1984; Vol. 63, c. 687.]
Will he explain why he has agreed to sell Sealink for £66 million, when the assets are valued at over £170 million? Will the sale include the harbours? Will he confirm that he has not accepted the highest bid and that European Ferries is reported to have been willing to pay more than £80 million? Surely this is just another privatisation rip-off in which the Tories give away assets to their friends.
Will the right hon. Gentleman confirm that the Government have sold Sealink's entire fleet of 30 ships for the price of fewer than two ships? Why has he agreed to sell Sealink to an American-owned, Bermuda-based tax-dodging company with no ships under the British flag and no experience of operating British ferries and ships except during the Falklands war, when it was sufficiently patriotic to employ British crews for a Falklands contract?
Did the right hon. Gentleman have any guarantees from Sea Containers Ltd. that routes to the Channel Islands and across the Irish sea will continue, or is profit to be the sole criterion for providing a public service? Against the background of Sea Containers' dubious past, can the right hon. Gentleman assure us that the guarantees that he has received on jobs ad conditions of service will be of more value than those given at the time of the sale of the British Transport Hotels group?
What assurances has the right hon. Gentleman received over yet another defence facility going to a foreign country? Will the Foreign Secretary be entering into negotiations with Bermuda for a leaseback arrangement in the event of a war?
Finally, is the right hon. Gentleman worried about his survival prospects in the autumn reshuffle? I for one wish to declare an interest in his retention.
Mr. Ridley: The hon. Gentleman can be forgiven for over-reacting and for a shortage of knowledge about an extremely good sale. Over the past five years Sealink has lost, on average, £2·5 million a year. As a mixture of asset value and earnings ability, the price of £66 million is a very reasonable one in the opinion of all the advisers and the Government. Sealink will be owned by a new British company called British Ferries, which will be floated on the British stock market. Sealink ships wll be "flagged in", except for two of the present ships, which are already "flagged out".
European Ferries was prevented from acquiring Sealink a few years ago. It asked to buy Sealink at an earlier opportunity and the matter was referred to the Monopolies and Mergers Commission, which came to the conclusion that that combination was against the national interest, on competition grounds.
Furthermore, details of the routes and ports will clearly be for the new owners to explain, but Sea Containers intends to continue all the existing business of Sealink and, moreover, to expand it in various profitable directions where it sees the opportunity to do so.
Sea Containers has already purchased hotels from British Rail — five in number — and the employees of those hotels, who have suffered no redundancies, are sharing in the prosperity that has been created.
Under the arrangements for the sale the Government hold a golden share, which will enable them to prevent the sale of Sealink to any undesirable company in the future.

315
An undertaking has also been given that ships will be available to the Government in the event of any emergency.
Mr. Terence Higgins: I congratulate my right hon. Friend on continuing to pursue Conservative transport policies. I especially welcome the passage in his statement which referred to a continuation of the rail-linked services, and the passage about increased investment in an area of the economy which has perhaps suffered from being associated with a nationalised industry which is not preoccupied with that particular part of the business.
There is some concern, however, among the staff, as many of them travel long distances and benefit from the present arrangements for concessionary travel on British Rail. Are those concessions to be continued?
Mr. Ridley: I welcome my right hon. Friend's comments. I am grateful for his obvious perception of what is in the interests of Sealink's employees as well as its customers. Over the past five years, more than £100 million of British Rail's finances, which could have been used to develop the railways, has had to be used for Sealink. The private sector has undertaken to modernise and expand Sealink and that is a welcome source of new capital. The question of concessionary travel will be for the two parties to decide. Matters are already subject to contract, and we must leave it to the parties concerned.
Mr. Stephen Ross: Is the Secretary of State aware that it was reported in The Observer last Sunday that an offer of £80 million was to be made by Common Brothers? What has happened to that?
Is the right hon. Gentleman also aware that £20 million has been invested in the Isle of Wight services over the past three years by Sealink on new boats and facilities? A bid of £66 million may be satisfactory to the right hon. Gentleman, but it is not satisfactory to me or my colleagues. The right hon. Gentleman gave an undertaking in the House that he would ensure that the work force would have a share in the profits of the company and be given the opportunity to buy up to 20 per cent. of the stake. We have heard a vague promise about that today, but have been given no assurance.
What about the assurances on the Isle of Wight's through services? That is where the profit is. Of the island's economy, 70 or 80 per cent. is dependent on the Sealink services. What undertaking has Sea Containers given on that matter? The situation is most unsatisfactory. If an American gentleman comes to us on the Isle of Wight in a year or so and asks us whether we would like to buy our ferries from him, he will get a rude response.
Mr. Ridley: All the bids were properly evaluated and discounted for the conditions made, including the terms of payment, and on the basis of that analysis the bid from Sea Containers was the best of the three that were received.
The hon. Gentleman is not so unrealistic as to believe that companies are sold on their asset value alone. Their profit record is also taken into account. Sealink has made an average loss of £2·5 million a year over the past five years. It is not surprising that we did not get the full asset value.
Mr. Stephen Ross: What about last year?
Mr. Ridley: The hon. Gentleman asked me about the Isle of Wight. The new owners intend to operate all the
316
present services, and I am sure the hon. Gentleman will find that there will be great benefits to his constituents. It would be stupid and unwise of him to question an arrangement which may turn out to provide very much better services.
Viscount Cranborne: My right hon. Friend may rest assured that his statement will be welcome on the Conservative Benches, in contrast to the churlish response from the Labour Benches.
My right hon. Friend has given assurances about future investment and expansion. Will he confirm that the Sealink services from Weymouth will continue at least at their present level? He will be aware that they not only perform a useful service for the public but play an important part in the local south Dorset economy.
Mr. Ridley: My hon. Friend is right in what he says about the Labour Benches. It is extraordinary that, when a decision is announced which not only increases competition in the channel but provides probably for more and better services, as well as safeguarding and enhancing the chances of the future prosperity of the employees, it is received with a grudging, doctrinaire reluctance by the hon. Member for Kingston upon Hull, East (Mr. Prescott) and his hon. Friends.
Sea Containers intends to maintain and expand the present activities of the company, but I think it would be right for Sea Containers to inform hon. Gentlemen and the trade unions of its more precise plans for each of the harbours which are sold with the company, as well as each of the routes.
Dr. John Marek: If the plan goes ahead, how much of the £66 million will be available after the costs of the sale have been deducted? Will the net sum then be available to British Rail in its entirety for investment, over and above any other moneys that might be available to British Rail in the course of its functions?
Mr. Ridley: Yes, the money will go to British Rail after any expenses have been deducted, as the hon. Gentleman suggests. The money will be very useful to British Rail in reducing any borrowing that it might have, or for further investment. It will be a great help to British Rail, because, instead of having to find money from its resources to invest in and cover the losses of Sealink, it will now have a capital sum to help its investment sources.
Mr. Tim Rathbone: Will my right hon. Friend take it from those who are interested in the future of the ports served by Sealink that they will welcome the sale as the best insurance of the future prosperity of those ports?
Will my right hon. Friend elaborate a little on the ownership of the ports, to which he alluded in a previous answer, and most particularly the property adjoining those ports, on which the future port expansion might depend?
Mr. Ridley: There has been an agreement between British Rail and Sealink as to the precise nature of Sealink's property and British Rail's property. Some of the deeds go back more than 100 years and it has been a little difficult to determine exactly to what they relate. Indeed, that has been one of the difficulties with the sale.
The harbour land which belonged to British Rail through Sealink now belongs to Sealink and the new

317
British Ferries. That will be available for development for the new company in the way that my hon. Friend said, and I am grateful to him for the welcome that he gave to that.
Dr. Norman A. Godman: What is the age of the Sealink fleet? Even in these early days, can the Secretary of State say what is the likelihood that the new owners of Sealink will seek replacement vessels from British shipyards?
Mr. Ridley: I cannot give the hon. Gentleman a precise answer concerning the age of each of the 37 ships that Sealink owns, but of the £170 million-worth of assets, £80 million are leased. In other words, a fairly large number of the ships are not owned, but leased.
I am sure that the new owners will wish to invest in modern ships as and when that is necessary. Obviously it is not for me to say where the new owners are likely to purchase their ships. I am sure that they will purchase then' where they can get the best value for money.
Mr. John Ward: Is my right hon. Friend aware that those of us who are genuinely interested in improving links with Europe welcome the sale as providing the best future for Sealink? Will he agree that the worst thing that the Sealink employees could do would be to conduct a series of idiotic strikes which turn away trade from the very asset that we are trying to preserve?
Mr. Ridley: I am grateful to my hon. Friend for his comments. The House will perhaps be glad to hear the resolution which the executive council of the National Union of Seamen passed on 22 June. It is rather long, but the crucial phrase is
"to take all necessary steps required to obtain from the prospective owners all relevant information relative to the individual bidders' intentions on future plans for Sealink in the event of a successful bid".
I hope that that will take place now. Sea Containers Ltd. is ready to meet the unions, and the unions say that they want to meet it. That will greatly help to reassure the people concerned that they will have a prosperous, successful and secure future with their new owners.
Mr. D. N. Campbell-Savours: During discussions on the sale between the Government, their advisers and the management of Sea Containers Ltd., were any undertakings sought by the company on the Channel tunnel development? Were any undertakings given or suggestions made which may have led that company into believing that the Government had taken decisions one way or another?
Mr. Ridley: There were no discussions between the Government and Sea Containers Ltd. They were carried out between British Rail and Sea Containers Ltd. So far as I know, there was no mention during those discussions of a fixed link across the Channel and I certainly did not mention any decision on that matter to the chairman of British Rail for onward transmission.
Mr. Michael Howard: My right hon. Friend's statement will be warmly welcomed, not least in Folkestone. I particularly welcome his reference to the preferential opportunities to be given to employees to purchase shares in the company and to profit sharing.
Following the point made by my hon. Friend the Member for Poole (Mr. Ward), will my right hon. Friend
318
encourage the new owners of the company to make it plain to the work force that if any attempts are made to persuade or force them to join in industrial action against their will they will be permitted to carry on working without placing their jobs at risk?
Mr. Ridley: I am grateful to my hon. Friend for that intervention. Let me say a little more about the arrangements for profit sharing.
Mr. Robert Adley: On a point of order, Mr. Speaker. I am sorry to interrupt, but I distinctly saw the hon. Member for Kingston upon Hull, East (Mr. Prescott) point at my hon. Friend the Member for Folkestone and Hythe (Mr. Howard) and say, presumably on behalf of the National Union of Seamen which sponsors him, "We will remember that." Is that not the sort of threat——
Mr. Speaker: Order. I did not hear that. We have four statements and we must get on.
Mr. Ridley: The question of profit sharing is of some relevance to the hon. Member for Isle of Wight (Mr. Ross) as well as to my hon. Friend the Member for Folkestone and Hythe (Mr. Howard). It is impossible to arrange for a direct shareholding in the new company in the first place. One reason why Sea Containers is setting up a separate company to be floated on the market is so that there can be preferential shareholding by the employees in that new company. Furthermore, it will try to introduce satisfactory profit sharing agreements for all employees until such time as they can become shareholders.
The question of industrial relations remains with British Rail until the conveyance is absolute. After that it will be the responsibility of Sea Containers Ltd.
Mr. Roland Boyes: Further to part of the question of the hon. Member for Isle of Wight (Mr. Ross), will the Secretary of State tell the House whether he received any cash bids higher than the one that he accepted? If so, where were they from and why did he reject them?
Mr. Ridley: The straight answer is no, Sir.
Sir Geoffrey Finsberg: Will my right hon. Friend accept that passengers will be delighted that Sealink may at last be brought up to the standard of the Sally Line and Townsend Thoresen? Will he confirm that had it not been for the strange attitude adopted by the Monopolies and Mergers Commission there might have been even more money available for British Rail? Can he also confirm that the microphones in this place are working and that the strange noise does not come from the hon. and bearded Member for Warley, East (Mr. Faulds)?
Mr. Ridley: As the Monopolies and Mergers Commission had put a ban on European ferries buying Sealink on an earlier occasion, and was consulted again on this occasion and reaffirmed its decision, it was clearly right that we should accept the decision of the commission just as if the transaction had been one taking place entirely within the private sector.
I do not think that my hon. Friend expects me to be responsible for the microphones, but I hope he will agree with me that there is every chance that the service on the Sealink crossings will be enhanced.
Mr. George Foulkes: What assurances has Sea Containers given about how long the Stranraer to Larne route will continue to be operated? What guarantees have been given about jobs at Stranraer and the train links between Glasgow and Stranraer?
Mr. Ridley: I told the House that I do not think I should be called upon to give precise details about every Sealink route. Sea Containers intends to maintain the existing business, and that goes for the Stranraer to Larne route as well as many others.
Mr. Foulkes: For how long?
Mr. Ridley: The hon. Gentleman can certainly ask the new owners about their intentions and I think that he will be pleasantly surprised.
Mr. Keith Best (Ynys Môn): Is my right hon. Friend aware that his statement will be welcomed in Holyhead, because it removes the uncertainty that has hung over the work force there? Is my right hon. Friend aware that on 7 June I received a reply from Sea Containers containing certain assurances? One was that it intended to invest in the company and to expand operations. The company also said that, in its view, there was no evidence of overmanning in Sealink, which should be welcomed by the work force. One of my hon. Friends mentioned travel concessions. Sea Containers told me that it envisages a similar arrangement for Sealink employees to that acquired for some British Transport Hotels employees, under which staff are provided with reasonable rail travel privileges, in this case through a special contract between Sea Containers and British Rail.
Mr. Ridley: My hon. Friend's information is quite right. I believe that it is correct for the new owners to give assurances about such matters, rather than for me to seek to give assurances on its behalf. I am sure that any hon. Members who wish to inquire about a harbour, a route or any other matter will be welcomed by Sea Containers, which will be able to give them the reassurance that they seek. That goes even further for the staff, because I am quite satisfied in my own mind that there is an expanding, investing, thrusting company here which intends not only to look after present staff, but to create additional jobs as it gets its investment moving.
Mr. Andrew Faulds rose——
Mr. Speaker: Order. If I call the hon. Member for Warley, East (Mr. Faulds) it will be because we are getting towards the recess, but will he please confine his question to the statement and not to the microphones?
Mr. Faulds: I am so grateful for your consideration, Mr. Speaker. I have been rising on a number of occasions, but you managed to avoid my eye.
Is this not simply another stage in the carve-up of British national interests, to the advantage of the Government's buddies in the market of money manipulation?
320
Is not the problem with the hon. Member for Hampstead and Highgate (Sir G. Finsberg), not that he cannot grow a beard, but that his testicles have not yet descended?
Mr. Speaker: Order. I ask the hon. Gentleman to withdraw that comment, on the ground of good taste.
Mr. Faulds: I might have to check on the matter, Mr. Speaker, which would be very embarrassing. If you wish me to withdraw my later comment I will do so, because I deeply adore and admire you.
Mr. Ridley: I think that that shows how frivolous and ill-based is the opposition to this move. I reaffirm to the House that this is a good deal for the Government, for British Rail and for Sea Containers, but above all it is a good deal for Sealink and its customers. I am sure that the House will wish all of them well.
Mr. Peter Snape: Does the Secretary of State agree that since 1979 Sealink has invested £120 million of British taxpayers' money in this company? That investment has meant that Sealink has the most modern fleet on the cross-channel routes—despite what was said by a Conservative Member.
What discussions have taken place with pool operators, such as the Belgians and the French, as well as other operators, about the use of the harbours that are to be sold?
Can the Secretary of State confirm that the adjusted assets of Sealink amount to about £130 million, which, coincidentally, is twice the size of the bid that the right hon. Gentleman has accepted for the company? Does he think that his announcement is fair on the British taxpayer? What has he got against British-owned companies? Why does he want to peddle off another public asset? Is he aware that he brings to his office all the ethical qualities of a back-street pawnbroker?
Mr. Ridley: The hon. Gentleman's sense of humour has not borne him out well today, although I congratulate him on his little joke last week.
The pooling arrangements are a matter for decision by the new owners after the current arrangements run out. They can either renew them or not. I must put the hon. Gentleman right on the question of assets. British taxpayers have had to find £2·5 million a year to make up British Rail's losses. In addition, they have had to invest capital in Sealink, with no return. They are now relieved from having to find that money in the future, with the bonus of £66 million to help with investment in the railways. I did not dare mention that this in my statement, but I should have thought that the taxpayers would benefit greatly from the deal.
Mr. Prescott: On a point of order, Mr. Speaker. The hon. Member for Christchurch (Mr. Adley) alleged that I made an offensive remark about the hon. Member for Folkestone and Hythe (Mr. Howard). That is not true. For the record, my remarks were to the effect that Folkestone was one of the first areas to come under threat.

Defence Policy (Central Control)
4.2 pm
The Secretary of State for Defence (Mr. Michael Heseltine): With permission, Mr. Speaker, I shall make a statement about the central organisation for defence.
In my statement on 12 March, I explained that I wished to see stronger central control over defence policy, operations and resource allocation questions, whilst decentralising day-to-day management. I also wished to improve efficiency by eliminating unnecessary overlap between staffs in the Ministry and between the Ministry and commands. A consultative document was issued on these lines, which has generated substantial, helpful discussion.
In the light of this, and following detailed work by those concerned within the Ministry of Defence, the Government have reached conclusions on future defence organisation which are set out in the White Paper, Cmnd. 9315, published today.
To provide a defence-wide perspective on strategy, service programmes and operational requirements, and for the central control of the conduct of military operations, a unified defence staff is to be created incorporating relevant parts of the present naval, general and air staffs, and bringing together military personnel and those in civilian secretariats.
The defence staff will be headed by a vice chief of the defence staff and will report jointly to the Chief of the Defence Staff and the permanent secretary. These changes will further consolidate the position of the Chief of the Defence Staff as the principal military adviser to the Government.
The Government also attach critical importance to the role of the service chiefs of staff in the maintenance of the fighting effectiveness and the morale of their services, on which our defence ultimately depends. To exercise these crucial responsibilities, the service chiefs of staff will have full access to the defence staff, as well as retaining substantial staffs under their direct control.
The service chiefs of staff will continue fully to contribute to policy-making through their membership of the Defence Council, the service boards and the Chiefs of Staff Committee, and will retain their right of direct access to the Prime Minister.
As part of the new arrangements under the Chief of the General Staff, a major general level post has been provided whose primary responsibility will be for the Territorial Army, reserves and cadets, reflecting the importance that the Government attach to these matters.
The Ministery of Defence is responsible for the work of more than half a million service and civilian personnel and for a budget this year of around £17 billion. We need to satisfy the public—who ultimately meet this bill—that we are pursuing in every possible way the objective of value for money.
To strengthen the central control and allocation of resources, and the scrutiny of spending proposals, we intend to establish, under the permanent secretary, an
Financial accountability for the management of resources will be improved by the introduction of executive responsibility budgets. And in the procurement field the Government believe that there is a need to improve value for money in purchasing through greater competition and through further enhancing the professional expertise of the staff involved.
322
Finally, Ministers need to be able to draw on independent scientific advice on long-term options and on the scrutiny of major equipment proposals, and the staffs concerned are to be brought more closely under the direction of the chief scientific adviser. We also intend to strengthen our capability for considering arms control issues by establishing a joint military-civilian unit separate from the defence staff and reporting directly to the permanent secretary.
This White Paper carries forward the approach that lay behind the creation of a unified Ministry of Defence in 1964. There was controversy then about that re-organisation, and there is controversy still over the proper balance between the addressing of problems in defence-wide terms and on a single-service basis. The Government's plans represent a significant further evolution in a process that has been under way for more than 20 years, and I commend them to the House.
Mr. Denzil Davies: The Secretary of State has made an important statement and issued an important White Paper which could have far-reaching consequences, not only for the organisation of the Ministry of Defence, but, more important, for the morale and efficiency of the armed forces. We shall need time to study the White Paper in detail—it must be one of the most leaked White Papers for some time. We have not so far had a clear explanation of why the changes are necessary. The case put forward so far is not proven. It looks like another exercise in escapism by the right hon. Gentleman which will do nothing to square the circle or to solve the right hon. Gentleman's defence budget problems.
Not only are the chiefs of staff worried — I understand their opposition — but many others are concerned. We believe that the changes may owe as much, if not more, to the right hon. Gentleman's obsession with business management as to any need for change. Ultimately the Government may stifle debate and discussion within the armed forces and the Ministry of Defence to the detriment of the forces.
What is the real reason for the change? Is it that the present system has a substantial defect? The system came through the Falklands war — the ultimate test of any such system. Did the system show a substantial defect in the course of that war? If it did, will the Secretary of State tell us what it was and, if it did not, may we know the reason for the change? Is it to save money? If so, will the Secretary of State tell us — since he has plenty of minions to find out—the exact annual savings from the proposed change?
The Secretary of State said that the service chiefs will sit on the Defence Council. I understand that the Defence Council hardly ever sits. Will it still be an irrelevance, or will the Defence Council be upgraded within the Ministry?
In view of the importance of the change, will the Secretary of State give a clear assurance to the House that we shall have a chance to debate and discuss the proposals, and to pronounce upon them, before any changes are made? I hope that when he answers that question the Secretary of State will not hide behind the Leader of the House who is sitting next to him.
Mr. Heseltine: I am sure that the right hon. Gentleman realises that no single Minister can give an assurance about debates in the House. That is a matter for my right hon. Friend the Leader of the House. The Opposition will know

323
that the Defence Select Committee is to examine these matters, so there will be the further scrutiny that the House has come to welcome. The Government intend to proceed with implementation of the proposals. As we approach the long recess it would be wrong if the uncertainty were allowed to continue further.
The right hon. Gentleman said that he needed time to study the White Paper and I was grateful for that. He will find that much in the White Paper was foreshadowed in the consultative document. There has been wide public discussion about the issues involved.
I do not apologise for an interest in business management. Anyone responsible for a budget of £17 billion owes it to the taxpayer to try to get value for money out of it.
As for why we need to move to a more central operation in view of the success of the Falklands war, the House will realise that we operated on precisely a central management arrangement in that war. It is to consolidate on our experiences then that my proposals are being produced.
Sir Antony Buck: Will my right hon. Friend assure the House that the structure that he has just announced will be appropriate to deal with the rapid expansion of the armed forces which may be necessary in times of crisis and has been in the past? Will he also say a word about the defence arms control unit mentioned in paragraph 22 of his White Paper and what the relationship of that unit will be with the Foreign and Commonwealth Office?
Mr. Heseltine: I am grateful to my hon. and learned Friend. He will be the first to realise that, if ever a crisis arose, the more preplanning that had taken place, the more effectively we could deal with it. It would be quite impossible for such a mobilisation to get under way without the most intense co-operation between the three armed services.
As for my hon. and learned Friend's other important question about the arms control unit, the House will realise that my right hon. and learned Friend the Foreign Secretary leads on matters of arms control. But it is part of the responsibility of the Secretary of State for Defence to have a role in central Government discussions on these matters. It seemed to me that, in briefing myself on these matters, it would be right for me to have advice that was not subordinate to the military advice in my Department so that there was a much more independent source of advice on these critical matters. The lead and responsibility within the Government will remain where it is.
Dr. David Owen: No doubt in the forthcoming defence review the Government will be helped by these changes to deal with the defence budget in 1986–87, which will show an absolute reduction in defence spending. Will the right hon. Gentleman assure the House about the strategic staff available to the individual single service chiefs? Will he say whether he thinks that Admiral Leach, on the day that the Falkland islands were invaded, would, under these proposals, have had sufficient back-up to be able to advise the Prime Minister that it was possible to retake the Falkland islands against the advice coming from the central defence staff, and against the advice of the Royal Air Force and the consensus view of the Ministry of Defence?
Mr. Heseltine: The right hon. Gentleman knows that I was not intimately involved with the details of that occasion, but I am aware that Admiral Lord Lewin was Chief of the Defence Staff at that time.
Dr. Owen: He was in New Zealand.
Mr. Heseltine: He was, nevertheless, Chief of the Defence Staff. That reinforces the point that when crisis action was required the central operation necessary was perfectly well co-ordinated and operated. No one has questioned that since I have been a Minister in the Department.
I realise that the right hon. Gentleman is trying to prove that the defence budget is going down. He fails to understand that it is nearly 20 per cent. higher than when he was Foreign Secretary. If only he understood the difference between Falklands inclusive and Falklands exclusive he would have no difficulty in understanding our figures.
Mr. Julian Amery: Is my right hon. Friend aware that, quite apart from the almost universal criticism that his proposals have met both from former chiefs of staff and, as I understand it, from the present chiefs of staff, there are the gravest political objections to the proposals? Will he recall that the question of parliamentary control over the armed forces and their strategy has been a major issue in the life of the House over three centuries or more? Does he appreciate that if he is to be advised by only one senior officer who is advised in turn by one single staff, he is depriving himself and the House of the different options which should be open to the Minister responsible for the armed forces? Will he bear in mind that the business of preventing war or, if necessary, winning it is very different from running a business cost-effectively?
Mr. Heseltine: Of course. I fully accept my right hon. Friend's last comment. But the capacity to wage war depends on the efficiency with which the budgets that are there to make the deterrent effective are discharged.
My right hon. Friend makes the point which historically has been expressed. It was made by those who were against the creation of a single Ministry of Defence in the 1950s and at that time won. The same point was again expressed in the 1960s. Al that time Lord Stockton prevailed and saw that a single Ministry of Defence came into existence. But the debate has gone on. In my view, in the dispatch of a military operation today, the more central planning, the more strategic appraisal and the more central control brought to bear, the more likely it is that one will be in a position to deal effectively with contingencies as they arise.
I have, to support the views that I have expressed, the fact that the late Lord Mountbatten was the architect of much of the present Ministry of Defence, and he happened to have been one of the last commanders of a great British force in the field.
Mr. Merlyn Rees: The Minister said in his statement that significant policy-making staffs would be left in the individual services. Does that mean that since 12 March the concern of the individual services about the down-grading of the role of the chiefs of staff—it was described in another place as "denigration"—has been met? Has there been a change since 12 March?
Mr. Heseltine: The right hon. Gentleman asks me a very important question, and I shall try to deal with it. In my open government document I anticipated the possibility of a need for staff to help the single service chiefs in their relationship with the new central staff, but I did not quantify that arrangement. When I was discussing these matters with the single service chiefs I asked them in the end to propose what staff they would require to have an effective relationship with the new central staff. Broadly I accepted the proposals of the working party, which included representatives of the single service chiefs. I could not pretend to the House that if the single service chiefs were left to their own devices they would propose the centralisation of the Department along the lines that I have in mind, any more than they would have done at any time in the last 20 or 30 years. Politically, I still believe that this is the right judgment.
Sir Peter Emery: Will my right hon. Friend accept that obviously right hon. and hon. Members on both sides of the House wish to see the greatest efficiency possible of our defence organisation? If streamlining brings greater efficiency, that is what everyone will want.
Will my right hon. Friend answer two questions? Does this mean that we shall see the release of more senior people to the sharp end of the forces rather than their remaining on the planning side? Secondly, on a purely constituency matter, does this mean that the Royal Marines will continue to play the same part in the defence structure and that their senior officers will play the same role as they have in the past?
Mr. Heseltine: I can help my hon. Friend about the Royal Marines. There is no way in which their position is diminished by the proposals. I cannot believe that any Secretary of State would contemplate such a prospect.
The release of more resources from the tail to the teeth is one of the objectives that we seek. We shall see the release of certain numbers of people currently serving in the Ministry of Defence and they will be available for deployment in a more front-line and active position. That is the switch that we are trying to bring about.
Mr. Tom Clarke: How often does the Defence Council meet? When did it last meet?
Mr. Heseltine: The hon. Gentleman raises an important question. It must be said that the Defence Council does not meet as frequently as most of the organisations that preside over the Ministry of Defence. The reason is that the inter-relationship of those who work in the Ministry is sufficiently close—we see sufficient of each other in the normal interplay of committees and ministerial briefings—that we do not need the more formal position of the Defence Council. But I would not change the need for the existence of such a council. It is central to the preservation of the powers of the individual chiefs of staff. If they should ever feel that the conduct of the Ministry's business or of the nation's defence was not being properly dispatched, it is the Defence Council to which they would go to ensure that there was a proper dialogue. It is essential that that right of membership should remain although, as the Minister in charge of so large a Department, I would not go for that formal way of arranging the Department's business unless it was necessary.
Sir Geoffrey Johnson Smith: I congratulate my right hon. Friend on his White Paper. So
326
that we do not truncate the debate, and in view of the criticisms from the Opposition, would it not be helpful if my right hon. Friend confirmed that the proposals are not being carried in the teeth of deep-rooted opposition from chiefs of staff? Will he confirm that the other proposals on medical services are being supported by medical personnel?
Mr. Heseltine: The decision to centralise medical services on a tri-service basis has resulted from a study conducted by Sir Henry Yellowlees on whether we could administer the medical services of the three services on that basis. We have accepted his recommendation to proceed in that way.
The Chief of Defence Staff will join me later this afternoon in a press conference dealing with these matters. He will say that the chiefs of staff are determined to make the system work and that they believe that it can work. However, I do not want to give the House the impression that, left to their own devices, the chiefs of staff would follow this course. However, nor would they have done so at any time during the past 30 years.
Mr. David Alton: Will the right hon. Gentleman tell the House rather more about the remit of the joint civilian and military arms control unit? To whom will it be accountable? If it is a committee, will it comprise only of those who slavishly adhere to the Government's line on arms control?
Will the right hon. Gentleman say something about the arms procurement policy announced in his statement? Will the Government take this opportunity for a more integrated Europe-wide procurement policy?
Will the right hon. Gentleman comment on the value for money that we might expect from arms purchasing policies, given the effects of the exchange rate on, for example, Trident?
Mr. Heseltine: We are securing substantial reductions in prices as a result of the more competitive policies that we are introducing. That will show in the additional resources available for the Ministry. We deal with Trident on a regular annual basis, and I shall stick with the precedent on how I report to the House. The arms control unit will be staffed by military and civil servants within the Ministry. They are not committed to any line of policy; they are there to advise Ministers across the breadth of policy options. It is for Ministers to decide what policies they seek to pursue.
Several Hon. Members rose——
Mr. Speaker: Order. There will be two more statements and a ten-minute Bill before we move on to the main business of the day, which is of great interest to hon. Members. I shall seek to call hon. Members who have been rising, but I ask them to be brief.
Mr. Jerry Wiggin: Does my right hon. Friend accept that, from the disaster of Gallipoli to the organisational triumph of Normandy and the recent successes in the Falklands, it has become increasingly apparent that no military operation can be carried out by one arm exclusive of the others?
Does he further accept that, from the moment of resolution in the Falklands, the three services co-operated magnificently? One of the more inspiring aspects of the performance was that all differences were absolved from

327
the moment of resolution. I hope that the myth of the right hon. Member for Plymouth, Devonport(Dr. Owen) does not gain credence.
Will my right hon. Friend take note of three points——
Mr. Speaker: Order. It is a little unfair of the hon. Gentleman to ask three questions, especially in view of what I have said.
Mr. Wiggin: Will my right hon. Friend give some thought to how the appointment of Chief of Defence Staff should be made in the new organisation? Will he make it clear that it should not necessarily be Buggins' turn, nor that the panel should necessarily represent those who recently have been chiefs of staff in any of the three services?
Mr. Heseltine: I am grateful to my hon. Friend, who has great knowledge and experience of these matters. The Government intend to remain with the policy announced by Sir John Nott when he was doing my job. He made it clear that the appointment would be made from the choice of people available and that no seniority considerations would overplay the judgment on who should get the job.
Mr. Cyril D. Townsend: Is my right hon. Friend aware that the general feeling in defence circles is that headquarters is very good at advising others on how to make cuts, but not so good at doing it itself? That has been especially true of the MOD in recent years. Does my right hon. Friend appreciate that, by and large, the forces will welcome this extension of Mountbatten's original proposals?
There will be great interest in defence circles worldwide in this experiment because my right hon. Friend is sensibly tackling a problem that faces all defence forces.
Mr. Heseltine: I am most grateful to my hon. Friend. I can confirm that the further away I get from the MOD the more popular my proposals appear to become.
Mr. Andrew Faulds: Is not the right hon. Gentleman's embarkation on this adventure less to do with national security than with the extravagance of the unrealistic Trident programme and his own political survival?
Mr. Heseltine: No, Sir.
Mr. Churchill: Will my right hon. Friend quantify in cash and manpower terms any savings that may be derived from his proposals?
Mr. Heseltine: I have some figures, but they are at an early stage because we have yet to work through the lower levels of management and staffing that will be required.
At the very senior levels, the proportions are substantial but the absolute numbers are relatively small. For example, in the medical services and the other centralised services that I have announced today, at the three-star level we shall save 35 per cent. of the posts. However, that is a reduction of only from 17 to 11. I would not want to make a great deal of the figures because they relate to a small number of people.
Mr. Toby Jessel: On the proposal to set up a joint services school of music at Deal, is my right hon. Friend aware of the high standard of excellence of British Army bands—which are the envy of the world—which are most closely bound up with the famous name of the
328
Royal Military school of music at Kneller hall, Twickenham? Is my right hon. Friend aware that some of us are concerned that standards might drop? My constituents will expect me not to take what he has said lying down, but to look most critically at his proposals.
Mr. Heseltine: I say to my hon. Friend and his constituents that no one has been more zealous in arguing the case of Kneller hall than has my hon. Friend. The House will realise that nothing that I am saying today has any relevance to the number of bands that serve the British armed services. After considerable examination, we have reached the conclusion that for a lower price we can centralise the military tuition processes of the three services. Therefore, we have taken the decision to move the three services' music school to Deal.
Sir Kenneth Lewis: What is my right hon. Friend's answer to the argument that, if centralisation is taken too far in the services, it could stifle creative argument on weapon deployment, strategic matters and so on? Is he satisfied that the chiefs of staff will still have a right to make their views known before decisions are finally made?
Mr. Heseltine: Not only do chiefs of staff have that right, but they have the staff and, as members of the appropriate committees, the duty to ensure that their voices are heard.
The central staff is in itself constructed of building blocks of single staff members. Therefore, it is impossible for there not to be a full debate and dialogue about all these matters before decisions are taken.
Mr. John Stokes: I welcome the new proposals. Will my right hon. Friend give an assurance that all ranks, down to the lowest ranks in each service, will still feel that there is someone at the top looking after their interests?
Mr. Heseltine: I give that assurance to my hon. Friend without hesitation. I hope that the ranks will realise that we are trying, with all the resolve possible, to ensure that the contingencies with which they might have to deal are properly anticipated and the necessary resources provided, and that we are also doing all we can to keep down the costs of central administration so that we can better provide them with resources in the front line.
Mr. Tim Yeo: Will my right hon. Friend's entirely justified efforts to bring better management into defence matters bring about a reduction in the number of people who can in theory report directly to him as Secretary of State? I believe that the number was well over 150 last year.
Mr. Heseltine: I hasten to assure my hon. Friend that one of the early things I did on going to the Ministry was to ensure that no such possibility existed. Only a relatively small number of people report directly to the Secretary of State. I and my Cabinet colleagues believe that that is one of the first things to ensure.
Mr. Edward Leigh: Is my right hon. Friend aware that, in contrast to those who have already enjoyed the glittering prizes of a Whitehall service career, there is widespread enthusiasm — especially among younger officers—for any reorganisation that results in more efficient resource management so

329
that we can get the additional eight frigates on the water and the additional 4,000 men in Germany, despite the ending of the 3 per cent. commitment?
Mr. Heseltine: I am most grateful to my hon. Friend. That certainly is my experience from travelling round visiting members of the armed services. By and large, there is a considerable welcome and understanding for what I am trying to do.
Mr. Kevin McNamara: The Secretary of State is not normally so coy about any savings that he might like to make as a result of his reform. Is it not true that these reforms will not release any major resources to the Ministry of Defence's budget for use in other spheres? If that is not so, will he not give the House more precise details than merely the number of brass hats who may or may not be lost?
Secondly, what will happen to the specialised schools of naval and air medicine which have been involved in the separate services? What will happen to them in the new centralisation of medical services?
How will he get conflicting opinions and advice upon which to base his judgment? Is this not the main concern of people when they are fearful of the service chiefs losing their own policy-making units? How will he get conflicting ideas, and how will he be able to test the ideas that are coming from his central defence staff?
Finally, on the arms control unit, may we hope that the Ministry of Defence's unit will have a far higher profile than that of the unit which exists in the Foreign and Commonwealth Office? May we hope that we shall have a more vigorous conduct of armament discussions and prospects for disarmament by a well-informed vigorous
330
Ministry of Defence seeking to ensure that, in the international fora, not only is Britain properly represented, but there is real defence discussion on these matters?
Mr. Heseltine: The hon. Gentleman has raised a number of important questions. It would be a matter for the new centralised medical staff to make judgments about the medical schools and to make recommendations.
As to the question of conflicting ideas, when the Opposition have had a chance to consider carefully the White Paper, they will find that built into the structure are a number of areas in which the conflict will ensure that competing and conflicting ideas are put forward. That is not just the conflict between the Office of Management and Budget and the defence staff. The operation analysis unit under the scientific adviser will play a similar role. We have similarly separated off the arms control unit to do that. I think that within the Ministry there will be an enhancement in the debate. The idea that the purpose of the proposals is to give the Ministry a higher profile within the Government is certainly not the case. The Government intend to pursue their arms control policies, and my right hon. and learned Friend the Foreign Secretary will remain firmly in charge of that.
When I am asked for figures, I do not want to produce figures to give an impression that we have concluded the work that is under way. I think that the House is aware only that the Ministry of Defence is embarked on a major reduction in the number of people who work for it. For example, it has reduced by 47,700, which is 20 per cent., since 1979, and we are targeted to go from the present figure down to 170,000 by 1988. Thus it is important to have the ability to appraise the priorities to carry through such a major diminution in the numbers of people employed, particularly, of course, as that will yield substantial economies that can be transferred to the front line.

Local Authority Capital Expenditure (England)
4.33 pm
The Secretary of State for the Environment (Mr. Patrick Jenkin): With permission, Mr. Speaker, I should like to make a statement on local authority capital expenditure in England. My hon. Friend the Parliamentary Under-Secretary of State for Wales will make a separate statement afterwards. [HON. MEMBERS: "Where is the Secretary of State?"]
Local authority capital expenditure, like capital spending by central Government Departments, is subject to a national cash limit. For last year, 1983–84, local authority returns suggest that the cash limit was overspent by around 13 per cent., that is, about £368 million. Normally, an excess over the cash limit would be deducted from the resources available in the following year. Rather than do that in this case, the 1983–84 overspend will be taken into account when setting the limit for 1985–86. Although we are only three and a half months into this financial year, returns from local authorities suggest that the overspend will be at least as high as last year's, and it could well be higher.
The anticipated overspending arises because each local authority is free to spend for capital purposes in any year the sum of its allocations plus the prescribed proportion of the capital receipts arising in the current year or in previous years. Many authorities have substantial unspent capital receipts from previous years: the House will remember that in 1981–82 and in 1982–83 local authorities underspent the resources available to them. The ability to spend receipts accumulated from previous years and other elements of flexibility in the capital control system mean that the aggregate of all authorities' capital expenditure can exceed the national cash limit allowed for in the public expenditure White Paper without any individual authority exceeding its own capital provision.
Local authority capital spending makes a valuable contribution to the development of the country's infrastructure. It is an important part of the work load of the construction industry. Nevertheless, the Government must take steps to deal with the prospective overspend. On the basis of present information, I believe that it would be wrong to ask for a complete halt to all new capital spending commitments this year. Instead, after discussions with the local authority associations yesterday, I am asking authorities to co-operate by restraining their capital spending this year to the level of the capital allocations made to them for this year, plus the prescribed proportion of new capital receipts arising this year. If they are already committed by contract to expenditure higher than that, they ought to enter into no further commitments at this stage.
This arrangement leaves every authority with the incentive to continue to make sales and so to add to the prescribed proportion of receipts which they will be free to spend. In this way, they can spend without adding to net public expenditure. Provided we have the co-operation of local authorities, this will be an effective means of restraining expenditure with the minimum of disruption. Capital spending will be monitored in the coming months. I shall be keeping the position under close review.
The arrangements which I have announced rest on the voluntary co-operation of local authorities. However, for
332
1985–86, I shall have regard to the extent to which authorities have responded to my request. If necessary, I shall use my statutory powers to reduce the total expenditure which local authorities collectively or individually may incur in that year. I hope that this will not be necessary.
The Government are committed to firm control of public expenditure, lower public sector borrowing and a proper monetary discipline. Cash limits are part of that discipline. My proposals are intended to hold expenditure in line with the cash limit while allowing authorities, particularly if they can increase their sales of assets, a measure of flexibility this year.
Mr. Eric S. Heifer: The right hon. Gentleman has given us a typical example of doublespeak—that is George Orwell, in case the right hon. Gentleman has not read him. On the one hand, the right hon. Gentleman has suggested that the Government are not introducing a moratorium and that they will pursue a system more or less of flexible controls, but his statement clearly adds up to a moratorium; in other words, a moratorium by any other name. …
I understand that the right hon. Gentleman told the Association of Metropolitan Authorities that six options were available to it. If I may quote Mike Millwood, the president of the Building Employers Confederation, which, incidentally, until now has been a great supporter of the Government, he said in today's Financial Times:
"It is like asking an unjustly condemned man whether he prefers to be hanged, shot, or starved to death. In the end, all the options add up to the same thing—more jobs lost, more urban decay, and disruption to capita] projects."
I think hon. Members will agree that the Government's decision, on top of the decline that is taking place in the whole of the construction industry, including the private sector, plus, incidentally, the inevitable consequences of last week's rise in interest rates and the effect on mortgages, is nothing other than a disaster for the construction industry. I could give quotation after quotation from people in various building organisations who in the past have been great supporters of the Government. I shall not give them but they are on record. I assure the right hon. Gentleman that there is a feeling of utter despair in the construction industry.
We were told by the Prime Minister in the debate on the Loyal Address:
"We need more capital spending by local government and in the public sector generally."—[Official Report, 3 November 1982; Vol. 31, c. 21.]
The right hon. Lady had previously, prior to the election, said in a letter to Sir Jack Smart:
"Local authorities have been enabled, and indeed encouraged, to increase their capital expenditure by using capital receipts to supplement their capital allocations."
The Government's present policies are the opposite of what the Prime Minister has urged in the past.
In view of the disasters for which the right hon. Gentleman has been responsible, does he not think that it is time that he stepped down from his job?
Mr. Jenkin: The hon. Gentleman is wrong. This is not a moratorium. It is certainly nothing like the massive cuts in capital spending that were ordered by the Labour Government in July 1976. Compare what I have announced today with what the Government of which he was a member announced — [Interruption.] Labour Members do not like it, but they are going to hear it. Their

333
cuts were on roads, car parks and public transport projects, they put a complete ban on construction and purchases for environmental services, they reduced spending on housing and they placed limits on spending on education, libraries and museums.
By contrast, we are not asking for cuts, but only that rising spending should be stopped from exceeding the limits set out in the White Paper. Furthermore, if local authorities can sell more houses and other assets, part of the proceeds can go towards maintaining their capital programmes.
The hon. Member for Liverpool, Walton (Mr. Heffer) referred to urban decay. The urban programme—the derelict land grant and many other forms of urban aid, such as assistance with derelict land reclamation—and sums spent on the police, the probation service and magistrates' courts are subject to separate cash limits and are not covered by this statement.
I remind the hon. Gentleman that in 1983 the construction industry's output rose to £24·3 billion, an increase of 8 per cent. in cash terms. The overspend in 1983–84 rose to about £250 million worth of construction output, or about 1 per cent. Thus, as a result of the overspend, the industry received a little extra last year.
For 1984 the NEDO is forecasting a 2·5 per cent. increase, or about £26 billion, in cash. The public sector accounts for about £12 billion of that. If local authorities now spend within the cash limits for this year, the growth should be more or less in line with those NEDO forecasts. The overspend would mean output higher than those forecasts, and that we could not afford.
Several hon. Members rose——
Mr. Speaker: Order. Many of the right hon. and hon. Gentlemen who are seeking to intervene are interested in the debate on the rate support grant that follows. In view of the time and the fact that there will follow another statement and a ten-minute Bill, I propose to allow questions on this statement to continue until 5.5.
Sir Ian Gilmour: I sympathise with my right hon. Friend for having to defend the ridiculous results of Treasury dogmatism, which he obviously deplores. Does he agree that the effect of his statement will be to make it difficult for local authorities to plan their capital expenditure properly and result in increased unemployment in the construction industry?
Mr. Jenkin: It is not ridiculous Treasury dogma to argue that an excess over the cash limits feeds into local authority borrowing, which increases the local authority borrowing requirement, which in turn is a significant element in the public sector borrowing requirement. As my right hon. Friend fought the last two elections on a firm policy of keeping those under control, I hope that he will support these measures.
Mr. John Cartwright: Will the Secretary of State try to understand the frustration in local authorities, which were berated by his predecessor 18 months ago for not spending enough on capital projects and which are now being penalised because they responded too vigorously to the Government's pre-election demands on them? Does he appreciate that local
334
authority capital schemes take time to work up and that they cannot be switched on and off like a tap without disruption and the waste of a great deal of money?
Mr. Jenkin: That is precisely why I have announced these flexible measures today. Two years ago, local authorities were heading for a massive underspend. My right hon. Friend the Prime Minister was right to urge them to spend up to the limits which they were allowed and for which the Government had planned. If they had done that earlier, the need for today's statement would never have arisen. As it is, capital spending is now pushing the total above the planned figure and we have no option but to seek the restraint for which I have asked.
Mr. Reg Freeson: Why no option?
Mr. Jenkin: My right hon. Friend's call in 1982 and the present measures should be seen as efforts to secure a more even level of investment and to smooth out the wilder fluctuations.
Mr. Mark Carlisle: I recognise my right hon. Friend's desire to control the overall amount of public expenditure, but will he accept that any idea of a moratorium on local authority capital expenditure—leading, as it inevitably would, to higher unemployment and the loss of many necessary public works—would be far more unacceptable to many than some increase in the public borrowing requirement?
Mr. Jenkin: I am sure my right hon. and learned Friend recognises that this is not a moratorium. [Interruption.] A substantial degree of flexibility is built into the arrangements which I have announced and, as I said, if authorities can sell more assets this year, they can maintain or increase their capital spending.
Mr. Allan Roberts: The Secretary of State is not executing local authority capital expenditure programmes, but is asking local authorities to commit suicide. This is a moratorium by any other name. Are not the Government, for the first time, replacing stop-go with stop-stop and producing more banana skins than bricks? Are local authority improvement grant loans included in the arrangements he has announced? Will the owner-occupier be attacked and criticised? Does the right hon. Gentleman appreciate that a decline is taking place in capital receipts because of high interest and mortgage rates? Is he aware that he should be announcing an increase, rather than a reduction, in capital allocations?
Mr. Jenkin: I will not take criticism from the Opposition about improvement grants. These grants totalled £900 million last year, whereas they were £90 million when the Labour party was in office. If we are to keep the economy on course, we must maintain cash limits and live within them, and local authorities cannot expect to be immune from that. Indeed, it was made clear when the new system of capital controls was set up that it would have to be subject
"to a firm annual ceiling and total capital spending figure. If overspending appears likely, it will be necessary to take corrective action … which may include adjustments of allocations."
I am not asking for any adjustment of allocations at this stage.
Sir Hugh Rossi: In view of rumours that have been circulating in the construction industry in recent weeks, the statement that local

335
authorities will be able to spend capital within their cash limits for this year and spend capital receipts within the limits for this year without any reduction will be received with great relief. However, is my right hon. Friend aware that that relief will be tinged with some regret that we appear once more to have returned to the old concept, beloved of the Labour party, of annuality on capital expenditure? We hope that this will be only temporary.
Mr. Jenkin: I am grateful for my hon. Friend's recognition that this is indeed a good deal less swingeing than some rumours circulating in the press had suggested. As for the future, the local authority associations have put forward proposals for monitoring the system of capital controls. I shall be happy to enter into discussions with them to see whether we can find a satisfactory system which delivers the cash limit rather more accurately.
Mr. Chris Smith: When will the Secretary of State for once stand up to the Treasury and tell it that its economic theories about the effect on the public sector borrowing requirement of the spending of accumulated capital receipts are sheer nonsense? When will the right hon. Gentleman tell the Treasury that the thousands of families who are waiting for homes and the hundreds of thousands of construction workers who are waiting for jobs will be severely disadvantaged by the effects of his statement? When will the right hon. Gentleman fight for his corner, our corner and the corner of people waiting for homes, and not fight for the Treasury's economic theories?
Mr. Jenkin: As my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) recognised, my statement contained a considerable degree of flexibility for local authorities, and that should be of some relief to the construction industry. Nevertheless, when we are heading for an overspend of the size that I mentioned in my statement, it would be irresponsible of the Government not to take some action to bring it under control.
Mr. John Heddle (Mid-Staffordshire): As local councils can now retain more of their capital receipts, does my right hon. Friend agree that an enormous number of local authorities are backsliding on their obligation to sell council houses, land and other wasted assets positively? Will he use the power given to him by the House to ensure that they abide by their obligations? Does my right hon. Friend agree that, because of annuality, certain underspending authorities are positively penalised? Will he conduct a review during the current financial year?
Mr. Jenkin: I am grateful for what my hon. Friend has said. My statement will mean that local authorities will now have an enhanced incentive to sell assets this year to maintain and, if appropriate, to increase their capital spending programmes. Local authorities, especially those which have been dragging their feet over council house sales, might care to note that point. I shall certainly look into the last part of my hon. Friend's question and, if necessary, write to him.
Mr. Freeson: Will the Secretary of State give an undertaking that he will not add to the shambles that he is creating by announcing in September, October or November further cuts or a moratorium on local authority capital spending? Will the right hon. Gentleman undertake not to make such a decision later this year?
Mr. Jenkin: It would be most unwise to give such an undertaking. I have said that I shall carefully monitor spending. I shall be asking local authorities to let me know swiftly their current capital commitments for the year. When I have the further information and the first quarter's outturn, I shall be in a position to decide. The decision may go either way—either to ease the restraints or to impose more stringent restraints to keep the spending within the cash limits.
Mr. Christopher Chope (Southampton, lichen): ft is a great relief to hear that there is to be no moratorium. Are the local authorities likely to co-operate with the request for voluntary restraint? Will my right hon. Friend ensure that the responsible authorities, especially those which keep down revenue expenditure — unlike those which have contributed to a £840 million overspend—will not lose at the expense of the extravagent authorities?
Mr. Jenkin: I shall have an opportunity tomorrow at the meeting of the Consultative Council on Local Government Finance to discuss my statement with the local authority associations. From the preliminary soundings that I took yesterday, it is clear that the leaders of some of the associations are willing to recognise the Government's problem and to do what they can to help to solve it. As for the question of distinguishing between authorities which behave responsibly and those which do not, I should not want to acid to my statement, where I made it clear that, if necessary, I would be prepared to use my statutory powers next year in respect of those authorities which, either selectively or individually, do not pay regard to my requests.
Mr. Simon Hughes: Will the Secretary of State at last admit to the House that the Government's local government finance policies are all over the place, that their housing policies are a disaster for those in the public sector and that this statement is totally illogical?
Local authorities have more money to spend largely because they receive capital receipts from sales of council houses. The right hon. Gentleman is now encouraging those authorities to increase those sales. Does he agree that that is discriminatory, because authorities such as mine, which have few desirable and saleable public sector properties—their properties are all in tower blocks or flats—receive little money from sales? If it is such a wonderful scheme, why did the Minister for Housing and Construction meet those Conservative Back Benchers with an interest in the construction industry at 2.45 pm today to explain to them what was in the right hon. Gentleman's statement before the statement was made to the House? What did the hon. Gentleman say to them that the right hon. Gentleman has not said to us?
Mr. Jenkin: If it ever happens, and I doubt that it ever will, that any member of the Liberal party has to make a statement from the Dispatch Box, the hon. Gentleman will find that it is normal procedure——
Hon. Members: No.
Mr. Speaker: Order.
Mr. Jenkin—to discuss in general with one's supporters what is likely to happen. The hon. Gentleman could not, however, be expected to know that. The hon. Gentleman will know that last year we reduced the prescribed proportion of housing from 50 to 40 per cent.

337
so that we would have a larger slice to reallocate to those authorities which did not have the same opportunities for sales as others. I had hoped that the hon. Gentleman would give the Government some credit for that.
Mr. Fred Silvester: I recognise that my right hon. Friend has protected local government capital expenditure from the worst excesses of the Treasury's demands, but will he recognise that his statement is very unsatisfactory? What sum of money is expected to be saved by his announcement? What proportion will that sum be of total expenditure in the coming year?
Mr. Jenkin: It is not possible at this stage to put a precise figure on what might be saved. Until one knows the details of the commitments into which local authorities have entered—I have said that I am preparing to ask them to give the details swiftly—it is not possible to put a precise figure on the amounts to be saved. As I have said, the amount of possible overspending is at least as high as last year and is possibly higher. We shall, if necessary, have to take steps to ascertain whether we can bring that spending into line with the cash limit which was published before the Budget last year.
Mr. Geoffrey Lofthouse: What figures on capital payment intentions has the Secretary of State obtained from local authorities? Will the right hon. Gentleman confirm that yesterday he told the local authority associations that the figures were unreliable? That being the case, how can the right hon. Gentleman base a judgment on them? Will he confirm that no local authority has overspent?
Mr. Jenkin: The hon. Gentleman must recognise that in asking for the estimates return this is the first time that the Government have asked for information in this form from local authorities. It is difficult to analyse the results, because we do not have previous experience to go on. We treated the local authority estimates with a good deal of circumspection and made a good number of adjustments, on the assumption that there had been a high degree of over-estimating about what they might succeed in spending during the year. Having made all those adjustments, it is the Government's view that, according to the figures that we have received, we are heading for an overspend. In those circumstances, it would be irresponsible for the Government to stand by and do nothing. That is why I made the statement.
Sir Dudley Smith: Despite what my right hon. Friend said in one of his answers, did he say in his original statement that he would pay regard to those authorities which responded to the guidance that he is now giving? If so, surely that step will be welcomed by those responsible authorities which are trying to play the game.
Mr. Jenkin: I assure my hon. Friend that the words I used towards the end of my statement were intended to show that if authorities co-operate, as I am sure most will, with the Government's requests, they need not suffer under the arrangements that I have outlined. Some authorities may be tempted not to co-operate. It is only right at this stage to warn that I might then have to use my statutory powers.
Mr. Tony Lloyd: Is the Secretary of State aware that those in local government in general rightly resent the fact that, because of the Government's financial crisis management, they are never able to plan their capital programmes? The people who suffer especially are the homeless and the badly housed in inner urban areas. Does the right hon. Gentleman accept that, although he is announcing something which, by its nature, is voluntary at the moment, the plan almost certainly cannot work, because many local authorities, such as Manchester, will have to ignore his blandishments and the right hon. Gentleman will therefore come back much later in the financial year with even more draconian powers causing much greater hardship?
Mr. Jenkin: The city of Manchester is rather wiser than the hon. Gentleman. It recognises that it is in the interests of all authorities that they should collaborate to try to help the Government achieve the cash limit. I am well aware of and have a great deal of sympathy with the desire of local authorities to plan their capital expenditure over a longer time scale. That is why earlier this year I gave them an assurance that they could—apart from deductions for overspend—look forward to 80 per cent. of this year's allocations next year and 70 per cent. the year after. That was much welcomed by the local authorities.
Mr. Teddy Taylor: Will these capital restraints apply to the substantial sums recently transferred by at least one local authority from revenue to capital account as an exercise in creative accounting to avoid grant penalty, or will these restrictions not be applied to Liverpool?
Mr. Jenkin: The restrictions for which I have asked apply to all authorities. I am sure my hon. Friend recognises that that form of accountancy has the effect of reducing the capital which a local authority has available to spend, and therefore makes more stringent the effect of the restraints which I am now asking all local authorities to observe. There is no question of any authority avoiding that by creative accounting.
Mr. Allen McKay: Has the Minister considered constituents such as mine who have high expenditure at present because of the industrial problems within the area which is causing local authorities legitimately to spend considerable sums of money? Has he also considered areas such as mine where, before the industrial dispute started, 58 per cent. of the tenants received rent rebates? There is no chance that they will buy their houses. Will he also consider the fact that because of the dispute many people who desire to buy their own houses will not be able to do so? The local authorities have already put into being a two-year programme to spend all the capital receipts on housing repairs and modernisation. What effect does the Minister think that will have on the Housing Defects Bill 1984?
Mr. Jenkin: Most of the matters to which the hon. Gentleman has drawn the attention of the House refer to revenue spending and not capital spending. I recognise the point that he has made that because of the most misguided coal strike a number of his constituents who might otherwise have been looking forward to buying their houses now cannot do so. That will, of course, reduce the

339
receipts of the local authorities in that area. The blame does not lie at the Government's door. The hon. Gentleman knows where the blame lies.
Mr. Richard Tracey: My right hon. Friend can be congratulated on his light touch, which compares favourably with the sledgehammer imposed by the Labour Government in 1976. Will he contrast the non-public housing construction output record of this Government with that of the previous Labour Government, when there was a steady decline?
Mr. Jenkin: This Government have been a great deal more successful than their predecessors in sustaining capital programmes. Our predecessors had the bailiffs in, and that of course made life difficult for them.
Mr. Eddie Loyden: Will the Secretary of State accept that his statement will worry those unions, such as the Transport and General Workers Union, involved in the construction industry? It has about 300,000 members in the construction industry. What hope does he give those people, who represent the highest proportion of unemployed in areas such as mine and the north-west, if his statement means a cut in capital programmes in cities such as Liverpool? What does the Secretary of State believe the effect will be on the 17 priority areas in Liverpool which have just been announced?
Mr. Jenkin: It is impossible for me at this stage to say what the effect might be on individual authorities. That is why I am asking for urgent returns of the commitment levels. I remind the hon. Gentleman that I said that the NEDO estimate for the output of the construction industry for the current year is a 2·5 per cent. increase. For those authorities which keep their capital spending within the national cash limit, that increase should be delivered.
Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that I have considerable sympathy with the fight that he put up against the powerful Treasury team? However, does he agree that the problem is that local authorities are treated like a wicked dog and are now beginning to bite because they are always being kicked? We must arrive at a system whereby we deal fairly with local authorities on current account
340
—where the rules are changed if they guess right—and on capital account when they invest capital because they are asked to and are then told that they are overspending. With the problems in our inner areas, we cannot run great authorities upon that basis. When will we do something with local government to ensure that fairness and common sense prevail?
Mr. Jenkin: No one would wish to find that Holy Grail more keenly than I. With regard to controls over capital spending, I have already said that we have had a number of proposals from the local authority associations. I shall want to sit down and discuss with them whether we can find a better system. On current expenditure, perhaps my hon. Friend will catch Mr. Speaker's eye during the debate that will follow.
Mr. John Fraser: First, I accuse the Secretary of State of a lack of candour over this announcement, which is characterised by the language that he has used. He has failed to tell the House, after a great deal of questioning, what is in his mind. He has today announced a cut.
Mr. Jenkin: No.
Mr. Fraser: Yes, it is a cut in this year's and next year's capital expenditure to take account of the so-called overspend. In fact, no local authority has overspent. They are being penalised for obeying the rules. Only a demented monetarist would cheer the statement that has been made to us today. For the rest of the people—the homeless, the badly housed, the building industry and building workers—it is a dose of despair and a kick in the groin for all those who took him and his predecessor seriously and believed that they cared about housing.
Mr. Jenkin: The hon. Gentleman is wrong when he says that this is a cut. Expenditure is heading for overspend. We are seeking to ensure, so far as we can, that the total capital spending of local authorities comes into line with the net cash limit which was published at the time of the Budget earlier this year. If that is achieved, the spending will be in line with what was planned when we embarked upon the year. I know that most local authorities will do their best to follow my request to try to achieve this objective.

Local Authority Capital Expenditure (Wales)
5.8 pm
Mr. Speaker: Statement. Mr. Wyn Roberts.
Mr. Donald Coleman: On a point of order, Mr. Speaker. [HON. MEMBERS: "No."]
Mr. Speaker: Before the Minister starts?
Mr. Coleman: Yes. We distinctly heard the Secretary of State for the Environment say that we were to have a statement today by the Secretary of State for Wales. We understand now that we are to have a statement from the Parliamentary Under-Secretary. While we have a great deal of respect for him, this is a matter of considerable significance for local authorities in Wales. Would it not therefore be better in the light of that for the statement to be postponed until the Secretary of State for Wales can be present? We know that he has important duties in Wales today, but it would be far better for the Secretary of State to make the statement.
Mr. Speaker: All I can say is that the indication given to me was that the Parliamentary Under-Secretary would be making the statement. [HON. MEMBERS: "On a point of order."] Order. It is not a matter for me, and it cannot be a matter for me. I am not responsible for deciding which Minister makes a statement.
Mr. Ted Rowlands: On a point of order, Mr. Speaker.
Mr. Speaker: Is it a different point of order?
Mr. Rowlands: It relates to it, Mr. Speaker. It refers to an exchange that took place in your presence on Monday 16 July. Question No. 3 from my hon. Friend the Member for Gower (Mr. Wardell) was about this matter. It was answered by the Secretary of State for Wales. He did not just answer it, but, in the view of many Opposition Members, he completely misled the House as to what was going to happen. In view of the fact that he chose to answer that question in the way that he did, and yet within two days he cannot even manage to be present to face the music, we have the right to ask you, Mr. Speaker, whether we have any rights in this respect.
Mr. Speaker: I say again to the House that there is no point in raising the matter with me. I have no responsibility for deciding which Minister will make a statement.
Mr. Ray Powell: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I am not taking any more points of order. It is not a matter for me.
Mr. Powell: Where is Edwards?
Mr. Speaker: Order. Let us hear no more about the matter. I am not prepared to take any further points of order on the whereabouts of the Secretary of State. I call upon the Parliamentary Under-Secretary to make his statement.
The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): With permission, Mr. Speaker, I should like to make a statement on local government capital expenditure in Wales. [Interruption.] The Secretary of State for Wales cannot be here to make this statement, because he is in Wales presenting an honour on behalf of Her Majesty the Queen.
342
On the basis of the local authorities' forecasts, the 1984–85 capital cash limit is on course to be exceeded by £88 million. Discussions with Welsh local authority associations, in the framework of the Welsh Consultative Council on Local Government Finance, indicate that the excess is likely to be within the range of £40 million to £50 million. We cannot accept the damaging economic impact of overspending on this scale. Accordingly, following the consultations to which I have referred, we are seeking the co-operation of all local authorities in holding expenditure to a more acceptable level, with the aim of preserving the cash limit.
In doing so, my right hon. Friend has not for the present employed any of the statutory measures that are available. As in 1983–84, we prefer to rely on voluntary co-operation, trusting that each authority will play its part. None the less, when considering the allocation of resources available for 1985–86, my right hon. Friend will have regard to the extent to which authorities both collectively and individually have complied with our request for restraint.
Taking action at this relatively early stage of the year enables us to be far more selective in our request for restraint than in 1983–84. Thus, county councils, whose aggregate spending is not currently projected to give rise to pressure on the cash limit, are asked only to contain their spending to the levels forecast in April. It is the district tier which will, therefore, have to trim its spending. District authorities are being asked to restrict their spending in the current year to their capital allocations, plus the prescribed portion of receipts accruing in the year, or the amount actually committed as at midnight tonight, whichever is larger, apart from limited areas which are of particular local and national priority. They are the urban programme, including urban development grants, Welsh Development Agency derelict land clearance, and spending covered by the special allocations made in respect of enterprise zones and priority estate projects.
We are asking local authorities to supply us with more precise information to allow monitoring of the course of their capital spending. That material will enable us to review the impact of our measures, and to see whether there is any scope for allowing authorities to enter into some additional commitments, or whether further restraint is required.
The revised cash limit for 1983–84 was overspent by some £7 million. Normally, an excess over the cash limit would be deducted from the resources available in the following year. Given the circumstances, such a procedure would clearly be inappropriate in this case. The overspend will be taken into account when setting the limit in 1985–86.
A copy of the text of the letter that is being sent to councils has been placed in the Library.
Mr. Barry Jones: Overall, this statement will receive a resentful welcome from district authorities because it will create uncertainty and confusion. Does not the Minister yet understand that Wales needs more, not less, capital spending? Does he not know that we have suffered major cuts in rate support grant allocations? We have the worst housing in Britain, with some 40 per cent. of the stock being pre-1919 housing. We

343
have lost 12,000 jobs in the construction industry since 1979 and, therefore, we expect more unemployment as a consequence of the measure announced today.
Regarding capital receipts, what will be the consequence of the Under-Secretary's advice on new council house building, for the improvement of aging council homes, for recreational and tourist schemes, and for our sea defence schemes? Does he not agree that the statement will throw the improvement grant scheme into chaos and cause more disruption to undertakings that have already been made by authorities throughout Wales? Is not the Minister employing the tactic of threatening penalties on local authorities which do not oblige him by agreeing that their 1985–86 allocations can be tampered with?
Is not this statement just one more instance of the Government's blatant disrespect for local government democracy? Is it not bully-boy tactics writ large? The Government are giving district authorities very little freedom to manoeuvre. They will have only the freedom to do as they are told. They are being invited to choose only the form of pain that they will have to suffer.
Mr. Roberts: I believe that the hon. Gentleman has taken a very short-sighted view of the situation. He has made it out to be far bleaker and darker that it really is. With regard to confusion, apart from the confusion that exists in the hon. Gentleman's own mind, the letter that we shall send to local authorities will make the position abundantly-clear to them.
The hon. Gentleman has pleaded for more capital spending in Wales. We would, of course, all like to spend more, but the Government are pledged to restrict spending to what the nation can afford. What we are doing in this statement, and the follow-up today, is holding down expenditure to the planned levels.
I have explained the position with regard to district councils. They are, of course, allowed to spend their allocations, plus the prescribed portion of receipts. The majority of improvement grants will have been committed already, and some 24,000 improvement grants have already been approved. The work to implement those improvements will carry on.
As for threatening the local authorities, I stress that we are seeking their voluntary co-operation and that we are not using statutory powers.
Sir Anthony Meyer: Will my hon. Friend accept that, within the context of an intolerable system of local government finance, he has made the best of a very bad job? None the less, it is unsatisfactory that when cuts are called for they have to fall in the first place on capital projects and that far less hardship is inflicted upon current expenditure. The Minister should use that as a further reason for pressing on with a thorough overhaul of the system of local government finance.
Mr. Roberts: May I reassure my hon. Friend, as my right hon. Friend the Secretary of State for the Environment has just reassured other hon. Members, that there is no question of cuts in this case. [HON. MEMBERS: "Trimming."] We must restore spending to its planned level.
With regard to the capital control system, as my right hon. Friend also said, we are seeking ways to improve it.
Mr. Michael Foot: Will the Minister convey to the Secretary of State our protest against his
344
absence from the House? Does he not realise that it would have been open to the Secretary of State, when he knew that the statement was to be made, to ask for it to be made on another day? He must have known how important the matter was. I do not say this in disrespect to the Under-Secretary, but for us in Wales the absence of the Secretary of State is just another proof of the right hon. Gentleman's total unfitness for the office that he holds.
I should like to ask the Minister a question about the application of the announcement to my constituents, who are fighting against mass unemployment on a huge scale. How many more will be added to the dole queue because of the announcement?
Mr. Roberts: I regret the right hon. Gentleman's remarks about my right hon. Friend the Secretary of State. He will be here later in the day. He is due to participate in a debate on the rate support grant reports. I dare say that the subject that we are discussing now can also be brought up during that debate.
With regard to unemployment, I reassure the right hon. Gentleman that the works to which district councils are already committed, and which they are legally bound and contracted to perform, will not be affected, so there is no immediate impact on employment.
Mr. Peter Hubbard-Miles: I am sure that my hon. Friend will realise that the exclusion of enterprise zones and urban grants from the restrictions that he has announced will be welcomed, but is he aware that the local authority that covers my constituency, which is one of the largest district authorities in Wales, had capital expenditure last year of £12 million and this year of £17 million and that its projected expenditure for next year is £21 million? In the light of those figures, my hon. Friend's modest proposal can hardly be described as cuts or a moratorium, but is merely a gentle containment of an explosive capital situation.
Mr. Roberts: My hon. Friend is absolutely right in that we are acting prudently in bringing local authority expenditure back to planned levels. I am glad that my hon. Friend welcomes the exemption that we have given to the enterprise zones in particular. Together with the other exemptions, that amounts to a capital spend of about £34 million. The reason we have been able to exempt the areas that I mentioned in my statement is that firm control was exercised over the planned spend in those areas.
Mr. Alex Carlile: Will the Minister tell those of us who do not have his command of language how one trims without cutting? Does he agree that the use of the word "voluntary" is absolute humbug because any local authority that does not act voluntarily will get its knuckles rapped? Does he agree that the housing stock in Wales, which the Secretary of State described as dreadful in the Welsh Grand Committee recently, will suffer further as a result of the cuts? Does the hon. Gentleman further agree that local authorities are indefensibly being forbidden to spend their own money—their own capital receipts, which have absolutely nothing to do with the Government? Does he agree that it is high time that there was a rolling programme for local authorities in Wales so that they could plan for the future and for the people of Wales without constant obstruction from the Welsh Office?
Mr. Roberts: There appears to be some confusion. Local authorities are allowed to spend their current capital

345
receipts. It is their accumulated capital receipts that we are restricting, for very good reasons. If those accumulated receipts are used, the cash limit will be exceeded and that in turn will lead to damaging effects on the economy, and employment, with all the other consequences that we do not wish.
With regard to the hon. and learned Gentleman's point about trimming and cutting, I have said that what we are doing is bringing the local authorities back to the planned level of expenditure. That is clearly shown in the case of the counties—we are simply saying that they must stand by their April forecasts. That is how they are affected. The scheme is voluntary. My right hon. Friend the Secretary of State met the Welsh Consultative Council on Local Government Finance yesterday, and I was present. We discussed the situation. It is fully aware of the fact that an overspend was threatened.
With regard to housing, I can give the hon. and learned Gentleman the same assurance that I gave previously to him, as well as the House, which is that we expect expenditure of about £200 million this year on housing in Wales.
Mr. Keith Raffan: The fact that enterprise zones will be exempt from voluntary restraint will be particularly welcome in Delyn, where we are doing our utmost to get the new enterprise zone off the ground as quickly as possible. Is my hon. Friend aware that Delyn borough council is extremely grateful for the helpful way in which the Government have made up what was held back under last December's voluntary restraint, and for the very generous £1,006,000 urban programme grant for the zone, which is £250,000 more than its wildest expectations?
Mr. Roberts: I am sure that Delwyn appreciates the fact that enterprise zones have been exempted. I am glad that my hon. Friend appreciates it, too. There is no hon. Member who does not wish success to the enterprise zone in my hon. Friend's constituency.
Mr. Donald Anderson: I shall say nothing about the humbug of calling this a "voluntary" arrangement, but is it naive of us to imagine that the Government have calculated the consequences of their own announcement? What estimate have they made of the effects on employment, direct and indirect, of the announcement? Will a similar restraint, voluntary or otherwise, be applied to housing associations?
Mr. Roberts: I certainly cannot add to the statement that I have already made, except to say, as my right hon. Friend the Secretary of State for the Environment did, that we are not talking about the same sort of cuts in expenditure as the Labour Government imposed in 1976, when all the horrors that are in the minds of Opposition Members were perpetrated. I must stress that what we are doing is bringing local authority expenditure back on track.
Mr. Rowlands: Will the Under-Secretary tell us which authorities might be caught by the midnight moratorium? In his statement he referred to the authorities that might have contracted expenditure by midnight tonight. Will the hon. Gentleman tell us, from his estimates, which those authorities are?
Mr. Roberts: I can tell the hon. Gentleman that there are positive aspects to the statement that I have just made—[HON. MEMBERS: "Answer the question."] Not only will there be encouragement for certain authorities to maximise their capital receipts in the course of this year so that they can increase their spending, but some authorities, possibly amounting to as many as half the district authorities in Wales, have not yet reached the limits that I outlined in my statement.
Dr. John Marek: I urge the Minister to worry less about preserving cash limits and more about the prevention of misery, deprivation and poverty in the Principality. Does he care in any way that the infrastructure of the Principality is crumbling about our very ears and does he realise that he is leading the nation fast to the status of a developing country? Is he aware that local authorities, unless they are legally obliged, will have to get together and put the interests of the people of Wales first and not co-operate in any way with the Minister because he does not represent those people in any way?
Mr. Roberts: The hon. Gentleman is encouraging the Government to allow capital spending to rocket. There is no doubt that that would have a very damaging effect. I know of no Government, Conservative or Labour, who have allowed that to happen. In order to prevent damage to the economy, we must stick to planned levels of spending.
Mr. Dafydd Wigley: Is the Under-Secretary aware that it is unacceptable that the Secretary of State should be prancing around Wales presenting honours, playing Santa Claus with royal palliatives, while the Government bring disaster to Wales?
The guidelines are vague and cannot be quantified, but the local authorities will be measured and punished against them. Will the hon. Gentleman admit that when he says "trim" he means "cut back"? What is the position of authorities that cannot undertake their statutory responsibilities because of the cuts?
Finally, will the hon. Gentleman tell the House whether there is any level to which he will not stoop or demean himself before he considers his position in office?
Mr. Roberts: The House is well aware of what, in this situation, the Government are about. I know that I am repeating myself, but I must say again that we are bringing the local authorities back to the planned level of spending, and seeking to avoid the adverse consequences that would surely follow if expenditure was allowed to rocket.
We will, of course, expect all local authorities to meet their statutory obligations.
Mr. Brynmor John: How can we take the Under-Secretary seriously when he said a week ago, in the Welsh Grand Committee, that it was far too early in the year for definite conclusions? If the midnight moratorium is not a definite conclusion, what is? Have the Government calculated the consequences of these measures on jobs and on the economy? Has the hon. Gentleman calculated by how much the number of housing starts will be reduced in south Wales, where 32,000 people are awaiting for a home in the coming year? How many authorities will be added to the six which will not build a single council house next year?
Mr. Roberts: Yes, of course I accept that we discussed the situation last week in the Welsh Grand Committee. I do not want to quote myself——
Mr. John: The hon. Gentleman misled the Committee.
Mr. Roberts: No, I did not mislead the Committee. I made it clear that we are concerned about the figures that the local authorities are giving us. As I said in my statement, this is fairly early in the year. The fact that we have taken action at this stage means that that action is less stringent than it might have been if it had been taken later on. But, as I have said, we shall monitor and review the situation. We have not made any calculations about the effect on housing starts, but there will be a very substantial spend on housing in Wales this year.
Mr. Coleman: The hon. Gentleman will recall that his voluntary persuasion of county councils—especially in Glamorgan — has had a devastating effect upon our education and especially on the conveyance of children to school. Will he accept that, after midnight tonight, those who had the expectation of being housed decently and those who are undertaking improvements to their homes can forget it?
Mr. Roberts: No, I will confirm nothing of the kind. By the end of March this year, some 24,000 improvement grants had been approved but not yet paid. They will not be affected by what I have said today. We can look forward to the payment of some 24,000 improvement grants.
The hon. Gentleman referred to schools. He well understands that the running of schools is a matter for revenue expenditure—current expenditure—rather than capital.
Mr. Ray Powell: I share the sentiment expressed by my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) about the absence of the Secretary of State. I understand that, if the right hon. Gentleman had to travel from Cardiff to London, he might be delayed by the presence of 110 lorries transporting iron ore and coal from Port Talbot to Llanwern, but he should be here to answer the questions. However, I notice that another of the three stooges has arrived on the Government Front Bench to support the hon. Gentleman.
The hon. Member for Bridgend (Mr. Hubbard-Miles) is a member of the local authority which represents my area as well as his. He failed to ask how much unemployment would be created in Ogmore by the measures to be introduced. He should have emphasised the fact that in Ogmore 8,000 people are out of work and only 100 jobs are on offer in the jobcentre, and that this measure will create unemployment and allow it to escalate out of all proportion. Is not it time that the Government took action?
Mr. Roberts: I must reiterate what I have already said, for the benefit of the hon. Gentleman, who is aping certain other statements made about my right hon. Friend. I said that local authorities would, of course, be allowed to spend their allocations, plus the appropriate proportion of their capital receipts. In the case of housing, that is 25 per cent. In the case of non-housing receipts it is 100 per cent. or the level of their legally binding commitments. All the work that has been planned and contracted over the past few months of the current year will go ahead, but the district authorities cannot take on further commitments.
Mr. Gareth Wardell: In view of the directive which the Government have issued today to local authorities in Wales, will the Parliamentary Under-Secretary spell out how, at a time of high interest rates, income and employment are to be generated in Wales without an expansion in capital investment? Will he further explain a reply to me last Monday during Welsh Question Time, when the Secretary of State said:
"We are discussing with local authorities the best way of dealing with this situation."—[Official Report, 16 July 1984; Vol. 63, c. 5.]
Will the hon. Gentleman say whether the discussions which were continuing on Monday stopped suddenly today? Is this situation not indicative of the lack of consultation and openness which characterises the Government's behaviour at the moment?
Mr. Roberts: There is every indication that the Government have been most open. We have, of course, consulted the local authorities. Yesterday, there was a meeting of the Welsh Consultative Council on Local Government Finance. That meeting had been preceded by other consultations with local authorities at an official level. The local authorities are well aware of the threatened overspend of the cash limit. Indeed, the sub-committee set up by that consultative council — comprising Welsh Office and local authority officials—has been discussing the capital situation, as we did yesterday. The cash-limited total of public expenditure—that is, capital expenditure—this year in Wales is £280 million and of that the local authority element is about £237 million. It is a substantial spend by any standards.
Mr. Ron Davies: Is it not a fact that the Department of the Environment and the Welsh Office have made a complete hash of their relations with local government? Does the Under-Secretary accept that, if there had not been three months of fine weather this year, they would not have been panicked into these measures? Is he aware that the moratorium which he has announced this afternoon will mean that some local authorities in Wales will be able to enter into new contracts for capital works, which will lead to nothing other than higher unemployment, a lower level of environmental services and a worsening of the relationship between local government and central Government? That is all that the Minister has achieved.
Mr. Roberts: The consequences for local authorities are spelt out in the letter to which I referred in my statement, which explains the position clearly. There is no hash, and I can assure the hon. Gentleman that there is no panic. I must tell Opposition Members once again that we are not indulging in the savage cuts that were introduced in 1976.
Mr. Barry Jones: May I take up the question of my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) about the midnight moratorium? Will the Minister take this further opportunity to tell the House what additional information is available to us about the local authorities that have reached the limit?
Mr. Roberts: I cannot give precise information to the hon. Gentleman, who will be aware that we are only just coming to the end of the first quarter of the financial year. All that we have now are strong signs. As I said, the local

349
authorities' estimate was about £88 million. We have agreed after consultation that the overspend threatens to be about £50 million. That is why we have taken this appropriate and timely action.
Mr. Speaker: Standing Order No. 10 application——
Dr. Roger Thomas: On a point of order, Mr. Speaker. In raising this point of order I am seeking your guidance. I accept that the Secretary of State for Wales is in Wales doing his duty for Her Majesty the Queen, but was it necessary for the right hon. Gentleman to take with him two thirds of the Conservative Back Bench Members who represent Welsh constituencies?
Mr. Speaker: The hon. Gentleman might have had the opportunity to put that question to the Minister if he had risen in his place during questions on the statement.
Standing Order No. 10 application——
Mr. Tony Baldry: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I have written to the hon. Gentleman about his point of order and I think that he should read my letter before he seeks to raise the matter on the Floor of the House.
Mr. Laurie Pavitt: On a point of order, Mr. Speaker. I sat through the interesting statement on Wales and the questions that followed it. I was naturally interested in the proceedings, but I do not represent a Welsh constituency. Is it the custom of the House that Members who represent English constituencies do not intervene in Welsh or Scottish questions, or is it permissible for them to do so if that is their wish?
Mr. Speaker: It is permissible, but whether the hon. Gentleman's Welsh colleagues would appreciate such intervention is another matter.

Sealink UK Ltd.
5.42 pm
Mr. Stephen Ross: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the terms of the disposal of Sealink, as announced by the Secretary of State for Transport earlier this afternoon."
I think that I would be failing in my duty to my constituents if I did not raise this matter with you, Mr. Speaker. I have been a Member of this place for 10 years and this is the first time that I have proposed the Adjournment of the House under this Standing Order.
About an hour ago, the Secretary of State for Transport announced the terms of the disposal of the largest ferry operator in the United Kingdom. It operates about 36 ships — admittedly, some are not totally owned — over 20 routes from about seven ports. This operation has been sold for £66 million. We were told fairly recently that £80 million to £120 million was confidently anticipated and we read in our Sunday newspapers — especially in the business section of The Observer—that an offer of about £80 million was supposed to be made by Friday of this week by Common Brothers of Newcastle.
A fact that was not revealed this afternoon was that last year Sealink made good profits of about £9 million. As it has been part of the public sector, Sealink has had most of its ships built in British yards. That is something that European Ferries has not done. The last ships that it ordered were built at the Robb Caledon yard for the Isle of Wight service at a cost of about £14 million. Before that, orders had been placed with Harland and Wolff at a time when that organisation was facing great problems. Those orders enabled Harland and Wolff to move into a much more favourable position.
No real assurances have been given today about work force participation and no assurances have been given to my constituents about the special concessionary fares that will be available to those who register their cars on the Isle of Wight. The concessions are sizeable—I raised this matter during an Adjournment debate last Thursday, which finally started at about 15 minutes to 12 o'clock—for they range between 25 per cent. and 35 per cent. That represents big money to my constituents, because the fares are about £30 a time.
The man who is buying the company, Mr. James Sherwood, has not been to the Isle of Wight to see my constituents. The Isle of Wight county council, which is the transport authority for the island, has not been consulted, and surely it should have been. It was not even allowed to have a copy of the prospectus when it applied for one.
If the work force is not worried, it should be. Statements have been made in the House by the Secretary of State for Transport and the Under-Secretary of State for Transport that great consideration would be given to the participation of the work force. We know that one of the other bidders — probably the National Freight Consortium—was prepared to give at least 20 per cent. of the shareholding to its work force. We have merely been told that in future there may be a flotation of the company and that at that time favourable consideration would be

351
given to the participation of the work force. It has been said that schemes are being prepared that will introduce some form of profit sharing, but that is not good enough.
The economy of the Isle of Wight depends on the operations of the Sealink ships. Between 70 per cent. and 80 per cent. of all the goods that come to and from the Isle of Wight are carried on Sealink boats. We have been sold down the river because we have not received assurances from the Secretary of State or from any other Minister that the price is satisfactory. The Government should have withdrawn the sale and waited for a year or two until the profits became more substantial. Undoubtedly they were advised to take the course by their financial advisers a year ago. They have not done that because they cannot get rid of Sealink quickly enough. A traditional ferry service which has always been in the ownership of the railways——
Mr. Speaker: Order. The hon. Gentleman must not advance arguments that he would deploy if his application were granted.
Mr. Ross: I am seeking through you, Mr. Speaker, the protection of my constituents. The sale of Sealink should be debated and voted upon.
Mr. Speaker: The hon. Member for Isle of Wight (Mr. Ross) has sought leave to move the Adjournment of the House under Standing Order No. 10 to discuss a specific and important matter that he thinks should have urgent consideration, namely,
"the terms of the disposal of Sealink, as announced by the Secretary of State for Transport earlier this afternoon."
The hon. Gentleman knows that the only decision that I have to take is whether the matter that he has raised should have precedence over the business set down for today or tomorrow. I listened carefully to the hon. Gentleman and I regret that I do not consider the matter that he has raised to be appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House.

Unfair Dismissal (Non-strikers)
5.48 pm
Mr. Peter Thurnham: I beg to move,
That leave be given to bring in a Bill to provide that dismissal of an employee in consequence of that employee not taking part in a strike shall be unfair dismissal; and for connected purposes.
This is the first ten-minute Bill that I have introduced. I had to make five visits to the Public Bill Office before I was first in the queue and thereby entitled to table the Bill. On one of these midnight occasions I met my hon. Friend the Member for Banbury (Mr. Baldry), and I am grateful to him for bringing the subject of my Bill to the attention of the House in part of his own recent ten-minute Bill.
The problem of unemployment that is caused by union pressures is the greatest issue facing Britain. Striking miners and dockers, in trying to protect their own jobs, are in turn threatening the livelihood of many millions of others who have to compete in world markets, and they will destroy their own jobs in the end.
The need for trade union reform has been recognised by this Parliament and the previous one but more needs to be done. I am grateful to my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) for drawing attention in his maiden speech to the area in which legislative support for the individual is most in need of reform. As he said, it is surprising that there is no protection for the worker who loses his job through refusing to strike.
Since May 1979 we have had Green Papers, codes of practice and two Acts of Parliament, with a third on the way. Despite all of them, there is still this one fundamental injustice which has not been effectively remedied. If a worker refuses to take part in a strike, he may be disciplined by his union and lose his union card. In a closed shop, that can mean the sack without a penny of compensation. At present, about 5 million workers are in closed shops.
Later this year, on 1 November, the Trade Union Act will require closed shops to be put to the test of a secret ballot. I believe that in most cases unions and employers will seek to avoid that requirement by attempting to continue the closed shop informally. In other cases—those where an 80 per cent. majority are in favour—the employer may agree to a ballot to continue the closed shop, with full powers to dismiss those who are not members of the union.
Thus, even after 1 November workers can still be in fear of dismissal without compensation if they work through a strike—afraid either because they are in a closed shop which has been confirmed by ballot or simply because they are uncertain of their rights in an informal, de facto, closed shop. That uncertainty arises because the legislation is complicated, and guidance to the employees is buried in paragraph 61 of the 24-page code of practice. Those employees can in many cases be frightened and afraid to assert their own rights. They are normal, quiet people who do not wish to risk a confrontation or publicity. They are reluctant to go to an industrial tribunal with no help from anyone.
As an example of the difficulties faced by an individual, consider the case of a print worker, John Seddon, of

353
Manchester, who has lost his job after 35 years with the Mirror Group because the union took away his card, and the union continues to oppose his return to work.
It is a matter of basic individual freedom for a worker to know without doubt that he cannot be sacked for refusing to strike, or that, if he is, he will be entitled to all the remedies for unfair dismissal provided by our laws. The right to work should be clearly stated in the union rule book and displayed on notice boards in all places where there is a de facto 100 per cent. union membership.
Closed shops have most force in public sector monopolies. Strikes in those industries are not limited by normal commercial considerations. If trade union officials cannot persuade their members to strike without threatening them with loss of their jobs, it is they who are the scabs of society.
Strikes in essential services hit the weakest members of society. Those individual trade unionists who are conscious of that, and do not wish to strike, should be given every protection by law, particularly if they are subject to intimidation, or threats, such as Arthur Scargill's, that non-union men will be frozen out of the industry.
Both my right hon. Friend the Prime Minister and the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan), when he was Prime Minister, have said that everyone has the right to work. It is important that ordinary people should know their rights and not be afraid to go to work. The former Prime Minister said:
"everyone has the right to work and everyone has the right to cross a picket line."—[Official Report, 23 January 1979; Vol. 961, c. 198.]
In my constituency, 210 nursery nurses who are required to be members of NALGO have been on strike since 1 May. Many of them do not wish to strike but, unfortunately, have been advised by their employer, Bolton council, to stay on strike rather than risk losing their jobs in the town hall's closed shop. That disgraceful advice is solely in the interests of the council's cosy union deals and is not in the interests of the children for whom the council is supposed to be caring—particularly the handicapped children, who should not be made to suffer in the dispute. Several of the nurses have been to see me to ask me for my help. Unless the Bill is made law, there is little that I can do to help them.
354
There have been other cases in the past that have come to my attention, again in Bolton. There was the case of councillor Kevan Hornby, who was employed as an ambulance driver during the "winter of discontent". He was victimised for attempting to work through that strike. He was physically assaulted, became disabled, lost his job, and was unable to secure employment until very recently.
It is to help such people that I am introducing the Bill, with the request to the Government that its provisions be included in future legislation which comes before Parliament, especially legislation relating to strikes and essential services. I trust that hon. Members will support me, and all those individuals who look to Parliament to protect their basic rights. I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Peter Thurnham, Mr. Tony Baldry, Mr. Peter Bruinvels, Mr. Patrick Cormack, Sir John Farr, Mr. Tony Favell, Mr. Michael Howard, Mr. Ralph Howell and Mr. Patrick Thompson.

Unfair Dismissal (Non-strikers)

  UNFAIR DISMISSAL (NON-STRIKERS)
  Mr. Peter Thurnham accordingly presented a Bill to provide that dismissal of an employee in consequence of that employee not taking part in a strike shall be unfair dismissal; and for connected purposes: 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 219.]
  Mr. David Winnick: On a point of order, Mr. Speaker. I was unable to listen to much of what the hon. Member for Bolton, North-East (Mr. Thurnham) said. I was at a Select Committee and then realised that the hon. Gentleman was speaking in the House.
  Sometimes the impression is given that if a Bill is allowed to proceed without interruption——
  Mr. Speaker: Order. That is not a point of order for me. The point has been raised before on numerous occasions. As far as this House is concerned, the hon. Member for Bolton, North-East (Mr. Thurnham) has had leave to bring in his Bill and we must leave it at that.
  Mr. Winnick: On a point of order, Mr. Speaker.
  Mr. Speaker: Order. There is nothing more to be said. It is not a point of order for me.

Rate Support Grant (England)
5.58 pm
The Secretary of State for the Environment (Mr. Patrick Jenkin): I beg to move,
That the Rate Support Grant Supplementary Report (England) 1984/85 (House of Commons Paper No. 536), a copy of which was laid before this House on 12th July, be approved.
I understand Mr. Speaker, that the two other motions might be debated at the same time:
That the Rate Support Grant Supplementary Report (England) (No. 4) 1981/82 (House of Commons Paper No. 534), which was laid before this House on 12th July, be approved.
That the Rate Support Grant Supplementary Report (England) (No. 2) 1982/83 (House of Commons Paper No. 535), which was laid before this House on 12th July, be approved.
Mr. Speaker: If that is for the convenience of the House, so be it.
Mr. Jenkin: It was almost exactly six months ago, on 23 January, that we debated the Rate Support Grant Report for 1984–85. That gave effect to the rate support grant settlement for the current year, the details of which I had announced on 14 December. I should like to remind the hon. Member for Copeland (Dr. Cunningham) of what he said on that occasion. He said:
"It was clear when the right hon. Gentleman made his announcement to the House on 14 December 1983 that most ratepayers would face steep rate increases in the spring as a direct result of the Government's policy."
Later in the same debate the hon. Member for Blackburn (Mr. Straw) said that
"the Government alone are responsible for the fact that there will be rate rises of at least 8p in the pound—and, in many cases, up to 40p in the pound".—[Official Report, 23 January 1984; Vol. 52, c. 646–725.]
In fact, the average general rate increase by local authorities in England was 5·5 per cent., the lowest average increase for 10 years. But, of course, the hon. Member for Blackburn might have been looking a little too near home, because the third highest domestic rate increase outside London was levied by the Blackburn borough council. It was 16·2 per cent. That is the background——
Mr. Jack Straw: The Secretary of State will accept that that very large increase in the Blackburn rate was a direct result of his cuts in the rate support grant, because Blackburn authority incurred no penalty and was within 1 per cent. of target. Is that correct?
Mr. Jenkin: It was a very high rate increase indeed. That is the background to today's debate. For all their bluster, Opposition Members simply cannot get away from the fact that the average general rate increase of 5·5 per cent. is an achievement which was not matched in any year of the last Labour Government. Indeed, it is local government's achievement and I applaud it.
Yet a number of councils have exceeded their targets and, as in 1983–84, it is only a handful of authorities which account for the overwhelming bulk of the total overspend which the report shows of £841 million. Just 11 authorities are planning to overspend by £633 million. They account for no less than 75 per cent. of the total budgeted overspend in 1984–85. Indeed, the two London authorities alone, the Greater London council and the Inner London education authority, contribute nearly 60 per cent. —nearly £500 million—of the total.
That handful of authorities have a reckless approach to spending. The House will be familiar with a long list of
356
the Labour local authorities' wanton extravagance with the money that they raised from their ratepayers. Everyone knows and can see the £5·7 million which the GLC has voted to spend on its advertising campaign to oppose the abolition of the GLC and other authorities. [Interruption.] That is Labour party propaganda at the ratepayers' expense, and it is a scandal. Other Labour councils have done the same. If that figure is added to the sums that are being spent by the metropolitan county councils, they are now spending on their advertising campaigns more than the entire advertising of both the Conservative and Labour parties at the general election. That is the measure of what is being spent and it is an outrage.
Mr. D. N. Campbell-Savours: Is the Minister aware that, as a resident of Pimlico, I receive a news sheet from Westminster city council every month or so which could equally be said to be full of political propaganda, and that is a Tory-controlled authority?
Mr. Jenkin: Is the hon. Gentleman complaining because somebody is answering back?
The GLC has become notorious for its grants to bizarre organisations. I came across a new one the other day. It is spending nearly £42,000 on a body called Police Accountability for Community Enlightenment — what-ever that may mean. The London borough of Lewisham is contributing £326,000 towards what it calls "artistic features" for new buildings. Hackney has set up a police support unit to monitor complaints against the police, employing a £16,000-a-year lawyer.
Mr. William O'Brien rose——
Mr. Jenkin: I must get on.
Islington spent more than £100,000—[Interruption.] I can understand that Labour Members do not like to hear about such things, but they will hear about them. Islington spent more than £100,000 on a free newspaper which collapsed after six months, leaving a reported 40-year liability to the ratepayers of £13,000 a year. So it goes on and on. Do not tell me that those authorities cannot save money. Of course they can.
We have made every effort to try to persuade, to encourage and to be reasonable. An overwhelming number of local authorities have heeded our advice. They have responded to our measures. But a substantial overspend persists. It is an intolerable burden for the ratepayers affected.
The continuing irresponsibility of that small minority of authorities is the most compelling justification for Parliament's enactment of the Rates Act 1984. They continue deliberately to flout all the guidelines that we have set. Their ratepayers have faced colossal increases. The Government were re-elected to take powers for selective control and Parliament has now granted those powers.
We need now to press the hon. Member for Copeland on the law. Does he support those councils which are threatening to break the law? It is only a month since the Rates Act became law. The hon. Gentleman participated at every stage of the parliamentary procedures, but, as we read in The Times of 9 July:
"Many Labour councillors have decided to risk breaking the law in defying the Government's next spending squeeze".
I understand that the hon. Gentleman was present at the conference in Sheffield to which that report referred. The press does not say whether the hon. Gentleman, who sits

357
on the Opposition Front Bench, stood up and spoke in defence of the law—[Interruption.] It has a lot to do with the rate support grant. "Labour Weekly" said:
"It is no longer the question of whether they break the law, but which law they have to break".
If the hon. Gentleman is not going to encourage Labour councils to break the law, I shall gladly give way and allow him to say so.
Dr. John Cunningham: I am not sure what that has to do with the right hon. Gentleman's rate support grant report, but as he has asked the question I shall answer it. He knows very well from his recent experiences with Liverpool city council, painful as they are, exactly what my attitude is to the law. Let me put something to him. I do not in any way condone lawlessness, but I can understand it. The foundation of law is justice, and the law will be obeyed only if there is acceptance of the justice on which it is based. If that consensus collapses, so will the law. The right hon. Member for Cambridgeshire, South-East (Mr. Pym) said that, and I agree with it.
Mr. Jenkin: The hon. Gentleman has not been as specific as he might have been. He needs to recognise that people will not treat seriously the words of those who preach about democracy while undermining the very foundation of democracy, which rests on the rule of law. No doubt the hon. Gentleman will give us a clearer explanation of where he stands.
The most important of the reports that we are debating today is the first 1984–85 supplementary report. I emphasise at the outset that the report does not represent any new decisions by the Government. The report withholds block grant from those authorities which budgeted to exceed their 1984–85 expenditure targets. Those proposals were announced last December. They were debated and approved by the House last January. Authorities had ample notice of them before finalising their budgets. Therefore, the contents of the report will come as no surprise to any authority. I have no doubt that every authority's treasurer will have told his councillors precisely what the impact would be.
Perhaps the only surprise might have come from the citizens of Somerset when they read in The Times on 13 July that Somerset had suffered a grant holdback of £8·1 million. I am happy to reassure them. The real figure was £0·81 million. A correction may have been published, but if so I have missed it.
The budgets that I have received from local authorities show a total overspend of £841 million. On that basis, the 1984–85 holdback amounts to £452 million. Sometimes we are inclined to take those figures a little for granted, but £841 million is a huge sum. Let me put it in a context which people may more readily understand. It is equivalent to the capital cost of building 18 850-bed district hospitals. That is the measure of the local authorities' current overspend in just one year. Furthermore, the burden often proves to be unnecessary because reductions in spending can be achieved without cutting services by cutting out waste.
Dr. Cunningham: It is reported today that the Audit Commission, established by the right hon. Gentleman's Administration, is about to report that the Government have got it wrong in considering that there has been
358
excessive overspending by local authorities. It is authoritatively stated in the Financial Times today that real overall local government spending last year was probably in line with target. Is that the right hon. Gentleman's understanding of the Audit Commission's view?
Mr. Jenkin: Neither I nor my Department have seen the Audit Commission's report on local authority finance. The commission tells me that the report in the Financial Times appears to be based on a working draft which has not yet been considered by members of the commission. I have no means of knowing how accurate the article is, but perhaps we had better wait and see what the Audit Commission says. The report is clearly based on an early draft and Miss Duffy might have been wiser to wait for the final report. I do not know what it will say, because I am not privy to these matters, but I think that the final report might be a better guide to what the Audit Commission really thinks.
Mr. Allan Roberts: If the right hon. Gentleman cannot confirm or deny the report of what the Audit Commission is to say, will he at least agree that the supplementary report takes about £188 million in holdback from the shire counties and that the vast majority of those authorities are Conservative controlled?
Mr. Jenkin: The share of the overspend attributed to the shire counties is absolutely tiny.
I was referring to cutting out waste. I have a quotation for the House:
"It is in everyone's interest that local services should be provided as efficiently and economically as possible. Waste, extravagance, and inefficiency must lead to higher taxes and lower standards of service."
I agree with every word of that comment, which appeared in the Labour Government's Green Paper in 1977.
Those of us who have some experience of the private sector know that even efficient companies can cut costs. No one believes that that is impossible, and no one is surprised when it is done, yet if the same is asked of local government, one is told that it cannot be done. Local government spends more than £30 billion and employs 2·5 million people. The chairman of the Audit Commission has recently strongly criticised the growth of rent arrears from less than £100 million in 1980–81 to £240 million last September. The most important factor is the quality of management performance.
Similarly, if councils looked more seriously at competitive tendering they would find great financial benefits. The number of services put out to tender in the private sector is still far too small. I quote some wise words which I read the other day:
"The public sector has not had a good name for efficiency".
If the public service had been
"less apparently self-serving, less complacent and more efficient",
the climate for cuts and privatisation would have been far less favourable. The words that I have quoted are those of the hon. Member for Blackburn. He was plumb, bang right. The hon. Gentleman knows that local authorities can save money and deliver services more efficiently, so do not let us hear a lot of nonsense about it being impossible for authorities to save money without cutting the standard of services.
The hon. Member for Bootle (Mr. Roberts) implied that the 1984–85 report was a blitz on the shire counties. That is just not so. If an authority spends at or below target, it

359
is not subject to grant penalties. Each authority has the choice, and each authority was given due notice. Eight shire counties chose to spend at or below target and a further 21 are within 2 per cent. of their target. I hope that that latter group will spend less than they budgeted for, and if they do come in at or below target any holdback will be paid back to them in the next supplementary report.
Sir Dudley Smith: I agree with almost everything that my right hon. Friend has said in his just criticism of high-spending authorities. However, does he agree that there is a case for more realistic spending targets for low-spending authorities such as Warwickshire?
Mr. Jenkin: I recognise that point. The House will recall that in the rate support grant debate on 23 January I gave an undertaking, repeated by my right hon. Friend the Parliamentary Under-Secretary at the end of the debate, that, as the Rates Act would give us power to curb the excesses of the high spenders, we would hope to set fairer targets for the low-spending authorities, whose targets are below GREA in 1985–86 and thereafter. I accepted then, and I accept now, the force of the arguments, which persuaded me that it was right to give that undertaking. I intend to honour that undertaking when I make an announcement about targets for next year within the next few days.
Mr. Michael Shersby: Will there be an examination and sympathetic consideration of the problem faced by some outer London boroughs which are high-resource authorities and, as a result of a quirk of the rate support grant system, incur penalties at a far steeper rate than do other authorities of a similar character?
Mr. Jenkin: I am well aware of the problem facing the local authority in whose area my hon. Friend's constituency lies. The problem is that the spending of such authorities is still above their GRE and a system aimed primarily at those below GRE cannot apply in the same way to those above it. However, I have my hon. Friend's constituency firmly in mind and I ask him to await next week's announcement.
Mr. Simon Hughes: So that we may be clear on this issue, will the Secretary of State confirm that the overspend of Tory authorities is not minimal, but is actually about £188 million out of the total overspend of about £500 million? It is not true to say that all the blame lies on one side of the political fence.
Mr. Jenkin: The percentage of overspending by the shire counties is tiny, because their budgets are very much larger than those of the generality of local authorities.
When I signed the report we did not have the figures from Liverpool city council and, therefore, the figures in the report are based on an assumption that the council would spend the budget which it originally threatened to introduce. We shall need to take account of the Liverpool figures in the next report.
There has been enormous amount of misinformed—one is almost tempted to say malicious—comment about the position of Liverpool city council. I wish to put the record right.
In the local elections in May, the Labour party in Liverpool offered the electorate a fraudulent prospectus—a growth budget of £261 million, matched by a rate increase of only 9 per cent. That would have left a huge gap of £164
360
million which, the council said, the Government would have to fill. The council has now resolved to accept a budget of £223 million, with a matching district rate increase of 18 per cent.
I emphasise yet again that none of that reduction of £38 million was financed by any special concessions to Liverpool from the Government. The council demanded all manner of concessions. It wanted special treatment an its rate support grant; it did not get it. It asked for favourable treatment on its targets; it did not get it. It asked for concessions on its holdback; it did not get them. It asked for a long list of special disregards; it did not get them. It sought an increase in its housing allocations in the current year; I made it clear that I was not prepared to withdraw housing allocations from other authorities so that I could improve Liverpool's allocation. Liverpool is being treated for rate support grant purposes in no different way from any other local authority.
Mr. Allan Roberts: Will the right hon. Gentleman stand by his letter of 29 June in which, although making no promises, he said that he would do his "very best" to ensure that allocations to Liverpool for next year's housing investment programme would: enable the council
"to make positive progress in dealing with the city's severe needs"?
Was that a promise to give more on the housing investment programme and enable the council to capitalise its repair accounts?
Mr. Jenkin: The hon. Gentleman recognises fairly that that was just an expression of good will towards a local authority which has, without doubt, some of the most severe housing problems in the country. I have seen the problems, as has my hon. Friend the Minister for Housing and Construction.
The urban programme allocation is allotted each year on the basis of our assessment of needs and resources. We are treating Liverpool no differently from any other local authority. Any local authority which thinks that it will get something by aping Liverpool's antics and going to the brink of civil bankruptcy has another think coming.
Mr. Robert N. Wareing: My hon. Friend the Member for Bootle (Mr. Roberts) quoted the letter of 29 June, but the right hon. Gentleman knows that discussions were taking place in January and February this year. At the first meeting that I attended there was no sign that the right hon. Gentleman would write a letter such as that which he wrote on 29 June. That letter can only be a response to the resistance by Liverpool city council and to its decision not to take no for an answer. Whatever the right hon. Gentleman says, Liverpool is financially better off in terms of Government grant than it would have been.
Mr. Jenkin: The hon. Member for Liverpool, West Derby (Mr. Wareing), has heard the criticisms by some of the hard Left groups in Liverpool, which have condemned the council for selling out to the Government, because it received nothing that it could not have obtained by ordinary, sensible negotiations with my Department. Liverpool is a partnership authority. I chair some of the partnerships, as do some of my hon. Friends. Nothing happened in that discussion which could not have beer, done through ordinary partnership discussions. I hope that

361
the citizens of Liverpool, many of whom were made apprehensive by threats of civic bankruptcy, will realise where the blame lies and take retribution in due course.
Like any other authority, if Liverpool spends less it will suffer less penalty. That is automatic under the rate support grant scheme. Liverpool's budget came down from £261 million to £223 million. With less penalty it receives more rate support grant, automatically. There is no special privilege in that. I emphasise that point. Liverpool city council had not made a budget by the time the report was published. I shall need to make adjustments when I receive the full details.
There is some risk that we shall come to treat excess spending by local authorities as being of little consequence. Some people think that since overspending happens every year it is now an acceptable part of the scenery. The Government do not accept that view. Indeed, in the last 10 years successive Governments have taken seriously their responsibility for the totality of local authority current spending. That is not surprising, because about 25 per cent. of total public spending is involved. No Government since the mid-1970s have been willing to stand idly by while local authority spending frolicked ahead.
This Government have taken a more purposeful approach than their predecessors. We introduced the block grant system. The Opposition should be the first to acknowledge that this achieves a far greater equalisation of needs and resources than the previous arrangement. It results in a fairer distribution of grant between more than 400 local authorities.
As part of our objective to bring local authority spending under control and make authorities more accountable, we have reduced steadily the proportion that rate support grant represents of total Government spending. That has reduced the burden on the taxpayer and enhanced local accountability. Targets and holdback encourage authorities to keep within what the country can afford.
Before the House rises for the long recess, I intend to follow the practice of the last two years by making an announcement about expenditure targets for next year. I also intend to table a report under the Rates Act, which will designate a small number of authorities for rate limitation. That will be the first stage in the statutory process leading to rate limitation for next year.
I shall refer briefly to the two other reports which we are debating today. The fourth supplementary report, for 1981–82, closes the books on the first year of the block grant arrangements. A year ago the House approved the third supplementary report, which put local authorities' grant entitlements and holdback on to a provisional outturn basis. The fourth report alters entitlements and holdback to reflect the audited outturn expenditure information for the year, which all authorities have now provided. The report also makes a number of final adjustments, but nationally only small changes are involved for all authorities.
The 1982–83 report is a little more significant. It is the second supplementary report for that year and adjusts authorities' grant and holdback in the light of outturn information. Until now grant and holdback have been based on local authorities' budgets, and most authorities have now provided audited accounts.
362
The report finally authorises an increased payment of block grant to the Greater London council of about £100 million in respect of 1982–83. The only reason why that happens is that the council's outturn expenditure for that year was a staggering £177 million less than expenditure for which it had budgeted. I suppose that one should be relieved that even that extravagant regime could not manage to spend at the level of its budget. However, the council's irresponsible approach to budgeting entailed raising from London's ratepayers both that overspend of £177 million and the loss of grant of a further £100 million. That meant that £277 million more than was needed was paid by London's ratepayers. Many people have urged the GLC to repay that money to the ratepayers, but so far it has failed to do anything by way of repayment. That £100 million has nothing to do with holdback. It is part of the normal operation of the block grant system, under which an authority's grant entitlement rises or falls according to the level of its expenditure, and depending on the resources which it can raise locally.
The GLC's original budget was so high that it took itself out of any entitlement to rate support grant because of the operation of the taper provisions. The council's spending was so far above the level of its GRE that its entitlement to RSG was tapered to nil. The actual outturn, however, showed considerably lower spending and brought the authority back to entitlement for grant. That is why the payment now has to be made. I understand the chagrin of some of my hon. Friends about that. They ask why that payment should be made at the expense of other authorities. The answer is that block grant is a close-ended, cash-limited sum. It is distributed initially on the basis of budget. If outturn differs from budget, as it always does, it has to be redistributed on the basis of outturn. Some authorities gain and some lose. If that were not so, block grant would have to cease to be close-ended over the total.
I doubt whether even one local authority treasurer was taken by surprise at this unwelcome development. Most treasurers spotted what was coming and wisely made provision, as soon as they knew the GLC's outturn figure. They took that into account when planning finances for this year and future years.
Mr. Tony Banks: I hope that later I might catch your eye, Mr. Deputy Speaker, to answer the travesty which the Secretary of State has just presented to us. Why does the Secretary of State not say something about the £2,500 million which Londoners have lost through rate support grant reductions since 1978–79?
Mr. Jenkin: I saw the figure which Mr. Livingstone quoted when the report was published. It is not a figure which I or any of my officials can begin to recognise. It is pure fantasy. We have to remember that between 1981 and 1982 and its budget for 1984–85 the GLC's total expenditure more than doubled. That compared with an estimated increase in local authority costs of 20 per cent. over the same period. That of itself is scandalously irresponsible squandering of ratepayers' money, and it has to be stopped.
The House will not be deceived by the Opposition's claim to be the sole guardians of local authority services and the only representatives of the people who make use of local authority services. That is humbug. The targets for local authorities this year totalled more than £20,000

363
million. They have plenty of scope for providing a reasonable standard of service, as the majority of local authorities do, without indulging in wasteful and unnecessary expenditure or pursuing damaging cuts in the level of services.
If the authorities all spent at the level of their targets the rate support grant would amount to £8,631 million. That is the measure of support from the Government. Because of the overspending the sum is reduced by the operation of holdback by about 5 per cent. —£452 million—but that still leaves the Government funding for local authorities' support for their current expenditure at £8,179 million. If, as I expect on previous form, a good many local authorities spend less than their budgets, the penalty will be reduced and the grant will be increased.
This Government were returned to office 15 months ago with an overwhelming mandate to sustain the policy on which we had embarked — restoring the prosperity of Britain by the firm control of public spending and public borrowing. Local government, accounting as it does for 25 per cent. of public spending, cannot be exempted. The overwhelming majority of local authorities are loyally playing their part in this. We see the result in the lowest rate increase for 10 years—since the reorganisation of local government. For the tiny minority which continue to spend up and rate up heedless of the Government's guidelines, the Rates Act is now on the statute book, and the first list of authorities to be capped will, I hope, be announced next week. Meantime, these three reports come before the House for approval, and I ask for the support of right hon. and hon. Members in the Division Lobby.
6.32 pm
Dr. John Cunningham: Such is the complexity, if not absurdity, of the Government's system of local government finance that today the House is debating the fifth rate support grant report for 1981–82, the third rate support grant report for 1982–83 and the second such report for 1984–85. We have five reports already for 1981–82. That is a record of some kind, which shows how much the complexity of the existing financial interface between central and local government requires revision, rechecking, alteration of relevant expenditure, and changes in GRE assessments and block grant entitlements even three years after the original decisions were made.
The third report for 1981–82 does similar things and both have in common on pages 8 and 9 the evidence that the Secretary of State has been forced to increase significantly the relevant expenditure to take account of actual outturn and the fact that in each year budgets were well in excess of the targets that he set. In one bizarre result of all these changes he has managed, by changing GRE, to convert Reigate and Banstead, which closed its accounts thinking that it had spent below GRE, into overspending authority. This means that it could now be in some jeopardy because it will not qualify on his four-year test under the Rates Act. That is one of the incredible outcomes of his system of local government finance.
In 1981–82 the increase in relevant expenditure, as the right hon. Gentleman has had to recognise, is £1.3 billion. In 1982–83 it is £1·4 billion. What better evidence does anyone need of the unreality of the targets which this Government imposed on local authorities in those years and which they continue to seek to impose in the current financial year? Is it any wonder that, by his insensitive and dogmatic pursuit of these policies, the Secretary of State
364
has united local government—the Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities—against him?
Ironically, and, as it turns out, hopelessly wrongly, the then Secretary of State for the Environment, the right hon. Member for Henley (Mr. Heseltine), when speaking on Second Reading of the Local Government, Planning and Land Bill, said:
"Electors will more easily be able to judge the nature of the decisions being taken by an authority"
as a result of the Bill. Does anyone believe that now? The right hon. Gentleman also promised:
"The new system in no way sets limits to what an authority spends, nor does it fix the level of an authority's rates. These decisions remain with the authority."
Things have moved on inexorably since those facile statements were made. As a consequence of their policies and approach, the present Government have made a mockery of those claims in the same way as they have ratted on their promise to abolish domestic rates altogether.
In the same speech the right hon. Member for Henley said:
"No cash is actually removed from an authority, but authorities that wish to pursue abnormally high levels of expenditure will have to bear a much higher proportion of the burden directly through rates or charges."—[Official Report, 5 February 1980; Vol. 978, c. 251–2.]
That statement and the assurances that it contained have also been cast aside by the present Secretary of State and his legislation.
When the right hon. Gentleman talks about overspending, does he not realise that, in terms of current expenditure volume increases, in the last year Conservative councils have shown a larger increase than Labour councils? Does he not also recognise that, since he has been talking about an increase in the rates, as has been pointed out in an article in the CIPFA magazine in June of this year, if the Government had maintained their share of local authority income, no rates increases would have been necessary. That is further evidence that the Government's system of automatic withdrawal of rate support grant is the principal reason why rates are being increased throughout the United Kingdom.
Mr. Jenkin: The hon. Gentleman made a comparison between Conservative and Labour local authorities. He may like to know that the average domestic poundage levels in the various classes of authority show that in the non-metropolitan areas Labour authorities have rates 27 per cent. above those of Conservative authorities, that in metropolitan areas Labour authorities' rates are 32 per cent. above those of Conservative authorities, and that in London Labour authorities have rate poundages 59 per cent. above Conservative authorities. I think that the public know where they will get good value for money. It is with Conservative authorities.
Dr. Cunningham: The right hon. Gentleman ignores my point, which was about the increase in expenditure. It is obvious that he was not listening in the first palce and he is not listening now. I repeal that Conservative councils have increased current expenditure more than Labour councils. I repeat that statement, because it is true.
The second report for 1984–85 shows clearly that the Government have been responsible for increases in the rates because, based on the current year's budgets, they clobber local authorities, including many Tory-controlled

365
councils. The penalties are substantial—5 per cent. of block grants, totalling £452 million. Shire counties especially, despite what the right hon. Gentleman said, are substantial losers. They suffer penalties of £188 million because three quarters of them have refused to cut their budgets to the Government-imposed targets.
In metropolitan areas outside London, councils will lose £151 million, while in London the people of the capital are robbed of another £103 million, with some of the harshest penalties falling on many of the most desperately needy communities, including some with black and ethnic populations who urgently need assistance.
The right hon. Gentleman mentioned partnership. Excluding Liverpool, partnership authorities are to be deprived of a further £70 million of block grant. The most needy and deprived of communities, designated by the right hon. Gentleman as areas requiring essential additional support because of stress, are given Government help with one hand, only to have it snatched away by the other hand—a classic example of political and bureaucratic insanity.
In non-metropolitan districts, two authorities —Harlow and Basildon—lose their entire block grant, and Tory-controlled Portsmouth faces a penalty of £940,000, which is more than 10 per cent. of its grant.
The Parliamentary Under-Secretary of State for the Environment (Mr. William Waldegrave): Will the hon. Gentleman remind the House of the three partnership authorities that have hit their targets, and explain why the other partnership authorities cannot do the same?
Dr. Cunningham: The Minister is well aware that this report removes £70 million from partnership authorities. They are being given assistance with one hand and having it taken away with the other. Does that make any sense? Is it a rational way to proceed in helping inner-city areas and authorities in conurbations? The total penalty of £452 million is a record—and one of which the Government should be ashamed.
The report is another milestone in and demonstration of the unreality and unacceptability of the Government's approach to local government finance and the increasingly difficult tasks councils face in trying to provide the standards of service that people desire, and often so desperately need—such as home helps for the elderly and the disabled, nursery provision for youngsters, public transport, meals on wheels for those unable to care properly for themselves, day centres for community groups and concessionary travel arrangements. Those services take the overwhelming bulk of expenditure and more, and they are being undermined by this Administration.
It is no wonder that more and more Tory-controlled councils are joining the revolt against this stupid, compassionless and authoritarian Government. Despite all the assurances from the right hon. Gentleman and his predecessors, no council is safe from these punitive policies.
In Cambridgeshire, Essex, Surrey, Hampshire, Hillingdon and Portsmouth—all Tory-controlled—Tory councillors have responded with anger as well as anguish to the assault on local democracy and freedom inherent in
366
the Government's approach to local government. Councillor Roger Parker-Jervis, the Tory leader of Buckinghamshire, said:
"We've gone as far as we can. We're running at the absolute minimum now and there is no room for more cuts … We've got an intelligent population who expect decent schooling and we're now running at the lowest level sustainable by a Conservative party which actually cares about people."
In Cambridgeshire, which has lost £4·3 million in penalties—more than its so-called overspend—cuts in schools on books, equipment and staff have been widespread. The council leader, Emily Blatch, has publicly expressed her anger and dismay at what the Government are doing to local authority services. The story is the same in Essex. Indeed, 29 out of 39 non-metropolitan counties are hit by penalties in this financial year.
Perhaps the best — or worst — example is Surrey, where block grant has fallen from £73·06 million in 1981–82 to £49·02 million in the current financial year—a fall in cash terms of £24 million, but a cut in real terms of 47 per cent. The county precept in 1981–82 was 111·6p and is now 14·4p—an increase of 34p, or 30 per cent. The loss of grant is equivalent to a Surrey precept of 25p, which is a 75 per cent. increase on the county precept. Ironically, exactly one year ago, on 18 July 1983, the Under-Secretary of State for the Environment readily confessed all that in a letter to the council leader, when he said:
"We have estimated that virtually all of the reduction in Surrey's share of grant since 1980–81 can be attributed to the effect of successive reductions in the grant percentage".
Indeed, if the 1980–81 grant percentage had been maintained, Surrey's grant in 1983–84 would have been almost two thirds higher. The Minister continued:
"I recognise that this has marked effects on the share of grant, and on percentage increases in rates for authorities like Surrey."
Quite so——
Mr. Waldegrave: This is a little ritualistic. The hon. Gentleman is running out of speech writers. He has made this part of his speech before and we dealt with it then. The Government's policy is not that which the hon. Gentleman would like it to be—it is that public spending should be cut. That is why the signal of the cuts in the block grant percentage has been made.
Dr. Cunningham: I well understand the Government's policy. The consequence of that policy is to shift the burden from taxes to rates, and the ratepayers are suffering. I am happy to have the hon. Gentleman's agreement on that.
The leader of Hillingdon wrote in a letter to The Times on 6 July:
"The 1984–85 Government assessment of Hillingdon's need to spend is £79·4 million. Hillingdon's budget is £87·8 million … If we cut social services we will force both the health authority and supplementary benefits to spend more, at substantially greater cost to public funds than Hillingdon's service. What sense is there in this? What prospect too for the people of Hillingdon if control over the level of local services moves from their elected representatives to Whitehall mandarins or to less democratically controlled health authorities and costs more in so doing?"
That letter was written by the Conservative leader of one of the most loyal Tory authorities in Britain.
The Government's approach to local government finance and services is now too much even for their own supporters to stomach. It is no wonder, because Government policy has failed, is failing and will continue

367
to fail. The Government have reduced support to councils across the board, and in a deceitful way they have switched burdens from the taxpayer to the ratepayer. The Government have become more draconian each year in their attack on the provision of services. They have become increasingly more authoritarian in attitude as more and more powers are concentrated in Whitehall.
Genuine local democracy and effective response of local government are being progressively undermined by the right hon. Gentleman's addiction to growing centralism. And for what purpose? There is no discernible effect on macroeconomic indicators, nor can there be.
As the Audit Commission report apparently shows, the commissioners concluded that the present arrangements for distributing central Government grants to local authorities are not conducive to good management and are actually leading to higher rates than may be necessary under a different system. I understand that that may amount to as much as £500 million a year. The arrangements that the Government have introduced are serving to undermine confidence in GRE which is likely to be central to the Government's future approach on grant distribution, and that can hardly inspire confidence in what the right hon. Gentleman says and does. In general, the Government have not succeeded in motivating local authorities to grasp the opportunities that exist to improve economy, efficiency and effectiveness.
Mr. Matthew Parris: I would readily concede the hon. Gentleman's point that, if the effect of the measure was only to alter the manner in which local authorities raise revenue so that it would no longer come from the Treasury, but would be placed on the local rates, there could be no overall effect on macroeconomic policy. Is that not what the Rates Act that the House will be considering later is to remedy?
Dr. Cunningham: The short answer to that is no, but I shall say something about that later.
The Audit Commission says clearly that the Government have it wrong, and that there is no case for the repeated assertions that many local authorities are engaged in massive and persistent overspending. The commission was set up by the Government, and it seems to be producing a damning indictment of the present policies on local government finance that have cost the ratepayers up to £1·5 billion over the last three years. What price now the Prime Minister's promise that her Government would abolish domestic rates? The Government have double-crossed and betrayed ratepayers the length and breadth of the country.
Mr. Patrick Jenkin: The hon. Gentleman has again made repeated reference to the article in this morning's Financial Times by Hazel Duffy, who made it perfectly clear that she had got hold of some kind of preliminary draft. The information that I have had—I hope the hon. Gentleman will accept this—is that this document has not yet been considered by the commission. I am sure that the hon. Gentleman, who is an honourable man, will not wish to saddle the commission with the views of a draft that it has not yet seen.
Dr. Cunningham: We shall see what the commission eventually reports, and whether what I am saying is borne out by the contents of the report.
Throughout their approach to local government finance, far from helping domestic ratepayers, the
368
Government have betrayed them. They have forced up rates, they have shifted burdens to the ratepayers and they have ratted on their promise to abolish the rates; yet more of the same is to follow. The Rates Act will soon fall with a heavy and authoritarian bureaucratic crash on a number of councils—but to what effect? Not only is it likely to be an administrative nightmare but, as the Chartered Institute of Public Finance and Accounting has shown recently, it will not deliver the right hon. Gentleman's promise to his Tory friends in the shires—that is, if he has any left.
If the Rates Act was in effect now, according to an article in the CIPFA magazine, London authorities would increase their share of grant from 13·7 per cent. to 14·3 per cent. of that awarded to English councils. Shire counties, on the other hand, would obtain 47·3 per cent. with the implementation of the Act as against 47·7 per cent. now. How does the right hon. Gentleman square that with his promise to his friends in the shire counties that the Rates Act would benefit them in the distribution of grant without introducing more biased political chicanery and legislating purely on the basis of party political advantage? We have pointed this out many times. The right hon. Gentleman smiles. His hon. Friends are not smiling, if he would care to look at them.
Ironically too for the right hon. Gentleman, in spite of all his blustering, the Audit Commission has recently confirmed that the Greater London council is the authority with the most efficient policy on purchasing, and, overall, Labour authorities come out well in the report. Another one of his myths is destroyed.
Furthermore, as he has confirmed in answers to parliamentary questions, the right hon. Gentleman's assertion that "high spending means high rates" is not true. There are many examples to demonstrate that. I cite what has happened in my own local authority of Copeland, which has increased its expenditure by 5·2 per cent. over a four-year period. That is similar to Tory-controlled Sevenoaks in Kent, but Copeland has cut its rate in the same period, whereas in the Tory authority rates have gone up. Hansard is full of such comparisons.
What does this show? The right hon. Gentleman will say simplistically that one authority is more efficient and gives better value for money, but without additional information—for example, on changes in block grant, use of balances and fees and charges—it is impossible to draw anything other than superficial conclusions. Nevertheless, on the basis of facile and meaningless comparisons of the movement in expenditure rates, the Secretary of State intends to use authoritarian power to take control of council budgets. Local authorities are unable to plan with any certainty in the present system which, as we have seen today, is barely consistent even on an annual basis.
The right hon. Gentleman in his statement today announced new cuts in capital spending.
Mr. Patrick Jenkin: New curbs.
Dr. Cunningham: The right hon. Gentleman says "new curbs". He is going to reduce the capital programmes of many local authorities.
I remind the right hon. Gentleman what his right hon. Friend the Prime Minister said in the debate on the Loyal Address:

369
"We need more capital spending by local government and in the public sector generally."—[Official Report, 3 November 1982; Vol. 31, c. 21.]
How does that square with what the right hon. Gentleman announced today? The Prime Minister wrote to local authorities conceding this argument in a letter of 2 November. She said:
"I recognise that authorities are still developing their expertise in operating the capital allocation system"—
she can say that again—
"and that there are difficulties in planning forward programmes when it is not possible for us to give firm indications of future levels of provision. Long lead times and the need to provide for the revenue consequences of higher capital spending are also significant factors."
All that is made nonsense by what the right hon. Gentleman has announced today, and he knows it only too well.
The Government are exposed by their own failed promises. More freedom, more choice, and less government were the election slogans coined by Saatchi and Saatchi, but the reality is less freedom, less local self-determination and much more domination and control from Whitehall.
Even now, in amendments to the Local Government (Interim Provisions) Bill, the Government are proposing more powers to control the GLC and the metropolitan counties from Whitehall for the remainder of their existence. Government cuts in support have, paradoxically, resulted in less freedom for local authorities, not more. The more local authorities contribute to their own expenditure under the present system, the more they are likely to fall into the trap of central control. That is the reality. Is it sensible, is it fair, is it democratic, does it improve accountability and the understanding of ratepayers and local electors? Of course not. It is the very antithesis of what the right hon. Gentleman says he is anxious to bring about. In my view, the answer to all those question is no, and it can only remain no as long as the Government persist with these policies. The Government's destruction of local democracy must be stopped and reversed.
Is it any wonder that participation in local government is less and less attractive? Is the right hon. Gentleman surprised that public service and public services are increasingly attacked? Is anyone surprised by the disillusionment among communities, as graphically demonstrated by the turnout at elections? The health and quality of local democracy is at risk as a result of all this and we must fundamentally rethink the role of councils and councillors if we are to reinvigorate our democratic institutions and produce better and more effective local government.
We must redefine the role of local government and restore genuine local freedom and democratic control. More decision-taking should be returned to local communities and elected representatives. We should review the means of providing the services that people need and decide what comes better from the centre and what from democratically elected regional or local government.
Those are not only my views but those of many people in the Labour party. We must redemocratise Britain so that we can have the genuine local devolvement of power in
370
health, water and industrial affairs. We need, in effect, a new deal for local government, and we shall provide that deal when the next Labour Government take office.
We shall sweep away the Rates Act and the system of penalties and targets. Local authorities will be given a general competence to carry out duties not expressly forbidden by statute, and an elected authority for London will be re-established if the GLC is abolished. The revenue base of local government will be restructured, and a rolling programme of RSG and capital allocations will be introduced. With all the local authority associations, we believe that the policies of the present Government are manifestly a disastrous failure. That is why we oppose the reports.
7.2 pm
Mr. Christopher Murphy: I shall concentrate on the report for 1984–85 and the difficulties associated with the calculation of RSG.
While the domestic rating system continues — I believe that it should be abolished and the search for an acceptable alternative reactivated—the assessments still appear not to be accurate enough to reflect local authorities' profligacy or prudence.
The supplementary report talks of "consultation". Since I previously raised this matter, with particular reference to the Hertfordshire and Welwyn Hatfield district, my hon. Friends at the Department of the Environment have been kind enough to see delegations from those councils, which I joined and supported, and I am grateful for their understanding and courtesy.
The supplementary report also talks of "adjustments," but the essence of their problems is still the consequences of a 40 per cent. higher rateable value than average, yet only an 11 per cent. higher income level than average, to which are added the difficulties, among many, resulting from the growth of the new towns and the distortions created by certain of the formula factors not accurately reflecting local needs.
The Jekyll and Hyde situation on rate support grant has yet to be overcome, as the supplementary report well illustrates. One face is that of sweet moderation and of recognising the requirements of a council. The other is that of apparent attack and of potentially endangering services.
The Government are right to impose certain financial constraints, and disciplines where necessary, to ensure that local government expenditure is in line with the national economic situation. Hence the importance attached to the supplementary reports and the motion before the House. The Government are wrong, however, after their consultations, not to make necessary adjustments such as introducing a new towns factor, if that theory works out inaccurately and unfairly in practice.
I fully accept that better value for money must be obtained, with the assistance of management consultants and privatisation. However, with very real regret I must take the opportunity of this debate to declare that if an improvement is not made available for Welwyn Hatfield district and Hertfordshire for the future, my support over RSG settlement must then be withheld.
7.5 pm
Mr. Peter Pike: I shall not delay the House because many other hon. Members wish to take part in this important debate.

371
I took strong exception to the reference by the Secretary of State to "reckless and wanton extravagance" by local government. That does not represent the true facts. Indeed, throughout local government there is frustration because authorities cannot meet the needs of their local communities.
Having spent many years in local government, I am well aware of the hours that councillors spend in determining the budget that they can pass on to their ratepayers. They must balance the needs of the community against what the ratepayers will consider reasonable, and I have never witnessed any degree of irresponsibility in local government.
Many services which are vital to communities are not being adequately provided because of the inability of authorities to meet the revenue implications, and the responsibility lies solely with the Government. Consider, for example, the urgent need for homes for the elderly. In my county of Lancashire the provision is utterly insufficient, with many people being forced into private nursing homes that they cannot afford.
Burnley borough council has two important priority areas, housing and employment. Housing presents major problems for all areas of Britain and I appreciate that our problems in Burnley are repeated throughout the country. We have an urgent need for sheltered accommodation for the elderly. Councils cannot provide that type of accommodation because they cannot obtain the capital, and the revenue implications are too great.
Many council houses are waiting for improvement. In Burnley, it will take 15 years to improve the pre-war council housing stock. Because we were a mining area in the 1920s, many houses built at that time had outside toilets and bathrooms. That state of affairs cannot be considered suitable in 1984. We must bring those properties up to the standard that is considered reasonable today. It will be at least the year 2000 before we in Burnley are able to complete that work.
Two years ago the Government had a bonanza with improvement grants, encouraging councils to spend as much as possible and urging people to apply for grants. I have said in the House before that that was one of the best actions of the Tory Government in trying to improve the nation's housing stock. Now, however, councils throughout Britain have either to call a halt to applications for improvement grant or introduce methods to regulate the giving of grants. People waiting for grants must lay the blame squarely on the Government.
In Burnley, we have £15 million worth of grant applications in the pipeline. We have called a halt to new applications for improvement grants. This year we have available for grant purposes about £3·8 million. Many people will wait years before being able to improve their homes. I fear that we are rapidly approaching a time when the housing stock will deteriorate rather than be improved, and there will be a housing crisis in a few years' time. It will cost a great deal more to solve that problem than it would to provide the necessary capital today.
Burnley, like many other areas of deprivation, is trying to keep industry and attract new industry. That is a priority for the Burnley council, and it is prepared to spend money from rates to do so. We are not ashamed of the fact that Burnley is the highest-rated authority in Lancashire, because we do not believe that that is wrong. Burnley council has always tried to fix rates at a reasonable level for domestic ratepayers and industrialists. We accept that
372
the level of rates is an important factor to consider when encouraging people and industries to remain in the borough.
I have invited the Parliamentary Under-Secretary of State to look at the building next to the town hall. The building, which is council-owned, is being converted in an ambitious project into a multi-purpose arts centre to provide much-needed amenities. The project will cost £1·7 million. If the council is unable to proceed with the project, because of the measures announced by the Secretary of State for the Environment, the blame will lie at the Government's door. Because of the revenue implications of the project, we were anxious for the Parliamentary Under-Secretary of State to look at the project, note why it was needed and what we intended to do. If the hon. Gentleman had gone to Burnley, he would have found that the Burnley council is not reckless or wanton but is trying to meet the community's needs.
Burnley council is only touching on some of the problems that must be urgently tackled. On many occasions, we have chased the Department of the Environment with questions about grant-related expenditure assessment. We discussed the matter with the Under-Secretary of State. Any grant-related expenditure scheme must be fair and understood, but that is not the case with the present scheme. We are not convinced about the reasons why the factor E7 for the housing revenue account varies from one local authority to another. The housing factor for Burnley varies considerably from the housing factor for Blackburn and many other authorities If the figure were altered, Burnley's rating system would be considerably changed. This year, Burnley's grant -related expenditure assessment is £5,472,000. Once local authority spending increases beyond that level, local ratepayers face a greater percentage of expenditure costs because the state meets a lower percentage. That affects their rates.
We welcome the fact that, because the Burnley local authority spends less than £10 million—I referred to this when the House debated the Lords amendments to the Rates Bill — it is excluded from the rate-capping proposals. Burnley spends 56 per cent. above its grant-related expenditure assessment, and will not be affected by ratecapping, but because Blackburn's population is larger, it will be so caught, even though it spends only 20 per cent. above its GREA. On one factor used by the Government, Burnley could be considered to be a big, overspender, but on its cash targets it is only a marginal. overspender. Lancashire county council is in the reverse' position to Burnley, because it spends less than the grant-related expenditure assessment figure but more than its cash targets. The system needs to be rethought and to be more fair.
Local government tries to tackle the problems faced by the community. The Government's measures are regressive, and the blame for the problems building up in local government and faced by people generally must he laid at their door.
7.15 pm
Mr. Michael Shersby: I am grateful to my right hon. Friend the Secretary of State for what he said in response to my earlier intervention on the high-resource outer London boroughs, of which Hillingdon, in which my constituency is situated, is one. We know that my right hon. Friend has very much in mind the problems of the

373
shire counties. Those problems were referred to last year in the debate on the rate support grant settlement. Hon.Members who represent constituencies in the outer London boroughs believe that the Government will consider our strange and special problems.
None the less, I am disappointed that in the first supplementary report for 1984–85 my right hon. Friend has been unable to moderate the swingeing effects of penalties on high-resource authorities. I draw the attention of the House to the fact that a nominal overrun caused by, for example, national pay settlements, such as the teachers' award, exceeding the guidance figures can cost my constituent ratepayers up to five times their actual cost. That is a significant figure. I hope that my hon. Friend the Parliamentary Under-Secretary of State will say something about the fact that my local authority is out of grant when its spending is 6·3 per cent. above target, or 17 per cent. above grant-related expenditure assessment.
The recent discussion in the House about the position in Liverpool gives rise to an intriguing comparison which I hope my hon. Friend the Parliamentary Under-Secretary of State will consider. Liverpool has below average resources. If my sums are correct, it would not run out of grant until spending was 26 per cent. above target—38 per cent. above GREA. Does my hon. Friend agree with me that that difference is caused by the slavish adherence to the principle of rate poundage equalisation at all levels of spend?
The main thrust of block grant is surely the achievement of grant-related expenditure assessments, inadequate though they may be. It may not be equitable for poundage equalisation to operate above that level when it produces the curious effects that I have identified. When my hon. Friend the Parliamentary Under-Secretary of State tells the House his plans to rectify this position, I shall be a much happier man than I am tonight. It is vital that steps are taken to rectify the problem and thus ensure greater equity in the treatment of ratepayers.
The hon. Member for Copeland (Dr. Cunningham) drew attention to the recent letter in The Times from Councillor Norman Hawkins. I am glad that he drew attention to that letter, because it is important. The letter has my full support. It is important that not only the Leader of the Opposition and his right hon. and hon. Friends, but my right hon. Friend the Secretary of State should recognise that a letter of that character from a Conservative-controlled borough council such as Hillingdon is highly significant.
I shall give some more examples which were mentioned in the letter but were not referred to by the hon. Member for Copeland. When the Department of the Environment is considering representations from the borough of Hillingdon it is wont to say, "Ah, well, Hillingdon is spending on its social services about £5 million above its assessment." I should like to examine the services for the elderly which are provided by Hillingdon. Comparable authorities are assessed to spend £130 for each elderly person. Hillingdon is assessed, without explanation, at £111 per elderly person. If Hillingdon had been assessed at the higher average figure it would have received £900,000 additional grant this year.
To cut expenditure to the Government's assessment is virtually impossible for an authority which, as I have said, is Conservative-controlled and has responsibly managed
374
its social services since the administration took office six years ago. It has made enormous efficiency savings, cut the bureaucracy and redistributed money in the budget to develop high priority services, especially care in the community for the elderly and mentally handicapped. That policy has always had my strong support, as one of the three Members of Parliament to represent constituencies in the borough of Hillingdon. I should like to remind my hon. Friend that in doing so Hillingdon has saved the Health Service money and put into effect explicit Government policies to care for people in their own homes and in other forms of community care rather than in expensive hospitals. I could give other examples in education, but I shall not do so because I know that many hon. Members wish to speak.
I shall summarise Hillingdon's position by reminding my hon. Friend that the borough lost £4 million in grant this year after doing everything the Government had asked it to do since the council came into office. Hillingdon faces a quirk of the rate support grant system. We have the honour of having London Heathrow airport in our borough. That is a good thing. It is good for Great Britain, and it is good for Hillingdon, because of the rates and employment that it produces. Long may it prosper. Nevertheless, it produces the most extraordinary result when one considers the penalties when the target is exceeded.
When my hon. Friend is next studying these matters in the privacy of his office, I invite him to compare the London borough of Hillingdon with the London borough of Bexley. It has a similar population, social structure, need for social services and need for educational provision. Let him consider the way in which the penalty applies to those two boroughs and ask himself whether it can be explained as fair and reasonable that the grant penalty that applies to Hillingdon is so much steeper that that which applies to Bexley.
This is not an entirely new problem. It was identified when the block grant system came into operation. The Government have therefore had a considerable time to consider how to deal with such a problem. I invite my hon. Friend and the Government to consider inserting into the formula for the calculation of grant a performance factor which would reward those authorities which, like the one I have described, has adhered to Government policies and cut public expenditure sensibly, but which is now incurring substantial penalties. If no performance factor is included in the formula for calculating rate support grant settlements, what incentive is there for local councillors and the community to back the policy which the Government have advocated and which many people believe is important if local government expenditure is to be maintained at a sensible level?
My colleagues who serve on the Hillingdon borough council face a pretty awful position tonight. On present figures, they face the possibility of a rate increase of some 47 per cent. next year. The alternative is to make substantial and sweeping reductions in services, but they will be difficult to achieve, given the best will in the world, by honourable men and women who have set out to serve their community in local government.
I have told my constituents that we must face difficult circumstances in local government in the same way as Governments of all parties, at one time or another, have to face difficult circumstances and have to make difficult and often unpopular decisions. My local councillors are

375
willing to face their responsibilities, but they would feel much happier in doing so, and I believe that my constituents would be far more understanding of the position, if the difficulties to which I have referred, and the curious position which forces us to incur penalty at such a steep rate, were to be rectified. They must be rectified, because unless they are it is impossible to carry out sensible local government.
The reports that we are debating do not correct a serious position. I believe that the time has come for the Government to say, not just to the shire counties, but to the other local authorities, which are equally and severely affected, that steps will be taken to remedy the position. I suppose that all of us in the House are pretty good at claiming that our local authorities are in a special position. In the 11 years or so during which I have been here I have not attempted to claim a special position, but I am afraid that I must do so tonight, because my hon. Friend is well aware that we face unusual difficulties which must be remedied if local government in the areas involved is to continue.
It is my experience in local government and in Parliament that one can ask the community to accept difficult decisions, to support and go along with them, provided that they are fair and reasonable and everyone understands why they must be taken. I am prepared to play my part and so are the members of the Hillingdon borough council. I ask the Government to play their part in return.
7.26 pm
Ms. Harriet Harman: The Government increasingly repeat slogans. I should like to give a couple of them and measure them against the reports that we are discussing. One is "care in the community". We hear the Government talk a great deal about that. Let us measure it against the facts. For care in the community to mean anything, it must mean practical help. Far from helping the community to care, through these measures the Government are preventing it.
The Government make assumptions about the need to spend, based upon a formula which ignores local needs and local democracy. The formula bears no relationship to the position that pertains on the ground.
In Southwark, for example, the Government say that we should prepare 244,000 meals on wheels a year, but we have to prepare 608,000. According to the Government's formula, we should have 252 home helps. We have 345 and we need many more. The money is not going on lavish wages for home helps, who work extremely hard on low pay. The Government say also that we should have no more than 181 places for the elderly in day centres. We need 787. Without those meals on wheels, home helps and day centres people will be forced into institutions. That is the opposite of care in the community.
We also have 53 more old people in residential care than the Government say that we should have. What an irony it is that the Ministers in the Department of the Environment should cut councils trying to provide places in old folks' homes when Ministers in the Department of Health and Social Security are providing an open sesame with money for people in private old folks' homes.
The grant-related expenditure figure for Southwark social services means that we are allowed only 65 per cent. of what the borough spends. There is a £12 million shortfall. For trying to meet needs, as Southwark is trying
376
to do, and for being responsible, responsive and caring, Southwark is called irresponsible. Those living in Southwark are penalised.
The total loss of block grant for exceeding the GREA and target has been £71 million since 1981. That has cost each person in Southwark £331, which is a back-door tax that Southwark residents can ill afford. The picture is the same around the country.
If this year's Government targets on social services were met, it would mean 11,600 fewer places in local authority old folks' homes, 52,000 fewer meals on wheels and 42,000 fewer home helps. Those are not luxuries or fripperies, but basic necessities. Meeting the targets would also mean 8,300 fewer day nursery places for the under-fives.
That leads me on to the next slogan that the Government are always using—the concept of people being "responsible parents".
Mr. Martin M. Brandon-Bravo: Perhaps the hon. Lady will estimate for the House how many of those laudable objectives could have been satisfied by using the £6 million—or is it million? —that the GLC has just wasted on its absurd advertising campaign.
Ms. Harman: I was just going to mention day care facilities for the under-fives. In relation to the Greater London council, if the council was abolished, £3 million would be taken from day care facilities in London in the voluntary sector.
The Government are always saying that people should be "responsible parents". Most parents want to work and have to work if they are not to rely on benefits from the DHSS—and the community needs their work. Yet clay care provision for children under the age of five is totally inadequate. The Government's own figures show not just that that provision is needed by a small minority of uncaring parents who cannot carry out their responsibilities, but that more than 90 per cent. of parents want some sort of day nursery places for their three to four-year-olds. Over half of parents want some sort of day nursery place, whether part-time or full-time, for their three-year-olds and under-threes. Yet in some areas of the country there in no provision whatsoever.
Instead of castigating the local authorities that are trying to make provision, why do not the Government turn their attention to places such as the Isle of Wight, Kent, West Sussex, Wiltshire, Cornwall and Devon, which have no local authority day nursery places for children under five? In those places, if one has plenty of money, one can make private arrangements for going out to work. That is fine. Otherwise, parents can lump it. What a terrible sense of Government priorities that they are pursuing the councils that are trying to make provision. Our under-fives are already Europe's poor relations in respect of nursery care, and the rate support grant figures will force yet further cuts.
Mr. Waldegrave: I am sure that, if we intervened in one direction on service provision, the hon. Lady would be the first to say that that was an attack on local autonomy. Now she invites us to intervene in local autonomy and to increase spending. Is she not saying, "You believe in lots of spending and we believe in expenditure constraint."?
Ms. Harman: I believe that the Government should enable local authorities, by providing proper finance from central Government, to meet minimum standards for the basic needs of children under five in their areas.
It is also difficult to be a good parent without after-school facilities or school holiday provisions. Instead of encouraging councils, the Government are penalising authorities such as Southwark and ILEA, which are struggling to provide them.
The Government say that they are a "Government of the family". It is very difficult to play happy families in crowded, small flats, especially if one or more members of the family are unemployed. In Southwark, land lies empty and building workers are unemployed, because of the Government's policies of cutting local authority spending. People are overcrowded because of the council's inability to maintain dwellings. More and more people live in three-bedroom flats, but can occupy only one of those bedrooms because the council cannot repair the place. Two bedrooms in a dwelling fall into disrepair.
The Government also say that they are the Government of "law and order", yet they prevent councils from having maintenance programmes to strengthen front doors and make estates more secure, to improve lighting and lifts on estates, so that people do not need to spend a long time at the bottom of tower blocks, where they feel that they might fall prey to muggers. The councils are prevented from providing more caretakers and warden-controlled housing. That is the sort of thing that the Government should be allowing councils to provide if they really were the Government of "law and order" that they claim to be.
It is hypocrisy for the Government to call themselves the Government of "law and order" when they prevent councils, through rate support grant penalties, from taking practical steps to make people feel safe. We have just heard the Minister call councils such as Southwark irresponsible. He accused them of reckless spending. The Government call themselves responsible and caring, but the situation is the reverse. In hard practical terms, councils such as Southwark and ILEA are responsible and caring. The Government are preventing them from being so.
7.36 pm
Mr. Martin M. Brandon-Bravo: I rise to support these reports but I do not do so blindly, as I have some of the reservations which were touched upon vaguely by my hon. Friend the Member for Welwyn Hatfield (Mr. Murphy).
In his opening remarks the hon. Member for Copeland (Dr. Cunningham) referred to the complexities and absurdities of the system. There is more than a little truth in that phraseology, but sorting out those absurdities has defied minds—dare I say it?—as great as that of the hon. Member for Copeland.
The famous GRE is supposed to be an estimate of what it would cost an authority to provide a typical standard of service, having regard to its general circumstances and responsibilities. That sounds eminently sensible, but somehow it gets chewed up in the washing. We accept that the methodology by which that GRE is finally assessed cannot possibly take into account all the factors relevant to an authority, nor do I believe that it was ever intended to do so. Therefore, as a base point for distributing grant
378
it is probably as good as any other method previously devised, but as an explicit target it has many weaknesses, as we all accept.
The famous word "target" is a very different kettle of fish. Among other things, it is based upon the authority's budget for the previous year. Because of the different methodology that is used for arriving at those two different items, the relationship between the two lovely words is purely accidental in any individual auhority. Perhaps my hon. Friend the Member for Welwyn Hatfield hoped that the Government would address themselves to that area, so that we can have sanity in and understanding of those two words.
I do not think that anybody on either side of the House is challenging the Government's right to control the totality of expenditure. I was on — and still am — our local authority when the right hon. Member for Bethnal Green and Stepney (Mr. Shore) held the high office of the present Secretary of State. It caused no surprise to our local authority when the right hon. Gentleman asked us to reduce our expenditure in the national interest. That was the custom and practice in those days and, as the right hon. Member for Manchester, Gorton (Mr. Kaufman) said at the time, no one challenged the right of Parliament to exercise its proper control over local authorities. It is a matter of some sadness that, simply because those two gentlemen have passed into opposition, somehow or other it is a different ball game for them.
With the estimated overspend of £841 million, it would be irresponsible for this or any other Government not to take the necessary action to restrain it. One of my reservations about being satisfied and confident of that £841 million is that I do not know to what extent balances and reserves affect that figure. It has always been a source of puzzlement to me — I addressed this matter to the Secretary of State earlier this year—why we take a view of balances and reserves in Government spending which no commercial undertaking would dream of applying.
If a local authority overspends, it goes into penalty and the grant is reduced. That is fair and reasonable, and I have no complaint about it. Unfortunately, that overspend becomes a basis for next year's target. I am sure I will be told that that is not the Government's intention. Equally, if an authority underspends, it receives less grant. Therefore, in order to maximise its grant, a local authority wants to reach target.
If a local authority does its homework and underspends, it will promptly transfer the gap to reserves. In that way, on paper it has spent its target, so it does not go into penalty. If it does not transfer the gap to reserves, but puts it into balances, that is an underspend, as my right hon. Friend the Secretary of State will tell me, and the authority reduces target. After exercising excellent financial restraint, it finishes up with less grant in the following year. Perhaps my hon. Friend the Member for Welwyn Hatfield was asking for better treatment in such a situation. I hope that during the next 12 months we shall try to refine the method by which we calculate GRE. I hope that we shall redefine target to remove that strange anomaly.
My right hon. Friend rightly referred to Liverpool, and was chastised by an Opposition Member on that account. I think that I speak not just for my own city but for most other cities which play fair with the Government when I say that we shall not accept a system under the guise of so-called local democracy which allows one local authority to vote for itself money which rightly should go

379
to others. That seems to be the logic of hon. Members representing Liverpool. They argue that their local people have a right, at a local election, to vote that their local council can spend in a way that means that resources will be siphoned off from Nottingham, Leicester, Derby and other cities. That must be wrong.
Mr. Straw: Does the hon. Gentleman not understand that exactly the reverse is true? The more some authorities overspend, in the Government's terms, the lower are the rate levels in the underspending authorities. Therefore, if the hon. Gentleman's authority underspent it would benefit in its rate support grant from the overspending of other authorities.
Mr. Brandon-Bravo: I am sorry if I have not made my point clear. I apologise to the House. If, as the Secretary of State said, the totality of spending and of rate support grant are fixed, and if Liverpool takes a bigger slice of the cake, someone else gets a smaller one. That is the point that I was trying to make.
I should like to refer to disregards. I welcome the reference to two items. The first is the disregard in terms of expenditure under urban programmes and joint projects which are rightly entered into with local health authorities. Secondly, I welcome very much the disregard which has been promised on the policing costs incurred by many local authorities as a result of the civil and criminal activities of a minority of our people.
I sincerely urge the Secretary of State to give much clearer long-term guidance on disregards. It has been said that we tend to get caught in annuality, the one year at a time budgeting, which makes long-term planning difficult for a responsible authority. I shall quote an example. A scheme might start with 75 per cent. Government grant and 25 per cent. from the local authority. That exercise represents an expression of confidence by the Government in the justice of what the local authority is doing. They are encouraging the local authority to make provision where general need has been established. We all agree that that is a sensible approach.
The problem is that the local authority finds that after the third or fourth year, when it must pick up 100 per cent. of the cost—it does not mind that in many cases—that 100 per cent. is included in its normal calculation of target when it receives its rate support grant. That should not happen. If there was a disregard in the first year because it was the wish of Government that that local authority should make the provision, after three years that should not suddenly cease to be the will of the Government so that in a sense the authority is penalised. Inevitably the local authority's other services are squeezed; services which the local people, and perhaps the Government, wish to be continued.
The one area of disregard which does not appear to be mentioned in the report is matters over which local authorities have no control. If they are precepted by parishes or for land drainage, they have no way of avoiding those charges. The charges go into the system of local expenditure and are therefore totted up when the authority joins the list of good or bad boys. The local authority has no choice about those expenses—they are precepts upon it. However, they should also be a disregard, as well as charges connected with housing benefit, participation in Manpower Services Commission schemes and increased activity in housing improvement
380
grants. Clearly, those are areas which will affect the cities much more than the rural areas, but they are precisely the areas to which the Government are encouraging the direction of spending. I feel, therefore, that they should be placed firmly within the area of disregard.
Particularly in relation to those disregards, I should like to see a reconsideration of section 137. The whole House is well aware of the abuse of the 2p rate, for which many local authorities are responsible. Nevertheless, there are many legitimate uses for section 137 and it is sad that some centrally inspired activities have to be funded under that section. In the original concept, that section was intended to enable local authorities to do that which was specific to them. They should not have to use it for inner area programmes and so on.
Ms. Harman: Will the hon. Gentleman accept that Basildon council uses the whole 2p rate to provide services for the elderly partly because Essex county council provides no day centres for the elderly in that area? Basildon has been designated by the Government as an overspender, but it has spent its whole 2p rate on services for the elderly which should be provided by the county council.
Is the hon. Gentleman aware that in Basildon we have joint funding with the health authority for an emergency alarm scheme for elderly people to enable them to remain in their own homes, and that that scheme might be subject to rate penalties for overspending, as might be the jointly funded expenses for volunteers who cut the elderly people's toe nails and keep them mobile? Is that lavish overspending which the Government are trying to reduce?
Mr. Brandon-Bravo: No, of course not. The hon. Lady should have read the report before making her last point. She would have learnt that joint projects connected with local health authorities are specifically named as being disregarded.
Ms. Harman: Not if there is an increase.
Mr. Brandon-Bravo: I believe that I have answered the hon. Lady's question.
I cannot comment on Basildon or Essex. I can speak only for my own patch. However, the hon. Lady's remarks in that respect were entirely in line with my own views. Section 137 should not be needed to provide such necessary services.
Whenever this House discusses rates, one matter is referred to time and time again. I refer to the effect on commerce and industry. It seems to be the tactic of the Opposition to suggest in some way that rates are irrelevant to commerce and industry. They take the most convenient statistic, suggesting that rates amount to only 1 per cent. of the gross turnover of industry and therefore they are irrelevant. I could choose an equally irrelevant yardstick and produce precisely the opposite result. I have spent most of my life in the textile industry, which operates on a profit of about 2 or 3 per cent. of its total turnover. I could therefore argue that rates amounted to between 33 and 50 per cent. of the textile industry's profits, but that would be an argument as absurd as that advanced by the Opposition.
I draw the attention of the House to an investigation into this matter by our regional CBI, which made a survey of 41 Nottinghamshire companies. Those companies, which employ 74,000 people, pay £17·6 million in rates. The

381
regional CBI states that if one were to take rates as a percentage of total costs, one would find that the average figure was 2·6 per cent. and the maximum was 5 per cent. If one were to work out the rate as a percentage of costs, ignoring labour and raw materials, one would find that the average figure was 4·7 per cent. and the maximum 14·5 per cent. I suggest that those figures are far more objective and meaningful than any which take rates as a percentage of turnover, because the survey also made it clear that, whereas the average family pays £224 a year in rates, commerce and industry pay £240 for every person employed. To argue that rates can in no way affect employment is sheer nonsense.
I wish that the system which was in operation five or perhaps 10 years ago was still with us. By consensus, discussion and agreement with the local authorities the House was able to keep the ship of state financially on course, and the local authorities played fair. Sadly, we have gone beyond that, and we are now obliged to use a rather blunt instrument. I therefore agree without hesitation that the reports under discussion should be approved.
7.57 pm
Mr. Simon Hughes: The Secretary of State asks us to approve three reports and effectively to approve decisions in those reports which will have a direct effect on the services provided by local authorities throughout England. It is clear to those of us on these Benches who, about twice a year, take part in such debates that the only proper option that we have is not to approve the reports. Every time the Government lay reports such as these before the House, they are seeking to defend the indefensible.
One of the reports is about the most recent financial year—1984–85. The implications of this report for the local authorities are serious. A report produced in December and discussed in January told the authorities by how much money the Government would penalise them if they overspent in this financial year. Now, a quarter of the way through the financial year, those estimates and assessments are being revised.
We are also discussing two reports about a financial year four years ago and a financial year three years ago, both of which will have retrospective effects on the budgets and finances of the local authorities.
As we frequently complain, it is impossible for the local authorities and their treasurers and other officers to decide in a practical, sensible and intelligent way how best to plan local services if, four years after the event, central Government are still tampering with the books and altering the figures.
That is even more ludicrous because of the existence of an Act which has only recently received the approval of this place despite the opposition of all Opposition parties in both places and much criticism from Conservative Back Benchers. The Rates Act has taken its place on the statute book and we have been told this afternoon by the Secretary of State that next week he is to announce the first list of authorities to be rate-capped, as the Act will require him to do.
We want to know how it will be possible for the Government to reconcile an amazingly complicated and Byzantine system of local government finance, which is
382
set out in the report before us, with their proposals for rate capping. If, for example, 14, 15 or 16 rate-capped authorities all fall within a certain category according to their overspend, the targets and the penalties, the supplemental report on the actual budget and the recalculation might reveal that they have not, in fact, fallen within the category that falls to be capped. If that happens, how will the Government compensate those authorities? How will they combine rate capping proposals that will bear on local government's expenditure for next year on the basis of its expenditure this year with the ever-changing pattern of retrospective local government financial adjustments that the present system continues year after year?
We believe that it is impossible to combine rate capping proposals with ever-changing adjustments that will add even more to the burden of the authorities which will be listed as rate-capped. It will increase the burden that even now they are finding almost impossible to discharge.
The number of adjustments that are made in the reports and the number of variations for which the Secretary of State is seeking support illustrate that the Government's proposals are ludicrous. The 1981–82 report—it is the fourth supplemental report for that year—adjusts the totals of relevant expenditure, of aggregate Exchequer grant, of estimated specific and supplementary grants and of rate support grants, and alters individual local authority block grant entitlements. It makes a number of changes to grant-related expenditure and re-determines grant-related poundage and multipliers.
One of the implications of the 1982–83 second supplemental report is the repayment of a substantial sum to the Greater London council. That has been determined three years after that council budgeted for and was embarked on expenditure decisions on the 1982–83 figures. That is ludicrous.
The Secretary of State was content this afternoon to enter into a political knock-about. He did not begin to try to defend our indefensible system of local government finance. He spoke only of the expenditure plans of a few specific authorities.
We must have some sign that the Government are beginning to think about a logical system of local government finance.
Can we not have a rolling programme of the sort that exists for capital expenditure programmes for a set number of years, which establishes financial constraints on local government, the grant that it will receive from central Government, the proportion of its expenditure that will be guaranteed by central Government and how much it will pay if the Government wish to impose penalties?
Why cannot the Department of the Environment create a system that will give at least three years of certainty? That was thought possible by the right hon. Lady the Prime Minister as long ago as 1974. The Department could produce a report which would state, if it insisted, "For the next three years this will be the Government's contribution to local authority finance, and in three years' time we shall introduce cuts so that public expenditure, in as much as it is affected by local government finance, will be altered by this amount."
Why do local authorities have regularly to suffer because the Government cannot get the system right? It is not fair that they should do so and the Government's failings have a direct effect on services, which is often felt halfway through a financial year. It is about time that the

383
Government decided how to assess the needs of local authorities. Members on both sides of the House have already made it clear that the Government merely provide arbitrarily a figure and a level for local authority expenditure.
There are many statutory duties on local authorities. Every borough, every district, every county and every metropolitan county has by law to make certain provisions. They must by law provide personal social services, environmental health services and public sector housing. They are not allowed by law to let property go into a state of statutory disrepair. By law they have to provide home helps and assistance for the elderly.
We never hear from the Government any statement of the cost at which such services should be provided. For example, Southwark council may decide that it wants to provide a decent library service. What sum should it spend on its libraries? Do the Government wish there to be only 100 books a branch or do they want the council to provide a library service that meets the reading needs of its population? Should it provide a service that will allow ratepayers to work in libraries in the evenings if they cannot work at home because of overcrowding and the lack of facilities for quiet study?
The elderly in Southwark are clearly in need of home helps, but what are the criteria for providing home helps? Should there really be home helps only for those who are totally unable to pass through their front doorways? There are no criteria and there are no guidelines. The ludicrous lack of principle that the Government perpetuate year after year is the result of pulling a figure out of the air, juggling with it, producing formulae at the Department of the Environment and producing an ever more complicated set of proposals by which to determine what local authorities could spend.
There is no proper assessment of quality of service. It is not said that a particular service is too good or that it is not as good as it should be. It is about time that the Government produced a statement of principle to make clear whether they expect local authorities to implement the services that they are bound to provide by law in a way that provides a good service for the population or, alternatively, made it clear that they are to provide minimal services. It is unfortunate that the figures that the Government impose on local authorities suggest that often only the poorest services should be provided.
We have heard something about the report that will be produced next month by the Audit Commission. When we debated RSG in January the Secretary of State laid great store by the commission. The Government set up the commission and the Secretary of State said:
"I want to say something about a new factor in the equation—the Audit Commission … the Commission was given a specific remit to look at value for money in local authority spending."
He added:
"I consider the Audit Commission handbook one of the most powerful tools for efficiency ever put into the hands of local councillors." — [Official Report, 23 January; Vol. 52, c. 643–44.]
When we debated the subject in January, the great complaint that was made by local authorities up and down the land, many of which were Tory-controlled, was that they did everything that the Audit Commission required them to do. Warwickshire county council, for example, desperately urged the Government to tell it how, having had auditors in to look at the books and having cut its
384
services to the bone, it was to meet the additional needs of the county without eating into the services. The hon. Member for Uxbridge (Mr. Shersby), in speaking earlier about the Tory-controlled Hillingdon borough council, made exactly the same points.
It is not possible for the Government to persuade the country—it is not possible for them even to persuade Conservative members of local authorities — that the present system can be perpetuated. It is a system that all authorities find unsatisfactory. The more it is perpetuated, the more unsatisfactory it becomes.
I ask the Secretary of State, through the Parliamentary Under-Secretary, to tell authorities such as mine in Southwark and others in inner London—and authorities in other parts of the country which would not appear, on the face of it, to be suffering under the Government's financial regime — how they are expected to manage their finances when they have no reserves left. Is the Under-Secretary's advice that local authorities should raid their reserves completely, as Southwark has done? Or is it that they should keep some money in their reserves to spend on necessary services, as some authorities have done but now very few are enabled to do?
What is the advice as to the planning that local authorities should enter into? Throughout the country, local authorities ask, almost unitedly, when the Government are to give them the ability to plan to meet the services which, in large measure, the Government have imposed on them the duty to fulfil. When will the Government give up the pretence that their present system of presenting report after report, more and more complicated, is helping the provision of services for the people of England? When will the Government replace the present system, which has long outgrown either its usefulness or its intellectual justification, with a system that allows money to be directed where need is, so that services can be met, and so that people in local government may understand how they are meant to do the job that the Government have given them to do?
8.12 pm
Mrs. Edwina Currie: I am delighted to be called to speak in the debate, Mr. Deputy Speaker. Despite the fact that I have tried to speak in every debate on rates and rate support grant in this Session, I have never managed previously to catch the eye of the Chair.
I am not a rates reformer; I actually like the rates system the way it is. I feel that if we did not have a property tax we would probably have to invent one. The Customs and Excise and the Inland Revenue for centuries have been taxing everything that moves. It is so much easier, therefore, to tax something that does not move. Rates are easy to levy, cheap to collect, and difficult to evade "hi better set of criteria for a tax-gathering system would be difficult to devise.
Nor do I think that the rate system is necessarily so unfair. We often hear the story of the old lady paying the same rates as the family of four or five working people living next door. But, of course, by taxation they are paying for the rate support grant through half of the public expenditure of their local authority. They are probably not receiving an equal amount of service. Indeed, as the hon. Member for Peckham (Ms. Harman) has shown this

385
evening, elderly people may well be receiving services substantially in excess of those received by the people next door to them.
The rates system is a roughly progressive system, in the sense that the larger the house the more rates the owners are likely to pay. Also, there is rates relief through rates rebate.
What has been wrong has been the abandonment of the traditional parochial wariness—the hesitancy to spend ratepayers' money — which used to be a feature of Conservative and Labour councils alike. The reason is partly to do with the fact that we now have a substantial gap between ratepayers and voters. As people would say in Derbyshire, "Those as vote don't pay". In a city such as Birmingham as many as 40 per cent. of the voters are no longer ratepayers, because they are in receipt of benefit, and "Those as pay don't vote". That is particularly the case with business people. I have often said, for example, to the CBI that one of the ways in which it should get round the problem is by ensuring that business people and senior management are encouraged to sit on their local councils. Where they do, a more businesslike aspect is apparent.
Mr. O'Brien rose——
Mrs. Currie: The hon. Gentleman can try to catch Mr. Deputy Speaker's eye, as I have.
I recall an occasion when there were five employees of British Leyland sitting on Birmingham council, and not one of them was in management. It was the fault of management that no one in management was encouraged to sit on the council.
Another problem is that of increasing expectations. I was very much involved in the allocation of money for improvement grants in the city of Birmingham. We were able to achieve, as were councils all round the country, record levels of expenditure. Unfortunately, we also generated record levels of demand. I have come to the conclusion that if we could not maintain a steady level of input of expenditure, it might have been better to let sleeping dogs lie. One of the results of the gaps between the voters and the payers has been the rapid increase in spending, which has ignored not only need, but Government guidelines and ratepayers' ability to pay.
Today we have been doing two things. First, we have been allocating grant based on estimates. Secondly, we have been making adjustments based on outturn. If the implications of fiddling around in 1984 with the 1981–82 figures are to be projected to the future, we shall be fiddling around with today's 1984–85 figures in 1988 and beyond.
My hon. Friend the Member for Ealing, Acton (Sir G. Young) will recall the occasions not so long ago when I sat on the opposite side of the table to him and argued for Birmingham's housing subsidy back to 1975. The only reason that we could not go back any further was that local authority reorganisation in 1974 had effectively destroyed the papers. I say to my right hon. and hon. Friends on the Front Bench that we seem now to have a system which, far from being rigid, as Labour Members seem to think, has become indefinitely flexible, and that is not a desirable development.
386
It would be helpful if there could be two improvements. First, local authorities should not deliberately overestimate — and they do. The GLC did just that for 1982–83. That is why we are now offering it the £100 million grant. It was not because the GLC was incompetent. I think it was done deliberately, because the GLC after 1981 decided to indulge a taste for yah-boo politics with the Government. If an authority can show, in some spurious way, that the budget that it is required to spend is too little for its needs, it can say that the Government are wrong. If the authority then comes back later to the Government and says, "Guess what—we didn't manage to spend it", I suggest that the Government were right in the first place and in the last place.
Mr. Tony Banks: I have heard that said many times. I have here the GLC's 1982–83 budget and its outturn. The hon. Lady might be interested to know that the service expenditure budget for 1982–83 was £1,341 million and its outturn was £1,313 million — a difference of £28 million. That is not the sort of figure that the Minister was talking about. The hon. Lady should bear in mind that interest rates, a larger contingency balance, and the special profits that accrued from the service contracts meant that the GLC had more money. It did not deliberately set out to over-budget.
Mrs. Currie: I still say that either way it was too darned big. Indeed, the provisional outturns for 1983–84 show that many local authorities are likely to have underspent. Sometimes that cannot be helped; I accept that. When a local authority has needed to increase expenditure and when, year after year, a budget has been increased—as were the housing investment programmes for which I was responsible — it is quite difficult to spend up to the limit, because one is always in the position of recruiting more staff, developing more programmes, and getting more people involved. Therefore, it is not all that surprising if sometimes we get a situation that is euphemistically dignified with the term "slippage", which in many local authorities has become a way of life, and is in fact institutionalised underspending.
All Governments must work with what local authorities say they will spend. Indeed, even in 1984–85 there is evidence that the same thing is happening. Evidence given to the Select Committee on Social Services shows that local authorities are budgeting to spend substantially more on personal social services than the White Paper allowed them. In my experience, they will not spend it. Therefore, I counsel my right hon. and hon. Friends on the Front Bench not to panic but to exercise a little patience, tinged perhaps with justified irritation.
The gap between the estimates and the outturns might be improved if the Government did not keep changing the rules. I refer particularly to the treatment of cash receipts, which we dealt with earlier this afternoon. Many local authorities have generated huge cash receipts. Under the Housing Act 1980 Birmingham has realised £100 million from the sale of council houses alone. It cannot spend it all in the year in which that money is generated. Sometimes it does not wish to because it wants to accumulate a large sum of money in order to carry out a major development such as the proposed city centre redevelopment.
Therefore, it is a little difficult to understand why it is all right to have retrospective changes on the revenue

387
accounts but not on the capital accounts. In other words, why cannot we simply allow the money that is sitting in banks all over the country to be used for the improvement of our housing?
The county of Derbyshire in which I live is not currently any place for the prudent ratepayer to be living. Rate poundages there have increased dramatically over recent years. Again, I allege that that is done deliberately. In 1981–82 we suffered a 13·3 per cent, rise, the following year a 25 per cent. rise, the year after that a 12 per cent. rise and this year a 13 per cent. rise. That gives us an overall increase in those four years of 59 per cent. That is diabolical. We are the most highly rated authority of our kind in the Midlands. We are the third highest rated authority among the non-metropolitan counties in England and Wales. Yet all our figures and calculations are similar to Nottinghamshire, Staffordshire and Warwickshire which have had much smaller increases. I must ask why Warwickshire, which had a higher rate poundage in 1981 and which is a similar county nearby, can manage now with 143·3p in the pound while Derbyshire has a rate poundage of 176·5p in the pound. Again, the answer is deliberate overspending.
The proportion of overspending each year in Derbyshire has gone up. In 1982–83 it overspent to the tune of 3·5 per cent. I exclude disregards. In 1983–84 it was 4·3 per cent. and this year it is 4·8 per cent. In other words, Derbyshire's ability to keep to budget has either got worse or its ability to defy the Government has got better. I strongly suggest that it is the latter. The result has been a substantial loss of grants and a substantial holdback which this year amounts to some £27·9 million. If Derbyshire had not overspent so wildly and deliberately, we would have received that grant, which is the equivalent of a 27p rate. We would have had a rate poundage of 149p, and, guess what, that is roughly the same as the other midland counties with which we are comparable.
Derbyshire will blame the Government. I blame the county, and, especially since 1981, its Labour leader, Mr. Bookbinder. He stood as a parliamentary candidate for Amber Valley and it turned out that he was worth more than 3,000 votes to the Conservative party. I hereby invite him to stand for my seat. I shall be delighted to take him on. If he cannot oblige, I hope that he will persuade one of the many brothers of the hon. Member for Bolsover (Mr. Skinner) to come and join me there.
I am not being in the least partisan in all this. I wish to put on record the fact that Labour-controlled Derby city council and Labour-controlled South Derbyshire district council have almost forgotten how to increase the rates. They have not put them up for several years. I must say to them, "Well done."
I have here a letter from Southern Derbyshire health authority to the Derbyshire county council which points out that the health authority is one of the council's largest ratepayers and will have to find a further £68,000 this year over and above that included in its financial allocation. It says in that letter that
"the Council should be mindful of the fact that any percentage rates increase which is greater than the allowance granted to the Authority for movements in the Health Services prices index (rates element) must have a detrimental effect on the level of health care services that this Authority can provide".
The health authority also draws attention to section 13 of the Rates Act 1984. It makes an important point when it says that industrial business ratepayers are now obliged
388
to be consulted by the rate-setting council, but that it, as one of the largest ratepayers in the county, is not included. It feels that that section should be extended to include a requirement for the council to consult health authorities as well. That is a fair point.
Public spending by local authorities is a large and now permanent part of our national expenditure. For that reason it must be kept under control. Every £5,000 extra given to the local authority is a job gone in industry. Every £5,000 spent in Derbyshire to send a social worker to Greenham common for nine months, or to provide free newspapers at a cost of £100,000, or to fund CND displays at the local carnival, is a job lost in industry. Worse, it is a job lost in the health authority. If I had to choose between parts of the public sector—which we all have to pay for — I would rather have 10 nurses on duty at Aston Hall hospital or at the other seven hospitals in my constituency, provided by that £68,000 extra that the health authority will have to find than fancy peace signs sported at I he entrance to the county three miles down the A6. That is wrong. I would rather have a man working at Swadlincote Electronics, generating employment for other people, than see that company having to find additional rates. It is easy for a council to spend other people's money and to wreck the local economy while it does it.
On those grounds I warmly support the Government.
8.26 pm
Mr. Robert N. Wareing: I sometimes wish that my hon. Friend the Member for Great Grimsby (Mr. Mitchell) could get his way and that the proceedings of the House were televised. In a debate such as this viewers would see a complete absence from the Conservative Benches of Members to discuss the services which have to be provided by local authorities. Their talk is of targets, penalties and rate capping. Their talk is of a saving on the rates. There is no discussion at all of what it means to councils to have imposed upon them grant-related expenditure figures which are in no way related to the real needs of the people.
One reason for that is that the people who are in government at the moment and those who advise them are more used to wining and dining at the Oxford and Cambridge club and at White's than they are to witnessing the real problems of poor people who do not know when their houses will be repaired, who live with leaking roofs and with rat-infested middens. There is no talk of people on waiting lists such as constituents of mine who are suffering from cancer, and who will die long before their housing needs are met. Such things are foreign to Conservative Members. Basically, they are ignorant of the facts.
There was a look of alarm on the faces of the Secretary of State and the Minister for Housing and Construction when they were dragged round the streets of Liverpool and saw what it is really like to live in an inner city. in the desolation which is the case: in so many of our housing estates. That was partly why concessions have been made to Liverpool in the past few weeks.
Mr. Malcolm Thornton: What concessions?
Mr. Wareing: In his statement on 10 July the Secretary of State said that there would be no concessions to Liverpool on targets, GRE, block grant, penalties, or disregards, that the rules would apply to Liverpool, that

389
the Government were not reopening this year's HIP allocation to give Liverpool extra, but the fact is that the right hon. Gentleman, whom we have seen in the House today, is quite chastened by the struggle which has been carried on in Liverpool over the past months.
Is it not the same Secretary of State who met Liverpool councillors and MPs during February and March? The intransigence of those days has given way to a sense of reality. The right hon. Gentleman realised that Liverpool was leading a fight which was the fight of all local authorities faced with the gauleiter politics of the Tory party. Local authorities have never been more bound by central Government control.
In 1981, when the Government set unrealistic GREs, they planned a 6 per cent. cut in social services. Most local authorities resisted cuts in services for the elderly, for children in need and for the handicapped. As a result, their rate support grant was cut. Liverpool lost £120 million between 1979 and 1983.
Local authorities were forced to compensate for that loss with higher rates. The cut in rate support grant, for which the Government are responsible, has brought about the rate increases in the past few years. Now even that freedom of local authorities to respond to the wishes of local electors is to be removed. A safeguard was provided for local services by the fact that local authorities could use the rating system, which has many faults, but which the Government have been unable to replace, despite their election pledge of 1979.
The only choice within the law left to local authorities which refuse to defy the Government will be to cut vital local services. Cuts in home help and meals-on-wheels services and reductions in the number of staff at residential homes and day centres for the elderly and disabled are likely to occur in the immediate future if there is not resistance such as that conducted by Liverpool city council.
Mr. Roland Boyes: May I draw my hon. Friend's attention to a parliamentary answer of which he may not be aware? My right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) asked the Secretary of State for Social Services to make a statement on the progress being made towards the further implementation of the Chronically Sick and Disabled Persons Act 1970. The reply was:
"Implementation of the main provisions of the Act rests with local authorities who are in the best position to recognise local needs and make arrangements for meeting them."—[Official Report, 10 July 1984; Vol. 63, c. 474.]
Is it not two-faced and hypocritical for the Government to say that it is the duty of local authorities to provide services for chronically sick and disabled people when, at the same time, another Government Department is taking cash away from local authorities so that they cannot carry out that duty?
Mr. Wareing: I am indebted to my hon. Friend. That reply is typical of a Government who, when asked about a proposal to close the neuro-pharmacological unit at Cambridge, say that it comes within the budget of the Medical Research Council. They do not say that the MRC budget is affected by the cuts which they are imposing on the council. In the same way, when the Government say that dealing with the problems faced by disabled people
390
is the responsibility of the local authority, they do not add, "We destroyed all hope for those disabled people by cutting the rate support grant."
Mr. Brandon-Bravo: The hon. Gentleman probably did not bother to attend the House not many days ago when my right hon. Friend the Prime Minister corrected the Leader of the Opposition, who was also trying to spread false information about cuts in the research budget. If my memory serves me right—I am sure that I shall be corrected if I am wrong—the research budget was £57 million when the Labour Government left office, and this year it is £117 million. It is false to suggest that there has been a cut in that budget. On the contrary, it has been increased in line with inflation and beyond.
Mr. Wareing: When my party was in government there was no threat to the neuro-pharmacological unit at Cambridge or to the pneumonocosis unit in South Wales. If the MRC had approached that compassionate Government, there would have been a positive response and no thoughts of cuts in vital services.
I often think that the present Government are the sort of Government whom Sir Winston Churchill had in mind when he referred to three types of lie—lies, damned lies and statistics. We have had volumes of statistics from the Government, but the realities of life are different, as the Secretary of State discovered in Liverpool. If Liverpool had succumbed to the Government, it would have been tantamount to driving large sections of the working class population into a sub-culture and into ghettos of multiple deprivation.
The Secretary of State said in his statement on 10 July that
"if Liverpool reduces overspending, then it benefits automatically from reduced penalties and therefore higher rate support grant."
If the Secretary of State believes that Liverpool is overspending, let him tell the city council where it is overspending. So far, he has refused to do that.
Mr. Waldegrave: Will the hon. Gentleman give way?
Mr. Wareing: In a moment. I know that the Minister is anxious to do a little more chuntering at the Dispatch Box.
After the Secretary of State had been dragged round Liverpool to see some of the 17 priority areas designated by the Labour-controlled city council, he said:
"I emphasise the need for all available resources to be applied to meeting housing conditions."
He did not say that there had been any overspending by the city council.
Mr. Waldegrave: I know that the hon. Gentleman will wish to correct himself, because he has not been fair to my right hon. Friend the Secretary of State, who said, for example:
"Liverpool is an authority which, in 1982–83, compared to the Metropolitan District average, spent two and a half times more per head on environmental services, 50 per cent. more per head on waste collection, 30 per cent. more per head on social services … spent £2,547 to sweep a mile of its streets compared with £784 in Sheffield."
There is a good list for the hon. Gentleman to start on.
Mr. Wareing: The hon. Gentleman should come to Liverpool to see whether it is overspending. Overspending must be measured against the reality of deprived social conditions. Let the Minister come with me to Falmouth road or Regal towers in Gilmoss. I will easily find a tenant

391
who will allow him to reside there for a week. A week in Falmouth road or in Regal towers would teach him far more than he could learn from his civil servants or his acquaintances in West End clubs.
The hon. Member for Nottingham, South (Mr. Brandon-Bravo) said that Liverpool had received concessions, which had resulted in losses for other local authorities. Let me read from the letter which the Secretary of State sent to Councillor John Hamilton, the leader of Liverpool city council. It is the surrender document of the Secretary of State. He said:
"I have decided to relax the housing subsidy arrangements to enable subsidy to be claimed by authorities on the reckonable proportion of loan charges and demolition costs relating to demolished dwellings, where the circumstances have been approved by my Department in accordance with certain guidelines."
Liverpool has struggled in the last few months and at least it has gained a real concession from the Secretary of State.
We must resist the Government's policy. In his intransigent period in February and March the Secretary of State told Labour councillors in Liverpool that they must not break the law, but must set a rate within the law. Had they done that, the Secretary of State would not have made a concession and local authorities with social problems would not have been given the hope that if they fight and resist the Government the Rates Act 1984 can be as immobilised as the Industrial Relations Act was in 1971.
The real reason why the Secretary of State gave up the struggle and decided to negotiate as an equal with members of the Liverpool city council was that when the district auditor sent a letter to each Liverpool city councillor explaining what would happen if they set an illegal rate the Tory Government realised what would happen to the capital market if they had to send in commissioners. They realised that a foreclosure on Liverpool by the banks would result in a monetary crisis of a proportion that we have not seen in Britain for generations. That is why the Government gave in.
The Government claim that they have achieved a great victory. I have been in the House for only about a year. I hope that in each subsequent year I shall see the Secretary of State for the Environment achieve similar victories. If that happens, the death knell will toll for the Tory Government.
8.41 pm
Mr. Patrick Thompson: I welcome the opportunity to speak in this debate. I shall support the reports when it comes to the vote. My reason for wanting to take part is not that in my year in Parliament I have suddenly mastered the complexities of local government finance. That is far from the truth. I have a love-hate relationship with this deplorable muddle. The other day I felt that I qualified for speaking in such a debate when I was challenged in public to explain what GREA stood for. To my astonishment, I discovered that I knew. That was a major step forward in my understanding of parliamentary matters.
I want to put some straightforward points to the House. As usual, the contributions from the Opposition Benches have, like an inefficient source of illumination, generated more heat than light. That is no better illustrated than by the contribution by the hon. Member from Liverpool, West Derby (Mr. Wareing). The humbug and cant with
392
which he approached the subject was deplorable and lowered the standard of debate, which so far has been reasonably high.
I listened with fascination to the hon. Member for Southwark and Bermondsey (Mr. Hughes). In his opening remarks he rightly said that deep thinking was needed. I agree that we need much deep thinking about local government in the coming years. The hon. Gentleman then talked vaguely about rolling programmes and other equally incomprehensible matters and I realised that I should not gain much enlightenment from him.
I was astonished that no alliance Members were in the Chamber a few moments ago and that the number of Labour Members present is astonishingly low considering the interest that they are supposed to have in the issue.[Interruption.] Throughout the debate, my hon. Friends and I have been in the majority.
Mr. Simon Hughes: The hon. Member obviously has not done his maths, because for most of the debate the alliance has been represented by a higher proportion of hon. Members than the two other main parties. If the hon. Gentleman reads the debate on 23 January he will see that I explained clearly what I thought should be done, as well as what should not be done.
Mr. Thompson: I conceded that at one stage two Members of the alliance were present but when no Members were present, that was a low proportion.
I was interested in the remarks by the hon. Member for Copeland (Dr. Cunningham), who talked about the dreadful way in which the Government were pushing the imposition away from the taxpayer towards the ratepayer. I found that astonishing, since the reason that we are in difficulty is that the burden of increasing local government expenditure has been bearing more and more severely on the taxpayer than the ratepayer. His remarks carried no weight.
The debate takes place against a background of local government overspending on a large scale. Spending has increased much faster than inflation. It is welcome news that at least the Secretary of State has been able to announce that the rate of increase has been moderated this year. According to my mail, there is resistance from domestic and business ratepayers to the ever-increasing rates burden. The problems will not go away just because of comments by Opposition Members.
We all know where more money should be spent. We can all make lists of priorities. We can address ourselves to those priorities only if public expenditure is kept firmly under control. No amount of huffing and puffing by Labour Members will alter that basic arithmetical truth.
I welcome the disregards in the report for 1984–85. En particular, I welcome the disregard for any increase in expenditure on civil defence. On more than one occasion I have said that I want more support for civil defence volunteers. Any move to support the excellent work which such volunteers do must be supported. I am delighted that their work is recognised.
I support the disregard for joint spending with the health authorities, to which the hon. Member for Peckham (Ms. Harman) referred earlier. She talked about community care. We must give the Government credit for that disregard. We must put more emphasis on community care, whether through spending policies or other ways.
I understand that there might be disregards for expenditure on policing the mining dispute. In Norwich at this

393
time of the year we look forward to an annual event—the arrival in the next month or so of the hippy, or peace, convoy. That creates problems in the Norwich area. Policing and law and order problems are created. Drugs and trespassing also cause problems. Members of the Norfolk county council and Norwich city council hope that the Government might disregard expenditure on such problems.
My constituents in Norwich, North and those of all hon. Members representing Norfolk constituencies will look forward to an announcement from the Secretary of State during the next week or so that the Government intend in the future to give much fairer treatment to low-spending shire counties such as Norfolk than they have in the past. I place on record my hope that my right hon. Friend will go a long way to meeting the representations on this matter that we have had in the last few months.
To anyone who believes in the importance of local government our recent debates must have been somewhat depressing. At a time when we should be wrestling with the major issue of the future of local government, we seem to have become bogged down in party political bickering of a kind which does the House little credit. I believe that more long-term thinking about local government will be necessary during the next few years.
At some time during the coming years we shall have to debate again methods of raising finance locally—and I do not duck the term "rating reform". Before long we shall also have to debate ways of increasing public interest in local government. We shall have to debate ways of simplifying and rationalising the ludicrous system of local government finance that we are discussing today and that can only be the result of fudge after fudge going right back to the 1945 Labour Government and, for all I know, well before then. We shall also have to debate education. In 1981–82, expenditure on education was £11,300 million. Without pressing the point too far, at least we shall have to consider whether there is any way of financing education other than through the rates. Finally, we shall have to debate the question raised earlier about annuality. I shall not develop the point now. I simply say that it is nonsense, and I support hon. Members on both sides of the House who have spoken against it.
The debate in the country has been lowered in many ways by the party political posturing of Opposition Members. I refer to one example which will make my point. I have had a number of complaints from constituents in Norwich who have received their rates bills. This is one, which I did not see until a week or so ago. When I began to read it, I thought that I had been handed an election address. It is full of party political propaganda. If I had time to quote it, it would raise cheers from Opposition Members, which proves that it has no business in a rates document. It has happened in London and in Norwich, and we can do without it.
The Opposition must take the largest share of the responsibility for the present unsatisfactory state of affairs in local government. I support the Government for that reason.
8.55 pm
Mr. William O'Brien: When I watched and listened to the Secretary of State it was brought home to me what a vicious, back-stabbing attack the right hon.
394
Gentleman had made and no doubt will continue to make on local government. It is done in the name of constraining public expenditure. The Minister cut a pathetic figure at the Dispatch Box, and his presentation did not convince anyone that his argument was right, or that it was accepted, because local authority services will be cut even further as a result of these reports.
At the beginning of his speech the right hon. Gentleman referred to the publicity put out by local authorities exposing the work of central Government and their attacks on local government. The right hon. Gentleman went to great lengths to explain the amount of money being spent by local authorities on this exposure of the Government's policies. At the time I wanted to intervene, but the right hon. Gentleman would not allow me to. I think that he realised that, since I was a member of the National Union of Mineworkers, I was about to remind him of the amount of public money being spent by the National Coal Board on a campaign to try to expose the weaknesses in the NUM. The Government criticise what local government does to try to expose central Government's attitude to it, yet they remain very quiet about what the National Coal Board is doing during the miners' dispute. Having contacts with NUM members who are on strike, I can tell the House that that campaign is doing very little and that the money being spent on it would have been better directed to the provision of vital services in local government.
I am sorry that the hon. Member for Derbyshire, South (Mrs. Currie) is not in her place. She said that the Inland Revenue taxed everything that moved, but implied that rates were not a tax. That assertion shows how little knowledge the hon. Lady has of local government. She tries to convince people who serve in local government that rates are not a tax. If she really believes that, she is living in cloud-cuckoo-land. Rates are a tax, and a regressive one. It was clear that the hon. Lady realised that she had misled the House because, when I attempted to intervene to put her right, she refused to give way.
I represent a constituency in west Yorkshire, and I am involved with the Leeds city council and the Wakefield district council because both form part of my constituency. In the Carlton, Rothwell, Oulton and Woodlesford area a number of local authority services are required. The demand for them arises because of increasing unemployment. Young people are leaving school with no job opportunities and they demand a number of services. Old people also want further services provided. Because of the restrictions on local government expenditure those facilities are denied them. Roadworks are required, but the Government restrict the resources that can be put to providing them. The result is a serious lack of services in areas of great need. The same applies in the Wakefield area, where there are demands for further services. We want better services for the elderly and the chronically sick and disabled. The Government's policy, which was outlined from the Dispatch Box this afternoon, means that my constituents will be denied valuable services that are desperately needed.
When people realise the way in which the Government are attacking the very fabric of local government—which they have done since 1979—it will not be long before my hon. Friend the Member for Copeland (Dr. Cunningham) is sitting on the Government Benches presenting Budgets that will provide the growth and services demanded by local authorities.

395
My hon. Friend referred to the shiftiness of the Secretary of State and the number of changes that have been made to the rate support grant orders during the past two or three years. Between 1979 and December 1982, there were nine changes in the rate support grant orders. The Government decided to replace the old rate support grant order in May 1979; in December of that year they introduced the new block grant system; and in March 1980 they introduced transitional arrangements for over-spenders. Those changes show, beyond any shadow of doubt, that the Government have no concept of what local authority is about. They are like shifting sand in trying to resolve the problem of rate support grant. Penalties have been imposed on the local authority in Wakefield. In 1983–84, a 1p rate brought a 1 per cent. penalty—that has doubled for 1984–85. The penalties were introduced to try to suppress local authorities which wished to implement necessary services.
Charges have been increased in an attempt to maintain services, yet we have not heard anything about that from the Secretary of State. Those services should be provided free of charge for the unemployed, the chronically sick, the elderly and the disabled.
Such services are now at a premium and many local authorities — and Liverpool is typical — are facing immense problems. If the order of the day is that to secure more benefit from the Department of the Environment local authorities have to fight the Department, I think that more local authorities will join that campaign.
Conservative Members have compared local government expenditure with Government expenditure. I have the figures up to 1982–83, and they show that in 1974–75 the central Government percentage of gross domestic product was 33 per cent., while it was 30·2 per cent. for local authorities. In 1982–83, the figure for central Government had risen to 37·2 per cent. while that for local authorities had fallen to 25·6 per cent. There can be no doubt, therefore, that the Government have increased their expenditure while local authorities have reduced theirs. We must nail the lie here and now—it is not in local government but in central Government that expenditure has increased.
People are now becoming aware of that fact. Indeed, they have demonstrated their awareness in both the local election and the EEC election. There is no doubt that they will demonstrate it at the next general election.
Public expenditure figures have been presented by CIPFA in the form of a graph. These show that public expenditure in local government has decreased by 17·1 per cent., and in central Government has increased by 12·5 per cent.
We heard from Conservative Members that there has been a general outcry about the contributions that industry is making to rates expenditure. First, I will give the figures for rates payable in England. Up to March 1983–84, industry paid £1,258 million, commerce, £3,127 million, and other non-domestics £1,881 million, making a total of £6,266 million. However, we find that local authorities in England and Wales will spend on maintenance £880 million, on advanced further education £700 million, and on the police service £2,300 million. The people who say that industry is paying the lion's share should get their facts right.
I will give a further illustration that industrial costs are not presented in a true form by the Government. First, let us take 1975 as £100 million. For 1982, the industrial rates
396
were £248 million. If the rate support had been maintained, that would have been £213 million. The cost of material was £244 million and the cost of output £240 million. The index of average earnings was £250 million.
The real problem that arises on the rate support grant lies not with local authorities. The cry that is so often heard from industry that high rates create the problems in industry is a false one. The problem lies in the reduction of the rate support grant. I appeal to the Government to take these figures on board, because it is important that the House should have correct information when making its decisions.
9.7 pm
Mr. John Maples: I wish to spend the short time available to me examining the affairs of one council, which is my council. Lewisham borough council is a Labour-controlled high spender which has consistently been subject to penalty, and I suspect that it is likely to be rate-capped. It has just imposed on my constituents a 14·5 per cent. rate rise on top of 25 per cent. last year. When one disaggregates all the special funds and moving expenditure from one year to another, one sees that its spending has risen in cash terms from £78 million to £88 million from last year to this year, yet this is a council which says that it cannot find any savings. It says that it can do nothing without dramatically affecting the services which it gives to the people of the borough.
I wish to consider two areas where I think that it and other councils could find savings. The first is what would call frivolous political expenditure. From a council which cannot make any savings there was a campaign costing £100,000, of which £15,000 has been spent on making a video to persuade the people of the borough that, instead of having about half a dozen council offices, they need 35. This is at a time when we are so short of money that we cannot make any savings and have to impose a 15 per cent. rate rise.
The council has recently converted a children's climbing frame into a bulldozer, at a cost of £550 to the ratepayers, because it was thought that it looked like a war toy. I am glad that the hon. Member for Blackburn (Mr. Straw) is present, because the last time I mentioned the borough artist, and the sexism awareness training programme, he accused me of vulgar abuse of the council. The hon. Gentleman need not make excuses for the borough, because it is proud of both programmes.
In the local newspaper it has been announced that the borough artist will be continued for a further two years, to be funded partly by the council and partly by the Greater London art association, and another £130,000 will be devoted to tackling sexism. The hon. Gentleman need not make apologies for that, because the council is proud of it. This is frivolity on an irresponsible scale. It is deeply resented by ratepayers, who have just had a 15 per cent. rate rise on top of a rate rise of 25 per cent. last year.
Real savings in the management of my local authority's affairs would come simply from conducting those affairs in a better way, either by doing the same for less, which I should like to see, or by doing more for the same amount of money, which presumably Opposition Members would like to see. By considering a few areas of its operations, one can see that substantial savings could be made without in any way affecting services.
The housing department is one of the council's two big spending departments. We have 2,600 empty houses and

397
the cost in lost rent and rates is £3 million, yet we have a large council house waiting list. We have rent arrears of more than £5 million. They have increased by £1·7 million in the last 12 months. The council has decided, however, not to use any of the legal procedures open to it to recover those arrears.
Not surprisingly, the unit cost of managing and maintaining a council house has risen, from £582 two years ago to £766 this year, an increase of 32 per cent. If any Opposition Member or I were to ask any of the council tenants in my constituency if they felt that the service being delivered to them had been improved by 32 per cent. during that time they would laugh, because the exact opposite is the truth. In other words, the additional expenditure is not spent on delivering a better service, but is largely wasted.
I cannot believe, it being one of the council's biggest spending departments, that an efficiency saving of about 5 per cent. is not available in those operations. That would yield about £2 million, which could be used to reduce the rates, or, as Opposition Members might like, be spent on some other service. At least it would not be wasted on the overheads of running the housing department.
Another test is the number of people employed by the council, which has risen between 1982–83 and 1983–84 from 4,132 to 4,606, an increase of 11 per cent., at a time when the council has been supposed to be cutting its services "to the bone," to use its own words. The number of new officer posts since April last year has risen by 168. This is not a council which is trying to find the most efficient way of conducting its affairs. It is a council which is refusing to make management savings that are available to it.
There is a good example of that in the transfer of GLC housing to the London borough of Lewisham. When GLC officers came with their London weighting money, the Lewisham officers who were not paid the inner London weighting allowance — because they did not work in what was defined as inner London—demanded the same weighting. One would have expected the council to put up a fight over that, because it meant a difference of £2·5 million a year to the ratepayers, but it did not—because it is in the pockets of the unions in regard to its manpower policies — and it gave in, and that has cost the ratepayers £2·5 million a year. It is an absolute abdication of management responsibility to make such decisions.
The council is in the process of buying some sophisticated computer equipment to enable it, one would expect, to do things more efficiently. However, as part of its agreement with the unions, it has agreed
"that the Council will not reduce its overall work force as a result of the new technology."
That is staggering.
Mr. Wareing: Do elections take place in Lewisham?
Mr. Maples: The hon. Gentleman knows that the relationship between voters and ratepayers is not exactly perfect, but I do not want to be distracted in the few minutes that are available to me.
Rubbish collection is another good example to consider. The council's own report, produced by its officers, described it as "staggeringly inefficient" and said
398
that drivers who were paid for doing 44 hours' work were doing 25 and that gangs which were supposed to be averaging 20 loads a week were averaging 14.
All of that comes from rank bad management. There is no general management of the council's affairs. There is no budget responsibility, no accounting system and no reporting system by which those responsible for budgets must answer for the spending of their departments.
A borough council such as Lewisham is a large organisation. It spends £200 million a year and employs 8,000 people. It must be managed properly, as anyone who has been involved with the running of a large organisation will agree. If only that happened, there would be massive opportunities for savings and improvement.
At the beginning of this year, when it was going through its budget exercise, the Labour group on the council said that it could find only £0·5 million of savings which would not affect services. Out of a total budget of £200 million, that is laughable. The Conservative group worked out an alternative plan under which there would have been savings of just over £4 million, which would not have affected services. That would have gained £3 million of additional Government grant and there would have been a rate rise of 7p instead of 29p without in any way affecting services.
We all acknowledge that some balance must be struck between the services needed and what the ratepayers can pay. At the moment, the Government's overwhelming objective must be to foster our economic recovery. That involves the control of public expenditure. [Interruption.] The Opposition perhaps know less about economics than about rates, because a recovery is going on. I should like to know the definition of "recovery" if it is not growth of 3 per cent. per year and 5 per cent. inflation. I do not wish to be sidetracked down that line.
There must be some limit on council spending. Whatever one's views about services and rates, there is no excuse for the rank waste of money, through inefficiency, that we have seen. I am afraid that there is no sign that councils such as Lewisham will be more efficient unless their spending is in some way limited. When forced to do so, they will examine their choices and make the tough decisions which are necessary to control public expenditure. The ratepayers of Lewisham will measure the success or failure of the Government's policies by the size of their rates bills. We must act to stop those bills increasing.
9.16 pm
Mr. Jack Straw: This debate is unusual in that the Government Whips' position has been manned by a series of irregulars, because today is the day for the annual dinner of the Government Whips' service. The Whips are out having a celebration as the rest of the Government fall apart. What a great deal they have to celebrate.
The debate has been characterised by a serious split on the Conservative Benches. The Under-Secretary of State has adopted a new tack, and is seeking to attack us in the hope of covering up the disastrous system of local government financing.
Mr. Tony Banks: He wants the job.
Mr. Straw: My hon. Friend said that he wants the job. The Under-Secretary of State is seeking to attack us.

399
The Conservative Benches have been split between those Conservative Members, such as the hon. Member for Lewisham, West (Mr. Maples), who seek slavishly to support the Government and the majority who in today's debate, as ever, seek to criticise the Government, because they know the damage and insanity of the local government system. I do not resile from my allegation that the hon. Member for Lewisham, West has vulgarly abused the London borough of Lewisham. The hon. Gentleman was in error the last time he spoke, as was the hon. Member for Derby, South (Mrs. Beckett) who claimed that Lewisham ratepayers had had to pay £100,000 towards a pantomime. It turned out that the pantomime had made a profit.
I shall cite the figures for expenditure and rate increases for Lewisham that were provided by the Secretary of State. The figures tell their own story about the way in which the Government have operated against inner city authorities. They show that rates increased between 1983–84 and 1984–85 by 32 per cent. but expenditure increased by less than half that amount. Other published figures, of which the hon. Member for Lewisham, West is well aware, show that, since 1978–79, Lewisham's expenditure has increased alongside the average increases for all local authorities. Lewisham is not in any sense the overspender to which the hon. Gentleman referred.
The hon. Member for Uxbridge (Mr. Shersby) made a sensitive speech, expressing his full support for the criticisms which the Conservative leader of Hillingdon borough council made of the Government. The hon. Gentleman pointed out that, even to stand still next year to keep services going in the Conservative borough of Hillingdon, the ratepayers would face in increase in rates of 46 per cent.
That increase has also been faced by many Labour-controlled authorities. The Secretary of State characteristically shot into his foot during his opening remarks when he said that the borough of Blackburn had to increase its rates this year by 49 per cent. That is true, but the Labour-controlled borough of Blackburn has been in no different position than the Conservative-controlled borough of Hillingdon. Both have sought to meet the Government's targets, and the penalty that they have paid, because of the capricious nature of the rate suppor grant, has been to see their rates increased by 46 or 50 per cent.
The past four years have witnessed an unprecedented and unparalleled attack not just on the financing of local authorities but on the vital services they provide and the system of government upon which they are based. The attack has shaken the foundations of our democratic system and turned into reality the horrifying spectre raised by the Lord Chancellor of an elective dictatorship seeking to abuse the absolute power which its large majority in the House gives it, to weaken and then crush opposition wherever it appears, including the ranks of the Conservative party.
Mr. Boyes: I wish to remind my hon. Friend of the opinion poll published in The Observer on 29 April 1984 which emphasises what he was saying. The questions were asked—does the Prime Minister act too much like a dictator? The answer was that 62 per cent. of the British people thought so. Does she refuse to listen to advice? The answer from 63 per cent. of the people was that she did.
400
Is she too Right wing? Of those asked, 59 per cent. thought that she was. That emphasises and underlines what my hon. Friend is saying.
Mr. Straw: I am grateful to my hon. Friend for that intervention. The Conservative party, having believed, with some justification, that because of the Falklands factor the Prime Minister was an asset to them in the last election, is now discovering that she is a serious liability.
An attack against local government, spearheaded by the Secretary of State, is without justification. It has, moreover, been carried out so incompetently and with such disregard for the principles of justice and fair play that its results have been capricious and arbitrary.
The administrative monster that the Secretary of State has created is now so out of control that it will not just wreck Labour-controlled local authorities, as the Secretary of State intends, but the Conservative-controlled ones as well. The only comfort for the House and the country, so beyond control is this monster, is that ultimately, and sooner rather than later, it will devour its creator—the Secretary of State.
It is written that
"Whom the Gods wish to destroy they first make mad."
A better, more rational system of regulating local government would be more likely to have emerged from Bedlam than the one which has come from the fevered imagination of the Secretary of State.
At the heart of the Government's ostensible justification for the present draconian controls imposed upon local authorities lies their claim that for reasons of macroeconomic policy—a point referred to by the hon. Member for Lewisham, West—local authority current expenditure must be strictly controlled. That is the Government's first error and one which, I hope, is slowly dawning upon Conservative Members.
It is entirely consistent with the responsibilities of central Government that they should determine and close-end what they grant to local government. Those sums are paid out of central taxation granted by the House or from borrowing against the public sector borrowing requirement. What local authorities spend from their local taxation has no effect upon the borrowing requirement, as they are prohibited by law from borrowing to meet their current expenditure. The Treasury asserts that such local authority spending has an infinitesimal effect upon other financial measures, such as the money supply, which the Treasury holds so dear.
What wholly explodes the Government's case is that other western nations, including those whose economies have performed far more successfully than ours, and those following similar monetarist policies, do not, at central Government level, even account for the expenditure of their local authorities, let alone seek to control it. That is true of West Germany and the United States, and it is increasingly the trend in other OECD countries. The rejoinder that West Germany and the United States are constitutionally federations is irrelevant. In economic terms, those nations are as unified as Great Britain.
If there is no basis for the ostensible economic case that the Government advance, what is the real reason for the unrelenting and unremitting attack on Community freedoms and local services? The Government have no parallel, in their philosophy or style, in post-industrial British history. The decent, Conservative principles of freedom, democracy and choice have been jettisoned,

401
even the principle of rolling back the frontiers of the state. What is more illustrative of state power than the powers that the Secretary of State has taken unto himself? These are alien ideas that have been imported from pre-war Europe.
We no longer have a Prime Minister who is primus inter pares; instead, we have a pastiche of a president who treats democracy, in the Conservative party and the Cabinet room, with the contempt with which she has treated democracy in local communities. The Secretary of State knows that only too well.
The measures that we are debating tonight have nothing to do with economic policy, and everything to do with the Prime Minister's personal vendetta against those who dare to disagree with her. Alongside the trade union movement there has been no greater source of opposition to the Government than the towns, cities and rural areas that have been sensible enough to elect Labour authorities to protect the local services that they hold dear.
Democracy, by its nature, presupposes diversity, difference and choice. Because those local authorities have chosen to do things differently from the Prime Minister, she is seeking to oppose them and snuff them out. What makes the Government attack on local choice all the more horrific is that it has not worked, even on its own terms. Rates have increased overall, rather than gone down. The Government are responsible for that, as the Conservative controlled Association of County Councils has shown only too clearly.
The relationship between rate levels and expenditure has been destroyed by the Government. That is why Forest Heath's expenditure has increased by 47 per cent. but its rates have decreased by 14 per cent. That is why Slough's expenditure has decreased by 2·5 per cent., and its rates have increased by 95 per cent. The Government, in pursuit of a policy that is claimed to ensure a much closer correlation between rates and expenditure, have ensured the opposite. Expenditure can go up and rates go down if an area is Tory. Expenditure can go down and the rates shoot up in a Labour area. Low-spending Conservative authorities have been hit arbitrarily by policies that were designed principally, and inexcusably, to hit the higher-spending Labour authorities. The evidence for that is that the Secretary of State has not only savagely penalised Labour areas, but has taken £188 million from Conservative areas.
None of that appears to be necessary, even in the Government's own terms, because local authorities may not have been spending over target at all. When the Secretary of State replies to the debate, we need to hear a much more serious and studied response to the report in the Financial Times today by the Audit Commission.
Mr. Waldegrave: That is an early draft.
Mr. Straw: It is no good the Minister saying that it is an early draft. If the Audit Commission, which is the creature of the Secretary of State and was appointed by the Government, has done calculations, at whatever level, that suggest that local authorities have been spending on target and not spending over target by £500 million, as the Secretary of State suggests, he should be conducting his own examination with the Audit Commission to find out who is right. The right hon. Gentleman would save himself a great deal of trouble if he did so, and perhaps even his
402
reputation. It may turn out that all his fights with the Treasury, Conservative Back Benchers and Cabinet colleagues have been for nothing, because authorities have not been overspending.
Despite the insanity of the system, it charges on rather like the train yesterday, crashing at 100 miles an hour into a nuclear flask. The Secretary of State charges on like that, unaware that destruction is so near. [HON. MEMBERS: "But it stayed intact."] The train did not stay intact—it was destroyed. I was comparing the Secretary of State to the train. The Labour authorities are the flask and the Secretary of State is the train.
The local government finance system of which the three reports form a part, designed to reduce overspending in Labour authorities, has these mind-bending and wholly contradictory results. I ask Conservative Members to think carefully about them. First, the Treasury now has an inbuilt incentive to ensure that local authorities overspend. If they do so, the Treasury claws back money, which in turn reduces the PSBR. That figure, not total public sector spending, exercises the Chancellor and financial markets. This year, so-called overspending by local authorities has reduced the PSBR by over £500 million. If local authorities had been able to meet the Government's targets, the PSBR would be £500 million higher and the financial crisis that the Government face all the worse.
Secondly, Conservative local authorities have a vested interest in some Labour authorities' overspending because it has meant lower rates and more rate support grant in Conservative areas. That is excellently illustrated by what has happened to the Greater London council's repayment of £100 million in respect of 1982–83. The GLC was entitled, as it now turns out, to the £100 million that has been taken from every other area, including pre-eminently Conservative shires. That illustrates the way in which high spending in Labour authorities under this system keeps the rates down in Conservative areas.
I hope that Conservative Members will weigh this with great care. My third point is that, if rate capping works, it will force up the rates in the non-rate-capped Conservative areas. If it works, more rate support grant will go to the so-called high-spending Labour areas and less will go to the lower-spending Conservative areas. Mr. Noel Hepworth, the respected director of the Chartered Institute of Public Finance and Accountancy, said:
"The uncapped authorities will consequently have to levy a higher level of rates than would otherwise be the case."
Is that what the Government seek? Is that what they want?
The House is right to mock the Secretary of State, but it must also take most seriously the damage to our national fabric over which he has presided. By his policies, he has undermined faith in democracy as well as faith in and respect for the law. The House has repeatedly placed duties upon local authorities to provide vital services to a high standard. Because of the system of financial penalties, authorities are now being forced, in the eloquent words of my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), to
"Obey Whitehall, break the law".
That quotation was referred to by the Conservative leader of Hillingdon council, Mr. Norman Hawkins, in a letter that my hon. Friend the Member for Copeland (Dr. Cunningham) quoted. Councillor Hawkins's remarks have the full support of the hon. Member for Uxbridge (Mr. Shersby). He said:

403
"Alfred Morris, MP (`Obey Whitehall, break the law' …) draws attention to a problem facing many local authorities, not just the few much-quoted Labour-controlled councils faced with rate-capping."
We know that the Jenkin law is capricious, arbitrary and unjust. It changes the rules and moves the goalposts in the middle of the game. The Secretary of State must bear the responsibility for the consequences.
Many of the remarks of the Secretary of State and the Under-Secretary have shown that they believe that they have the wisdom and knowledge to replace the decisions of thousands of councillors up and down the land. The Under-Secretary asked, almost rhetorically, why some partnership areas had met targets while others had failed to do so. The reason is that targets take no account of local circumstances, nor can they ever do so. What the Prime Minister and the Secretary of State have, in their arrogance, failed to understand is that of which Sir Karl Popper warned in "The Poverty of Historicism". He said:
"It is easy to centralise power, but impossible to centralise the knowledge which is distributed over many individual minds, and whose centralisation would be necessary for the wise wielding of the centralised power. This fact has far-reaching consequences. Unable to ascertain what is in the minds of many individuals, he must try to simplify his problems by eliminating individual differences: he must try to control and stereotype interests and beliefs … the greater the gain in power, the greater will be the loss in knowledge".
Mr. Waldegrave: Does the hon. Gentleman agree with that?
Mr. Straw: The question is not whether we agree with it, but whether the Under-Secretary, with his background, agrees with it.
The Secretary of State has sought to replace the knowledge and wisdom of 24,000 councillors in 400 communities by the mind of one man—himself. He has gained in power, but he has lost in knowledge—to the point where he controls more and more but comprehends less and less. He is wrecking local government, and in the process wrecking himself. The reports before the House are an offence to reason, decency and democracy. We shall vote against them tonight.
9.36 pm
The Parliamentary Under-Secretary of State for the Environment (Mr. William Waldegrave): The hon. Member for Blackburn (Mr. Straw) should be more careful when he attacks historicism. A number of Back Bench Opposition Members believe in the principal modern historicist theory. A number of other historicists are engaged in trying to de-select him in his constituency.
My hon. Friend the Member for Lewisham, West (Mr. Maples) made an admirable speech about waste in the public sector. The hon. Member for Blackburn accused him of vulgar abuse. But the hon. Gentleman has accused the whole public service of being self-serving, complacent and lacking in efficiency. Is that not vulgar abuse? When the hon. Gentleman was indulging in personal abuse of my right hon. Friend, I thought that he was not up to his best standard. I was reminded of what one of his right hon. Friends once said to me about him. He said that, when the hon. Gentleman is in that mood, there is something about him that reminds one irredeemably of the student debating society.
There is something profoundly distasteful about the structure of much of the argument that we have heard from the Opposition today. It is not good enough for Opposition
404
Members to quote the words of admirable Conservative councillors such as my friend Councillor Parker Jervis, my hon. Friend the Member for Uxbridge (Mr. Shersby)) and the leader of Hillingdon council. Those councillors criticise the Government for not cutting enough out of high-spending Labour councils. The Buckinghamshire council thoroughly supports a programme of expenditure cuts. It believes that it has cut spending in its area and that it should not be asked to do more.
It would be much more honourable — as well as making for a more interesting debate—if Opposition Members would say that the Labour party believes in high spending and that that is why it does not like spending controls. They should not hide behind the skirts of Conservative councillors who thoroughly support overall Conservative policy and say that more should be cut from the Labour high spenders. That is a dishonest argument.
Mr. Straw: Why does not the Parliamentary Under-Secretary quote Mr. Roger Parker Jervis correctly? He was complaining about the cuts in his own budget. What about Essex county council, which said that it was going to overspend and to set a rate that allowed for Government penalty? Does the Parliamentary Under-Secretary approve of that, or does he think that Essex should be allowed to overspend but not other authorities?
Mr. Waldegrave: That does not answer my point at all. What is more, Councillor Parker Jervis has nothing to do with Essex county council, and the hon. Gentleman cannot pronounce his name. The Essex district and the county believe in expenditure control. Their argument is that they have made cuts and should get credit for doing so.
The most profoundly unsatisfactory argument from the Opposition side was their attempt to call in aid my hon. Friend the Member for Uxbridge and the leader of Hillingdon council. At the heart of that criticism is an attack on one thing which the Labour party supports in the rate support grant system—the principle of equalisation. That is what my hon. Friend the Member for Uxbridge and the leader of the Hillingdon council are unhappy about. If Labour is to abandon equalisation, it will launch itself into a revolution. It is a proposal that will not find much support on the Opposition Back Benches.
The hon. Member for Copeland (Dr. Cunningham) forgot, as well he might, that, unfortunately, the Labour party controls one or two shire counties. He made a great to-do about the overspending of shire counties, as if that must all be something to do with the Conservatives. In fact, of the £188 million holdback, £113 million derives from Labour-controlled shire counties. Only £30 million of the £140 million of overspend comes from Conservative-controlled shire counties.
The hon. Member for Copeland talked about the introduction of reports and further reports and the years that it takes to clear up the accounts. There is nothing new in that. The hon. Member for Blackburn will remember that that happened when he was at the Department of the Environment. There used to be increase orders under the previous system. The first one was introduced after 12 months and the second after 24 months. Before we become sentimental about the old system, with its black box and regression analysis, let us not forget how profoundly unsatisfactory it was seen to be by Members on both sides of the House, including the late and lamented Anthony Crosland.

405
The hon. Member for Liverpool, West Derby (Mr. Wareing) made one of his classic speeches but he did not take up examples of West End clubs where he imagines I live and compare them with places such as Sheffield, which manages its services much more efficiently than Liverpool manages its services.
Mr. Wareing rose——
Mr. Waldegrave: No, I shall not give way. The hon. Gentleman will have plenty of opportunity to conduct this debate in future.
Mr. Wareing rose——
Mr. Speaker: Order. I do not think that the Minister is giving way.
Mr. Wareing rose——
Mr. Waldegrave: No, I shall not give way. There will be plenty of opportunity——
Mr. Wareing rose——
Mr. Speaker: Order. The hon. Member for Liverpool, West Derby (Mr. Wareing) must not persist if the Minister is not giving way.
Mr. Wareing: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I think that the hon. Gentleman is about to ask me why the Minister is not giving way, and that is a question I cannot answer.
Mr. Waldegrave: Very well, I shall give way to the hon. Gentleman.
Mr. Wareing: I am pleased that the Minister has mentioned Sheffield, which for many decades has had a Labour-controlled council. Liverpool had to suffer for a decade from Liberal-Tory domination. Now that a Labour council has been elected we shall alter all that.
Mr. Waldegrave: The hon. Gentleman can still learn about how to run a more efficient waste disposal system and a street cleaning service from many of his hon. Friends.
My hon. Friend the Member for Norwich, North (Mr. Thompson) made an excellent and thoughtful speech. I agree that we were all rather disappointed when the hon. Member for Copeland came to the end of his speech and set out the broad strategic direction of his thinking. We were all at once in the most frightful gobbledgook and felt rather let down. My hon. Friend is right when he says that we must think further about all the underlying arguments.
My hon. Friend the Member for Norwich, North was right to remind us that, despite all the Government's efforts, the volume of local authority spending has increased since 1979. There has been a reduction in manpower levels as a result of our efforts, but only by about 3 per cent. My hon. Friend is right to remind us that much further work must be done in the long term. I know that that work will be done.
My hon. Friend also mentioned the disregard for civil defence and welcomed it. My hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) and the hon. Member for Peckham (Ms. Harman) spoke about disregards in certain areas of spending. Before signing supplementary reports, my right hon. Friend considers carefully all the representations that he receives from local
406
authorities about items of expenditure which, in their view, should be disregarded. He has not been persuaded at this stage that he should grant any completely new disregards.
A common link between the speech of the hon. Member for Peckham and that of my hon. Friend the Member for Nottingham, South, and with the speeches of other hon. Members, was care in the community. In response to a number of representations about the 1984–85 disregard for certain expenditure on projects that are being jointly financed with health authorities, my right hon. Friend proposes to make a change to the present definition. In future it will apply to increases in authorities' expenditure on individual jointly financed schemes rather than to aggregate increases as at present. This will make it easier for authorities to fulfil their obligations and to absorb schemes into their main programmes. Effect will be given to the change in the next 1984–85 supplementary report.
My right hon. Friend mentioned briefly the situation that has arisen over Liverpool's budget. I want to make it clear that the figure in the report is £261 million. In the way that he put it, it may have sounded as though my right hon. Friend referred to the £261 million, which was the original budget figure. The figure in the report is the original target figure, and we shall have to come back to that in due course.
Several of my hon. Friends, including my hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) and my hon. Friend the Member for Uxbridge who explained why he could not be here for the winding-up speeches, have put us on notice that they are looking for fairer treatment for the low spenders. That is a matter for the statement which my right hon. Friend will make next week. We know that we are under the obligation.
I am not sure that we can meet my hon. Friend the Member for Uxbridge in his suggestions about revolutions in relation to the central principle of equalisation. I am not so sure that we can meet those demands in a short time scale; nor am I convinced that we should do so.
I have to say to my right hon. and hon. Friends that, although we recognise the efforts made by many genuinely low-spending authorities, and will be taking steps in due course to ease some of the pressures on them, there are still many opportunities for the good performers among the low spenders to achieve the performance of the best.
I was born in the county of Somerset, which has £800,000 of penalty. I know that if that admirable county council could find ways of reducing its considerable budget expenditure by £1·5 million it could still avoid that penalty. If it did so, it would still be spending more per head on its transport systems than Gloucestershire and Wiltshire, the neighbouring counties. [Interruption.] Even now it could still — and may well — find ways of avoiding the penalties which are set out in the reports. That is just one example of the kind of sum that is involved in avoiding the penalties that have been imposed on some Conservative authorities.
I suspect that, when the final outturn figures are seen, we shall find that a good many of the authorities avoid holdback. I suspect that they will have found, during the course of the years, ways of cutting their budgeted expenditure. I believe that they will have found the relatively small savings that are required.
The shires, with one or two Labour exceptions—I am sorry to say that my own constituency shire county of Avon, which is Labour-controlled, is one of them—are

407
not the source of the real problem. The whole shire county overspend of £140 million is not that much more than the single overspend of ILEA, at £125 million. That puts the shire county overspend—even including those such as Avon—in perspective.
Among the shire counties and the shire districts there is what one might call a roll of honour. There are cases in which not only the county but the shire districts within the county have all avoided holdback penalties. For example, in Berkshire, Dorset, Gloucestershire and Oxfordshire, the county and every district has avoided holdback penalties. In East Sussex, Shropshire, Hampshire, North Yorkshire, Leicestershire, Suffolk and Norfolk, virtually all the districts and the counties have avoided penalty. At the other extreme, in South Yorkshire and in Tyne and Wear, the counties and every district are in penalty.
I find the situation most interesting in counties such as Avon, where my constituency is. Not one of the districts is in penalty, yet the county has completely squandered the benefit of sensible district council spending by landing the ratepayers in £25 million of penalty. That is because of the absurd way in which the county council has been run. The county cannot use the argument that it is in an area of unsupportable economic stress, or something of that sort, because the district councils in the same area have managed to provide their different services satisfactorily within the targets.
Take again the west midlands. My hon. Friend the Member for Derbyshire, South (Mrs. Currie) knows the west midlands and Birmingham well. Six of the seven districts are on target. They are not all Conservative; some are Labour. Birmingham, Coventry and Wolverhampton are all on target. Yet the absurd West Midlands metropolitan county has landed its ratepayers with penalties of £32 million. Three of the inner city partnership authorities—Birmingham, Manchester and Salford—and many programme authorities have hit the target. That has proved that overspending against target is not a problem of city government, despite the fact that that argument has been put again and again by Labour Members.
Targets can be met in every shape and type of council, regardless of political control, to the great benefit of the ratepayers. Many cities — Bristol, Oldham, Doncaster, Dudley, Leeds—are all on or just about on target, but the situation is completely different in some Labour urban councils. My hon. Friend the Member for Lewisham, West made an excellent speech which showed that that could have been repeated for a wide range of other Labour-controlled inner city constituencies.
Overspend is caused by an amazing mixture of the sort of incompetence which my hon. Friend detailed and the sort of political fantasy about the role of local government which we usually hear from the hon. Member for Newham, North-West (Mr. Banks). He came in, was not called and went away again. That is principally a phenomenon of those Labour-controlled councils where the local Labour parties have been dead on their feet for so many years that they have been taken over, quite easily, by a collection of cranks and extremists. Some of them even make their way into the House. The great thing is that they always make it easy to identify them by emitting amazing whoops, hoots, screams, and such noises, thereby proving the argument. An ostensive definition of them is available.
The irony is that right hon. and hon. Gentlemen on the Opposition Front Bench, who, without insulting them too
408
much, represent a certain tradition in the Labour party which, to put it at its mildest, is rather different from the tradition of Mr. Derek Hatton and Mr. Kenneth Livingstone, find themselves defending the very people who are driving them out of the Labour party, the whole of whose efforts are directed at securing that they do not remain in their seats, let alone on the Opposition Front Bench.
The irony is that the shells which the dead Labour party left in the cities — the admirable biography of Mr. Livingstone shows how half a dozen people took over the London Labour party within a few years, and the hen. Member for Newham, North-West was one of them — are the origin of the change in local government's style and objectives which we now face. That is rather little understood in some parts of the country which have not yet seen the phenomenon but which think that it is the old Labour boys who are still running the Labour city councils. They are not and those who are will not allow people such as the admirable hon. Members on the Opposition Front Bench to be their spokesman for very much longer.
My hon. Friend the Member for Lewisham, West described what happens when such people are put in charge. My hon. Friend the Member for Derbyshire, South, with her experience of local government, and my hon. Friend the Member for Nottingham, South, who also has great experience of local government, said that we must have the weapons with which to deal with these councils. If we do not, local government in the cities will become even more of a scandal than it is at present. It is a mixture of incompetence and political fantasy about the role of local government. It is those councils which have compelled the Government, with no joy whatever, to embark on rate capping. It is those councils which have compelled the Government to seek to maintain the whole structure of targets and penalties.
Next week my right hon. Friend the Secretary of State will come forward with proposals which will deal with the pledge that we gave to meet some of the objectives and aspirations of the low-spending councils. We shall be able to demonstrate how the weapons which we sought, and were forced to seek by the developments in city government, in the rate-capping Bill have given us a little room to help those at the lower spending end which have a justifiable right to say that they have done what the Government have asked, have looked at their programmes and have genuinely sought to make savings.
Again, that reminds one of the dishonesty—that is not too strong a word—of the arguments that Labour Members try to use when they deploy the case put by the low-spending Conservative councils. We even had a quotation from Winston Churchill, who would not have been quoted with approval by the hon. Member for West Derby when he was alive. In addition, there were quotations from Mr. Roger Parker Jervis and the leader of Hillingdon council. That was profoundly unsatisfactory and dishonest.
I urge the critics on the Government Benches who are fairly putting to us the case of the low-spending councils —to which we must listen—not to fall into the trap of believing that there is anything in common between their arguments and those of Labour Members who are arguing against any controls on expenditure. Labour Members are making a feeble and foolish attempt to build a tactical alliance.
Mr. Simon Hughes: Is it an example of paucity of argument that the Under-Secretary has finished his prepared speech and still has five minutes left of his allotted time?
Mr. Waldegrave: The hon. Member makes a fair point. I had a sheet of paper in front of me earlier. On one side I wrote the names of Labour Members who had spoken and on the other side I left spaces for their original and interesting points which I would answer. Not only had I heard all the speeches before—some were repeated almost verbatim — but the points made by Labour Members were even less compelling today than they had been before.
Unfortunately, I was out of the Chamber when the hon. Member for Southwark and Bermondsey (Mr. Hughes) spoke. No doubt his uncharacteristically short speech was a powerful and weighty contribution. If so, it was alone on the Opposition side. The paucity and thinness of the contributions of Labour members were not impressive.
Some of my hon. Friends rightly remind the Government that we have commitments towards low-spending councils. My right hon. Friend the Secretary of State will meet those commitments, but they must be seen against the background of the overwhelming importance of maintaining public expenditure controls. There is no easy or painless way of stopping the growth of spending in powerful organisations that are devoted to spending. Trade unions, lobbies and Labour Members can make all the easy speeches in favour of spending. There is no easy or painless way of holding back that spending, and no system of restraint on spending, promised by my right hon. Friend or anyone else, can remove all conflict in this area.
To those who seek consensus, I say by all means let us have consensus, but if one argument says, "Control expenditure" and the other argument says, "Increase expenditure", there can be no consensus between those points of view. There must be consensus about the way in which we go about things, but we cannot disguise the facts and seek easy popularity or plaudits from the Opposition by denying that control of expenditure is difficult and will always involve conflict.
Mr. Simon Hughes: On a point of order, Mr. Speaker. Is the Under-Secretary allowed to indulge in repetition, deviation, and hesitation without limit?
Mr. Speaker: I did not hear any repetition. I call the Minister to finish his speech. It is rather good.
Mr. Waldegrave: If there was not repetition from Opposition Members of the same old cry of more spending under every circumstance, I do not know what repetition is.
The reports are part of the necessary and difficult process of restricting and restraining the growth of the 25 per cent. of local spending that falls to local authorities. I have no hesitation in commending them to the House.
Question put:—
The House divided: Ayes 335, Noes 195.

Division No. 413]

[10 pm

AYES

Adley, Robert

Arnold, Tom

Aitken, Jonathan

Ashby, David

Alexander, Richard

Aspinwall, Jack

Alison, Rt Hon Michael

Atkins, Rt Hon Sir H.

Amery, Rt Hon Julian

Atkins, Robert (South Ribble)

Amess, David

Atkinson, David (B'm'th E)

Ancram, Michael

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

410

Baker, Nicholas (N Dorset)

Forth, Eric

Baldry, Anthony

Fowler, Rt Hon Norman

Banks, Robert (Harrogate)

Fox, Marcus

Batiste, Spencer

Franks, Cecil

Beaumont-Dark, Anthony

Fraser, Peter (Angus East)

Bendall, Vivian

Freeman, Roger

Benyon, William

Fry, Peter

Berry, Sir Anthony

Gale, Roger

Best, Keith

Galley, Roy

Biffen, Rt Hon John

Gardiner, George (Reigate)

Biggs-Davison, Sir John

Garel-Jones, Tristan

Blaker, Rt Hon Sir Peter

Gilmour, Rt Hon Sir Ian

Body, Richard

Glyn, Dr Alan

Bonsor, Sir Nicholas

Goodhart, Sir Philip

Bottomley, Peter

Goodlad, Alastair

Bottomley, Mrs Virginia

Gorst, John

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

Gow, Ian

Bowden, Gerald (Dulwich)

Gower, Sir Raymond

Boyson, Dr Rhodes

Gregory, Conal

Braine, Sir Bernard

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

Brandon-Bravo, Martin

Griffiths, Peter (Portsm'th N)

Bright, Graham

Grist, Ian

Brinton, Tim

Ground, Patrick

Brittan, Rt Hon Leon

Gummer, John Selwyn

Brown, M. (Brigg & Cl'thpes)

Hamilton, Hon A. (Epsom)

Browne, John

Hamilton, Neil (Tatton)

Bruinvels, Peter

Hanley, Jeremy

Buchanan-Smith, Rt Hon A.

Hannam, John

Buck, Sir Antony

Hargreaves, Kenneth

Budgen, Nick

Harris, David

Bulmer, Esmond

Harvey, Robert

Burt, Alistair

Haselhurst, Alan

Butcher, John

Havers, Rt Hon Sir Michael

Butterfill, John

Hawkins, C. (High Peak)

Carlisle, John (N Luton)

Hawkins, Sir Paul (SW N'folk)

Carlisle, Kenneth (Lincoln)

Hawksley, Warren

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

Hayes, J.

Carttiss, Michael

Hayhoe, Barney

Cash, William

Hayward, Robert

Chalker, Mrs Lynda

Heathcoat-Amory, David

Channon, Rt Hon Paul

Heddle, John

Chapman, Sydney

Hickmet, Richard

Chope, Christopher

Higgins, Rt Hon Terence L.

Churchill, W. S.

Hind, Kenneth

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

Hirst, Michael

Clark, Sir W. (Croydon S)

Hogg, Hon Douglas (Gr'th'm)

Clarke, Rt Hon K. (Rushcliffe)

Holland, Sir Philip (Gedling)

Clegg, Sir Walter

Holt, Richard

Cockeram, Eric

Hooson, Tom

Colvin, Michael

Howard, Michael

Conway, Derek

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

Coombs, Simon

Howarth, Gerald (Cannock)

Cope, John

Howell, Rt Hon D. (G'ldford)

Cormack, Patrick

Howell, Ralph (N Norfolk)

Corrie, John

Hubbard-Miles, Peter

Couchman, James

Hunt, David (Wirral)

Cranborne, Viscount

Hunt, John (Ravensboume)

Critchley, Julian

Hunter, Andrew

Currie, Mrs Edwina

Hurd, Rt Hon Douglas

Dorrell, Stephen

Irving, Charles

Douglas-Hamilton, Lord J.

Jackson, Robert

Dover, Den

Jenkin, Rt Hon Patrick

du Cann, Rt Hon Edward

Johnson Smith, Sir Geoffrey

Durant, Tony

Jones, Robert (W Herts)

Dykes, Hugh

Jopling, Rt Hon Michael

Edwards, Rt Hon N. (P'broke)

Kershaw, Sir Anthony

Eggar, Tim

King, Roger (B'ham N'field)

Emery, Sir Peter

Knight, Gregory (Derby N)

Evennett, David

Knight, Mrs Jill (Edgbaston)

Eyre, Sir Reginald

Knowles, Michael

Fairbairn, Nicholas

Knox, David

Fallon, Michael

Lamont, Norman

Farr, Sir John

Lang, Ian

Favell, Anthony

Latham, Michael

Fenner, Mrs Peggy

Lawler, Geoffrey

Finsberg, Sir Geoffrey

Lawrence, Ivan

Fletcher, Alexander

Lee, John (Pendle)

Fookes, Miss Janet

Leigh, Edward (Gainsbor'gh)

Forman, Nigel

Lennox-Boyd, Hon Mark

Forsyth, Michael (Stirling)

Lewis, Sir Kenneth (Stamf'd)

411

Lightbown, David

Rossi, Sir Hugh

Lilley, Peter

Rost, Peter

Lloyd, Ian (Havant)

Rowe, Andrew

Lloyd, Peter, (Fareham)

Rumbold, Mrs Angela

Lord, Michael

Ryder, Richard

Luce, Richard

Sackville, Hon Thomas

McCrindle, Robert

Sainsbury, Hon Timothy

McCurley, Mrs Anna

St. John-Stevas, Rt Hon N.

Macfarlane, Neil

Sayeed, Jonathan

MacGregor, John

Scott, Nicholas

MacKay, Andrew (Berkshire)

Shaw, Giles (Pudsey)

MacKay, John (Argyll & Bute)

Shaw, Sir Michael (Scarb')

Maclean, David John

Shelton, William (Streatham)

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

Shepherd, Colin (Hereford)

McQuarrie, Albert

Shepherd, Richard (Aldridge)

Madel, David

Shersby, Michael

Major, John

Silvester, Fred

Malins, Humfrey

Sims, Roger

Malone, Gerald

Skeet, T. H. H.

Maples, John

Smith, Sir Dudley (Warwick)

Marland, Paul

Smith, Tim (Beaconsfield)

Marlow, Antony

Soames, Hon Nicholas

Mates, Michael

Spencer, Derek

Maude, Hon Francis

Spicer, Jim (W Dorset)

Mawhinney, Dr Brian

Spicer, Michael (S Worcs)

Mayhew, Sir Patrick

Squire, Robin

Mellor, David

Stanbrook, Ivor

Merchant, Piers

Stanley, John

Meyer, Sir Anthony

Steen, Anthony

Miller, Hal (B'grove)

Stern, Michael

Mills, lain (Meriden)

Stevens, Lewis (Nuneaton)

Mills, Sir Peter (West Devon)

Stevens, Martin (Fulham)

Miscampbell, Norman

Stewart, Allan (Eastwood)

Mitchell, David (NW Hants)

Stokes, John

Moate, Roger

Stradling Thomas, J.

Monro, Sir Hector

Sumberg, David

Montgomery, Fergus

Tapsell, Peter

Moore, John

Taylor, John (Solihull)

Morris, M, (N'hampton, S)

Taylor, Teddy (S'end E)

Morrison, Hon C. (Devizes)

Tebbit, Rt Hon Norman

Morrison, Hon P. (Chester)

Thatcher, Rt Hon Mrs M.

Mudd, David

Thomas, Rt Hon Peter

Murphy, Christopher

Thompson, Patrick (N'ich N)

Neale, Gerrard

Thorne, Neil (Ilford S)

Needham, Richard

Thornton, Malcolm

Nelson, Anthony

Thurnham, Peter

Neubert, Michael

Townend, John (Bridlington)

Newton, Tony

Townsend, Cyril D. (B'heath)

Nicholls, Patrick

Tracey, Richard

Norris, Steven

Trippier, David

Onslow, Cranley

Trotter, Neville

Oppenheim, Philip

Twinn, Dr Ian

Oppenheim, Rt Hon Mrs S.

van Straubenzee, Sir W.

Ottaway, Richard

Vaughan, Sir Gerard

Page, Sir John (Harrow W)

Waddington, David

Page, Richard (Herts SW)

Wakeham, Rt Hon John

Parkinson, Rt Hon Cecil

Waldegrave, Hon William

Parris, Matthew

Walden, George

Patten, Christopher (Bath)

Walker, Rt Hon P. (W'cester)

Patten, John (Oxford)

Wall, Sir Patrick

Pattie, Geoffrey

Waller, Gary

Pawsey, James

Walters, Dennis

Peacock, Mrs Elizabeth

Ward, John

Percival, Rt Hon Sir Ian

Wardle, C. (Bexhill)

Pollock, Alexander

Warren, Kenneth

Porter, Barry

Watson, John

Powell, William (Corby)

Watts, John

Powley, John

Wells, Bowen (Hertford)

Prentice, Rt Hon Reg

Wells, Sir John (Maidstone)

Price, Sir David

Wheeler, John

Proctor, K. Harvey

Whitfield, John

Raffan, Keith

Whitney, Raymond

Rees, Rt Hon Peter (Dover)

Wiggin, Jerry

Renton, Tim

Winterton, Mrs Ann

Rhys Williams, Sir Brandon

Winterton, Nicholas

Ridley, Rt Hon Nicholas

Wolfson, Mark

Ridsdale, Sir Julian

Wood, Timothy

Roberts, Wyn (Conwy)

Woodcock, Michael

Robinson, Mark (N'port W)

Yeo, Tim

Roe, Mrs Marion

Young, Sir George (Acton)

412

Younger, Rt Hon George

Mr. Carol Mather and Mr. Robert Boscawen.

Tellers for the Ayes:

NOES

Abse, Leo

Foster, Derek

Adams, Allen (Paisley N)

Foulkes, George

Alton, David

Fraser, J. (Norwood)

Anderson, Donald

Freeson, Rt Hon Reginald

Archer, Rt Hon Peter

George, Bruce

Ashdown, Paddy

Gilbert, Rt Hon Dr John

Ashley, Rt Hon Jack

Godman, Dr Norman

Ashton, Joe

Golding, John

Atkinson, N. (Tottenham)

Gould, Bryan

Banks, Tony (Newham NW)

Gourlay, Harry

Barnett, Guy

Hardy, Peter

Barron, Kevin

Harman, Ms Harriet

Beckett, Mrs Margaret

Harrison, Rt Hon Walter

Beith, A. J.

Hart, Rt Hon Dame Judith

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

Healey, Rt Hon Denis

Bermingham, Gerald

Heffer, Eric S.

Bidwell, Sydney

Hogg, N. (C'nauld & Kilsyth)

Blair, Anthony

Holland, Stuart (Vauxhall)

Boothroyd, Miss Betty

Howell, Rt Hon D. (S'heath)

Boyes, Roland

Howells, Geraint

Bray, Dr Jeremy

Hoyle, Douglas

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

Hughes, Dr. Mark (Durham)

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

Hughes, Robert (Aberdeen N)

Brown, Ron (E'burgh, Leith)

Hughes, Roy (Newport East)

Bruce, Malcolm

Hughes, Sean (Knowsley S)

Buchan, Norman

Hughes, Simon (Southward)

Caborn, Richard

Janner, Hon Greville

Callaghan, Rt Hon J.

Jenkins, Rt Hon Roy (Hillh'd)

Callaghan, Jim (Heyw'd & M)

John, Brynmor

Campbell, Ian

Jones, Barry (Alyn & Deeside)

Campbell-Savours, Dale

Kaufman, Rt Hon Gerald

Carlile, Alexander (Montg'y)

Kennedy, Charles

Carter-Jones, Lewis

Kilroy-Silk, Robert

Cartwright, John

Kirkwood, Archy

Clark, Dr David (S Shields)

Lambie, David

Clarke, Thomas

Lamond, James

Clay, Robert

Leadbitter, Ted

Clwyd, Mrs Ann

Lewis, Ron (Carlisle)

Cocks, Rt Hon M. (Bristol S.)

Lewis, Terence (Worsley)

Cohen, Harry

Litherland, Robert

Coleman, Donald

Lloyd, Tony (Stretford)

Conlan, Bernard

Lofthouse, Geoffrey

Cook, Robin F. (Livingston)

Loyden, Edward

Corbett, Robin

McCartney, Hugh

Corbyn, Jeremy

McDonald, Dr Oonagh

Cowans, Harry

McKay, Allen (Penistone)

Cox, Thomas (Tooting)

McKelvey, William

Craigen, J. M.

Mackenzie, Rt Hon Gregor

Crowther, Stan

Maclennan, Robert

Cunliffe, Lawrence

McNamara, Kevin

Cunningham, Dr John

McTaggart, Robert

Davies, Rt Hon Denzil (L'lli)

McWilliam, John

Davies, Ronald (Caerphilly)

Madden, Max

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

Marek, Dr John

Deakins, Eric

Marshall, David (Shettleston)

Dewar, Donald

Maxton, John

Dixon, Donald

Maynard, Miss Joan

Dobson, Frank

Meacher, Michael

Dormand, Jack

Meadowcroft, Michael

Dubs, Alfred

Michie, William

Dunwoody, Hon Mrs G.

Mikardo, Ian

Eadie, Alex

Millan, Rt Hon Bruce

Eastham, Ken

Mitchell, Austin (G't Grimsby)

Edwards, Bob (W'h'mpt'n SE)

Morris, Rt Hon A. (W'shawe)

Ellis, Raymond

Morris, Rt Hon J. (Aberavon)

Evans, John (St. Helens N)

Nellist, David

Ewing, Harry

Oakes, Rt Hon Gordon

Fatchett, Derek

O'Brien, William

Faulds, Andrew

O'Neill, Martin

Field, Frank (Birkenhead)

Orme, Rt Hon Stanley

Fields, T. (L'pool Broad Gn)

Owen, Rt Hon Dr David

Fisher, Mark

Park, George

Flannery, Martin

Parry, Robert

Foot, Rt Hon Michael

Patchett, Terry

Forrester, John

Pavitt, Laurie

413

Penhaligon, David

Snape, Peter

Pike, Peter

Soley, Clive

Powell, Raymond (Ogmore)

Spearing, Nigel

Prescott, John

Strang, Gavin

Randall, Stuart

Straw, Jack

Redmond, M.

Thomas, Dafydd (Merioneth)

Rees, Rt Hon M. (Leeds S)

Thomas, Dr R. (Carmarthen)

Roberts, Allan (Bootle)

Thompson, J. (Wansbeck)

Roberts, Ernest (Hackney N)

Thorne, Stan (Preston)

Robertson, George

Tinn, James

Rooker, J. W.

Torney, Tom

Ross, Stephen (Isle of Wight)

Wainwright, R.

Rowlands, Ted

Wallace, James

Ryman, John

Warden, Gareth (Gower)

Sedgemore, Brian

Wareing, Robert

Sheerman, Barry

Weetch, Ken

Sheldon, Rt Hon R.

Welsh, Michael

Shore, Rt Hon Peter

White, James

Short, Ms Clare (Ladywood)

Wigley, Dafydd

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

Williams, Rt Hon A.

Silkin, Rt Hon J.

Winnick, David

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

Woodall, Alec

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

Wrigglesworth, Ian

414

Young, David (Bolton SE)

Mr. James Hamilton and Mr. Frank Haynes.

Tellers for the Noes:

Question accordingly agreed to.
Resolved,
That the Rate Support Grant Supplementary Report (England) 1984–85 (House of Commons Paper No. 536), a copy of which was laid before this House on 12th July, be approved.

Rate Support Grant (England)

  RATE SUPPORT GRANT (ENGLAND)
  Resolved,
  That the Rate Support Grant Supplementary Report (England) (No. 4) 1981–82 (House of Commons Paper No. 534), which was laid before this House on 12th July, be approved.
  Resolved,
  That the Rate Support Grant Supplementary Report (England) (No. 2) 1982–83 (House of Commons Paper No. 535), which was laid before this House on 12th July, be approved. — [Mr. Douglas Hogg.]

Rate Support Grant (Wales)
10.15 pm
The Secretary of State for Wales (Mr. Nicholas Edwards): I beg to move,
That the Welsh Rate Support Grant Supplementary (No. 2) Report 1982–83 (House of Commons Paper No. 519), which was laid before this House on 12th July, be approved.
Mr. Speaker: With this we can also consider Motion No. 5:
That the Welsh Rate Support Grant Supplementary Report 1984–85 (House of Commons Paper No. 520), which was laid before this House on 12th July, be approved.
Mr. Edwards: I discussed both motions with the Welsh consultative council on local government finance yesterday.
Before signing the supplementary reports, I considered carefully all the representations that I have received from local authorities about items of expenditure which, in their view, should be disregarded when calculating liability to hold back block grant. I was not persuaded that, at this stage, I should grant any new disregards beyond those already announced, which include, of course, the additional portion of a local authority's expenditure incurred in 1984–85 as a result of policing the miners' industrial dispute. Provision for this disregard will be made in the next supplementary report for 1984–85.
In response to a number of representations about the 1984–85 disregard for certain expenditure on projects being jointly financed with health authorities, I propose to make a change to the present definition. I shall do so in the next supplementary report for 1984–85 so that in future the disregard will apply to increases in an authority's expenditure on any such scheme rather than to aggregate increases on all its schemes as at present. This change will make it easier for authorities to fulfil their obligation to absorb such schemes into their main programme.
The second supplementary report for 1982–83 is very straightforward. In January last year the House approved a supplementary report and an amending report for that year, the effect of which was to withhold grant of £4·2 million from local authorities in Wales that had exceeded their expenditure targets. Grant withholding was based on authorities' revised budgets. We now have the outturn figures which show that actual expenditure was somewhat higher than the revised budgets. As a result, grant penalties are higher as well, and the net effect is to reduce by a further £800,000 the total block grant payable for 1982–83, that is to say, block grant withholding has increased in total from £4·2 million to £5 million. The cash limit of the relevant Vote has been reduced accordingly, as I announced to the House by written answer on 13 June.
Mr. Alex Carlile: Does the right hon. Gentleman agree that the effect of what he is saying is that there will be a cut in the capital moneys granted to Welsh authorities by central Government, and that the people of Wales can, therefore, be aware, without any complication of the language, that the provision is being cut?
Mr. Edwards: The hon. and learned Gentleman may not be familiar with these instruments and the way in which they work. We are talking about current, not capital, expenditure and about withholding on current expenditure. He has missed the point of what the motions are about.
416
The report demonstrates, as we saw last year for 1981–82, that when authorities which budgeted to spend above their expenditure targets subsequently reduce their spending the amount of grant withheld is reduced, or restored entirely in the case of those authorities which spend at target. Three counties and nine districts have reduced their expenditure sufficiently to meet their targets, and thus received over £1 million which had previously been withheld. Total holdback would have been reduced by a quarter had it not been for the fact that several authorities which had budgeted to exceed their target actually increased their excess still further.
There is an additional adjustment in the supplementary report which I should draw to the attention of the House. Interest rates for the year proved to be significantly lower than those assumed when the main report for the year was presented to the House. As a result, relevant expenditure, aggregate Exchequer grant and block grant are lower than originally estimated. The reduction of block grant for this reason is £5·8 million. This adjustment for variation in interest rates is part of the agreement which exists between the Government and the local authority associations.
Mr. Ron Davies: The Minister is giving details of the impact of interest rates on last year's settlement. Will he estimate the impact on local authorities of the rise of 2 per cent. in interest rates last week?
Mr. Edwards: I was about to say that, had interest rates gone up, block grant would have increased. It works both ways.
A copy of the report has been sent to each local authority in Wales. Adjustment of the block grant payable will be made after the report is approved by the House.
I come to the supplementary report for 1984–85. The principal purposes of this report are to effect grant withholding from those authorities whose planned budget expenditure exceeds their individual targets for the current year, and to protect the grant entitlements of the 31 authorities—which is about two thirds of all the Welsh local authorities—whose budgeted expenditure is at or below target level.
I had hoped, in this fourth year of a separate Welsh rate support grant, that it might not be necessary to apply grant withholding to any authority. Unfortunately, that is not the case. While I congratulate those 31 authorities—two counties and 29 districts—on meeting their targets. I say again to the remaining six counties and eight districts that excess spending will continue to mean grant penalties.
This is costly for authorities, costly for their ratepayers and damaging in the impact which consequential rate increases impose on industry and commerce in their areas. This year, the 14 authorities involved have in total exceeded aggregate targets by £19·7 million. That is about £20 a household in Wales and much more for each household in the local authority areas responsible. I have told the local authority associations in Wales that I cannot accept that level of overspending.
Sir Raymond Gower: As only a part of the financial year has elapsed, how is it possible to ascertain whether an authority is likely to exceed its target? Is it not a fact that some councils spend more heavily at the beginning of the year and others at the end of the year? I find it difficult to understand how these targets can be established.
Mr. Edwards: My hon. Friend must have misheard an observation I made about an earlier order. The local authorities are budgeted to achieve their targets. As I observed earlier, if the local authorities reduce their spending, they can remove themselves from penalty. They will receive additional grant in a supplementary order. That is the answer to my hon. Friend's question.
Mr. Dafydd Wigley: Will the right hon. Gentleman confirm that some county authorities, although their expenditure will be below the grant-related expenditure level which has been acknowledged by the Welsh Office as the level necessary to maintain services will be penalised, even though they are not spending to the level acknowledged by the Welsh Office and are above target?
Mr. Edwards: We have debated on many occasions the relationship between grant-related expenditure and targets. For many years, many local authorities had of their own volition—before we had targets and any of these systems — levels of spending below the GREs, which are a general assessment of need. It would be an absurd proposition to force local authorities up to spending levels because they start below GREs. Our objective is to relate expenditure not just to GREs but to the patterns of previous spending by local authorities which they judge to be right or had achieved because they were practical and possible. The targets are related to both GREs and to previous patterns of spending.
I emphasise again that the decision to go above targets is costly for the households in the areas concerned. I referred to an average effect of £20 per household throughout Wales. There are local authority areas where the cost per household is as high as £53. I note that the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) is about to rise. It is a fact that that is the effect of a decision taken by his local authority to go above its targets.
Mr. Ted Rowlands: I am trying to follow the right hon. Gentleman's gobbledegook. Table 5.4 on page 32 of the report shows that Dwyfor has overspent by £20,959. In terms of the time of under-secretaries, assistant secretaries, principals and executive and clerical officers, how much did it cost to find out whether Dwyfor or any other authority had overspent? Will the right hon. Gentleman insert another column showing the cost of the whole nonsense operation?
Mr. Edwards: Local authorities provide returns of their expenditure to the Welsh office. Dwyfor is an excellent example of a local authority which, by simply reducing its expenditure by about £21,000, avoided all penalties. A number of local authorities took that action and therefore were not penalised. I am grateful to the hon. Gentleman for enabling me to identify one of the many authorities that took a more sensible course than his authority. As a result, the householders in that area have not been landed with the additional burdens with which householders in his constituency have been landed by the decision of their local authority.
The very fact that 31 local authorities have budgeted in the current year so as not to exceed their targets shows that what I asked of them was by no means unreasonable or impossible. By keeping within their targets they avoid grant penalty. Those authorities avoid also the associated close ending adjustment which ensures—[Interruption.]
418
I know that the hon. Member for Alyn and Deeside (Mr. Jones) not surprisingly finds it difficult to understand this matter, although we debated it frequently. The local authorities regard these matters as important and have, of course, taken the trouble to ensure that they understand them. I am sure that the hon. Gentleman has not done so. The case for close ending adjustment ensures that the grant paid out equals the amount of grant available.
Mr. Ray Powell: Will the Secretary of State give way?
Mr. Edwards: No, I shall not give way to the hon. Gentleman.
Legislation enables me initially only to reduce the block grant of all authorities by a common percentage across the board if grant claims exceed the amount available. That was the case this year, and all authorities initially had their grant claims abated on that account by about 1 per cent.
It is more appropriate to the circumstances in Wales, where most authorities are meeting their targets, that they should have the close ending reduction restored to them. The report effects that restitution. I know that the authorities concerned will especially welcome this step, which will improve their cash flow.
The report shows that an important aspect of achieving targets from the local authority viewpoint is that authorities budgeting to spend at or below target will know their targets within narrow limits and will thus be able to plan their activities with a fair degree of certainty. That goes for two thirds of local authorities.
I turn now to the question of grant withholding, which is entirely a consequence of the individual decisions of the remaining authorities. For an authority whose planned expenditure exceeds its target, the grant to be withheld will be directly related, as in previous years, to the extent of the excess. It will in no way be affected by the expenditure decisions of other authorities.
Councils were notified of their provisional targets last summer, and of the final targets last December. They knew the amount of grant that would be withheld for particular levels of spending above those targets. Any authority that decided to budget for more than its target did so consciously, in the full knowledge of the grant consequences and—this is important—the consequences for its ratepayers.
The Government are responsible for overall economic management. Local government expenditure forms a large proportion of total Government expenditure. We are determined that it should be curtailed to relieve inflationary pressures and the tax burden on productive industry. It is no good for the hon. Member for Alyn and Deeside saying from the Opposition Front Bench that that is untrue or unreasonable, because he used almost identical words when speaking from this Bench when he was in Government and represented the Welsh Office.
I told the House and the local authorities exactly what we meant to do. It is against that background that we have to consider the consequences of the report.
Welsh local authorities are budgeting to spend £19·7 million — 1·5 per cent. — more than the total of expenditure targets that we set of £1,280 million. As I have told the House, most authorities, including many with problems at least comparable with those of the overspending authorities, complied with their target, but, taking into account expenditure disregards, six counties and eight districts failed to do so.

419
Therefore, it is the Government's intention to withhold a total of £13 million. I want to make it absolutely clear that it is still open for any of those authorities to avoid grant withholding and close ending by adjusting their spending between now and the end of the financial year so as to come within their targets.
Authorities that decided to overspend had to go to their ratepayers, draw from balances previously provided by ratepayers, or use some combination of those two mechanisms to cover not only the excess of expenditure incurred, but the amount of grant that will now be withheld. The position varies from authority to authority, but in aggregate terms it means that overspending authorities have had to find from the rates or from balances or a combination of rates and balances not just the £19·7 million overspend but the £13 million grant withholding. The £32·7 million involved is equivalent to about an 11·5p rate or about 6·3 per cent. of the average general rate poundage levied this year. In short, after making an allowance for the use of balances, rates in those local authority areas where targets have been exceeded could have been lower than they are. Indeed, the high rate increases in those authorities that have not met their targets have been a major factor contributing to this year's 8 per cent. average increase in rates.
As I have made clear, local authorities have not been required to act suddenly or unexpectedly. Most of them made provision and adjusted their balances accordingly in the expectation of grant withholding. If I failed to act in the face of their response to our declared policy, not only would taxpayers and ratepayers suffer, but local authorities would in future make their plans in the expectation that the Government would not carry out their intentions.
In addition to our responsibility to contain overall spending within a level that the country can afford, I consider that the Government and the House have an obligation to protect industry, commerce and ratepayers. High spending demands high rates; high rates mean high costs; and high costs mean lost markets and lost job opportunities. We are not prepared to allow that to happen.
I believe that the lower rate increases that we have seen in recent years have taken place only as a response by local authorities to this Government's policies. I am determined to see that the improvement continues in the period ahead. The two reports before the House today reaffirm the Government's determination to act in a firm but fair way to secure that improvement.
10.36 pm
Mr. Barry Jones: We have heard an example of Ministerial sadism — the Secretary of State seemed to enjoy the punishment that he was handing out. The statement that he was not here to make this afternoon has not made it easier for our local authorities in Wales to cope with the difficulties that he is making for them through the impact of the reports.
I should like to draw to the right hon. Gentleman's attention today's edition of the Financial Times, where we learnt that the independent Audit Commission has concluded its first major investigation into local government finance. It stated that the complexities and uncertainties associated with block grant distribution could have cost the ratepayer
"up to £1·5 billion in the last three years."
420
The report could prove highly embarrassing for the Government, who have made control of local authority spending a central plank in their efforts to keep overall public sector spending under control. It also suggests that the Government may have got it wrong in considering that there had been excessive spending by local authorities, and concludes that real overall local government spending last year
"may have been about in line with the overall target."
I should like to draw to the attention of the House information supplied to me by the right hon. Gentleman about the comparison between current expenditure in 1979–80 and 1983–84. On that basis, district authorities' expenditure was about 2 per cent. lower than current expenditure in real terms in 1979–80. Even the counties of Wales were only 2 per cent. higher than in 1979–80. That is one way of putting into context the message that the right hon. Gentleman has just spelt out.
I think that a computer in the Welsh Office is running Wales's local government; the robotic approach of the right hon. Gentleman does not illuminate with any warmth or sympathy the realities behind the technicalities of the documents. My consideration of the reports is influenced by my meetings with, first, the Wales Association of District Councils at Llandrindod Wells earlier this month. Housing was its chief preoccupation. It told me that it desperately seeks to build more houses. I think of my meetings earlier this year with the leaders of the Welsh county councils. For example, I have in mind Messrs. Squire, Allison, Turnbull and Davies. They expressed their deep concern at the Rates Act and the erosion of the historic freedoms of local government in the Principality.
I think, too, of my meeting with the heads of the valleys local authorities in Merthyr yesterday. They left me in no doubt that they are desperately anxious to improve the environment of their unemployed citizens. They were critical and scornful of the fact that central Government were failing to make sufficient local government moneys available to them.
Mr. Peter Hubbard-Miles: Will the hon. Gentleman give way?
Mr. Jones: No. The Secretary of State did not have the courtesy to give way, and, furthermore, right hon. and hon. Members on this side of the House will wish to take part in the debate.
My recent meeting with Blaenau Gwent council led me to believe that that council was sincerely seeking to attract new industries to its area—for example, to the Rassau estate. When I toured the Blaenau Gwent area, I saw positive examples of superb reclamation, exciting housing renovation——
Mr. Hubbard-Miles: Will the hon. Gentleman give way?
Mr. Jones: —road-building to a high standard, and civic initiatives in developing industrial estates in the area. However, I also saw immense problems still to be tackled. All the local authorities have expressed to me their dismay at the right hon. Gentleman's approach to local government finance and the prospect of the Rates Act coming into operation.
Mr. Hubbard-Miles: Will the hon. Gentleman give way?
Mr. Jones: The homeless, the elderly and school-children—
Hon. Members: Give way.
Mr. Jones: I was about to say that the West Glamorgan county authority finds itself in desperate straits. Its predicament stems from the effect of the Government's financial policies on education. School transport has been heavily hit. Free transport to school for pupils who live beyond the statutory mileage limit has been withdrawn. This measure has produced the largest single saving—it may have accounted for £1 million—but it has caused hardship for parents, particularly in areas of high unemployment.
My right hon. and learned Friend the Member for Aberavon (Mr. Moms), my right hon. Friend the Member for Swansea, West (Mr. Williams), my hon. Friend the Member for Neath (Mr. Coleman) and my hon. Friend the Member for Gower (Mr. Wardell) have campaigned hard for those who they know have been penalised by the policies of the right hon. Gentleman. I support their campaign.
In the county of Dyfed, the number of teaching staff in the primary schools has been reduced by 29, and in the secondary schools, by 28. In the further education sector, the number of lecturing staff has been reduced by 38. In non-vocational further education, community provision has been reduced by some £87,000.
The schools meals service has also been affected. Charges have been increased by 5p over the past two years——
Mr. Hubbard-Miles: Will the hon. Gentleman give way on this point?
Hon. Members: Give way.
Mr. Jones: An increase in the free meals entitlement has resulted from unemployment and low earnings have resulted in an increase in the free school meals entitlement, but there has been a decrease in that surprising sector.
In Dyfed there is a historic commitment to literature and cultural affairs, but cultural services have been cut. Some small branch libraries have been closed and at others, opening hours have been reduced.
I have deduced from the reports that I have seen from local authorities that they are facing a financial as well as a constitutional crisis. My own county of Clwyd tells me that its unemployment is the worst in Wales, with a current rate of over 17 per cent. The population of Clwyd has grown by 9 per cent. since the 1971 census compared with only 2 per cent. throughout Wales and 5 per cent. in England and Wales. The local authority has emphasised that in 1984–85, under the regime of the Secretary of State, the expenditure target is £370 per head of population compared with the Welsh average of £379. It is not unnatural that Clwyd's county treasurer believes that Clwyd is an underspender and an under-receiver of grant and does not have an adequate target in the light of its economic plight.
Mr. Keith Best (Ynys Môn): Will the hon. Gentleman give way?
Mr. Jones: No, I wish to press on. I shall not give way, not even to the hon. Gentleman, whose county of Ynys Môn suffered a penalty well in excess of £100,000.
I shall put into context the shoddy exercise involving holdback targets.
Mr. Best: Is the hon. Gentleman afraid of me?
Mr. Jones: Not at all.
422
The exercise is designed to shackle Welsh local authorities to the Welsh Office. It is autocratic as a Department, in that it operates the penalties and targets. I draw attention to little Dwyfor, which has had a holdback of £20,000 and to Cynon Valley, which is to suffer a holdback of £38,000 although its long-term unemployment is over 40 per cent. of total unemployment in the area. What is the financial crime of lovely Merioneth? It is to be punished by the implementation of a £60,000 holdback. In Merioneth, there is isolated Blaenau Festiniog, which has been devastated by quarry closures and has 29 per cent. long-term unemployment. However, it must face the vindictive and petty spite of the Welsh Office.
These are stupid penalties——
Mr. Nicholas Edwards rose
Mr. Jones: No, I shall not give way.
Mr. Edwards rose——
Mr. Jones: I have no intention of giving way to the right hon. Gentleman. He did not have the courtesy to be in the Chamber this afternoon.
Mr. Edwards rose——
Mr. Deputy Speaker (Mr. Harold Walker): Order. The hon. Member for Alyn and Deeside (Mr. Jones) has made it clear that he is not giving way, so the Secretary of State should not persist.
Mr. Jones: The right hon. Gentleman is so beside himself that he is ripping up his papers in his anger.
The Government are introducing stupid penalties. I am caused to ask how many officials work in the section of the Welsh Office which is supposed to police the errant authorities. What are the salaries of the right hon. Gentleman's civil servants? What are their departmental telephone bills and how much did the printing of the reports cost? How much computer time has the right hon. Gentleman's Department used in this petty war on local authorities, which do not deserve to receive such attacks?
I remind the Secretary of State that the Welsh district councils reduced their expenditure in real terms by 6 per cent. between 1979 and 1984.
Mr. Best rose——
Mr. Jones: Their performance has been comparatively responsible over the past three years and they have been penalised unfairly.
I shall address my remarks to the detail of the Secretary of State's speech. The second supplementary report for 1982–83 continues the trend of taking grants away from local authorities in general, especially those in Wales. I have to emphasise to him that the single most significant fact is that block grant for 1982–83 will now be £16·4 million, or 2 per cent. less than announced in the main report in December 1981. As that relates to a year for which the accounts were closed almost a year ago, the implications for some local authorities in Wales could be very serious. I hope that in the reply to the debate the Minister will be able to say whether one Welsh county may be more than £1 million adrift in that respect.
The 1984–85 first supplementary report, in which the Secretary of State implements his grant holdback, may mean that £13 million of grant will be returned to the Treasury in respect of an estimated excess over Government spending targets of only £19 million.

423
I emphasise here that the grant percentage continues along its downward path, and it is at this point that I remind the right hon. Gentleman what the Welsh counties themselves are saying. They tell me that, throughout Wales, there is all-party criticism of the Government's recent Rates Act. There is criticism of the selective and general rate limitation schemes. They say that they will prove impracticable, that they are misconceived in principle, and that they will result in a growth in central bureaucracy and an increasing threat to local government freedom.
The Government should recognise the importance of proper local choice and restore to local government its ability to make proper decisions as county and district councils. That, fundamentally, is what the right hon. Gentleman should do.
Mr. Hubbard-Miles: Will the hon. Gentleman give way on that point?
Mr. Jones: The perceptive Western Mail public affairs correspondent has said that the Government will be forced to move from a hard list of about 12 authorities to a soft list of many more councils, which is likely to include some in Wales. He even goes on to speculate that Wales's council leaders are concerned that the right hon. Gentleman will move the goalposts if the first round of rate capping on the highest spending English authorities does not bring down local government spending. Many in Wales believe that it will not. We shall watch with care, as the months go by, to see whether the right hon. Gentleman moves the goalposts.
In 1984–85 the financial facts regarding local government in Wales are that the Government reduced the percentage level of grant from 70·4 to 69·2; that the Government have shifted grant away from rate support and towards specific and supplementary grants; that they have reduced our target in real terms, increased the penalties for exceeding target, and not fully inflation-proofed pay and prices in calculating grant.
What the right hon. Gentleman omitted to say tonight was that in 1981–82 the overall rate of Exchequer grant stood at 73·4 per cent., and that it is now only 69·2 per cent. That is the record of the right hon. Gentleman, and it is a poor one. I urge him to change his policies, because local government is under threat in Wales. The advent of mass unemployment, and the cuts in public expenditure, place councillors and their officers under the severest of pressure.
Mr. Hubbard-Miles: Will the hon. Gentleman give way on that point?
Mr. Jones: The right hon. Gentleman knows that tens of thousands of Welsh people live on the borderline of poverty, frequently without work or hope or even a pleasant environment. The local government services are desperately needed to help our vulnerable fellow Welsh citizens. The reports confirm a lessening of prized Welsh local government services, and I ask my hon. Friends to vote against them tonight.
10.55 pm
Mr. Keith Best (Ynys Môn): The hon. Member for Alyn and Deeside (Mr. Jones), whom I like very much, gave us a superb view of his backside in all its glory as he ran for cover. Unfortunatel—I say this in respect—he has been guilty of gross discourtesy in the House in not
424
giving way to my hon. Friend the Member for Bridgend (Mr. Hubbard-Miles) or myself when we sought to intervene. He either does not believe in parliamentary debate, in which case he believes that his views are not subject to challenge, or he does not understand his brief, which must have been written for him, and was therefore afraid to give way in case he was challenged and did not have the answer. I am in a charitable mood tonight, so I can only assume that he does not really understand his brief.
Mr. Ron Davies: Does the hon. Gentleman agree that my hon. Friend the Member for Alyn and Deeside (Mr. Jones) followed the example of the Secretary of State for Wales, who refused to give way to my hon. Friend the Member for Ogmore (Mr. Powell)?
Mr. Best: The hon. Gentleman is mistaken, because my right hon. Friend gave way to those who were capable of making a valuable contribution to the debate. He was singularly discriminatory in not giving way to those who were incapable of making a valuable contribution to this or any other debate.
I do not wish to be unpleasant to the hon. Member for Alyn and Deeside. As I say, I am in a charitable mood, so I shall assume that he does not understand his brief and that is why he did not give way.
At one moment I was encouraged because I thought that we would be treated to that rare delicacy in the House of an insight into Labour party policy—what it might do instead of what my right hon. Friend is doing. I became excited, but the hon. Gentleman, tantalising and tempting as he always is, excited me beyond the realms of his own ambition and could not deliver the goods and tell the House what he would do. He made no reference whatever to the view, if any, of the Opposition on this subject. He was able to quote, in extenso, from newspaper cuttings, but not a word, not a shred, of Labour party policy did we hear. One can only assume that that is because there is none.
The hon. Gentleman spent much of his time recounting a tale of woe and tragedy of local authorities which wanted to spend more on, I accept, worthwhile projects. I have considerable sympathy with what he said. We are all in the House, fortunately, subject to representations by our respective local authorities and they are all capable of bringing to our notice matters on which there is a crying need for further expenditure, particularly in the social welfare area, and, as the hon. Gentleman mentioned, in trying to stimulate further prospects for employment. Of course, we would all like to see more money spent on those particular aspects, but the hon. Gentleman cannot translate himself from the Back Benches to the Front Bench, in that he cannot take a responsible view which necessarily has to be representative of Wales and the financial situation in the country as a whole instead of limiting himself to his own parochial interests.
All hon. Members are charged in the House to represent not only the area which we have the privilege to serve, but to speak on behalf of Wales and the United Kingdom. It is in that context that we should see the reports that are before the House tonight and I speak as a Member who represents one of those local authorities which will suffer holdback.
Mr. Alex Carlile: The hon. Member referred to the need to look at local government policies in the context of

425
the financial situation of the country as a whole. Is he proud of that financial situation? Is he proud of the fact that Welsh householders who have bought council houses will have to pay 12·875 per cent. interest on their mortgages as a result of his Government's policies?
Mr. Best: The hon. and learned Member has hitherto commanded my respect. He must be careful if he is not to endanger that opinion. If he believes that the mortgage interest rate is determined entirely by Government policy, he is mistaken. On sober reflection, he will understand that world events, particularly American interest rates and the American budget deficit, command a need for British interest rates to follow others, to an extent, if we are not to suffer a run on sterling.
The hon. and learned Member may claim that that is not the story that has come from the Government, but that only enhances my view that the Conservative party believes in individual contributions, rather than sticking to a rigid line. The hon. and learned Member asked whether I was proud of the Government's achievements. I am, because the Government have put the country in a financial position that is better than it was under the Labour Government and is certainly better than it would be if we ever had the misfortune of suffering an alliance Government.
No one is happy to see local authorities being penalised in relation to expenditure in excess of target, rather than in relation to grant-related expenditure. However, I shall not rehearse that argument, because, as my right hon. Friend the Secretary of State said in answer to an intervention from the hon. Member for Caernarfon (Mr. Wigley), the subject has already been well articulated in the House.
However, I wish to ask my right hon. Friend whether we should not look carefully at the rigid distinction between capital and current expenditure. My hon. Friend the Under-Secretary said in his statement to the House earlier that district authorities are being asked to restrict their spending in the current year to their capital allocations plus a prescribed proportion—25 per cent. —of receipts accruing in the year or to the amount committed at midnight tonight.
My right hon. Friend knows that capital receipts have accrued over a number of years and have not been used. In many cases, 25 per cent. of this year's capital receipts will be negligible. For example, Ynys Môn borough council expects to receive only £300,000 of capital receipts this year—25 per cent. of that is only £75,000. However, total accrued receipts amount to about £2·5 million — 25 per cent. of that is £600,000. Local authorities are not entitled to spend that amount under the present regime on capital expenditure.
I am sorry if I am being parochial. I do not wish to follow the example of the hon. Member for Alyn and Deeside, though, as a Back-Bench Member, I am more entitled than the hon. Gentleman to be parochial. Ynys Môn borough council is to spend £1 million on improvements to council properties, £1 million on new building and £1·5 million on improvement grants, but those grants are committed as a result of the flood of applications already received. Effectively, there is small joy there.
426
I do not wish to dwell on the capital side, because the debate relates to current expenditure, but, while local authorities will welcome the fact that there is no question of a moratorium —I congratulate my hon. Friend the Under-Secretary on that decision— I hope that further consideration will be given to whether there can be a translation between capital and current expenditure.
I do not wish to detain the House. The hon. Member for Alyn and Deeside did detain us at length and we learnt nothing from him. I hope that the contrary will be true of my brief contribution.
11.5 pm
Mr. Donald Coleman: The hon. Member for Ynys Môn (Mr. Best) said that he hoped we would learn something from his contribution. That remains to be seen. We certainly will not learn anything from the report. I am not surprised that local authorities overspend. The formula on page 26 of the report reads:
"for R less than or equal to 1
GRP=PGRE + [PGRE x 1.53 x (1.10 x R -1)];
for R greater than 1
GRP= PGRE + [PGRE x 1.53 x (1.10 x Rto the power 1.45 -1)]".
What rubbish is this? It is no wonder that my colleagues complain about gobbledegook. What nonsense it is. It is no wonder that local authorities are in difficulties when they have to deal with such tripe.
I intend to be brief, but the Secretary of State must not misunderstand. A great deal can be said about the way in which he has abused and is abusing local government in Wales. We witnessed a glaring example this afternoon when he absented himself from making a statement to the House on the capital expenditure of district councils. He answered questions on that matter on Monday. We understand that he was today involved in duties at royal command, but he should have left today's statement until tomorrow, when he could have made it himself, instead of putting his hon. Friend in the firing line.
Whenever the right hon. Gentleman does something in respect of local government in Wales, the people of Wales can expect the worst. The rate Support grant settlement is no different from the right hon. Gentleman's last effort, which has meant that the people of west Glamorgan have had to bear cuts in education expenditure. Parents have to pay to transport their young children to school. Some children have to walk along dangerous roads to school. That is the fault of the Secretary of State, not of west Glamorgan councillors. The right hon. Gentleman is guilty and he should take the blame.
Today's announcement about local government capital expenditure will have the same effect. That should be made clear to everyone. Councils are unable to meet housing needs and are unable to improve properties. That is not their fault, but the fault of the Secretary of State. We condemn him for his failings and for bringing such rubbish before the House.
11.9 pm
Mr. Peter Hubbard-Miles: I shall be brief, but I cannot fail to comment on the remarks of the hon. Member for Alyn and Deeside (Mr. Jones), who recited his speech with little confidence and no conviction. It was clear that he came to the Dispatch Box knowing little of what happens in local government in Wales.
The hon. Gentleman spoke of his conversations with members of local authorities and their fear that they would

427
not be able to provide for the housing needs of the people of south Wales. Earlier today I referred to the capital expenditure of one of the largest housing authorities in Wales: last year £12 million, this year £17 million. That is an increase of 40 per cent., or £5 million, but not one penny of that increase was to be spent on housing. It is the Ogwr borough authority.
In addition to its capital allocations and the expenditure of capital receipts, the authority has gone to merchant bankers to arrange an additional £6 million of expenditure. Was it to meet the housing needs of the people of south Wales? No, it was to build council offices at a cost of £4·5 million and a £5 million leisure services programme including three swimming pools and a leisure centre. That is how Labour authorities in south Wales are concerned about the housing needs of the people.
We hear a great deal about the dreadful state of affairs whereby schoolchildren are going without school meals. I wonder whether the hon. Member for Alyn and Deeside is aware that Mid Glamorgan county council has just admitted that providing school meals for the children of miners is costing £266,000 but that the dinner ladies who are preparing those meals have complained that little more than 10 per cent. have been taken up and the remainder have been thrown away. Again, a Labour authority is shown to be politically motivated and to be seeking purely to gain political popularity. This is the care that the Labour party has for the people of south Wales. It is concerned only with the power which it has held on to for so many years by confidence trickery against the people.
I invite those hon. Members who say that savings cannot be made to go to Mid Glamorgan and see the waste that there is in the extravagant system of district administration of education and social services. They should experience the wasteful system of meetings held in county hall on Saturday mornings, of meetings held every day of the week, of local authority members' expenditures running into many thousands of pounds when, on the advice of their own officers, they could save a large percentage of that expenditure. They could save all that would be needed to restore the cuts that they made in home helps, again to draw attention to a political situation rather than a social one.
These are the matters about which the people of Wales want to hear. They do not believe the Labour party any more, and that is why the Conservative party is the fastest growing political party in Wales.
11.13 pm
Mr. Alex Carlile: In the second report we see the words
"Grant reduction arising from expenditure excess."
That is one of the most pernicious fallacies to have pervaded Wales in recent years.
A few minutes ago, we heard from the hon. Member for Ynys Môn (Mr. Best). His speech struck me as particularly complacent coming from an hon. Member whose constituency is subject to a grant holdback of £115,576. Those of us who have the privilege of knowing Ynys Môn will have travelled round it and not seen a great deal of excess expenditure by the district council there. Those of us who live in the county of Powys, which is subject to a grant holdback of £430,825, will not have seen much evidence of excess expenditure there.
The judgment being made by the Government's, a dogmatic and subjective one. It is high time that they
428
realised the frustration which is becoming very evident throughout Wales at this type of policy. I always understood that at least one of the purposes of having a Secretary of State for Wales—a representative of Wales — in the Cabinet was that., on behalf of Wales, the Secretary of State would meet head-on the issues affecting Wales most severely; and would meet head-on the criticism of Government policy so far as it related to Wales. Today, when we had the statement on the capital grant allocation for Wales, Cinderella in the guise of the Secretary of State was away at the ball, and we were treated to the Ugly Sisters standing in for him, except that one of them wandered in halfway through, just as he left halfway through this debate. The Secretary of State did not turn into a pumpkin, but his policies certainly have; and it is surprising that his four little mice dared to pull the coach back to the House today for him to face this debate.
If the consequences were not so bad, the method of government in Wales today would be something of a comic opera, a pantomime. 'We heard this afternoon—I see that we are hearing something of the same tonight—that local authorities can of course "voluntarily" avoid any penalties. It is entirely up to them, it is all "voluntary" —"You local authorities can avoid penalties provided that you keep within Government guidelines". What sort of voluntariness is this? The Secretary of State is the political Sergeant Bilko — asking for volunteers, but saying, "You, you and you, and, if you do not do as you are told, then the stick will be brought to you." He is a Sergeant Bilko without the sense of humour, unfortunately.
The sort of policy that we see in the reports, the policy which we heard announced this afternoon—the carrot and stick type of voluntariness which the Secretary of State is imposing upon Wales—is more appropriate to what we were hearing from the Home Secretary about prison discipline and prison regimes yesterday, and certainly entirely inappropriate to the government of Wales.
Mr. Best: Does the right hon. and learned Gentleman believe that there should be no controls on local government expenditure in terms of total identifiable public expenditure? If there should be such controls, in his party's view, what controls would he implement?
Mr. Carlile: If the hon. Gentleman will bear with me, I will come to that matter towards the end of my remarks.
These reports and the statement that we heard this afternoon are full of the most incredible euphemisms, phrases like "guidance-related multiplier". What on earth is a guidance-related multiplier? I will tell the House: "Either you do as you are told, or you will be clobbered by the Secretary of State." It is the use of that type of euphemistic threatening policy that is giving rise to the real frustrations that any hon. Member with his ears open to listen to his local authority hears every day from his councillors.
The Secretary of State is faced now by a scrum of Welsh local authorities clamouring for the money, and. whenever the ball is fed out to him at stand-off half, he drops it. In fact, he is probably the most standoffish Secretary of State for Wales that we have ever had. The Welsh selectors would drop him unless he was willing to go on a trip to South Africa. One of the problems about the system of government for Wales is that the selectors are not Welsh; so here we see the whole picture of Welsh

429
government, against the will of the people, with an autocratic Secretary of State who appears not to care about the needs of local authorities. The sort of humbug contained in the documents under debate—and also in the statement this evening—has become endemic. The Government do not even know when a cut is a cut. This afternoon, for example, we heard the word "trim", which apparently was not a cut.
The letter from the Welsh Office to local authorities, placed in the Library today, states that steps will be taken to "reduce" expenditure this year. Do we assume that that is not a cut? The distinction between capital and current expenditure is being blurred by local authorities because they are having to remove items from capital expenditure and put them into the current account by such dodges as, for example, leasing fire engines. Who can blame them for doing that? That sort of officialised fiddling, for which we have sympathy, is a result of the Secretary of State's policies.
If any of us were to go to a hairdresser and ask him to trim without cutting, he would think that we were part of the lunatic fringe.
Mr. Hubbard-Miles: Does the hon. and learned Gentleman accept that, if capital expenditure is £12 million one year, £17 million the next and £21 million the following year, it is hard to describe that as a cut?
Mr. Carlile: The hon. Gentleman should use his eyes to see what is happening in areas such as Powys, and especially in Montgomery, where the real — [Interruption.] I know that Conservative Members find this embarrassing. I shall cite a couple of examples that might make the hon. Gentleman think. What about the parsimonious removal of lollipop ladies by the local education authority? Let him think about the inability of the Powys county council to comply fully with the requirements of the Education Act 1981 for children with special learning needs. Let him think of the cuts in teaching provision in the Carno primary school in my constituency—where rolls are not falling—that are a direct result of the Government's policies — [Interruption.] Perhaps the hon. Member for Delyn (Mr. Raffan) should find out how many babies are being born in Delyn, if he can find out. Let him think about what is happening to housing in Wales and about the fact that there are cuts even in refuse collection, privatised or not. Conservative Members should remember that many district councils in Wales cannot carry out what their electors regard as necessary projects because the Government are bleeding them to death and depriving them of the money they need.
If the Secretary of State must remain in his post, he should go back to the drawing board. He should think about the needs of Welsh local government. He should be prepared to resign if there is not a gradual reflation of the Welsh economy and a rolling programme of economic growth that local authorities can understand—so that on 18 July 1984 they can have an idea of what they can do on 18 July 1985, 1986, 1987 and 1988.
Of course, there must be some elements of control, but let the right hon. Gentleman exercise a method of control that is consistent, comprehensible and that gives Welsh local authorities and those who live within those authorities a future in which they will be provided with
430
their needs and in which they can meet the requirements of a society so sadly depleted of jobs because of the Government's activities.
11.25 pm
Mr. Keith Raffan: The House was treated by the hon. and learned Member for Montgomery (Mr. Carlile) to a characteristic performance, full of contrived passion and devoid of content. We heard nothing about Liberal policy —because there is no Liberal policy—except towards the end of his remarks when we heard, said meekly and in coded language, "spend, spend, spend" and "inflation". The only remark to be made about speeches from the two Benches below the Opposition Gangway is, "No power, no responsibility."
Commenting on the Welsh rate support grant settlement, Mr. Mervyn Phillips, secretary of the Welsh counties committee and chief executive of Clwyd county council, said:
"Local authorities in Wales have made strenuous efforts to meet Welsh Office expenditure targets which are entirely unrealistic to met our present economic and social needs."
It is not the Welsh Office targets that are entirely unrealistic. As is often the case with county councils, and Clwyd in particular, it is their spending priorities that are entirely unrealistic.
Let me instance a couple of examples-and for the sake of symmetry I shall take them from Clwyd. My hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) knows of the purchase of Bodelwyddan castle. This fantasy vision of the county council is big enough in capital cost, but in the next two or three years this white elephant will consume £2 million simply to run. If that building has such great tourist potential, it should have been left to private enterprise to exploit, and the county council should concentrate on other spending priorities. For example, it should concentrate on Sychdyn primary school in my constituency, where badly needed extensions have twice been delayed. That should be the priority, not a golf course, museum and portrait gallery at Bodelwyddan castle.
Let me give a second example. Clwyd county council officers' travelling expenses are running at nearly £1·5 million a year. Recent budget measures in Clwyd managed to reduce that, without difficulty, by 10 per cent. It is agreed by many county councillors, not only Conservatives, that those travelling expenses could be cut tomorrow by 30 per cent. Three or four officers are going to the same part of Clwyd to perform the same function —an unnecessary and extravagant expense.
Dr. John Marek: Will the hon. Gentleman give way?
Mr. Raffan: I will, and thereby set a good example to the occupants of the Opposition Front Bench.
Dr. Marek: I look forward to the hon. Gentleman now publicly saying that he does not intend to claim his 39p per mile travelling expenses.
Mr. Raffan: As usual, the hon. Gentleman has not been listening to my argument. There is no need for four Clwyd officers going to perform the same function in the same place. Indeed, to my extreme embarrassment, when I went round Bodelwyddan I was accompanied by the assistant chief executive, the chief librarian and a member of the architects' department, when somebody was resident at the castle who could have shown me round on

431
his own. There was no need for the other officers to be there. Not only is there waste in terms of travelling expenses, but also in terms of manpower.
We have seen what Clwyd county council has been up to. It has been pretending to cut down staff, on full-time staff, while it has increased part-time staff by 700 in the last five years, Fifteen years ago Flintshire county council employed 2,500 people, while Shotton employed 15,000. Today the statistics are reversed; Clwyd county council—the old Flintshire county council plus Denbighshire—employs 15,000 full-time and part-time staff and Shotton employs 2,500. The wealth-creating jobs have been destroyed and the wealth-consuming jobs have been created. What logic is there in that?
The only conclusions to be drawn are that essential services can be provided and economic and social needs can be met if the county council—in this case Clwyd—can get its spending priorities right. It must pare administrative expenses and reverse the growth in manpower. That is what the domestic and industrial ratepayers in Clwyd want. They want efficiency, economy and better value for money. Why should the public sector, why should local government, escape the rigours and restraints to which the private sector has been subjected? Why should local government expect private industry to subsidise its inefficiency, to subsidise its excesses moreover through the loss of manufacturing, wealth— creating jobs?
Let me finish with these words:
"the Chancellor spoke the truth in his Budget speech. His message on public expenditure was loud and clear. We cannot afford it.
I am sorry, but the fact is that nearly everyone is in favour of cuts in public expenditure as a means of helping to solve our economic problems, but very few are prepared to accept the local implications of such a policy". — [Official Report, Welsh Grand Committee, 7 May 1975; c. 96.]
Those were eminently sensible words, but not mine. The Opposition should be heckling, not me, but their own Front Bench. The hon. Member for Alyn and Deeside (Mr. Jones) uttered those words in the Welsh Grand Committee when debating the economy in Wales. The hon. Gentleman's early works read much better than his later works sound. I hope that he soon gets his memory back. I wish him a spedy recovery from his increasingly frequent bouts of amnesia.
11.31 pm
Mr. Dafydd Wigley (Caernafon): I shall switch the House back from the feigned indignation of the Conservatives to the reality that the report has for local authorities, espcially county authorities, in Wales. I draw attention to rural county authorities such as mine —Gwynedd—and Dyfed. I intervened during the speech of the Secretary of State about the ridiculous circumstances applying to Gwynedd. This year, the county's grant-related expenditure — the conceptual figure of what is needed to be spent—is £92,300,000. After adjustment, its expenditure is less than £91 million —more than £ 1 million less than has been acknowledged by the Government's formula to be necessary to maintain services. Those services include social services, education, home helps, disabled persons assistance and highways. Gwynedd has been penalised by £750,000 because of its level of expenditure. That must be crazy. The same position is facing Dyfed. Its grant-related
432
expenditure is £127,800,000—that is its acknowledged need—and it is spending £125,500,000. Gwynedd has been penalised by £700,000.
The Secretary of State may be right in saying that authorities can adjust themselves so as not to incur penalty —but that must be done by cutting back on home helps, education and grants. Some students in my constituentcy are receiving £200 a year in grant to go to technical college. They are giving up their courses to go on the dole because their parents are out of work. They are not receiving the support they should be getting from their local education authority. That authority cannot give the necessary money because of the cuts that are implicit in this report.
We have a paper formula which leads to suffering by ordinary people. We need meaningful formulae giving more weight to the needs of people over 75, to the augmentation of the population in tourist areas such as Dyfed and Gwynedd and to the problem of the sparsity of population in rural areas. Those factors are not included in the present formula. When we have a meaningful formula, the Secretary of State for Wales and the Welsh Office must acknowledge that it is necessary to maintain basic services in those areas. Having acknowledged that fact, they should allow the necessary grant. At the very least, when the county authorities are determined to make the formula work, the Government should not penalise them. Because the report does not acknowledge those needs and help to meet them, I hope that the House will reject it.
11.34 pm
Mr. Roy Hughes: Listening to the Secretary of State introducing the reports, it seemed to me that he gained some joy from imposing pain on our local authorities and on the citizens they serve. Many of our most senior and respected councillors and officials can find no rhyme or reason in the Goverment's policies. My hon. Friend the Member for Alyn and Deeside (Mr. Jones) referred to the petty war being waged against people merely carrying out the functions that they were elected to carry out. To me, today's statements mark the continuation of tension between central and local government— tension which will undoubtedly develop increasingly into confrontation.
Due to the diktat of the Secretary of State and the monetarist policies of the Government, local authorities in Wales will lose millions of pounds. Top of the hit list, of course, is Mid-Glamorgan, which is to lose £4·5 million. I do not know whether that is the soft or the hard assessment for a county with a massive stock of pre-1919 housing, an aging population and mortality rates soaring above the national average. A Government with any compassion would acknowledge that such an area needed every possible assistance. I bitterly resented the sordid attack by the hon. Member for Bridgend (Mr. Hubbard-Miles) on a county which has one of the most wonderful communities in Great Britain.
Newport borough is to lose nearly £1 million. Having worked with that authority for many years and knowing its officials, I can confirm that they are dedicated and responsible public representatives. The town has experienced severe blows, including thousands of redundancies, with all the problems that that brings for local authorities.

433
The whole of Wales is now suffering from de-industrialisation and social despair. As with current expenditure, today's moratorium and cuts in capital expenditure can only mean more unemployment and further demoralisation. We need massive expansion in the construction industry so that the men now standing in the dole queues can provide homes for our people and the other capital projects that Wales so badly needs.
Two major national disputes are now engulfing our country and helping to create a summer of turmoil and discontent. Increasingly, the local authorities will see their role as fighting to save jobs and services. I believe that there will be a revolt in local government. Our elected representatives are gaining confidence and saying that enough is enough. It is time that the Secretary of State realised that our local authorities have served Wales well and deserve better treatment than they are receiving from the Government.
11.39 pm
Mr. Nicholas Edwards rose——
Dr. Marek: On a point of order, Mr. Deputy Speaker. I am most confused and I wonder whether you can help me in my quandary. Contributions to the debate have been short, but only one Back Bench Member has been called from the majority party in Wales which holds more than 50 per cent. of the seats. Is there any reason for that? Is it the result of some procedure of which I am unaware?
Mr. Deputy Speaker: The occupant of the Chair has many factors to take into account in determining which hon. Member shall speak in a debate. It is a difficult matter. The debate has been short and I understand the hon. Gentleman's resentment, but the House will want to hear the reply of the Secretary of State for Wales.
Mr. Edwards: The hon. Member for Caernarfon (Mr. Wigley) talked of the continuation of tension. Many hon. Members, including the hon. Member for Alyn and Deeside (Mr. Jones), spoke about the pressure on social services and local government. I have been reading a speech made to the Central Council for Education and Training in Social Work, which refers to the financial constraints under which local authorities are working. It says that the social services capital building programme in Wales at any rate, was set at a level little more than a third of the level of seven years ago, with a virtual standstill in the growth of revenue expenditure.
The speech goes on to refer to the Government's necessary measures for containing public expenditure, apressed down firmly on local authority expenditure in global terms, which were being translated by local government into measures that some would argue would bite disproportionately on social work training.
That speech was not made today. It was made by the hon. Member for Alyn and Deeside in Cardiff on 31 March 1977. We hear the same hypocritical approach time and time again. The hon. Gentleman talks about pressures on local government. When he was at the Treasury Dispatch Box he had to make exactly the opposite speech from the one he gave today.
The hon. Gentleman drew attention to the problems and the overspends planned by Dwyfor and Meirionnydd. It is worth saying, particularly in the light of the speech made
434
by the hon. Member for Caernarfon, that Dwyfor is planning to spend 9 per cent. over its GRE and Meirionnydd 13 per cent. over its GRE. Meirionnydd is a good example of how a local authority can escape penalties. It planned to spend over budget last year and reduced its budget so that it would not incur penalties. It is possible for the authority to do so again this year. As for Dwyfor, with a budget just £40,000 above target, it is hard to believe that it cannot get that within target as well, and ease the burden on its householders by an additional £17 per household.
We were told by the hon. Member for Alyn and Deeside that there were far too many people in the Welsh Office dealing with these matters. With a total staff of 20 employed in the divisions dealing with the local government financial provisions for all of the local authorities in Wales, I do not think that that can be regarded as excessive.
My hon. Friend the Member for Ynys Môn (Mr. Best) spoke of the advantage of capital expenditure over current expenditure. I have much sympathy for his point of view, but it would be a little easier to consider the position in his own constituency, if there was not such a large overspend on current spending. Local authorities must face up to that. If they want more capital spending, they must make a greater effort to contain their current expenditure.
That point was made very effectively and forcefully by my hon. Friend the Member for Bridgend (Mr. Hubbard-Miles), who spoke to the economies that are possible in local government. There is no doubt that savings can be made.
I found it very odd that the hon. and learned Member for Montgomery (Mr. Carlile) had such difficulty in understanding what was and was not a cut. I must draw his attention to the fact that, in referring to the restraint and requested reduction on capital expenditure, we are talking not of a reduction in capital expenditure but of an effort to avoid the high excess level of expenditure over the plans spelt out by the Government, which are so necessary for the economic prosperity of this country.
The hon. and learned Gentleman referred to the hairdresser who would be unable to understand when a cut was a cut. I tell him that one cuts hair when it is too long. What we are having to do is not reduce the thing to an absurd proportion, but cut back excessive spending so that it does not impose too great a burden on the economy, ratepayers and industry, which has to pay the taxes.
We have had from the hon. and learned Gentleman a characteristic Liberal approach, trying to get the best of all worlds and trying to believe that all could be had easily and without expense. That was the party that supported the Labour Government in power and the reckless policies of inflation that the hon. Member for Alyn and Deeside was again advocating tonight. The solution that he proposed was inflationary. That would be the result if we had the policies that he advocates.
I urge the House to approve the report.
Question put:—
The House divided: Ayes 330, Noes 188.

Division No. 414]

[11.46 pm

AYES

Adley, Robert

Ancram, Michael

Alexander, Richard

Arnold, Tom

Alison, Rt Hon Michael

Ashby, David

Amery, Rt Hon Julian

Aspinwall, Jack

Amess, David

Atkins, Robert (South Ribble)

435

Atkinson, David (B'm'th E)

Franks, Cecil

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

Fraser, Peter (Angus East)

Baker, Nicholas (N Dorset)

Freeman, Roger

Baldry, Anthony

Fry, Peter

Banks, Robert (Harrogate)

Gale, Roger

Batiste, Spencer

Galley, Roy

Bendall, Vivian

Gardiner, George (Reigate)

Benyon, William

Garel-Jones, Tristan

Berry, Sir Anthony

Gilmour, Rt Hon Sir Ian

Best, Keith

Glyn, Dr Alan

Biffen, Rt Hon John

Goodhart, Sir Philip

Biggs-Davison, Sir John

Goodlad, Alastair

Blaker, Rt Hon Sir Peter

Gorst, John

Body, Richard

Gow, Ian

Bonsor, Sir Nicholas

Gower, Sir Raymond

Bottomley, Peter

Grant, Sir Anthony

Bottomley, Mrs Virginia

Gregory, Conal

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

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

Bowden, Gerald (Dulwich)

Griffiths, Peter (Portsm'th N)

Boyson, Dr Rhodes

Grist, Ian

Braine, Sir Bernard

Ground, Patrick

Brandon-Bravo, Martin

Grylls, Michael

Bright, Graham

Gummer, John Selwyn

Brinton, Tim

Hamilton, Hon A. (Epsom)

Brittan, Rt Hon Leon

Hamilton, Neil (Tatton)

Brown, M. (Brigg & Cl'thpes)

Han ley, Jeremy

Bruinvels, Peter

Hannam, John

Buchanan-Smith, Rt Hon A.

Hargreaves, Kenneth

Buck, Sir Antony

Harris, David

Budgen, Nick

Harvey, Robert

Bulmer, Esmond

Haselhurst, Alan

Burt, Alistair

Havers, Rt Hon Sir Michael

Butcher, John

Hawkins, C. (High Peak)

Butterfill, John

Hawkins, Sir Paul (SW N'folk)

Carlisle, John (N Luton)

Hawksley, Warren

Carlisle, Kenneth (Lincoln)

Hayes, J.

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

Hayhoe, Barney

Carttiss, Michael

Hayward, Robert

Cash, William

Heathcoat-Amory, David

Chalker, Mrs Lynda

Heseltine, Rt Hon Michael

Channon, Rt Hon Paul

Hickmet, Richard

Chapman, Sydney

Higgins, Rt Hon Terence L.

Chope, Christopher

Hind, Kenneth

Churchill, W. S.

Hirst, Michael

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

Hogg, Hon Douglas (Gr'th'm)

Clark, Sir W. (Croydon S)

Holland, Sir Philip (Gedling)

Clarke, Rt Hon K. (Rushcliffe)

Holt, Richard

Clegg, Sir Walter

Hooson, Tom

Cockeram, Eric

Howard, Michael

Colvin, Michael

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

Conway, Derek

Howarth, Gerald (Cannock)

Cope, John

Howell, Ralph (N Norfolk)

Cormack, Patrick

Hubbard-Miles, Peter

Corrie, John

Hunt, David (Wirral)

Couchman, James

Hunt, John (Ravensbourne)

Cranborne, Viscount

Hunter, Andrew

Critchley, Julian

Hurd, Rt Hon Douglas

Currie, Mrs Edwina

Jessel, Toby

Dicks, Terry

Johnson Smith, Sir Geoffrey

Dorrell, Stephen

Jones, Robert (W Herts)

Douglas-Hamilton, Lord J.

Jopling, Rt Hon Michael

Dover, Den

Kershaw, Sir Anthony

du Cann, Rt Hon Edward

Kilfedder, James A.

Durant, Tony

King, Roger (B'ham N'field)

Edwards, Rt Hon N. (P'broke)

King, Rt Hon Tom

Eggar, Tim

Knight, Gregory (Derby N)

Emery, Sir Peter

Knight, Mrs Jill (Edgbaston)

Evennett, David

Knowles, Michael

Fairbairn, Nicholas

Knox, David

Fallon, Michael

Lamont, Norman

Farr, Sir John

Lang, Ian

Favell, Anthony

Latham, Michael

Fenner, Mrs Peggy

Lawler, Geoffrey

Finsberg, Sir Geoffrey

Lawrence, Ivan

Fletcher, Alexander

Lee, John (Pendle)

Forman, Nigel

Leigh, Edward (Gainsbor'gh)

Forsyth, Michael (Stirling)

Lennox-Boyd, Hon Mark

Forth, Eric

Lewis, Sir Kenneth (Stamf''d)

Fowler, Rt Hon Norman

Lightbown, David

Fox, Marcus

Lilley, Peter

436

Lloyd, Ian (Havant)

Roe, Mrs Marion

Lloyd, Peter, (Fareham)

Rossi, Sir Hugh

Lord, Michael

Rost, Peter

Luce, Richard

Rowe, Andrew

McCrea, Rev William

Rumbold, Mrs Angela

McCrindle, Robert

Ryder, Richard

McCurley, Mrs Anna

Sackville, Hon Thomas

Macfarlane, Neil

Sainsbury, Hon Timothy

MacGregor, John

St. John-Stevas, Rt Hon N.

MacKay, Andrew (Berkshire)

Sayeed, Jonathan

MacKay, John (Argyll & Bute)

Scott, Nicholas

Maclean, David John

Shaw, Giles (Pudsey)

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

Shaw, Sir Michael (Scarb')

McQuarrie, Albert

Shelton, William (Streatham)

Madel, David

Shepherd, Colin (Hereford)

Major, John

Shepherd, Richard (Aldridge)

Malins, Humfrey

Shersby, Michael

Malone, Gerald

Silvester, Fred

Maples, John

Sims, Roger

Marland, Paul

Skeet, T. H. H.

Marlow, Antony

Smith, Sir Dudley (Warwick)

Mates, Michael

Smith, Tim (Beaconsfield)

Maude, Hon Francis

Soames, Hon Nicholas

Mawhinney, Dr Brian

Spencer, Derek

Maxwell-Hyslop, Robin

Spicer, Jim (W Dorset)

Mayhew, Sir Patrick

Spicer, Michael (S Worcs)

Mellor, David

Squire, Robin

Merchant, Piers

Stanbrook, Ivor

Meyer, Sir Anthony

Stanley, John

Miller, Hal (B'grove)

Steen, Anthony

Mills, lain (Meriden)

Stern, Michael

Mills, Sir Peter (West Devon)

Stevens, Lewis (Nuneaton)

Miscampbell, Norman

Stevens, Martin (Fulham)

Mitchell, David (NW Hants)

Stewart, Allan (Eastwood)

Moate, Roger

Stewart, Andrew (Sherwood)

Monro, Sir Hector

Stokes, John

Montgomery, Fergus

Stradling Thomas, J.

Moore, John

Sumberg, David

Morris, M. (N'hampton, S)

Tapsell, Peter

Morrison, Hon C. (Devizes)

Taylor, John (Solihull)

Morrison, Hon P. (Chester)

Taylor, Teddy (S'end E)

Mudd, David

Tebbit, Rt Hon Norman

Murphy, Christopher

Thomas, Rt Hon Peter

Neale, Gerrard

Thompson, Donald (Calder V)

Needham, Richard

Thompson, Patrick (N'ich N)

Nelson, Anthony

Thorne, Neil (Ilford S)

Neubert, Michael

Thornton, Malcolm

Newton, Tony

Thurnham, Peter

Nicholls, Patrick

Townend, John (Bridlington)

Norris, Steven

Townsend, Cyril D. (B'heath)

Onslow, Cranley

Tracey, Richard

Oppenheim, Philip

Trippier, David

Oppenheim, Rt Hon Mrs S.

Trotter, Neville

Ottaway, Richard

Twinn, Dr Ian

Page, Sir John (Harrow W)

van Straubenzee, Sir W.

Page, Richard (Herts SW)

Vaughan, Sir Gerard

Parkinson, Rt Hon Cecil

Waddington, David

Parris, Matthew

Wakeham, Rt Hon John

Patten, Christopher (Bath)

Waldegrave, Hon William

Patten, John (Oxford)

Walden, George

Pattie, Geoffrey

Wall, Sir Patrick

Pawsey, James

Waller, Gary

Percival, Rt Hon Sir Ian

Walters, Dennis

Porter, Barry

Ward, John

Powell, William (Corby)

Wardle, C. (Bexhill)

Powley, John

Watson, John

Prentice, Rt Hon Reg

Watts, John

Price, Sir David

Wells, Bowen (Hertford)

Proctor, K. Harvey

Wells, Sir John (Maidstone)

Raffan, Keith

Wheeler, John

Rees, Rt Hon Peter (Dover)

Whitfield, John

Renton, Tim

Whitney, Raymond

Rhodes James, Robert

Wiggin, Jerry

Rhys Williams, Sir Brandon

Winterton, Mrs Ann

Ridley, Rt Hon Nicholas

Winterton, Nicholas

Ridsdale, Sir Julian

Wolfson, Mark

Roberts, Wyn (Conwy)

Wood, Timothy

Robinson, Mark (N'port W)

Woodcock, Michael

Robinson, P. (Belfast E)

Yeo, Tim

437

Young, Sir George (Acton)

Tellers for the Ayes:

Younger, Rt Hon George

Mr. Carol Mather and Mr. Robert Boscawen.

NOES

Adams, Allen (Paisley N)

Dobson, Frank

Alton, David

Dormand, Jack

Anderson, Donald

Dubs, Alfred

Archer, Rt Hon Peter

Dunwoody, Hon Mrs G.

Ashdown, Paddy

Eadie, Alex

Ashley, Rt Hon Jack

Eastham, Ken

Ashton, Joe

Ellis, Raymond

Atkinson, N. (Tottenham)

Evans, John (St. Helens N)

Barnett, Guy

Ewing, Harry

Barron, Kevin

Fatchett, Derek

Beckett, Mrs Margaret

Faulds, Andrew

Beith, A. J.

Field, Frank (Birkenhead)

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

Fields, T. (L'pool Broad Gn)

Bermingham, Gerald

Fisher, Mark

Bidwell, Sydney

Flannery, Martin

Blair, Anthony

Foot, Rt Hon Michael

Boothroyd, Miss Betty

Forrester, John

Boyes, Roland

Foster, Derek

Bray, Dr Jeremy

Foulkes, George

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

Fraser, J. (Norwood)

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

Freeson, Rt Hon Reginald

Brown, Ron (E'burgh, Leith)

George, Bruce

Bruce, Malcolm

Gilbert, Rt Hon Dr John

Buchan, Norman

Godman, Dr Norman

Caborn, Richard

Golding, John

Callaghan, Rt Hon J.

Gould, Bryan

Callaghan, Jim (Heyw'd & M)

Gourlay, Harry

Campbell, Ian

Hamilton, W. W. (Central Fife)

Campbell-Savours, Dale

Hancock, Mr. Michael

Carlile, Alexander (Montg'y)

Hardy, Peter

Carter-Jones, Lewis

Harrison, Rt Hon Walter

Cartwright, John

Hart, Rt Hon Dame Judith

Clark, Dr David (S Shields)

Haynes, Frank

Clarke, Thomas

Heffer, Eric S.

Clay, Robert

Hogg, N. (C'nauld & Kilsyth)

Clwyd, Mrs Ann

Holland, Stuart (Vauxhall)

Cocks, Rt Hon M. (Bristol S.)

Howell, Rt Hon D. (S'heath)

Cohen, Harry

Howells, Geraint

Coleman, Donald

Hoyle, Douglas

Conlan, Bernard

Hughes, Dr. Mark (Durham)

Cook, Robin F. (Livingston)

Hughes, Robert (Aberdeen N)

Corbett, Robin

Hughes, Roy (Newport East)

Corbyn, Jeremy

Hughes, Sean (Knowsley S)

Cowans, Harry

Hughes, Simon (Southwark)

Cox, Thomas (Tooting)

Janner, Hon Greville

Craigen, J. M.

John, Brynmor

Crowther, Stan

Jones, Barry (Alyn & Deeside)

Cunliffe, Lawrence

Kaufman, Rt Hon Gerald

Davies, Rt Hon Denzil (L'lli)

Kennedy, Charles

Davies, Ronald (Caerphilly)

Kilroy-Silk, Robert

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

Kirkwood, Archy

Deakins, Eric

Lambie, David

Dewar, Donald

Lamond, James

438

Leadbitter, Ted

Prescott, John

Lewis, Ron (Carlisle)

Randall, Stuart

Lewis, Terence (Worsley)

Redmond, M.

Litherland, Robert

Rees, Rt Hon M. (Leeds S)

Lloyd, Tony (Stretford)

Roberts, Ernest (Hackney N)

Lofthouse, Geoffrey

Robertson, George

Loyden, Edward

Rooker, J. W.

McCartney, Hugh

Ross, Stephen (Isle of Wight)

McDonald, Dr Oonagh

Rowlands, Ted

McKay, Allen (Penistone)

Sedgemore, Brian

McKelvey, William

Sheerman, Barry

Mackenzie, Rt Hon Gregor

Sheldon, Rt Hon R.

Maclennan, Robert

Shore, Rt Hon Peter

McNamara, Kevin

Short, Ms Clare (Ladywood)

McTaggart, Robert

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

McWilliam, John

Silkin, Rt Hon J.

Madden, Max

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

Marek, Dr John

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

Marshall, David (Shettleston)

Soley, Clive

Maxton, John

Spearing, Nigel

Maynard, Miss Joan

Strang, Gavin

Meacher, Michael

Straw, Jack

Meadowcroft, Michael

Thomas, Dafydd (Merioneth)

Michie, William

Thomas, Dr R. (Carmarthen)

Mikardo, Ian

Thompson, J. (Wansbeck)

Millan, Rt Hon Bruce

Thorne, Stan (Preston)

Miller, Dr M. S. (E Kilbride)

Tinn, James

Mitchell, Austin (G't Grimsby)

Torney, Tom

Morris, Rt Hon A. (W'shawe)

Wallace, James

Morris, Rt Hon J. (Aberavon)

Warden, Gareth (Gower)

Nellist, David

Wareing, Robert

Oakes, Rt Hon Gordon

Welsh, Michael

O'Brien, William

White, James

O'Neill, Martin

Wigley, Dafydd

Orme, Rt Hon Stanley

Williams, Rt Hon A.

Owen, Rt Hon Dr David

Winnick, David

Park, George

Woodall, Alec

Parry, Robert

Wrigglesworth, Ian

Patchett, Terry

Young, David (Bolton SE)

Pavitt, Laurie

Penhaligon, David

Tellers for the Noes:

Pike, Peter

Mr. Don Dixon and Mr. James Hamilton.

Powell, Raymond (Ogmore)

Question accordingly agreed to.
Resolved,
That the Welsh Rate Support Grant Supplementary (No. 2) Report 1982–83 (House of Commons Paper No. 519), which was laid before this House on 12th July, be approved.

Rate Support Grant (Wales)

  RATE SUPPORT GRANT (WALES)
  Resolved,
  That the Welsh Rate Support Grant Supplementary Report 1984–85 (House of Commons Paper No. 520), which was laid before this House on 12th July, be approved. —[Mr. Major.]

Dairy Produce Quotas
11.59 pm
The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): I beg to move,
That the draft Dairy Produce Quotas Regulations 1984, which were laid before this House on 11th July, be approved.
I understand, Mr. Deputy Speaker, that the other motion may be debated at the same time:
That the draft Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations 1984, which were laid before this House on 16th July, be approved.
Mr. Deputy Speaker (Mr. Harold Walker): If that is for the convenience of the House, so be it.
Mr. Jopling: The House is familiar with the background to the regulations, because hon. Members will remember that we debated these matters on 3 July, and the reasons for the introduction of milk quotas. I do not wish tonight to repeat everything that I said then. With my right hon. and hon. Friends I have, however, been considering the many helpful points that were made in that debate. As a result of what was said, we have withdrawn the draft regulations which were laid before the House on 27 June and have laid fresh drafts instead, which are now before the House. I shall explain to the House the changes that we have introduced since that last debate.
First, with regard to special hardship cases, which were referred to by a number of hon. Members on both sides of the House, we have inserted in paragraph 17 of both schedule 1 and schedule 2 a new provision to help producers who had entered transactions or who had made arrangements before 2 April 1984, as a result of which they are now unable to obtain as much quota as they need to sustain their businesses. It is a limited provision to help those who might suffer exceptional hardship, but it is a response to the representations of several of my hon. Friends on a point on which I am enormously sympathetic. The quota to assist those cases will come not from the 2·5 per cent. reserve which is set aside already but from the quota to be bought up under the outgoers' scheme. Most of the outgoers' quota will not become available for some months, but we plan to make a small amount available for this purpose as soon as we possibly can.
Mr. Richard Needham: I am sorry to interrupt my right hon. Friend at the beginning of his speech, but one of my constituents was offered a new farm by the county council as a tenant dairy farmer in January this year. He has now, therefore, given up his existing farm, and the county council has re-let it. Yet because the farm that is being let to him by the county council as a dairy farm was not farmed for several years previously as a dairy farm, he has no quota whatever. Therefore, having on the advice of the county council given up the farm that he had previously, he has gone to a new farm where he has no quota, so he will be in a very difficult position. I should be grateful if my right hon. Friend will let me know whether——
Mr. Deputy Speaker: Order. Interventions must be brief.
Mr. Jopling: I know that my hon. Friend is most concerned about the case that he has explained to the House. I think that it would be foolish of me to attempt to give a firm and categorical answer about a particular case which my hon. Friend has explained to me in these
440
circumstances. All I would say to my hon. Friend is that the key question is whether milk was being produced on the farm on 2 April 1984. If it was not, there are provisions in the regulations which I would draw to the attention of my hon. Friend and his constituent, whereby consideration could be given to the case if his constituent could prove and demonstrate that a firm commitment to produce milk was entered into. I do not think that I should go any further than that at this stage.
Many hon. Members have referred to the problem of the interplay between direct sales and wholesale sales and the position of quotas, remembering that on one farm producers can have both a direct and a wholesale quota. We have always believed that it makes no sense to impose artificial and rigid constraints upon a producer who retails direct to consumers and sells the rest of his milk to the Milk Marketing Board. We shall go on pressing in Brussels for greater flexibility between direct sales and wholesale quotas. Indeed, I spoke to the Commissioner in Brussels about it only yesterday and I shall continue to press him on the matter.
However, the new regulation 8 provides in effect that if a producer has more wholesale but less direct sales quota than he needs he may swap his spare wholesale quota with another producer who has spare direct sales quota. That is a new measure. In that way we can achieve some flexibility without breaching the principle in the Community legislation that the direct sales and wholesale quotas are distinct and cannot be merged or confused.
Mr. Ron Davies: Can the Minister envisage any set of circumstances whereby producers will have any surplus retail sales quota which they wish to get rid of?
Mr. Jopling: Yes, there are examples, particularly where people have given up direct sales in the fairly immediate past and where, because of the way that part years are treated, they find themselves with unused direct quota. In those circumstances, that would be available for a swap. I am grateful to the hon. Gentleman for allowing me to elaborate on that.
Regulation 9 in the new draft provides that where a producer moves to a new farm after the regulations come into effect he may take his quota with him provided that the MMB and all parties with an interest in the original holding agree to that change. Again, that is a matter that was drawn to our attention in the earlier debate and I am sure that the House will agree that it is another useful step that we have been able to take after listening to the views of the House.
I should like to provide even greater flexibility. However, our options are limited as long as the Community legislation makes no provision for the marketing or leasing of quotas. We are continuing to work on that and I hope that we shall be able to obtain some movement in the months ahead.
Although producers will wish to go very carefully through the explanatory material and forms that we shall be sending them, many may wish to seek advice. I have therefore amended paragraph 1 of schedules 1 and 2 to increase from four weeks to five weeks the time limit for applications in Great Britain for additional quota under the special case provisions and for registration as direct sellers. The same time limit, incidentally, will apply to the

441
outgoers scheme. I should like to have allowed even longer, except that it would mean delaying the whole process of settling definitive quotas.
Mr. Robert Hughes: Is the right hon. Gentleman saying that people can apply under the outgoers scheme only five weeks after the date that he sets?
Mr. Jopling: We have increased from four weeks to five weeks the time limit for applications in Great Britain, and that will also apply to the outgoers scheme. We are giving producers an extra week in which to make their applications. In the previous debate, a number of hon. Members referred to the original proposal for four weeks, but it did not receive a volley of criticism. Despite that, we have increased the period to five weeks, which is reasonable and helpful.
Mr. Keith Best (Ynys Môn): The outgoers scheme is principally designed to re-allocate quotas to small producers so that they can reach their 1983 levels with incurring penalties. If there are insufficient people going out to achieve that aim, will my right hon. Friend look at the matter again, to help the small producer?
Mr. Jopling: I have every hope that the outgoers scheme will give us the full 2·25 per cent. of our milk quota for redistribution. The whole purpose of it is to redistribute the quota to small producers, to bring them back to the 1983 production patterns. We are anxious to achieve that quantity of milk.
Mr. James Molyneaux: The right hon. Gentleman has twice referred to the five-week period for Great Britain. What will be the position in Northern Ireland?
Mr. Jopling: It is intended that the period will be left at four weeks in Northern Ireland. There is a good reason for that. As a farmer, the right hon. Gentleman will know that one of the important aspects of the scheme in Northern Ireland is that it is applied under formula A and each producer is responsible for the payment of the supplementary levy at a flat rate on his own overproduction. That is not the case in Great Britain, where the levy paid by producers who exceed the quota will depend on the level of above-quota production within the milk board as a whole. Therefore, because it is important that milk producers in Northern Ireland know where they are as regards their own quota allocation, we have left the period at four weeks.
I am anxious to ensure that special case claims are dealt with speedily so that producers know where they stand. Under paragraph 1 of schedule 5 to the new draft regulations, the maximum number of members of the dairy produce quota tribunals will be increased from seven to 12 for England and Wales and for Northern Ireland. A tribunal will therefore be able to sit in two or more places at the same time, if necessary, which will mean that the work can be speeded up.
I am glad to take the opportunity to announce that, if the regulations are approved, we shall be appointing Lord Grantchester to be chairman of the tribunal for England and Wales. He is a most distinguished lawyer with experience of work on tribunals and I am most grateful to him for agreeing to serve.
442
The separate regulations on the definition of base year revision claims have only one purpose—to clarify, for special case claims, the point at which bad weather might be classed as a serious natural disaster. The hon. Member for Aberdeen, North (Mr. Hughes) specifically asked us to do that.
Any figure must be to some extent arbitrary, but if all claims are to be treated alike the tribunals will have to have, from the start, a rule of thumb which they can apply in each case. The figure—a reduction of 15 per cent. due solely to weather—is deliberately set fairly high and is not intended to cover ordinary bad weather.
Various aspects of the regulations are bound up with the payments to outgoers scheme, copies of which have been placed in the Vote Office and the Library. The arrangements are as I described them on 25 May. We plan to buy up to 2·25 per cent. of quota in Great Britain and up to 5 per cent. in Northern Ireland. In England and Wales, about 1·25 per cent. would be needed to bring 40 per cent. of all producers—that is, those who delivered up to 200,000 litres or had up to about 40 cows—back to their 1983 levels of sales. That would leave about 1 per cent. available for allocation to other producers.
We cannot yet decide just how this 1 per cent. should be used, but we intend to reserve part for the special hardship cases under the new provision which I have described.
Many hon. Members have shown interest in the outgoers scheme. We have been asked whether a tenant will have to obtain his landlord's consent before being admitted to the scheme. In Scotland my right hon. Friend has decided that, because of the agreement by interested parties, it is sufficient to rest upon a declaration by the tenant that he has obtained any necessary consents.
In England and Wales, However, a surrender of milk quota will be subject to the consent of both parties and not just of the one receiving the payment under the scheme. I regret that we were not able to get the same agreement between interested parties which was obtained in Scotland. I urge landlords and tenants to sit down together and to work out whether the scheme makes sense for both of them, as in many cases I am sure it will. The president of the Country Landowners Association has said that he hopes that landlords will give their consent wherever possible.
Since the last debate we have had further discussions with the Inland Revenue to clarify the tax treatment of payments to outgoers. There has been some difference of opinion within the industry, on the relative advantage of capital or income taxation. I am glad to tell the House that we have been able to frame the scheme in such a way as to provide the producer with a choice of either a capital payment or an income payment. The individual producers will obviously choose whichever option best suits his own tax liability.
I am sure that the industry will welcome this satisfactory arrangement, which was urged upon me in our last debate by my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) and others.
I have made it clear to the House that the reserve and the outgoers quota are small and that there are many claims upon them. The provisions for special hardship claims, weather cases, expanders and small farmers have all been kept very restrictive, to avoid all the spare quota being

443
consumed by any one group. I must issue the warning that, even if a claim is accepted, the regulations give no guarantee that it can be met in full.
If acceptances exceed the reserve quotas, they will be scaled down proportionately in the case of expanders and special hardship claims. Quotas can be found for one producer only at the expense of another.
Because of the safeguards built into the regulations, it may take some time to resolve every case. In the debate on 3 July my right hon. Friend the Member for Taunton (Mr. du Cann) and others were anxious that producers should not have to pay levy before their claims had been settled. I sympathise with that point of view, but I must first see how many applications come in and what progress is made by the tribunals and panels. If I can see a way of helping those whose claims have not been settled before the first payments are due, I shall certainly pursue it.
Mr. Patrick Cormack: How optimistic is my right hon. Friend of success?
Mr. Jopling: As I said during our last debate, I can make no estimate at this stage—nor can anyone else—about when it will be possible for everyone to have his exact quota clarified. I cannot do that without knowing how many producers will apply to be considered special cases. That is an imponderable which I cannot yet tell.
Mr. Dafydd Wigley: Will the right hon. Gentleman give way?
Mr. Jopling: No, I must go on with my speech. I have given way a great deal. Many right hon. and hon. Members wish to speak.
In passing, I should add that I have made it clear that the quota system must be applied fairly in all member states. I raised this issue once more at the Council of Ministers this week, and I shall continue to watch developments closely. The Commissioner gave me an undertaking in Brussels yesterday that he would make a comprehensive report on this matter to the Council in September.
Subject to approval of the regulations, we intend to send all producers an explanatory note and an application form for registration as a direct seller, for treatment as a special case or for admission into the outgoers scheme. The material will be dispatched as soon as the regulations come into operation and should be with producers early next week, provided that the House agrees to the regulations. I know that many fanners — and the National Farmers union—are anxious for us to go ahead and agree the regulations without further delay, and I am sure that the House will agree that we should do so.
Quotas are not popular. I have never hidden my own view about them from the House in the course of the last 12 months. We cannot expect any measure that reduces production to be popular with those who are currently producing.
I have often heard the plea that producers should have had more time to adjust. I sympathise with that, as I have said before. But if we are to reduce the milk surplus, the Community's guarantee to cover surpluses must be limited. I believe that the draft regulations provide the fairest and most rational way that we can devise within the constraints of Community legislation designed to achieve the better balance in the Community milk market which was so much needed.
444
In the changes that we have introduced we have responded to the views of hon. Members on both sides of the House and those of the industry. I commend the regulations to the House.
Several Hon. Members rose——
Mr. Deputy Speaker: Order. Before I call the hon. Member for Aberdeen, North (Mr. Hughes), I should point out that it is clear that a great many right hon. and hon. Members on both sides of the House want to take part in the debate. I hope that those hon. Members who catch my eye will be fair to their colleagues still waiting to speak.
12.24 am
Mr. Robert Hughes: Like the Minister, I have no intention of rehearsing the arguments which I advanced in the debate on 3 July, beyond saying that I still believe. that it was a bad deal and a bungled application.
Since that debate, from the unceasing torrent of letters and telephone calls that I have received and from a visit that I paid to Wales to discuss this matter with farmers, it is clear to me that I underestimated the worries of dairy farmers facing uncertainty and great financial hardship.
Even at this late hour it is possible to have a sneaking sympathy for the Minister. He is in a quicksand. The more he struggles to get out, the deeper he sinks.
Late last week, we saw the revised draft regulations. On Monday we had the supplementary regulations dealing with base year revision. Yesterday the outgoers scheme was laid, which deals solely with payments. It is difficult to understand and to try to explain the regulations. It reminds me of the American television comedy called "Soap", which begins by explaining the plot, while the voice-over says, "Confused?—if not you will be after you have watched this episode." The more that we debate the issue, the more confused we become.
If we try to understand the regulations we find that they do not match up to what the Minister claims. He said that there are reserves of milk, but that a proportion will be set aside for outgoers, hardship cases and so on. But that is not laid down anywhere in the regulations. As I understand it, regulation 5(3)(b), in relation to schedule 2(3), shows that, initially, an estimate is made of each producer's primary quota. Once that is done, it is added together—and if the aggregate is greater than the limit set—which presumably means the wholesale quota—everyone must be scaled down pro rata. If someone was unlucky enough to have his estimates set too low, he would suffer more than the person whose estimates were set too high because he is taking a pro rata cut on the higher figure.
If, having done that, the aggregate of the estimates—I hope that the House is following this closely—comes to less than the limit, a reserve is created. The regulations explain how that initial reserve will be allocated. First, if on the estimates someone has had too much quota, and the aggregate is less than the total, the estimated quota is taken away and added to the initial reserves.
The first call on the initial reserve is to tot up those whose estimated primary quota is less than that to which they were entitled. The next call on the initial reserve is hardship cases. However, there is only a reserve for that if the topping-up leaves something spare. Once the hardship cases are disposed of, and if there is still a surplus in the initial reserve, that is made available to developers.

445
All the way through, the regulations say that if the claims settled are greater than the amount of milk left, everyone must be scaled down in proportion. I do not know how the Minister squares that series of events with setting aside particular proportions of quota to deal with specific hardship cases.
After all that, if anything is left over from the initial reserve, a running reserve is created—which appears to be what the Minister has been able to buy in on the outgoers scheme. Now he tells us that the application for the outgoers scheme must be in within five weeks. What is the running reserve? It is either a five-week reserve, or it is not. It does not make sense. In the running reserve there is an additional category called exceptional hardship cases, and that must be provided for out of the reserve. Frankly, it is total administrative chaos. I do not understand how anyone can make any sense of it.
I shall mention some matters in detail—for example, the mixed retail-wholesale producers. The Minister pointed to regulation 8, which is the only regulation expressed in such simple language that everyone can understand it. It firmly states that two producers within a region can get together and swap either the retail or wholesale quotas. That will reduce farming to a lottery. We will see a rash of advertisements in the farming press akin to those that appear in the personal columns of The Times.For example, on Monday 9 July, under the wanted column we see
"BP. Money match wanted £20,000 Left hand £10,000 Right hand. Split winnings."
On Saturday 14 July we see,
"MOBIL SCRABBLE letters. J, B, F. C and L. Cash paid. Telephone … "
That will be the sort of farce to which producers will be reduced. They will have to advertise in the press for someone in the region. The chances are that more people will be looking for someone to swap a direct quota for a wholesale quota than the other way round. It may well be different, but we do not know what will happen. Nor do we know what help will be given by the Ministry to people in such difficulty. I do not know whether the scheme is based on a similar scheme that operates in Canada. If so, the Minister ought to be aware that in Canada the departments concerned take great care to try to match producers who want to change quotas.
I turn next to the outgoers' scheme. That appeared yesterday, and deals only with payments. I would like to study what the Minister says about the five weeks. At one point, it states that the scheme shall come into operation on the same day that the regulations come into operation. That is fine. It continues:
"Applications for any payment under the scheme shall be made during the period of five weeks immediately following the date on which the scheme comes into operation or such later date as the appropriate Minister may determine."
There is a five-week period from the date that it comes into operation, or five weeks from some other date that the Minister sets. I hope that the Minister will explain what that is, and where we go from there.
Nothing in the regulations specifies how the small producer will get his claim settled in relation to the quota. The Minister said on 3 July this year that his intention is to bring small producers back to the 1983 production
446
patterns. However, it is not stated anywhere in the regulations how someone can apply for the quota to be set on the basis of 1983.
The Minister has dealt with hardship cases on climatic grounds. As he has pointed out, the supplementary regulations say specifically that there has to be a minimum of 15 per cent. reduction in production in 1983 compared with the base year that the producer chooses—1981 or 1982—before he can apply for additional quota on hardship grounds. All the advice that I have had is that 15 per cent. is far too high a hurdle. Why did the Minister settle on the figure of 15 per cent., given that in the debate on 3 July he said that he was thinking of 10 to 15 per cent.? He has to justify why he chose the figure of 15 per cent.
One direct question has to be put to the Minister. Does this exercise—setting regional quotas, applications for hardship, revised estimates, aggregating the totals — have to be done every year? The statutory regulations say that, once all the process has been gone through, that is it until five years hence. Indeed, that cannot be so if there are to be further reductions in national quotas in the coming years. Must this whole exercise, this administrative nightmare, be conducted every year?
At column 165 on 3 July the Minister spoke of the way in which developers would be treated. I think I summarise the right hon. Gentleman correctly when I say that he said that the first 7·5 per cent. of increased production of developers would be allowed to stand and there would be no penalty; that half the increase between 7·5 and 12 per cent. would be taken into account; and that for any production over 12 per cent. there would be the full penalty.
However, that is not what the Minister said today, nor what the regulations say. What guidelines will be given to what is described in the regulations as the further examination body? Ministry officials set the quotas and then there is a further examination body and tribunals. It has been suggested that there will be flying tribunals meeting in two places at the same time. What guidelines will be given to these bodies which will determine the fate of producers? What will be their starting point or base line?
Paragraph 6(2) of schedule 2 to the regulations says that there may be circumstances in which the Minister, having heard all the objections, reaches the conclusion that an applicant's case can be met only at the expense of another producer. That refers to a producer in specific terms, not to producers generally. In other words, if the Minister tells farmer A, "I accept that you have a just claim and that you have not been given enough quota. The only way I can give you additional quota to meet your just claim is to take quota away from farmer B." That is specific, because the regulations go on to say that the Minister must inform both farmers, first to tell farmer A that he is to get additional quota and, secondly, to tell farmer B that quota is being taken from him to satisfy farmer A. Then we have all the paraphernalia of arbitration, with arbitration rules for England and Wales, and so on.
Is the Minister saying that under the regulations at the end of the day he will have to arbitrate not in relation to the totality of the scheme but in relation to individual farmers, perhaps next-door neighbours, taking quota from one to give to the other? If that happens, there will be mayhem. Apart from setting farmer against farmer, the situation will be ludicrous. I hope that the right hon. Gentleman will explain the position in more detail and will

447
say how often he thinks that the procedures will be used. He cannot reply that, in his view, this provision will cover a minority of cases. He must have introduced that procedure because he thought there would be a significant number of cases to which it would apply.
I appreciate the difficulty in which the Minister finds himself tonight. On the one hand, he has been pressed—I accept that on 3 July I pressed him hard on the subject—to do something to get some certainty into the situation as soon as possible. On the other, there was no need for him to bring the regulations forward so quickly that there was not time for sufficient consultation, with the result that they are not right.
The right hon. Gentleman will have to return to the question of the financial problems of individuals. No matter how fairly people are treated under the regulations—even if they work perfectly and everyone gets justice — hundreds, if not thousands, of people will be in desperate financial straits. The Minister must look at this matter again and consider additional finance. He will be compelled, when he sees the hardship that will occur, to examine the finances of people who must pay interest on their overdrafts——
Mr. Nicholas Budgen: Will the hon. Gentleman give way?
Mr. Hughes: —I shall not give way. The problems of such people will be compounded by the fact that interest rates have increased by 2·5 per cent. in the past couple of weeks.
Mr. Budgen: How much? £100 million?
Mr. Hughes: It is no use the hon. Gentleman asking how much. I am saying that the Minister is in a difficulty and must look at the matter again.
The best course is for the Minister to withdraw the regulations and give us and himself a little longer to sort the matter out. If the right hon. Gentleman cannot withdraw them, the best course is for the House to defeat the regulations and to bring back proposals of greater clarity. I advise hon. Members to join us in the Lobby.
12.41 am
Mr. Robert Harvey: I think that hon. Members on both sides of the House understand the need for a substantial reduction in the dairy surplus. At a time when the Community was expected to overproduce by an estimated 70 million tonnes this year, producing 105 million tonnes, and consumption stood at only 88 million tonnes, of course cuts had to be made. It would have been unreasonable of dairy producers to have expected otherwise.
A number of aspects to the present agreement should be of serious concern to hon. Members. The first is that cuts in quotas have been imposed sharply and suddenly without the kind of transitional period that would have made the move palatable to those who, with every support and encouragement from the Government, had invested in dairy farming and equipment. Of course, that is not primarily the Government's fault. The Community is structured in such a way that the pressures for change gradually build up over years in which there is no change. That change proves much more traumatic and cathartic when it eventually occurs.
In view of the assurances given to farmers during the past few years and the encouragement to invest — I
448
understand that when the Milk Marketing Board encouraged farmers to expand and invest, it was not its practice to advise what could be cut—it was surely the Government's duty to ensure that change was much less sudden and violent than has been the case.
There are horrifying tales in my constituency of the degree to which farmers have found themselves in financial difficulties as a consequence of the suddenness of the change. The jump in interest rates comes as a body blow to an industry that depends heavily on borrowed money for its survival. — [Interruption.]. The farming industry depends on borrowed money to a much greater degree than many other industries, and I believe that most hon. Members are aware of that fact.
The second aspect of the quota that is profoundly disturbing is the way in which we appear to have obtained one of the poorest deals in the Community, suffering a bigger cut in production than most member states, especially Ireland and France. That is a tragedy, because the reason why our milk production has increased steadily in recent years, to the point where we are more than self-sufficient in many products, is that we are much more competitive than our European partners. We have the most efficient farming in Europe, not because our producers are guaranteed markets—all our competitors benefit from that advantage—but because we produce more, better and cheaper. I see no reason why Britain should suffer from the fact that is is more competitive or why those countries that have accumulated smaller surpluses because they are less competitive should not suffer corresponding cuts.
A matter of major concern in the past two or three years has been the determined campaign by certain sections of the Left and of the conservation lobby to portray farmers as environmental vandals bent on destroying the British countryside and reaping enormous profits from guaranteed prices while the rest of the country suffers economic retrenchment. There are, of course, exceptions to any rule and there will always be a handful of farmers who provide the ammunition for such an attack, but we must acknowledge that the source of farming prosperity in this country is not guaranteed markets but the fact that we were able to corner a substantial share of the market when our less efficient competitors were unable to do so.
The concepts of competition and efficiency and the small man building up a small business into a large one are anathema to many Opposition Members, but the hard result of all this efficiency in British farming has been a stability in food prices unparalleled in earlier years. In the past few years, food price increases have been consistently below the rate of inflation and in some seasons prices have not risen at all. That is a remarkable tribute to the fact that as the market stabilised and farmers ploughed their hard-earned profits back in investment it has proved possible to keep food prices more or less under control. Between 1973 and 1980 food prices rose by 7·4 per cent. compared with 11·2 per cent. inflation. That has been the staggering achievement of our farmers and due credit should be paid to the common agricultural policy in helping to achieve that.
The second great achievement has been the great stride towards farming self-sufficiency in Britain, which has made a major contribution to our balance of payments. Stable food prices above all help the lower income groups for whom food looms large in the family budget and an improvement in our balance of trade should be especially

449
welcomed by the Opposition, but instead the Labour party intends to slash the CAP for dogmatic reasons, at the cost of destroying food price stability and our favourable agricultural balance. There can be few spectacles so hypocritical as that of the Labour party attacking the dairy agreement when everyone in the House knows that a Labour Government would have slashed milk production to a far greater extent than is provided for in the agreement.
It must be recognised, however, that a large section of the farming community is far from prosperous, especially in my area of Wales, and will suffer greatly as a result of the agreement. I welcome the Government's measures to provide relief for the smaller producer, but there are many medium and small farmers not entitled to relief who were encouraged to go into dairy farming, whose market has now disappeared, whose stock is now worth considerably less and who face the prospect of having to switch into a potentially flooded beef or sheep market as a result. Those small producers are not so efficient as the big ones, but they form an essential part of the social fabric of Wales and other parts of these islands and they are a great deal more efficient than their counterparts in France, West Germany or Italy. The Government have a clear duty towards medium and small farmers that is no less pressing than that assumed by the Governments of France and West Germany. When it is considered that farming incomes in the hill and upland areas of Wales have fallen below the 1978 level in real terms and by almost 20 per cent. between 1982 and 1983, that duty becomes clear.
I hope that the House will recognise, thirdly, that the great majority of farmers are not spoilers of the countryside, but its natural curators. I do not propose to enlarge on that point in this debate, which is clearly about dairy farming, except to say that many of the same people who have been urging drastic changes in the CAP are those who have been character-assassinating the farming community on the environmental issue. I am convinced that the ultimate purpose of many of those engaged on that campaign is to extend the concept of the state's right to the land, to the planning and ownership of property. That call has been repeated in one Labour conference after another, with all the grim regimentation of the countryside and destruction of the farming community that that implies.
In that context, I believe that a word of warning should be addressed to farmers from the Conservative Benches. Understandably, the impact of the two dairy quotas has provoked a great deal of distress and bitterness among farmers. Yet, the spectacle of them pouring away their milk and slaughtering calves in protest will do nothing but provoke indignation among the public, which has already been subjected to this anti-farming campaign.
Fanners should set about displaying the acceptable face of British farming to the media and to the quality newspapers, and desist from the kind of action that may be persuasive in France, but which strikes a deeply repugnant chord in the British people.
Farmers, like all those who sympathise with them in the debate, must turn their minds, now that the dairy agreement has been reached, to ensuring that no such violent adjustment of dairy or any other quotas takes place in future. It would be unacceptable, after the shock that farmers have suffered, if stability were not guaranteed in the diary sector, at least for the next five years.
450
Further adjustment must be gradual and must reflect our own competitiveness against the inefficiency of our EEC partners. I ask for the Minister's assurance that the uncertainty is over, so that farmers can plan for the future with confidence. My right hon. Friend can still go down as the Minister of Agriculture — [Interruption.] — who took the painful decision necessary to restore the common agricultural policy to the equilibrium that will allow it to continue as a guarantee of price stability and producer security. But, if he has imposed only a first cut in the CAP at the expense of the one industry of which this country can be justifiably proud, the judgment will be otherwise.
12.53 am
Mr. Robin Corbett: If I were the Minister sitting here tonight, with so many of his right hon. and hon. Friends behind him, I would be very worried about how many of them would deserve the epithet "friends" when the Vote is taken at about 3 o'clock this morning.
The Minister is asking us to help him, through the regulations, to put flesh on the initial folly of the milk quotas. The Minister has been at the Dispatch Box twice about this piece of lunacy, and on neither occasion has he been able to give a rational explanation of why on earth he accepted this method of dealing with cuts in unwanted milk production in the European Community.
The Minister must know — it would be nice if he admitted it before the night was over—that there is a profound and important difference between the milk market in the United Kingdom and that in all the other nine member states. It is very simple; of course the right hon. Gentleman knows it. The overwhelming majority of the milk produced in this country is drunk. The problem arises only with the milk in the other nine states, which is not drunk and which then has to be turned into butter, cheese and skim. I see the Minister's sidekick looking surprised. The penny has dropped with him, and I hope that it will drop with the Minister before the night is over.
The Minister of State, Ministry of Agriculture, Fisheries and Food, (Mr. John MacGregor): The proportion of milk produced in this country that goes into liquid milk and is drunk is about 45 to 47 per cent.
Mr. Corbett: Of course, if the hon. Gentleman tells me that, I shall take it into account— [Interruption.] Let us see whether we can get agreement this way. More of the milk produced here is drunk and is for liquid consumption than in any other Common Market country. That is the difference. That is the point that the hon. Gentleman's right hon. Friend the Minister cannot get into his skull; otherwise, he would not have accepted this sellout to Brussels.
That now having been established, what the right hon. Gentleman cannot do in the House is give an absolute guarantee to those who have daily doorstep milk deliveries that the scheme will not put those supplies in jeopardy. There is no way in which he can do so. I shall tell the House why. I shall not bore hon. Members with quotations, but the fact is that the right hon. Gentleman has admitted—he did it again tonight—that he does not have the faintest idea how many milk producers will opt to collect the money under the outgoers scheme. There is no limit on that. In that case, there is no way in which the Minister can assure the House — and, perhaps more

451
important, the consumers—that the doorstep deliveries on which they rely will be guaranteed under the regulations. I shall go further and say that there is inherent in the regulations a real risk that once again under this Government doorstep deliveries will be in jeopardy.
It may well be that the brakes on a possible stampede out of milk have been slightly applied by the news that the National Fanners Union itself is debating a scheme to pay people not to grow cereals. That is one of the options for some of those who get out of milk. Another thing might put the brakes on. Again, the Minister cannot answer this, because he does not know. After the right hon. Gentleman has put his tiny paw up in favour of the milk quotas this year, what will he do next year when the Commission turns round and says, "What about cereal quotas?"? Will all the Conservative Members go through the Lobby and vote for that?
Mr. Andrew Rowe (Mid-Kent): It seems that the hon. Gentleman is once again making a clear statement that is constantly made by Opposition Members, that the Government are in the business of guaranteeing people jobs for ever, regardless of how markets change.
Mr. Corbett: That was a foolish comment, and I am sorry that I gave way.
We have a right to insist that the Minister of Agriculture and his Government should give guarantees to consumers about the supplies of materials such as milk, on which they rely. However, the Minister can give us no guarantee about the future level of supplies of milk.
The Minister has made much of the question of special cases. I have heard it said that every dairy farmer can claim to be a special case. In a sense, that is true. The president of the National Farmers Union is reported in Farming News this week as saying that one dairy farmer in four is likely to claim to be a special case. Why not? If the offer is there, why not take it?
The Minister cannot know how many applications there will be under the outgoers scheme. He has admitted that he cannot know how many special cases will be allowed. Both ends of the scheme are total unknowns. He wishes the House to approve the scheme on that lunatic basis. [HON. MEMBERS: "How can one know?"] Of course we cannot know. Why does the Minister not wait until he knows the answer to those questions before he comes here with his daft and lunatic schemes? [Interruption.]
The Country Landowners Association claims that the dairy produce quota tribunals—another set of quangos which the Government are establishing—will reduce the uncertainty facing producers. With respect, the CLA is wrong. Far from ending the uncertainty, the tribunals will prolong the agony. The Minister has said today that there will be flying tribunals. No doubt they will be followed by flying pickets — [HON. MEMBERS: "Oh!"] — I mean flying pickets of dairy producers, not miners. Given that the president of the NFU has said that it is likely that one producer in four will claim to be a special case, it will take until kingdom come to resolve the applications—unless the tribunals sit round the clock.
Under the regulations, it is the direct sellers who will receive the worst treatment. We are being asked to approve an arrangement under which a producer who sells solely direct to the front door against known and regular demand is being asked to cut production. What will that do to his or her business, or to total milk production?
452
In many of the areas where direct sellers operate, there is no other milkman. To ask the direct seller to cut back is therefore to introduce a form of rationing. A note will be left outside the door of No. 35: "Two pints today, please". The direct seller will have to say, "I'm terribly sorry, but you can only have one pint, because I have nearly exceeded my quota." [Laughter.] I am sorry that Government Members make light of the matter. Whatever may happen to total milk production nationally, milk consumption in the areas where the direct sellers operate—the milk delivered to the doorstep and drunk in those households—will fall. There will be a form of backdoor rationing.
Mr. Hugh Dykes: If the hon. Gentleman is logical, he must be suggesting that someone who only wants one pint will be forced to take two and drink them, whether he likes it or not.
Mr. Corbett: I have done it again. I must stop giving way.
At the time when the Minister is inviting the House to approve the regulations, milk production is already falling. In April there was a fall of 4·2 per cent. In May, the figure was 5·5 per cent. largely because of the weather. We need only a further slip of less than 1 per cent. to achieve the total reduction in milk output which the regulations are designed to achieve.
What sort of contribution does the Minister believe the regulations will make to the much vaunted Food from Britain campaign? We face the certain prospect of less British butter being eaten because less of it will be made. The Milk Marketing Board decided not to sell any more butter into intervention from 1 July, and that is without the half-witted scheme that we are debating. Butter production in the United Kingdom is already on the decline, and the predicted decline in 1984–85 is 32,000 tonnes. The regulations are likely to force down the level of production even further and, presumably, to open the door to costly imports.
The regulations make no mention of the details of the outgoers scheme. Again, the Government have picked on tenant farmers. They have taken away their rights of succession and the farmers will now be left in uncertainty about their position within the quota system. The scheme makes no provision for redundant dairymen, herdsmen or creamery workers. Redundant cows can attract a cash payment from the taxpayer, but those people who are made redundant in the dairy industry cannot. Where is the justice in that? Many dairymen have given a lifetime of skill, experience and care to their herds and they will have to stand by and see the cows collect while they receive only the minimum statutory provision. No other group of workers would be expected to put up with that treatment, and it is a disgrace that the Minister expects farm workers to tolerate it.
Several Hon. Members rose——
Mr. Deputy Speaker (Mr. Paul Dean): Order. Before I call the next hon. Member to contribute to the debate I remind the House that less than two hours remain for this important debate. More than 20 hon. Members wish to speak and I appeal for a series of short, crisp speeches.
1.7 am
Sir Peter Mills: This is another difficult debate on the thorny problem of milk

453
production and how to deal with the surpluses, but once again certain things must be said from the start. First, we must accept that certain things cannot be changed. One is that we are stuck with the quota system, which is something I dislike strongly.
Mr. Dykes: Change it.
Sir Peter Mills: If only some of those who shout from a sedentary position understood the subject, it would be much easier for us all.
Secondly, we must accept that my right hon. Friend the Minister of Agriculture, Fisheries and Food has to deal with the Commission and with other Agriculture Ministers. We may gain something for Britain in discussions with them, but that might open the door for further production in other countries. The situation in France is a good example of that.
Thirdly, whatever we say about quotas, the system and the regulations, it will be difficult to adapt the regulations to make them fair for each individual farm. There will be rough justice and I think that that must be accepted.
Fourthly, some of my right hon. and hon. Friends, some Labour Members and some farmers do not accept that we have a surplus and that something must be done if we are to cut back. If we do not cut back, the end price for the farmer will be considerably reduced as funds become depleted in the Community.
Against that background, I believe that my right hon. Friend has introduced changes which we can welcome. I congratulate him on making changes within the area in which he can manoeuvre. He has listened to the House, and I thank him for that. In view of those changes I am prepared to support, and to recommend my colleagues to support, the Government, but much more needs to be done, and I do not accept that these regulations are the end of the story or that we have to accept them for five years. Changes have to be made.
I hope that the Opposition, and even the few of my hon. Friends who do not support us, will support the Minister in his efforts in Brussels. I hope that the Minister will work extremely hard to get the adjustments that are needed.
Mr. Nicholas Fairbairn: Will my hon. Friend give way?
Sir Peter Mills: With great respect, I do not want to give way, because others want to speak. I shall be as brief as I can.
I welcome the attempt to help the exceptional hardship cases. Whatever people say, there will be some very real hardship cases and they will have to be dealt with. I hope that the Minister will bend over backwards to help in those difficult cases.
I believe that further adjustments will have to be made for the producer-retailers. I agree with the view that the position in which they find themselves is totally unfair. It is also wrong in principle. If ever there was a group of dairy farmers whom we need to encourage it is the producer-retailers, because the milk is going down the throats of the consumers and that is the end of it, unlike butter, which is put into intervention and stored. The Community must sort out that problem and there must be more flexibility.
One of the most difficult problems with which the Government have had to deal is the weather and how that
454
should be—[Interruption.] This is a serious debate and it is very stupid of some hon. Members to laugh. The weather is crucial to hundreds of farmers who are affected by it. It affects their allocations and their quota. I can well understand——
Mr. Fairbairn: Will my hon. Friend give way?
Sir Peter Mills: I can well understand the farmers' difficulty, but I believe that the Government, in their approach to the quota problem, have just about got it right. [Interruption.] I believe that the first 10 per cent. of production can be sifted or left on one side, and that 15 per cent is about right. Most farmers expect, in the average working year, to have production at either plus 10 per cent. or minus 10 per cent. That is part of their job and part of the risk they take.
If we allow too much quota to be given to people because of the weather problem, what is to happen to all the others — to those on the farm and horticultural development schemes, for example? It must not be forgotten that there is a ceiling, and we cannot bump that ceiling. We have a ceiling nationally and in no way can we forget those who are on the various expansion schemes. Many of them will be in real trouble because of the amount of money they have borrowed and put into their businesses. Now they have been cut off and cannot achieve the increased production for which they had planned.
I ask those who are concerned about the weather issue not to think only of themselves. There are many others in other categories who need some extra milk quota. I repeat that I believe that the Government have got it about right.
With regard to timing and delay, I do not accept the argument that we have to deal with the problem as quickly as possible. It is far better to get the right solution than to get the wrong one. That is why I have been urging my right hon. Friend to try to delay things until we can get the regulations and quotas right. I was surprised at the most unhelpful article in the Financial Times today. It even raised the old hat about when the Minister went to Wales and the treatment that he had there, as if that was the most important thing. Those financial journalists could have written about a host of other problems that we have at the moment rather than raising that old hat.
I do not subscribe to the view that we must get on with the task at a tremendous speed. It is far better to get it right. No farmer has yet suffered any penalty, and at the rate things are going I cannot see that happening for some time. The Minister must try to get it right and make even further adjustments. Not one deduction from a dairy farmer in Britain should be made before Europe has got its schemes going. I do not want to see any penalty for any farmer in Britain until all the quotas are worked out. Every farmer must know exactly where he stands before the penalties start, and we must insist upon that.
The problem of the tenant farmer and the landlord is difficult and there has been no solution so far. However, the possibility of a solution can be found through what the CLA has suggested—that is to have a leasing system. That should be explored carefully and I hope that the Minister will do so. I am not prepared to see many of my small tenant farmers not able to take the outgoing scheme because the landlord refuses to allow it. Something should be done and some scheme must be found.
I am not a tax expert. I find is difficult to understand even the reply that was given to a written question today

455
and what the Minister has said. We need far more details on how taxation will work out for each farmer and what it means. We must find a way in which virtually no tax is taken from a dairy farmer if he uses the outgoers scheme.
One could go on for much longer, but the Minister has gone a long way towards dealing with the various problems that we raised. In the interests of the farming community, I urge that we pass the regulations tonight.
1.18 am
Mr. Robert Maclennan: The hon. Member for Torridge and Devon, West (Sir P. Mills) never leaves the House in any doubt of his willingness at all costs loyally to support whichever Minister of Agriculture, Fisheries and Food his party puts forward. Some of us in the debate tonight consider that we have a higher duty, and that is to support the interests of the farming industry. The hon. Gentleman made few constructive contributions. Many in the agriculture industry in Britain feel with justification that the Conservative party has taken them for granted for too long and they will not be taken for granted in the future.
Mr. Patrick Nicholls rose——
Mr. Maclennan: I shall not give way. The debate could be confined to the consideration of the modest amendments to the scheme that the Minister has made. I do not propose to follow that course, because the issues raised by the regulations go far wider than the Minister's speech.
The Government were unprepared to tackle the problem of surplus production. Indeed, far from being willing to give a lead in Europe in tackling this matter, the Minister and his predecessor, the right hon. Member for Worcester (Mr. Walker)—who bears a greater share of the blame for the current mess—encouraged our farmers to believe that they ought to go on producing. The former Minister went round the country trumpeting the success that he and the Government had achieved in boosting domestic output. On his return from Brussels, he boasted in the House of his success in increasing the institutional prices at a rate above the level of inflation. It is sheer hypocrisy for the Government to pretend to the House and the country that they have been endeavouring to produce order in the CAP.
Mr. George Foulkes: Will the hon. Gentleman give way?
Mr. Maclennan: No.
Mr. Foulkes: On this point?
Mr. Maclennan: Not on any point. The Minister was so unprepared for the introduction of quotas, which he is now trying to sell to the farming community, that last summer he spoke in the House of his total opposition to the introduction of quotas. It was not until December that his tune began to change. It is plain that he went into the price-fixing negotiations with not the slightest idea of how he would tackle the problems faced by the Community.
Mr. Foulkes: Will the hon. Gentleman give way?
Mr. Maclennan: I admit that the Minister was left with an inadequate hand and that the Prime Minister had squandered the Government's negotiating capital by focusing exclusively on the British budgetary problem. However, if some forethought had been given to these issues before the price-fixing negotiations, Britain would
456
not have had such a bad deal as that which the Minister brought back and which he has been trying so hopelessly to defend.
Mr. Foulkes: Will the hon. Gentleman give way?
Mr. Deputy Speaker: Order. It is clear that the hon. Member for Caithness and Sutherland (Mr. Maclennan) is not giving way. The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) must not persist.
Mr. Foulkes: But this is a debate, is it not?
Mr. Maclennan: The Minister has told the House more than once that he did his best. Not many hon. Members would deny that, but his best is not good enough for the future of our farming industry. The right hon. Gentleman has created dismay, havoc and rural poverty where prosperity once existed. The Government have systematically misled the agricultural producers for five years and they will reap the whirlwind. [Interruption.] The noise that Conservative Members are making makes it abundantly clear that that charge is well based.
It was a bad deal for Britain, because we have had to accept an unfair share of the cuts in the total quota. It is a bad deal because the New Zealand quota is treated as part of our national quota. It is time that the British Government faced up to the fact that our farming industry cannot thrive if New Zealanders are given preferential treatment. If New Zealand dairy producers were asked to accept the cuts in production which our dairy producers are asked to accept the deal might be fair, but they have not been asked to do that.
Mr. Jim Spicer: Will the hon. Gentleman give way?
Hon. Members: Sit down.
Mr. Maclennan: The impact of the deal is not only upon those who produce milk, but upon manufacturers.
Mr. Teddy Taylor: Will the hon. Gentleman give way?
Mr. Maclennan: No. Manufacturers of dairy parlours, and others who provide equipment for dairy farms, have experienced a 50 to 70 per cent. reduction in output—at least. The knock-on effect on suppliers is insufferable. The impact falls not only upon——
Mr. Jim Spicer: Give way.
Mr. Maclennan: Constant interruptions prolong the time that I shall be forced to take. The hon. Gentleman had better sit down. I do not intend to give way.
One of the purposes of the CAP was to foster——
Mr. Spicer: Give way.
Hon. Members: Sit down.
Mr. Deputy Speaker: Order. This is a serious debate and the hon. Member for Caithness and Sutherland (Mr. Maclennan) is entitled to be heard.
Mr. Maclennan: One of the purposes of the CAP is to foster the production of food in those parts of the Community most suited to it. There has never been any doubt that the grasslands of the west of England and of Wales are most suited to the production of milk. The Minister has succeeded in distorting the Community's production to ensure that those who want to transfer to the production of other commodities are driven out of business.

457
We need direct support for the incomes of those who, as a result of the quotas, will be driven out of production and who will not benefit from the outgoers' scheme. it is unacceptable that the only money which the Government are prepared to make available—in itself inadequate and lower compared with what is available in France and Germany—should be devoted to paying people to go out of production. Farmers need payments to keep them in production so that those who are able to switch from milk to some other agricultural activity and who are willing to take payments under the outgoers' scheme may see their quotas go to those who have no option but to produce milk.
The most unsatisfactory feature of the outgoers' scheme is that it is to be spread over a period of five years. In describing it the Minister did not make it clear whether he had met the request of many of his right hon. and hon. Friends in the earlier debate that these payments should be made tax-exempt. He said that those who would receive a payment would have the option either to have an income payment or a capital payment. What he did not make plain was whether an income payment would be subject to tax. It is my assumption that it will be. He did not say whether a capital payment would be subject to tax. he introduced this proposal in response to a question about tax which he did not answer.
In bringing forward his proposals the Minister has shown an administrative incompetence which is considerably greater than that of almost any other Department in Whitehall, and that is saying something. The president of the National Fanners Union, Sir Richard Butler, told me before this debate that he had returned from Belgium today and that the Belgian Government had already dealt with all the special cases which had been made and had completed them this week. The Minister has not even yet made it clear what the special cases will be. It is obvious that it will be many weeks, if not months, before those who are to be considered special cases know that that is so.
The degree of uncertainty that the Minister has induced by his lack of preparedness for this scheme is deeply damaging to fanning interests. It is intolerable that no British farmer affected by the introduction of these quotas yet knows what his quota is to be. It is quite scandalous that it will be many months——
Mr. Jim Spicer rose——
Mr. Maclennan: It is scandalous that the levy may be raised on people who do not know what their quota is to be. The Minister said that it was impossible to tell them because he did not know how many people would apply under his scheme. It is astonishing that he is so tardy in comparison with every other European country affected.
Mr. Jopling indicated dissent
Mr. Maclennan: Does the Minister deny that under the outgoers' scheme there have already been more than 20,000 applications in the Federal Republic of Germany and more than 30,000 in France? He has given a closing date of the end of August. The Minister and his colleagues have let the industry down appallingly by their failure to provide in time for the introduction of the scheme.
Three specific matters require further discussion in the debate. The first is to whom the quota should adhere. It
458
has been made plain by the NFU and it was advocated by the Social Democratic party last summer that quotas should not only adhere to the producer but that they should be tradeable, though regulated. It is reasonable that when producers are required to give up production they should receive in return a nest egg that is realisable at a time of their own choosing.
The suggestion that the tenant farmers should not enjoy that right and that they should be subject to a veto from land owners is unacceptable, and the industry will certainly not accept it. It is astonishing that the Minister is not prepared to exercise his ministerial office to propose a scheme and bring it before the House tonight. He says that it is possible in Scotland because there is already some agreement, and I pay tribute to those in Scotland—not members of the Government—who came up with an agreement. In the absence of such an agreement, the Minister had a responsibility to make absolutely plain what is to happen and that the tenant farmer would not be deprived of his asset.
My second point of detail is of great importance, especially in Scotland. It is the question of the interchangeability of quota between wholesale and direct sales. It must be made plain to the Minister that his weasel words tonight do not deceive anyone who is looking to the Government to ensure that there will be full interchangeability of quota. The particular importance of that is clear in the Scottish context. As the hon. Member for Dumfries (Sir H. Monro) said, there have been particular problems with the introduction of compulsory pasteurisation in Scotland.
Mr. Foulkes: On a point of order, Mr. Deputy Speaker. In the interests of the House and all those hon. Members who wish to speak in this debate, is there no way at all that you can enforce your request for short contributions? Does that Social Democrat have no conscience? Do the Whips of that party have no power, or will this man be allowed to drivel on all night?
Mr. Deputy Speaker: Order. I get the impression that the hon. Member for Caithness and Sutherland (Mr. Maclennan) is drawing towards the close of his speech.
Mr. A. J. Beith: Further to that point of order, Mr. Deputy Speaker. In considering this matter, I hope that you will take due note of the time that the Labour party takes in this debate, despite the fact that it represents virtually none of the areas affected?
Mr. Deputy Speaker: Order. I hope that we can now get on with the debate.
Mr. Maclennan: The Minister, by his action, has deprived my farmers not only of their livelihoods but of the value of their capital assets. As a result of the introduction of quotas, dairy cows are being culled. In the Principality of Wales and the south-west, up to one fifth of the herds have already gone——
Mr. Ron Davies: What right does the hon. Gentleman have to speak for Wales?
Mr. Maclennan: The value of the cows retained has dropped by £100 per head. This will have a disastrous impact upon the rural areas of the country. The Government had better come forward with proposals to provide that direct income support that is needed to ensure the continuing prosperity of the rural areas of the country,

459
which depend crucially upon the milk industry and which have been betrayed by the action of this Minister and his predecessor.
1.40 am
Mr. Eric Cockeram: I shall seek to obey your request, Mr. Deputy Speaker, for short speeches and not follow the example of the hon. Member for Caithness and Sutherland (Mr. Maclennan).
First, I must protest at the fact that this important matter has been put down for debate at this hour. This matter concerns one of Britain's most vital industries. It will have long-term significance, and it merits more than a truncated debate in the small hours of the morning.
I have much sympathy with my right hon. Friend in the problem that he faces. Clearly, it had to be tackled, and it should have been tackled before now. The milk regime costs some £3 billion per annum, which is approximately one third of capital agricultural policy expenditure, yet at the end of it we have a surplus of some 20 per cent. of production. It is costing far too much money, the EEC is running out of funds, and it is in the interests of all farmers, including those who are not in the milk industry, that the problem be tackled. If the former regime had continued, the common agricultural policy would have run out of funds later this year and all farmers would have suffered. I hope that those farmers who are not involved in milk production will recognise that the problem concerns them, too, even though they are not milk producers.
I deal next with the solution that we are asked to endorse. It appears to be the very opposite of what the Common Market is supposed to be concerned with. The Common Market is supposed to be about competition, trade and a wider trading area, but Europe is now divided into a series of watertight compartments—or should I say milk tight compartments? Those watertight compartments within each country are further divided into quotas for farmers and farmland, and this goes right down to tenants. That is not the right way to tackle the problem of a production surplus.
The regulations, which are detailed and complex, have already produced many problems. One needs no great foresight to comment that it will not be very long before there are still more problems. There is the problem of direct sales versus wholesale sales—something which the Milk Marketing Board does not like. We have not been satisfied tonight on how that will be sorted out. There are hardship cases. How does one define them? There is the problem of ownership and of quota transfer—does it go with the land, or with the tenant? There is the problem of the levy—how is that to be paid, and when? There is the problem of enforcement, particularly across the Channel, and the general uncertainty.
It can be said that the regulations which the House is being asked to approve are a veritable hornet's nest, and over the coming years nobody will be satisfied. Farmers who apply for special quotas and are granted them will be the envy of neighbouring farmers who have applied but have not been successful. We are setting farmer against farmer. The more details and the more regulations we produce, the greater the anomalies.
Mr. Fairbairn rose——
Mr. Cockeram: I would rather not give way. We have been asked to make brief speeches, which I think is the wish of the House.
The United Kingdom has a highly efficient farming industry and our milk sector is an example to the rest of Europe. About 75 per cent. of our herds are of 50 cows or more. Only 10 per cent. of French herds, and only 7 per cent. of German herds are of 50 or more cows. We in this country have a highly efficient milk industry and there is no reason why we should not be able to produce milk much more cheaply than it can be produced abroad.
France and other countries produce wine and other commodities for which their climate is well suited. Our climate is suited to milk production. As we have such an efficient industry, it seems to be against the principles of the Common Market that we should be asked tonight to pass regulations which, as I say, are a veritable hornet's nest. I hope that the Minister will work towards a scheme which enables competition to take place and enables us to get rid of all these regulations, which deal with what I regard as a most unsatisfactory scheme.
1.46 am
Mr. Denzil Davies: If hon. Members accept the regulations, it will mean that the House is approving what was a disgraceful decision made by the Minister of Agriculture, Fisheries and Food in the Council of Ministers.
It is extraordinary that a Tory Government who are supposed to be in favour of a free market, who are against bureaucracy and who seek to allow people to compete, are introducing gobbledegook regulations setting up tribunals, arranging for flying tribunals, making judges decide whether the weather is too severe to act, and so on—all this from a Tory Government who are pledged to allow people to conduct their businesses in the way they choose.
The Prime Minister preaches thrift, hard work, enterprise and the values of entrepreneurship. There is no greater thrift, enterprise and hard work to be found than on the farms of Carmarthenshire, Cardiganshire and Pembrokeshire. The right hon. Lady preaches the virtues of the self-employed. These people are self-employed. They stand on their own feet, yet many of them are being virtually destroyed by the actions of a Tory Government pledged to uphold Victorian and other values about which the Prime Minister likes to preach.
Imagine the result if a Labour Government were in power and their Minister of Agriculture had introduced regulations such as these. He would not have done so. But, if he had, the complaints of Conservative Members would have been tremendous. Marx, Trotsky, Stalin and the kulaks would have been trotted out. We would have heard about the rule of law, natural justice and every other cliché with which we are familiar.
We had a statement this week about GCHQ. Apparently the court decided that what the Government did in that connection was contrary to the rules of natural justice. What the Minister is doing tonight and what he accepted in Brussels is clearly contrary to any of the rules of natural justice that I was brought up to respect, understand and believe in. The Tory Government are taking this action against people who have worked all their lives and have put all their savings into their communities and farms.
Where were the Welsh Office representatives when this matter was being decided? The Secretary of State for Wales has sat here silently throughout this debate. He told

461
us in the Welsh Grand Committee that there was no need for him to go to Brussels, although he gets paid partly for being responsible for agriculture in Wales. He has not had the courage to answer one debate on this issue in the House. Why is he not answering this debate? His constituency is affected by the regulations.
The Secretary of State for Wales knows that Wales and particularly west Wales will suffer more than any other part of the United Kingdom from the regulations. Yet he has not had the courage to rise in this debate and even try to defend the Government's position. Did the right hon. Gentleman know that this decision was being taken? Did the Welsh Office make an assessment of the effects of these measures on west Wales and other parts of Wales? Was there a Cabinet Committee on the subject, or are we back in the pre-Falklands situation when Cabinet Committees are not called, and the Prime Minister simply tells the Minister of Agriculture to go to Brussels, to accept the regulations and not to use the veto? I suspect that is what happened. If the Secretary of State for Wales did not know about that, he is negligent and should resign. If he did know and accepted these regulations, he should resign, because he has failed in his duty not only to his constituents but all the people whom he represents and for whom he is responsible in Wales.
Perhaps the Tory party should try to understand what all this means. It means a massive fall in income for a large number of fairly small producers. That means that they cannot service their debts. Most of them have borrowed from the banks because they were encouraged to do so. They were encouraged with capital grants to build milking parlours and given tax allowances to invest in capital projects. They were encouraged to borrow from the Agricultural Mortgage Corporation, and they did. Now they find that not only their income but their capital assets have been substantially cut. The value of their farm, on which the mortgage is fixed, has been substantially cut. The value of their herds has been substantially cut. That is the position in which a Tory Government, who apparently are supposed to help people like them, have put hundreds of people in west Wales and other parts of the country.
The Secretary of State for Wales (Mr. Nicholas Edwards)rose——
Mr. Davies: I am glad that the right hon. Gentleman has, for the first time——
Mr. Edwards: The right hon. Gentleman——
Mr. Davies: I have not yet give way. The Secretary of State has had his opportunities. There have been many debates in the House, and now he wishes to intervene. I shall give way to him. I am glad that at last he has got to his feet, perhaps to try to defend this shoddy deal.
Mr. Edwards: The right hon. Gentleman has described and attacked the bureaucracy. He has now attacked a fall in income. How does he propose to amend the common agricultural policy, which the former Secretary of State, the right hon. and learned Member for Aberavon (Mr. Morris), has described as an obscenity, without either some form of bureaucracy or a fall in income? What is the right hon. Gentleman's solution to the problem?
Mr. Davies: The right hon. Gentleman's intervention would be more credible if he had tried to do something about the problem. HON. MEMBERS: Answer. It would have been possible for the Minister of Agriculture, Fisheries and Food to have done as the Irish did—vetoed this deal and given the farmers of Wales and the rest of Britain three, four or five years of transitional time to enable them to adapt. They are enterprising people; they would be able to adapt. HON. MEMBERS: Answer. I have answered the question. This is not a reform of the common agricultural policy.
Mr. Jim Spicer: On a point of order, Mr. Deputy Speaker. Will you ask the right hon. Gentleman to explain in a little more detail why he claims that the Irish used their veto? They did not.
Mr. Deputy Speaker: Order. The hon. Member knows that that is not a point of order.
Mr. Davies: This is not a reform of the common agricultural policy. The most vulnerable section of the farming industry has been picked on. Why? That happened to enable the Prime Minister to get her budget deal next week or the week after, so that she could bring home the just about half a loaf that she had managed to get. That is what it is about. That is why the Minister of Agriculture, Fisheries and Food was not allowed—even if he had wanted to—to deliver the British veto. That would have upset the later Council of Ministers which was discussing the budgeting.
Why should the farmers of Britain pay a price just to save the Prime Minister's face because she has so often failed to get a proper deal on the budget? What will happen? The House will be asked in the autumn to increase the VAT contribution to 1·4 per cent. When that is done, the common agricultural policy will not change. More money will be spent until we get to the limit of 1·4 per cent. The beef farmers may well be next when the ceiling is reached in four or five years' time.
A case in my constituency shows the iniquity of the regulations. I do not believe that it was covered by the Minister of Agriculture. A farm which long ago had been a dairy farm but which was being used only for grazing, the then owners having grown old, was purchased by a gentleman in my constituency a few months before the Minister failed in his duty to use the veto and accepted the agreement. It is no use the Secretary of State for Wales sitting there smiling. He knows that this is a serious case because I have written to him about it. The purchaser bought the farm with a view to producing milk. It could not produce anything else in west Wales. Now he finds that the farm is valueless because he cannot milk cows on it. That is the enormity of what is being done by a Conservative Government who are supposed to respect the rule of law, to be concerned about property rights and to be against retrospection in legislation. The regulations take away people's rights in that way.
The unkindest cut of all, especially for Wales, was the fact that the Irish were prepared to use their veto as a last resort to protect their dairy industry while the British Minister of Agriculture was not prepared to do so because he had not the guts to do so and because the Prime Minister had made it clear that he should not do so.
Mr. Dykes: Will the right hon. Gentleman give way?
Mr. Davies: No, I cannot give way, because of the time.

463
The Minister of Agriculture then said that he would make sure that the French and the rest observed the regulations. Unfortunately, his writ does not extend to the Dordogne or the Auvergne and neither does that of the Commissioner in Brussels. Moreover, the French have no milk marketing board. We all know that at the end of the day the French will simply flout the regulations as they have flouted other EEC regulations in the past. There is no point in pretending that the French will abide by the regulations. We shall abide by them, of course. This is a lawful country and we believe in the rule of law, or at least we think that we do. The French, however, do not, and the British Government clearly do not believe in the rule of law either or they would not be supporting the regulations.
The Minister should withdraw the regulations, go back to Brussels and get a decent deal with a decent transitional period. That is the honourable, just and right thing to do. If he is not prepared to do that, we shall vote against the regulations.
1.58 am
Mr. Nicholas Baker: Despite the applause from the Strangers Gallery—I am used to applause when I start to speak — not one Opposition Member has advanced any constructive argument about the policy which they would have pursued, and our debate has been lacking as a result.
The imposition of quotas has been an ugly shock for the agriculture industry and its impact has been felt not just by farmers but by other businesses which depend on agriculture and by the rural community in general. As the agriculture industry does not control its own prices but is imprisoned by the common agricultural policy, we have an extra special responsibility towards it. It is thus perfectly reasonable for Conservative Ministers to argue, as Labour Ministers argued in the past, for a change in the system and to point out, having lost the argument with the EEC, that the system has encouraged an increase in agricultural production, because farmers do not under-stand that aspect, and we should appreciate why they do not. The suddenness of the imposition of quotas is like throwing a car that is being driven in forward gear into reverse. Only a supremely strong gear box will survive such treatment. Some cogs will fly off and others will break.
I shall comment briefly on the regulations. I congratulate my right hon. Friend the Minister on bringing forward the changed regulations so quickly, and I dissociate myself from the comments of the hon. Member for Caithness and Sutherland (Mr. Maclennan) about the Ministry of Agriculture, Fisheries and Food. On direct sales, I hope that my right hon. Friend will press for full interchangeability of direct and wholesale quotas.
One of the cases that concerns me most is that of the producer-retailer who, like many of that small band of farmers, is developing new markets by selling milk to people who otherwise would not buy it. He saw quotas coming, took evasive action and reduced the number of cows. He has increased his sales by that alternative method of sale. He has made a large investment to do so. I believe that he and others like him are a special case. I hope that we shall not ignore the good work of retailers in extending sales of milk.
On special cases, I am glad that the definition of base year revision claims regulations will allow some
464
consideration of whether to allow a change in the base year. I hope that my right hon. Friend will examine the 15 per cent. figure carefully, as it will be unreasonably high according to the views that have been put to me.
I welcome the outgoers' scheme which was announced in reply to a question that I asked my right hon. Friend. It applies principally to farmers with fewer than 40 cows. The small farmers who will be especially endangered by the quota system, as I know from my own constituency experience, will be those with 65 to 70 cows, particularly those farming on land which cannot be used for any purpose other than dairying.
I hope that my right hon. Friend will put this point about taxation to our right hon. Friend the Chancellor. There is favourable treatment of permanent reductions in herds of 20 per cent. I believe that it would help owners of herds that are being reduced as a result of the imposition of quotas if a lesser reduction far that purpose received the same favourable tax treatment. I hope that my right hon. Friend will consider that matter.
On quotas generally, I welcome my right hon. Friend's determination that he will not collect levy if other EEC countries are not doing so. I, and certainly the farmers in Dorset, including those in my constituency of West Dorset, expect that quotas will be applied in the EEC and elsewhere in the United Kingdom. Failure to do so will mean that we must reconsider the scheme's application.
This whole episode raises the fundamental question whether the CAP can be changed gradually enough to allow our farmers to work within it. It was formed for purposes which another hon. Member has described, but which no longer exist.
I share the deep concern about the need to increase our own resources. I have to accept that the imposition of the quotas is necessary, although their sudden imposition has been a deep shock to the system. The alternative to the system that we are considering tonight is a national system of quotas, and if the system that we are debating is not imposed satisfactorily throughout Europe, my right hon. Friend will have to look for a national system.
The pain of quotas will be sustainable if this is the first step in the reform of the common agricultural policy, but the EEC has yet to develop the will to reform. It is political will, not financial insolvency, that must be the spur to reform. Only a gradual and sustained programme of reform will provide a framework in which our most efficient and important industry — agriculture — can survive and prosper.
2.5 am
Mr. James Nicholson: I am honoured to put forward the case again for Northern Ireland. I apologise, and crave the indulgence of hon. Members, for again taking them across the Irish sea. I listened with great interest to previous speakers relating the problems in their individual constituencies. I sympathise with those representing Wales, but I can tell them that theirs is not the worst hit region in the United Kingdom—Northern Ireland is.
I am more than disappointed at the draft regulations and how they will affect Northern Ireland. There is nothing in them to change our minds about what we thought in the debate on 3 July, so we on this Bench will vote against the regulations. Total lack of sympathy has been shown to the Northern Ireland dairy farmers by the Minister since April. It was bad enough to negotiate the disastrous deal for

465
Northern Ireland in Brussels, but then the right hon. Gentleman returned and attempted to camouflage that deal as being good for Northern Ireland. However, we now know the truth. We were all misled into believing that the Northern Ireland quota was based on 1981 deliveries, but now we know that 1983 was the base year.
We further know about the 63·1 million litres that was awarded to Northern Ireland as a special allocation, because of our special circumstances, at the Brussels agreement. Some 52·3 million litres went to England and Wales and 5·4 million litres to Scotland, leaving Northern Ireland with 5·4 million litres. The figures that I have given are agreed upon by every organisation in Northern Ireland, from the Milk Marketing Board to the Ulster Farmers Union, as well as every farmer and dairy producer, and myself. I ask the Minister to confirm or deny that that is what happened. Will he further confirm that those involved in carving the quota into the regions had great difficulty in making the calculations look respectable?
I refer the Minister to some figures that were presented in an attempt to justify the situation in Northern Ireland by the noble Lord responsible for agriculture in Northern Ireland. The figures are for the percentage reduction, and applied to 1983 deliveries are as follows. England had a reduction of 6·25 per cent., Scotland had a reduction of 6·39 per cent. and Northern Ireland had a reduction of 10·35 per cent. over 1983 deliveries. Had Northern Ireland not received the 65,000 tonne special aid, what would the Government have done? Would the Northern Ireland reduction still have been 10·35 per cent? If that is so—I believe that it is—all the statements that the Minister and Prime Minister made, that Northern Ireland's special circumstances would be protected, were totally incorrect. The Minister speaks of equalising the grief throughout the United Kingdom. He must also be prepared to equalise the price. The situation is monstrous and must be examined and remedied by the Minister.
What about next year? Will Northern Ireland be placed in the same position again? The Minister has got the regulations wrong, and he would do the House a great service if he would withdraw them and make them more acceptable to the farmers not just of Northern Ireland but of the United Kingdom as a whole.
Can the Minister tell us what will happen to the farmers—there are about 2,500 of them—who are currently expanding and developing their farms in Northern Ireland through schemes embarked on in conjunction with the Department of Agriculture? They want to know very quickly whether they will be allowed to continue with that work.
In the regulations, the Minister has allowed farmers in Great Britain five weeks instead of four in which to apply for extra quota under the special case provisions. Will Northern Ireland be allowed five weeks too? If not, why not?
I listened with interest to the Minister's reply to my right hon. Friend the Member for Lagan Valley (Mr. Molyneaux). His argument does not hold water in relation to Northern Ireland. This is simply another attempt to make Northern Ireland different. The Minister should allow Northern Ireland the same five weeks as any other part of the United Kingdom. We will accept no less.
466
There are many points that I would like to make, and it is totally wrong that hon. Members should be restricted to a three-hour debate when so many of us wish to speak. I shall conclude by referring to another issue about which, it appears, the Minister is wrong.
In the headlines of the Belfast Telegraph yesterday, we read:
"Jopling not aware of milk smuggling".
I wonder where the Minister has been. If he knew anything about Northern Ireland he would know that milk smuggling is rampant. People from the Irish Republic are buying milk at the back of the tanker at 40p a gallon. The Minister can tell Brussels that that is the situation.
We in Northern Ireland do not want milk smuggling to continue. We want our milk put to good use within Northern Ireland, where it can help to create employment. The Minister must realise that milk is being smuggled across the border to the Irish Republic, which has been given an extra 4·5 per cent. That milk will not count against the 4·5 per cent. It will be turned into butter and cheese and be sold in England and Wales where it will ruin more farmers.
Mr. Roy Beggs: The Minister said that this statement about smuggling is hearsay. Would he also say that the fact that 3,000 jobs are at stake in Northern Ireland — jobs which depend on milk processing and cheese making—is hearsay?
Mr. Nicholson: My hon. Friend has made an important point. I must agree with him. Any Minister who could bring such an agreement back from Brussels, for any part of the United Kingdom, is capable of anything.
I propose to be crisp and to the point. I end by repeating my earlier plea. I hope that, when he replies, the Minister will deal effectively with the problems of Northern Ireland. I hope that I shall not, as on other occasions, be told that I will be sent a letter answering my points. I am still waiting for the letter. We in Northern Ireland are more affected by the scheme than any other part of the United Kingdom. I believe that I speak on behalf of every Northern Ireland dairy farmer when making this plea: "Consider the scheme again because as it stands you are robbing us. You have stolen from us, for you have taken our quota. You did not get what you set out to negotiate for us and you may have been forced to accept less by Europe, but look at the proposals again. If you do not, you will ruin our dairy industry."
2.15 am
Mr. Robin Maxwell-Hyslop: We should remind ourselves immediately of the piece of nonsense that came from the right hon. Member for Llanelli (Mr. Davies), who talked about a veto. No country had a veto, but if something is said often enough people tend to assume that it is true. There was no British veto and no Irish veto; no one had a veto because unanimous consent was not required.
I have been of the view for many years that we need a national quota system. It was nonsense to advocate, as some did, and as my right hon. Friend the Minister has done, that milk prices should be slashed instead of introducing a quota system.
Two large sections of the milk producing industry in Europe react to reduced prices by increasing output. Those who have a heavy load of debt which they must cover by interest payments can react only by increasing output so

467
as to spread their overheads over a greater gallonage. Secondly, especially in Germany and to a lesser extent in France, there are many part-time producers who are not dependent on their income from their milk production for either their livelihood or for sustaining a reasonable standard of living. The theory that we can squeeze those people out of milk production by slashing the price is fallacious. It should not be within the realm of conjecture because we saw what happened in years gone by in Britain under the standard quantity system. Further, it is not a morally tenable proposition. The evidence is there for those who have eyes to see it and memories to retain what they have seen.
We should have introduced the quota system long before the massive Irish expansion and, to a lesser extent, French expansion took place. Unfortunately, that was not done. It was scandalous that in those circumstances the Republic of Ireland, which is to a large extent the author of the misfortune in which the Community as a whole finds itself, should have been rewarded with an extra quota. There can be no justification for that.
The balance of advantage lies in getting our quota regulations into force as quickly as possible so that farmers know where they are on their initial quotas and so that the settlement of all the appeals is brought as far forward as possible. No one can make rational decisions about running his farm until he knows what his quota will be. That is why the leadership of the NFU has asked us to pass the quota regulations.
There are a number of provisions in the regulations which I find intolerable. The first is the absence of any provision for making the compensation payments under the outgoers scheme tax-free. There has been a spurious attempt on the part of my right hon. Friend and others to represent going out of milk as not going out of farming. For many it is exactly that, because tenants cannot get another tenancy. In many cases it is written into the agreement—for example, in Devon county council's holdings — that the farm will be used for milk production. If farmers go out of milk production, their tenancy agreement is violated and it is no longer valid. To imagine that they can get another tenancy elsewhere not producing milk is to imagine what is known to be untrue.
In many cases to go out of milk production is to go out of farming, just as certainly as a steel worker, subjected to the only other EEC quota there has ever been, on steel, has to leave the steel industry. But somebody who leaves the steel industry does not have to give up his occupation except in producing steel. If a man has been in a steel rolling mill, he can roll aluminium instead of steel in another firm. If he is in a foundry the same thing applies. He does not have to sign an agreement to go out of that style of livelihood, as a milk producer does. It is not a matter of conjecture.
The outgoers scheme regulations are there in the Vote Office to be inspected. The farmer has to undertake never to produce milk again or to participate in the production of it as long as those milk regulations or their successors last. No such requirement applies to somebody driven out of the steel industry. A moulder in a steel foundry can be a moulder elsewhere in industry—if he can find a job. It can be in any other metal, non-ferrous or otherwise. Steel workers do not have to sign agreements of this kind, yet they get their redundancy or compensation money without the taxation which is to be imposed on people who
468
receive the paltry sum of £650 over five years, not one year—it is £130 a year—for every 5,000 litres of quota. That is quite intolerable.
It is quite intolerable that there should be double the maximum summary penalty for fraud under this scheme in England as compared with Northern Ireland. I know that in Northern Ireland there is a limit of £1,000 on what can be imposed as a summary penalty, but there is no requirement that we should have a higher penalty in England. I have drawn this to my right hon. Friend's attention and he has done nothing about it; he has left it as it is.
Nothing has been done by my right hon. Friend to deal with the question of the tenant farmers under the outgoers scheme. He has just said, "Let the CLA and the NFU get together and work it out," but he knows perfectly well that they have not worked it out. It is his job as Minister, not their job, to make the regulations, whether they be for milk quota or for the outgoers scheme. What it means—we all know it—is that tenants will not be able to get their landlord's consent because of the value that will be knocked off the capital value of the farm; therefore they will not be able to benefit from the outgoers scheme. They will be completely trapped in many cases having just negotiated new three-year rent agreements before 1 April, only to find that they cannot now generate the cash flow to meet the increased rent because of the quota system.
If my right hon. Friend says that he has just made provision—may I have his attention, please? If my right hon. Friend says that he has just—if the Whip on duty would be good enough to allow the Minister to listen to the debate I would be much obliged. [Interruption.] It is no good my right hon. Friend saying that the regulations laid tonight make an additional provision—which they do—that quota can be brought up to the 1983 level rather than the 1981 level, for those whose output is not more than 200,000 litres a year, if, owing to weather conditions in 1983, their output in 1983 was lower than it was in 1981. Using anything bought by the outgoers scheme to bring it up to 1983 when 1983 is lower than 1981 in many cases to be found in Devon, and I do not doubt elsewhere, is no help at all.
Those are the problems that have not yet been grasped by my right hon. Friend, and which should have been grasped by him before he land the regulations before the House, which can only accept or reject them: it cannot amend them. They should have got it right before they were laid on the Table. That is why I shall not be able to support them.
2.25 am
Mr. George Foulkes: First, I remind the alliance that I am a Labour Member and represent a rural constituency, and there will be a lot more of us here soon. When the hon. Member for Caithness and Sutherland (Mr. Maclennan) was apportioning blame to those who encouraged farmers to increase their production, he forgot someone. He forgot the former President of the Commission, now the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). If farmers think that they can look to the Social Democratic party for a rosy future they can think again.
Along with my hon. Friends the Members for Cunninghame, South (Mr. Lambie) and for Kilmarnock and Loudoun (Mr. McKelvey) and the hon. Member for Cunninghame, North (Mr. Come) I attended a meeting of

469
the Ayrshire executive of the National Farmers Union last Friday. It asked me to put a number of questions to the Minister and I hope, like the hon. Member for Newry and Armagh (Mr. Nicholson), that he will answer them when he replies.
First, we know that in Scotland the tenants now, by a voluntary agreement, has to have a declaration from the landlord to be able to sell. What happens, as other hon. Members have asked, if the landlord refuses to allow a tenant to enter the outgoers scheme?
Secondly, the NFU asked about the transferability of quotas. There is great concern in Scotland that there will be a black market in quotas and that they will go to the highest bidder. As Scotland is being treated as one area, it is feared that there will be a movement from the relatively poor west of Scotland to the relatively rich east of Scotland. What will the Government do about that?
The Minister said earlier that if other member states do not adhere to their quotas he will watch developments closely. Then he said that there will be a report in September. What will he do if the report in September says that countries have not adhered to their quotas? What sanction or control will there be?
Unlike the hon. Member for Caithness and Sutherland, I shall be brief and observe your request, Mr. Deputy Speaker. What will happen about producer-retailers? They do a damn good job. We have not had a proper answer from the Minister about what special attention will be given to producer-retailers.
Finally, the farmers of Ayrshire, like the farmers of Wales and Northern Ireland, are fed up. They believe that the Minister has sold them out and that the French have got such a good deal out of it while we have had such a bad deal. They are shocked, ashamed and disgusted and next time many of them, thank goodness, will be voting Labour.
Mr. Deputy Speaker: Before I call the hon. Member for City of Durham (Mr. Hughes) I should inform the House that if there are any further disturbances in the Strangers Gallery I shall feel obliged to order the Gallery to be cleared and to suspend the sitting while that is happening. I should be most reluctant to take such action.
2.29 am
Mr. Mark Hughes: The debate has demonstrated that this procedure is a most unsatisfactory way of dealing with a formidable change brought to the British dairy industry—the most important change since the war.
For 40 years our farmers, particularly the dairy farmers, have been encouraged to increase their production. They have received grants and assistance and advice on how to do that. Suddenly, that process is reversed. It was originally proposed that we would have only one and a half hours to debate the regulations, which cannot be amended. No doubt the Government are legally in order in using the European Communities Act to introduce the scheme, but they would have been better advised to do so by primary legislation, which would have been given a Second Reading and examined in detail in Committee.
There are many faults in the scheme. I doubt whether any hon. Member in any part of the House could not find some aspects that he would want to amend. No one
470
believes that they are right. Even the hon. Member for Torridge and Devon, West (Sir P. Mills) said that he did not think that these were the final regulations and that the Government would have to come back to the House time and again to get them right. It would have been better to have this major change incorporated in primary legislation, with a Second Reading and an effective Committee stage during which hon. Members could have got the regulations right and reflected the points that constituents have put to them. Instead, we were to be allowed only one and a half hours, though it was subsequently extended to three hours.
It is an insult to the dairy industry that the debate should take place between midnight and 3 o'clock in the morning. No one in the industry can believe that our minds are at their clearest at this hour.
The regulations provide that if an entrant is to qualify, milk must have been in production on a holding on 2 April this year. My right hon. Friend the Member for Llanelli (Mr. Davies) mentioned a case that illustrated some of the problems that will arise, and I wish to draw attention to the difficulties faced by the Royal Society for the Protection of Birds which, after much consultation, bought a couple of farms on the island of Islay and turned them into a bird reserve.
In order to manage the farms as a bird reserve, the RSPB had to have dairy cows. The previous tenant was a dairy farmer, but he had moved out of milk production. The RSPB was urged to reintroduce dairy production on those holdings. It has no quota and nothing in the regulations would enable it to get a quota.
The Parliamentary Under-Secretary of State for Scotland (Mr. John MacKay): I am happy to respond to the hon. Gentleman. The previous tenant had a quota. That is his quota, even though he has left the farms and they have been bought by the RSPB. The society has been rather dilatory in deciding whether it wishes to continue in dairying. Now that it has decided to continue, it can negotiate with the previous tenant who has a quota which is transferable.
Mr. Hughes: I am grateful to the hon. Gentleman, because he brings out the fact that there will be a market in quotas. The previous tenant can hawk his quota round to anybody. There is no security for the RSPB and if its holdings do not produce milk, the creamery on Islay will cease to be viable. If that happens, what will the other farmers on the island do with their milk?
The Under-Secretary seems to suggest that the RSPB should have done something about that in April, but it was told about the regulations only 10 days ago. How could it have done something in April when it found out about the regulations only 10 days ago? That is an absurd suggestion.
I noted that the Minister said that only a person moving into a farm after the regulations come into force can apply for an allocation de novo. What is the position of those who moved in on 1 April or on any subsequent day? If they moved in any time after 2 April they are in no man's land. If a person moves in after the regulations are approved he has a claim, but if he moves in after 2 April and before the regulations come into effect he will never have a claim.
The outgoers' scheme is unsatisfactory as drafted. I shall not repeat the arguments in today's debate, but I plead with the Minister to realise that if the regulations

471
come into force—for argument's sake—this weekend, within five weeks the farmer must sign an undertaking to give up his entire dairy quota. That time-scale is unreasonable. Surely the Minister will not stick to the five-week stipulation. I hope that he can assure us that the scheme is ongoing and that farmers can use it for some time to come.
We could go on at length about the details and the points of importance involving Irish and Welsh interests, but the main thrust is that the scheme is bad, hook, line and sinker. The whole deal is bad. It forces upon hard-working farmers a fall in income, the prospect of loss of income and loss of capital which they cannot recoup. After years of Governments advising them to increase production, suddenly, at far too short notice, they are required to accept this woeful scheme.
I believe that a stern price policy would have brought costs down, by as much as the right hon. Member for Worcester (Mr. Walker) increased costs when he was Minister for Agriculture, Fisheries and Food and there was a structural surplus.
The dairy farmers believe, with justification, that they were sold down the river for a deal on the budget rebate. That belief is widely held. I trust that my right hon. and hon. Friends will vote against this bad deal, which is unamendable and unacceptable.
2.38 am
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): I shall follow the lead of my right hon. Friend the Minister and the hon. Member for Aberdeen, North (Mr. Hughes) in not going over again the many general points about the quota scheme made in other debates and in the full debate that we had on 3 July. However, the background to the quota scheme is important. I take up what my hon. Friends the Members for Torridge and Devon, West (Sir P. Mills) and for Ludlow (Mr. Cockeram) said about something positive being done to deal with the cost of disposing of the surpluses. If we had not done that no cheques would have been paid to any farmers for any purpose from September this year onwards. The debates in the House would have been very much more critical of us if we had not taken the action in March to avoid that position happening from September.
My hon. Friend the Member for Ludlow made it clear that the cost last year of some £3,000 million to dispose of the dairy surplus was one third of the total cost of the CAP and one fifth of the total cost of the Community. If we had not taken the action on quotas in March, according to current Commission estimates the cost of the dairy surplus for this year would be well over £4,000 million. That would be very difficult to justify as a sensible use of the Community's resources. I remind the hon. Member for Aberdeen, North that he has constantly criticised the cost of the CAP and said that it should be brought down and constantly complained about the cost of the surpluses. I noted carefully that the hon. Member for City of Durham (Mr. Hughes) said that he would have acted on price in a more severe way than the 12 per cent. alternative that we are discussing. Whatever action was taken, we had to face these costs and had to do something. That is a very important starting point for this debate.
Mr. Robert Hughes: The agreement reached earlier this year is not bringing down the cost of the CAP. What
472
is more, we were told only yesterday or the day before that, unless more money was provided to the EEC, payments to farmers would stop in September.
Mr. MacGregor: The budget is being discussed in Brussels at the moment in the Budget Council. But the matter relevant to this debate is that had we not taken the action on quotas, we would have had to face costs of another £1,000 million to dispose of a dairy surplus which could not be justified in terms of a sensible use of economic resources. Had we not done that, that is what we should be facing.
Mr. Nicholas Winterton: Bearing in mind that the Prime Minister said when she opened the Royal Agricultural Show in 1981 that in the previous 25 years agriculture had increased production, saving the country £1·5 billion in imports, and that there was still room for a lot more production, how does my hon. Friend square that with what he has just said to the hon. Member for Aberdeen, North (Mr. Hughes)? I speak as one who is totally and implacably opposed to this package.
Mr. MacGregor: I was well aware of my hon. Friend's position on this, and I gave way to him to enable him to make it clear once again. I yield to no one in my admiration of what our farmers have achieved over the last 25 years and their balance of payments achievements for us, but that has nothing to do with the fact that since 1981 we have seen big increases in dairy production. We are now more than self-sufficient. We see the huge surpluses in the Community, and this matter has to be tackled.
I have been asked many questions. I shall not be able to respond to all of them, but I shall endeavour to write to those hon. Members who raised specific points if I have not the time to deal with them. I hope that the House will allow me to try to answer as many of them as I can without interruption.
The hon. Members for Aberdeen, North and for city of Durham asked about the time limit on the outgoers scheme. There is a problem here. Obviously we want to get the scheme going as quickly as possible, and get the quotas released from the scheme so that we can reallocate them to all those cases that we have discussed. The sooner that we can achieve that, the better for the dairy producers who remain. We believe that five weeks is sufficient, because many dairy farmers will have been thinking about their position in recent weeks. But we have allowed some flexibility in the regulations if it should prove necessary.
The hon. Member for Aberdeen, North referred to weather difficulties and asked me to justify the 15 per cent. Although we asked for comments on this in the debate on 3 July, not many hon. Members commented on it, so we did a trawl of as many opinions as we could following that debate, which perhaps explains why this regulation was tabled rather later than the first one. As my hon. Friend the Member for Devon, West pointed out, the problem is that, if we had allowed too low a filter through which to go on the weather point, it would have been up to panels and tribunals to decide how they wanted to define a serious natural disaster. If it had been too low, the expanders—who have put their money up front—might have had no additional quota allocation. Therefore, it is right to define "serious natural disaster" at about 15 per cent. We have consulted many of my hon. Friends on this point, and I believe that that figure is about right.

473
The purpose of paragraph 6(2) of schedule 2 is to cover the position where the Milk Marketing Board has allocated a quota to a producer not knowing that he has given up some of the land that he was farming on 2 April 1984. The producer who took over the land might have a valid claim to a share of the quota. It is entirely reasonable to provide for both parties to be notified when the position arises, and for them to be given the opportunity to reach an agreement or to go to arbitration. There is nothing sinister in all that—it is a sensible arrangemet for ensuring fairness. The hon. Gentleman asked that there should be widespread consultation on the regulations. I assure him that there has been intensive consultation, both before and after April.
My hon. Friend the Member for Clwyd, South-West (Mr. Harvey) called for a transition period — a point made in our previous debates. I shall repeat the point that I made then. We have allowed for a transitional period of 1 million tonnes, which must be paid for by the additional co-responsibility levy. That was done at the request of much of our farming industry. My hon. Friend was right to say that we could have had a longer transitional period if the whole problem of the costs of disposing of the dairy surplus had been tackled earlier. Alas, from the figure I have already quoted, he will note the enormous financial problems facing the Community. Frankly, that is why the transitional period had to be so short.
My hon. Friend said that we have a clear duty to small farmers, and I agree with him. I am sure that he will welcome the relief for the small producer that we are introducing in the outgoers scheme. Many farmers still have not taken fully on board that one of the main objectives of the outgoers scheme is to release quota, rather than to help people getting out, so that we can put the small producers back to their 1983 position.
The changes that my right hon. Friend has secured after many months of hard negotiation on the extension of the less-favoured areas, bring benefits to some 9,000 small producers in Wales alone. I am sure that he will welcome that and recognise the efforts that have been made to assist the small farmers.
The hon. member for Birmingham, Erdington (Mr. Corbett) must concede that we do not drink all the milk that we produce in this country, and therein lies our problem. He said that more milk is drunk in this country. I ask him to reflect on the fact that in our intervention stores—both in butter where we have about 180 to 190 days supply, and in skimmed milk powder where we have more than 620 days supply — is evidence that we are contributing considerably to the cost of disposing of the surplus. The problem is that we may not have been as successful in the past in marketing to the market a lot of the manufactured milk products to which the other half of our milk production goes. If he reflects on that point, he will see that we are contributing considerably to the problems that the Community faces.
The hon. Member asked also about doorstep delivery, and for an assurance about supplies of liquid milk. The very fact that less than half of our total milk production goes to liquid milk consumption shows that there is a great deal of leeway. He may know that in the seasonal trough in August and September there is often a problem of regional distribution of liquid milk supplies. That has been the case in the past, and it may be the case in the future. In itself, it has not anything to do with quotas, I think.
474
The problem lies in the fact that a cut in production means that some of the outlets for milk that have been used in the past will be cut back. Here I am thinking of manufactured milk outlets. I am pleased, having described the contribution that we have already made to intervention stores, to note that the amount of butter and skimmed milk powder being offered for intervention has now fallen. Indeed, in June about 45,000 tonnes of butter and 8,000 tonnes of skimmed milk powder were offered, compared with 12,900 tonnes of butter and 29,000 tonnes of skimmed milk powder in June last year. That shows that quite a bit of quota operation is having its effect in the right direction, and the one that we want to achieve.
It is up to industry to decide on the priority to be given to the various outlets for milk. In practice, it gives first priority to the liquid market, and I believe that it is alarmist to suggest that there will be a shortage of drinking milk. As I said, there may be regional variations in the supply of milk. Our marketing system is well used to coping with these, and moving milk supplies to areas that need them.
I am grateful for the comments of my hon. Friend the Member for Torridge and Devon, West about the attention that we have given to all the points made in debate on 3 July. I assure the House that we spent a great deal of time poring over all the comments that were being made in that debate, and doing all that we could to meet them. My hon. Friend said that more needs to be done, and I agree. He will know that there is a review after three years of the quota system.
Even before then, I agree with him that we ought to be pursuing in the Council of Ministers and with the Commission a number of other matters. I assure him that we will do so. Among the most prominent in our minds at present of the points raised by him and others of my hon. Friends is the need for greater flexibility between wholesale and direct sales. I have much sympathy with the points made about producer — retailers and producer-processors who are, after all, serving directly the needs of a market, and not intervention. We are continuing to press for greater flexibility through this area in the Commission regulations.
In the changes put before the House, we have introduced one regulation that gives greater flexibility. I also agree with my hon. Friend that we need to pursue the matter of transfer, leasing and marketability of quotas. There are limits to what we can do in the Commission regulations, but that will be our endeavour in the coming months.
My hon. Friend referred again to the exceptional hardship cases, the point that he raised so much in the last debate. I am sure that he will be pleased to see the new amendment put into the regulations to meet this point. My right hon. Friend explained that he was enormously sympathetic to this group. On the point about implementation in other countries, we explained in the debate on 3 July that we had already raised this point in one Council of Ministers meeting. Earlier this week in the latest Council meeting, as my right hon. Friend said, we again made clear that we believe that it is said, we again made clear that we believe that it is essential that all member states are implementing the arrangements together and effectively.
It will be impossible to defend imposing the levy on producers in some member states in the autumn if it is evident that in other member states the measures are not ready for full implementation. That is why my right hon.

475
Friend secured this pledge of a full report on progress from the commission at the next Council of Ministers meeting, which will be before the end of September, and will give us good time to note how well it is being implemented.
The question of tax was raised by my hon. Friends the Members for Torridge and Devon, West and for Tiverton (Mr. Maxwell-Hyslop). On the general point about whether the tax treatment of the outgoers scheme is more or less favourable than the tax treatment of redundant steelworkers and so on, I wish that I had more time in this wind-up speech to devote to the matter, because there is rather a lot to be said about tax. I am afraid that I will have to truncate my remarks somewhat.
I think that there are differences in the position of a fanner who opts for the outgoers scheme who will, after all, still be able to farm on his farm, although not in dairy. If he opts for the outgoers scheme, he will be able to turn to other farming activities if it is possible for him to do so. Where redundancy payments are made to workers who are made redundant, there is the general rule that lump sum redundancy payments have tax exemption for the first £25,000, but the balance thereafter is charged to income tax.
A particularly important point in relation to the steel workers paid under the Community and British Steel Corporation schemes is that, where the benefit is paid in the form of periodic payments, the payments are liable to tax as earned income under the normal PAYE rules. Under the outgoers scheme, we have secured the provision that the farmer has the option of being taxed either on capital gains or income tax, depending on which method under the outgoers scheme he chooses.
That is favourable tax treatment, especially when one takes into account the fact that these fanners will, of course, be giving up their herds and so will be able to take advantage of the herd basis of taxation, which means that they will pay no tax on the proceeds of their herds. Overall, that is favourable tax treatment to encourage farmers to take advantage of the outgoers scheme.
The speech of the hon. Member for Caithness and Sutherland (Mr. Maclennan) was so riddled with inaccuracies that it is difficult even to begin to comment on it. He talked about the impact on ancillary industries, and one understands that. There is always an impact in any industry when one is trying to bring supply and demand into closer balance. But I thought that it came rather rich from him, when one bears in mind that for a long time he has been calling for quotas in the dairy sector, and the same implications for some of the ancillary industries would be bound to flow from his policies. He was, therefore, shedding crocodile tears.
I had much sympathy for many of the points made by my hon. Friend the Member for Ludlow. He rightly drew attention to the need to contain the cost of disposing of the surpluses. Frankly, this was, in the end, the only way of gaining agreement in the Council of Ministers to achieve that. My hon. Friend made a number of fair points, but inevitably, in such a situation, where the overriding need was to get the costs down, we had to make certain compromises. I believe that the quota scheme was fair to Britain in its general outcome.
I come to the remarks of the hon. Member for Newry and Armagh (Mr. Nicholson) and in particular the question which he raised in the previous debate about the Northern Ireland quota share. Account was taken of the substantial
476
increases between 1981 and 1983 in deliveries to dairies, which rose by nearly 20 per cent., as we are permitted to do under the Community regulations.
In arriving at the Northern Ireland share of the wholesale quota, that was taken into account, and the basic Northern Ireland share is 7 per cent. higher than the 1981 deliveries, or 12·5 per cent. higher taking account of the extra 65,000 tonnes. In contrast, for the United Kingdom generally, the increase over 1981 is about 2 per cent., so it is clear that there has not been unfavourable treatment. As the hon. Gentleman knows, there is favourable treatment for Northern Ireland in the outgoers scheme in that the allocation there is more than twice the United Kingdom general level.
To summarise, there are four key points before us in facing the regulations. First, restraint on costs is necessary; otherwise the costs of disposing, of the surpluses would soar beyond all economic reason, and, as a major net contributor to the CAP, we would be one of the biggest losers. Secondly, we have responded to the request of the House on all points relevant to the regulations so far as we possibly could within the EEC rules.
Thirdly, we have made our position absolutely clear on non-compliance by other member states. Fourthly, and above all, what our producers now want is to get on with knowing where they stand, to get the production quotas made firm, and to set in hand the procedures for special cases, exceptional hardship and the outgoers scheme. That is what the hon. Member for Aberdeen, North meant when he talked about uncertainty. That is why the NFU and the CLA have made the remarks that they have in their briefs to hon. Members. The NFU says:
"It is hoped that Parliament will approve the regulations without delay."
The CLA says that it supports
"the passage of this Statutory Instrument through Parliament."
We agree. We want——
It being three hours after the commencement of proceedings on the Motion, MR. DEPUTY SPEAKER put the Question thereon pursuant to the Order [17 July].
The House divided: Ayes 284, Noes 160.

Division No. 415]

[2.59 am

AYES

Adley, Robert

Brandon-Bravo, Martin

Alexander, Richard

Bright, Graham

Amess, David

Brinton, Tim

Ancram, Michael

Brown, M. (Brigg & Cl'thpes)

Arnold, Tom

Browne, John

Ashby, David

Bruinvels, Peter

Atkins, Robert (South Ribble)

Buchanan-Smith, Rt Hon A.

Atkinson, David (B'm'th E)

Bulmer, Esmond

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

Burt, Alistair

Baker, Nicholas (N Dorset)

Butcher, John

Baldry, Tony

Butterfill, John

Banks, Robert (Harrogate)

Carlisle, John (N Luton)

Batiste, Spencer

Carlisle, Kenneth (Lincoln)

Beaumont-Dark, Anthony

Carttiss, Michael

Bendall, Vivian

Cash, William

Benyon, William

Channon, Rt Hon Paul

Best, Keith

Chapman, Sydney

Biffen, Rt Hon John

Chope, Christopher

Biggs-Davison, Sir John

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

Blaker, Rt Hon Sir Peter

Clark, Dr Michael (Rochford)

Bonsor, Sir Nicholas

Clark, Sir W. (Croydon S)

Bottomley, Peter

Clarke, Rt Hon K. (Rushcliffe)

Bottomley, Mrs Virginia

Colvin, Michael

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

Cope, John

Bowden, Gerald (Dulwich)

Cormack, Patrick

Boyson, Dr Rhodes

Corrie, John

477

Couchman, James

Knowles, Michael

Cranborne, Viscount

Knox, David

Crouch, David

Lamont, Norman

Currie, Mrs Edwina

Lang, Ian

Dicks, Terry

Latham, Michael

Dorrell, Stephen

Lawler, Geoffrey

Douglas-Hamilton, Lord J.

Lawrence, Ivan

Dover, Den

Lee, John (Pendle)

Durant, Tony

Leigh, Edward (Gainsbor'gh)

Dykes, Hugh

Lennox-Boyd, Hon Mark

Edwards, Rt Hon N. (P'broke)

Lewis, Sir Kenneth (Stamf'd)

Eggar, Tim

Lightbown, David

Emery, Sir Peter

Lilley, Peter

Evennett, David

Lloyd, Peter, (Fareham)

Fairbairn, Nicholas

Lord, Michael

Farr, Sir John

Luce, Richard

Favell, Anthony

McCrindle, Robert

Fenner, Mrs Peggy

McCurley, Mrs Anna

Finsberg, Sir Geoffrey

Macfarlane, Neil

Fletcher, Alexander

MacGregor, John

Forman, Nigel

MacKay, Andrew (Berkshire)

Forsyth, Michael (Stirling)

MacKay, John (Argyll & Bute)

Forth, Eric

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

Fox, Marcus

Madel, David

Franks, Cecil

Major, John

Fraser, Peter (Angus East)

Malins, Humfrey

Freeman, Roger

Malone, Gerald

Gale, Roger

Maples, John

Galley, Roy

Marland, Paul

Gardiner, George (Reigate)

Mates, Michael

Garel-Jones, Tristan

Maude, Hon Francis

Glyn, Dr Alan

Mawhinney, Dr Brian

Goodhart, Sir Philip

Mayhew, Sir Patrick

Goodlad, Alastair

Mellor, David

Gorst, John

Meyer, Sir Anthony

Gow, Ian

Miller, Hal (B'grove)

Gower, Sir Raymond

Mills, lain (Meriden)

Grant, Sir Anthony

Mills, Sir Peter (West Devon)

Greenway, Harry

Miscampbell, Norman

Gregory, Conal

Mitchell, David (NW Hants)

Griffiths, Peter (Portsm'th N)

Moate, Roger

Grist, Ian

Monro, Sir Hector

Ground, Patrick

Montgomery, Fergus

Grylls, Michael

Moore, John

Hamilton, Hon A. (Epsom)

Morris, M. (N'hampton, S)

Hanley, Jeremy

Morrison, Hon C. (Devizes)

Hannam, John

Morrison, Hon P. (Chester)

Harris, David

Mudd, David

Haselhurst, Alan

Murphy, Christopher

Hawkins, C. (High Peak)

Neale, Gerrard

Hawkins, Sir Paul (SW N'folk)

Needham, Richard

Hayes, J.

Nelson, Anthony

Hayward, Robert

Neubert, Michael

Heathcoat-Amory, David

Nicholls, Patrick

Heddle, John

Norris, Steven

Hickmet, Richard

Onslow, Cranley

Hicks, Robert

Ottaway, Richard

Higgins, Rt Hon Terence L.

Page, Sir John (Harrow W)

Hind, Kenneth

Page, Richard (Herts SW)

Hirst, Michael

Parris, Matthew

Hogg, Hon Douglas (Gr'th'm)

Patten, Christopher (Bath)

Holland, Sir Philip (Gedling)

Patten, John (Oxford)

Holt, Richard

Pattie, Geoffrey

Hooson, Tom

Pawsey, James

Howard, Michael

Percival, Rt Hon Sir Ian

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

Porter, Barry

Howarth, Gerald (Cannock)

Powell, William (Corby)

Hubbard-Miles, Peter

Powley, John

Hunt, David (Wirral)

Prentice, Rt Hon Reg

Hunt, John (Ravensbourne)

Raffan, Keith

Hurd, Rt Hon Douglas

Rathbone, Tim

Jessel, Toby

Rees, Rt Hon Peter (Dover)

Johnson Smith, Sir Geoffrey

Renton, Tim

Jones, Robert W Herts)

Rhodes James, Robert

Jopling, Rt Hon Michael

Rhys Williams, Sir Brandon

Kershaw, Sir Anthony

Ridsdale, Sir Julian

King, Roger (B'ham N'field)

Roberts, Wyn (Conwy)

King, Rt Hon Tom

Robinson, Mark (N'port W)

Knight, Gregory (Derby N)

Roe, Mrs Marion

Knight, Mrs Jill (Edgbaston)

Rossi, Sir Hugh

478

Rowe, Andrew

Thompson, Patrick (N'ich N)

Rumbold, Mrs Angela

Thorne, Neil (Ilford S)

Ryder, Richard

Thornton, Malcolm

Sackville, Hon Thomas

Thurnham, Peter

Sainsbury, Hon Timothy

Townend, John (Bridlington)

Sayeed, Jonathan

Townsend, Cyril D. (B'heath)

Scott, Nicholas

Tracey, Richard

Shaw, Giles (Pudsey)

Trippier, David

Shaw, Sir Michael (Scarb')

Trotter, Neville

Shelton, William (Streatham)

Twinn, Dr Ian

Shepherd, Colin (Hereford)

van Straubenzee, Sir W.

Shersby, Michael

Vaughan, Sir Gerard

Silvester, Fred

Viggers, Peter

Sims, Roger

Waddington, David

Skeet, T. H. H.

Wakeham, Rt Hon John

Smith, Sir Dudley (Warwick)

Walden, George

Smith, Tim (Beaconsfield)

Wall, Sir Patrick

Soames, Hon Nicholas

Waller, Gary

Spencer, Derek

Ward, John

Spicer, Jim (W Dorset)

Wardle, C. (Bexhill)

Spicer, Michael (S Worcs)

Warren, Kenneth

Squire, Robin

Watson, John

Stanbrook, Ivor

Watts, John

Stanley, John

Wells, Bowen (Hertford)

Steen, Anthony

Wells, Sir John (Maidstone)

Stern, Michael

Wheeler, John

Stevens, Lewis (Nuneaton)

Whitfield, John

Stevens, Martin (Fulham)

Whitney, Raymond

Stewart, Allan (Eastwood)

Wiggin, Jerry

Stewart, Andrew (Sherwood)

Wolfson, Mark

Stokes, John

Wood, Timothy

Stradling Thomas, J.

Woodcock, Michael

Sumberg, David

Yeo, Tim

Tapsell, Peter

Younger, Rt Hon George

Taylor, John (Solihull)

Taylor, Teddy (S'end E)

Tellers for the Ayes:

Thomas, Rt Hon Peter

Mr. Robert Boscawen and Mr. Carol Mather.

Thompson, Donald (Calder V)

NOES

Adams, Allen (Paisley N)

Dewar, Donald

Anderson, Donald

Dixon, Donald

Archer, Rt Hon Peter

Dobson, Frank

Ashdown, Paddy

Dormand, Jack

Atkinson, N. (Tottenham)

Dubs, Alfred

Barron, Kevin

Dunwoody, Hon Mrs G.

Beckett, Mrs Margaret

Eadie, Alex

Beggs, Roy

Eastham, Ken

Beith, A. J.

Ellis, Raymond

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

Evans, John (St. Helens N)

Bermingham, Gerald

Ewing, Harry

Blair, Anthony

Fatchett, Derek

Boyes, Roland

Faulds, Andrew

Bray, Dr Jeremy

Fields, T. (L'pool Broad Gn)

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

Fisher, Mark

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

Forrester, John

Bruce, Malcolm

Forsythe, Clifford (S Antrim)

Caborn, Richard

Foster, Derek

Callaghan, Jim (Heyw'd & M)

Foulkes, George

Campbell-Savours, Dale

Fraser, J. (Norwood)

Carlile, Alexander (Montg'y)

Freeson, Rt Hon Reginald

Cartwright, John

George, Bruce

Clark, Dr David (S Shields)

Godman, Dr Norman

Clarke, Thomas

Golding, John

Clay, Robert

Gould, Bryan

Clwyd, Mrs Ann

Hamilton, James (M'well N)

Cocks, Rt Hon M. (Bristol S.)

Hamilton, W. W. (Central Fife)

Coleman, Donald

Hancock, Mr. Michael

Conlan, Bernard

Hardy, Peter

Cook, Robin F. (Livingston)

Hogg, N. (C'nauld & Kilsyth)

Corbett, Robin

Holland, Stuart (Vauxhall)

Corbyn, Jeremy

Howells, Geraint

Cowans, Harry

Hoyle, Douglas

Cox, Thomas (Tooting)

Hughes, Dr. Mark (Durham)

Crowther, Stan

Hughes, Robert (Aberdeen N)

Cunliffe, Lawrence

Hughes, Roy (Newport East)

Davies, Rt Hon Denzil (L'lli)

Hughes, Sean (Knowsley S)

Davies, Ronald (Caerphilly)

Hughes, Simon (Southwark)

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

John, Brynmor

Deakins, Eric

Jones, Barry (Alyn & Deeside)

479

Kaufman, Rt Hon Gerald

Penhaligon, David

Kennedy, Charles

Pike, Peter

Kilfedder, James A.

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

Kirkwood, Archy

Powell, Raymond (Ogmore)

Lamond, James

Prescott, John

Leadbitter, Ted

Randall, Stuart

Lewis, Ron (Carlisle)

Redmond, M.

Lewis, Terence (Worsley)

Robertson, George

Litherland, Robert

Robinson, P. (Belfast E)

Lloyd, Tony (Stretford)

Ross, Stephen (Isle of Wight)

Lofthouse, Geoffrey

Ross, Wm. (Londonderry)

McCartney, Hugh

Rowlands, Ted

McCrea, Rev William

Sedgemore, Brian

McDonald, Dr Oonagh

Sheerman, Barry

McKelvey, William

Shore, Rt Hon Peter

Maclennan, Robert

Short, Ms Clare (Ladywood)

McNamara, Kevin

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

McTaggart, Robert

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

McWilliam, John

Smyth, Rev W. M. (Belfast S)

Madden, Max

Snape, Peter

Maginnis, Ken

Soley, Clive

Marek, Dr John

Spearing, Nigel

Marshall, David (Shettleston)

Strang, Gavin

Maxton, John

Straw, Jack

Maynard, Miss Joan

Thomas, Dafydd (Merioneth)

Meacher, Michael

Thomas, Dr R. (Carmarthen)

Meadowcroft, Michael

Thompson, J. (Wansbeck)

Michie, William

Wallace, James

Mikardo, Ian

Wardell, Gareth (Gower)

Millan, Rt Hon Bruce

Wareing, Robert

Miller, Dr M. S. (E Kilbride)

Welsh, Michael

Mitchell, Austin (G't Grimsby)

Wigley, Dafydd

Molyneaux, Rt Hon James

Williams, Rt Hon A.

Morris, Rt Hon J. (Aberavon)

Winnick, David

Nellist, David

Winterton, Mrs Ann

Nicholson, J.

Winterton, Nicholas

O'Brien, William

Woodall, Alec

O'Neill, Martin

Young, David (Bolton SE)

Owen, Rt Hon Dr David

Park, George

Tellers for the Noes:

Patchett, Terry

Mr. Frank Haynes and Mr. Allen McKay.

Pavitt, Laurie

Question accordingly agreed to.
Resolved
That the draft Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations 1984, Which were laid before this House on 16th July, be approved.
Motion made,
That the draft Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations 1984, which were laid before this House on 16th July, be approved.—[Mr.Jopling]
Question put forthwith, pursuant to the Order [17 July]:—
The House divided: Ayes 269, Noes 149.

Division No. 416]

[3.11 am

AYES

Alexander, Richard

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

Amess, David

Bowden, Gerald (Dulwich)

Ancram, Michael

Boyson, Dr Rhodes

Arnold, Tom

Brandon-Bravo, Martin

Ashby, David

Bright, Graham

Atkinson, David (B'm'th E)

Brinton, Tim

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

Browne, John

Baker, Nicholas (N Dorset)

Bruinvels, Peter

Baldry, Tony

Buchanan-Smith, Rt Hon A.

Banks, Robert (Harrogate)

Bulmer, Esmond

Batiste, Spencer

Burt, Alistair

Beaumont-Dark, Anthony

Butcher, John

Bendall, Vivian

Butterfill, John

Best, Keith

Carlisle, John (N Luton)

Biffen, Rt Hon John

Carlisle, Kenneth (Lincoln)

Biggs-Davison, Sir John

Carttiss, Michael

Blaker, Rt Hon Sir Peter

Cash, William

Bonsor, Sir Nicholas

Channon, Rt Hon Paul

Bottomley, Peter

Chapman, Sydney

Bottomley, Mrs Virginia

Chope, Christopher

480

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

Knight, Gregory (Derby N)

Clark, Sir W. (Croydon S)

Knight, Mrs Jill (Edgbaston)

Clarke, Rt Hon K. (Rushcliffe)

Knox, David

Colvin, Michael

Lamont, Norman

Cope, John

Lang, Ian

Corrie, John

Latham, Michael

Couchman, James

Lawler, Geoffrey

Cranborne, Viscount

Lawrence, Ivan

Crouch, David

Lee, John (Pendle)

Currie, Mrs Edwina

Leigh, Edward (Gainsbor'gh)

Dorrell, Stephen

Lennox-Boyd, Hon Mark

Douglas-Hamilton, Lord J.

Lewis, Sir Kenneth (Stamf'd)

Durant, Tony

Lightbown, David

Dykes, Hugh

Lilley, Peter

Edwards, Rt Hon N. (P'broke)

Lloyd, Peter, (Fareham)

Eggar, Tim

Lord, Michael

Emery, Sir Peter

Luce, Richard

Evennett, David

McCrindle, Robert

Fairbairn, Nicholas

McCurley, Mrs Anna

Farr, Sir John

Macfarlane, Neil

Favell, Anthony

MacGregor, John

Fenner, Mrs Peggy

MacKay, Andrew (Berkshire)

Finsberg, Sir Geoffrey

MacKay, John (Argyll & Bute)

Fletcher, Alexander

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

Forman, Nigel

Madel, David

Forsyth, Michael (Stirling)

Major, John

Forth, Eric

Malins, Humfrey

Fox, Marcus

Malone, Gerald

Franks, Cecil

Maples, John

Fraser, Peter (Angus East)

Marland, Paul

Freeman, Roger

Mates, Michael

Gale, Roger

Maude, Hon Francis

Galley, Roy

Mawhinney, Dr Brian

Gardiner, George (Reigate)

Mayhew, Sir Patrick

Garel-Jones, Tristan

Mellor, David

Glyn, Dr Alan

Meyer, Sir Anthony

Goodhart, Sir Philip

Miller, Hal (B'grove)

Goodlad, Alastair

Mills, Iain (Meriden)

Gorst, John

Mills, Sir Peter (West Devon)

Gow, Ian

Miscampbell, Norman

Gower, Sir Raymond

Mitchell, David (NW Hants)

Grant, Sir Anthony

Monro, Sir Hector

Greenway, Harry

Montgomery, Fergus

Gregory, Conal

Moore, John

Griffiths, Peter (Portsm'th N)

Morris, M. (N'hampton, S)

Grist, Ian

Morrison, Hon C. (Devizes)

Ground, Patrick

Morrison, Hon P. (Chester)

Grylls, Michael

Murphy, Christopher

Hamilton, Hon A. (Epsom)

Neale, Gerrard

Hanley, Jeremy

Needham, Richard

Hannam, John

Nelson, Anthony

Harris, David

Neubert, Michael

Haselhurst, Alan

Nicholls, Patrick

Hawkins, C. (High Peak)

Norris, Steven

Hawkins, Sir Paul (SW N'folk)

Onslow, Cranley

Hayes, J.

Ottaway, Richard

Hayward, Robert

Page, Sir John (Harrow W)

Heathcoat-Amory, David

Page, Richard (Herts SW)

Heddle, John

Parris, Matthew

Hicks, Robert

Patten, Christopher (Bath)

Higgins, Rt Hon Terence L

Patten, John (Oxford)

Hind, Kenneth

Pattie, Geoffrey

Hirst, Michael

Pawsey, James

Hogg, Hon Douglas (Gr'th'm)

Percival, Rt Hon Sir Ian

Holland, Sir Philip (Gedling)

Porter, Barry

Holt, Richard

Powell, William (Corby)

Hooson, Tom

Powley, John

Howard, Michael

Prentice, Rt Hon Reg

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

Raffan, Keith

Howarth, Gerald (Cannock)

Rathbone, Tim

Hubbard-Miles, Peter

flees, Rt Hon Peter (Dover)

Hunt, David (Wirral)

Renton, Tim

Hunt, John (Ravensbourne)

Rhodes James, Robert

Hurd, Rt Hon Douglas

Rhys Williams, Sir Brandon

Jessel, Toby

Ridsdale, Sir Julian

Johnson Smith, Sir Geoffrey

Roberts, Wyn (Conwy)

Jopling, Rt Hon Michael

Robinson, Mark (N'port W)

Kershaw, Sir Anthony

Roe, Mrs Marion

King, Roger (B'ham N'field)

Rossi, Sir Hugh

King, Rt Hon Tom

Rowe, Andrew

481

Rumbold, Mrs Angela

Thorne, Neil (Ilford S)

Ryder, Richard

Thornton, Malcolm

Sackville, Hon Thomas

Thurnham, Peter

Sainsbury, Hon Timothy

Townend, John (Bridlington)

Sayeed, Jonathan

Townsend, Cyril D. (B'heath)

Scott, Nicholas

Tracey, Richard

Shaw, Giles (Pudsey)

Trippier, David

Shaw, Sir Michael (Scarb')

Trotter, Neville

Shelton, William (Streatham)

Twinn, Dr Ian

Shepherd, Colin (Hereford)

van Straubenzee, Sir W.

Shersby, Michael

Vaughan, Sir Gerard

Silvester, Fred

Viggers, Peter

Sims, Roger

Waddington, David

Skeet, T. H. H.

Wakeham, Rt Hon John

Smith, Sir Dudley (Warwick)

Walden, George

Smith, Tim (Beaconsfield)

Wall, Sir Patrick

Soames, Hon Nicholas

Waller, Gary

Spencer, Derek

Ward, John

Spicer, Jim (W Dorset)

Wardle, C. (Bexhill)

Spicer, Michael (S Worcs)

Warren, Kenneth

Squire, Robin

Watson, John

Stanbrook, Ivor

Watts, John

Stanley, John

Wells, Bowen (Hertford)

Steen, Anthony

Wells, Sir John (Maidstone)

Stern, Michael

Wheeler, John

Stevens, Lewis (Nuneaton)

Whitfield, John

Stevens, Martin (Fulham)

Whitney, Raymond

Stewart, Allan (Eastwood)

Wiggin, Jerry

Stewart, Andrew (Sherwood)

Wolfson, Mark

Stokes, John

Wood, Timothy

Stradling Thomas, J.

Woodcock, Michael

Sumberg, David

Yeo, Tim

Tapsell, Peter

Younger, Rt Hon George

Taylor, John (Solihull)

Taylor, Teddy (S'end E)

Tellers for the Ayes:

Thomas, Rt Hon Peter

Mr. Robert Boscawen and Mr. Carol Mather.

Thompson, Donald (Calder V)

Thompson, Patrick (N'ich N)

NOES

Adams, Allen (Paisley N)

Dubs, Alfred

Anderson, Donald

Dunwoody, Hon Mrs G.

Archer, Rt Hon Peter

Eadie, Alex

Ashdown, Paddy

Eastham, Ken

Barron, Kevin

Ellis, Raymond

Beckett, Mrs Margaret

Evans, John (St. Helens N)

Beggs, Roy

Ewing, Harry

Beith, A. J.

Fatchett, Derek

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

Faulds, Andrew

Bermingham, Gerald

Fields, T. (L'pool Broad Gn)

Blair, Anthony

Fisher, Mark

Boyes, Roland

Forrester, John

Bray, Dr Jeremy

Forsythe, Clifford (S Antrim)

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

Foster, Derek

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

Foulkes, George

Bruce, Malcolm

Fraser, J. (Norwood)

Caborn, Richard

George, Bruce

Callaghan, Jim (Heyw'd & M)

Godman, Dr Norman

Campbell-Savours, Dale

Golding, John

Carlile, Alexander (Montg'y)

Gould, Bryan

Cartwright, John

Hancock, Mr. Michael

Clark, Dr David (S Shields)

Hardy, Peter

Clarke, Thomas

Hogg, N. (C'nauld & Kilsyth)

Clay, Robert

Holland, Stuart (Vauxhall)

Clwyd, Mrs Ann

Howells, Geraint

Cocks, Rt Hon M. (Bristol S.)

Hoyle, Douglas

Conlan, Bernard

Hughes, Dr. Mark (Durham)

Cook, Robin F. (Livingston)

Hughes, Robert (Aberdeen N)

Corbett, Robin

Hughes, Sean (Knowsley S)

Corbyn, Jeremy

Hughes, Simon (Southwark)

Cowans, Harry

John, Brynmor

Crowther, Stan

Jones, Barry (Alyn & Deeside)

Cunliffe, Lawrence

Kaufman, Rt Hon Gerald

Davies, Rt Hon Denzil (L'lli)

Kennedy, Charles

Davies, Ronald (Caerphilly)

Kilfedder, James A.

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

Kirkwood, Archy

Deakins, Eric

Lewis, Ron (Carlisle)

Dewar, Donald

Lewis, Terence (Worsley)

Dixon, Donald

Litherland, Robert

Dobson, Frank

Lloyd, Tony (Stretford)

482

Lofthouse, Geoffrey

Randall, Stuart

McCartney, Hugh

Robertson, George

McCrea, Rev William

Robinson, P. (Belfast E)

McDonald, Dr Oonagh

Ross, Stephen (Isle of Wight)

McKelvey, William

Ross, Wm. (Londonderry)

Maclennan, Robert

Rowlands, Ted

McNamara, Kevin

Sedgemore, Brian

McTaggart, Robert

Sheerman, Barry

McWilliam, John

Shore, Rt Hon Peter

Madden, Max

Short, Ms Clare (Ladywood)

Maginnis, Ken

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

Marek, Dr John

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

Marshall, David (Shettleston)

Smyth, Rev W. M. (Belfast S)

Maxton, John

Snape, Peter

Maynard, Miss Joan

Soley, Clive

Meacher, Michael

Spearing, Nigel

Meadowcroft, Michael

Strang, Gavin

Michie, William

Straw, Jack

Mikardo, Ian

Thomas, Dafydd (Merioneth)

Millan, Rt Hon Bruce

Thomas, Dr R. (Carmarthen)

Miller, Dr M. S. (E Kilbride)

Thompson, J. (Wansbeck)

Mitchell, Austin (G't Grimsby)

Wallace, James

Molyneaux, Rt Hon James

Wardell, Gareth (Gower)

Morris, Rt Hon J. (Aberavon)

Wareing, Robert

Nellist, David

Welsh, Michael

Nicholson, J.

Wigley, Dafydd

O'Brien, William

Williams, Rt Hon A.

O'Neill, Martin

Winnick, David

Owen, Rt Hon Dr David

Winterton, Mrs Ann

Park, George

Winterton, Nicholas

Patchett, Terry

Woodall, Alec

Pavitt, Laurie

Young, David (Bolton SE)

Penhaligon, David

Pike, Peter

Tellers for the Noes:

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

Mr. Frank Haynes and Mr. Allen McKay.

Powell, Raymond (Ogmore)

Prescott, John

Question accordingly agreed to.

Dairy Produce Quotas

  BUSINESS OF THE HOUSE
  Ordered,
  That, at the sitting on Friday 20th July, if the Motions relating to Office, Secretarial and Research Allowance, Car Mileage Allowance, and Parliament have not previously been disposed of, Mr. Speaker shall, three hours after the first Motion has been entered upon, put any Questions necessary to dispose of the first two Motions and of any Amendments moved thereto which have been selected by him; and shall then put forthwith the Question upon the third Motion, notwithstanding the provisions of Standing Order No. 3 (Exempted business).—[Mr. Goodlad.]
  Motion made,
  That, at the sitting on Thursday 19th July, notwithstanding the provisions of Standing Order No. 3 (Exempted business) and Standing Order No. 4 (Prayers against statutory instruments, &c., (negative procedure)), if proceedings on the Motion in the name of Mr. Secretary Fowler relating to the Housing Benefits (Increase of Needs Allowances) Regulations 1984, and on any Motions in the name of Mr. Neil Kinnock relating to Housing or Local Government have not been disposed of before half-past Seven o'clock, Mr. Speaker shall at that hour put forthwith any Questions already proposed from the Chair and on such of the said Motions as may then be moved; and thereafter Mr. Speaker shall at Ten o'clock put any Questions already proposed from the Chair and on such of the remaining Motions relating to Social Security as may then be moved.—[Mr. Goodlad.]
  3.22 am
  Mr. J. Enoch Powell rose——
  Mr. Deputy Speaker (Mr. Paul Dean): Order. I am afraid that it is not possible to debate the motion. Do I understand that the right hon. Gentleman wishes to object to it?
  Mr. Powell: Well, I will object to it.
  Mr. Deputy Speaker: Objection taken.

BBC Transmitter (Bearley)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Goodlad.]
3.23 am
Mr. Alan Howarth: I am glad to have the opportunity to raise the matter of the proposed transmitter at Bearley. I am grateful to my hon. Friend the Minister and to my other hon. Friends for coming to the House to take part in this debate on an important issue, but at an inhospitable hour.
The proposal to site a radio transmitter at Bearley has been put forward by the BBC, acting as agents for the Foreign Office. It is part of a programme to improve the audibility of the external services. The installation will be one of largest and most powerful radio transmitters in Europe, consisting of six 300 Kw units, using 24 masts or more, most of them almost 300 ft high.
I and, to my knowledge, the many people who have objected to the use of the Bearley site hold the external broadcasting services of the BBC in the highest regard. We would wish to see those services further enhanced. But that is not the point at issue. The point at issue is the choice of the Bearley site for the new transmitter.
Bearley is three miles from the centre of Stratford-on-Avon. Within a radius of three miles of Bearley there are also 11 villages. Some 32,000 people live within the three-mile radius. In the past, the area has been the site of a radio receiving station. At present there are three slender masts on the site, less than 100 ft high and altogether inconspicuous. As a receiving station, it has caused no radio interference locally. Environmentally and technically, it is as different from the proposed transmitter as chalk from cheese.
There is a range of important objections to the choice of Bearley for the transmitter. They are the effects of radio frequency interference on households, businesses, and the Royal Shakespeare theatre, the damage to tourism, and the damage to the environment.
A large volume of evidence has been submitted to a public inquiry and there has been sharp disagreement between technical witnesses. Two key conclusions from the evidence presented are, however, beyond dispute.
The first is this. Observation of what actually happens around other existing transmitters shows that a wide variety of electronic equipment is affected by interference to distances of up to three and a half miles. This is so in the vicinity of the relatively new transmitter at Woofferton, as well as around the older one at Daventry. More than 200 complaints a year continue to be made about the effects of the Daventry transmitter. Equipment impaired in its operation includes televisions, radios, video recorders, hi-fi, answer-phones, club amplifiers, church organs, office and factory equipment, audio-visual equipment for conferences and computers.
Secondly, there is the evidence of the tests which were carried out at Stratford as part of the public inquiry. The BBC carried out test transmissions simulating the effect of the Bearley transmitter. The tests bore out the worst fears and demonstrated how devastating the effects of random and unpredictable radio frequency interference would be in the vicinity of the transmitter. At the Royal Shakespeare theatre, two out of 20 items of equipment which were observed under test were seriously affected. The stage lighting console was rendered unusable and three

485
electronic typewriters had their memories erased. On an earlier occasion when tests were made by the theatre, other equipment, including the sound system, was made inoperable. At the Arden hotel, which is adjacent to the theatre, television, radio and hi-fi equipment was similarly affected.
The BBC has disputed the significance of the tests, but there has been no such trouble either before or since at the theatre. It is clear that interference would be liable to impair the operation of computers and other sensitive electronic equipment, whether in the RSC's two theatres or in homes or business premises.
The BBC has argued that screening is possible and claims that modern equipment in perfect working order will not be affected. That argument will not do, as it is unrealistic to suppose that every relevant item of electronic equipment in the area can be of the latest design and maintained in perfect condition or be screened or suppressed. Even if it were possible to achieve that, the disruption and the cost of doing so would be altogether prohibitive. It is not surprising that the BBC has made it clear that it would not be prepared to foot the bill, which for a household might be up to £100, while for the National Vegetable Research Station at Wellesbourne, even at a distance of eight miles from Bearley, it is estimated that a minimum of £30,000 would have to be found—out of research budgets which are already sorely depleted.
There are 11,000 households in the immediate area where the worst effects could be experienced. I want to emphasise the real apprehension and anxiety that exists and the really passionate opposition that there is to the transmitter. The feelings of the villagers of Bearley and Snitterfield, who would live in the very shadow of the construction, may be imagined, but there are very strong feelings throughout Stratford and the surrounding area.
I have submitted to my right hon. Friend the Secretary of State for the Environment and my right hon. and learned Friend the Foreign Secretary a statement of opposition to the transmitter, signed by 37 representatives of local interests. These include seven local parish councils, Stratford town council, the district and county councils, bodies representing trade unionists, hoteliers and caterers, other businesses and professional partnerships, the District Manufacturers Association and the chamber of trade, the Heart of England tourist board, the Shakespeare Birthplace Trust, the Royal Shakespeare theatre, the CPRE, the Friends of the Earth, the Liberal, Labour and Conservative parties, the Bishop of Coventry, the High Sheriff of Warwickshire, the Lord Lieutenant of Warwickshire, and the Lord Lieutenant of the West Midlands. My hon. Friend may agree that that is a remarkably comprehensive representation of the local community and serves to underline the unique and critical character of this issue.
It will be clear to my hon. Friend that what we are dealing with is not the exaggerated special pleading that is alway liable to be heard from people who object to a development which may mar their environment. We are talking of a genuine threat to the way of life of a community.
I should like to quote from letters written by the chief executives of the two largest employers in Stratford. Mr. Charles Thomas, the managing director of NFU Mutual and Avon Insurance, which is the 12th largest insurance company in Britain, has written:
486
"The employment of our 500 staff here in Stratford could be in jeopardy if our computer and associated equipment were to fail because of radio interference. Our headquarters in Stratford houses the main computing centre for the group into which we have recently invested over two and half million pounds in new equipment. We have been unable, however, to obtain guarantees of the continued operation of the equipment installed when transmission takes place. Many of the administrative processes of the group are totally dependent upon the continued operation of computers, and thus interference from this radio transmission station would rapidly bring the company to a standstill."
Dr. Howard Hicks, chairman of IDC, a firm of international designers, constructors and engineers, employing 1,000 people, has similarly written:
"This company, which this year will have a turnover of approximately £60 million, could suffer irreparable damage by failures in computing and data processing equipment. Our computer-aided design and drafting deals with tens of millions of pounds worth of complex project work."
These are the testimonies of senior and responsible people who have no interest at all in stirring up trouble or in causing anxiety to their employees and their clients. What they have said is paralleled by evidence from other smaller businesses on the industrial estates which are on the edge of Stratford and in the direction of Bearley. The much-used conference facilities in the hotels in Stratford would similarly be at risk. The blight on businesses and jobs which the transmitter would carry with it is deeply worrying.
The BBC has argued for the Bearley site in preference to the Orfordness site, for which permission was previously given, on the ground that it is cheaper. Cheaper for whom?
The aspect of this matter which has naturally aroused most concern nationally and, indeed, internationally, is the threat to the Royal Shakespeare theatre. The joint artistic directors of the RST, Mr. Trevor Nunn and Mr. Terry Hands, and the general manager of the theatre, Mr. David Brierley, have said publicly and repeatedly that it would not be possible for the theatre to survive in Stratford if the transmitter were built as proposed at Bearley.
Productions in the theatre depend upon computer-controlled lighting and sound systems. The theatre box office also depends upon a computerised system. There is a quantity of other electronic equipment in the theatre which would, as the inquiry tests demonstrated, be vulnerable.
My hon. Friend will recall the Government's positive response to the Priestley report last year. May I remind my hon. Friend of Mr. Priestley's conclusion:
"My advice is that the Government should now settle the affairs of the Royal Shakespeare Company on a foundation which consolidates its past investment and enables the Royal Shakespeare Company to go on from strength to strength."
It would be a bizarre reversal if the Government, having last year rescued the RST financially, were now to countenance a development which would, in the words of the joint artistic director, be "unimaginably destructive". The artistic reputation of the RST is such in this country and abroad that there would be widespread outrage if its survival were even to be put at risk.
My hon. Friend may have noted an early-day motion which is on today's Order Paper and which is supported by no fewer than 133 hon. Members from the Labour and alliance parties in this House as well as the Conservative party. Among the leading signatures are those of the cochairmen of the all-party parliamentary arts and heritage group as well as the chairman and officers of the Conservative party arts and heritage committee.

487
The onus must plainly be on the BBC to demonstrate beyond any doubt that the sort of damaging effects which I have described would not take place. As it is, the BBC, notwithstanding protestations in various letters to the national press in recent weeks, does not deny that there could be interference. It is offering technical assistance to the theatre and to local businesses, although not to local households, in the event of trouble, but it has quite specifically refused to offer financial compensation—and a matter which the House might look at is the present state of the law, which allows the BBC to create high-tech pollution without financial liability.
A further very important ramification of this affair would be the damage to tourism if the theatre in Stratford were to be seriously disrupted or closed. It is estimated that about 1·5 million visitors, of whom 70 per cent. are foreigners, come to Stratford every year. For an important proportion of them the major attraction is the theatre. They then visit the Shakespeare Birthplace Trust properties as well as Ragley hall and the National Trust properties at Charlecote and Coughton.
Not only is the local economy substantially dependent on tourism, but the maintenance of this treasured part of our national heritage depends upon the income received from visitors. I need not elaborate on the significance of tourism to the national economy and the contribution to that that Stratford makes.
Looking at the case more broadly still, the impact of the transmitter upon the environment would also be unacceptable. The proposal, let me say again, is for 24 masts, most of them virtually the height of St. Paul's cathedral, linked by cables. This monstrous cat's cradle would loom not only over Stratford but over an extensive area of countryside greatly valued for its historical associations and natural beauty.
I hope, too, that my hon. Friend will be responsive to the consideration that the proposal is to site the transmitter and the associated plant for repair work in the Warwickshire green belt. Of course, that has been opposed by the local authorities. I know that my hon. Friend will be conscious of the strength of feeling that has been manifested in Parliament on the principle of the green belt. I draw encouragement from the recent statement by my right hon. Friend the Secretary of State for the Environment on 4 July when, annnouncing his new circular, he said that
"the planning system must maintain established conservation policies, including Green Belts"
and from the wording of circular 14/84 which says:
"The essential characteristic of Green Belts is their permanence".
It is difficult not to conclude that the choice by the BBC of the Bearley site was hasty and ill considered. The BBC was impatient after being turned down on previous applications for two sites. The evidence of the inquiry contradicts the assertion in a letter to The Times today by Mr. McCrirrick, the BBC director of engineering, that the BBC had made an exhaustive search for alternative sites. When challenged to say what alternative sites it had considered, it took the BBC witnesses a fortnight to come up with a list. As it is, nine other sites have been identified which, it is believed, match the criteria which the BBC claims for Bearley and of those three are in sparsely populated areas and one is on Crown land.
How can such a muddle have arisen? Busy men, impatient to achieve their purposes, advised by officials
488
on a narrow technical basis, are, I suppose, liable to fall into grievous errors. We see two great British institutions, the BBC and the Foreign Office, heads down, lumbering towards disaster. It is difficult to be sure that they can be stopped in their tracks. My hon. Friend the Member for Surbiton (Mr. Tracey) received a letter dated only 10 July from the private office of a Foreign Office Minister referring to the
"likely construction of a transmitter at Bearley."
Officials take it for granted that they will get their own way. The task of averting disaster falls on a few people: a band of local opponents working tirelessly and for a long time not very widely heeded and I would very much like to pay a tribute to the Stratford Transmitter Opposition Group, a local Member of Parliament, the inspector, my hon. Friend the Minister, his right hon. Friend the Secretary of State, and the governors of the BBC.
I do not believe for one moment that the BBC authorities would wish to be responsible for snuffing out the Royal Shakespeare theatre and for doing the wider damage that I have described. I note that in his Gwilym James lecture at Southampton university earlier this year the director-general of the BBC, Mr. Alasdair Milne, observed that
"Public service broadcasting should always be mentor to the muses"
and that
"culture is a subtle, tender and complex plant."
Quite so. It would be a grotesque irony if the BBC, a great patron of the arts, were to perpetrate such an act of vandalism.
A member of the BBC's engineering staff actually al one point volunteered the suggestion that if interference caused any trouble theatre staff would only have to ring up the staff at the transmitter and ask them to stop transmitting. On another occasion a BBC official suggested to me that the transmitter would be a positive embellishment to the Stratford skyline. It is hard to credit that things so fatuous could have been said, but they were.
Happily, more sense and more sensitivity are likely to prevail in the higher reaches of the BBC. Sir William Rees-Mogg, who is both chairman of the Arts Council and vice-chairman of the governors of the BBC, has, I am pleased to say, expressed his own concern about the environmental aspect and given me his assurance that, even if the BBC is successful in the inquiry, the matter will again come before the governors and, if there is a likelihood of serious damage to the Royal Shakespeare theatre or to local businesses, the BBC will reconsider the whole question of the Bearley transmitter.
I believe that the inspector will be bound to recommend against the use of the Bearley site. I urge Ministers, however, to be ready, whatever the outcome of the inquiry, to insist that Stratford is not violated.
3.40 am
The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): My hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) has raised a subject which is important to him and his constituents. No doubt his words will be widely read over the next few days. His constituents have every reason to be grateful for what he has done on their behalf.
In view of the concern being expressed by my hon. Friend, other Members of both Houses and others outside

489
Parliament, I am grateful for the opportunity to explain both the present position on this matter and the procedures being used to reach a decision.
Perhaps I may first recap on the history. The current proposal for a transmitter at Bearley dates from September 1983. It is in the form of a notice of proposed development, because it is Crown development and is, therefore, being handled under the procedures laid down in circular 7/77, "Development by Government Departments".
In view of the objections received, the Secretary of State directed that a public local inquiry should be held to enable arguments about the proposed development to be heard and considered by an inspector.
Although it was a non-statutory inquiry, the normal provisions of the inquiries procedure rules have been followed. Since many of the objections concerned the possibility of interference from the proposed transmitter with electrical, radio, computer and other such installations, a technically qualified assessor was appointed to advise on those interference aspects.
The public local inquiry took place in three stages—from 8 November to 2 December 1983 at the shire hall, Warwick; from 6 to 9 December 1983 at the town hall, Stratford-on-Avon; and from 20 to 22 March 1984 at the shire hall, Warwick.
Between 16 and 19 January this year, the BBC arranged for trial transmissions to be undertaken locally, so that tests could be made of the potential interference effects. The results of those tests were reported to the public local inquiry when it re-opened in March.
Although the inspector has not yet submitted his report, I understand that all the aspects of the proposal that concern my hon. Friend were fully ventilated at the public inquiry. I assure him in particular that the Royal Shakespeare theatre was represented at the inquiry and submitted evidence to the inspector. Indeed, I believe that more time was allocated at the inquiry to the Royal Shakespeare theatre's objections than to any other single objector. I am, therefore, satisfied that the matters that so concern my hon. Friend and others have had a full airing at a public local inquiry. Moreover, I have no reason to believe that circumstances have changed in any way since that inquiry took place.
The Secretary of State for the Environment directed that such an inquiry should be held. The public local inquiry procedure is designed for just this type of situation. It enables a planning proposal to be discussed in detail, for objections to be heard and for the proposers and objectors to cross-examine and to challenge each other's evidence. I do not, therefore, see what more could have been done to arrange a fuller, or more open consideration of the important issues raised by the proposal.
On the general policy about BBC world service transmissions, the Government attach considerable importance to the BBC external services which this year have a budget of £78 million. My hon. Friend was graphic in his approval of the role of the external services and their reputation. I agree with him. Britain has an external broadcasting service which is without equal in the world and which contributes greatly to our international reputation. However, in many parts of the world the BBC's signal is less strong than it should be and I know that the BBC is anxious to remedy that situation. In 1981
490
a programme was announced totalling £102 million to be spent over a 10-year period, to improve the BBC's reception round the world.
The proposed transmitting station at Bearley is a major component of that programme. It is intended to benefit listeners in several parts of the world, but perhaps most importantly it will benefit those people in the Soviet Union and eastern Europe who, despite considerable difficulties, continue to rely on the BBC for the honest and unbiased account of world affairs that they are denied by their own media.
I understand that there was some discussion at the public local inquiry about alternative sites for the proposed transmitter. Finding a site for a relay station such as this is no easy matter. It involves finding a site which is physically suitable for the propagation of a strong signal in the desired direction. And it must be close to the necessary services, including telecommunications and power.
In its search for a suitable site for the new high frequency transmitting station the BBC drew up a list of 21 criteria which needed to be satisfied. I am informed that a total of 21 possible sites were then examined in detail and that, after careful assessment, the BBC concluded that the site at Bearley came closest to satisfying all the criteria for this important and expensive investment. I understand that in the BBC's opinion the site at Bearley meets more of its requirements than any other of the sites considered in its exercise. The proposal has however raised considerable concern locally in view of both the size and visual impact of the aerials that it is proposed to construct and the fears that a high-powered transmitter would cause interference with electrical and other apparatus including in particular, various installations at the Royal Shakespeare theatre in Stratford-on-Avon. It was because of these various objections that the Secretary of State decided to set up a public local inquiry and to appoint a technically qualified assessor to advise on interference questions.
I would now like to deal with the request of my hon. Friend and of other Members of both Houses, who have signed an early-day motion and called for a debate on this matter before the Secretary of State announces his decision. I am sure that hon. Members will understand that the Secretary of State for the Environment's responsibility in cases like this require him to consider the planning merits of a proposal, in the light of evidence submitted by the local planning authority, the developing department and other interested parties. The inspector's role at a public local inquiry is to report to the Secretary of State on the evidence given both for and against the proposed development and on his conclusions and recommendations.
I have no reason to doubt that the inspector will provide such a report in this case. If any fresh evidence comes forward after the inquiry which the Secretary of State regards as relevant to the decision, and this includes evidence arising from a parliamentary debate, he must provide an opportunity for all parties to comment on it and they may ask for the inquiry to be re-opened.
Before issuing his decision the Secretary of State has a duty to satisfy himself that the inspector has dealt satisfactorily with the evidence, that the findings of fact flow from that evidence and that the conclusions and recommendations are soundly based.

491
Sometimes circumstances change after the conclusion of an inquiry, and it is thought necessary to give the parties the opportunity to make further representations. I am not aware of any such change of circumstance in this case. I am satisfied that all the matters of current concern were fully ventilated at the public local inquiry.
In case my hon. Friend was thinking of the arrangements in Scotland, perhaps I should explain that although the parties there are given the opportunity to comment on the accuracy of the factual part of the inspector's report, his conclusions and recommendations are not published in advance of the decision.
In conclusion, while recognising the breadth and depth of anxiety which this proposal has provoked, I would like to assure my hon. Friend that a full, thorough and open public local inquiry has been held. I am confident that the inspector will provide the Secretary of State with a report that will enable him to reach a balanced, reasoned decision. While I cannot at this stage comment on the planning merits of the proposal, I can assure my hon. Friend that the Secretary of State will certainly have regard to the many points because they were fully aired at the inquiry.
If, however, hon. Members or others have any new material which they think the Secretary of State should
492
take into account in reaching his decision they are, of course, free to bring such material to my attention. I must, emphasise to hon. Members and others that any new evidence produced now which has a material impact on the decision will have to be copied to the parties and this may lead to a re-opening of the inquiry.
Although the Secretary of State is anxious to ensure that he has all the material in front of him needed for his decision, we do have to strike a balance between extending discussion and bringing the matter to the point of decision. Hon. Members will know the importance that the Government attach to processing planning proposals expeditiously.
I hope that my hon. Friend will accept that the procedures adopted in this case have enabled the issues involved to be thoroughly evaluated. The Secretary of State awaits the inspector's report and I can assure my hon. Friend that, when we receive it, the Secretary of State will proceed to a decision as soon as possible. I shall of course inform my hon. Friend and others direct of the Secretary of State's eventual decision.
Question put and agreed to.
Adjourned accordingly at eleven minutes to Four o'clock am.