Commons Sitting of 8 March 1984

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

  NOTTINGHAMSHIRE COUNTY COUNCIL BILL [Lords] (By Order)
  Order for further consideration, as amended, read.
  To be further considered upon Thursday 15 March.

  TEES AND HARTLEPOOL PORT AUTHORITY BILL (By Order)
  ALEXANDRA PARK AND PALACE BILL (By Order)
  DARTMOOR COMMONS BILL By Order
  Orders for Second reading read.
  To be read a Second time upon Thursday 15 March.

  LONDON DOCKLANDS RAILWAY (No. 2) BILL By Order
  Order for Second reading read.
  To be read a Second time upon Thursday 12 April.

Oral Answers to Questions
  NATIONAL FINANCE

    Building Societies (Lending Rate)
    Mr. Ottawayasked the Chancellor of the Exchequer if he will estimate the annual saving to the Treasury if the building societies lending rate is dropped by 1 per cent. per annum.
    The Economic Secretary to the Treasury (Mr. Ian Stewart): A reduction in the building societies mortgage interest rate would reduce the cost of tax relief for mortgage interest by approximately £180 million, but this would be largely offset by the reduced tax yield from interest paid to investors if deposit rates were also lowered.
    Mr. Ottaway: I am obliged to my hon. Friend for that answer. Does he agree that building societies interest rates are too high? Does he further agree that the arbitrary way in which building societies impose their policy, which is dictated by the number of people who walk through the doors of building society offices, affords little protection to borrowers and is dictated by the building societies cartel?
    Mr. Stewart: It is for the building societies to decide how they determine their lending rates, but there are hopeful signs that there may be a reduction. I understand
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    that they will meet on 16 March after the Budget to consider a decision. I am sure that if the societies decide to reduce interest rates, that will be widely welcomed by all those with mortgages.
    Mr. Weetch: Does the hon. Gentleman agree that if the lending rate falls by 1 per cent. there will be an immediate effect on the investment rate? Does he agree also that the Government's arrangement with the building societes whereby they pay a composite rate of tax is inequitable for people on low incomes, who pay no tax? If he were to extend this composite system to the banks, would that not compound the inequity? Does he finally agree that if the only alternative to the payment of gross interest that he leaves open is national savings, this is political sharp practice?
    Mr. Stewart: The building societies composite rate has been in place for many years, and a large number of tax payers and non-tax payers have deposited money with building societies during that period. If there were a reduction in the lending rates of societies, it is expected that there would be a reduction in deposit rates also, but that is the normal pattern of building societies business.
    Mr. McCrindle: As my hon. Friend's reply underlines the importance of tax relief to those who are purchasing their properties through building societies, will he urge upon his right hon. Friend the Chancellor of the Exchequer the great importance, in the development of thrift through house purchase, of retaining the present structure of tax relief to borrowers, and hasten very slowly in any movement which might have been implied in the press over the last few days towards its termination?
    Mr. Stewart: I am sure that my right hon. Friend heard the comments of my hon. Friend as well as I did.
    Mr. Wrigglesworth: Does the Minister accept that the changes which the Government have recently announced in the tax treatment of the gilt-edged stock of the building societies are likely to have delayed a decrease in the lending rate to mortgage holders? Why did the Government not come to the House before making that statement—and, indeed, the statement on changes in taxes on banks—and inform the House of what was to be done, or, indeed, leave it to the Budget? Does this not show a degree of high-handedness that is rather like the actions of an elective dictatorship?
    Mr. Stewart: No, the hon. Gentleman is mistaken. It is not a budgetary matter to apply a tax that already exists. The question is only whether a tax should or should not be applied, and the legal advice received, which was unequivocal, was that such a tax should have been applied. It is also proper that once such a decision is made it should be implemented without delay.

    North Sea Oil Revenue
    Mr. Dubsasked the Chancellor of the Exchequer what was the total revenue derived from North sea oil in 1982–83; and what he expects it to be in the present financial year.
    The Chief Secretary to the Treasury (Mr. Peter Rees): The total tax take from the North sea was £7·8 billion in 1982–83 and is estimated to be £9 billion in 1983–84.
    Mr. Dubs: Does the Chief Secretary agree that one of the most damaging accusations that is being made against his Government's policies is that they are squandering the benefits of North sea oil, to the detriment of Britain's industry and jobs? The question can best be summed up in the phrase, "Where has all our money gone?"
    Mr. Rees: If the hon. Gentleman had reflected a little on the facts, he may not have gone into that cul de sac. Oil revenues have helped to reduce Government borrowing and so have contributed to a reduction in inflation and interest rates, which is essential for substantial growth in output and jobs.
    Mr. John Townend: Does my right hon. and learned Friend agree that one reason why the forecast level of oil revenues is higher than expected, and likely to last at a higher rate for longer, is the sensitive and pragmatic way in which the Government have dealt with oil taxation as compared with their predecessors and especially the way in which they have encouraged the developmment of marginal fields?
    Mr. Rees: I am grateful to my hon. Friend, who has perceptively observed that the Government have struck the right balance in this rather delicate issue.
    Mr. Gould: Contrary to what the hon. Member for Bridlington (Mr. Townend) said, are not the Government caught in a cleft stick? To sustain the present peak of production they are having to grant tax concessions to the oil industry. Does that not make it inevitable that tax revenues will fall sharply from next year onwards?
    Mr. Rees: It is true that oil tax revenues may fall from next year onwards. That is due not to the structure of the tax but to the geological conditions of the oil reserves that have been or are likely to be discovered.
    Mr. Bill Walker: Does my right hon. and learned Friend agree that tax revenues, whether from oil or anything else, once collected cannot be spent twice? Scotland has gained remarkable benefits from having the North sea so close to its shores.
    Mr. Rees: I agree with my hon. Friend. It is right and proper not to double count revenues, as previous Administrations did. I am happy to note the remarkable increase in industrial and related activities, particularly in and around Aberdeen.
    Dr. McDonald: Is the hon. and learned Gentleman aware that the total oil tax take since 1979 to date amounts to £29 billion? Why have the Government frittered all that money away on unemployment during that period?
    Mr. Rees: I am surprised if the hon. Lady feels that unemployment benefit should have been cut. If she does her sums more accurately she will find that the oil revenues have used to productive purposes, not exclusively for that purpose.

    Public Sector Borrowing Requirement Outturn
    Mr. Richard Wainwrightasked the Chancellor of the Exchequer by approximately what date he expects to know the public sector borrowing outturn for 1983–84.
    The Chancellor of the Exchequer (Mr. Nigel Lawson): I expect to publish an estimate of the public sector borrowing requirement outturn for 1983–84 on 17 April.
    Mr. Wainwright: As the Chancellor treats the PSBR as the centrepiece of his policy, and as in the previous two Budgets there have been mistakes of £2 billion and £1·5 billion in the forecast of the PSBR outturn, why does he not revert to the mid-April Budget date, so that it may be more accurately based?
    Mr. Lawson: The hon. Gentleman has a good point. We seek to make the most accurate estimate that we can of the borrowing requirement for the year coming to an end when framing the Budget for the following year. I agree that a case can be made for having the Budget in mid-April rather than in mid-March, as he suggested.

    Balance of Payments
    Mr. Skeetasked the Chancellor of the Exchequer if he is satisfied with the current and projected position of the balance of payments
    Mr. Ian Stewart: Yes, Sir.
    Mr. Skeet: Does my hon. Friend agree that there is a great variety of opinion with a wide margin of error? For example, for 1985 Phillips and Drew have given a projection of £1·1 billion on the minus side, whereas the London Business School has given a figure of £1·5 billion on the plus side. Where can one find reliability, and who has been turning in the best estimates?
    Mr. Stewart: My hon. Friend is right to draw attention to the difficulty of making accurate forecasts of the balance of payments for any year, let alone those in the future. We achieved a healthy surplus of £2 billion on the balance of payments last year, and that, in my view, is satisfactory.
    Mr. Skinner: Does the Minister agree that one reason why the Government have been placed in some difficulty once again this year is the appointment of Mr. MacGregor to the mining industry? He took on the miners last autumn and was stupid enough to say that he could stand an overtime ban for 50 years because he was saving the Coal Board money. The fact is that, as a result of an overtime ban of 18 or 19 weeks, not only has the Coal Board not saved money, but it has finished up with a big debt round its neck and is asking for more money from the taxpayer as a result of Mr. MacGregor's foolishness, when—
    Mr. Speaker: Order. I am not certain that that has anything to do with the balance of payments.

    Economic Progress
    Mr. Dormandasked the Chancellor of the Exchequer if he is satisfied with the progress of the economy.
    Mr. Peter Rees: We are currently enjoying a combination of steady growth and low inflation not seen since the 1960s.
    Mr. Dormand: Does the Minister agree that any definition of the progress of the economy must include a consideration of the level of unemployment, the level of taxation and the development of manufacturing industry? As the Government have so signally failed on these three issues during the past five years, and as the Tory party made specific election promises on them, why does the Chancellor not bury his pride and embark seriously on fundamentally new policies?
    Mr. Rees: Because my right hon. Friend and I are satisfied that the long-term policies adopted by the Government offer the best prospects for the country. I remind the hon. Gentleman, and the House, that if he adopts at least one of his criteria as the touchstone of success or failure, he will recall that unemployment doubled under the last Labour Administration.
    Mr. Cockeram: Will my right hon. and learned Friend accept that an important plank in the Government's policy is to contain the public sector and encourage the private sector? Can he, therefore, explain the recent anomaly of the imposition of the composite rate of income tax on private sector banks and Trustee Savings Bank deposit account interest, while exempting deposit account interest in the public sector National Savings Bank? Will he take steps to rectify the anomaly?
    Mr. Rees: I assure my hon. Friend that we attach the greatest importance to encouraging and enlarging the private sector. I cannot comment on rumours that may or may not touch on my right hon. Friend's Budget on Tuesday.
    Mr. Boyes: In his latest report to Sunderland borough council, the principal careers officer said that there were 1,700 youngsters registered without jobs and 2,500 on special schemes, yet there were just 40 job vacancies, and only 10 vacancies for youngsters in my constituency. How can the Minister say that the economy is recovering, when we are in that sorry state?
    Mr. Rees: Perhaps I can encourage the hon. Gentleman by reminding him that the number of people in work has recently been increased by 85,000.
    Mr. Nicholls: Does my right hon. and learned Friend accept that, in addition to the other indicators that we have seen of late, the fact that only today we note that the building society rate may come down by 0·5 or 0·75 per cent. is yet another indication that the economy is reviving?
    Mr. Rees: I am grateful to my hon. Friend for reminding me of that fact. The OECD and the European Community have singled out the United Kingdom of all the countries in the Community as the country whose economy is most likely to grow in the current year.
    Mr. Terry Davies: How can the Chief Secretary be satisfied with the progress of the economy when the underlying level of unemployment shows an increase of more than 50,000 in two months?
    Mr. Rees: One is never complacent about the underlying position of the economy. As an earnest of our concern, we are spending between £2 billion and £3 billion on training and job creation measures.

    Inflation
    Mr. Stokesasked the Chancellor of the Exchequer what is the present rate of inflation.
    Mr. Lawson: In the 12 months to January 1984, the retail price index increased by 5·1 per cent.
    Mr. Stokes: I thank my right hon. Friend for that news, which will delight everybody. Does he agree that, in addition to all the other advantages, reducing inflation will help unemployment more in the long run than almost any other measure that the Government could take?
    Mr. Lawson: My hon. Friend is right, and the 364 economists were wrong in 1981 because they failed to realise that bringing down inflation, as we have succeeded in doing, would itself be a major contributory factor to the recovery that is now taking place.
    Mr. James Lamond: In view of the rosy picture which the Chancellor and his colleagues on the Government Front Bench are trying to paint of the economy and inflation, may I ask him to explain the collapse of the Tory vote at the Chesterfield by-election?
    Mr. Lawson: I am disappointed—[HON. MEMBERS: "Hear, hear."]—that Labour Members should seek every opportunity to decry a state of affairs in which inflation is low and coming down, output is at its highest level ever and still rising, living standards are at their highest level ever and rising and interest rates are low and trending down.
    Dr. McDonald: The right hon. Gentleman will have to do better than that next week.

    Exchange Rate
    Mr. Gouldasked the Chancellor of the Exchequer what role the exchange rate plays in his monetary policy.
    Mr. Ian Stewart: The exchange rate is one of many factors taken into account in interpreting monetary conditions.
    Mr. Gould: If the Chancellor's money supply objectives, interest rate policy and exchange rate targets should prove to be inconsistent, which will take priority? Will he opt for an overvalued exchange rate, still pricing British workers out of jobs, high interest rates at damagingly high levels, or increased deflationary contraction? Which will it be?
    Mr. Stewart: There is a fundamental flaw in the hon. Gentleman's supplementary question, because there is no target for the exchange rate.
    Mr. Latham: Will my hon. Friend confirm that it should be Treasury policy to ensure a declining trend in interest rates?
    Mr. Stewart: It is our policy that there should be a declining trend in interest rates, and I am glad to note that the effectiveness of our fiscal and financial policies in recent years have brought that about. I hope that it will continue.

    Employment
    Mr. Formanasked the Chancellor of the Exchequer what has been the impact of the recovery upon employment.
    Mr. Peter Rees: Latest estimates show a rise of 85,000, between March and September of last year, in the number of people in work.
    Mr. Forman: I welcome that news as a modest step in the right direction. Does my right hon. and learned Friend agree that one of the great hopes for the economy in the coming period of recovery is the recovery and expansion of the service sector and of the new manufacturing industries in, for example, electronics?
    Mr. Rees: My hon. Friend refers to two growth areas. I remind the House that there was an increase of about 200,000 in the number of people in service industries in the first three quarters of 1983.
    Mr. James Hamilton: In view of the right hon. and learned Gentleman's remarks about recovery, is he aware that in Scotland unemployment has been increasing for a considerable time? Is he further aware that in my constituency one of the larger companies has gone into liquidation, that two other companies, in only four months, have also gone into liquidation, that one firm is on the brink of packing up and that, on that basis, 22·4 per cent. of the insurable population in Lanarkshire are unemployed? Is that recovery?
    Mr. Rees: I am sorry to hear of the individual cases in his constituency to which the hon. Gentleman draws attention. [Interruption.] Perhaps he will lift his eyes a little and look at the increased activity in the Grampian region.
    Mr. Nicholas Winterton: Will my right hon. and learned Friend confess to the House that, despite the views of some of the pundits in the Treasury, manufacturing industry is still the real wealth creator in this country? Will he further confess to the House that the majority of the service industries, such as insurance, banking, and shipping, are in existence only because they are serving manufacturing industry? Will he make this confession to the House and therefore give emphasis to manufacturing industry in the Budget and in Government policy?
    Mr. Rees: Much as I should like to succumb to the charms of my hon. Friend, I am not certain whether I shall choose him as my father confessor in this matter. The service industries are very important. They may well complement the activities of manufacturers, but they also stand and justify themselves in their own right.
    Mr. Wrigglesworth: Has not the recovery to which the right hon. and learned Gentleman referred been fuelled largely by a growth in consumer expenditure and by a lowering of the savings ratio? Will he therefore tell the House when he expects the recovery in the manufacturing sector, to which the hon. Member for Macclesfield (Mr. Winterton) has just referred, to come and how he expects that to be fuelled?
    Mr. Rees: I remind the hon. Gentleman that the gross domestic product increased by 3 per cent. last year and is expected to increase by 3 per cent. this year.
    Mr. Adley: Is my right hon. and learned Friend satisfied that the taxpayer will get good value from the Nissan development? Will he examine the funds to jobs ratio of that project vis-a-vis urban development grant projects, in which I declare an interest? Will he in due course let the House know whether he thinks the Nissan project stands up to this comparison?
    Mr. Rees: The Nissan project is extremely important, but my right hon. Friend the Secretary of State for Trade and Industry should answer my hon. Friend's questions, and I shall make sure that his attention is drawn to them.
    Mr. Barron: Reference has been made to individual cases of unemployment. Is the Minister aware that 3·2 million is well below the actual figure of unemployed, because of the way in which the figures are collected? Is he aware that the true figure shows no indication of coming
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    down and that the outside world sees no sign of the so-called recovery that is talked about eloquently in the House? Is he further aware that in my constituency there is no uncertainty about the situation and that it is an utter disgrace to talk about a recovery that is doing nothing for the unemployed?
    Mr. Rees: I think that the hon. Gentleman is basing his rather fevered observations on anecdotal evidence rather than on hard facts. I remind him, and this is factual, of the increase in the number of people in work of 85,000 between March and September last year.

    Departmental Annual Performance Review
    Mr. Thurnhamasked the Chancellor of the Exchequer if he will report progress being made in developing the system of annual performance reviews in his Department.
    The Minister of State, Treasury (Mr. Barney Hayhoe): My right hon. Friend's departments are implementing the proposals reported to the House in last year's White Paper, "Financial Management in Government Deprtments." As promised in that White Paper, we will report progress in July.
    Mr. Thurnham: Is my hon. Friend content with the drive for efficiency in the rest of the public sector?
    Mr. Hayhoe: I am by no means content. If the rest of the public services were doing as well as we have been doing in the Civil Service, the position would be much improved. In local government, although we have seen some fall in numbers, the trend is going up. Certainly the Greater London council is behaving in a most irresponsible fashion over the recruitment of staff. I want to see the implementation of the Griffiths report on the National Health Service.
    Mr. Rooker: When the Minister is considering value for money within his Department, will he examine the results of the Inland Revenue's in-depth investigation into company accounts? Last year it examined 5,300 accounts, as a result of which 4,100 companies had to pay increased tax for that year. Does he agree that an 80 per cent. return in this area of tax avoidance merits more investigation, not less, by the Inland Revenue?
    Mr. Hayhoe: That is precisely what the Government have done. The number of people in the investigation branch of the Inland Revenue has been increased significantly compared with the number available for that work under the Labour Government.

    Common Market
    Mr. Teddy Taylorasked the Chancellor of the Exchequer what net contribution the United Kingdom has made to the Common Market from 1 January 1973 until the most recent date for which figures are available; and if he will express this total as a net sum per day.
    Mr. Ian Stewart: Net payments in the period 1 January 1973 to 31 December 1983 amounted to £4,777 million. This is equivalent to approximately £1·2 million a day since accession.
    Mr. Taylor: Does this not represent an indefensible and damaging drain on our national resources, which should come to an end in the current discussions? Will my

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    hon. Friend assure us that the £42 million, on which the Common Market defaulted on 31 December, and the £450 million rebate due on 31 March will be paid?
    Mr. Stewart: In the days and weeks ahead we shall be pursuing with determination the recovery of our refunds. The figures that I cited demonstrate the need for reform of the European Community budget and the value of the refund that the Government have been able to obtain for the United Kingdom. In the period 1 January 1973 to 31 December 1983, the Government's record of refunds stands at Conservatives, £2,500 million, Labour, nil.
    Mr. Marlow: As it has cost Britain, which is supposed to be one of the least wealthy countries in the Community, £1·2 million a day, why is it assumed that if Spain and Portugal join the Community they will be net recipients?
    Mr. Stewart: The figure of £1·2 million is significant. It is difficult to make any exact assessment of the impact of Spain and Portugal joining the Community, especially as the transitional arrangements have yet to be worked out.
    Several Hon. Members rose—
    Mr. Speaker: As an act of charity, Mr. Dennis Skinner.
    Mr. Skinner: Will the Economic Secretary confirm that, during the first 10 years that Britain was in the Common Market, the net contribution, after all refunds, was about £4,000 million and that, since the Government came to power, the net contribution to the Common Market has been £2,500 million? That represents 60 per cent. of the total contribution during fewer years.
    Mr. Stewart: I am delighted to be able to confirm that the Labour Government in the 1970s — [Interruption.] I am delighted to be able to confirm that the Labour Government in the 1970s—[Interruption.] I am delighted to be able to confirm that the Labour Government in the 1970s benefited from the transitional arrangements so prudently worked out by the previous Conservative Government under my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).

    Public Expenditure
    Mr. Budgenasked the Chancellor of the Exchequer when he intends to publish his long-term proposals and options for public expenditure.
    Mr. Lawson: A Green Paper on public expenditure and taxation in the 1990s will be published on Budget day.
    Mr. Budgen: Will the Government set out their priorities for cutting public expenditure in the event of their assumptions for containing public expenditure and an optimistic assessment of growth not being achieved?
    Mr. Lawson: A Green Paper is, of course, a discussion document, one of its main purposes being to elicit responses from others outside the Government. One of the responses to which I most look forward is that from my hon. Friend.
    Mr. Loyden: Will the Chancellor now end his relentless and unsuccessful attempts to resolve the ever-deepening crisis within the economy and turn his mind to massive public expenditure to provide the jobs needed and to start the recovery of the economy?
    Mr. Lawson: There is a great social problem of unemployment in many parts of the country, and no
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    Conservative Member would wish for a moment to minimise it. I hope that Opposition Members will equally acknowledge that the economy is recovering and is in a sounder and healthier position than for many years.
    Mr. Yeo: Does my right hon. Friend agree that, despite the strength of the economic recovery, on which I congratulate him and his colleagues, the level of public sector capital formation is still causing worry? Will he include in his paper next week some options showing how public capital investment can be increased?
    Mr. Lawson: I understand my hon. Friend's view, which I know is widely shared. I am not sure that it is especially helpful to consider public expenditure on capital account as a whole. Each individual project must be justified on its merits. I am sure that my hon. Friend will look at table 1.13 in the public expenditure White Paper published last month, which showed that during the past four or five years, in aggregate, public sector capital formation years has been roughly stable in real terms.
    Mr. Wainwright: As the official release of long-term options will give rise to immediate public discussion, and as the long-term survey does not contain market-sensitive information, will the Chancellor be courteous enough to give hon. Members the assistance of advance copies on the morning of Budget day?
    Mr. Lawson: That is not possible, for reasons that will become clear to the hon. Gentleman when he sees the document.
    Mr. Higgins: Is it still the Government's policy that the availability of finance will determine the level of expenditure, and not the other way about, and will the Green Paper include both sides of the economic equation?
    Mr. Lawson: Yes, Sir.
    Mr. Freeson: Will the Chancellor bear in mind that private sector industry depends largely on public expenditure, especially on capital account, and in particular that the construction industry depends for about 50 per cent. of its work load on public capital investment? Would it not be wise, if not urgent, to increase capital investment for the benefit of the construction industry, get the houses and other buildings that we require put up and bring back into employment some of the more than 4,000 unemployed construction workers?
    Mr. Lawson: It is the policy of this Government to allow as many people as possible to own their own homes—in other words, we attach greater importance to the provision of housing in the private sector than to the provision of housing in the public sector. That is why we have given council tenants unparalleled opportunities to buy the homes in which they live, and I am glad to say that large numbers of them are doing that.
    Mr. Dorrell: Has my right hon. Friend seen the reports that have started to emerge of skilled labour shortages in manufacturing, and of industries trying to recruit but being unable to find people with the right skills? In making his long-term plans for public expenditure, will my right hon. Friend make certain that there is adequate provision to ensure a proper supply of skilled people to the labour market?
    Mr. Lawson: My hon. Friend is on a good point. My right hon. Friend the Secretary of State for Employment

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    and his predecessors have done more for training than any previous Government. My hon. Friend will be interested to know that this was a matter on which we had a worthwhile discussion in the NEDC only yesterday.
    Mr. Campbell-Savours: If the Government's policy is real economic growth and no real growth in the public sector, what happens if the real growth assumptions in the economy are not met? Does that mean that there will be a fall in public expenditure? Is it true that the Prime Minister has issued instructions to each of the Departments that they should not publish the real effects on individual services provided by the state if those public expenditure cuts were to be introduced, to avoid embarrassment to the Government and yet another banana skin?
    Mr. Lawson: There are no such instructions and the hon. Gentleman is piling hypothesis upon hypothesis.

    Inflation
    Mr. Kenneth Carlisleasked the Chancellor of the Exchequer how the most recent figures for the rate of inflation in the United Kingdom compares with the rates of inflation of the United Kingdom's main competitors within the Organisation for Economic Co-operation and Development.
    Mr. Peter Rees: Over the 12 months to January 1984 the United Kingdom retail price index increased by 5·1 per cent., that is to say above the rates of Japan, West Germany and the United States, but below the rates of Canada, France and Italy.
    Mr. Carlisle: Is my right hon. Friend satisfied that the public understand that a 5 per cent. rate of inflation still means a doubling of prices in 14 years? As this is far too high, will he ensure that the Government continue their policies to reduce the rate of inflation?
    Mr. Rees: I cannot answer for the state of mind of the general public, but I can give my hon. Friend the assurance on Government policies that he requires.
    Mr. Bottomley: At the meeting of the NEDC and the TUC, was there any discussion of the levels of pay settlements consistent with improved competitiveness?
    Mr. Rees: It has always been the Government's view that wage settlements should be low enough to be consistent with improved job prospects in the industries concerned.

    Manufacturing Investment
    Mr. Eggarasked the Chancellor of the Exchequer if he is satisfied with the trend of manufacturing investment.
    Mr. Lawson: Manufacturing investment is on a rising trend. The latest DTI investment intentions survey suggests that it will increase by 9 per cent. in the coming year.
    Mr. Eggar: If that most encouraging trend is to continue, is it not essential that the Treasury ensures that the Department of Trade and Industry has enough funds available to continue its excellent capital grant schemes?
    Mr. Lawson: That is, of course, a matter for my right hon. Friend the Secretary of State for Trade and Industry, but as he is an assiduous reader of Hansard I feel sure that he will discover my hon. Friend's remarks very quickly.
    Mr. Wareing: Are our 40 largest manufacturing companies still producing one third of their total output overseas? If this is so, does the Chancellor agree that it is not surprising in view of the Government's abandonment of exchange controls on assuming office? Is not the only way to ensure real investment in manufacturing industry for the Government to take control of the large companies?
    Mr. Lawson: Perhaps the hon. Gentleman did not hear the reply that I gave some moments ago. The Department of Trade and Industry investment intentions survey suggests that manufacturing investment in this country will increase by 9 per cent. in the coming year. There has also been substantial investment abroad, which is good for British exports. It produces and will continue to produce a flow of invisible earnings to this country, which will be particularly valuable when earnings from oil begin to decline.

    Construction Industry
    Mr. Heddleasked the Chancellor of the Exchequer what evidence he has indicating that the construction industry is benefiting from the economic recovery.
    Mr. Hayhoe: Figures available so far for 1983 show that construction industry output increased by about 3·5 per cent., with new orders rising by about 13 per cent.
    Mr. Heddle: Does my hon. Friend agree that, notwithstanding those encouraging signs, there is concern throughout the construction industry that the European Community might in future levy VAT on non-domestic construction work? Will he confirm that the Government are united in their resolve to resist that at all costs?
    Mr. Hayhoe: My hon. Friend had an interesting Adjournment debate only last week, when I made the Government's position abundantly clear.
    Mr. Evans: Does the Minister agree that one way to benefit the construction industry is to make hundreds of millions of pounds available to local authorities so that they can repair and renovate the many industrialised housing sites that are literally falling down?
    Mr. Hayhoe: I am sure that my right hon. Friend the Secretary of State for the Environment is well aware of that matter, but if local authorities spent less in wasteful current expenditure more money would be available for capital spending.
    Mr. Allan McKay: Does the Minister believe that the Government's rate-capping proposals will help the construction industry, and if so, how?
    Mr. Hayhoe: That matter would be best put to my right hon. Friend the Secretary of State for the Environment.
    Mr. Nellist: In view of the Chancellor's encouraging remarks this afternoon—from his point of view—will he give the House an estimated date when the 400,000 unemployed construction workers will be back at work building and renovating houses and ensuring that the 6 million people living in damp properties have decent homes to live in?
    Mr. Hayhoe: As I have said, if local authorities were more careful and increased the efficiency of their current account spending, more funds would be available for such

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    projects. As Government policies are leading to economic recovery in the country as a whole, that will also benefit the construction industry.

    Nationalised Industries
    Mr. Adleyasked the Chancellor of the Exchequer if, for fiscal policy purposes, he regards all the nationalised industries as identical.
    Mr. Peter Rees: In general, for fiscal policy purposes, no distinctions are drawn between the nationalised industries.
    Mr. Adley: Does the Treasury recognise the essential difference in the deserving qualification for public funds between manufacturing and extractive industries such as steel and coal, and vehicle manufacture, in which competitive factors apply? Is it aware of the need for public funds to sustain part of the nation's transport infrastructure, where the factors are totally different?
    Mr. Rees: My hon. Friend will recognise that, with regard to the first category of industries, a central theme of Government policy is to return as many of them as possible to the private sector. In relation to the second category referred to by my hon. Friend, a 5 per cent. rate of return is expected on most investments, with the possible exception of British Rail, where the need to continue the safe operation of loss-making lines must be taken into account, because of its public service obligation.

    Beer (Duty)
    Mr. Leighasked the Chancellor of the Exchequer what recent representations he has received concerning the duty on beer.
    Mr. Hayhoe: Representations have been received from a number of organisations, including the Brewers' Society, Licensed Victuallers Associations, the Association of Licensed House Managers as well as from individual companies and members of the public. All these representations are being carefully considered by my right hon. Friend.
    Mr. Leigh: Does my hon. Friend agree that in a beer-drinking country sudden increases in the duty on beer are as unwise for the political health of the Chancellor as imbibing large quantities of wine are unwise for his physical health?
    Mr. Hayhoe: I am sure that my right hon. Friend the Chancellor has heard that sage advice, but I know that my hon. Friend would not expect me to anticipate my right hon. Friend's Budget statement.

  PRIME MINISTER

    Engagements
    Mr. Brintonasked the Prime Minister if she will list her official engagements for Thursday 8 March.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Brinton: I thank my right hon. Friend for that reply. Does she agree that there is a great future for the coal industry but that the taxpayer cannot for ever continue to pay for old and uneconomic pits through Government spending, which this year will exceed £1 billion? Does she share my hope that the miners' trade unions will eventually understand that the best hope for jobs for their members lies in new and profitable developments in new coalfields and not in support for the dying or the dead?
    The Prime Minister: I agree with my hon. Friend that there is a great future for a productive, profitable and well-paid mining industry. The "Plan for Coal" and its revision consisted of three parts. The first was good investment for the industry. That has been honoured. Since 1979, through the taxpayer, the Government have provided about £2 million per day investment in coal mining. The second part was increased productivity'. Productivity was due to increase by about 4 per cent. per annum. That was 10 years ago and it has risen by only 4·7 per cent. over the whole period. The third part was the closure programme, which is also behind. If we concentrate on putting investment into the good pits and carry out the rest of the programme, there is a good future for the industry.
    Mr. Lofthouse: Is the Prime Minister aware that, on the instruction of a former Secretary of State for Energy, the present Chancellor of the Exchequer, the British Gas Corporation is about to sell off the Wytch farm oilfield at a knockdown price of £180 million when its full economic value is £400 million? Does she agree that that is a scandal when the same Chancellor has instructed the gas and electricity industries to increase their prices by 2 per cent.? Bearing in mind that the Chancellor's instruction is questionable legally, will she put a stop to the sale until the House has had a chance to debate it?
    The Prime Minister: No, Sir. Nor do I accept the hon. Gentleman's figure for the economic value of the field. As for price increases, the electricity price increase to domestic consumers will be 2 per cent. over two years. Under the Labour Government, it was 2 per cent. every six weeks. Gas prices are bound to rise as the cheaper gas from the southern basin of the North sea runs out and has to be replaced by the more expensive gas, at five or six times the price, from the northern part of the North sea.
    Mr. Traceyasked the Prime Minister if she will list her official engagements for Thursday 8 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Tracey: Has my right hon. Friend had the chance to read reports of a draft pamphlet entitled "Parliamentary Reform" written by the new right hon. Member for Chesterfield (Mr. Benn), which includes, among other extreme ideas, a proposal to remove the royal prerogative? Does my right hon. Friend agree that that is the real face of the Labour party, or should we invite the Leader of the Opposition—
    Mr. Speaker: Order. I do not think that the Prime Minister can answer questions on matters for which she has absolutely no responsibility.
    Mr. Kinnock: Is the right hon. Lady aware that I and countless others warmly support the views expressed by the Prince of Wales this week, both about the insecurity' of the old and about criminal offences by a small

    985
    proportion of the young? Is the right hon. Lady further aware that we are appalled by the 30 per cent. increase in crime that has occurred while she has been Prime Minister? Will the right hon. Lady now confront these problems, not just with sufficient and effective policing, but through the provision of jobs, education and the strengthening of family life?
    The Prime Minister: I warmly endorse the Prince of Wales's view that lack of respect for age is a factor in causing the apparent increase of attacks by young thugs on old people. With regard to his comments on unemployment and crime, I must point out to the right hon. Gentleman that a study has been carried out under the auspices of the Social Science Research Council, which concluded:
    "There is no significant association between increases in recorded crime and increases in unemployment."
    That is not, perhaps, wholly at odds with what his royal highness said. [interrruption.] Freedom of speech is the freedom to say what other people may disagree with, as well as the freedom to say anodyne things.
    I am afraid that increases in crime have persisted through periods of both low and high prosperity. The rapid increase in the number of police initiated by the Government—there are now 12,000 extra policemen—has, I believe, been a factor that has led in the past year to a slight reduction in the crime figures.
    Mr. Kinnock: There are colliding counsels from various research bodies on the relationship between crime and economic depression, but I tend to go in the same direction as the Prince of Wales—
    Mr. Adley: Come on, Prince Charming.
    Mr. Kinnock: I must say that we are hearing new sentiments of all kinds from the Government Benches today.
    The Prime Minister's view that support for the police is essential is shared strongly by the Opposition. However, does she not realise that if the support is to have full effect she will have to do better than to ask the police to deal with problems that are substantially the product of her own economic and social policies? Even the Devil can find work for idle hands. When will the right hon. Lady start to do so?
    The Prime Minister: If the right hon. Gentleman studies the crime figures over the years he will probably come to the same conclusion as the SSRC, which said in the study I have in my hand::
    "There is no significant association between increases in recorded crime and increases in unemployment."
    The study also pointed out that it was unwise to taint the unemployed with blame for increased criminality. I am delighted with the right hon. Gentleman's conversion to our policy of taking on extra police, but he will know, as I do, that the police can carry out their task only if they have the full support of the civilian population.
    Mrs. McCurley: Will my right hon. Friend acknowledge that the impending sale of the Scott Lithgow yard to Trafalgar House and Howard Doris is due in part to the efforts and energies of Ministers and is an endorsement of the view that the lower Clyde is a potential world-beater in offshore oil technology? Does she further agree that the deal enhances the prospects of recovery in the Scottish economy?
    The Prime Minister: Yes. I join my hon. Friend in welcoming the deal between Trafalgar House and Howard Doris, which have made a joint bid for Scott Lithgow. I believe that it will augur well for the yard and give it a chance to re-establish its reputation and performance. I hope that it will gain orders for new exploration.
    Dr. Owen: Why has the Prime Minister not referred to the threat to shipping in the Straits of Hormuz and the Gulf itself? As, at Question Time, the Prime Minister refused to exclude the use of the British Navy, will she admit that it would be far better to take this issue to the United Nations and mount a United Nations maritime peace-keeping force as, if that had been done in 1967 with regard to the Straits of Teheran the Arab-Israeli war might have been prevented?
    The Prime Minister: It would be extremely difficult, if not impossible, for the United Nations to mount a maritime peacekeeping force. The contingency arrangements of the United States—we might one day have to add our ships although they are not there yet—are the best way in which to try to keep open the Straits of Hormuz. With regard to a statement about the vessel Charming in the port of Bandar-Khomeini, my hon. Friend the Minster of State, Foreign and Commonwealth Office, will be making a statement after Question Time.
    Mr. Evansasked the Prime Minister if she will list her official engagements for Thursday 8 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Evans: Has the Prime Minister been made aware of the petition that I handed in to No. 11 Downing street last week on behalf of the National Union of Labour and Socialist Clubs, which was signed by many thousands of working people, protesting at the suggested nonsense that the tax on beer should be increased by 7p a pint to bring it into line with the tax on wine? Will the Prime Minister make it clear to Ministers and the Common Market bureaucrats that this harmonisation nonsense will not apply in this country?
    The Prime Minister: I am not aware of the petition that the hon. Gentleman handed in to No. 11 Downing street. I do not live there, but I am sure that the occupant knows about it.
    Mr. Sayeed: Has my right hon. Friend had time today to study the press report that members of the National Union of Journalists who are in dispute with the Libyan Jamahiriya news agency in London have had their lives threatened by an official of that agency, to wit a Mr. Omar Faraht? Will she confirm that if those allegations are proved to be correct she will ask the Foreign Secretary to lodge the strongest protests with the Libyan Government?
    The Prime Minister: If what my hon. Friend says is correct, perhaps he will take it up vigorously with my right hon. and learned Friend the Foreign Secretary. Anyone in Britain who is threatened can expect to get the maximum police protection that is as good as we can possibly make it.
    Mr. Golding: Will the forecast increase in prescription charges apply to terminal cancer patients? If so, how on earth can the right hon. Lady justify that?
    The Prime Minister: The order for prescription and other charges increases will be laid before the House

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    today. The exempt groups—children, old people, expectant and nursing mothers, certain of the long-term sick and those on low incomes—are unchanged. Moreover, 72 per cent. of prescriptions are free and another 6 per cent. are purchased by low-cost season tickets. The increases in charges will mean that, as a percentage of the total cost of the National Health Service [Interruption.] Those who would be expected to have the benefit of long-term low-cost season tickets will have them. In other words, the existing arrangements are not changed. Charges are only 3·2 per cent. of the total cost of the National Health Service, compared with 5·4 per cent. 20 years ago.
    Mr. Faulds: St. Francis, St. Francis.
    Mr. Speaker: Order. The hon. Gentleman must contain himself.
    Mr. Ashdownasked the Prime Minister if she will list her official engagements for Thursday 8 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Ashdown: Does the Prime Minister agree that the Trident missile system will increase from 64 to 900 the number of targets in the Soviet Union that Britain can independently hit? In the light of those figures, how can she justify the continued exclusion of British nuclear weapons from the Geneva disarmament talks?
    The Prime Minister: First, the precise numbers depend on the number of missiles that we decide to put on each submarine, and no decision has been taken about that yet. It will, in any event, increase the present numbers. With regard to the second part of the question, it is an independent nuclear deterrent for use in the last resort. To include it in those talks as part of the United States' strategic missile system would mean that the United States could no longer have parity with the Soviet Union and that their numbers would be determined by the numbers that Britain and France had.

Business of the House
3.31 pm
Mr. Neil Kinnock: Will the Leader of the House state the business for next week?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:
MONDAY I2 MARCH—Proceedings on the Consolidation Fund Bill.
TUESDAY 13 MARCH—My right hon. Friend the Chancellor of the Exchequer will open his Budget statement.
European Community documents relevant to the Budget debate will be shown in the Official Report.
The Chairman of Ways and Means has named opposed private business for consideration at seven o'clock.
WEDNESDAY 14 and THURSDAY 15 MARCH—Continuation of the Budget debate.
FRIDAY I6 MARCH—Private Members' Bills. MONDAY 19 MARCH—Conclusion of the debate on the Budget statement.
Documents cited as relevant to Budget debate and relevant reports of European Legislation Committee:
10156/83 Annual Economic Report 1983–84, with the
final version as adopted by the Council.
See HC 78-ix (1983–84) para. 7
HC 78-xiii (1983–84) para. 4.
Mr. Kinnock: Since the European Community summit will take place on 19 and 20 March, the House will want an early opportunity to discuss its implications. Can the right hon. Gentleman assure us that a debate will take place as soon as possible after the conclusion of that summit?
The increasing dangers to many craft and people arising from the war between Iran and Iraq necessitate an early foreign affairs debate. Will the right hon. Gentleman assure us that that debate will be substantially extended to allow for an examination of many dangers facing the world and posing problems of foreign policy?
Will the right hon. Gentleman find time for a debate on the Government's 1979 election pledge not to increase presciption charges in the light of the stories clearly and deliberately leaked to the press this morning that the Government are making yet another increase in charges to the sick?
Mr. Biffen: Last week the right hon. Gentleman mentioned the importance he attached to Parliament attending to the issues which would arise at the European summit meeting. He also asked for a debate on foreign affairs so that attention could be paid to the problems in the middle east, especially in Iran and Iraq. I note what he has said this afternoon and repeat that we would certainly wish to discuss the matter through the usual channels. I emphasise my agreement with him that these are matters proper for parliamentary consideration.
The issue of prescription charges is a sensitive one. Only 23 years ago the late Aneurin Bevan left a Labour Government over this issue. I understand that someone who thinks of Mr. Bevan as his hero—together with Prince Charles—would like to see early consideration of a current and topical issue. The debate on the Budget will provide just that opportunity.
Sir David Price: May I repeat the point of the Leader of the Opposition about the need for an early debate on the near and middle east? Many of us believe that Islamic fundamentalism is probably the greatest threat to peace at present, as the statement that will follow today will bear out.
Mr. Biffen: Without entering into a consideration of Islamic fundamentalism, I say at once that it is important for the House to have an opportunity to debate foreign affairs. However, it must be borne in mind that no time is available in the programme announced for next week.
Mr. Willie W. Hamilton: The Leader of the House will have noticed that I have debate No. 10 in the Consolidated Fund Bill debate on Monday, which relates to the Prime Minister's behaviour in Oman in 1981. As it relates specifically to the Prime Minister's conduct, can the right hon. Gentleman assure the House that the Prime Minister herself will reply to the debate at breakfast time on Tuesday?
Mr. Biffen: I am sure that we would all wish to widen the scope of breakfast time debates, but I remind the House that the terms of the motion relate to the Prime Minister's visit to the middle east in 1981. I cannot give an undertaking such as that sought by the hon. Gentleman.
Mr. Robert E. Jones: As the Inland Revenue seems to have spent so much time, first on postmen's tips and now on milkmen's tips, will my right hon. Friend make time for a debate on the priorities of the Inland Revenue when investigating the underpayment of tax?
Mr. Biffen: Since the whole of next week will be devoted more or less to the Budget, it will not need too much ingenuity to work in a speech on that subject.
Mr. Paddy Ashdown: Does the Leader of the House recall that about four weeks ago I asked him to consider providing time for a debate on the impact of American extra-territoriality on high technology exports? During his busy programme last week, did he listen to an extremely interesting broadcast called "File on Four" on this subject and, in the light of recent statements by the Secretary of State for Trade and Industry, does he believe that that matter should be brought before the House for serious consideration?
Mr. Biffen: As the hon. Gentleman will notice, no provision has been made for such a debate next week, but I shall draw his remarks to the attention of my right hon. Friend the Secretary of State for Trade and Industry.
Mr. Roger Gale: My right hon. Friend will be aware that I am seeking to pilot through the House a Bill to control the burning of straw and stubble after harvest. My right hon. Friend can confirm that the Government would not wish to obstruct such a public-spirited measure. However, he will be aware that time for debate on such matters is limited. One such day is 13 April, the day on which the House rises for the recess. Will my right hon. Friend confirm that if private business is lost on that day an alternative day will be provided?
Mr. Biffen: I cannot answer that, because I do not know what the answer is. If my hon. Friend will keep in touch with me, I shall break the bad news as best I can.
Mr. Tom Clarke: Is the Leader of the House aware that there is widespread concern about the

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Government's decision to send observers to the forthcoming sham elections in El Salvador? So that the House may have the opportunity to express its views on the desire not to be seen to legitimise those elections, in a country where 4,000 people were assassinated last year and where one of the candidates has been described as a psychopath, will the right hon. Gentleman ensure that we have time for a debate?
Mr. Biffen: I note the hon. Gentleman's concern about this aspect of Latin American affairs. No time is available for a debate next week. I think that he would be best advised to see what he can secure by way of an Adjournment debate.
Mr. Nicholas Winterton: I recognise that an encouraging Budget will dominate the business of the House next week, but will my right hon. Friend ensure that a debate takes place in the House in accordance with the wishes of the Secretary of State for Social Services on the Griffiths report on the management of the Health Service before Government decisions are taken about this matter so that the House can express its views?
Mr. Biffen: I am unwilling to make any commitment on the point that my hon. Friend raises, but I will of course refer it to my right hon. Friend the Secretary of State for Social Services.
Mr. Andrew F. Faulds: Will the right hon. Gentleman try to comprehend the urgency of the need for a debate on what is happening throughout the middle east? We have a unique opportunity in Britain to try to restrain our American allies from their ill-considered interventions in that part of the world. Does he not understand that the more the Americans intervene in any area of the middle east, the more they increase the inevitability of radicalisation of that area, not only in religious but in political terms as well?
Mr. Biffen: I would not wish to be drawn into the merits of the hon. Gentleman's argument, and I would be anxious that any debate we had was not tinged with delusions of grandeur about what we might or might not be able to achieve in the middle east. However, it is undoubtedly true that there is a widespread desire that the matter should be debated.
Mr. Nigel Forman: My hon. Friend the Member for Macclesfield (Mr. Winterton) has already asked about the Griffiths report. Does my right hon. Friend intend to allow the House to debate the Binder Hamlyn report and the implications for GPs and doctors in this country? I believe that it is every bit as significant as the Griffiths report.
Mr. Biffen: I had a feeling that my hon. Friend the Member for Macclesfield (Mr. Winterton), in all innocence, was opening a Pandora's box, and now the debate is to be widened from Griffiths to include Binder Hamlyn. I recognise the importance of these topics for the House, but my first step must be to inform my right hon. Friend the Secretary of State for Social Services of the points that have been raised.
Several Hon. Members rose—
Mr. Speaker: Order. I appreciate that business questions are an important time for Back Benchers, but we have next a very important debate on Supplementary Estimates, and also a statement, and a large number of
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hon. Members wish to take part. I shall call those hon. Members who have been rising, but I ask them to put their questions succinctly.
Mr. D. N. Campbell-Savours: Is the Leader of the House aware that, in the light of my question to him two weeks ago that he put it to the Prime Minister that she was required to declare an interest in communications and transactions with civil servants on the briefing in relation to the contract to build a university in Oman and of the fact that she has not been willing to reply to that question, I have this morning submitted a new complaint to the Select Committee on Members' Interests requiring that it investigates whether she was required to declare such an interest in discussions with civil servants?
Mr. Biffen: I note what the hon. Gentleman says.
Mr. Ivor Stanbrook: Are the Government ready to meet the situation which may arise quite shortly when the funds of the Common Market run out and numerous people in this country will be expecting to be paid funds from that source?
Mr. Biffen: I am bound to say yes.
Mr. Mark Hughes: Will the Leader of the House accept that we have received strong representations from all parts of the House that the Animal Health and Welfare Bill [Lords] should not be submitted to a Second Reading Committee but should be debated on the Floor of the House?
Mr. Biffen: I take note of the comment and will certainly be in touch with the hon. Gentleman about it.
Mr. John Home Robertson: Is the Leader of the House aware that there are apparently well-founded rumours in the press to the effect that the Secretary of State for Scotland may be about to compel the Scottish Electricity Board to increase electricity charges by 5 per cent — a figure higher than that which has resulted from Government interference in England? If this is so, can he give an undertaking that this will he the subject of a statement in the House by the Secretary of State for Scotland and not be learned from a press release circulated in the House?
Mr. Biffen: I do not think that the hon. Gentleman would expect me to comment on newspaper reports or rumours. I will refer the point he makes to my right hon. Friend the Secretary of State for Scotland.
Mr. David Winnick: Why is it that the stories about increased Health Service and prescription charges have been leaked to the press instead of there being an explanation in a statement by the Minister? Does this not happen far too often? Is the right hon. Gentleman aware that those who have to pay the increased charges will not be very happy with the flippant reply which he gave to my right hon. Friend the Member for Islwyn (Mr. Kinnock)?
Mr. Biffen: I cannot make any helpful comment about why — [Interruption] — in his excitement, the hon. Gentleman is not even allowing me to get to the end of my sentence—leaks may have arisen, but I am sure that he and I would be at one in deploring that situation. The hon. Gentleman will have an opportunity to discuss the merits of the issue in the Budget debate. I should have thought that that was a fair comment.
Mr. Dennis Skinner: Although there is to be a short debate on the coal industry later today, will the Leader of the House give a guarantee, in view of the growing crisis in the industry, that there will be a statement next week, bearing in mind the fact that there may well be a strike, and that about 18 weeks ago the chairman of the National Coal Board said that he was not bothered about the overtime ban lasting for decades because it would save the National Coal Board and the taxpayer money? As it has already cost the board and the taxpayer £240 million, should not the Leader of the House make sure that the chairman of the NCB—[Interruption]—not the Liberals, who are heckling again; they are fast becoming the hooligans of this House—is put in his proper place for not making the proper fiscal arrangements?
Mr. Biffen: I am sorry about the hon. Gentleman's difficulties with the Liberals, but he has got himself into this scrape ever since he was so unwise as to go through a Social Democratic Lobby.
Mr. Skinner: What about the right hon. Gentleman being in the Labour Lobby in the Common Market debates?
Mr. Biffen: I think I was keeping better company then than the hon. Gentleman is keeping now. By way of consolation, may I assure the hon. Gentleman that I shall be in close touch with my right hon. Friend the Secretary of State for Energy to see whether a statement should be made to the House, depending on the progress of the present difficulties in the coal industry.

The Charming (Iraqi Attack)
3.47 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): With permission, Mr. Speaker, I should like to make a statement on the recent attack on a British vessel near Bandar Khomeini.
We learnt on 7 March that a British-registered ship, The Charming, which formed part of a convoy under Iranian protection, was hit in an Iraqi attack in the northern Gulf on 1 March. The attack took place within Iranian territorial waters in the approaches to Bandar Khomeini.
The ship, which was carrying a cargo of alumina ore, is reported to be substantially damaged and aground outside Bandar Khomeini. I am glad to say that none of the crew was seriously hurt and I understand that most of them have now left Iran. It has been reported that Turkish and Indian ships forming part of the same convoy were also hit.
The Charming, like other ships in the convoy, had been and was required to maintain radio silence. Her owners did not subsequently inform Her Majesty's Government about the attack on their ship, and have requested no assistance.
Her Majesty's Government deplore this incident and, indeed, all attacks on shipping in the Gulf area. We have summoned the Iraqi ambassador to protest at his Government's action and to demand an explanation of it.
Her Majesty's Government remain deeply concerned to see an early end to the wasteful and destructive conflict which is continuing between Iraq and Iran. We are working vigorously with the international community to that end.
Mr. George Robertson: First, on behalf of the Opposition, may I express our relief that, apparently, no British lives were lost in this unwarranted attack on a British ship, but also our regret that, apparently, sailors on other ships in the incident were killed. This incident highlights the dangers that exist in that region, where one spark could well set the whole middle east, and beyond, alight.
We must therefore be deeply concerned that the news of this attack comes to the British Government an incredible seven days after it happened. Notwithstanding the obvious need for some radio silence in the Gulf, why did it take so long for any news of such an important attack to get to the British Foreign Office? Does this not reflect the grave information gap which must somehow be closed, and what steps are being taken by the Government to make sure that it is closed? Furthermore, what confidence can the House have that at this very moment British ships, or even other ships, are not being attacked in the Gulf, and that we will not hear about it until this time next week? Is there not some significance in the fact that Lloyds of London doubled the insurance cover for journeys to Kharg island last week? Did Lloyds of London perhaps know of this attack before the British Government did? What significance is there in this? Can the Minister elaborate on the fact that the owners of this ship felt that they did not need to inform the British Government, or to request any further assistance for their substantially damaged ship?
This incident underlines the wider dangers of the Gulf war for all of us, so can the Government assure us all that, while they consider their reaction to this attack, they will make sure that the United States of America and the Soviet

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Union are involved in any discussions about preventing a repetition? Both the super powers have a considerable interest in this region, and their joint interests should surely override any sectional interest that they may have.
First, what evidence have the Government of the use by Iraq of the Exocet missiles that we know they possess in their armoury? Secondly, what British warships are in the area, how close are they to where this incident occurred, and what operating instructions have they for any future incidents that may occur? Finally, what is being done at the United Nations to protest at this disgraceful attack, and to push for some urgent initiative to stop this murderous war before its effects spread to the rest of us?
Mr. Luce: Of course I join the hon. Gentleman in sharing relief that there were no major British casualties. I have already explained the position with regard to the delay in the British Government knowing about this attack. I have explained that there was radio silence as far as the Iranians were concerned, that this convoy of shipping was under Iranian protection, and that the firm chose not to tell us.
I should like to add one other point. It has been known since 1982, on the advice given by the General Council of British Shipping, that there is what is declared as an Iraqi maritime exclusion zone which covers this whole area and in which the Iraqis are repeatedly giving warning that they would be liable to attack shipping. The General Council of British Shipping has repeatedly given warnings to British ships that there would be just that danger in entering that area. I am sure that this should be noted again, in the light of the recent experience.
On the use of weapons, all I can say is that we believe very strongly that our policy of not selling lethal weapons to either side is a policy that every other country should follow.
There are, and have been for some time, two British warships in the area south of the Gulf, and they are available if required.
On the question of the United Nations, where all our diplomatic efforts should be made with the international community to try to help the parties reach a settlement, informal discussions are currently taking place in the Security Council to see whether there is any possibility of the Secretary-General undertaking mediation.
Sir Peter Blaker: Will my hon. Friend confirm that, as far as action by the United Nations in concerned, there is already a resolution of the United Nations calling for a ceasefire, and for freedom to navigate international waters? Can my hon. Friend see how the United Nations can be any more effective than it has been so far?
Mr. Luce: My right hon. Friend is absolutely correct. Resolution 540, which of course we supported very strongly, asks for a ceasefire in the Gulf area, as he says, and calls for the freedom of navigation in the Gulf area. We fully support that. The plain fact is that there have been repeated attempts over not only months but years to mediate between Iran and Iraq. A wide range of countries in the middle east, and outside the middle east, have attempted to mediate. The United Nations has attempted to play a role and resolution 540 calls upon those countries to do just that. However, as yet there is no agreement
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between the two parties that they should receive a representative of the Secretary-General, and until that happens it will not be possible for him to go.
Dr. David Owen: Surely the Minister of State is not asking the House to believe that the British Government did not know about this incident until 7 March. There are other ways of finding out what is happening in the Gulf without having to rely on information from British shipping. Can the Minister assure the House that in fact we did know about this incident before 7 March and give some explanation as to why he has not been more forthcoming on that point?
Whether the hon. Gentleman listened to the Prime Minister I am not sure, but in view of her remark about the United Nations it is hard to believe that the Government are using the Security Council. Would it not be an act of grave folly for Britain to involve itself in a so-called peacekeeping operation with the United States in the Straits of Hormuz without at the very least having first gone through every possible avenue in the United Nations, including the Security Council? Have we not learnt one lesson from the Lebanon—that the first course is to try to use the United Nations machinery?
Mr. Luce: No, we did not know until yesterday and I have explained why. I must repeat that there have been warnings over many months and since 1982 from the General Council of British Shipping that there would be grave risks if British ships went into that area, and I am sure that those warnings will be noted.
I must agree with the right hon. Gentleman about the United Nations. All our efforts and priorities are and must remain on the diplomatic side in seeking support for international effort and from the United Nations to get mediation between the two parties. That is our priority, and that is where all our efforts are going.
Mr. Cranley Onslow: Can my hon. Friend confirm that if British ships are sent by their owners into those waters the responsibility for any consequences to their ships or crews rests with the owners and not with the British Government?
Mr. Luce: My hon. Friend is right. It is important to draw a distinction between this particular area in the northern Gulf, where shipping has been under repeated attacks over the past several months from the various parties, and the rest of the Gulf south of what the Iraqis describe as their maritime exclusion zone, where there seems to be a normal flow of shipping.
Mr. J. Enoch Powell: Is the Minister aware that it was reassuring, apart from his last sentence, to note that the tone of his statement was inconsistent with any possibility of the Government being tempted to take part in yet another American fiasco in the middle east, this time in the Gulf? Will he recommend to his right hon. arid learned Friend the Foreign Secretary that he studies again the experience of a certain Admiral Duckworth in the Dardanelles?
Mr. Luce: Excluding the right hon. Gentleman's last point, I am glad that on the general thrust of what he said about where the British Government's priorities should be in this matter we are in agreement. All our efforts should be devoted with the international community and those who have more influence than we may have in this particular set of circumstances to seeking a diplomatic

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solution. We have a United Nations resolution and we are trying to pursue that as vigorously as we can with the Community.
Mr. Peter Tapsell: Will my hon. Friend, whose family name enjoys respect on both sides of the Gulf, remind both Iraq and Iran that the Chinese leadership has frequently made it clear that it regards the prime strategic aims of the Soviet Union as being the closing of the Straits of both Hormuz and Malacca, and that if the Straits of Hormuz become closed for any reason the only long-term beneficiary will be Communist Russia, and that that would be deeply repellent to the whole Islamic world?
Mr. Luce: Indeed. That is why it is all the more important that we put all our efforts into supporting any international effort for a diplomatic solution to the problem and for mediation between Iraq and Iran. It is essential that the Gulf area remains stable, and that the part of the Gulf that is now stable should remain so and should not be subject to exploitation by outside powers.
Several Hon. Members rose—
Mr. Speaker: Order. I have already said that there is an important debate to follow. I propose to allow questions to go on for not longer than 10 minutes and hope to be able to accommodate all hon. Members during that time.
Sir Anthony Kershaw: Have the Government any information as to whether ships penetrating the so-called maritime exclusion zone of the Iraqis are covered by insurance?
Mr. Luce: It is not for me to answer that. It is for them to decide whether they should be covered by insurance. It is up to each party. As regards the specific ship, I believe that it was.
Mr. Ivor Stanbrook: Would it not be unwise for the United Kingdom to react too strongly to this particular incident? Will my hon. Friend reject the inflammatory talk of the hon. Member for Hamilton (Mr. Robertson)? These are not territorial waters but a war zone well known to everyone where both parties are concerned with their own interests in pursuing that war. The incident was within the territorial waters of one of them and in international law we have no right whatsoever to intervene.
Mr. Luce: I repeat that we think that this incident is serious and to be deplored. That being said, and looking at the wider picture, we must see it in perspective. There have been a number of attacks over many months by Iraqis on shipping in general in this area of the northern Gulf. There is nothing new in that sense. As far as we know, the rest of the Gulf remains stable with a normal shipping flow. There is no change in the situation.
Mr. Eldon Griffiths: Does my hon. Friend agree that a large part of the problem is the insistence of the Iranians that vessels must go into Bandar Khomeini where the danger is greatest rather than into Bandar Abbas where things are much safer? Will he consider getting together with the other OECD nations in order to forbid flag carriers from going to the more dangerous port so that the Iranians, who depend very much on imports, will take a more sensible view?
Mr. Luce: I will give serious consideration to what my hon. Friend has said. I should have thought that, as a result of particular incidents and others in the area, many shipping companies would make careful note of this if they wanted to continue trading with Iran.
Mr. Michael Latham: Since this dreadful war is now in its fourth year, with hundreds of thousands of casualties and now suggestions of the use of chemical weapons, is it not time that the Western powers tried immediately, in conjunction with Eastern countries, to set up an arms embargo?
Mr. Luce: We are now well into the fourth year of the war, the numbers of casualties on both sides have been devastating and we hope very much that they will come to their senses and bring an end to the war. I repeat that our policy is one of neutrality and a refusal to sell lethal arms to either side. We believe that it would be both constructive and helpful if all nations followed that policy.
Mr. Nicholas Winterton: Will my hon. Friend qualify his use of the words "lethal arms"? What are lethal arms and what are not? Will he confirm that we are not supplying arms of any sort to either side? Will he also confirm that we have no supplied mustard gas to the Iraqis, which the Iranians have accused us of doing?
Will he also say what further positive initiative the United Kingdom is making at the United Nations and what discussions it is having with its European partner, France, about the latter's supply of arms to Iraq?
Mr. Luce: Our policy is not to sell any arms that can be used for lethal purposes to either side. As to chemicals, we have already made our position absolutely clear. The allegation that Britain is selling chemical weapons to Iraq is completely untrue. Indeed, in 1959, no less than 25 years ago, Britain eradicated all its stocks, and we are taking a leading part in Geneva in an attempt to achieve an agreement on the control of chemicals as weapons. We will pursue that. We take these allegations very seriously indeed.
As regards the United Nations and our contact with France, all I can say is that we urge all other nations not to sell lethal arms to either country.
Mr. Nigel Forman: Is it not clear that this is just the latest incident in a long, tragic and brutal war between two countries? Is it not also clear that Her Majesty's Government are right to redouble their diplomatic efforts to achieve a solution? Would it be possible to consider an Islamic mediator in this dispute? Is that something that the Government are proposing? Is there any chance of the Government playing a part with their European partners in bringing about a solution?
Mr. Luce: Of course, my hon. Friend is right about the main emphasis being on the diplomatic side. I must remind him that over the three and a half years since the war began there have been numerous attempts by several Islamic countries, both singly and in groups, to mediate between the two sides. Each attempt has failed. Further discussions are currently taking place between Islamic nations on the possibility of further mediation and talks are taking place at the United Nations. I hope that both these efforts will result in some progress.
Mr. John Townend: Have the Government any intention of approaching the Iraqi Government with a view to obtaining compensation for the damage caused to the British ship?
Mr. Luce: That is a matter for the parties concerned, although obviously, after we have investigated and have received an explanation that we demanded from the Iraqi Government this morning, we have to reserve the right to compensation in due course.
Mr. Andrew MacKay: Contrary to the quite extraordinary comments of the hon. Member for Hamilton (Mr. Robertson) a few minutes ago, is it not true that, quite rightly, the Government are not in a position to take positive action other than to make diplomatic representations and that this is precisely what they are doing?
Mr. Luce: My hon. Friend is right. That leads back to the point that ships go to that part of the Gulf at their own risk. We cannot nanny everybody. People must make their own decisions. However, the Government are in touch with the General Council of British Shipping, and the latter has given repeated warnings of the risks to ships which go to that part of the Gulf.
Mr. George Robertson: May I underline my message to the Minister, which is that, if the Government are considering a reaction to this deplorable incident, it should be in the form of a diplomatic initiative, ideally through the Security Council of the United Nations and involving both the super powers which have considerable interests in the area? May I press him on the question of the delay between this incident taking place and the British Government saying that they knew of it? Despite the need for radio silence, an extremely long time elapsed before the Government learnt of something that could have turned out to be a very serious incident involving a large number
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of fatalities. If it is true that it took seven days for us to know about it, what steps are now being taken to ensure that in the future we know a lot sooner than that?
Mr. Luce: We knew that there had been an attack on shipping in general on 1 March, involving a number of ships in a convoy moving near the port itself. What we did not know until yesterday was that there had been an attack on a British registered vessel.
I agree with the first part of the hon. Member's question, that the incident itself, one of many that have occurred in the northern Gulf, will be repeated until there is a successful resolution of the war between Iran and Iraq. The only way to bring to an end incidents of this sort is to achieve success on the diplomatic side, and that is where all our priorities are directed.
Mr. Dennis Skinner: On a point of order, Mr. Speaker, arising out of the statement. Will you confirm that there has been no change in the procedure for applications for private notice questions or in the custom that these matters should not be discussed until they are before the House? I was led to believe that the principle is that if an hon. Member applies to ask a private notice question it is a matter between the Member and the Chair because there is always the possibility that the application will be refused. It seems that on this occasion—perhaps not through insolence but mere naivety on the part o f the leader of the alliance—that rule has been broken. I wondered whether the principle still applied.
Mr. Speaker: The general principle enunciated by the hon. Member for Bolsover (Mr. Skinner) is absolutely right. I know of no breach of confidentiality between my office and the right hon. Member for Plymouth, Devonport (Dr. Owen), or, I may say, any other hon. Member who might have put in a private notice question on this subject.

BILLS PRESENTED
  REGIONAL ASSEMBLIES (ENGLAND) (No. 2)
  Mr. Paddy Ashdown, supported by Mr. David Alton, Mr. A. J. Beith, Mr. John Cartwright, Mr. Clement Freud, Mr. Simon Hughes, Mr. Michael Meadowcroft, Mr. David Penhaligon, Mr. Stephen Ross and Mr. Richard Wainwright presented a Bill to establish regional assemblies in England; to provide for the transfer of functions to those Assemblies; to make consequential changes in the government of the United Kingdom; and for connected purposes; And the same was read the First time; and ordered to be read a Second time upon Friday 4 May and to be printed. [Bill 120.]
BILLS PRESENTED
  SPECIFIED PREMISES (IMPROVEMENT)
  Sir Ian Gilmour, supported by Mr. Maurice Macmillan, Mr. John Golding, Mr. Charles Morrison, Mr. Gordon A. T. Bagier, Sir Hector Morro, Mr. Clement Freud, Mr. Jim Lester and Mr. Richard Needham presented a Bill to amend the provisions of the Betting, Gaming and Lotteries Act 1963 in relation to the conduct and advertisement of licensed betting offices and to make provision for the alteration of the fees payable under paragraph 20 of Schedule 1 to that Act: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 122.]
ESTIMATES DAY
[1st ALLOTTED DAY]—considered
ESTIMATES DAY
  Supplementary Estimates 1983–84

    Class XI, Vote 1
    Mr. Speaker: As this is only the second occasion on which the new procedure on Estimates days has been used, it might be helpful if I make a short statement on the course to be followed.
    The two Estimates down for debate today have been selected by the Liaison Committee, the report of which was agreed to by the House on 29 February. That agreement gives the Committee's recommendations the force of an order of the House, in accordance with Standing Order No. 101.
    Debate on the first Supplementary Estimate may not range over the whole of Vote 1 of Class XI, health and personal social services, England. The Liaison Committee has recommended only subhead F5 — compensation payments to National Health Service staff—for debate, and the committee's recommendation has been approved by the House. Debate on this subhead must end by seven o'clock, but the second debate can begin before seven o'clock if the first debate ends early. In either case, the Question will not be put at the end of the debate but will be deferred until ten o'clock, under Standing Order No. 19(2)(c).
    At ten o'clock the Question will be put on the two Supplementary Estimates in the order in which they were debated. The House will then move on to the outstanding Votes Nos. 2 to 6 on the Order Paper and the presentation of the Consolidated Fund Bill.
    Motion made, and Question proposed,
    That a Supplementary sum not exceeding £1,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1984 for expenditure by the Department of Health and Social Security on the provision of services under the national health service in England, on other health and personal social services including certain services in relation to the United Kingdom, and on research, exports, services for the disabled and certain other services; including grants in aid and international subscriptions.—[Mr. Kenneth Clarke.]
    4.12 pm
    Mr. Peter Hordern: I wish at the outset to congratulate my right hon. Friend the Member for Worthing (Mr. Higgins) on whose initiative this debate takes place. This is the second debate, and I hope that we shall have many more arising from the Supplementary Estimates because it allows the House to engage in debate on specific subjects, whereas previously we had to content ourselves with a debate on a variety of subjects which came under the Supplementary Estimates.
    I should not really be opening this debate. I do so only because the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) is unavoidably absent. He should, and would normally, be opening the debate, as the Chairman of the Committee of Public Accounts. I open it, therefore, in the knowledge that I shall not be able to put the case as he would have done. Nevertheless, this is a unique occasion for us in the Committee of Public Accounts. Normally when we have our debates in the Public
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    Accounts Committee we debate 30 or 40 different reports at a time. On this occasion we are able to debate just one, and I am glad of that.
    The debate centres on the question of voluntary redundancies in the National Health Service, a subject which we in the PAC examined as recently as 30 January. We saw witnesses and produced our report in the last few days. Therefore the House has not had the opportunity to consider fully the report or all that flows from it.
    In our report on voluntary redundancies in the NHS we pointed out that the last major reorganisation, in 1974, was subsequently recognised as having had a number of weaknesses. Those of us who were present at the time felt that that might be the case, and we said so. Subsequently, when the Royal Commission reported that problems had arisen, mainly from too many levels of administration, we were concerned that the changes in administration that were then to take place would not show a great improvement, either.
    In the last reorganisation, as the House will remember, 98 area health authorities were abolished and were replaced by 201 district health authorities. I did not think that the abolition of one form of health authority, to be replaced by almost twice as many, would in itself ease the administrative pressure on the Health Service. Indeed, that has proved to be so. The very weaknesses that were apparent in the original administration of the Health Service before 1974 have remained with us in the latest reorganisation, perhaps in an even more marked form.
    In July 1981 the DHSS estimated that by 1984–85 the reorganisation would have resulted in the number of management posts in the NHS in England being reduced by about 4,000. It expected in 1981 that 2,800 of those would go by means of natural wastage, 765 through compulsory redundancy and 435—and only 435—through voluntary and early retirement.
    It is worth while recalling exactly what terms were offered to those who wished to seek early retirement. For those over 50 with at least five years' service, applicants whose premature retirements were approved would have their pensionable service enhanced by up to 10 years, subject to a limit of 40 years.
    That applied with a minimum of only five years' service. Hon. Members will recognise, therefore, that that was a generous offer made by the NHS at the time. It was added to by a possible redundancy payment equivalent to 30 weeks' pay. That emphasises that the arrangements made for voluntary redundancy were extremely generous by any standards.
    The cost of the voluntary early retirements was expected to be £8·6 million by the end of March of this year. When the Comptroller and Auditor General made his investigations, he found that the estimated total number of premature retirements in England alone had risen by 550 per cent., from 435 to 2,830, and that the cost was not to be £8·6 million but an estimated £54 million.
    There appeared to have been, on the other hand, no compulsory redundancies of any kind, although the original forecast was that there would be 765. Furthermore, as is the general practice throughout the Health Service, there were wide variations within the regions of the service in the take-up of early retirement. For example, the northern region had approved early retirement only where there would be surpluses, and it was careful to see that no replacements for those surpluses would take place.

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    On the other hand, the south-east Thames regional health authority allowed 417 cases to go, when the total estimate of voluntary redundancies was 435, so that the anticipated number was filled almost entirely by only one region. In Wessex, every application for voluntary early retirement was approved, and subsequently it was discovered that over 100—I believe that the number was nearer 130—of those who had voluntarily retired early were subsequently re-employed.
    The DHSS replied by saying that it had received only rough guidance from the regional health authorities, whose capacity for manpower planning, it said, had been "variable". That is a lovely word to describe what had happened. The Department itself had not the least idea what was happening in the regions and the regions had not the smallest notion of any direction from the Department, because there had been none.
    In February 1982—after some time—the Department had become aware of greater regional variations and of a higher number of premature retirements than had been anticipated. In October it instituted a monthly check. The House might well wonder why it took six months before the Department established that things were not going according to plan and before it wanted to know more about it, let alone do anything about it.
    The House might justifiably ask about the expected reduction, which was supposed to take place, of 4,000 management posts by 1984–85. The Department was again doubtful whether it would ever be able to give the number of posts actually saved by the 1982 reorganisation. If one could count the number of managerial posts and include them in the number of administrators and clerical staff—it is by no means certain that one could because I do not think the Department knows how many managers there are—one might find that far from going down, let alone by 4,000, the number of administrators and clerical staff has actually risen by over 1,000.
    The Department doubted whether it would have been right to try to reduce the take-up of the scheme to the level of the northern region. Therefore, the Department was saying that it neither knew what was happening in the regions nor did it really care, and that the regions might do what they wished about the voluntary redundancy scheme. The finding in our report was that it was clear that the Department had no basis on which to form an idea about how many retirements there would be and that there were never any proper monitoring arrangements of any kind. In the view of the PAC, the Department was not at liberty to treat its responsibility to its taxpayers as inadequately as it did in this case.
    Why, we should ask, was there such a difference between the treatment in the regional health authorities as between, for example, the northern region and the Wessex region, which later allowed every application to be accepted? As I have said, so far as one can judge, the number of administrative and clerical staff, according to the latest figures, which go only to September 1983—and that is a story in itself—shows an increase of over 1,000. Perhaps when the Minister is replying he will be kind enough to tell us the latest figures and what progress has been made in the rundown of managerial staff.
    As a whole, the Health Service has not suffered from lack of employment, and this is a matter on which I have wearied the House on many occasions. In 1961 there were
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    575,000 employees and in June 1981 there were 1,250,000. Questions have been asked before about numbers. The numbers that I refer to are those employed in the Health Service and not the figures given by the Department, because the Department's figures are rounded up to what are known as whole-time equivalents. It is strange that any Department of State should use such a statistical method to arrive at the total number of individuals working in the Health Service.
    One would think that the Department would be interested enough to know and to display its knowledge of how many people are actually employed in the Health Service. The total is well over 1,250,000. It is the largest service, not only in this country, but in the whole of Western Europe. I urge my right hon. and learned Friend to recognise that this statistical method of arriving at total employment figures for the Health Service is not as good, in the view of many, as saying how many people are working in it, full time and part time.
    My hon. Friend the Member for Norfolk, North (Mr. Howell), whom I am glad to see in his place, has taken the Committee of Public Accounts to task. He says that we have not done our job properly. I am the first to admit that there are inadequacies in any group of men, but I do not think it can be said that we have not examined the Health Service on a number of occasions in the past. We have tried to level criticism at the standard of administration. I welcome very much the interest shown by my hon. Friend in our endeavours and I hope that what I have to say will encourage him to intervene, if he catches your eye, Mr. Deputy Speaker.
    My hon. Friend has made a serious charge against the Comptroller and Auditor General, based, I think on a total misapprehension of his work and duties. He is not a civil servant and he is unable to answer for himself directly in the House; unlike a normal civil servant, he is not protected by a Minister. Therefore, someone has to say something in his defence, and I think it falls to members of the PAC to do so.
    If my hon. Friend criticises the Comptroller and Auditor General, I hope he will be good enough to quote the letter of the Comptroller and Auditor General of 2 December last and his replies to specific queries. As my hon. Friend knows, the Committee of Public Accounts is not an executive body. Serious though our criticisms are, and much as we would like to do something, there is nothing we can do other than to report, to have debates on the subject and to continue to embarrass successive Administrations who fall down on their job of running the National Health Service properly.
    Mr. Ralph Howell: I am grateful to my hon. Friend for having informed me that he would criticise my actions in writing to the PAC as I did. He has referred to what has happened in the Health Service over the last 36 years and to how unmanaged it always has been and still is. Over-staffing, now by 700,000, which my hon. Friend has already mentioned, has gone on despite some 33 reports from the Comptroller and Auditor General, followed by another 33 reports by the Committee of Public Accounts. All this time, as things have been getting more and more out of control, the PAC has reported to the House, but it has not been effective. We must in some way try to get public expenditure properly under control and cut out waste, which is good for nobody. When he suggested—
    Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman has made his point and I know that he will be trying to catch my eye.
    Mr. Hordern: The truth is that, much to our regret, we have no executive power. We wish we could get our hands on the Health Service. We all feel we could do a better job than those who have handled it so far, and we could scarcely do worse. However, I should draw the attention of my hon. Friend to the report that we made in the 1980–81 Session on the financial control and accountability of the National Health Service. We have considered these matters fully in the past and, if I may say so, we make a much more devastating analysis than any that my hon. Friend has so far made. If he is determined to shoot our fox, it is much better not to shoot at the hounds as well, and better still not to shoot at the master, the Comptroller and Auditor General.
    I have read the report that my hon. Friend sent to the Prime Minister. He makes the valid point that National Health Service staff have increased from 565,000 to 1·2 million in the last 20 years. That is a matter to which I have alluded on many occasions in the past. He has contrasted the number of daily beds occupied, saying that in the same period they have decreased from 478,000 to 370,000. I believe that is the only example he has given.
    The question is not so much how many beds were occupied but how many cases were dealt with in the National Health Service. The truth compels us to recognise that in 1961 there were just over 5 million discharges and deaths, and the number rose to just over 7 million in 1981—an increase of almost 50 per cent. The number of cases dealt with is a more significant and important statistic than the number of beds occupied, because patients can now stay in hospital for a much shorter time, and on the whole that is a good thing. The average length of stay in 1971 was 14·7 days and in 1981, 10·2 days. The Health Service is not suffering from a shortage of beds. Our reports show that more than 2,000 beds in five different hospitals cannot be used because the revenue costs are too expensive.
    It is true that the waiting lists in the NHS have increased. In 1971, there were 596,000 on the waiting list and in 1981 there were 745,000. However, the number of doctors and nurses to deal with the increase in the waiting list has risen as well. The number of doctors—this is an important point—decreased from 2·25 per 1,000 people in 1961 to 2·1 per 1,000 in 1982. Similarly, in the same period the number of prescriptions has increased from 233,000 to 383,000. Everyone must recognise that, in the past 20 years, life expectancy has increased and there is a much lower infant mortality. Most people would say that we should have more doctors and nurses to deal with the increased waiting lists. I must say, in justice to my right hon. and learned Friend, that that is exactly what successive Governments have succeeded in doing. It is not right to say that the waiting lists have increased without pointing to the fact that the number of doctors, nurses and treatments has increased markedly during that period.
    I wish to give a slightly larger perspective than my hon. Friend the Member for Norfolk, North has so far done. It is true that productivity has declined in the sense that there are more doctors and nurses to deal with cases, and many would say that is a good thing. Between 1965 and 1979, the ratio of administrators to doctors increased from 1·07 to 1·95—almost doubling. In that context, management
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    costs, which we are told are to be lower as a proportion of total costs, are unconvincing. In the past 20 years, there has been an extraordinary increase in the number of administrators. More management appears to be necessary by virtue of the larger share of public expenditure and greater resources devoted to the Health Service, but that claim is unconvincing in the context of what happened after the last reorganisation, especially with regard to the number of administrators.
    What was the proudest boast that the Minister for Health could make in 1976?
    Mr. Ralph Howell: Will my hon. Friend give way?
    Mr. Hordern: I shall give way to my hon. Friend, but first I shall finish this good point. The Minister's proudest boast was that in three years he had witnessed the largest increase in the number of administrators, from 87,000 to 112,000. Despite all of the Minister's responsibilities, his greatest contribution was more administrators.
    Mr. Ralph Howell: My hon. Friend has made a rather strong attack on my publication, and I should be allowed to correct it. My report states:
    "Kenneth Clarke, the Minister for Health, claims that the increase in staff is explained by the fact that considerably more patients are treated now than in 1960—that output has increased both in bed patients and out-patients. This is true and must be taken into account. Also treatment is, in many cases, more complex and advanced than would have been the case in 1960 and there are considerably more intensive care units."
    In view of that passage, my hon. Friend has made a rather hard attack on what I said.
    Mr. Hordern: I know that my hon. Friend will expand on his remarks. I accept that his remahks were balanced. but he made a mortifying attack on the Committee of Public Accounts, from which the Committee must recover as best it can. In 1981, the Committee was told that the Department was developing a computerised system. However, when the Committee took evidence on 30 January, no figures beyond last June were available. What had happened to that wonderful computerised system, whirling and churning out information all the time in those seven months? Absolutely nothing. In 1981, the Committee of Public Accounts report stated:
    "We consider this situation is quite unsatisfactory."
    The circumstances remain that way.
    What about the recent Department of Health circular? I understand that, last September, the Department told England's 92 district health authorities to invite tenders from private contractors and the existing Health Service work force and to accept the cheapest tender offered. The district health authorities were supposed to send their plans for tendering by the end of February to 14 regional health authorities. We are right up to date, and I am sure that my hon. and learned Friend can tell us what happened to that instruction. The Economist says that at least five districts, including Brent, Islington and Haringey, have voted to ignore this instruction. What happens when the Department issues an instruction which is disregarded?
    We have found that there is no staff inspection of the Health Service, unlike the position in the rest of the Civil Service where regular staff inspection occurs. That lack of inspection accounts for the wide regional variations in the number of places and the different methods of dealing with treatment within the Health Service. I cannot understand why the NHS and successive administrators have thought it right to ignore the business of staff inspection to

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    ascertain what people are doing in the regions and districts. What is their objection to it? Do they believe that the whole of the Health Service functions so well that it does not sometimes require simple checks to establish what people are doing?
    I do not know whether we shall later debate the Griffiths report, which recommended more direct line management and a clear chain of commend. Right hon. and hon. Members interested in the Health Service will recognise that many years ago that process was followed with a much better result than rule by committee, which presently occurs at every stage throughout the Health Service, even to the extent of deciding how many beds there should be in a hospital ward.
    It would be helpful if more people with business experience were required in the regional health authorities and the district health authorities. I know that my right hon. and learned Friend is seized of this point, but the Health Service should not be allowed to continue to be run by health authorities, with a large number of superannuated local politicians with no business experience.
    In the Beveridge report, it was recommended that much more should be spent on prevention than was spent in those days. This still remains the truth today. If only we could have more prevention and earlier diagnosis, the health of the country would be better than it is. Is it not strange that there should be an MOT test for cars but no compulsory test, or any form of early diagnosis, for human beings? This is a reform that I hope the Government will initiate one day. There should be regular inspections and checks of all employees. If that could be done by firms, they should be eligible for relief against the national insurance surcharge for doing so.
    All our reports over many years show that the reform of the NHS has a long way to go. It must start with the Department accepting more responsibility. It is not good enough that it should continue to act just as a funnel for cash, handing it out to the regions and then seeing what a disaster most regions make with the money. The Health Service is charged with the care of the nation's health and it cannot be right that it should be so careless in seeing how this is done.
    Several Hon. Members rose—
    Mr. Deputy Speaker: Order. I remind hon. Members that the House has approved a recommendation that we concentrate on the compensation payments to NHS staff. I have allowed the opening speech to range fairly widely, but we should stick to what we have been told to do.
    4.41 pm
    Mr. Michael Meacher: I pay a warm tribute to the Public Accounts Committee, to its chairman, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), and to the hon. Member for Horsham (Mr. Hordern), who opened the debate. This is an extremely revealing and penetrating report, and the hon. Gentleman's speech was balanced and representative, setting out findings that are disquieting to both sides of the House.
    On any standards, this report on premature retirement in the National Health Service is a damning indictment of administrative laxity and bungling within Whitehall. As
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    the hon. Member for Horsham said, such retirements in England were originally estimated at 435, but the Comptroller and Auditor General estimates that the total has soared to 2,830. That is a six and a half times increase. Corresponding to this gigantic underestimate of the numbers of staff involved, the DHSS had similarly estimated the cost at £8·5 million, but it turned out, in the end, to be £54 million. Those facts are agreed.
    Although this is mainly the result of administrative incompetence, to which I shall address the main part of my speech, there are a number of political issues involved. The only reason for these premature retirement payments, in the first place, was to assist in remedying some of the grosser bureaucratic excesses of the 1974 Tory reorganisation, associated with the name of the then Secretary of State for Social Services, now the Secretary of State for Education and Science. If that reorganisation had not, regrettably, sired upon the NHS a gratuitously multi-tiered structure, there would be no need to pay out millions of pounds in compensation for the abolition of one of those tiers.
    Secondly, this expenditure excess of £46 million has been allowed to overshoot uncontrollably by a Government who have seen fit on more than one occasion recently to go to great lengths of harshness towards the poor and deprived sectors of the population simply to save minuscule sums of money—far less than the £46 million to which the Public Accounts Committee has drawn attention as being squandered.
    Let me give one or two examples. The Government were prepared to introduce, through their notorious overseas visitor regulations, a new layer of bureaucracy with racist overtones in the NHS to save, theoretically, the miserly sum of £6 million. Of that, only a farcical fraction was saved—£370,000. The Government were prepared to bring in emergency regulations, which were debated only a couple of months ago, to put an instant stop to single payments to those on supplementary benefit—despite the fact that the Social Security Advisory Committee believed that the beneficiaries should have them—to save a few niggardly tens of thousands of pounds.
    The Government were prepared to stop disabled persons in long-term care from accruing more than £1,000 in savings, despite their entitlement, like everyone else, and all to save petty hundreds of thousands of pounds. Now the Government, according to the report today are prepared to raise prescription charges, yet again, when they have already been raised by no less than 700 per cent. over the past five years, even though they are a straight tax on the sick, simply to save a few million pounds. I could go on, but bearing in mind your strictures, Mr. Deputy Speaker, I shall not. However, it is important to put in context the sums of money about which we are talking.
    It would be a great deal easier to stomach this £46 million overspending blunder if the Government had not been quite so ruthlessly demanding in paring away the meagre livelihood of so many defenceless and helpless groups in the population. It would have been easier to excuse this debacle if the Government had not been insisting, year after year, on so-called efficiency savings from others, such as district health authorities, requiring them to produce the same services next year with less money than this year. A little more rigour by the Government in managing their own operations would not come amiss before they start lecturing others on their failings.

    1011
    There is another political point that needs to be made clear. I refer to the stark contrast in the treatment—revealed by the Public Accounts Committee—by the Government when they make redundant high-paid managers compared with low-paid ancillaries. Managers losing their jobs are offered extremely generous premature retirement and a superannuation gratuity of about £20,000. One has to compare that with the treatment being meted out to NHS ancillary workers made redundant by privatisation. They are being forced to accept lower wages than the disgracefully low level, under both this Government and the previous Government, of about £1.20 or £1.10 an hour, that they are now receiving. Such people are being forced to even lower sub-poverty wage levels. This lucrative premature retirement scheme reveals that there is one law for the rich and another for the poor, even in the loss of jobs.
    The administrative implications of this episode were well displayed by the hon. Member for Horsham.
    The Minister for Health (Mr. Kenneth Clarke): Before the hon. Gentleman leaves his general conclusion and as he is now emerging in a new guise as an enemy of bureaucracy, will he be chastened by the Public Accounts Committee report into changing his stance on these matters? Will he support the Government's proposals to get better management in the Health Service, as outlined in the Griffiths report? Will he also support our efforts to reduce management costs and the number of administrative and clerical staff in the Service? The thrust of the hon. Gentleman's activities as Opposition spokesman has so far been to obstruct the Government's efforts in those directions at the behest of his allies, the trade unions.
    Mr. Meacher: I am in favour of reducing management costs, but perhaps the Government could do it a little more effectively than the PAC report reveals.
    As to the Griffiths report, I am in favaour of improved management of the National Health Service, greater efficiency and more effective management, as I have always been. However, the reduction in the role of regional and deputy health authority members, the upgrading of the line management position of authority chairmen and the review of consultation procedures point more to facilitating further cuts and the acceleration of closures, to which I am opposed, than to greater efficiency. In principle, however, I am in favour of improved management.
    Coming to the administrative implications of the episode, the Department has much to answer for, as was made very clear by the hon. Member for Horsham. We shall listen with great interest to what the Minister says.
    The central question is why the DHSS made no precise estimate of the numbers intended to qualify for premature retirement. Why was there no adequate basis for monitoring the use or cost of the scheme? Apparently the DHSS became aware in February 1982 that the scheme was being used far more than had been expected, but why did it then take eight months, until October 1982, to institute regular monitoring?
    Such extraordinary administrative practice means, as the hon. Member for Horsham rightly said, that we are never likely to know whether the overall reduction by 4,000 management posts including almost 3,000 premature retirements, has been achieved. We expect to hear straight, informed answers to those questions. As they are integral to the report, must be asked.
    1012
    The central issue at stake in this deplorable episode is not in dispute. The DHSS has difficulty in reconciling accountability to Parliament with delegation of day-to-day management decisions to health authorities. In Wessex, for example, apparently all the applications from officers in the qualifying age group were approved, although the region accepted that not all such retirements would help to avoid redundancy. In other words, it paid attention only to one of the two criteria laid down by the department and the number of applicants was much greater there than in other regions, such as the northern region, which the Minister used as a comparison.
    It is an astonishing administrative oversight that Ministers and their advisers did not reckon—it should be obvious—that excessive cost to the taxpayer would be avoided if the health authorities bore the full cost of authorised premature retirements from their own budgets. Such blatant managerial negligence and incompetence, with such costly consequences, would cause heads to roll in the private sector. We are entitled to ask by what standards of propriety the Secretary of State, the Minister for Health and senior civil servants can lose £46 million and blandly wave it aside as not a resigning matter.
    The Secretary of State's only defence, so far as I know, is plaintively to say that the 1982 reorganisation has reduced management costs by £64 million. He made that point in the press notice issued on publication of the report, and I believe that he has repeated it since. That is no defence. There are bound to be substantial savings in management costs in any case if a tier of management is removed. That saving cannot be used to justify a huge cost overrun in offsetting payments.
    The Secretary of State claims that the savings of £64 million are more than twice the original prediction, but the earlier £30 million management savings figure, to which the right hon. Gentleman referred, derives from the consultative paper "Patients First". At today's money value, those savings must be approximately £45 million, so present savings on management costs are about 50 per cent. higher than forecast, but there is an enormous overrun on premature retirement payments, which are 550 per cent. higher than forecast. Management incompetence on that scale, coming from a Government who like to pride themselves on their interest in efficiency, is wholly indefensible.
    Mr. Eric Deakins: Is it not anomalous that the Government are able to estimate savings in management costs but the Department cannot give figures for savings in management posts? There must be some relationship between costs and numbers. If it is not possible to estimate either figure separately, it should at least be possible to get some estimate of both.
    Mr. Meacher: That is a very important point, to which I am sure my hon. Friend will refer more fully if he catches your eye, Mr. Deputy Speaker.
    It is extraordinary that the Department is able to give a figure only for the reduction in management costs. It is puzzling and bewildering that the reduction in management posts cannot be calculated from costs or found by other means. If the figure of 4,000 management posts is incorrect, what is the true figure? Will the Minister give us his best estimate?
    It adds insult to injury to hear that the Comptroller and Auditor General found that more than 100 officers, who

    1013
    had prematurely retired after the 1982 reorganisation, were subsequently re-employed in the National Health Service. The hon. Member for Norfolk, North (Mr. Howell) drew attention to that by tabling a question to the Minister for Health, which was answered in Hansard on 29 February. The PAC, in a report that is excellent in every other way, merely says that it has "misgivings" about it. The Committee is entitled to use its own language, but that must surely be the understatement of the year. To put it somewhat differently, there is an ominous whiff of, not corruption, but very dubious practice when someone who has received £20,000 in total benefits for prematurely retiring is re-employed in the same organisation within a few months. That calls for some kind of explanation, and we want to hear it from the Minister tonight.
    The Minister for Health, in a written answer on 29 February, justified that practice only where it was necessary
    "to fill a temporary need that could not be foreseen at the time of premature retirement and that could not otherwise be filled except by recruiting an officer for whom the authority would have no continuing need."—[Official Report, 29 February 1984; Vol. 55, c. 258.]
    It is difficult to believe that those suitably narrow qualifications would cover anything like 100 cases. The House needs to know how often managers have been reemployed in circumstances falling outside those criteria. I suspect that there has been considerable abuse on those grounds. I hope that the Minister will answer that question, too.
    This is a lamentable story of ministerial negligence and Civil Service laxity. The CPA report roundly declares that
    "the DHSS appeared to us to act as little more than a rubber stamp in issuing certificates covering individual cases."
    The House needs to know how a ministerial regime of such crass incompetence was ever allowed to prevail in the DHSS and, without being fobbed off with such soothing euphemisms as annual accountability reviews, that that massive hijacking of taxpayers' money by already well-heeled administrators will not happen again.
    4.59 pm
    Sir Michael Shaw: Perhaps I may deal a little later with some of the points raised by the hon. Member for Oldham, West (Mr. Meacher).
    First, I should say how sorry all members of the Committee of Public Accounts are at the absence of our right hon. Friend and Chairman—he is certainly that to all members of the Committee—the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). My hon. Friend the Member for Horsham (Mr. Hordern), however, was far too modest. No one could have led us better on this occasion than he did, and we expected no less, given the great interest that he has taken in this important subject over a number of years. I admired the skill with which he deployed the case. He made it clear that there were enough matters to discuss for at least a whole day and he covered the points raised in our necessarily critical report extremely fully. I wish to consider the report and its conclusions bearing in mind that I entirely support the detailed criticism that my hon. Friend has so rightly brought out.
    It is unusual to debate the report so soon after the Committee's investigation. That is especially welcome as
    1014
    so many of our reports have still to be debated — I believe that there are 37 outstanding from earlier Sessions and already 12 from this Session. The force of such reports is bound to be lessened if there is undue delay. Therefore, the early debate on this subject must give added force to the report and the message to be drawn from it.
    In examining this problem, I have felt from the beginning that as a result of our experience we must have in mind a general fear of what always happens when changes are made in a major national service—the fact that additional costs always seem to creep in sooner or later. We may set out with the best of intentions, but all too often additional costs become apparent to an alarming extent, sometimes too late for anything to be done about them.
    Mr. Frank Dobson: As most of the predictions about cost savings and reductions in administrative manpower in this case came from the right hon. Member for Wanstead and Woodford (Mr. Jenkin) when he was Secretary of State for Social Services, does the hon. Gentleman agree that there must be some doubt about the right hon. Gentleman's predictions as Secretary of State for the Environment as to the savings that will accrue if he gets rid of the GLC and the metropolitan counties?
    Sir Michael Shaw: In the Committee of Public Accounts we have almost entirely got rid of party political points. We study the problems as they are and try to reach a unanimous conclusion. I believe that, if I followed the hon. Gentleman's intervention, the spirit in which the Committee of Public Accounts conducts its business would be lost, but—the hon. Gentleman can make what he likes of this—our experience was borne out in the local government reorganisation and the National Health Service reorganisation in 1974. To some extent, we found the same shortcomings. The present report brings out the case in relation to premature retirement. The estimated number of premature retirements was 435. The actual number was 2,830. The estimated cost was £8·6 million. The actual cost has proved to be about £54 million.
    The lessons to be drawn from the report are set out in paragraphs 19 and 29. Broadly speaking, the DHSS has told us that it had no real idea how many premature retirements would result from the reorganisation. It felt, however—this is the interesting point—that it had a duty to make some kind of guess or forecast, but that as such a guess was bound to be extremely uncertain it would have been wrong to confine the reorganisation to the limits contained in the original estimate. I have to say, however, that if that was so there was certainly no reference to the vagueness of the estimate at the time it was made. I therefore draw the general conclusion that, once again, it appears that no adequate financial disciplines were built into the original scheme. I should also say in passing that we have been waiting far too long for the appointment of a successor to Sir Kenneth Sharp. Greater accountancy discipline at a high level is still a great need in the Civil Service and Government Departments so that when actions are planned proper forecasts can be made, proper objectives defined and a pattern established against which the actual outturn can be set so that we can see where we are going all the time.
    Let us consider what happened in this case. The regions were given power to grant premature retirements, but the

    1015
    discipline of having to provide the cash was largely absent, as the report makes clear. The Department was left to pick up the bill. The result was hardly surprising, given that the regions did not have to pick up the bill. Secondly, the 1981 estimate was based on various hypotheses and not on ascertainable facts. The Department had received only rough guidance from the regional health authorities, whose capacity for manpower planning at that time was extremely varied. The need for accountancy disciplines to be brought into the Department's various plans, decisions and conclusions is clear. The Department recognised the regions' inability to plan manpower, but was apparently willing to accept their decisions as to who should be granted premature retirement.
    Finally, there has been the problem of people who have accepted premature retirement then being re-employed. I see the argument—it is simple, straightforward and basically right — that anyone who has received a substantial sum in respect of premature retirement should not be re-engaged, although I accept that re-employment may sometimes be necessary. I believe, however, that on such occasions the Department itself should sanction the re-employment. I understand that the Department had to authorise premature retirements in the past even though it did not seem to consider the facts very carefully. If that was right for premature retirement, it is also right that the Department should take final responsibility for reemployment. Those points must be taken on board.
    As I said at the beginning of my speech, we have had a chance to debate the report far more quickly than is usual. I hope that this will be a good precedent for the future, because I believe that the existing worries in the Department will be more than a little reinforced by the views of the House on the inquiries made by the Committee and the report that we have submitted to the House. I hope that that is the spirit in which we shall conduct this debate.
    5.11 pm
    Mr. Eric Deakins: The House is at a disadvantage in this debate, although we have the report of the Committee of Public Accounts, because it is inappropriate on these occasions that the House should debate a topic on the basis of a Committee report—however however good—without the benefit of a written reply from the Government. No one is to blame. We completed the report only a few days ago. Normally, there would be a Treasury minute—a Government reply—and I have no doubt that the Minister who replies to the debate will be in a difficult position because, in a sense, he will have to anticipate what may be said in the appropriate Treasury minute. That is not the fault of the Committee of Public Accounts.
    I congratulate the hon. Member for Horsham (Mr. Hordern) on what he said about the report, and wish to supplement some of his remarks. The whole point of debating Select Committee reports—particularly those that are critical of Government Departments and, indirectly, of Ministers—is that some notice should be taken of them. Lessons should be learnt for the future. We should emphasise to the House and to the public that in discussing the effects of the voluntary premature retirement scheme in the National Health Service we are not discussing a scheme that is dead and buried. It is not
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    the case that the scheme will come to an end on 31 March and that that will be the end of the matter. In paragraph 8 of the Committee's report, we said that the scheme
    "was introduced … to provide a permanent facility within the management of the NHS."
    We are not discussing a scheme for voluntary premature retirment designed to operate only within the reorganisation in which the area health authorities disappeared. We are discussing a permanent feature of the NHS — a management tool. The scheme was not a one-off arrangement that is over and done with. We cannot therefore simply say that it was a pity that the scheme overran on costs but that there is nothing that we can do about it. The scheme is continuing, and we must be careful about the way in which our criticisms are answered by the Department and the Minister.
    The original estimates by the Department were so far out that they almost qualify for some other description. If one asks someone what something is going to cost, he says £9 million and the cost turns out to be £54 million, one is entitled to say that that is not a real estimate but an uninformed, even ill-informed, guess. If the difference had been between £45 million and £54 million, one would have understood, but in this case the margin of error is so substantial as to disqualify the original attempt from being described as an estimate.
    The estimate was not merely meaningless; it was misleading. The original estimate of £8·6 million was reported to the House of Commons. Hon. Members probably thought that as something had to be done to smooth over the reorganisation of the NHS, and there would have to be some redundancy payments and some money for voluntary premature retirement, £9 million did not seem too bad a sum. They may have thought, "That sounds about right. Let them get on with it." Had we been told at the start that the cost would be £54 million, could we assume that the House would have adopted precisely the same attitude to the scheme? I doubt it. There is a considerable difference between £9 million and £54 million, and furthermore, for psychological reasons, those right hon. and hon. Members who take an interest in the NHS would have asked more searching questions at the time about the pattern of the scheme.
    Parliament is right to express concern about an overrun in take-up of 550 per cent. and in costs of 527 per cent. Hon. Members are used to cost overruns, particularly in defence contracts, but we are not accustomed to cost overruns of that order. We are entitled to be concerned.
    The scheme was designed and endorsed by Parliament, as a national scheme applying to England, with a spillover into Wales. There has not yet been a scheme in Scotland. However, the DHSS devolved the implementation of the scheme to the regional health authorities. In terms of the way in which the DHSS has acted in the past decade, that may have been a good thing. We all claim to believe in decentralisation of responsibility and management. The NHS is a vast and complex operation, and perhaps most things should be devolved to management. I do not argue against the DHSS's action in principle. However, the result was that a very different pattern emerged in different parts of the country.
    In Wessex, 325 staff took advantage of the provisions of the scheme which, as my hon. Friend the Member for Oldham, West (Mr. Meacher) has pointed out, were very generous. In the north of England only 40 people did so. Questions put to the two regional health authority

    1017
    chairmen concerned failed to show that one region was very different from another. The chairman of Wessex regional health authority told us that there had been three multi-district areas there before the reorganisation, and that that made a difference. However, we learnt that the northern region had also had three multi-district areas. The Wessex chairman, Dr. Thwaites, also said that Wessex was a gainer under the resource allocation working party formula. That was true, but the north of England was a gainer, too. There was no major difference between the two regions. The differences that emerged had nothing to do with the constitution or structure of the regions. They were entirely due to decisions made by the regional management in each case. Under the DHSS decentralisation, those managements made wildly different decisions. That was serious, because the intentions of Parliament were laid down and were mentioned in paragraph 11 of the report, which stated:
    "DHSS also stated that they had made the authorities aware of what it would be proper for them to do in order to administer the scheme in accordance with the intentions of Parliament."
    Parliament may have intended that all the regions should behave in the same way as northern region. I suspect that that was Parliament's intention. We did not intend that any region should behave like Wessex and one or two others, which did not follow all the criteria that had been laid down but adopted the scheme in a high, wide and handsome manner and gave voluntary premature retirement on very generous terms and conditions to almost any member of the management staff who opted for it. That was a serious blow to parliamentary control of the executive, and parliamentary financial control. The Minister should weigh up that point carefully, and it should be answered either this evening or in the written Treasury document.
    Mr. David Crouch: I do not seek to defend the Department against the charge of laxity of control over the regions in this matter. I am a member of a regional health authority. However, the hon. Gentleman should remember, as he skips his way about the report, quoting paragraphs here and there, that in paragraph 9 there is evidence that the DHSS believed that, had there not been so much voluntary retirement claimed and given, there would probably have been considerably more use of redundancy.
    Does the hon. Gentleman recognise that those of us who have worked in the Health Service appreciate what it is for people to be faced with a great change, especially in the structure of management? The going of 98 health authorities personally affected many people. They wondered where their future lay and, presented with an open-door policy by the DHSS, thought that perhaps it would be better to take voluntary retirement while it was being offered. The hon. Gentleman should remember—I hope that the Committee bore this human factor in mind—how individuals at the receiving end approached the problem and applied for voluntary retirement.
    Mr. Deakins: I take the hon. Gentleman's point, but I hope that he and the House will also appreciate that that was not the intention of Parliament when it sanctioned the scheme. The Committee of Public Accounts is, rightly, not allowed to debate policy matters—that is for the Government and the departmental Select Committees. The
    1018
    Committee is merely saying that Parliament said certain things some time ago and laid down the scheme and that it was not carried out as Parliament intended. Perhaps Parliament was wrong. I am not arguing that point. However, once the House has made a decision, Ministers, senior civil servants and members of regional health authorities should stick to the principles that Parliament lays down when sanctioning the expenditure of public money. That is what the debate is about.
    It is obvious that there was inadequate central control of expenditure under the scheme. Even the DHSS admitted that when questioned by the CPA. Such inadequate control led to a serious risk that turned out to be the fact of overspending. No one can deny that. One of the reasons for the overspending, apart from the inadequate guidelines laid down at the centre, was, as the hon. Member for Horsham said, the fact that there was inadequate monitoring of the progress of the scheme until quite late in the day, when it was almost too late to make much impact on the total. That process was aided by health authorities being exempted from the bulk of the costs that the operation of the scheme incurred in their regions and areas because most of the costs fell on DHSS central funds. That was a crucial error on the part of the DHSS. That was not laid down by Parliament but was a managerial or perhaps, directly or indirectly, a ministerial decision. I suspect that something of this magnitude must have warranted ministerial intervention and therefore a ministerial decision. It will be interesting to hear what the Minister says about that later.
    It must have been decided that, although the scheme would operate differently in different parts of the country, because it was a national scheme most of the costs would be borne nationally by the DHSS central fund. By giving that concession to regional health authorities, the DHSS immediately lost financial control. Once the regions were exempted more or less from the financial consequences of the decisions that they took, they could do virtually what they liked within the parameters of the scheme as they would not have to bear more than a small proportion of the cost.
    The objectives of the scheme should be linked with the objectives of National Health Service reorganisation. In addition to getting rid of area health authorities and making the service more efficient, one of the main purposes of the reorganisation was to reduce management and bureaucracy. I invite the House to consider the following sequence of events. Paragraph 2 of the PAC's report says:
    "In July 1981"—
    less that three years ago—
    "DHSS estimated that by 1984–85 the reorganisation would have resulted in a reduction in the number of management posts in the NHS in England by about 4,000."
    Therefore, in July 1981 there was a firm estimate—I use that word deliberately as it was an estimate that was given to Parliament. I now invite the House to consider paragraph 17 of the report of Comptroller and Auditor General on which the CPA's report is based. He says of the DHSS that, during his investigations in 1982–83:
    "It was too soon for the Departments and the NHS to determine whether the pre-reorganisation estimate that some 4,000 posts would be lost by 1984–85 would prove to be accurate."
    When that report was submitted, right hon. and hon. Members were still entitled to assume that eventually a number would be advanced to the House on a proper

    1019
    statistical basis, comparing the number of management jobs that would be saved with the original estimate of 4,000. However, if we turn to paragraph 20 of the PAC's report we find the following:
    "DHSS estimated that the 1982 reorganisation would produce a reduction of 4,000 management posts by 1984–85"—
    here are the important words—
    "but admitted … that it was unlikely that they would ever know what had actually been achieved."
    Therefore, in 1981 we started off with a firm estimate but when the Comptroller and Auditor General did his investigations in 1983 it was too soon to decide whether the number target had been reached; and now the PAC and the House have been told that it will never be possible to know how many management posts have been saved as a result of reorganisation.
    Mr. Michael Morris: The hon. Gentleman should know that it is worse than that. If he looks at Hansard for 7 March 1984, at columns 625 to 626, he will see that there were 112,100 NHS administrative and clerical staff at 30 September 198 I and 112,450 at 31 December 1983 so, far from it being a cut, there has been an increase in numbers.
    Mr. Deakins: I am grateful for that information. I shall leave that point for the House to consider and for the Minister to reply to in due course. We might not have come to the end of reorganisations of the Health Service. I hope, for the sake of the staff in it, that we have come to the end of major reorganisations for the next decade or so. Nevertheless, I hope that the House will insist that the DHSS and Ministers of whatever political complexion will learn the lessons of this reorganisation, just as the lessons of the local government reorganisation of 1972–73 should have been learnt.
    It might be that, as a result of all the changes that have cost us £54 million, the NHS will be a lot more efficient. I do not deny that possibility, but it is surprising that, because of the way in which the scheme was operated, some voluntary premature retirements were accepted and paid for in specialties such as community medicine, in which there is a nationwide shortage. One would have thought that, in such a reorganisation, every effort would have been made to ensure that someone in a speciality who might be made redundant or given voluntary retirement would be given a job, with the appropriate terms, in another part of the country. No such luck.
    It was said in evidence to the PAC that the scheme was also being used to get rid of what I would call dead wood. That is my expression. However, I should like to use the wonderful circumlocution that is to be found in paragraph 18 of the Comptroller and Auditor General's report. It says:
    "many authorities had preferred not to rely on the uncertain results of natural wastage but to hasten the departure of existing officers who felt, or were thought by the health authority to be, unable to contribute as effectively and efficiently as required in the changed management situation."
    Dickens, and the circumlocution office, would have been wonderfully pleased to be the author of those words. However, it stems from what the Comptroller and Auditor General was told by health authorities and the DHSS.
    In any other profession or job—as is happening in many British industries—people would be sacked. That circumlocution would not be applied to them. Many prematurely retired people have been re-employed which, as the hon. Member for Scarborough (Sir M. Shaw)
    1020
    pointed out, is disturbing. Why is it that people can get substantial redundancy payments, which include enormous increases in the pension that they will eventually receive, when they retire from the NHS at 60, and then be re-employed in lesser jobs? It suggests that something is wrong with the way in which management operates. One would have thought that there were plenty of people remaining in the National Health Service who could be promoted. If one is getting rid of dead wood there is no point in re-employing it, even in a lesser job, within the NHS.
    As the permanent secretary to the DHSS told the Committee, we must have rigorous criteria for reemployment. As a member of the PAC, I doubt whether we have them yet. We need to spend much time on this because the NHS is about to be reorganised in Scotland, where there will undoubtedly be voluntary premature retirement scheme. It is essential that the lessons of England and, to a lesser extent, Wales are learnt by hon. Members, the Department and, above all, by Ministers before that reorganisation in Scotland. It is essential that we get it right for the future because it is a permanent facility within the management of the NHS. Indeed, it is a permanent facility for the management of the NHS because it is such a generous scheme. The DHSS must give priority to satisfying the requirements of Parliament instead of to decentralisation. If Parliament lays down a scheme with financial implications for, for example, premature retirement, the DHSS and especially Ministers have a duty to operate the scheme so that the intentions of Parliament are carried out. They have not been carried out on this occasion.
    Finally, there are lessons for any forthcoming reorganisation of local government. I shall play my part as a member of the PAC and of the Labour party to ensure that we do not make the same mistakes — if local government is reorganised—as have been made on this occasion and as were made in the local government reorganisation of the early 1970s.
    5.32 pm
    Mr. Ralph Howell: I preface my remarks by commenting on the criticism levelled at me by my hon. Friend the Member for Horsham (Mr. Hordern). I am sad that he felt it necessary, because I have the highest regard for him and the great work that he has been doing in drawing to Parliament's attention the inefficiencies in our control of public expenditure, especially in the National Health Service. We have been working on parallel lines.
    On reflection, the letter which I sent to the Public Accounts Committee could have been worded rather better and, perhaps a little less bluntly. I underestimated the sensitivity of the PAC. My hon. Friend suggested that I was shooting the hounds as well as the fox. I am merely trying to whip in the hounds. They have been allowed a long leash for years. I therefore stand by my general criticism completely, although it could have been worded better.
    Astounding figures have been quoted during the debate, but the figures are even worse than has been suggested. It is obvious that the Department of Health and Social Security had no thought-out plan for the premature retirement scheme. The figure of £8·6 million was pulled out of the air, and there was no substance behind it. No hon. Member could say otherwise. The original intention

    1021
    was to prematurely retire 435 people. When the Comptroller and Auditor General made his report on 4 November 1983, he stated that 2,580 people were early retired and that the total cost would be £45·2 million. The PAC's twelfth report gives the figure as £54 million. That means that since the PAC reported that the total cost would be £45·2 million, the cost rose by a further £8·8 million, which is even greater than the original sum.
    It does not stop there. Yesterday, the Department told me that the expected outturn would be about £67 million and that it does not quite know when it will stop.
    The average pension payment has been £3,469, with a lump sum of £14,598. The highest individual pension payment was £15,125 with a lump sum of £45,375, plus a redundancy payment of £9,200. Those figures are startling. By 31 October, 115 people had been re-employed. We must question whether such re-employment is fraudulent and whether any measures have been taken to recover the money from those who have been immediately re-employed.
    The Comptroller and Auditor General's report of 4 November 1983, in paragraph 18, makes a startling statement:
    "The Departments stated that they endorsed the authorities' approval of the premature retirement of senior regional and specialist officers, including those in disciplines where there were staff shortages."
    What on earth is going on? The Department has shown appalling negligence.
    I first became aware that something strange was happening as long ago as 19 August 1982, when I was informed that
    "the Wessex region has told all the Districts, that there are to be no redundancies, but where people wished to take early retirement, they could, even though their posts were to be refilled immediately at the same, or enhanced, salaries."
    In other words, in August 1982 the Wessex region was planning to thwart the Department's aims. In 1982 I informed the Department, Sir Kenneth Stowe, Mr. Roy Griffiths and also Dr. Bryan Thwaites, the chairman of the Wessex regional health authority, of what I had been told. However, the PAC did not see him until January 1984. There has been some slackness in the Department and in the PAC.
    As to criticism of my attacks on the Comptroller and Auditor General, I have been in touch with him for the past two years and I have made accusations to his face and in letters. It is not correct that he should make a statement such as, "The total cost will be £45 million," when we know that it will be much more. I also believe that there are serious errors in the entire accounts of the National Health Service. The losses cannot be as small as they are reputed to be. In 1980–81 losses through theft and fraud were certified to be 0·01 per cent.; in 1981–82 they were 0·008 per cent.; and in 1982–83 they were 0·007 per cent. They are still going down. They are smaller than any firm in the country could accomplish. The Secretary of State has set in motion an inquiry into the appalling losses reported by the National Association of Health Authorities in England and Wales, yet the Comptroller and Auditor General continues to certify as correct such absurdly low losses. This matter must be drawn to the attention of the House.
    Sir Michael Shaw: Does my hon. Friend appreciate that the Comptroller and Auditor General merely audits the
    1022
    accounts of the individual areas and regions, which are already audited by Government officials or by private auditors from the commercial and professional world? When they come in, the Comptroller and Auditor General groups the accounts together. Therefore, he is not the responsible auditor for the detailed regional accounts.
    Mr. Howell: I am grateful to my hon. Friend for making that point. I fully realise that that is the position, but the Comptroller and Auditor General is the senior auditor of the entire nation, and he puts his signature on accounts stating that they are correct. I am convinced that they are not correct, and I believe that the House should take this matter very seriously.
    It is strange that the Comptroller and Auditor General has no auditing or accountancy qualifications. That is unreasonable, because if anyone masqueraded as a doctor, a solicitor, or any other professional—
    Mr. Deputy Speaker: Order. I reminded the House of the narrowness of the debate. The hon. Gentleman is straying a little now.
    Mr. Howell: This is a serious matter, because we are talking about the accounts put forward by the Comptroller and Auditor General. The whole force of the law would come down on the head of anyone who pretended to have professional qualifications.
    Mr. Deakins: On a point of order, Mr. Deputy Speaker. The Comptroller and Auditor General is responsible to the House through the Committee of Public Accounts. He is being unmercifully attacked without any reference to the subject of the debate. The hon. Member for Norfolk, North (Mr. Howell) is introducing extraneous matter and putting the remaining members of the CPA, who may wish to catch your eye, in an invidious position, because they may be tempted to defend the Comptroller and Auditor General rather than to concentrate on the subject of the debate.
    Mr. Deputy Speaker: I have reminded the House and the hon. Member for Norfolk, North (Mr. Howell) that we are discussing compensation payments to NHS staff. He must confine himself to that topic.
    Mr. Howell: To return to the PAC report, I must ask why the Committee reported in such a soft, gentle manner. The report is not nearly strong enough in view of what happened. We shall be overspending by about 700 per cent., and some serious questions must be asked. Cases must be examined to discover whether they are fraudulent. It cannot be right for people to accept early retirement payments and then immediately to be re-employed by the same authority. The PAC should have suggested that the Director of Public Prosecutions should examine the matter. I realise that that is a serious thing to say, but we must get proper control of our accounts.
    I conclude by quoting the paragraph in my letter that offended the PAC so much:
    "In my opinion, successive Secretaries of State, C & A G's and Public Accounts Committees, including the present incumbents, have failed lamentably to safeguard public funds allocated to the NHS and have failed to ensure that the Nation has received value for money."
    We always hear a great deal about patient care. Money that should have gone into patient care has been misappropriated in this instance. We are talking about a

    1023
    relatively small sum in the context of total NHS spending, but, if we take the entire NHS, very much larger sums are being used improperly and inefficiently.
    It is unfair to say what I said in my letter to the PAC, because I should have included Parliament as well. We are all guilty of allowing such things to happen and funds to be misused in this way. Therefore, I take fully on board the criticism by my hon. Friend the Minister for Horsham.
    Several Hon. Members rose—
    Mr. Deputy Speaker: Order. This is a very short debate, and I am sure that the House wishes to hear the Minister's statement. I must ask for particular brevity, since the Front Bench spokesmen hope to catch my eye at 6.15 pm.
    5.48 pm
    Mrs. Renée Short: I add my thanks to those of hon. Members who have spoken to the Public Accounts Committee for giving the House an opportunity to debate the matter today, and for speeding its report so that we could debate it earlier than we might have done.
    The PAC is concerned with what has already happened. Today the House is discussing a Supplementary Estimate—what will happen—and I am surprised that no one has yet referred to the fact that the Department is asking for another £8 million over and above what has gone before.
    The Select Committee looked at the whole of this matter. We actually antedated the examination by the PAC as far back as March 1982. Nobody has yet mentioned that either. It seems to me that the House is not always as well informed as it might be about what goes on under its own roof.
    The Estimates laid before the House in March 1982 anticipated expenditure for 1982–83 of £5·8 million in superannuation scheme benefits to those receiving compensation as a result of early retirement following National Health Service reorganisation. The Select Committee sought an indication from the Department of the estimate number of those retiring early. We were told by the Department:
    "about 300 staff will receive lump sums of around £14,000 each and over 350 staff will receive recurring pension payments averaging nearly £5,000."
    Although the PAC report, at paragraph 19, reveals that the department became aware in February 1982 that the scheme was being used more than expected, the first public sign that something was going wrong was when the Department sought a massive Supplementary Estimate in 1982. The £5·8 million originally asked for became £17·8 million—a phenomenal rise of £12 million. The Select Committee naturally sought information from the Department as to what was going on. We were told in November 1982 that its latest figures showed that to date 1,062 staff had left the Service on premature retirement. That compared with the 300 or 350 estimated for 1982–83 and the 435 total. Half of those retiring were in administrative and clerical grades and a quarter in nursing and midwifery grades. Nobody has mentioned that fact either—that scarce nurses and midwives were taking early retirement.
    We were not satisfied with that reply, so we sought further information — in particular, on the issue of redundancy as against premature retirement. We discovered that the issue was really very simple. If a health
    1024
    authority makes an officer redundant, it has to find its statutory share—59 per cent—of the expense. Under the premature retirement scheme, central Government pay the whole whack. That is where the dog lies buried. Therefore, it is not really surprising that the regional health authorities should have been so willing gaily to endorse hundreds of early retirement certificates. They were not footing the bill; the Department was.
    Sir Kenneth Stowe told the PAC that there was no question of
    "a kind of piggy-bank at the Department in which they"—
    the regions—
    "could go dipping their paws".
    But they were doing that, were they not?
    To return to the sorry tale, by January 1983 the Department was estimating 1,600 early retirement cases coming into payment in 1982–83, compared with 300 or 350 10 months earlier. In February 1983 a further Supplementary Estimate was laid. The £17·8 million had risen to £23·5 million. So in a single year the costs had risen from £5·8 million to £23·5 million and the numbers from 350 to 1,600. Clearly there was something very wrong with both those sets of figures.
    The Estimate for 1983–84, the current financial year, was presented in March 1983, and £19·5 million was sought for NHS reorganisation early retirement expenses, assuming fewer than 1,000 new cases.
    In April 1983 the Select Committee examined the Department's principal finance officer on the subject. He told us that the Department had made the best estimate it could in a "very uncertain area" and that the Department would be
    "charging the cost out to the regions"
    in 1983–84.
    At least it now seemed that the Department had the matter under control—the film grip of strong leadership—or that it had an idea of the scale of its origami misjudgment. There would surely be no more Supplementary Estimates.
    In the autumn the Comptroller and Auditor General produced a pretty damning indictment of the Department in his report on volume 8 of the 1982–83 Appropriation accounts, but of course by then it was all so much water under the bridge.
    Now, however, the House is being presented with another Supplementary Estimate. Apparently £19·5 million is not enough. Adding together the sums under F5(1)(a) and F5(2)(a), it is now £27·5 million. It is that Supplementary Estimate that we are debating to give voice to the dissatisfaction with the Government's handling of the issue from start to finish which the PAC's report expresses and which surely all hon. Members must echo.
    The Department was to have spent £8·6 million over three years. The House is now confronted with a bill for £54 million. There will have been almost 3,000 premature retirements, not 435.
    PAC's report is properly and expertly critical of the management of the scheme by the Department and by individual regions. An enormous sum of money has been spent already. Was it wasted? The idea of the 1982 reorganisation was to lose around 4,000 management posts. If they had not taken early retirement, there would have been wider use of redundancy, costing the same in the long run, but there can be little regret that the costs of this were borne by central Government, because it left health authorities more resources for providing patient

    1025
    care and enabled the Department to squeeze the additional £40 million out of its existing cash limit. It is worth pointing out that the central funding arrangement meant, as the PAC report puts it in paragraph 16, that
    "health authorities had apparently had a very easy option of encouraging premature retirement and leaving the Department to pick up the bill."
    It is incredible that the Department should have allowed that to happen. What was intended was that there would be 2,800 posts lost through what we call natural wastage. That turned out to have been wildly optimistic. With the prospect of generous early retirement provisions, why should someone wait a few more years to retire if he was to be encouraged to go now on the same terms, with his pension made up and a substantial lump sum into the bargain? It was money for old rope.
    Some even took early retirement and, as we have heard, promptly found other National Health Service employment. The PAC report points out that 135 former employees prematurely retired have been subsequently reemployed. In December 1982 the Social Services Select Committee was told:
    "NHS management has been told that when an officer is receiving compensation, in effect, for being surplus to requirements of the NHS he should not be re-employed save in ad hoc or exceptional circumstances."
    Is the Minister going to tell us what these ad hoc and exceptional circumstances were?
    It is disturbing that there have been 135
    "ad hoc or exceptional circumstances".
    The PAC, at paragraph 29 of its report, expresses "misgivings". The House may wish to express rather more than that at the idea of an officer's taking early retirement and returning to NHS employment, with his average lump sum of £15,000 intact and his pension being paid in addition to his salary.
    There must be a number of lessons that could and should be drawn from this debacle. Is the Minister going to draw them? One is that the national target of a 10 per cent. reduction in the proportion of NHS expenditure on management set out in HC(80)8 to be achieved by the end of 1984–85 is now virtually meaningless. The original target—that 4.61 per cent. of total expenditure should be on management — has already been achieved. However, that does not take into consideration the expense of the early retirement scheme. The difference between devoting 4·61 per cent. and 5·12 per cent. of expenditure to management is probably less than £40 million—less than the £54 million that the 3,000 premature retirements cost.
    In March 1983 the Department told the Social Services Select Committee:
    "as these costs fall almost entirely in the years preceding the 1984–85 management costs deadline, they will not, in any case, affect the outcome of the exercise".
    That is gobbledegook.
    Of course, the present savings in management costs will eventually produce savings which outweigh the costs of premature retirement benefits, but the salutary lesson must be that the savings on management costs to date have been more than eaten up by the costs of early retirement. So where is the benefit? That lesson should be remembered by any Government who contemplate abolition or reduction of public authorities' staff—and that applies
    1026
    not only to central but to local government. This has been a most expensive lesson to learn, so let us make sure that we have learnt it.
    This debacle also suggests an inbuilt lack of competence in central Government in managing early retirement schemes. In the 1981–82 Session, the Social Services Select Committee devoted a lot of time to a report on the retirement age. In the course of that, we discovered somewhat surprising facts about the Government's use of the job release scheme for civil servants. Departments were rather vague about how many staff had taken advantage of the scheme. Extraordinarily, even the Department of Employment, which runs the scheme, could not tell us how many of its own staff had used it. It was as bad as the DHSS. We had a feeling that a number of staff, who legitimately could have been asked to retire at 60, were given permission to remain for a few months, and then went on job release with the £50 a week allowance.
    The Government's reply to our report took a year. It was only a few hundred words long, and of course it did not deal with this point. Perhaps the Minister will take it away and look at it. It is also slightly alarming that the scheme is not over. It is a permanent scheme that may be used in any eventuality. If it is to be used further, it must be tightened up — for example, in connection with privatisation.
    Another lesson to be drawn is that the House does not control public expenditure as it should. That is very clear. The Department and the Treasury fail to do so, and we seem unable to do so. The House has had opportunities: two statutory instruments have been before the House, undebated; and three main and three Supplementary Estimates have been approved, albeit formally, by the House.
    My Committee has gathered information, expressed its anxiety to the Department, and even raised the matter publicly in oral evidence, but to no avail. Does the Department not read what is going on in the Select Committee when it debates matters that affect it? As the vast extra sums were found within existing cash limits, in essence, there was no trouble. If one keeps within cash limits, there is no trouble from the Treasury, and one is doing all right. However, the PAC has now completed its inquest. Why did the patient die? That is the crucial question. In castigating the Department, quite properly, for its management failure, we must also draw lessons for Parliamentary scrutiny in future.
    Today, interestingly, we have an alliance of two Committees—the Public Accounts Committee and the Select Committee on Social Services—and that is a pointer. It is significant that the first debate on a PAC report since the independence of the National Audit Office should take place on a Supplementary Estimate, with hon. Members outside the PAC taking part. That partnership, and the use of the work of the National Audit Office, may be one of the best things to emerge from this whole sorry business, which shows the Department in a very poor light.
    Reference has been made to past reorganisations of the NHS. If we are to have another—I hope we shall not—let us make sure that, before it takes place, we debate the report presented by the Select Committee so that we do not get into the morass of mistakes and damage to the NHS that has happened on this occasion.
    6.4 pm
    Mr. Eric Cockeram: I am glad to have this opportunity—albeit a brief one, as time is running out—to express my concern at the developments and handling of the voluntary redundancy scheme in the National Health Service. Having been a member of the Public Accounts Committee, and having listened to and participated in the inquiry, I must say that as the evidence unfolded my fears were not allayed. Rather, they have increased.
    Of the original intention to retire 4,000 staff, it was envisaged that 765 staff would take compulsory retirement. The only good aspect of the scheme is that the number of people who were asked to take compulsory redundancy was nil. There the good news ends. The rest is the bad news. The bad news was that 435 people would be asked to take voluntary retirement and, as we know, the figure was exceeded substantially, by about 520 per cent., but as other hon. Members have pointed out, that was only the running total at the time when we took evidence. There were others in Wales, Scotland—the scheme runs a year later there, into the financial year 1984–85—and in England. So the original cost estimated at £8·6 million was, we are told, about £54 million at the time when we conducted the inquiry, but it will be £60 million at least.
    When we have increased the number of administrators in the NHS—as the hon. Member for Horsham (Mr. Hordern) told us in opening the debate, the ratio has increased from 1·07 administrators per medical person employed to 1·93, almost double—one wonders why we are authorising the employment of these further administrators if they cannot control the administration of the machine that they are employed to administer.
    From the start, the DHSS made no real attempt to control the scheme. It said to the regions, "You take control of this, and we will meet the bill." Not surprisingly, the regions and their staff took advantage of that. There was little incentive in the regions to run the scheme efficiently. The DHSS centrally did not even know whether the target of 4,000 would be met. We know, of course, that it was substantially exceeded. Worst of all, more than 100 of those who took that redundancy payment and early retirement had been re-employed. The DHSS did not even know that that had happened until it was pointed out. It said in its evidence at a later stage that if it were to start again on the scheme it would run it differently.
    The National Health Service has been going for 38 years. It has increased its total payroll from about 500,000 to 1,250,000 in 1983. We have increased the ratio of bureaucrats to medical staff from 1·07 to 1·93. The machine is out of control. It is as if one put an engine on the rail, loaded it with coal, lit the fire, got up steam, took the brake off and said, "Now, just go." There was no attempt whatever to control the engine. It is a sorry story.
    My constituents cannot understand—I am worried on their behalf, when I read a report of this nature and take part in an inquiry of this nature—why the community hospital in Shifnel in my constituency is threatened with closure of its general medical treatment department, turning it into an old people's home. Similar action is proposed at a community hospital in Broseley, at a community hospital in Much Wenlock, and at a community hospital in Bridgnorth. My constituents ask me to explain the paltry savings made by the closure of such community hospitals while substantial sums of more than £50 million are being wasted in administration of the
    1028
    National Health Service. I am not able to answer that question. I look to the Minister to give an answer that ensures that in future he and his staff, led by Sir Kenneth Stowe at his Department, do not leave the control of the National Health Service to be administered at regions when they centrally—
    Mr. Kenneth Clarke: My hon. Friend links these proposals for hospitals in his constituency with the Public Accounts Committee report. I know that he is very concerned about those hospitals, but he would not wish to mislead the House or his constituents. There was a proposal to build a new hospital at Telford, and to provide facilities for the treatment of his constituents. Shropshire has decided that it wishes to build that hospital in Telford, it is being put under pressure to make sure that it provides it within a fair share of the resources available to Shropshire, and it has to look at the future pattern of its services. My hon. Friend must not lead his constituents into believing that they can override the difficult decision about which old services are to be replaced with new services by attributing it to the possibility of administrative savings.
    Mr. Cockeram: I do not wish to enter into a debate on that point now, and I do not think you would wish me to do so, Mr. Deputy Speaker. The point I wish to make that the Minister has not answered is that the totality of the National Health Service expenditure is, and has to be, controlled by Parliament. The country has a total sum to disburse. If within the totality £54 million or £60 million is being spent on a scheme that was originally budgeted to cost £8·6 million, my constituents cannot understand why they must make economies at the grass roots I hope that the Minister will address himself, although not in detail, to that point of principle in his reply.
    6.11 pmin
    Mr. Charles Kennedy: While I am mindful of the time available in the debate hope that the Minister, in replying will remember that discussion of an overshoot of £46 million must surely sit rather uneasily on the conscience of the Minister for Health on the very same day that an announcement is made that prescription charges for some of the financially weaker members of society are being jacked up yet again.
    One of the most worrying aspects of the mess that has been created is the fact the House is considering a permanent feature. Given that I represent a Scottish constituency, I bear in mind what the hon. Member for Walthamstow (Mr. Deakins) and the hon. Member for Wolverhampton, North-East (Mrs. Short) said, that the effect of this measure will shortly be felt north of the border. I only hope that, when that happens, the travesty that has occurred in England will not be repeated, and that, for once, the Scots may decide to learn by the English experience—something that has not happened very often in our respective histories—and that, as a result, we shall not have this waste. If we were to have such waste, I would experience the problem that was described by the hon. Member for Ludlow (Mr. Cockeram). In my constituency, small hospitals, or wards of cottage community hospitals, are facing closure to provide for a new unit that has been built elsewhere. However, the new unit is a control of infections unit, and not a geriatric or maternity unit such as those units being phased out. That

    1029
    is a difficult concept for a Member of Parliament to explain or to justify to constituents—not that I am trying to justify the Government's health policies. I fully take the point made by the hon. Member for Ludlow.
    In the debate, the House has heard much about the senior officials in the health authorities who have received considerable pay-outs and have possibly been re-employed. There is another category that has suffered, in a different but distinctive way as a result of the scheme. About eight years ago, the opportunity was given to health officers to purchase added years to make their service up to the maximum possible at normal retirement age. One effect of this has been that, since the scheme under debate was introduced, which the CPA has examined, those people, particularly in middle management rather than senior management, have suffered severe anomalies. One of my hon. Friends who represents an English constituency passed on to me one example—I am sure there must be many more—in which the purchase of extra years was described in the following way by the health authority:
    "Although the appropriate agreement entitles individuals to enhancement of superannuable service up to that which they could have earned by age 60, where added years have been purchased, then these must be offset against the premature retirement enhancement."
    This means that the decision to purchase added years some eight years ago has in effect paid for the enhancements that would have been made to the pension, given that administrators have taken this early option. In other words, as well as those who have benefited rather grossly from the scheme, there are those who have suffered considerably in local health administration, so there are two sides to the equation which should be remembered in the debate.
    I do not wish to prolong the debate, because I am anxious to hear what will be said from the Treasury Bench. However, to ensure that these proposals, when their effect is felt north of the border, will be administered properly and successfully, I hope that the Scottish home and health department—and, to be fair, the Minister indicated this last week—will take considerable notice of the report of the Committee of Public Accounts, which has highlighted an appalling problem at a time when the finances of the Health Service—indeed, this applies to other policies of the Government—are being cut and cut again.
    6.17 pm
    Mr. Roy Galley: In the short time available to me, I should like to emphasise that the report of the Public Accounts Committee is the clearest sign that the House has yet had of the need for a more incisive and better quality management of the National Health Service.
    The hon. Member for Oldham, West (Mr. Meacher) referred to "administrative laxity". I prefer to use the term "management laxity", and I welcome the apparent eleventh-hour conversion of Opposition Members to the principles of good management. It behoves hon. Members to be constructive and fair to the Government by saying that, in terms of managing the enormous lumbering elephant that the National Health Service represents, they have made greater attempts than have been made before to manage it in terms of accountability reviews, manpower planning and so on.
    The whole episode of premature retirement shows a
    1030
    major lack of management acumen in terms of not having clear objectives, not controlling and monitoring events, and not appraising effectively the available options. However, as the report shows, the central failure has been at regional level. Significant differences have occurred in the performances of different regions. What better indictment is there of the current consensus management in the regions and districts of the Health Service? The sooner the concept of good management and general
    Many of the arguments surrounding the Griffiths report and the concept of general management have centred on the illusory conflict between general management and clinical judgment. Doctors have nothing to fear from the concept of general management because it is to matters such as have been highlighted in the report that general managers will turn their attention. There is plenty of scope in the NHS for rooting out waste. The saving of £46 million, and, as was shown in another report this week, some £15 million in transport costs, is significant. That money would be better spent on patient care. It is for those reasons that good management is required in the NHS.
    I hope that my right hon. Friend the Secretary of State and my right hon. and learned Friend the Minister for Health will move quickly to bring in general managers on a full-time basis at regional and district authority level with a clear mandate to attack such waste and to manage resources properly. I hope that my right hon. Friend will resist the temptation because of practical problems to go for a nominalist approach by appointing a current official on a part-time basis to be a general manager.
    The PAC's report demonstrates the central dilemma of the NHS. Such an organisation cannot be fully managed from the centre but delegation has considerable pitfalls. One region followed the guidelines and dealt soundly on good management principles with premature retirement; others did not. Management needs to be not only good but accountable. I hope that the central management at the DHSS will increasingly ensure that that is the case at other levels.
    Finally—I have very little time because of the lengthy contributions from other hon. Members—it has been mentioned more than once that the handling of the retirement arrangements was devolved largely to the regions but funded centrally. Surely here is a crucial principle of management which my right hon. Friend must follow when he is considering changes in NHS management. Budgets and responsibility go together and must go together. Regions and districts must be given firm budgets and, within the overall guidelines of central policy, they must be able to get on with the job. It is the job of my right hon. and learned Friend the Minister for Health to set the central policy. He must then give the budget, let them get on with the job and make the authorities accountable.
    This report is the best argument that has ever been produced for implementing general management within the NHS. I pay tribute to the fact that over the past few months my right hon. and learned Friend has increasingly endeavoured to manage the NHS, with its enormous size, more effectively. Acting constructively on the report, he must now take that process further.
    6.23 pm
    Mr. Frank Dobson: The most distinguished statesman to be born in my constituency was Benjamin Disraeli, who, besides

    1031
    describing the Tory party as an organised hypocrisy, also counselled new politicians, "Never explain. Never apologise." It might have been as well if he had also counselled some distinguished Tory politicians never to predict.
    We are considering today a lot of predictions which were made by Tory politicians about savings that would result from a further reorganisation of the NHS which they had already reorganised once, putting the costs up. We are now looking at the product of the NHS reorganisation undertaken by the right hon. Member for Wanstead and Woodford (Mr. Jenkin), in his role as Secretary of State for Social Services, when he abolished a tier of the NHS which was introduced by his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). That was intended to save money, to reduce staff and to put more skilled staff "back at the coal face" treating patients.
    If we look at those propositions, we find that it did not turn out exactly as the right hon. Member for Wanstead and Woodford predicted. He seems to have a peculiar role at the moment. He was given the task of doing down and setting aside one Tory NHS reorganisation and, as Secretary of State for the Environment, he has now been given the task of doing away with a tier of local government which his Tory predecessors introduced. Indeed, when he goes to the Cabinet he ought to ask which of its members will plead guilty and perhaps they would even ask for certain other offences to be taken into consideration. But he does not do that.
    We are faced today with the product of what was done, in a sense, to ease the pain of NHS reorganisation for people who worked in it. The DHSS made an estimate — it was called an estimate at the time and was degraded only when it went wrong — that 435 people would seek early retirement under the scheme at a cost of £8·6 million. Now, an increase of 550 per cent. later, 2,830 people have made use of the scheme at a cost of £54 million. That is not as great as the percentage increase in prescription charges which followed the Government into office, and which is now about 700 per cent., but it is nevertheless a substantial increase.
    It is a poor performance by the DHSS, and I am not willing to stand here and let the DHSS headquarters slough off all responsibility for that on to the regional health authorities which made some of the decisions, if only because it was the DHSS which made the original estimate and got it wrong and because every early retirement had to be approved by the head of the DHSS. Every early retirement has passed across the desk of someone at DHSS headquarters. Therefore, it is no good anyone just blaming the regional health authorities. Exactly what was happening ought to have been clearer much sooner than it was.
    An impression is created—even, to some extent, in the PAC's report—that only administrators have taken early retirement under the scheme. When the right hon. Member for Wanstead and Woodford was in his predicting mood in January 1980, in a press release he said:
    "We are determined to retain the services of those who are best qualified to see the NHS through the difficult years ahead."
    Those are his words, not mine. He went on:
    "It would be most unfortunate if precisely those people who we are anxious to see using their experience and talents nearer to the point of patient care, felt that their own interests were best furthered by leaving the Service altogether."
    He went on to say:
    1032
    "One of our objectives is to switch resources from management administration into direct patient care. One certain consequence of the changes is that clinically trained staff, be they doctors, dentists, nurses or other clinical professions, who have over the years moved into management, will be given every help and encouragement, where appropriate, to return to clinical practice."
    He summarised that by saying:
    "I want to see more of our doctors practising medicine, more of our dentists doing dentistry and more of our nurses engaged directly in the care of patients."
    Therefore, one needs to ask: who has been retired early under the scheme? In an answer that I received only yesterday, I discovered that no fewer than 103 medical staff, 18 dental staff and 763 nursing staff have retired early under the scheme. Those are from a total of 2,500 officers of health authorities, not the 2,800 that we have been talking about. Therefore, of that reduced total, one third of those who have prematurely retired from the Service—given up, gone away—and whose services are no longer available to the Health Service were exactly those clinically qualified staff that the Secretary of State said that he wanted to retain in the Service.
    It goes further than that because, among the people who were qualified medically, if we look at the report of the Comptroller and Auditor General, we discover that the DHSS was later
    "concerned at the loss under the scheme of 80 specialists in the understaffed area of community medicine".
    So 80 specialists, either doctors or nurses, retired early from community medicine under this scheme, when it is one of the self-same Department's priorities to transfer people into rather than out of that discipline. It shows how absurd this scheme has been for people in the National Health Service and the damage that it has done to the Service.
    If we have got rid of many skilled, trained and experienced doctors, dentists and nurses, the odds are that the National Health Service has suffered rather than benefited from the change and that people have taken this option, presumably because they do not like working in a National Health Service run by the present regime.
    The Government have got rid of a tier of the Health Service now and they say that they have "cut administrative costs", but, as the hon. Member for Horsham (Mr. Hordern) pointed out, there has actually been an increase in the number of administrators in the National Health Service, despite this early retirement scheme which was trumpeted as a method of reducing the number of administrators. The Government claim that, despite the increase in the number of administrative staff, as the Minister for Health said on 14 November:
    "We appear"—
    he is very cautious—
    "therefore, to have saved nationally £64 million" — [Official Report, 14 November 1983; Vol. 48, c. 329.]
    on administration.
    I should like the Public Accounts Committee and the distinguished members of it who are here today to think about that. The number of administrators in the National Health Service has actually increased. At least 70 per cent. of the cost of the National Health Service is pay. How is it that £64 million has allegedly been saved in administration? It seems very odd. I suspect that what may be happening is that regions and districts are shuffling a little of what was previously regarded as administration into other budgets so that they will continue to impress the Minister. I hope that the Public Accounts Committee will

    1033
    look seriously into this matter, because it is rather difficult to reconcile an increase in the number of administrative staff with a substantial reduction in the expenditure on administration.
    What we have had from this reorganisation is an increase in costs, an increase in the number of administrative staff and a sad reduction in the number of trained medical, nursing and dental staff among those who were the most experienced in the Health Service. It seems to me, therefore, that, despite all the predictions of the Secretary of State, things have not improved quite as he intended when he asked for the removal of the tier. I hope that hon. Members on the Government Benches will bear that in mind when considering his proposition for the removal of a tier of local government.
    I challenge all hon. Members on the Government Benches to tell me when and about what the Secretary of State said this. Was he talking about the National Health Service or about local government when he said:
    "Abolishing a whole tier is bound to yield scope for substantial savings. It is not possible at this stage to make precise estimates of savings, or to say in exactly what areas they will be made; much depends on decisions to be taken by the successor authorities."
    I hope that the Minister will rise to my challenge, that other hon. Members on the Government side will wait patiently and that, when they come to vote on matters relating to local government, they will bear in mind his record on the National Health Service.
    6.36 pm
    The Minister for Health (Mr. Kenneth Clarke): This is a debate following a novel procedure. Perhaps the first thing that I ought to make clear, responding to a point made by the hon. Member for Walthamstow (Mr. Deakins), is that we are, in the main, discussing a report of the Public Accounts Committee on premature retirement in the National Health Service which was published only last Thursday. Usually the House would have a written response to the report in the form of a Treasury minute, and I can assure right hon. and hon. Members that that will follow in this case, but what we are doing at the moment is responding as quickly as we can to the report. I am happy to do so because it is obvious that we must take on board these serious criticisms and act as quickly as we can in the light of them.
    Whilst I do not accept every criticism in the report, I accept the general drift of the criticisms that it makes and the lessons that it seeks to draw. Here we are, with the benefit of the wisdom of hindsight, looking back on a reorganisation launched in 1981. However, its course has not followed either the course that was predicted or one of which the PAC approves. I will, however, try to put one or two of the criticisms into a perspective somewhat fairer to all those involved.
    I accept that one of the main things is to see what can be done to remedy the defects and what lessons we can learn for the future—a question that the hon. Member for Wolverhampton, North-East (Mrs. Short) asked. I draw the same conclusions for the future as did my hon. Friend the Member for Halifax (Mr. Galley). He underlined the continuing need to improve the performance of the National Health Service. We need better and clearer management, better monitoring of management and better control over it. We need improved
    1034
    manpower planning and control. I only hope, given that this afternoon hon. Members on both sides of the House have criticised the shortcomings revealed by the report and sought improvements in performance that when we continue in our efforts to get better value for money out of the Health Service, improve management, eliminate waste and tighten control over manpower, we will continue to have such all-party support for our endeavours as we might expect from this debate.
    I should like to put one or two of the criticisms into perspective. There is no room for argument about the difference between the estimates and the final cost. It is quite obvious that the estimates first given were no more than guesstimates based on inadequate information from regional health authorities, which were not at the time in a position to give adequate information and estimates, and that they have proved to be quite wrong.
    Mr. Michael Morris rose—
    Mr. Clarke: My hon. Friend has not been here throughout the debate.
    Mr. Morris: I have.
    Mr. Clarke: I apologise to my hon. Friend. Those who have been here have taken the bulk of the time, and as no one has supported the Government or the Health Service from beginning to end, I should like to make the last 20 minutes to offer some explanation. I am sorry that I did not notice the presence of my hon. Friend earlier.
    First, the Committee has not—
    Mr. Morris: Will my right hon. and learned Friend—
    Mr. Deputy Speaker (Mr. Harold Walker): Order. The Minister is clearly not giving way.
    Mr. Clarke: It is not my hon. Friend's fault that I have even less time left in which to answer than I expected, but it would be foolish to have two and a half hours' criticism followed by no reply.
    The criticisms must be put in perspective. The Committee has not expressed any concern about the terms of the premature retirement scheme. It has not said that any individual has taken more than that to which he was entitled under the scheme. It has not said that the scheme was too generous in the terms that it offered to individuals. What it has criticised is the number that were allowed to go and the difference between the estimated and actual numbers, and I have just conceded that that is a well-founded criticism.
    I remind the House that the whole point was to forward the reorganisation of the Health Service to which the Government were committed at the time. That reorganisation has achieved benefits for the service by removing a wholly unnecessary tier of administration. I believe that the effects of that abolition of unnecessary area health authorities is, on the whole—although there have been some critics of it—widely supported by those interested in the NHS.
    Some have asked whether we can demonstrate how much we have saved by abolishing area health authorities and how far we can show that we have achieved reductions in administrative costs, in particular by simplifying the structure of the service. It is difficult to make an estimate because one is trying to compare what is now being spent

    1035
    on management and administration not with what was being spent then but with what would have been spent had matters continued unchanged.
    For that reason, my right hon. Friend who is now the Secretary of State for the Environment set a target—the House knew all about it; it was explained to hon. Members—to achieve a 10 per cent. reduction in the proportion of total health authority revenue devoted to management costs. That has happened. There has been a reduction during our period in office, from 1979 to 1980 and from 1980 to 1983, from a 5·12 per cent. to a 4·4 per cent. proportion of costs absorbed by management.
    Mr. Dobson: The right hon. and learned Gentleman cannot prove that.
    Mr. Clarke: I accept that I cannot prove it. That is why I wrote into the answer that I gave the hon. Gentleman in November, from which he quoted, "it seems likely" or words to that effect. Nevertheless, it is the best estimate that can be given. We have seen a clear change in the trend of management costs following our beginning the process of tightening up the management of the Health Service by abolishing the area tier.
    Taking that estimate, we arrive at the figure of £64 million. Had the health authorities carried on completely along the previous course which they were following, and had they had the funds devoted to them which this Government have devoted to the NHS, that is what it seems likely they would have spent.
    I accept that it is not possible to calculate an exact figure for the reduction of management costs compared with what would otherwise have happened. For all the reasons that I have given, I shall not attempt to give such a figure; I would not want to stand on it. Nevertheless, it continues to be our intention to reduce management costs in the NHS to their inescapable minimum; to improve the value for money that we get for those managements costs by introducing a proper structure of management; and to achieve real reductions in administrative and staff numbers, and I shall return to that because that is now beginning to happen.
    Problems arose when the reorganisation of 1981 was carried through in 1982–83 and 1983–84 because, as the report says, of the difficulties of delegating authority to the health authorities. The report says:
    "This case well illustrates the problems for the DHSS in reconciling accountability to Parliament with the delegation to health authorities of day-to-day management decisions, to which our predecessors referred in their 17th report for the Session 1980–81."
    That is right. It was decided by the Government in the new arrangements to delegate responsibility for this matter to regional health authorities. To be fair to all concerned, it was made clear to the House that they were doing that, and that was broadly welcomed. Indeed, I warn our present critics that the next time they accuse the Government of interfering with health authorities, either at regional or district level, when we step in with manpower targets and proposed new forms of management, I shall remind them of the criticisms aimed at delegation when it goes wrong.
    I accept that we must delegate day-to-day responsibility to those nearest to the patient, those best able to judge such matters. But we must not abdicate responsibility by leaving it entirely to health authorities. It is our duty to hold them to account and to monitor their performance, and we have made great strides in that direction.
    Mr. Dobson: Does the Minister acknowledge that every early retirement covered by the scheme had to be approved by the permanent secretary at the DHSS? That was not delegation.
    Mr. Clarke: The PAC describes whoever was responsible as acting like a rubber stamp. That is the PAC's description and judgment—I do not necessarily agree with it—of the way in which the policy was followed through of devolving responsibility for making decisions to regions. It also enabled regions to come to such divergent opinions. It is obvious, for example, that the policy followed by Wessex does not commend itself to any hon. Member, whereas the policy followed by the northern region is perfectly acceptable. I do not think that any hon. Member has said that there should not have been any voluntary redundancies — [Interruption.] We changed the Wessex regional chairman, though not with the approval of the hon. Member for Holborn and St. Pancras, because at that time he was a Labour chairman.
    I was speaking about monitoring and holding to account the authorities for what they do. That has been taken a great deal further forward since 1982 by the introduction of regional reviews. I do not have time, and this is not the occasion, to describe fully the process of regional review. It is the system which we have devised, and which is working well, to hold the regional authorities to account, with Ministers presiding personally over a review of their objectives for the coming year, and then their performance in achieving those objectives at the end of the year.
    We developed that all the way down the line—with regions holding districts to account and districts holding units to account—once we had developed the system. My right hon. Friend and I are determined to strengthen that system of accountability because we all improve our performance if we are held to account and made to justify our use of public funds, as well as having our achievement of policy objectives monitored in an organised way.
    I must however, remind members of the PAC and hon. Members generally that we should not overstate what can be achieved by accountability, nor should we start going back to the central control of all details of management, which would merely lead to our having to recruit more staff at the centre—whereas we are running down the numbers—and result in too many layers of authority.
    It never would have been possible in a change of this kind, involving management structures in 192 health districts and 14 regions, with a reorganisation that affected 40,000 posts, for the Department from the centre to have approved each and every detail of that reorganisation. Therefore, it is for the centre to exercise only a general holding to account of the regions in respect of their performance.
    I accept what has been said about our retaining the provision for premature retirement for the future. Now that we have the review system fully in operation, it will be important for us to ensure that any future premature retirements are justified and that regions are being held to account for the policy that they follow towards voluntary retirement so as to ensure that what happened in the past does not recur.
    Still putting matters in perspective, I should make an elementary point about the cost of the scheme, for almost all hon. Members have spoken as though the cost of the voluntary retirement scheme was £54 million. That is the

    1037
    total amount of money to be paid out to 2,800 individuals by way of lump sum gratuities and pension by the end of March 1984.
    The committee's report does not bring out the fact that the greater part of that expenditure represents payments arising directly from the superannuation records of the individuals concerned; in other words, money that was due to them on retirement, irrespective of the premature retirement scheme. Of the £54 million, £40 million represents lump sum payments. About £33 million of that is based on what the individuals had already earned. Only £7 million was compensation for their early retirement. In other words, £33 million would have to be paid out, in any event, in the course of the next few years if the individuals reached normal retirement age.
    Pension payments represent £14 million. Of that, almost half the sums paid out to date are earned superannuation rather than compensation. [Interruption.] Hon. Members cheerfully say that we should save local hospitals threatened by closure at a cost of millions of pounds. The fact remains that the compensation element, both in lump sums and pension, amounts to about £14 million, which gives an average cost per employee prematurely retired of £5,000, or little more than one quarter of the figure given in the report. No doubt Opposition Members would have supported an alternative approach with the retention of these staff for whom there were no jobs and the overmanning of administration to avoid the cost of redundancies or premature retirement. Had that happened, they would soon have got through more than £5,000 per head.
    Redundancy would not necessarily have reduced costs significantly. In fact, the cost would probably have been the same since all the employees over the age of 50 who were made redundant would have got the same benefits as for premature retirement. Most, if not all, authorities have redundancy agreements which provide that those over 50 must go first. For the over-50s premature retirement is in a sense a polite phrase for redundancy.
    The hon. Member for Wolverhampton, North-East hit one bull's eye when she pointed out that one reason for opting for premature retirement was not just because it was an euphemism for redundancy but because the Department centrally paid the full cost as opposed to it coming out of the region's budget in the first year. We have now corrected that.
    It is also an irony that what the Department did to pay those costs was to take the money out of the shortfall in expenditure by health authorities. We are talking about 1982 when the strike led to underspending by authorities. Therefore, public funds suffered no loss and there was no over-expenditure on the National Health Service.
    The other worrying point is the re-employment of staff who were offered early retirement. We are not remotely defensive about this. As we have informed the House in answer to questions, 135 staff who took premature retirement were recorded on 31 October last as being re-employed, 99 of them part time, 16 whole time and 20 on an occasional consultancy basis. There is nothing illegal about it, but it is the view of Ministers that it should never have happened unless there were exceptional circumstances in each case.
    My right hon. Friend has written to the chairmen of regional health authorities asking that in each and every
    1038
    case where the person is still employed they should discover the exceptional reasons for the employment and review the position. They are reporting back to us and when we receive the results of the review we shall consider whether further guidance is needed.
    Meanwhile, we have directed the authorities that no further re-employment of people who have accepted premature retirement should take place without the matter being referred for ministerial approval. I can assure the House that that approval will be given only in exceptional circumstances.
    Mr. Deakins: Will the Minister make sure that regional health authority chairmen are aware of the strong feelings expressed not only by the Committee of Public Accounts but by the House?
    Mr. Clarke: I certainly shall. My right hon. Friend has written on two occasions to chairmen to underline the point. They will have to come to Ministers now in every case where they propose to re-employ someone who had retired prematurely. We shall bear in mind the strong views of the House.
    I have described the regional reviews that we are undertaking. My hon. Friend the Member for Horsham (Mr. Hordern), who opened the debate with admirable clarity and very constructively, asked what we were doing about management costs, manpower numbers and general administrative control. Of course, again a great deal has happened since this scheme was launched. Apart from the regional reviews and the accountability process that I have described, we have also begun to introduce proper manpower planning and control to achieve our objectives.
    Everyone will recall the manpower targets exercise which was launched in the summer of 1982. I accept that it was a coincidence that it happened at a time when these problems were emerging. By March 1983 we had got up-to-date reporting of manpower numbers, we had reintroduced quarterly returns of how many people were employed, and we had established a baseline on which to base targets. In the summer of last year we set manpower targets for March 1984 and we have agreed them with the regions. I do not remember that that was greeted certainly by the new enemy of bureaucracy, the hon. Member for Oldham, West (Mr. Meacher), with universal support. He was not then so keen on eliminating waste and inefficiency in the Health Service and getting better value for money. In fact, he allied himself with the ridiculous attacks on the manpower arrangements we were introducing.
    I should have thought that the report of the committee showed that, if anything, the changes were overdue and necessary. I hope that future developments on manpower planning, control and targets for next year will have the full support of the hon. Member for Oldham, West and the hon. Member for Holborn and St. Pancras (Mr. Dobson), but I suspect that the National Union of Public Employees will make sure that they do not adopt that stance when the time comes.
    If I may go back to the point made by my hon. Friend the Member for Horsham, the exercise is beginning to show effects. We are all in favour of better value for money in the Health Service and we all want to maximise the resources that go to patient care and the sharp end of medicine and nursing. The latest figures, for which my hon. Friend expressly asked, can be found in appendix 3 of the report of the Committee that was produced only a

    1039
    few days ago. Provisional figures are given for administrative and clerical staff employed in each region. He quoted the figures at 30 September 1983 as 104,480, using the whole-time equivalent which he dislikes and which I like to use warily but on which I do not go all the way. The figure at 31 December 1983 was 103,880. There has been a reduction of about 600 in the total number of administrative and clerical staff. That is a small reduction and I should think it is the first time within living memory that there has been a reduction in the Health Service. That is what has happened in one quarter, and it is too soon to take trends. It is the first direct result of the manpower targets we set.
    We introduced firm targets. When we received their bids, the regions were proposing to increase administrative and clerical staff, although they wanted to cut nursing and other staff. I assure the House that we shall press the need for better management. That will include proper control of management numbers and administrative and clerical costs.
    Mr. Dobson: Will the Minister nevertheless confirm that even the figure that he says is going down is still higher than the number of administrative staff before the reorganisation that we are talking about?
    Mr. Clarke: I can confirm that.
    Therefore, we have been examining the matter continuously and we will have the full support of the hon. Member, I am sure, as we press on to reduce the number of members of the National Association of Local Government Officers employed in the administrative and clerical grades, and to reduce the management tail of the service to the size it ought to be. However, we know that if we produce manpower targets next year, the hon. Member will launch another hysterical assault, saying that this is an attack on the National Health Service and is cutting back on all that was most dear to Nye Bevan and his descendants.
    Not only are we getting numbers under control, but we also want to improve the quality of management. [Interruption.] Yes, we are. First, the manpower targets are being achieved; secondly, the regions are, if anything, aiming below the manpower targets for the totality of staff
    1040
    compared with what was set, but we shall not penalise them for that. We shall use the March 1984 figures as the basis for next year.
    Regions are finding it more and more possible to make better use of manpower and increase the money for patient care. The achievement of the targets is not reducing the quality of patient care or the quantity of service. Waiting lists are beginning to decrease again. In answer to a question this afternoon, my right hon. Friend gave the latest downward turn in waiting lists and the shorter time that patients have to wait for treatment as a result of the improved efficiency and despite the reduced manning that I have just been describing to the House. Waiting lists increase when we have strikes and industrial action. They go down when we have good management and eliminate waste and inefficiency, and they will continue to go down.
    As my hon. Friend the Member for Halifax said, we have not only tighter control of management by holding it to account properly and monitoring performance, but we also need better quality of management. That is the point of the Griffiths exercise to which he referred and which we believe will eventually lead to proposals to establish a general management function. We want to have people in charge who are responsible and answerable for the overall duty of the National Health Service to achieve better value for money in its services.
    Despite all the criticisms, we are happy to answer to the Committee of Public Accounts and to the House for the strictures that have been made because they are urging us in a direction that we are already following. We are redoubling our efforts to go ahead with policies to which we are committed. We are particularly happy to answer to patients and to the general public because we are aiming at better value for money so that the standards of patient care can go on improving. I am astonished at the extent to which all-party support has been won for these efforts. I look forward to getting that all-party support as we proceed during the next few years to do something about this matter. I trust that the Committee of Public Accounts has not only held us to account but produced converted men on the Opposition Benches whose approach to the Health Service will be transformed from now on.
    The Question was deferred, pursuant to paragraph (2)(c) of Standing Order No. 19 (Consideration of Estimates).

    CLASS IV, Vote 3
    Motion made, and Question proposed,
    That a Supplementary sum not exceeding £289,952,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1984 for expenditure by the Department of Energy on assistance to the coal industry including grants to the National Coal Board and payments to redundant workers.—[Mr. Buchanan-Smith.]
    Mr. Deputy Speaker (Mr. Harold Walker): More than 25 right hon. and hon. Members have told me that they will be seeking to catch my eye. The moral is obvious — the briefer the speeches, the more right hon. and hon. Members can participate in the debate.
    7.1 pm
    Mr. Ian Lloyd: The Select Committee on Energy is grateful to the House for this opportunity to debate its report. It is some years since we last debated a report from my Committee, which then dealt with nuclear power. In the interim, we have produced several reports. We should like our reports debated more frequently.
    I thank the members of my Committee from both sides of the House who performed a marvellous piece of work in producing this report in just one week. I thank them for the assiduous way in which they handled the paperwork, cross-examinations, and so on. I thank also the Committee staff who performed a miracle in producing such a comprehensive report in the short time between Tuesday 28 February and Monday 5 March.
    I shall start with the highly particular and end with some rather more general observations. The former will summarise the essential conclusions of my Committee's report. I must emphasise that the Committee members were, as we invariably have been, unanimous. I hope to carry the House, if not the Government Front Bench, with me at least that far. I hasten to add that I have some sympathy with my hon. Friends who, doubtless, will echo the "expectancy and apprehension" expressed by the Chief Secretary to the Treasury over the Treasury Select Committee's report on Tuesday.
    Those elements cannot be avoided. First, a Select Committee that does its work properly is bound to offer more criticism than praise, and it will do so whichever Government are in power. Secondly, the Select Committee on Energy especially, which has the somewhat daunting responsibility of monitoring the national interest throughout the major energy industries—amongst the largest in the country—is bound to find weak points in a very large system that may generally work well and achieve, on average, acceptable standards of performance. Sometimes, we must examine those standards as a whole and ask whether they are sufficiently demanding, making international comparisons where necessary. On other occasions, we must look at the attainment of the standards that the Department and the industries it monitors have set themselves.
    The Select Committee performs the role of the national shareholder who asks awkward questions at the company's annual general meeting. We have more powers of inquiry than the average shareholder, and, regrettably for Governments but fortunately for the nation, we are part of the self-discipline of democracy which others find so difficult to understand. We will not go away.
    1042
    The debate is, in some senses, a continuation of Tuesday's public expenditure debate. We have now moved on from the global to the particular. On that occasion, the Chief Secretary said:
    "we expect better cost control and greater efficiency".
    He asked
    "whether the mechanisms for control are adequate."—[Official Report, 6 March 1984; Vol. 55, c. 746–50.]
    Those premises precisely underline our present inquiry, which follows from the adherence in the spring Supplementary Estimates to a figure of £290 million for the whole industry—a large sum of money launched on three sentences in the Supplementary Estimates.
    The facts are easily summarised. The sum is a quarter of that called for in the Estimates as a whole. It represents a 50 per cent. increase in the support of the National Coal Board in 1983–84. It is explained by three factors—an increase in social grants of £10 million, an increase in the redundant mineworkers repayment scheme of £88 million, and an increase in deficit grants of £192 million. Those facts raise important issues.
    The deficit grant concealed two significant developments—the overtime ban and subsidence. The former has now cost a certain £135 million and the latter a certain £162 million.
    Mr. T. H. H. Skeet: Subsidence.
    Mr. Lloyd: As my hon. Friend says, "Subsidence." Both amounts are likely to increase substantially. The amount for the overtime ban is almost unquantifiable, and a forecast of a further £128 million for subsidence has been revealed.
    The House will agree that those are formidable sums. Collectively, they outweigh either the net result of the increase in electricity prices or the savings made by each of the four major Departments of State, which have just managed, with all the pain and agony of which the House is well aware, to trim their cash programmes for next year by a similar amount. It is worth noting, that, if there were no subsidy to the industry, electricity prices would increase by 5 per cent. or 6 per cent. Our inquiry disclosed also that that is merely the vortex of a large and destructive financial black hole in the economy. It is clear from the evidence — the Committee has so reported — that the Supplementary Estimate of £290 million will not be sufficient to deal with the problem.
    There are two issues. The first and most serious is the financial cost of transforming an industry so as to make it profitable when its management must operate within a series of powerful and, in the view of some hon. Members, damaging and largely unnecessary constraints. Secondly, subsidence claims appear to be virtually out of control, although we believe and hope that the National Coal Board is making resolute attempts to regain policy and financial control.
    I hope that so far I have carried the whole of my Committee with me. The major issue is of redundancies in the coalmining industry. Sometimes, I wonder whether, despite all the publicity, the country as a whole has any idea of how much it is being asked to pay to achieve the modernisation and transformation of the industry's economic prospects, which is an objective common to both sides of the House. Within the past 24 hours the announcement of the introduction of a further massive redundancy payments scheme has burst on the nation,

    1043
    which is almost immune to the shocks of public expenditure. I hope the House will allow me to examine that scheme in detail, because it reinforces my Committee's argument and shows yet again that the vast efforts to trim expenditure in one direction can easily be squandered by the stroke, if not of a pen, at least of a statutory instrument.
    This morning a draft statutory instrument dealing with redundant mineworkers was made available in the Vote Office. It deals with redundancy payment schemes and extends them to those aged 50. It exempts those affected from the exhaustion of unemployment benefit, and I understand that that is unique in this industry. It improves the lump-sum provisions available to those aged 21 to 50. The measure grants a second lump sum to those aged 50 to 60. It reimburses the National Coal Board for the cost of concessionary coal to redundant employees over 50, giving the full amount for mineworkers up to the age of 60, and thereafter half for life.
    There are other interesting provisions. The weekly sum is index-linked. The Government will pay an additional sum to compensate for a higher rent that may be charged by the NCB for a house, up to £1·50 a week. It ignores part-time or self-employed work for anyone who might be qualified up to 16 hours a week, and, a particularly generous and most interesting contribution, it completely ignores by definition—it is clearly defined—any period in which any applicant has ever been on strike. Of all, the most interesting provision is the one that is not there. There is no sign, from beginning to end of the document, of what the cost is likely to be to the Exchequer or the nation.
    To whom does it apply? There would be general agreement in the House that wherever possible the establishment should be as generous as possible to the miners on the coal face and to those associated with dangerous and difficult work. That is the mood of the nation as a whole. Does the document apply solely to those in that category? No, it includes those employed in area offices and establishments, laboratories — electricity distribution stations, estate and house maintenance depots, those who work in the granaries kept for the pit ponies and those who look after the ponies, those who work in medical centres, railway sidings, road transport depots, waterworks, workshops and training centres, and to commissionaires, typists and accountants. Here is where these major types of failure of control are to be seen.
    Mr. Stanley Orme: The hon. Gentleman is giving a report to the House of the work of the Select Committee that discussed the Supplementary Estimates. The document to which he was referring was not before his Committee, and I feel that he does not have the right to speak as Chairman of the Committee on this issue.
    Mr. Lloyd: I understand the right hon. Gentleman's point. I would not have done so had this document not precisely and unequivocally fallen in that part of our concern over the National Coal Board and public expenditure on it. It is an illustration of that, and an enlargement of our concern, and as such I felt not only entitled but obliged to call the attention of the House to it.
    I shall move away from this subject now, because I do not want to take too much of the time of the House. However, the cost of the Supplementary Estimate and all
    1044
    that is implied by it, in addition to what we have learnt overnight, is formidable. Control will be virtually open-ended. That is what lies at the heart of the public expenditure control problem. A privileged group has been created that is exempt from the restrictions applying to many other categories in our society. A large number of employees will be eligible who cannot claim the special consideration that applies to coal miners.
    I had four questions for the Minister about this, but in deference to the right hon. Member for Salford, East (Mr. Orme), I shall reserve them for another occasion. However, in a remarkable and interesting speech the other day, we heard the right hon. Member for Chesterfield, (Mr. Benn) talk about Chesterfield having mined coal for several centuries, and in this context he talked about the views and philosophy of someone whom he described as abacus man. In this interesting context, he suggested that abacus man had no heart, compassion or feeling. The right hon. Gentleman said that government by abacus man was appalling government. However, he did not say what the alternative would be.
    The alternative is government by ayatollahs, by the flight-lieutenants who govern Ghana and some of those other countries where we have seen the collapse of the value of the currency, of trade and of the whole economic system. I make this point to say that the Select Committees and those who serve on them, the process of analysis and examination, which we support, is that which is sustained by and requires the existence of, if not abacus man, his modern equivalent, computer man. The right hon. Member for Chesterfield is a former Minister of Technology and to suggest that modern man, man who calculates, measures and thinks, is not required is deplorable. We admit that even when he does calculate and measure he sometimes gets it wrong, but the alternative, the ayatollahs of this world, make the most appalling mess of our society.
    7.15 pm
    Mr. J. D. Concannon: The hon. Member for Havant (Mr. Lloyd) thanked the members of the Energy Committee, who I know work very hard. When I was put on the Select Committee, I did not think that I would have to work as hard as I have done. The amount of time and effort that we have put into the reports have benefited from the hon. Gentleman's chairmanship of the Committee. I am sorry that he has spoilt that today by some of his other remarks, which were not necessary in a debate such as this. The hon. Gentleman should have stuck to the Select Committee report.
    When I first served on this Committee, I went with open eyes, feeling glad that I was on such an important Select Committee. After this latest report, I do not know whether I am lucky or plain unlucky. A great slice of it centres on my constituency. Hon. Members will have to give me a little licence if I say something about the effects of this Supplementary Estimate on my constituency. I shall try to explain it fairly as I go through the report.
    This is a Supplementary Estimate of £290 million. It is the largest spring Supplementary Estimate of any Department this year. The amazing thing is that we had hardly got through the door of the Committee when we found that the Supplementary Estimate about which we were talking bore no relation to the financing of the

    1045
    industry. The Secretary of State for Energy came along and casually said that this Estimate would shortly be followed by another—also for about £200 million.
    We are talking about £290 million, a deficit grant of £192 million, £10 million on social grant and £88 million on the redundant mineworkers' scheme. The social grant for pit closures, resettlement and transfers gets an extra £10 million. Part of the £88 million is due to the fact that the Coal Board had estimated for 10,000 redundancies in the year, but, lo and behold, it has found that there are 20,000 redundancies. That will fuel certain arguments that have raged in the industry over the past year. In effect, £90 million is to pay for the extra redundancy payments to 10,000 people whom the Coal Board had not put in for originally. We have to be careful because the industry is in a perilous position. Those who represent the area will have an interesting weekend. I had an interesting weekend last weekend as well, but I shall leave that for now.
    From what was said in the Committee about extra redundancies, pit closures, resettlements, transfers and the effects of the overtime ban, it became obvious that changes of policy that had taken place had been helped and encouraged by the Government. One has only to turn to page 97 of the report to see that. The chairman of the National Coal Board was asked:
    "Is it true to say, or is it a fair comment for me to make, that it appears that the Government has underwritten the management to continue to manage in the way that it thinks best, even if that means continuing the overtime ban indefinitely?"
    Mr. MacGregor replied, "Yes, that is correct."
    The present overtime ban and other activities in the coalfields are being underwritten by the Government in that way as part and parcel of the Supplementary Estimates. The lads in the industry are getting a bit trigger-happy and are about ready to take decisions on further action, as much out of frustration as anything. The miners have been engaged in an overtime ban for many weeks in response to threatened pit closures. They find that more pit closures have taken place and that the effect of the ban has not been felt at all outside the mining areas. They have come through the winter and nothing seems to be happening except a reduction in the Coal Board's finances, which are being underwritten by the Government. That will have a devastating effect on its finances years hence.
    A pay claim has been outstanding since November, and the board will no longer consider negotiating. This weekend 180,000 miners will be deciding what to do next. Should they escalate their present action, when no one seems to be taking any notice of it, or surrender to the butchery of their jobs? Those of us who represent mining areas will have an interesting weekend, as we shall be called upon to attend NUM meetings.
    My right hon. Friend the Member for Chesterfield (Mr. Benn) said that fear plays a predominant part in the issue, especially the fear of losing jobs. Should miners fight for their jobs now, or wait and perhaps find in a few weeks that they have no jobs to fight for? It is easy for me to stand here and speak for an east midlands constituency, as we have not been so badly affected as Scotland or Wales, where many thousands of jobs have been lost, and perhaps thousands more will be lost. The miners in those areas are in a more perilous position than their colleagues in the area that I represent.
    Mr. Richard Alexander: The right hon. Gentleman properly deals with the situation in the mining industry. A sensible way might be to organise a ballot among miners to find out what they really want in such a difficult situation.
    Mr. Concannon: That is not my business. It must be decided by the National Union of Mineworkers. It is still a federation of unions and each area has its own rule book. The national rule book comes into play only when a dispute becomes a national issue. If a national strike is called, there will have to be a ballot. Each area, however, conducts its business in its own way. It is obvious that Ray Chadbum has his finger on the pulse in Nottinghanshire. He says that he will not call out the Nottinghamshire miners without a ballot, but other areas will work to their own rules.
    I hope that hon. Members will not start complaining about the way in which the NUM conducts its business. Over the years, many Conservative Members have thanked the miners for the way in which they have conducted their business. I sometimes wonder whether that was because the outcome has been what Conservative Members have wanted. We must be careful not to get involved in union matters, as the report recognises.
    The report, in page 11, says that the industry lost 32,000 jobs between March 1981 and September 1983 and that scope for further voluntary redundancies is very limited. In September 1983 there were about 190,000 miners. There are only 180,000 now. I expect that the number at the end of September 1983 was considerably reduced. Even so, if the number of miners aged 55 and over is 18,000 out of a total of 190,000, no doubt there will be even fewer middle-aged miners in future. The number may fall to as low as 11,000 or 12,000. There are only 22,000 men in the 50 to 54 age group.
    We are not talking about a bottomless purse, despite what has been said. We are reaching rock bottom for that age group. After so many voluntary redundancies we are coming to the crunch, and there must be some compulsory retirements. My union will certainly be considering that fresh problem.
    I felt it necessary to make those opening remarks about the mining industry, but I shall return to the Suplementary Estimates. The deficit and operating grant and the overtime ban are included in the Estimates, but the overtime ban takes up only £30 million to the end of December. After the end of March, that figure will be £135 million. As a Select Committee member said, based on information emanating from various quarters, it was a surprise to him. We were all told that the overtime ban was not having a positive effect. Now we find that the overtime ban will finally reduce the board's finances by £135 million, only £30 million of which is provided for in the Supplementary Estimates.
    Subsidence claims account for only £60 million in these Estimates, although we were originally told that a further £68 million was to be added. The subsidence claim will thus become £128 million, and the overtime ban will become £135 million.
    Mr. Dennis Skinner: My hon. Friend has long experience in the House and association with nationalised industries. Can he remember a previous occasion when, in the space of six months, a nationalised industry chief, such as Mr. MacGregor, has said at the

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    outset of an overtime ban that he was prepared to see it last for decades because it would benefit the Coal Board financially? However, after a ban of 18 or 19 weeks, the Coal Board is at least £135 million in debt, as the Estimates show. Does my hon. Friend know of any chairman who made a monumental error, tactical blunder or whatever it was, such as that made by Mr. MacGregor, and yet survive and keep his job?
    Mr. Concannon: The Select Committee would agree with all that my hon. Friend says. That criticism was made in the report. I do not know whether my hon. Friend was in the Chamber at the beginning of my speech, but I read out a question put to Mr. MacGregor by the Committee. His answer shows that the Coal Board's losses have been willingly underwritten by the Government out of public expenditure.
    The Government are involved politically and financially in this dispute, because they are willing and able to underwrite the Coal Board's losses in the Supplementary Estimates. If the Estimates had been put forward without provision for the overtime ban, I am sure that the Government would have taken much stronger action against the miners.
    A figure of £68 million has been allowed for additional subsidence claims, plus another £60 million, making a total of £128 million, which must be considered against the original Estimates of £102 million for the whole of the industry. The addition of £128 million puts up the Estimates immediately to £250 million for claims from the industry as a whole. Mansfield was allocated £35 million from the original Estimates. I knew there might be changes in subsidence claims from Mansfield, but I never thought that they would be of such magnitude. Out of that £128 million, all but £15 million, which is spread over the rest of the mining areas, will go into the office at Mansfield, making a total of £148 million for the year.
    The north Nottinghamshire coalfield made a profit of £310 million from 11 pits between 1973–74 and 1982–83. One may ask how that has been achieved and what might have been done to avoid the present situation. During the weekend I had many interesting meetings and telephone calls, not to mention conversations with people from the press, television, and the rest. I wish to be as fair as I can for the benefit of my constituents and others. In December, which really amounted to no more than two weeks, 647 new claims arrived at the Mansfield office. There are already 8,000 claims outstanding. Taking the average given in the report of £8,700 per claim, those claims amount to £69,600,000. I am not absolutely sure, but I believe that most of that is covered in the second Supplementary Estimate.
    In all my time as a Member of Parliament I had no problems with the Coal Board about subsidence claims until two years ago. The performance of the NCB in my area was excellent, processing claims extremely quickly with a staff of four plus office staff. There is now a staff of 25 plus office staff to deal with subsidence claims.
    Mr. Skinner: That is the free market economy.
    Mr. Concannon: I shall come to that.
    Why is there suddenly such a surge in the number of claims and in the scrutiny that they receive from the House and the media? I cite just a few headlines. The Yorkshire Post says, "Town sinks into riches". The Daily Telegraph
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    refers to a "Rich Vein for Estate Agents", and the Nottingham Evening Post writes of a "£113 Million Pit Bombshell" and of
    "Coal Board 'Millions' going on Luxuries"
    such as cruises and new cars. When the Select Committee inquiry began, we all thought that we should be considering the cost to the industry of the overtime ban and redundancies. I knew that there had been an upsurge in subsidence claims in my area, but I had no idea that it was so great. Why Mansfield?
    Mr. John Heddle (Mid-Staffordshire): The right hon. Gentleman is about to explain the position in Mansfield. He speaks vociferously and persuasively on behalf of his constituents, and we respect that. Does he agree, however, that the problems of subsidence are not confined to the coalfields of Nottinghamshire and Derbyshire? In Staffordshire, whole villages above mine-workings are sinking.
    Mr. Skinner: The hon. Member for Mid-Staffordshire (Mr. Heddle) should declare an interest. He makes money out of it.
    Mr. Heddle: Does the right hon. Member for Mansfield (Mr. Concannon) agree that the basis of compensation enshrined in the 1975 Act allows the NCB to act as judge and jury and to offer compensation on a take-it-or-leave-it basis so that his constituents and mine do not necessarily receive a fair deal?
    Mr. Concannon: I said that I wished to be as fair as possible. I shall deal with that point later in my speech. First, I wish to deal with Mansfield.
    Clearly, mining under the fields or the sea, or under the mountains of Scotland or Wales, creates very few subsidence problems. In areas such as mine, however, coal has been taken out from under built-up areas for many years. The problems are therefore much greater and the claims seem to have caught up with the NCB all at once—with considerable help from professional agents. As Mr. MacGregor rightly said in his evidence, people's hopes have been raised by the activities of agents.
    In recent times local newspapers in the area have been full of advertisements from agents touting for claims. There is one aspect that I find morally unpleasant. It is not unusual for agents to leaflet certain parts of the town touting for business. My constituents appear to have nothing to lose from putting their claims into the hands of such agents, as the agents charge on results. The going rate seems to be 10 per cent.—5 per cent. from the Coal Board and 5 per cent. from the client—falling to 2·5 per cent. on amounts above £10,000.
    I gather that all this was set in motion a few years ago when an ex-NCB employee, having left the estates department, set up as an agent-consultant in the area. There are now more than 40 such agents in Mansfield. One agent's name crops up in every discussion. I am reliably informed that this agent handles 75 per cent. of the claims and has made himself a multi-millionaire in no time at all. After all, 10 per cent. of £148 million is a great deal of money. It hurts me to think that a great deal of money is being made out of the coal industry by a person who has probably never hit a lump of coal in anger in his life.
    Mr. Tony Favell: Was that ex-NCB employee eligible for redundancy money? If so, was it paid to him?
    Mr. Concannon: This is a serious matter and I am trying to be as fair as I can. I hope that interventions will keep to the point. A great deal of money is flying about in my area, as well as a large number of stories which I hope the House will help me to kill.
    The agents take the view that they are simply catching up with the NCB on claims that should have been made over the years. Many of the claims relate to coal dug five, six or seven years ago, and new claims now coming in relate to damage caused by diggings in the past two or three years. I saw some of the claims last weekend. One was for £45,000. After investigation, it was knocked down to £24,000. To be fair, I must make it clear that the NCB investigates claims carefully. In respect of a house valued at £8,000, a claim was made for more than £14,000. The NCB paid £13,000. Those claims have been settled, but 8,000 remain remain outstanding.
    I am surprised at the amount of detail given in the claims. One contained 17 foolscap pages of details such as
    "Take down house number plates, store and later replace … £1.50.
    Take down, store and later refix pelmet 1·5 metres long … £7.50.
    Take down and renew softwood curtain rail … £3."
    The claims are very detailed and must be gone through in detail with the NCB.
    No one is saying—the NCB is not saying this and neither am I—that my constituents should not claim. If damage has been done to their property, they should certainly claim. Indeed, the agents may be right that over the years the people of Mansfield have tended to regard cracks in their ceilings, doors not fitting, and so on, as part and parcel of living in a coal mining area.
    The NCB's point of view was given by the NCB press officer to the Nottingham Evening Post, which, on 1 March 1984, reported as follows:
    "He said the NCB in Nottinghamshire did not feel it was `being taken for a ride' by claimants and surveyors.
    `We feel surveyors have got their job to do and we have got our job to do. We try to deal with all claims in a reasonable manner.
    `It is true that some of the claims are settled for cash and we are aware of the fact that some of these claims are not spent on repairs. But these claimants sign a document from us saying they have been properly compensated.'"
    That is the board's point of view. The board's view is also that, due to the surge of old claims for mining carried out in the past few years, and further expected claims, the Supplementary Estimates for this year are certainly necessary to cover them.
    The profit and loss accounts of two mines in my area —Sherwood and Mansfield—and one, Sutton, in the area of my hon. Friend the Member for Ashfield (Mr. Haynes) will be affected. The situation is an absolute mockery. Those three pits will De charged 75 per cent. of the bill. What is ridiculous is that subsidence claims are charged against the mine from which the coal comes. As I have explained, three mines in my area which in the past nine years have made a profit of £310 million could become uneconomic overnight, not because they are not good or productive pits but purely and simply because the costs of subsidence claims will be quoted against them. In the previous year, one of those pits made a profit of £5·50 on every tonne on an output of 1 million tonnes. That profit has been turned to a loss of £4·50 a tonne in one year, perhaps because of these arrangements.
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    One NCB official said to me that the effect on the three collieries this year will be horrendous, but that, once it has been paid, they will be able to carry on as if nothing had happened. Mr. MacGregor's evidence to the Select Committee was not as specific as that. He talked about new mining techniques—the sterilisation of coal and so on. There will be long-term effects on the viability of those pits and their length of reserve time. At my request, Coal Board officials visited the three collieries last weekend, or are to visit them, in order to explain the problems to the representatives. If there is to be a long-term problem—I was reliably informed that there is not—the effects on the economy of Mansfield and certain pits in my area will be disastrous.
    In its speedy investigation of the Supplementary Estimates, the Select Committee brought to light some interesting goings-on. The report, in page 22, states:
    "This may not however, be sufficient to satisfy public concern, particularly in the areas most affected, and we may therefore wish ourselves to return to this subject in the near future."
    I am sure that the NCB, the agents and my constituents would welcome the Select Committee to Mansfield. I believe that it is the only body that could now satisfy public concern.
    Various questions can be asked about who should pay, and how the money should be paid. It is nonsense to charge it to the mine from which the coal comes. That ludicrous arrangement can turn profit-making collieries into loss-making ones. Should it be the area that pays or the NCB as a whole, or should the state cover the cost? I made that suggestion and got short shrift from the Secretary of State for Energy. However, one cannot expect three small collieries to cover these costs.
    Mr. Frank Haynes: Does my right hon. Friend agree that, looking back over the years, it has not been usual to pay compensation for subsidence to such an extent? The chairman of the NCB talks about mining techniques. It is not a question of the men who work in the pits. They have proved their ability by breaking output records. However, they are under pressure from management and from the Government to produce as much coal as they can. The ideas about mining techniques have come from management and the Government, and the responsibility is theirs. Does my right hon. Friend agree that if we go on in this way, there will be more pit closures and more people in the dole queue?
    Mr. Deputy Speaker: Order. If we go on in this way, very few right hon. and hon. Members will have a chance to speak.
    Mr. Concannon: I accept your strictures, but I hope that you will be lenient with me, Mr. Deputy Speaker, as the Chairman of the Select Committee was.
    At the beginning of his evidence, the Secretary of State for Energy pointed to me and said that it was all Mansfield's fault. I have therefore found myself mixed up in these matters. I hope that I am being fair. I am trying to put everybody's point of view. I apologise for speaking at length, but Mansfield and my constituents are involved.
    There are certain matters that should be considered. Should we pay for completed work? I must be honest. One does not have to go far in Mansfield before one hears stories about what people have done with the compensation money. I do not know how large the problem is. Local councils, the gas board and the water

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    board also have compensation problems. I have heard it said, on good authority, that, on odd occasions, compensation has been claimed and paid by the board and the beneficiary has then applied for a local council improvement grant and got it, the council not knowing that he had had money from the Coal Board.
    There is also the unique problem of what used to be the Duke of Portland's estate, where payment of compensation is written into the deeds. I do not know how extensive the area is, but the duke owned most of Mansfield at one time. I do not have much information about that matter. When I went home last weekend I wondered whether Mansfield would have slumped into a huge hole, but, fortunately, it is still there.
    I think that I have said enough.
    Mr. Skeet: Hear, hear.
    Mr. Concannon: I thank the hon. Gentleman. At least I understand the problems, having worked in the industry.
    Mansfield is not usually in the public eye, and I do not believe that Mansfield likes to be in the public eye. I am concerned about our good name. Except for a handful of people who never touch a lump of coal in anger, no one is getting rich in Mansfield at the taxpayers' expense. I invite the Select Committee to "satisfy public concern" and "return to this subject". I ask the right hon. Member for Worthing (Mr. Higgins) and the Select Committee to visit Mansfield soon to study the problem in greater depth. I hope that in that way we can do the right thing by my constituents, the industry and everybody else.
    7.47 pm
    Mr. Michael Morris: It is fortunate that the right hon. Member for Mansfield (Mr. Concannon) serves on the Select Committee, as it is clear that the problem is of major significance. I want to consider the macro-financial implications of the Supplementary Estimate and to reassure the right hon. Gentleman that Mansfield is not the sole cause of the problem.
    Paragraph 12 of the report referred to the fact that no winter Supplementary Estimates were laid before the House. When the Secretary of State was questioned, he said that there was a general downward trend in the National Coal Board's deficit, that it was not until August that an upward trend appeared, and that the Department did not receive the figures for another five weeks. However, I presume that the Department had access to the chart that the Select Committee studied, which showed consistently that the estimated outturn of the whole of the board's finances was way above the original deficit grant limit. It would be to take us as a little more than credulous to suggest that we had no winter Supplementary Estimate because the Department was not clear what was happening. It is clear that the National Coal Board was clear about that, but with just three weeks of the financial year left we are asked to approve £290 million. That is extraordinary. However, that is not the end of the issue as, apart from the continuing problems of Mansfield, I should have thought that the House could have been slightly more reassured. In paragraph 15, the PAC draws attention to the fact that there is an additional £200 million. If we take out the £68 million for Mansfield, we are still left with an additional £132 million.
    As has been said, that is not all. There is one element missing in these figures—the cost of the wage offer if it
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    is accepted. That will not involve an additional £5 million or £10 million. We now find that one nationalised industry which operates through one Department of State is effectively asking the House for more than £0·5 billion in Supplementary Estimates. I know that the Committee was told that the extra £200 million, plus the wage increase, will be hidden away in next summer's Estimates. Were that expenditure to come under the control of the PAC and the Comptroller and Auditor General, it would not be acceptable. It would not be acceptable to any other Government accounting dimension that the House oversees, nor would it be acceptable to any of the private sector companies that are audited. Such laxity in forecasting is not acceptable to the House.
    I must ask my right hon. Friend the Minister of State—I am sorry that the Secretary of State is not with us—what he and his colleagues are doing to control the financial dimensions of this nationalised industry.
    When the Committee produced its report on electricity prices, I said that the 2 per cent. increase was a blatant example of the Government interfering in the pricing policy of a nationalised industry. I said that because last year the House tried to persuade the Government to extend the National Audit Act 1983 to cover the nationalised industries and we were told that if we did that we should be interfering in the nationalised industries and that we would not be able to do the job as well as the Monopolies and Mergers Commission or the then Secretary of State. The laxity in financial control cannot be acceptable to my right hon. Friend the Chancellor. We cannot believe that he will accept an extra £0·5 billion.
    I shall rest my case there and compensate, to some extent, for the length of the previous speech. Like the House, I should like to know when the Department believes that it will get its forecasting under control. Its present forecasting makes an utter mockery of our debate earlier this week on the public expenditure White Paper. It is a mockery to have Supplementary Estimates of £290 million with another £250 million hidden under the bed. I look forward to hearing what my right hon. Friend has to say.
    7.54 pm
    Mr. A. J. Beith: This is an alarming report and it has been recognised as such in all parts of the House. It is alarming because of what it reveals about the National Coal Board's ability to project its financial circumstances and about the Department of Energy's apparent lack of grasp about what is going on in the industry. It is not surprising that right hon. and hon. Members have referred to the fact that, since the Supplementary Estimates were produced, other major factors have come along, not least the announcement of a massive expansion of the redundancy scheme. I can see that there is obviously justification for that, but it is a substantial amount of expenditure, the cost of which has not yet been set out by the NCB or the Government.
    The right hon. Member for Mansfield (Mr. Concannon) dwelt on many aspects of that problem with expertise. The more I listened to him talking about subsidence problems the more convinced I became that the expansion of Ellington colliery is the best way ahead for the NCB, as subsidence problems do not occur under the sea as they do under built-up areas such as Mansfield. We are bound to feel sorry for areas that suffer a problem such as

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    Mansfield. The fact that the climate of pursuing claims has changed so dramatically in one community is bound to suggest that the same can happen in other places.
    The other key element of the report is the effects of the overtime ban. It was nonsense to claim that the ban was something that the board could live with or even benefit from. It is obvious—some attempt was made to explain it in the evidence that the chairman gave to the Energy Select Committee—that the ban will prove quite costly for the NCB, not least because it cannot continue to meet all the demands for coal, while at the same time it has surplus coal in other places. That points to a miscalculation by the NCB and shows that the overtime ban is not doing anyone any good. It is not stopping pit closures and it is not encouraging customers to take out long-term contracts for the use of coal. It is harming the NCB's finances and is an expression of real frustration among many people in the mining industry but it is difficult to see what benefit anyone, anywhere will get out of it.
    The announcements and revelations of the past few days have increased frustration in most parts of the industry and alarmed people in communities that will be badly hit. Many of them are areas where the general effects of recession and Government policy are most severe, such as the north-east of England. Collieries such as Bates in Blyth and Ashington are in areas where alternative opportunities are negligible. Hon. Members who represent County Durham can tell the same story. The major closures are projected in areas where there is no prospect of replacing jobs.
    There is, however, some prospect, at least in the Northumbrian coalfield that, by expansion in areas such as Ellington, we can create additional jobs. It is certainly possible that more investment in Ellington to take up the reserves under the sea northwards towards Amble can create new opportunities in that part of the Northumbrian coalfield. The industry must have investment to replace what is being taken away. We must have greater confidence that we are not removing capacity which will be needed quite soon. It is well within living memory that, during a Labour Government's term of office, 200 pits were closed and before very long we were importing coal because there was a clear under estimate of future demand for coal. The record of prediction by all of the energy industries is appalling, whether it be the coal industry, the nuclear industry or the electricity generation industry. All of their projections have been drastically in error, and miners are therefore bound to question the closure of pits where there are clearly mineable reserves.
    I do not believe that we shall get out of the circumstances that I have described or benefit in any way from strikes in the coalfields. At its meeting today the NUM executive stepped a little way back from the brink. It refrained from calling a national strike. It is clear, however, that we now have an atmosphere in which there will be area strikes. That will not encourage the taking out of long-term contracts for the use of coal. Moreover, it will lead to the House being presented with Supplementary Estimates not for the things that we desperately need, such as new investment and schemes to deal with the fact that miners are not where the best mineable coal is, but to deal with a mess in the NCB's finances and the types of problems to which the report refers. We should be
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    strengthening the industry's prospects by electricity generation in the coalfields, and industrial action in the coalfields will harm that.
    The true motive for much of the emphasis on the nuclear alternative in energy policy is not admitted often enough. The Northumberland coalfield in my constituency is engaged in a bitter and lengthy argument about the installation of nuclear power at the Druridge bay nuclear power station. People in that area are bound to wonder what assumptions that is based on. There is no doubt that in the back of the mind of the Government and, I suspect, of previous Governments is the belief that unless we invest heavily in nuclear power, we place our energy supplies too much in the hands of the leaders of the National Union of Mineworkers. That feeling should be dispelled. I fear that industrial action in the coalfields will only play into the hands of those who use that argument for an expansion of nuclear power, which the costing figures do not justify.
    We should be in the business of the promoting the use of coal. Some of the steps being encouraged by some leaders in the mining industry will have precisely the opposite effect. I do not want to see the House confronted with Supplementary Estimates to rescue the Coal Board from a financial mess. It should be considering estimates for investment in the coal industry, which will safeguard energy supplies and ensure mining in the most effective way in the best places.
    The sort of report that we have seen today and its description of the implications of the overtime ban is just the beginning of the problems that could face us, if an unrealistic attitude is taken about the future of the coal industry.
    8.2 pm
    Mr. Terence Higgins: It must seem the most natural thing in the world to hon. Members who were returned for the first time at the general election that we are debating a particular Estimate and considering whether it is justified. At school we were all taught that the power of the House of Commons stems from its control over money, which is how it exercises control over the Executive. However, with the exception of a one-day debate in the previous Parliament, after we had reformed our procedures, this is the first occasion since the Lord Chancellor's bathroom was debated last century that the House has had an opportunity of debating an individual Estimate. If there were any justification for the new procedure, it is the debate that we had earlier today and this debate. They show how necessary such debates are.
    What has been said gives grave cause for anxiety. I welcome the fact that no fewer than 25 hon. Members wished to speak. That shows the genuine demand of the House to consider individual Estimates. Two days ago we debated a White Paper covering a total cost for the current year of more than £120 billion. It is interesting that the House is now much fuller than it was when we debated the generality of public expenditure. It shows that we need to consider the matter in detail, and so far that has proved illuminating.
    The last thing I wish to do is to speak at great length, since many hon. Members wish to speak. Therefore, I shall make three points. During the debate on the public expenditure White Paper the right hon. Member for Chesterfield (Mr. Benn) accused me of making a managerial speech. I make no apology for that because

    1055
    there is a great deal to be said for looking at the actual figures. Those figures represent matters of great concern to our constituents.
    The right hon. Member for Mansfield (Mr. Concannon) said how important the matter was for his constituency. It is equally important for my constituency. It is however difficult for my constituents to comprehend what is meant by £120 billion, or even £290 million, which is covered by this Estimate. If we pass the Supplementary Estimate, we will levy on every man, woman and child an additional £5 approximately, in taxation. That means £500,000 from my constituents. Therefore, it is right that we should question whether the Estimate is justified.
    My second point relates to the White Paper on public expenditure. I shall ask Ministers two specific questions and, therefore, I hope that I shall have their attention. The report of the Treasury and Civil Service Committee cast considerable doubt on the figures in the White Paper, which showed for the present year a deficit on nationalised industries of £2·5 billion. The White Paper suggested that that deficit over the two to three-year planning period would come down to only £90 million. The Committee challenged that figure and cast doubts on its credibility.
    Will the Minister tell the House whether the amount of this Supplementary Estimate was included in the White Paper figures? Are the additional costs for future years, which have been so clearly revealed by the Select Committee's report and tonight's debate, also included? It is estimated that the deficit of nationalised industries at the end of the present period will be down to £90 million. If doubts are to be cast on the figures in the White Paper, as they have been this evening, the Chancellor of the Exchequer should read the report of the debate before he introduces his Budget on Tuesday. I do not want to put him off making tax reductions but he should consider the matter.
    My third point stems from what the right hon. Member for Mansfield said about his coal mining constituency. He suggested that subsidence costs should be borne by the individual pits, but I disagree with him totally. That cost should be attributed to the individual pit, taken into account in pricing policy and used when deciding whether a pit is economic. As that point was brought out clearly in the report and in tonight's debate, I hope that the Department and Mr. MacGregor in particular, and even the National Union of Mineworkers, will take that into account when considering whether a pit is justified in continuing to operate.
    The cost of keeping uneconomic pits in operation, which has gone on far too long, is a burden on the rest of the community. We need to know who is subsiding whom. My constituents are paying out more than £5 a time for the cost of providing concessionary coal to miners—[HON. MEMBERS: "Untaxed."]—untaxed, as my hon. Friends say. It is strange that my constituents, many of whom are poorer than the miners concerned, are paying to provide them with concessionary coal.
    For the first time in many years the House of Commons has an opportunity to look into these matters. There is overwhelming evidence that the cases we have debated tonight should be examined. I hope that they will receive the attention they deserve from Ministers.
    8.8 pm
    Mr. Kevin Barron: I was a member of the Select Committee on Energy and found it interesting
    1056
    to consider the Supplementary Estimate in the short time that we had to do so. It was interesting and enlightening to listen to the evidence given by the Secretary of State for Energy and the chairman of the National Coal Board. I am worried about the Estimate. I was in the industry for many years before I became a Member of Parliament, so I know about the difficulties of rationalisation in the coalfields.
    We should examine the apportionment of £290 million to the deficit grant, although it is not clearly defined. The subsidence allowance was originally estimated by the Coal Board to be £102 million for the year, but under Tonight's order the board will receive another £60 million, and a further £68 million is projected for the future. The Board has underestimated the subsidence damage compensation by more than 100 per cent. That is incredible.
    The chairman of the National Coal Board was asked whether he thought that the National Coal Board was being taken for a ride. He said that he was sure it was but that he did not know how to stop it. That was the man for whom the British taxpayer paid a £1·5 million transfer fee, and he tells us that he does not know how to stop misconduct in handling claims in the Mansfield area. If all those claims are valid because of damage by subsidence, he should not have had to answer such questions. We must get to the bottom of the problem in Mansfield, because if taxpayers' money is being paid for damage that has not occurred, someone is guilty of misconduct and should be called to order.
    The deficit grant includes £30 million towards the cost of the overtime ban. Paragraph 5 of the Select Committee report shows a table of the cost of the overtime ban. Mr. MacGregor has been telling us for a few months that the ban has caused no problems. However, the table shows that the board has lost 4·4 million tonnes of coal that could have been sold, although we have many stocks at present. The board has also lost 9·5 million tonnes of coal that could have been produced during that period. Even after the saving in wages was taken into account, the overtime ban still cost the National. Coal Board £135 million. Paragraph 15 of the Select Committee report states that another £105 million is likely to come from the summer Estimate. The total cost of the overtime ban to the British public will be £240 million.
    Who is to blame? My right hon. Friend the Member for Mansfield (Mr. Concannon) said that during questioning Mr. MacGregor said that he had been given, if not an open cheque book, a licence to pay for the overtime ban in the mining industry. I cannot blame one organisation or individual for the miners' overtime ban, but everyone will agree that it stems from one organisation and individual. On that basis, we must protect the British public from having to pay that £240 million.
    In The Times on 10 November 1983, Mr. MacGregor talked about the overtime ban that had then been continuing for only a few weeks, and said:
    "The overtime ban is having no effect whatsoever. We have stocks and supplies that will last until 1985."
    Only a few months later he tells us that we have lost £240 million. In a television interview on 11 November 1983, Mr. MacGregor said that there was so much surplus coal in the world that the overtime ban could last for 15 or 20 years before our coal stocks were used up.
    Those are incredible remarks from the chairman of a nationalised industry, who must have known then that the ban would cost the NCB millions of pounds, yet he and others were adamant that they could not get round a table

    1057
    and settle the dispute. This new style of management has come into the mining industry since Mr. MacGregor was appointed chairman of the board. It has altered the position of the industry extraordinarily. Since the industry was nationalised, we have never examined the concept that management is there to manage. At collieries we worked as teams and worked together on consultative committees. There has never been the dictatorial attitude that we have now. Thousands of my constituents are on strike because of the recent dictatorial attitude taken in the south Yorkshire coalfield, when some miners who had been promised, only a few months previously, that they would have five years' work at a colliery, were then told that production would cease on 6 April. They had no time to implement the colliery review procedure in the industry.
    In those circumstances, the attitude that has entered the industry since Mr. MacGregor became chairman is something that we cannot afford either in terms of running the industry or in terms of the cost of overtime bans perpetrated and carried on by the person who should be trying to get people round the table, bring peace back to the industry, and to assure people that they will have jobs in the future so that their families can live well.
    The sorry mess that has occurred since Mr. MacGregor became chairman was predicted months before he was appointed, and not by anyone from the miners' side. Sir Norman Siddall, who was chairman of the Coal Board in August of last year, said:
    "I would say that to return the industry to profitability within three years is a fairly massive task."
    Mr. MacGregor was brought into the industry to do exactly that. His predecessor knew that it would be an impossible task without creating much upheaval in the industry, but in six months we have seen the upheaval that has been created and the cost to the British public.
    Sir Norman Siddall also said, after warning Mr. MacGregor quietly that a softly, softly approach to pit closures was necessary, that he had done so himself. He said:
    "I do not think he is the sort of man that would make a facile assumption that he can import his strategy from BSC to coal mining. The situation of the two industries is entirely different."
    Sir Norman Siddall recognised the problem. He was not the president of the NUM but a man who had worked his way up from the bottom in the coal industry and who knew all about it. He knew that if the BSC measures were introduced into coal mining they would create chaos. They have created chaos, and £30 million of the money that we are discussing tonight will be used to continue the chaos created because the Government gave Mr. MacGregor a licence to continue the overtime ban for as long as he thinks necessary.
    The Chancellor of the Exchequer should consider withdrawing what he said on 28 March 1983, when he was Secretary of State for Energy, about Mr. MacGregor's appointment:
    "I am confident that securing the services of Mr. MacGregor as chairman of the National Coal Board will prove excellent value for money for the taxpayer, the industry and the nation."—[Official Report, 28 March 1983; Vol. 40, c. 20.]
    The Chancellor should sit down and read that statement that he made nearly twelve months ago, and perhaps when he has thought about it he will withdraw it.
    Mr. Tony Faye11: Does the hon. Gentleman agree that the coal industry was making vast
    1058
    losses long before Mr. MacGregor was appointed? Thank goodness he has been appointed, because he might bring some sense to the industry.
    Mr. Barron: If the hon. Gentleman believes that it is sensible to add another £240 million to the already terrible economic consequences of trying to get the industry back on its feet, he is welcome to do so. I do not believe that it is sensible. Ian MacGregor has played as big a part in the overtime ban and in the dictatorial attitude of the NCB than has any person who works in the industry.
    We need a new plan for coal. We need the Government—
    Mr. Neil Hamilton: We need to implement the previous one.
    Mr. Barron: Yes, but we need the Government, the unions and the National Coal Board, to sit down together again and to consider a strategy that will give people in the industry confidence that they will still have a job in six or twelve months' or even in 10 years'. Areas in which there is disagreement should be considered with a more conciliatory attitude than is shown at present. If that does not happen soon, Mr. MacGregor should be sacked as the chairman of the National Coal Board. He will be leaving the industry in one or two years' time, and he can be of no benefit to the long-term needs of British miners or the British people in their quest for coal. The Government should consider removing Ian MacGregor and replacing him with someone who will sit down with the miners and ensure that we have a mining industry on which Britain will once again rely when we get out of the recession.
    Finally, I wish to ask the Minister a question which was not asked in the Select Committee. It relates to where these deficit grants are going, and specifically to compensation for industrial deafness in the British coal mining industry. I am sure that the Minister knows that at the present time the National Coal Board has paid out about £350,000 in out-of-court settlements to people suffering from industrial deafness—about 750 miners in all. One estimate is that there could be in the region of 37,000 miners out of the total of 200,000 claiming industrial deafness compensation at the present time. This could mean an immediate payment of £60 million for that compensation, and in the next 10 years perhaps another £50 million. I therefore ask the Minister to tell us, when he is winding up the debate on these Supplementary Estimates tonight, if he knows of any provision within the deficit grant that is being put forward for compensation for industrial deafness.
    8.21 pm
    Mr. Peter Rost: The Committee has examined a huge overrun in the budget of the coal industry. The enormous support budgeted for has not proved adequate. Moreover, we are told that for the current financial year another £200 million at least of additional subsidy is likely to be required. Nobody in the House can regard that as satisfactory. The total amount of taxpayers' funds going into the coal industry in the current year, therefore, is likely to exceed £1,100 million, and that does not include capital investment. With that, it is likely to be £1·6 billion.
    We have heard about the subsidies and we know that much of the money is going to pay for redundancies and pit closures. I do not think that the Committee can be satisfied and I hope that hon. Members will not be

    1059
    satisfied, because what this investigation shows, surely, is that the huge cost of maintaining the coal industry has not resulted in that industry's putting its house in order. We have a right to demand, in the taxpayer's interest, in the national interest, that a greater effort is now made to do just that.
    The whole nation—with one or two exceptions among NUM leaders—realises that coal can no longer be immune from the facts of life as we have had to accept them in this country in recent years. The industry must now come forward urgently with a medium-term corporate strategy, as we have recommended in our report—a tight timetable, a tough timetable, which will start to take the burden off the taxpayer and put the industry's house in order.
    Secondly, it is time that the Government played a firmer role in ensuring that the timetable is achieved. Let us end the drift and the political cowardice of all Governments in recent decades, who have been afraid to face up to the coal industry. It will be painful, but other industries in both the private and the public sector have had to face this. The essential adjustment is necessary if coal and coal miners are to have any secure future. Coal has to compete in the energy market and it is time everybody realised it. Of course there is a price to pay for the strategic importance of the coal industry, the advantages of self-sufficiency in energy. Of course we need coal and shall need it even more in the future. But we do not need coal at any price. We must consider what the economy can stand, what the taxpayer can afford, the effect of high coal prices on industry and its competitiveness and on the price of electricity and the hardship that this causes to consumers as a whole.
    Coal has a prosperous future, but only if the industry accepts the realities of modernisation. There is tremendous potential in the immediate term in converting from oil to coal. There is huge potential in starting to meet the problems of fuel poverty in this country. Millions of people suffer from inadequate heating because we have not developed more efficient combined heat and power schemes in district heating, which would of course provide a market for coal. There is an export potential if we can only get the costs of the industry right, as we know can be done with the new investment balanced by closing down the old high-cost coalfields.
    Mr. Jack Thompson rose—
    Mr. Rost: I am trying to be brief so that other hon. Members can come in, so I hope that the hon. Gentleman will forgive me if I do not give way.
    Unless the industry accepts that there must be a limit to what the taxpayer can be expected to provide, that the coal industry must now make an effort to put its house in order, and unless the Government take a grip and ensure that this is done, there will not be a long-term future for the coal industry. I believe that this necessity is now accepted by the Government, and I hope that my hon. Friend will confirm that the Government are not best pleased with these huge overruns and will in future monitor the progress of the coal industry more effectively than in the past.
    The Government are right to give support to the modernisation programme, redundancies and closures. They are right to finance the new investment. But the two must go hand in hand. I believe that management in the
    1060
    coal industry needs a good shake-up too and I am pleased that the new chairman is to try to achieve that. Too often in my area in the east midlands, Derbyshire, I am told by miners that there are too many chiefs and not enough Indians. I get complaints about the ineffectiveness of the bonus scheme—it is not sharp enough and does not benefit sufficiently those who are doing the productive work. Rather, it benefits those who are not. That is a management problem that must be tackled.
    I also believe that the Government have a responsibility to sharpen up the industry and make it more efficient by ensuring that there is more competition from outside. Let us see some privatisation at the edges; let us encourage licensed opencast operators instead of trying to clobber them; let us encourage more private deep mine operations. Why should companies like BP have to mine abroad and be prohibited from doing so in this country when we could get genuine private sector investment in partnership with the nationalised industry to develop the new fields and supplement the capital that taxpayers are having to put in, which the Coal Board has failed to provide because it has not had any positive cash flow?
    Most miners understand this. They know the facts of life, especially in the area of the east midlands. Unfortunately, some of the militant NUM leaders who are leading the industry to destruction refuse to accept this. Instead of co-operating to try to make the industry more competitive, improve sales and secure the future, Arthur Scargill and one or two others are trying to wreck the industry. The huge sums that are being invested could be providing more new jobs and a future for the coal industry—but only if the hopeless, loss-making, old, dangerous and dirty pits are now closed down more speedily and the subsidies reallocated to provide a more economic industry by building on the new low-cost coalfields.
    If the president of the NUM was really concerned about defending miners' interests, instead of trying to ruin their future, he would encourage miners to leave those dirty, dangerous old pits and encourage the industry to modernise. If Arthur Scargill was really concerned he would not be trying to frog-march miners over the precipice to their own destruction, as he is doing. This will surely lead to more closures, more lost markets for coal and less investment in new mines. Nobody can benefit from the overtime ban, and certainly nobody will benefit from any strike.
    The president of the NUM, like all Marxists, is scared of democracy. That is unacceptable and shameful. He does not have the guts to call a ballot, which his members in the east midlands, Derbyshire and Nottinghamshire demand. Why? Because he lost the last three ballots that he called. He prefers deliberately to cheat on the NUM rules, abuse his position and use the miners as sacrificial pawns to pursue his personal political ambitions. If he really believes that miners want to ruin their own future, why is he afraid to put his disastrous confrontation policies to the test in a proper secret ballot? He should overcome his prejudices and cowardice, call off this headlong push over the precipice and call an immediate ballot. Indeed, he is so out of touch with the aspirations of the majority of his members, who know that the industry has a future if he will only allow it, that it is time that he put his own job on the line and sought a new vote of confidence by standing for re-election.
    The disastrous leadership in the NUM has led to the present aggravation of the problems. The Government

    1061
    should support the new management to put the industry in order. The Government have a role to play, but we must ensure that we get better value for the money that taxpayers are putting in—a medium-term strategy and a tough timetable that the Government must see is met.
    I hope that we shall hear that message from the Government Front Bench tonight. The Government are right to back the industry, but only provided that we now get results. I hope, too, that the NUM leadership will realise that there is a limit to taxpayers' generosity and that politically motivated adversarial militancy will wreck the jobs in the industry, instead of securing a promising future for coal and making a contribution to that vital part of our economy. That would be a real disaster for which all miners would pay a heavy price.
    8.32 pm
    Mr. Alexander Eadie: It is rich for the hon. Member for Erewash (Mr. Rost) to talk about democracy in the mining industry, when the chairman of the Conservative party is appointed, not elected.
    In answer to the hon. Member for Havant (Mr. Lloyd), who opened the debate, I take no exception to the fact that he brought in the new scheme on redundancy pay. He would expect me to say that I am glad when—in mining language — anyone who is shoved down the road is treated generously when it comes to redundancy pay. Let me point out that the average age in the mining industry is 36·7. So we are not talking about 50-year-olds—possibly they will be 30-year-olds—who will be sent down the road. Hon. Members should recognise that. May I say, in passing, that if money is to be made available, we should use it on an early retirement scheme in the mining industry. Such a scheme is long overdue, as I am sure the Minister will agree.
    I have just returned from Sheffield. We are debating this report against the background of a serious situation in the coal industry. As hon. Members may have heard in the news, Yorkshire and Scotland will be on official strike, commencing next week. I was at the meeting. I would not call myself a prophet, but I predict that many other areas will be on strike before next week is out. It has been said that there has been a violation of the rules, but it has all been done according to the rule. It was done according to rule 41. Areas are autonomous, and we have democracy in the NUM. It is for areas to decide. Under rule 41, the NUM, which is a confederation of area unions, will decide what policy to operate.
    Let no hon. Member say that the miners will be on their own in the strike that is developing. They will not. If the strike develops, the triple alliance will be triggered. Let us not imagine that we shall be able to go about our business as if nothing was happening. The situation is serious, although I do not like to have to say that. All my life I have stood for conciliation—indeed, I have been criticised for it — not confrontation. We debate this Select Committee report against the background of that serious situation.
    Mr. Favell rose—
    Mr. Eadie: I apologise to the hon. Gentleman, but I shall not give way.
    We are talking about the industry contracting. I am sure that the Chairman of the Select Committee and the
    1062
    Minister who will be winding up our debate will agree that this year the industry has been contracting. We have had pit closures. Twenty-three pits have closed this year, and about 21,000 men have been made redundant as a result. Hon. Gentlemen say that the industry should contract and that all dying pits should go out of existence, but I can tell them that it is happening already. The House should know what has happened this year. The House should know that 21,000 men have gone down the road. So no one should say that nothing is happening in the mining industry. The industry has, of course, been contracting.
    The report dealing with the closure programme talks of the need for the industry to contract. I hope the House will accept now that the industry has been contracting. We are in a debating chamber and we are entitled to debate the issues. If we are to talk about personalities, it is not Arthur Scargill who is on the rack, according to the Select Committee, but Mr. MacGregor. We warned the Government. If our advice had been taken, Mr. MacGregor would never have been made the chairman of the National Coal Board. Mr. MacGregor has no credibility in the report, and he has no credibility among the miners or the people of this country. It was a disastrous appointment.
    I want to develop what I said at the start of my remarks about the serious situation that faces us. Mr. MacGregor must bear a big responsibility for that situation. The style of management that he has perpetuated in the mining industry has been responsible for the overtime ban. I draw a distinction between managers and people in Hobart house, such as Mr. MacGregor, who know nothing about mining engineering. We have some of the finest engineers in the world. I object to the fact that our mining engineers are not being allowed to manage our industry because of people like MacGregor being appointed to carry out the board's policies.
    When the Secretary of State gave evidence to the Committee, there was talk, as the hon. Member for Erewash will agree, about how the industry should be developed and how investment could be made in terms of the contraction of the industry. When the Secretary of State gave evidence, I noticed that there was a lot of talk about the Vale of Belvoir. One of the reasons for bringing in the Vale of Belvoir was that money and costs were being discussed. If the Committee had examined the whole issue of the Vale of Belvoir, it would have realised that the Vale of Belvoir, even before it started, was a millstone round the neck of the NCB. Rather than one pit, it should have been three pits. Since we are discussing money, millions of pounds were spent on a feasibility study of the Vale of Belvoir. If the House, in considering the report of the Committee of Public Accounts, is worried about how money is being spent, it is as well to know that, in the case of the Vale of Belvoir, instead of one pit there should have been three.
    I am bound to say—and I have said this in many other debates on the coal industry — that the Government's record in relation to new investments and new pits is not good. The Government have not sunk one new pit since 1979. They talk about sinking a pit at the Vale of Belvoir. The Secretary of State has sometimes said in the House that he was associated with Selby. He was indeed associated with Selby, yet it was a Labour Government who acted and were responsible for the Selby sinking. It is as well for the House of Commons to know these facts.

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    Some comment has been made about the need to get rid of old capacity. I used always to put it another way. I said that one should talk not about closures, but about a replacement policy. The House should not be deceived into thinking that the MacGregor policy—the policy of the NCB—is to get rid of old Victorian relics.
    In Scotland, I have called for a public inquiry into the administration and management of the NCB. I have done that because there are two pits that are not Victorian relics. The first is Bogside mine. I have documentary evidence—I will give this to the Minister—that proves that the National Coal Board deliberately let the mine be flooded in order that it could be closed.
    My hon. Friend the Member for Clackmannan (Mr. O'Neill) has Polmaise colliery in his constituency. That is not a Victorian relic; it is a comparatively new mine. A sum of £15 million was spent on going for reserves. The colliery was not producing any coal. Under an edict from MacGregor and the area director of the NCB, based on a geological report, it was decided to close Polmaise. I can give the Minister the geological report showing that it is untrue. The £15 million spent on Polmaise is an indictment of the National Coal Board and of the Government if they allow the taxpayers' money to go down the drain, with the result that hundreds of miners in the area are out of work. To some extent, that embarrasses the local authority as well, because it sterilised the ground in the area for the development to go ahead. I know that the Minister is aware of these facts.
    I should like to say much more in the debate. In these mining debates, some of us do still have the coal dust in our lungs—
    Mr. Richard Hickmet: Rubbish. Why does the hon. Gentleman not tell us about the effect of high coal costs on the steel industry?
    Mr. Eadie: I worked for years in the industry, and I am taking no snubs from any hon. Gentleman who can make such a remark.
    I do not like having to make some of the remarks that I have made, because I believe in the greatness of our industry and of the people who work in it. Those who work in the industry are among the best people in British industry. I wonder whether we have reached the situation—I have never before seen such a volatile situation not only in Scotland, but throughout the coalfields—where conciliation has gone out of the window. Will any hon. Gentleman stand up for conciliation and consultation before the country is plunged into a national strike that will not only do the miners a great deal of harm, but injure the nation?
    Several hon. Members rose—
    Mr. Deputy Speaker (Mr. Paul Dean): Order. The winding-up speeches are expected to begin at 9.30 pm. Many hon. Members still wish to speak in the debate.
    8.45 pm
    Mr. Richard Alexander: The need for the Supplementary Estimate is a symbol of the problem that faces the coal industry and those in it, the problem of uncertainty. The sum under discussion is, of course, a considerable one. It is a sum that would transform the prospects for kidney patients in the country and for hospital building, so it is an earnest of the commitment that the Government have to the coal industry. Like marriage,
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    it is a commitment that ought to be entered into not lightly or inadvisedly but with full awareness of what is being done. The Estimate will uprate the redundancy support that we are giving to the coal industry, support that has been operating for some time. It complements the already high investment that has been made in the industry by successive Governments, not least the Conservative Government since 1979. Since 1974, over £7,000 million of investment has been made in the coal industry. When we hear the comments from some Opposition Members about the Conservative attitude towards the coal industry, I think that statistic could well be borne in mine. Since 1979, £2 million a day has been invested in the coal industry, so our commitment is there for all to see.
    However, it is the future that is worrying for the tax-payer and for those who work in the industry, for those who use it and for the many young men who have committed their future lives to working in the industry. It is for them that we as a Government ought to spell out our commitment to the industry and how we see the future. It is for them that I believe that "Plan for Coal 1974" ought to be bought up to date. "Plan for Coal 1974" cannot be strictly relevant in 1984. The Committee of Public Accounts asks for a medium-term strategy. I would rather see it called Plan for Coal 1984. This would spell out not only the commitment of the NCB and the Government to the industry, but also the structure of pits, the commitment of manpower and the levels of involvement by the Government to be forecast over the next 10 years.
    Miners are generally very reasonable people. If one tells them the truth, where their future will lie in the industry, I believe that they will respond. The Supplementary Estimates give the Minister the opportunity to state that commitment. There is obviously a natural anxiety about our future — politicians, opticians, solicitors and coal miners are all concerned: "Will I survive, what will my future be?" It is quite natural to ask this question.
    The very proper contraction of the coal mining industry that has taken place over the years, of which the Supplementary Estimate is a natural part, feeds this anxiety.
    The antics of Arthur Scargill stir anxiety further. If that gentleman would talk less about pits and jobs and a little more about the mining industry as a whole, we might get the more constructive dialogue for which Labour Members have been calling. People are asking the Government and the NCB to spell out for them where they stand.
    I believe that my right hon. Friend the Secretary of State does see a thriving, viable future for Britain's coal industry. He should continue to spell that out and tell us what the plan for coal is over the next 10 years. Tell the industry that our pits must be profitable if they are to remain open. If they are not profitable, cheaper energy will come in and jobs will continue to be at risk.
    An article in The Mail on Sunday on 12 February said, to my astonishment and regret, that that decision may already have been taken. It said that the CEGB had decided to run down all its coal-fired power stations, to do no more maintenance on them, and that, in the words of one CEGB official,
    "Britain's coal industry had had it."
    I invite my hon. Friend to repudiate those words when he replies. I invite him to repudiate the conclusion reached by the author of the article, Mr. John Rawlings, when he says

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    "The … progressive run down of the National Coal Board now seems inevitable".
    No Conservative Member is asking that we continue to subsidise unprofitable pits. No one is asking that we should not have competitive prices. No one is asking that we should not have alternative sources of fuel in Britain. But many Conservative Members as well as Labour Members are asking for a continuing commitment to an important natural resource in Britain and an indication of the likely proportion over the years of future energy from coal, from nuclear power, and from abroad.
    The threat of industrial action is incompatible with confidence in the industry. But no one wants to have foreign control over our power supplies. That would be unacceptable too. If the industry shows, not least at this time where there is anxiety in the industry and in the country, that it is willing to produce coal at a profit which people are willing to buy at home and abroad, which can be sold at home and abroad, it deserves our support. It deserves this Supplementary Estimate and I am confident that my right hon. and hon. Friends will support it.
    8.53 pm
    Mr. Peter Hardy: The hon. Member for Newark (Mr. Alexander) expressed concern about the coal industry, as I think have all hon. Members since the debate began. It is obviously right that there should be concern because of the large sums of money about which the House is talking—they seem likely to increase as a result of the large figures that have been talked about today—but it is a concern about the industry which does not seem to have been taken deeply enough.
    People are blaming Mr. Scargill, or others in the mining unions. Some feel that Mr. MacGregor might have played an important part, but the basic problem is that the modern mining industry in Britain is geared to meet a large part of the energy needs of Britain when it is in a healthy and economic condition. But Britain is not in a healthy and economic condition and because of that the energy industries are in difficulty. It is no good blaming the miners or their leaders for the fact that the industrial devastation which has taken place in Britain in the past three or four years has had an enormous effect upon the coal industry. My constituency has seen the most successful steel plant in the world brought to short-time working and the amount of electricity used in our special steels industry, which used to consume as much as half a dozen cities when it was working properly, has been brought down to a low level of activity.
    Mr. Hickmet rose—
    Mr. Hardy: No, I shall not give way. Let the hon. Gentleman go and look after his hotels.
    Mr. Hickmet rose—
    Mr. Deputy Speaker: Order. It is clear that the hon. Member is not giving way.
    Mr. Hardy: I shall not give way. The hon. Gentleman came in in a very excited state three quarters of the way through the debate, yet he expects me to restrict my remarks when I have very little time to speak about matters of enormous importance in my constituency. I shall have to curtail my remarks now because I promised to speak for less than 10 minutes.
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    I have in my house a plan of what we call the Fitzwilliam pits in the western half of my constituency. They have all closed. Most of them closed 100 years ago and the last one closed in December. The 100 or so men from that pit, Elsecar, which had been carefully supported and sustained by my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay), who once worked there, were advised that they could transfer to Cortonwood, and they did so between October 1983 and January 1984. They were told by the area director on 1 March that Cortonwood, which produces the finest quality coal in south Yorkshire—a pit with an enormously high reputation for stability, common sense and superb industrial relations — that he expected it to cease production on 6 April. That is no way to run an industry. That is no way to reward men who have demonstrated the stability, common sense, and co-operation at all levels at the colliery that we have seen year in and year out. I know the colliery well.
    A few miles away is the Manvers colliery where my father worked and which I represented on my local authority. We are told that it must start doing well by June. Three miles away, Kilnhurst colliery has been told that it must show a marked recovery within a short time. Is it any wonder when those demands are made at a time of industrial fragility, at a time of dispute, concern and anxiety, that the situation is explosive? The situation in south Yorkshire is serious. The Minister will understand why I am going to refer to the Secretary of State. In south Yorkshire we have a particular difficulty. In 1973 the Secretary of State was one of those who called on Britain to be geared to produce over 30 million tonnes of steel. The coal industry in south Yorkshire invested heavily to ensure that it could meet the coal market for 30 million tonnes of steel production and more. Now industrial demand for metallurgical quality coal has diminished.
    The overheads on south Yorkshire pits are still very large. They cannot make a profit while they bear that burden. Now we are told that the south Yorkshire pits must cut production by half a million tonnes in the next 12 months. That merely means that the burden will be borne by a smaller volume of coal. That is the economics of madmen. Moreover it is imposed on a fragile human situation. I propose to ask the Minister—and I hope that he will consider the request very carefully—not to allow the position to deteriorate. The Secretary of State himself must intervene in the coal industry. It is obvious that Mr. MacGregor cannot command the absolute confidence of the House. Hon. Members on both sides of the House have made this point already. The Secretary of State—
    Mr. Favell: They do not all feel that way. What about Mr. Scargill? He does not have the confidence of Members on both sides. Should he resign?
    Mr. Hardy: I wish the hon. Member would go back to his hotels, or to whichever benighted constituency has the misfortune to be his. I am making a point of real importance. I hope that I can make it without the hon. Member's infantile interventions.
    I ask the Minister to convey to the Secretary of State the urgent need for him to bring both sides of the industry together to reduce the temperature which is now rising rapidly. I shall be addressing the men of Cortonwood tomorrow night. I have remarked already on their common sense and stability, but their mood will be one which is

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    developing very widely in the industry and I do not believe that it is in the national interest for that mood to develop further.
    I accept and the Minister knows that the Conservative party has few friends in south Yorkshire. However, it has a responsibility to the nation as a whole. It cannot simply serve the interests of those who may be pleased with the hon. Member for whatever constituency he represents. It must govern the country in the national interest. It must recognise that the coal industy cannot prosper unless the economy is healthy. It must recognise that constituencies such as mine can no longer face the prospect of 40 or 50 per cent. unemployment. I cannot face the thought of looking at my constituency as I now must and seeing that last year 85 per cent. of school leavers there were unable to find jobs and that next year the figure will rise to 90 per cent. and to 95 per cent. in the following year.
    What sort of society does the Minister think we ought to put up with? The Government have a responsibility to the nation and it is about time that they exercised it.
    9.1 pm
    Mr. David Ashby: We seem in this debate to have been placing a great deal of blame on Mr. Ian MacGregor, a man who has only just taken up his post as chairman of the National Coal Board. he has scarcely had a chance to get into the job, yet we are blaming him already for estimates drawn up and actions taken years before. What we are seeing today is the outcome of decisions taken some considerable time ago.
    I wonder whether some Opposition Members want a strong and viable coal industry. What do they really want out of it? If there is one person who is responsible for many of the problems besetting the coal industry today it is Mr. Scargill, the leader of the National Union of Mineworkers, who has made a god out of confrontation. For an industry to ask, as the coal industry is doing today, for an extra £289 million of grant when it is already receiving £624 million per annum in grants shows that there is something gravely wrong with that industry and proves how right we are to have appointed someone of the calibre of Mr. MacGregor. It also shows the size of the task facing him. Already £11 for every man, woman and child in this country is paid in grant to the industry. Now it wants an extra £5 for every man, woman and child, an increase of almost 50 per cent. That is not the end of it; there is more to come.
    The industry asks for the money that has already been spent. It is shutting the stable door after the horse has bolted. We are given no opportunity to suggest areas for savings. We as taxpayers are simply left with the bill and I and most other taxpayers resent that very much. If the Coal Board had any decent form of cost or management control, we would never be faced with this extra demand. The effects of the Coal Industry Act 1983, which lowered the eligibility age for redundancy from 55 to 50, could have been foreseen. The likely take-up of that redundancy scheme should not have been so underestimated. I could understand the estimate being out by 5 per cent., 10 per cent, or even 15 per cent. To be 100 per cent. out is ridiculous.
    The redundancy scheme is good for the mining industry because it gives miners redundancy terms that are superior to those available to employees in any other industry. Many of my non-miner constituents, taxpayers for many years, would love those terms. Many of them, being
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    closely associated with mining — delivery contractors and others involved in the industry on the periphery, not employed by the NCB—are losing their jobs because of the decline of the industry in Leicestershire. They would love the redundancy terms that the miners have. There appears to be one law for the new super-privileged in the nationalised industries and another for the poor underprivileged and over-taxed people who create the wealth.
    Mr. Jack Thompson rose—
    Mr. Ashby: No, I will riot give way.
    Having asked for such vast sums of money and having created super terms for the industry, they are not interested in having an industry that will be efficient and slimmed down. They are demanding that any measures designed to improve the industry should not be taken. As lemmings rush over the cliff edge, so they are going on strike when the industry is on its knees. They want to take it into the grave. We find that attitude coming from their leader. Mr. Scargill believes in confrontation time and again.
    Mr. Kevin Barron rose—
    Mr. Ashby: I fear this sort of situation arising next year and the year after. Some of the NCB's capital proposals leave me in grave doubt about the future financial viability of the schemes. I urge the Minister to consider carefully the proposed investment in the Phurnacite plant on the Aberavon site. I understand that £30 million is to be invested there to produce a new smokeless fuel called Ancit. It is proposed that the site should produce 80,000 tonnes per annum. On capital expenditure alone, it will cost £96·50 per tonne. That same fuel can be bought in Germany for £99 per tonne.
    Is it right that we should make that sort of investment on that plant when it can be bought in that way? One cannot buy it in this country at that price because of the muscle of the NCB, through its subsidiary, National Smokeless Fuels, which in a most improper way stopped a constituent of mine importing that type of coal. My constituent had already purchased for £99 per tonne, had chartered a vessel and was trying to load that vessel. National Smokeless Fuels sent its people to Germany arid stopped the loading. It told my constituent that it would buy at £102 per tonne and that he would have to buy it back from it at £105. In fact, he had intended to sell the coal to retailers for £105 per tonne. But no, National Smokeless Fuels says that he must sell it at £109·30 per tonne. That is why we have high fuel costs. Coal can be bought more cheaply on the continent but people are not permitted to purchase there because of the industrial muscle of a nationalised industry that is using taxpayers' and ratepayers' money to support it.
    Mr. Hickmet: Is my hon. Friend aware that the chairman of the Central Electricity Generating Board, Stir Walter Marshall, stated only last week that if he were free to purchase coal from overseas it would reduce his coal costs by 25 per cent. and the cost of electricity by 15 per cent.? Is my hon. Friend aware of the tremendous effect that would have on my constituency, which is a major steel producer?
    Mr. Ashby: Those figures are right. I have spoken to Sir Walter Marshall and I have heard those figures from his lips. I hope that Mr. MacGregor will be able, in due course, with his new management and improvements to

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    the National Coal Board to produce coal at a price competitive with coal produced abroad. We must give him a chance.
    Mr. Allen McKay rose—
    Mr. Ashby: I am not giving way.
    Subsidence has been referred to in the report. The suggestion has been made that those seeking compensation for the effects of coal mining upon their property are doing something that is immoral or is certainly not in the public interest. Most people in mining and steel know that the Coal Board has detailed plans for years ahead for the areas it intends to mine. It is not difficult to superimpose those plans upon a ground plan to see what buildings the mining will affect. Where normal mining takes place under buildings, subsidence can be expected to follow. Surely that can be measured and gauged by the National Coal Board when it is working upon estimates for future years.
    If the National Coal Board thinks, as seems to be suggested, that it can dig under somebody's home or factory and that the victim of the resultant damage should agree to the repairs without professional advice, it must be out of its mind. This is a sophisticated society where people can and should get proper advice before agreeing to something as important as major repairs to their homes. What also surprises me about the report is that the National Coal Board does not seem to have heard of the escalating cost of house repairs.
    The report relates a sad tale and, as I have said, we are left with no choice. I end as I began, by repeating that we have a new chairman who has had a baptism of fire. The problems that he faces must be crystal-clear to him. The immensity of his task means that he merits the support of all hon. Members and of the miners, who must surely want a good and healthy industry.
    9.14 pm
    Mr. Jack Dormand: The hon. Member for Leicestershire, North-West (Mr. Ashby) does no service to himself or to the House by giving the impression that he intends to make a short speech, and then refusing three interventions from my hon. Friends, giving way to one of his hon. Friends, and speaking for 13 minutes. I hope that he will bear that in mind in the future. I had intended to go into detail on figures, but in view of the time I shall be brief.
    If there was every any doubt in anyone's mind about the National Coal Board's policy on the coal industry, it must now be completely dispelled. The chairman's single-minded aim can be summed up in one word—profit. My hon. Friends and I are not opposed in principle to profit, but there was never a more inappropriate time to call for profit from a publicly owned industry.
    I repeat what I and other hon. Members have said in this debate and previously: Mr. MacGregor's appointment was the Prime Minister's most provocative action since she came to power in 1979. Hon. Members have all directed their remarks to Mr. MacGregor. I hold no brief for the chairman of the National Coal Board. The initial mistake was made by the Prime Minister, who knew exactly what she was doing when the appointment was made. That act, more than any other, has brought the industry to what must be recognised as a crisis.
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    This week, the chairman of the NCB said that he must cut production by 4 million tonnes to balance supply and demand. It is not possible in present circumstances to be so precise in forecasting demand, especially in relation to energy requirements. By common consent, that is notoriously difficult to do. I presume that the upturn in the economy, which the Government tell us has now begun—if I remember rightly, it has now begun seven times—will have a substantial effect on the coal industry.
    The Government's and Mr. MacGregor's policy of profit above everything else pays no heed to the devastation caused to the coal mining communities by pit closures. The chairman of the Coal Board said this week in his announcement that there will be 15,000 job losses; the president of the National Union of Mineworkers said there will be 25,000 job losses. Whatever the figure, it can be doubled, and perhaps even trebled, when applied to the tradesmen, business men, professional people and virtually everyone who lives and works in a mining community. The Government have consistently refused to recognise that fact, and publicly have never made any statement that that is the effect of pit closures.
    The Government and the NCB point to redundancy payments. Miners deserve every penny they get, because of the nature of coal mining, and I believe that a Conservative Member was good enough to say that. We are worried about retaining jobs not only for today's miners but for future generations. Today the announcement had been made about extending the redundancy scheme by reducing to 21 the age at which redundancy payment is made and paying £1,000 for each year worked in the industry. That measure has been produced like a white rabbit out of a conjuror's hat. Because of that redundancy sum of £1,000 and the same amount which, a couple of weeks ago, was paid to GCHQ employees to forgo their basic human right to belong to a trade union, the Government will be known in history as the £1,000 Government.
    It is not for me to say whether the NUM should accept that extension of the scheme. The policies of the Coal Board and the Government, which are profoundly mistaken, have given rise to these conditions. It is of the utmost significance that Mr. MacGregor is refusing to deny or confirm that there will be compulsory redundancies because of his announcement this week.
    I direct two questions to the Under-Secretary of State which could be directed also to the Chairman of the Select Committee on Energy, whose report we are debating. They may wish to consider these points. Will the Under-Secretary of State confirm that the Government are still committed to their promises in 1980 at the Venice summit of OECD leaders? The Government were vociferous then in proclaiming that there would be massive investments in and extensions of the coal industry. The main reason for the conference was to free economies from excessive dependence on oil. I believe that the Under-Secretary of State and the House will agree that there is no dispute about our limited oil reserves, so it is economic lunacy to run down our coal industry. The Government often boast about their adherence to international agreements. I hope that the Under-Secretary of State will give an unequivocal answer to my question.
    What will the Government do to create a common coal policy on the lines of a common agricultural policy? The CAP was created in the name of the vital need of the EEC

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    to be self-sufficient in food. If the principle of self-sufficiency in agriculture is here to stay — whatever criticisms we may have, we would agree that, and I see the Under-Secretary nodding his head—why should it not be extended to other, equally vital, commodities? Self-sufficiency in coal would not only be logical but would be a cast-iron insurance against the vagaries of the various energy supplies.
    One commentator, in The Guardian, said of such a step that the effect on Britain's coal industry would be "revolutionary". What the Prime Minister and her Cabinet defend in the way of preference and the protection of farmers they condemn out of hand when it comes to the British coal industry. I shall not repeat the substantially greater subsidies measured by each tonne of coal produced in other EEC countries. However, they provide a strong case for a common coal policy. Such a policy would be good for Britain, good for Europe, and in the longer term good for all coal-producing countries.
    In my constituency, 12,000 people are employed by the NCB and many more are directly or indirectly dependent on the Coal Board. It represents more than 30 per cent. of the district work force. Our rate of unemployment is already 16·2 per cent. and I shudder to think what would happen if there were further pit closures. Such circumstances as these are repeated over other coalfields throughout the country. If the board persists in its policies, it must take full responsibility for the consequences, as must the Government. I hope that even at this late stage there will be a realisation that the butchery of the industry cannot continue and that a new start can be made to bring bout a more civilised approach to the industry's many problems.
    9.22 pm
    Mr. Spencer Batiste: I share the concern of many of those who have spoken about this large Supplementary Estimate coming in so late in the year, and I, too, congratulate the Select Committee on an informative report, which has enabled us to have this debate in what might be one of the most critical weeks in the life of the coal mining industry. I should declare an interest at once as a director of a company that undertakes advanced technology research into industries, including mining, and I have a strong constituency interest in mining in that the area headquarters for the NCB in north Yorkshire is at Allerton Bywater in my constituency and many of my constituents work in the local pits.
    Earlier this week, the hon. Member for Barrow and Furness (Mr. Franks) commented on the effect of the difference between ours and foreign coal prices on the profitability of other industries, especially those that are heavy energy users. This has been reflected by other speakers tonight. I remember similar comments being made in the 1960s and early 1970s about oil and how that illusion was shattered in the early 1970s when we discovered that what we thought was cheap and plentiful was not so. One thing that was left clear in my mind was the strong and overwhelming strategic necessity for this country to be independent, self-sufficient and diverse in energy.
    I accept that such a policy will inevitably be expensive, but I should prefer to see Government money going towards investment rather than subsidy. I should prefer to see it going to structural reform of the industry so that it may be profitable rather than in supporting the high costs
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    of maintaining uneconomic pits. I welcome the Government's good record in investment, a record that stands every comparison with that of other countries in Europe, such as Germany, France and Belgium and, despite what the hon. Member for Midlothian (Mr. Eadie) said, it stands good comparison with the record of previous Labour Governments.
    I support the Government's Estimates because they will be of great importance to the mining industry and to its modernisation. In my constituency, those who work in pits that are shortly to close can look to Selby for alternative employment, but in many other areas there are no such opportunities and we must recognise, in steel as in coal, that whole communities are tied up with those industries. The substantial redundancy payments made in those industries are the seed corn that enables the local communities to establish a new industrial base and create new employment for themselves.
    There is, however, an overwhelming cause for concern arising from the £135 million cost of industrial action thus far. No bottomless purse is available. Money that is wasted on industrial action and confrontation cannot be available elsewhere.
    In the past few months I and other hon. Members in the Chamber tonight have been sitting through the Committee stage of the Trade Union Bill. The NUM was put forward as one of the best examples of democracy at work within the trade union movement. Yet, this week we hear Mr. McGahey widely quoted as saying, "We shall not be constitutionalised out of action." That is not the language of the sort of industrial democracy mentioned in Committee, and will not encourage new customers to the coal industry or help to retain existing customers
    Despite the comments made tonight by right hon. and hon. Members who clearly feel heat and passion about the subject, I hope that when they return to their constituencies and speak to their constituents they will do their best to calm the temperature in the interests of the industry as a whole so that an industry that is central to our future prosperity and is of strategic importance to the whole range of industries in this country can move forward, on the basis of confidence.
    9.27 pm
    Mr. Martin J. O'Neill: I have to be brief, and I cannot accept interventions, as I have only three minutes to try to save 700 jobs.
    Polmaise colliery in my consitutuency in some ways has sparked off much of the industrial unrest, although NUM officials have played an exemplary role in keeping the men there from going on strike. The men saw the only way to defend their jobs as being to withdraw their labour and prove that they meant to hold on to them. The colliery is the life of the village. If it closes, the village will die with it. The miners realise that that cannot be exchanged for whatever redundancy money has been put on the table so far. The new offer issued today may prove overwhelmingly attractive to some of them, but only time will tell.
    There is much dispute about whether the Coal Board has a case for closing the Polmaise mine. My hon. Friend the Member for Midlothian (Mr. Eadie) referred to the gulf between the views of the board and those of the NUM about the extent of geological faulting. It is believed that if a further £1·3 million was spent on top of the £15 million already spent out of the programme's provision of £23

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    million, the miners and the board would know for sure whether the coincidence of two faults results in such bad faulting behind as to sterilise the supplies of coal that are known to exist. The board accepts that that is only a hunch.
    I ask the Minister to take the points that I have already made to Mr. MacGregor, Mr. Whelan and his colleagues and to the Secretary of State for Scotland. There is an overwhelming case for giving the Coal Board powers, permission, encouragement and whatever is necessary to spend that £1·3 million to prove the hunch. The NUM has said that it will accept the consequences if the road is driven through and the miners go through the fault to see what is behind it.
    I plead with the Minister at this point in the debate, because our mood is one of pessimism, gloom, frustration and bitterness. We look to the board for some willingness to conciliate and a prospect that it is prepared to talk about the future of the industry, not simply to offer the miners money to walk away from it. The men in my constituency want to continue working at Polmaise. It is a development mine in the process of creating 450 more jobs with a massive impact on an area of high unemployment. It would have employed 700 people within 18 months, but it will become a graveyard—as will the village of Fallin—if urgent action is not taken.
    I ask the Minister to take up the NUM offer and to spend the money required. It will take only five or six weeks to test the matters on which geologists and mining engineers cannot agree, and the men will accept the result. They may not be happy to accept the judgment if it is negative, but they will know that they have done everything possible to save their colliery. At the moment they feel that it has been stolen from them by a board acting on instructions from a Government who have neither the interests of the industry nor the interests of the country at heart.
    9.30 pm
    Mr. Ted Rowlands: First, I thank the Select Committee for its report. The invaluable evidence and information forming the background to the debate has justified the nature and character of the Select Committee at work.
    Some of the severe strictures in the report have received little attention because the broader, more serious, situation facing the industry has inevitably loomed large. Nevertheless, the report contains severe strictures on the presentation and timing of the Estimates, and so on. I hope that the Government will take those strictures to heart and that the Minister will tell us how he intends to avoid putting the House in a similar position in the future.
    It was not until the Committee really got down to work that we appreciated the extraordinary developments in relation to subsidence in Mansfield and elsewhere. The rising number and cost of claims has led to a severe financial problem which could damage the prospects of a number of pits. I shall not dwell on this, as I understand that the Government have promised an urgent review of the situation. Both the Secretary of State and the chairman of the NCB have said that they will review the matter in the light of the overwhelming new evidence.
    Two major issues are reflected in the Estimates and are central to the present arguments in the coalfields—first, the cost of the overtime ban and, secondly, pit closures and
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    redundancies. Again, it is to the credit of the Select Committee that for the first time the House and the country appreciate the cost of the overtime ban in this financial year. It certainly did not emerge from any of the remarks of Mr. MacGregor as NCB chairman. The cost of the overtime ban for this financial year will be £135 million. Unless something dramatic happens, the cost in the next financial year will also be very large—perhaps another £100 million.
    Whatever our stance in the current arguments, perhaps we can agree about the presentation of the NCB's case. Mr. MacGregor has gone around the country and has regularly given the press selective steers which could not have led anyone to suppose that the NCB estimated that the cost of the ban would be of such magnitude. An important case has to be answered. The NCB chairman utterly misjudged the financial consequences and implications of an extended overtime ban. Whatever our attitude to the ban, it is clear from the report that the chairman seriously miscalculated its financial implications. Interestingly enough, when the hon. Member for Erewash (Mr. Rost) put the question to Mr. MacGregor, he did not answer but passed it on to the marketing director, Mr. Edwards. After weeks of travelling round the country and constantly telling the press that the ban was of marginal consequence in financial terms, he must now admit that that is far from the case—unless he regards £135 million in one financial year as marginal.
    I share the fundamental criticisms made by my hon. Friends about Mr. MacGregor's handling of the situation during the past three or four months. The reason for that mishandling is deep and fundamental. Mr. MacGregor completely misjudged the character and the mood of the miners and the mining communities. He did not fully appreciate the character and nature of those communities and miners. The impasse that the industry finds itself in is, to a significant extent, the result of Mr. MacGregor's misjudgment of those important factors.
    I say with a measure of regret that, at a time when the Government have published a new redundancy payments scheme offering new redundancy payments to miners between the ages of 21 and 50, Mr. MacGregor—who is 71 years old—should consider his position. I say that, too, in the light of the report.
    Secondly, there is the issue of pit closures and redundancies. One of the major reasons why the supplementary estimate had to be made is that the number of redundancies has increased. The estimate was of 10,000 redundancies, but there have been 20,000. Not only have there been 20,000 redundancies, but, in the past 12 months or more, 20,000 jobs have been lost in the industry. When Government Members criticise what they call the Luddite attitudes of the miners clinging to their jobs and their mines, they should remember that 20,000 jobs is equivalent to the closure of four Ravenscraigs. The Minister of State would do well to remember that. If the closure of four Ravenscraigs had been announced in the past year, there would have been uproar in the House and in the country and we would have heard the Secretary of State for Scotland promising to resign.
    It is little wonder that, when Mr. MacGregor told the NUM this week that the equivalent of four more Ravenscraigs would have to go in the next 12 months, there was an explosion of frustration and resentment.

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    Another 20,000 jobs are to be lost in the British coalfields if the MacGregor plan as proposed to the NUM goes ahead unaltered.
    On top of that, there is the new redundancy scheme. We will be able to debate this scheme in more detail later on, but it must be considered, too, in the context of this debate. Paragraph 16 of the report of the Energy Committee states:
    "We were surprised that the Chairman of the NCB was unable, or unwilling, to give even a broad indication of the number of redundancies likely to be budgeted for in 1984–85".
    Now we know why. We did not know then that a completely new redundancy scheme was to be put forward, proposing that miners between the ages of 21 and 50 could collect £1,000 for every year of their service. What sort of industry are we trying to develop when we offer a 26-year-old miner with training and skill—who, with experience, could be at the peak of his productive capacity—£10,000 to walk away from the industry? Do we want an industry that is staffed by young, experienced, skilled miners? If so, does this scheme represent the right answer to the problems of redundancies and of the industry?
    My hon. Friends were right to express their suspicion that the scheme has been devised as a substitute for compulsory redundancies. The industry was facing such redundancies and the scheme is an attempt to hide the fact that there would now be a compulsory redundancy programme. My hon. Friend the Member for Clackmannan (Mr. O'Neill) spoke about Polmaise. There is an expression of frustration in the coalfields because there is a growing feeling that the take-it-or-leave-it type of management is no longer personified only by the chairman but at area level by managers who pay only lip service to the concepts of colliery review procedures. That experience has been growing, although the Secretary of State, when giving evidence to the Energy Select Committee, and the Minister, speaking in our debates, have said that the colliery review procedures are sacrosanct. We are increasingly witnessing only the bare letter of that procedure being observed. The experiences that my hon. Friends have described reflect that. That is why a combination of factors — frustration, fear and resentment—has led us into present circumstances.
    Conservative Members sometimes put about the notion that Opposition Members think that there is some joy or glory in being on strike. No Opposition Member thinks that. I certainly do not. I represent a mining constituency and, in 1972 and 1974, I saw the difficulties and hardship that face families when people go on strike. No one finds glory or joy in a strike. People go on strike only as a last resort when their patience is ended and their frustration has reached a peak. We are worried that the events of the past few days and what might happen in the next few days might mean that the conflict and the frustration grow.
    I hope that we can avert the extension of confrontation. That process must begin with the chairman and top management. The take-it-or-leave-it management that the chairman has promoted has proved costly and inappropriate for the industry of which he is chairman. I therefore ask the Secretary of State to consider what he might be able to do during the weekend. I am not suggesting that he makes a highly publicised and dramatic move. There are ways in which to start conciliation. We
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    plead with the Secretary of State to examine the ways and means by which he can bring people back to the negotiating table.
    Statement after statement on radio and television today from Yorkshire and Sheffield show that the NUM wants to go back to the negotiating table to have genuine negotiations. If there cannot be such negotiations with the chairman the Secretary of State should play whatever role he thinks fit in an effort to assist. The report shows that he has a role to play. He has a function as he must pick up the tab for misjudgment and miscalculation. We plead with the Secretary of State to play an important role to ensure that rather than heading towards confrontation we head towards conciliation, thus ensuring that the industry and the men in it make the greatest possible contribution to the nation's wealth.
    9.43 pm
    The Under-Secretary of State for Energy (Mr. Giles Shaw): I have to respond to this debate in three phases. I must respond first to the Select Committee's report. I join others who have congratulated the Committee on the speedy way in which it has taken evidence and produced a report on this extremely important matter. Secondly, I must respond to as many of the points that have been raised as I can. Thirdly, I must respond to the comments about the immediate circumstances that the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) made in his winding-up speech.
    The Secretary of State for Energy drew attention to the supplementary provision with which the Estimate and report are concerned in a written answer to my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) on 8 February, the day on which the Supplementary Estimates were made available to the Select Committee. He explained briefly the reasons which had led to the need for a substantial additional provision, and added that there were significant areas of uncertainty which could further increase the board's deficit. The Government might, therefore, need to consider seeking parliamentary approval for a further payment of deficit grant since, as the House is aware, the National Coal Board now has no reserves on its balance sheet. The Government took prompt action to bring Supplementary Estimates, and the reason for it, to the attention of the House by virtue of that answer. I am a little surprised that the Select Committee's report did not mention that.
    The board's deficit grant limit for 1983–84 was set in the autumn of 1982 at £409 million. That figure was derived from the board's own projections of its expected financial performance, which were examined carefully by the Goverment in setting both the board's external financial limit for 1983–84 and the upper limit to deficit grant payments. The Government, having set the hoard's financial objectives for the year, proceeded to monitor them carefully.
    My Department receives monthly reports from the board on its performance which arrive about five weeks after the end of the period to which the report relates. The discussion of the reports with the board, which is also undertaken every month, provides an opportunity for the board to give early warning of trends since the report was prepared.
    My hon. Friend the Member for Northampton, South (Mr. Morris) was especially critical of the speed with which the Department monitors these trends. The Select

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    Committee recommended that efforts be made to ensure that the Department's information on the board's financial performance is more up to date. We shall certainly look into that, although it may not prove possible for the board to let the Department have reports more quickly than at present. It is no simple matter to bring together detailed information about a large organisation such as the NCB. I can, however, confirm that the board habitually gives the Department warning of significant new trends as they emerge during the regular discussions that we have with it, in advance of receiving the formal reports.
    In March 1983, the NCB was forecasting an outturn deficit for 1983–84 of £606 million. During the first several months of the year the forecast came down steadily, and by August the forecast deficit stood at £520 million. The evidence which the NCB gave to the Select Committee shows that, without the adverse factors which emerged during the autumn, the outturn deficit for the year would have been less than £500 million. In other words, it would have been closer to the deficit grant limit of £409 million than to the figure of £606 million which the NCB had forecast at the beginning of the year. That trend gave rise to the view, from the examination of the monitoring results, that the problem was not of the gravity that ultimately emerged.
    Why is the board's deficit for the year now expected to be higher than the £409 million originally provided? The main factors are that output has been significantly lower, by 6·6 million tonnes, which has reduced the board's net proceeds by more than £100 million. Secondly, prices in major markets have also been lower, and that has cut the board's revenue by over £150 million. Interest payments will be higher than £51 million. There were certain other provisions and the provision for subsidence, to which the Committee paid special attention in its report.
    About £60 million of that is reflected in the Estimate now before the House. Since the Estimates were laid in February, it has become clear that the board will have to provide a further £68 million on that one score alone. Other measures, also agreed to by the Government, have contributed to the board's deficit. These are measures to help the foundry coke market, import compensation paid to CEGB, and measures to promote coal stocking. The total costs of these is a further £31 million.
    Finally, the overtime ban had an adverse effect on the board's revenue accounts. About £30 million came from this and is reflected in the Supplementary Estimate. Since then, as the chairman said in evidence to the Committee, the cost of the overtime ban to the end of the financial year will be about £135 million. On the other side, there have been substantial reductions in operating costs net of social grants.
    The Select Committee felt strongly about discipline, but the discipline of the deficit grant system was not given much prominence in its report. It is a yardstick against which the Government can measure the board's performance, and against which we expect the board to plan. I am sure that the House will agree that it would be wrong for the Government to relax financial disciplines on the NCB, and my hon. Friends have said eloquently that they should be increased. It would have been wrong to seek further Estimates provision before it was clear that there was no hope of the board being able to stay within
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    the deficit grant limit. That was not a decision to be taken lightly or as a snap judgment on the basis of one-monthly returns. The deficit grant is not demand-led in any sense.
    The first several months' returns from the NCB showed a fall in estimate. On 1 November we received the September return, and it appeared that the trend might have changed. The Select Committee report refers to the August return instead of the September return, which must be a mistake. In mid-November the Department received the first informal warning from the Board of the need for higher provision for subsidence damage, and only in January was the full scale of that problem apparent. Until the beginning of November it was unclear whether an overtime ban in the industry would take place, or for how long it might last. Of course, we are still uncertain as to how long the ban will continue. Considering those uncertainties, and the Government's proper reluctance to relax financial discipline on a nationalised industry, it is readily apparent that the Government were not in a position to seek a winter Supplementary Estimate to increase the deficit grant payable to the board. That was the point raised by my hon. Friend the Member for Northampton, South.
    I note what the Committee said about the possibility of a late winter Estimate. That would have been an unusual procedure for Supplementary Estimates. Moreover, I do not know whether the House would have regarded it as satisfactory if a large additional Supplementary Estimate had been made. Nevertheless, the Government lost no time in informing the House that the board's losses after deficit and social grants might be about £200 million. My right hon. Friend made that clear when he opened the Second Reading debate on the Coal Industry Bill on 15 November.
    Those matters relate to the Committee's report, but if my hon. Friend the Member for Havant wishes to have a further and fuller written comment on his report, that will follow.
    The right hon. Member for Mansfield (Mr. Concannon) mentioned subsidence. Much additional provision has now been made, and my right hon. Friend the Secretary of State told the Select Committee that we are alarmed by the increase. The Select Committee questioned the chairman of the NCB on the reasons for it, and he explained that the number of claims and the size of claims had been much higher than expected. The board is investigating the circumstances, and my right hon. Friend told the Select Committee that he has asked for special inquiries to be made by my Department to examine those figures closely. The Government will ask the board for a full report. An interim report has been received, and my Department will investigate fully the reasons for this large increase in the board's call on Exchequer support, and will keep the House and the Select Committee informed of its results.
    I stress, in case there has been some confusion on this point, that the increase is in the provision for claims that will be made in the board's accounts this year. Only a small part of the provision will be spent in cash in this year. The rest will fall in future years as claims are made, examined and settled.
    Mr. Heddle: Could the reason for the increased claims be that the form of compensation is not the same as the form of compensation in any other respect? It is not on all fours with the Land Compensation Act 1973 but is an entirely voluntary code of compensation. Does my hon.

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    Friend agree that the Waddilove report, which is about two months overdue, should he debated by the House so that hon. Members can consider whether the basis of compensation for coal mining subsidence can be put on a more fair and equitable footing?
    Mr. Shaw: I understand my hon. Friend's interest in these matters and I can assure him that the Waddilove committee was set up because of the Government's concern that there should be fairness in the compensation system and the legislation under which it was taken through. There are two sides to this question and both will be fully considered as and when the Waddilove report comes before the House.
    My right hon. Friend the Member for Worthing (Mr. Higgins) raised a question about whether or not the White Paper included absolute provision for subsidence. I can confirm to him that the White Paper, Cmnd. 9143, shows the National Coal Board's expected financing needs as £1·409 billion, and the NCB's estimate of the outturn at the time the PWP went to press is included in that figure. That, of course, he will recognise is after the publication of this Supplementary Estimate. So in broad terms the answer is that it has been provided for.
    Mr. Higgins: I should, of course, have referred to the external financing limits and not to a deficit. The point I was making is that the White Paper suggests that the EFLs will decline from £2·5 billion in the present year to only £90 million at the end of the planning period. What I wished to know was whether the point about subsidence but also all these other matters, including the new redundancy scheme, were included in those figures or if account has not been taken of them.
    Mr. Shaw: My right hon. Friend would not expect me to be able to say how that £90 million would be distributed among the various nationalised industries which are involved, but he has my assurance that the provision that will be made for the forthcoming redundancy payments scheme will be featured and will be accepted within the White Paper estimates as they come to be laid before the House.
    The right hon. Member for Mansfield (Mr. Concannon) referred particularly to the problems of Mansfield and his offer to invite the Committee to Mansfield to examine them. I hope that my hon. Friend the chairman of the Select Committee will look at that very closely, because that would be an extremely useful thing to do.
    My hon. Friends the Members for Erewash (Mr. Rost) and for Newark (Mr. Alexander) asked about medium-term plans for the board. Until we get some sense of stability within the industry it will be difficult to produce a corporate plan which will be meaningful in the full sense of the word. They will remember that the planning procedure does include consultation and that Mr. MacGregor was able to consult the unions by laying before them on Tuesday of this week the full propositions for the following financial year.
    With reference to the points made about Mr. MacGregregor, the chairman of the National Coal Board. There has been very clearly a consistent suggestion by right hon. and hon. Gentlemen and perhaps one or two of my hon. Friends that the chairman of the National Coal Board is in some way the architect of the misfortunes which at present prevail within the industry. The chairman of the National Coal Board is committing himself to
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    ensuring that there is a viable and prosperous future for the coal industry. He believes in the coal industry and he believes that it can return to financial viability. No industry can in the long run offer secure jobs and good wages to its employees if it is dependent upon substantial support from the taxpayer. The strategy which Mr. MacGregor has applied and which the Government accept is that it is a matter for the Coal Board to ensure that this industry returns to viability. Mr. MacGregor has told them that the board is determined to create and maintain a high-volume, low-cost industry one that will have an exporting future and a production future. It is really nonsense for hon. Gentlemen to talk about the butchering of an industry when he is prepared to commit £800 million, or £2 million a day, to the industry. Nobody could say that that was the work of somebody who was about to destroy the industry.
    If the House really expects the Government to stand by and allow the coal industry to die, to kill itself or to put itself away, that is an absurdity. We are committed to ensuring that this industry is provided with substantial financial resources. For 1984–85 we envisage grants totalling £680 million. We envisage the deficit grant next year at £522 million. This will mean that on present terms, in the current year, the National Coal Board's loss before deficit will be the equivalent of £62 per week for every man employed in the industry. The Supplementary Estimates will provide deficit and social grants of £57 a week for every man employed in the industry. The investment this year accounts for £60 a week for every man employed in the industry. The Government have come before the House with these Supplementary Estimates as an indication of our commitment to ensure that the coal industry can have the financial resources to enable it to be viable. No Government in recent times have ever made such an important commitment.
    I put it to the House, and to my hon. Friends, who are rightly critical of public expenditure, that the prize of securing viability in the coal industry, of removing uneconomic pits to enable the price of coal to be competitive, is a prize which every hon. Member of this House should be committed to achieving. The work that Mr. MacGregor and his colleagues are doing in the National Coal Board is a commitment to achieving that objective — a viable coal industry with a long-term future, high employment and a high wage industry. [Interruption.] I repeat, a high-employment industry, because there will still be a 100-million tonne industry—
    Mr. Michael Cocks: On a point of order, Mr. Speaker. The Minister has talked out his part of the business.
    It being Ten o'clock, the Question was deferred, pursuant to paragraph (2)(c) of Standing Order No. 19 (Consideration of Estimates).
    MR. SPEAKER then proceeded to put forthwith the deferred Questions necessary to dispose of the proceedings on Supplementary Estimates, 1983–84, Class XI, Vote I and Class IV, Vote 3.
    Question,
    That a Supplementary sum not exceeding £1,000 he granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1984 for expenditure by the Department of Health and Social Security on the provision of services under the national health service in England, on other health and personal social services including certain services in relation to

    1081
    the United Kingdom, and on research, exports, services for the disabled and certain other services; including grants in aid and international subscriptions.
    put and agreed to.
    Question,
    That a Supplementary sum not exceeding £289,952,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1984 for expenditure by the Department of Energy on assistance to the coal industry including grants to the National Coal Board and payments to redundant workers.
    put and agreed to.

ESTIMATES, 1984–85 (NAVY), VOTE A
Question,
That during the year ending on 31st March 1985 a number not exceeding 74,500 all ranks be maintained for Naval Service.
put and agreed to.

ESTIMATES, 1984–85 (ARMY), VOTE A
Question,
That during the year ending on 31st March 1985 a number not exceeding 190,500 all ranks be maintained for Army Service, a number not exceeding 5,000 for the Home Service Force, a number not exceeding 125,000 for the Individual Reserves, a number not exceeding 86,000 for the Territorial Army and a number not exceeding 12,600 for the Ulster Defence Regiment.
put and agreed to.

ESTIMATES, 1984–85 (AIR), VOTE A
Question,
That during the year ending on 31st March 1985 a number not exceeding 96,600 all ranks be maintained for Air Force Service,
1082
a number not exceeding 11,675 for the Royal Air Force Reserve and a number not exceeding 4,550 for the Royal Auxiliary Air Force.
put and agreed to.

SUPPLEMENTARY ESTIMATES, 1983–84
Question,
That a further Supplementary sum, not exceeding £1,103,954,000, be granted to Her Majesty out of the Consolidated Fund to defray charges for Defence and Civil Services which will come in the course of payment during the year ending on 31st March 1984, as set out in House of Commons Papers Nos. 244, 245 and 281.
put and agreed to.

SUPPLEMENTARY ESTIMATES, 1983–84

  ESTIMATES, EXCESSES, 1982–83
  Question,
  That a sum, not exceeding £135,693,449·27, be granted to Her Majesty out of the Consolidated Fund to make good excesses on certain grants for Defence and Civil Services for the year ended 31st March 1983, as set out in House of Commons Paper No. 250.
  put and agreed to.
  Bill ordered to be brought in upon the Resolutions come to this day relating to Supplementary Estimates, 1983–84, and Estimates, Excesses, 1982–83 by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Peter Rees, Mr. John Moore, Mr. Barney Hayhoe and Mr. Ian Stewart.

  CONSOLIDATED FUND
  Mr. John Moore accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31 March 1983 and 1984: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 105.]

Jonathan Mills
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Donald Thompson.]
10.2 pm
Mr. Michael Marshall: I am especially grateful to you, Mr. Speaker, for allowing me the opportunity to outline some of the problems and concerns that have arisen following injuries sustained by Weapons Engineering Artificer Apprentice Jonathan Mills from the efflux of a Seacat missile on board HMS Fife off the Falkland Islands on Saturday 28 January. [Interruption.] This is a matter of serious concern, and I would be grateful if I could have a period of quiet.
As I was saying, this tragic incident occurred on 28 January this year and my constituent subsequently died as a result, at the age of 18, on 1 February.
I shall not spell out the facts, because I am sure that my hon. Friend the Minister will give as much background as he can to the incident. I stress that my concern for the problems that have arisen since the end of January, when these terrible injuries were sustained, takes account of the situation in which the Commander-in-chief, Fleet, has, I believe, ordered a full board of inquiry which, together with the coroner's inquest, adjourned in Oxford on 8 February, rules out any consideration of the circumstances leading to Jonathan Mill's death under the sub judice rules which govern the procedures of this House.
In any case, my comments about the events that have taken place since the end of January relate, above all, to the concerns expressed to me by Jonathan Mill's parents who, in turn, reflect the anxieties expressed to them by many other naval families. I am therefore glad that my hon. Friend the Under-Secretary of State for Defence Procurement will reply to this debate.
I have been able to give the Minister some advance warning of the things I intend to raise. I know there will not be time to cover all the issues that I had hoped we might discuss. However, I have previously referred to a number of the issues that I intend to raise on behalf of Jonathan Mills' parents and myself. I know that the Minister will want to take this opportunity of giving as much reassurance and comfort as he can. I recognise that detailed responsibilities for handling this matter have previously been with my noble Friend the Under-Secretary of State for the Armed Forces who, for obvious reasons, cannot answer the debate in this House, but with whom I had extensive correspondence, and whose offer to arrange a meeting with the family was much appreciated.
I am also aware, following approaches which have been made by members of the Mills' family or myself, of the interest shown in these matters by my right hon. Friend the Prime Minister, who has written in helpful and supportive terms to Mr. and Mrs. Mills, my right hon. Friend the Secretary of State for Defence, and my hon. Friend the Minister of State for Defence Procurement. To conclude my preamble, I am especially grateful to my hon. Friends who are present here tonight to support me. If I single out my hon. Friend the Member for Southampton, Test (Mr. Hill), it is because he is an old friend of the Mills' family, and of course he takes a deep interest in all matters affecting the welfare of the Royal Navy, as do my other hon. Friends who are present. I am also appreciative of the
1084
fact that my hon. Friend the Member for Southampton, Itchen (Mr. Chope) has written to me to express his concern, following approaches made by one of his constituents, who is one of Jonathan Mills' uncles.
As to the concerns I wish to put to the Minister, I wish to specify these into three brief areas. First, there were problems of communication and travel after news was received of Jonathan Mills' severe injuries. Having visited the Falklands myself, I am aware of the major problems posed in trying to get communications between Port Stanley, the Royal Navy in Portsmouth and other parts of the United Kingdom. I also appreciate the logistical difficulties in arranging swift travel to the Falkland islands via Ascension island. The tragedy in this case was heightened by the fact that by the time Mr. and Mrs. Mills reached Port Stanley, their son had died some hours earlier. From the full account that they have given me, and in which, incidentally, they express the view that every possible kindness and consideration was shown to them from the time they left this country until the time they returned, I am nevertheless worried about the fact that their Falklands visit was arranged at their own suggestion when news of their son's medical condition proved sparse and difficult to obtain. I put it to the Minister: would it not be appropriate in such cases for an immediate option to be given to next of kin for such a visit?
Second, I have to say that. I am further concerned about what appears to be a complete lack of written formal advice to families in such cases. It was only as a result of detailed questions, which Mr. and Mrs. Mills submitted to me, and which I put to my noble Friend, that such basic information as the processes for registering death, the issue of a death certificate and arrangements with the coroner in Oxford were made known to me by a letter from my noble Friend dated 1 March, a month after the death of Jonathan Mills. It should surely be standard practice in a situation such as this for guidance notes to be made available to families at the earliest possible moment. It would also have been helpful, and, I believe, more sensitive, to have arranged for some form of personal caller to make contact with Mr. and Mrs. Mills, rather than the repeated use of the telephone by a number of differing contacts and telephone callers.
Thirdly, the period awaiting further advice has caused anxiety of an even more profound kind. I refer to the rumours which perhaps inevitably come with uncertainty, in this case to the effect that the Seacat missile and launching system, which had been in service for many years, are inherently unstable. Such suggestions were put to Mr. and Mrs. Mills, riot by those serving in the Falklands, but by other naval families including, I am bound to report, some with direct Royal Navy experience. The anxieties of Mr. and Mrs. Mills in recent weeks can well be imagined, and, while some judgment must be reserved until the naval inquiry is complete, I believe that the Minister and I have an opportunity tonight to try to set at rest the minds of not only Mr. and Mrs. Mills, but also of other naval families by a re-statement of established facts relating to this missile system.
First, I give in evidence the comment that my noble Friend Lord Trefgarne made in a letter that I received on 29 February, in which he confirmed that there was no truth in the suggestion that the Seacat was to be phased out due to instability. Secondly, during a public hearing yesterday of the Select Committee on Defence, of which I am a member, I was able to establish from Ministry of Defence

1085
officials and serving Royal Navy officers that there was no other examples of any serious injury or loss of life since the Seacat came into service in the early 1960s until this recent tragic event. While there is evidence of a small proportion of misfirings over the period and also of Seacat circuitry problems in service with the Brazilian and Swedish navies, about which I shall be seeking further information, the complete absence of previous serious accidents or fatalities gives considerable reassurance. I am also bound to say that public disquiet could have been allayed earlier by reference to such facts. I hope that my hon. Friend will take this opportunity to re-emphasise the assurances and facts that I have put before the House tonight.
I cannot conclude without asking the Minister for his help in two other matters. First, I realise the constraints on my hon. Friend and myself because the naval inquiry makes the matter subjudice. However, there are certain matters of fact with which my hon. Friend could assist me. If he cannot answer tonight, perhaps he will undertake to write to me. Will my hon. Friend give as much information as he can? Am I right in assuming that there was an immediate inquiry on HMS Fife which was superseded when the full naval inquiry set up by the Commander-in-chief, Fleet, began its work? Can my hon. Friend describe the composition of that inquiry? Has it already begun its work, and what is the latest estimate of when it will complete its deliberations?
My hon. Friend will be aware that the latest estimate that my noble friend gave me in a recent letter was some time in April. I am sure that my hon. Friend will recognise that that inquiry is of the greatest personal significance to the Mills family. He will know of press reports saying that its findings will not be made public. Will my hon. Friend assure me that the representations and questions that I have put to my noble Friend will be taken into account by the board of inquiry and by Ministers? Further, will he reiterate the assurance given by my noble Friend that he would return to the outstanding questions when
"the promised full account of the accident is provided for you and the parents"?
I am sure that my hon. Friend, and indeed all hon. Members, will wish to join with me in offering sincere condolences to Mr. and Mrs. Mills and their family. They have told me of their son's total dedication to the Royal Navy and of a remark which he made shortly before leaving for service in the South Atlantic. He said that if he had to die for his country he could think of no better way than in the service of his country in the Falklands. His death is a tragedy, but I know that his family's chief concern now is to ensure that death in this way will not be repeated and that the anguish that they have experienced will not be unnecessarily shared by other naval families.
It is in that sense that I pay tribute to the memory of Jonathan Mills and I invite my hon. Friend to reassure the House and the country with his answers tonight.
The Under-Secretary of State for Defence Procurement (Mr. John Lee): I am sure that the House will join me in expressing to the parents of Jonathan Mills our profound sorrow at the tragic death of their son. He is reported as having been a cheerful, lively young man, and popular on board his ship HMS Fife, where he will be greatly missed. It must be a terrible shock for parents to
1086
lose such a fine young son in an accident in a faraway place, and a terrible experience to know that he was lying seriously ill in a place where they could not get quickly to his bedside.
I am grateful to my hon. Friend the Member for Arundel (Mr. Marshall) for securing this debate. Even in peace time there are special risks for the men of our Armed Forces, not least because they often have to work with weapons, explosives and missiles, but it is always a matter of grave concern to my Department, and, I am sure, to the House, when a service man dies or is seriously injured in an accident of this kind.
I assure the House that full inquiries into the cause of this incident are well advanced. However, the coroner for Oxfordshire has opened and adjourned an inquest and is actively investigating the circumstances and cause of this young rating's death. My Department is in close touch with the coroner and is giving him all the assistance he needs so that he may determine the issues that are his legal responsibility and enable him to complete his inquisition. I am sure that, in the circumstances, the House will appreciate why I cannot comment on matters that the coroner will wish to determine for his purposes, or anticipate the results of our own inquiries. When all these inquiries have been completed we shall make available a full summary of the events and the conclusions of our investigations.
I can, however, say something about the way in which our own investigations are being conducted. On 1 February, the day Jonathan died, the Commander-in-chief, Fleet, immediately convened a board of inquiry. Its members included as professional experts a medical officer and a weapons engineering officer. They sat on board the MV Bar Protector in San Carlos water, starting a few days after the accident, and completed their report in the middle of February.
That was only the beginning of a comprehensive investigation. The advance copy of the report has already reached the Commander-in-chief, Fleet, and the full proceedings, including transcripts of statements by all witnesses and records of the technical data, are expected to reach him in the next day or two. He will study it with his professional advisers, consulting the Commander-in-chief, Naval Home Command on matters related to casualty reporting and arrangements for the next-of-kin, and will forward his complete report and recommendations to my Department.
Technical and other professional aspects must then be studied by specialist staffs within the Ministry of Defence, and all the reports will be submitted to the Admiralty Board, including a Minister. When the Admiralty Board has formed its opinion and given the necessary directions for future action, my hon. Friend — I give him this assurance—will be given a full account of the whole affair, and an opportunity to discuss the case with the Minister concerned. Before then, if they attend the inquest, Mr. and Mrs. Mills will hear evidence for themselves. There is nothing at present to suggest that security will inhibit the account that will be presented.
I cannot say for sure how long this process will take. If all is straightforward, we should receive the commander-in-chief's report in two or three weeks. However, sometimes additional information has to be obtained and analysed. It will all be done as swiftly as possible, but we must balance speed with thoroughness, to be sure we get at the root cause of the accident.

1087
Meanwhile the chain of command will take any interim action considered necessary to reduce the risk of accidents. When the inquiries are complete and the Admiralty Board has made its judgments, any final arrangements for the future will be put in hand.
I had not intended to say anything that might touch upon the accident itself. But, lest the House should fear from what has been said that there might be some widespread defect in the Seacat system—a matter of importance to defence, and hence to the House—I ask your indulgence, Mr. Deputy Speaker, to be allowed to say that the Royal Navy's stability requirements for explosives and missiles are at least as stringent as those in any other navy of which we have detailed knowledge.
Any rumour that Seacat was or is about to be withdrawn from service because of instability are without foundation.
The Seacat missile system has been in service with the Royal Navy since the early 1960s. Its first sea trials were in 1962. During its long period of service, my Department has had no occasion to harbour doubts about the inherent safety of the missile. Apart from this one tragic case, there have been no accidents resulting in loss of life or serious injury.
The House will appreciate that it has not been possible to check back over every incident in over 20 years. But I can say that in the past five years there has been no history of accidental firings. It is a weapon the stability of which has given no cause for concern and is planned to stay in service until the 1990s.
The Navy has a combination of safety measures in the design of systems and of correct procedures by maintainers and operators which prevent accident in normal circumstances. When there is an immediate operational problem, some safety measures have to be modified, but special procedures are introduced to replace them. Although safety receives a very high priority in design and in procedures for maintaining and operating, such a missile system is there to be fired, and, when engagement might be needed, the firing procedures must be simple and swift.
As the House will appreciate, however remote the threat may seem, our forces in the Falklands must maintain a high state of operational readiness, with Seacat missiles normally on the launchers. Coupled with their high state of operational readiness there must be a regular routine of maintenance and checks of the weapon systems. That is the context in which the accident occurred; a force in constant readiness, constantly testing the efficiency of its weapons.
I come to the question whether the family was kept properly informed and why the parents were not flown out before Jonathan died. These matters are being studied by the Commander-in-chief, Fleet, in consultation with the Commander-in-chief, Naval Home Command. It would be premature to make judgment until we have studied their reports.
But I can give the House a summary of the system and explain the nature of the problems affecting this case. It is, of course, a fundamental principle in the Royal Navy, as with the other services, that they take particular care to look after their casualties and to keep next-of-kin fully informed when a service man is injured.
Within a short time of the accident, Jonathan was on his way by helicopter on the 150-mile journey to Stanley. The helicopter was met by an ambulance, and Jonathan was quickly in the British military hospital at Stanley. The
1088
commanding officer of HMS Fife sent one of his chief petty officers, whom he knew to be a close friend of Jonathan's parents, ashore to Stanley to be with Jonathan. The commanding officer wrote immediately to Jonathan's parents giving an account of the accident and what followed. Since then, the coroner has opened his inquest, and I cannot now comment on what was said by the commanding officer.
When naval personnel are injured overseas, a signal is sent to the appropriate shore establishment, in this case HMS Nelson at Portsmouth. Among its many duties is the sad and always difficult one of informing next-of-kin of service men killed or injured. Within a few hours of the accident, the duty staff on HMS Nelson telephoned Jonathan's family to let them know what had happened. They were in touch several times that day and kept Mr. and Mrs. Mills informed whenever they had information during the days that followed.
If a service man is seriously injured overseas he will normally be flown back to this country when his condition permits. If he is so seriously ill that he cannot be flown back, there are special arrangements under which he can be visited by next-of-kin flown out at public expense. That system is known as DILFOR.
One of the criteria laid down for DILFOR is that, for obvious reasons, there must be little possibility of the casualty being evacuated to the United Kingdom before the visitors arrive, and no likelihood that he will die before they arrive. This creates special difficulties with the Falklands because the total journey time is over 30 hours.
A decision was made to fly out Mr. and Mrs. Mills. Whether the decision should have been made earlier is a matter we will be looking into. They left Brize Norton early on 31 January and arrived at Stanley at 1500 hours local time on 1 February. Sadly, Jonathan had died while they were flying there.
Mr. and Mrs. Mills were met at Stanley by Jonathan's divisional officer and the chaplain from the ship, who accompanied them during their two-day stay in the Falklands. They were also attended by the chief petty officer who had been landed to be with Jonathan, and the commanding officer of HMS Fife released him to fly home with them to provide comfort.
On their return to England the commodore of HMS Nelson wrote personally to Mr. and Mrs. Mills and offered his assistance. He appointed an officer to assist them, particularly with any problems connected with their son's estate, and the chaplain of HMS Collingwood—where Jonathan had recently served—made several visits to the family to provide comfort and offer help. Sadly, at such a time of loss it can never be enough.
When my Department has studied the reports we shall know whether all that could reasonably be done was done. What I have said should, I believe, show the House that the Royal Navy does take trouble to look after its families. If the final analysis shows anything wrong, I believe that it will not be through failure to care.
My hon. Friend has raised a number of other detailed points. I assure him that I shall be covering in writing those that I have not been able to deal with in this short debate. I assure him once again that he will have a full account once all the inquiries have been completed and when all the reports have been studied. My Department is as concerned as he is that the possibility of accidents is reduced to a minimum. That is why we have these very thorough inquiries, and why such boards of inquiry are

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studied so carefully by commanders-in-chief and by my Department. However, a balance must be struck between speed in remedying any faults found, and thoroughness of study to be sure we have got at root causes.
It is a matter not of looking for scapegoats—though where there is personal responsibility that is dealt with as necessary—but of finding the root causes, remedying
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any faults found, and if necessary introducing new arrangements or new procedures or modifications to equipment, for the future safety and operational efficiency of the Royal Navy. I give my hon. Friend my assurance on that point.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes past Ten o' clock.