Commons Sitting of 8 May 1984

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  DEATH OF A MEMBER
  Mr. Speaker: I regret to have to inform the House of the death of Ralph Bonner Pink, esquire, CBE, VRD, Member for Portsmouth, South, and I desire, on behalf of the House, to express the sense of the loss we have sustained and our sympathy with the relatives of the hon. Member. [HON. MEMBERS: "Hear, hear."]

  PRIVATE BUSINESS
  GREATER LONDON COUNCIL (MONEY) (No. 2) BILL
  Order for Second Reading read.
  To be read a Second time upon Thursday 17 May.

Oral Answers to Questions
  SOCIAL SERVICES

    Griffiths Report
    Mr. Colvinasked the Secretary of State for Social Services if he has yet completed his consultations on the Griffiths report.
    Mr. Marlowasked the Secretary of State for Social Services if he will make a statement on the implementation of the Griffiths report.
    The Secretary of State for Social Services (Mr. Norman Fowler): I have now completed formal consultation and the report was debated in the House last Friday. I shall be reaching final conclusions on how to carry forward the report's recommendations, in particular on the establishment of the general management function in the Health Service. I hope to issue guidance to health authorities in the next few weeks.
    Mr. Colvin: Does my right hon. Friend agree that, notwithstanding the fact that the Conservatives have doubled expenditure on the National Health Service since coming to office in 1979, it is vital that we get value for money and that that is what the Griffiths report is all about? Will he confirm that during his consultations he had direct talks with nurses at the hospital level, because they see waste and inefficient management at first hand? Will he confirm that that could be a great deal more useful to him than relying on the views of the NHS establishment, which may well have a vested interest in maintaining the status quo?
    Mr. Fowler: We have had consultations with all the professional bodies, including the Royal College of Nursing. In the main, most of those whom we have
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    consulted have supported the broad thrust of the Griffiths report. I agree that basically we are trying to secure the best possible value from the increasing amount of money that the Government spend on the Health Service.
    Mr. Marlow: Will my right hon. Friend draw aside the curtain slightly and let the House know when and at what rate he anticipates general managers being introduced into the Health Service?
    Mr. Fowler: As I said in the debate on Friday, We expect that to be done in a phased manner and we shall set that out in the guidance that is given to health authorities in the next few weeks.
    Mr. Boyes: Will the right hon. Gentleman give the House an assurance that he will not be influenced by a document written by the hon. Member for Norfolk, North (Mr. Howell), produced by a tuppenny-ha'penny outfit called Aims of Industry, in which he argues that, because patients spend a shorter time in hospital, we do not need as many members of staff, when he ought to understand that the fact that people spend a shorter time in hospital means that they get much more intensive treatment?
    Mr. Fowler: I always listen carefully to my hon. Friend the Member for Norfolk, North (Mr. Howell). I have pointed out consistently on this subject that the best way of making comparisons on efficiency is in terms of patients treated. Over the past five years the number of patients treated in NHS hospitals has risen by 500,000 a year.
    Mr. Meadowcroft: Has the Secretary of State yet had time to reflect on the calls from both sides of the House on Friday for flexibility in the implementation of the Griffiths report? Does he now feel that it would be inadvisable to force general management functions on those parts of the Health Service which both sides of the House believe to be functioning well under the present consensus arrangements?
    Mr. Fowler: As I said on Friday, we support the concept of flexibility. We do not support the idea of having pilot or experimental areas, as was one once put forward, I think, by the Liberal and SDP parties. As I say, we will be setting out the plans in the guidance.
    Mr. Couchman: Although the Select Committee received memoranda of evidence, and, indeed, oral evidence, from many quarters, it did not receive direct evidence from many of the health authorities. Is my right hon. Friend able to say whether the regional and district health authorities in the main welcome the thrust of the Griffiths report?
    Mr. Fowler: Yes, as a generalisation, I think that the health authorities have welcomed the thrust of the Griffiths report, and certainly the direct talks that I have had with the regional health authority chairmen fully confirm this. Virtually all the district health authorities have also put in their proposals.
    Mr. Bell: In the light of the widespread concern at local level among those who work in the Health Service that national pay agreements will be replaced by district pay agreements, will the Secretary of State take this early opportunity of agreeing with Griffiths that local pay negotiations and local pay agreements are not practicable?
    Mr. Fowler: I have nothing to add on pay arrangements to the statements that I have already made.
    Mr. Favell: Has the Secretary of State yet made a decision on whether he will make what is regarded as the most important appointment of all, namely, that of a chief executive in overall charge of the National Health Service?
    Mr. Fowler: We have advertised for a general manager, which is, I think, rather different in concept from the chief executive which has been proposed from time to time. That advertisement was placed some weeks ago. We are therefore in the process of seeking names for recruitment, and I will tell the House immediately I am in a position to make an announcement.
    Mr. Meache: In view of the rising tide of criticism of and scepticism about the Griffiths report, will the right hon. Gentleman give a committment that this fresh upheaval will not be imposed nationwide on the National Health Service either until the sixth evaluation studies already made are published, or until genuine experiments are carried out in specific areas to test the advisability of these changes, especially at unit level, where the recipe for conflict is greatest?
    Mr. Fowler: No, I do not agree with almost anything that the hon. Gentleman has said. [Horn. MEMBERS: "It must be right, then."] The rising tide of dissatisfaction to which the hon. Gentleman refers is not borne out by the evidence. I made it absolutely clear in response to the hon. Gentleman, who is still, surprisingly, on the Front Bench, that the health authorities are perfectly free to publish that evidence. There is nothing on our part to stand in the way of that. As to experiments and trial and error, I think that it would be absurd to approach the problems of general management inside the Health Service in that way. I think that that would be absurd and counter-productive, and we certainly do not intend to do it.

    Council for Professions Supplementary to Medicine
    Mr. Pavittasked the Secretary of State for Social Services what are now his intentions regarding amendments to the Council for Professions Supplementary to Medicine, in particular as applied to chiropody.
    The Minister for Health (Mr. Kenneth Clarke): We continue to have discussions with the Council and with bodies representing both registered and unregistered practitioners on the question of protection of professional titles, including chiropodist. However, the response to our previous consultation document showed that there is no clear consensus or common ground on the subject between the professions concerned. We have no intention of legislating at the moment.
    Mr. Pavitt: Will the Minister reconsider that answer in the light of the situation regarding chiropody and take steps to ensure that the general public are aware of the chiropodist who has the full four years' training and is therefore qualified to treat the patient, and the unqualified people who are treating at present without the right to do so?
    Mr. Kenneth Clarke: I entirely share the hon. Member's concern that members of the public should know exactly the qualifications of the people with whom they are dealing, and then make their choice of a suitable practitioner. However, all attempts to reach agreement on this have led to professional rivalries and disagreements,
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    and we certainly must not put out of practice many unregistered chiropodists who at present give every satisfaction to their patients.
    Mr. David Atkinson: Is my right hon. Friend aware of the widespread mistrust and lack of confidence in the Council for Professions Supplementary to Medicine of the alternative medical professions, and is this not itself a good reason why the Government should now embark upon their own fair and impending inquiry into alternative medicine?
    Mr. Clarke: I always encourage practitioners of alternative medicine to make application to the council to seek registration, or whatever they require for their profession. The problem is that the council deals with contentious subjects, over which it is impossible to achieve professional agreement.

    Mental Health Act 1983
    Mr. Proctorasked the Secretary of State for Social Services if he will make a statement on the further progress of implementation of the Mental Health Act 1983.
    Mr. Kenneth Clarke: Implementation of the Mental Health Act is continuing in a satisfactory manner.
    Mr. Proctor: In view of the need to have sufficient approved social workers by 21 October for the purposes of the Act, will my right hon. and learned Friend say something about the outcome of the working party, comprising NALGO, the local authorities and his Department, to resolve the dispute on this matter?
    Mr. Clarke: I agree that it is important to have approved social workers, as the House decided when it passed the Act. It is unfortunate that NALGO is trying to encourage its members not to go on courses. I find it impossible to understand NALGO's objection. I believe that it thinks it is elitist for certain social workers to be described as approved social workers. I hope that the working party overcomes its difficulty and that we achieve the full working of the Act, as Parliament intended, by the due date.

    Elderly Persons (Expenditure)
    Mr. Favellasked the Secretary of State for Social Services what is the extent to which the increase in money made available for personal social services expenditure reflects the increase in number of the elderly.
    The Parliamentary Under-Secretary of State for Health and Social Services (Mr. John Patten): The Government do not earmark any particular sum to be spent on different parts of the personal social services. Demographic and similar pressures, including the rising numbers of the elderly, are however reflected in the indicative planning figure used for block grant distribution.
    Mr. Favell: I am grateful to my hon. Friend for that answer. It is obvious that the rising number of elderly people present an increasing problem to his Department. May I draw my hon. Friend's attention to an excellent scheme in Stockport, where the elderly are fostered in private homes rather than being taken into council homes, which saves a great deal of money for councils? Would he like to commend that scheme to other authorities?
    Mr. Patten: That is a very entrepreuneurial and farsighted scheme by the local counc—[Laughter.] It is all very well for Opposition Members to laugh, but providing such forms of care in an informal and domestic atmosphere may be much better for elderly people than providing expensive accommodation.
    Mr. Meadowcroft: Will the Minister consider exempting from penalty the results of joint finance, which encourage some experimental schemes for helping the rising number of elderly people in the community?
    Mr. Patten: I am happy to say that the enforcement of penalties on local authorities is not one of my responsibilities.
    Mr. Andrew Bowden: Since the number of those over 85 years old is likely to increase by about 50 per cent. in the next 15 years, what long-term planning is being done? Will my hon. Friend take particular note of the problems that that will create for certain health authorities such as mine, where so many elderly people live?
    Mr. Patten: I am well aware of my hon. Friend's longstanding interest in this matter and of the fact that his constituency contains a rapidly aging sector. The Government are undertaking longer-term strategic action in a number of ways, including the development of new policy plans, examining expenditure and, especially, looking at ways of encouraging local authorities to become more efficient in what they are doing, to save more money and to involve themselves in the greater provision of care for the elderly.
    Mr. Holt: Does my hon. Friend recall that in a recent Adjournment debate he replied to me about Alzheimer's disease? This is now funded by the Manpower Services Commission. What funds will be available after those funds dry up?
    Mr. Patten: I well remember the Adjournment debate to which my hon. Friend refers. My Department already centrally grants the Alzheimer's Disease Society to help it with its central administrative costs. Otherwise, the help comes from individual health authorities which make grants-in-aid.
    Ms. Harman: How will the Government ensure that already hard-pressed social services departments properly inspect and supervise the enormous growth in private old folks' homes — a business which is booming at the taxpayers' expense? Even though the registration fees for old folks' homes are to be raised, is the Minister satisfied that the registration fees will bring in enough money to provide the resources needed for supervision? Will the increased registration fees go towards inspection and supervision and not into the general coffers?
    Mr. Patten: My right hon. and learned Friend the Minister for Health has already announced an increase in the registration fee to be charged by local authorities. That should be more than adequate to cover the cost of the increased amount of time spent by social workers—quite rightly—in examining private homes and ensuring that they are well run—as most of them are, as we know from our constituencies.

    Under-fives Initiative
    Mr. Andrew F. Bennettasked the Secretary of State for Social Services if he will make a statement on the progress of the under-fives initiative.
    Mr. John Patten: This initiative was launched by my right hon. Friend in October with 80 projects to be managed by 14 major voluntary bodies working in the child care field. Almost all of these schemes are now under way. A further 22 projects run by small local groups are receiving support through the National Council for Voluntary Child Care Organisations as the Department's agent. A sum of £648,000 was paid during the financial year 1983-84.
    Mr. Bennett: Does the Minister agree that that is a small sum of money, which works out at about five second-class stamps per child? Is he aware that many of those who originally intended to take up the scheme had to drop out because sufficient funding was not available? Will he confirm that provision for the under-fives is seriously under threat as more and more urban aid programmes come to an end and local authorities, because of rate-capping, cannot take responsibility for them?
    Mr. Patten: I am surprised at the churlish attitude adopted by the hon. Gentleman towards this very welcome scheme. It has been welcomed by the voluntary organisations. I should have thought that the hon. Gentleman and his hon. Friends would welcome it, as it is aimed at exactly those groups — such as ethnic minorities, one-parent families and parents on low incomes — about whom they tell us they are so concerned.
    Mr. Greenway: Is it not a fact that more under-fives are in nursery schools, playgroups or other facilities provided by my hon. Friend's Department than ever before?
    Ms. Harriet Harman: Two per cent.
    Mr. Greenway: Yes—more than ever before.
    Ms. Harman: It is not enough.
    Mr. Greenway: It is more than any Labour Government ever did. Is it not essential to do everything possible for the under-fives, especially those in deprived areas?
    Mr. Patten: Yes, my hon. Friend is right. A record number of under-fives are receiving one sort of care or another under provisions from both my Department and the Department of Education and Science. We need to do everything possible to develop new modes of care, especially informal modes. That is why the Select Committee's report is so interesting-it certainly does not suggest any great growth in institutional care.
    Ms. Richardso: Is the Minister aware that, although he may be giving £2 million to the voluntary sector, some of his ministerial colleagues are taking money from that sector? Is he aware that with the abolition of the GLC will go its provision of £3 million a year for the under-fives? Because of rate penalties, services must be cut.
    Is it not a fact that what the hon. Gentleman's Department is doing is cosmetic because it is giving money on the one hand, while other Departments take it away on the other?
    Mr. Patten: It is not at all cosmetic. The under-fives initiative, which has been so widely welcomed, involves the expenditure of £2 million a year for three years. On the hon. Lady's point about the GLC and other councils that may be abolished, my right hon. Friend the Secretary of State for the Environment has made proper provision for the handling of the interests of voluntary bodies.

    Invalidity Benefit
    Mr. Nichollsasked the Secretary of State for Social Services if he is satisfied with the level of invalidity benefit for those disabled unemployed who have undertaken rehabilitation courses.
    The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Tony Newton): Invalidity benefit ceases when people start employment rehabilitation courses. Employment rehabilitation allowances are paid by the Manpower Services Commission to persons attending these courses.
    Mr. Nicholls: Does my hon. Friend realise that, despite the generally held view that when a person finishes his rehabilitation course he can be reinstituted to long-term invalidity benefit, certain appeals tribunals are interpreting regulation 7(1)(a) of the 1983 requirement regulations to the effect that a person loses long-term invalidity benefit? Does my hon. Friend accept that it is a great blow to a person who, having finished his rehabilitation course, finds that he cannot work and, in consequence, has smaller means than before he began the course?
    Mr. Newton: The point to remember about invalidity benefit is that the primary condition for receiving it is being incapable of work. From what my hon. Friend has said, I would guess that a tribunal found his constituent capable of work. I shall happily study the matter if my hon. Friend cares to write to me, but I cannot overturn the judgment of an appeals tribunal.
    Mr. Alfred Morris: Is it not outrageous, with regard to the cut in invalidity benefit, that a Government who gave in a single day £1·5 billion in tax relief to the richest 5 per cent. of taxpayers should at the same time have cut the living standards of more than 600,000 long-term sick and disabled people? Is the hon. Gentleman aware that the excuse given does not apply to large numbers of people who are below the tax threshold? When will the cut inflicted on them be restored?
    Mr. Newton: First, a large number of those affected by the abatement of invalidity benefit will have it made good by supplementary benefit; that is to say, we take care of those least well off. Secondly, we have said time and again that the abatement will be restored when invalidity benefit is brought into taxation.

    Family Practitioner Committees
    Mr. Knoxasked the Secretary of State for Social Services whether he is satisfied with the operation of family practitioner committees.
    Mr. Kenneth Clarke: I am not satisfied with the current performance of all family practitioner committees. We must raise the performance of all of them to the level that the best already achieve. We intend, through provisions in the Health and Social Security Bill, to
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    improve their effectiveness to enable them to make a greater contribution to the planning and development of the family practitioner services.
    Mr. Knox: Is my right hon. and learned Friend aware that there is a great deal of concern about the way in which family practitioner committees deal with complaints? Does he not think that the system is far too bureaucratic? Is he satisfied that the changes which he proposes will lead to an improvement in this respect?
    Mr. Clarke: I agree that complaints should not be handled in a bureaucratic manner and that the family practitioner committees should hold the balance between the interests of the patient and the legitimate interests of the professional concerned. We propose shortly to issue a leaflet entitled "How to Complain about Family Practitioner Services", which will describe the procedures in plain English to the ordinary layman. We also intend to hold the new FPCs to account for their performance, and that will involve them giving more information about the number of complaints they receive and how they deal with them. I hope that we shall be able to bring the performance of all FPCs up to the level of the best in the handling of complaints and other matters.
    Dr. Mawhinney: How many inspectors who are currently monitoring general practitioners' drug-prescribing habits are reporting to FPCs and to his Department?
    Mr. Clarke: I shall have to inform my hon. Friend by letter of the exact figure. We are looking at the work of those inspectors as an important part of our policy of trying to make general practitioners more aware of the necessity to prescribe generic drugs where they are the most effective and cost-effective form of treatment.
    Mr. Dobson: Does the Minister accept that many of the positive proposals that he has for FPCs are not likely to be achieved so long as manual recording systems continue to be used? When does he expect every FPC to go over to a computerised system, and can he guarantee that all the committees' computerised systems will be compatible with the computerised systems of the district health authorities to which they relate?
    Mr. Clarke: I am happy to agree with the hon. Gentleman in his premise. We have commissioned a report, which is to hand, from a firm of consultants, Arthur Andersen and Co., on the whole question of the computerisation of the records and administration of FPCs. We hope that the systems will be compatible with one another, and I agree with the hon. Gentleman about the importance of ensuring that they facilitate collaboration with the DHAs.

    Smoking
    Mr. Yeoasked the Secretary of State for Social Services what is the cost to his Department arising from the consequences of smoking.
    Mr. John Patten: The information available relates only to the cost to the National Health Service. It is estimated that the annual cost to the NHS in England and Wales of diseases attributable to smoking is about £170 million at current prices.
    Mr. Yeo: Does my hon. Friend agree that the real cost to his Department of smoking and smoking-related disease

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    is much higher than that and includes such items as the lifelong support of handicapped people whose handicap can be attributed to heavy smoking by their mothers during pregnancy, and the support of widows and children whose husbands and fathers have been killed by smoking? Does he further agree that the enormity of the cost is an overwhelming argument for stronger action to discourage smoking?
    Mr. Patten: My hon. Friend is right to say that we cannot accurately judge the cost to my Department, or to the Government as a whole, of smoking cigarettes. It is clear that the list of problems which he outlined is not complete—for example, the 50 million days a year lost by people at their places of work —but Government action in the last four or five years has resulted in a considerable reduction both in the number of people who smoke cigarettes and in the number of cigarettes smoked.
    Mr. Dubs: In the light of the enormous economic and social costs to the country of smoking, is it not unacceptable and intolerable that night after night on our television screens we see sporting and other events that are sponsored by the cigarette companies? When will the Minister take action on that?
    Mr. Patten: I do not want to get too deeply drawn into that issue, because it is a matter for my hon. Friend the Minister with responsibilities for sport and not one of my ministerial responsibilities. However, I shall hazard one remark—[Interruption.]—if I can make it heard—
    Mr. Speaker: Order.
    Mr. Patten: —over the raucous noise that is coming from the Opposition Benches. There is no clear and unequivocable evidence to show whether advertising does or does not increase the smoking of cigarettes by children or anyone else.
    Sir William Clark: Does my hon. Friend agree that the Exchequer benefits to the extent of £4,500 million from the tax on cigarettes? Would he care to speculate on the way in which that revenue would be raised by my right hon. Friend the Chancellor of the Exchequer if everyone stopped smoking? Will he give us some idea of how that would be done?
    Mr. Patten: I do not know how my right hon. Friend the Chancellor of the Exchequer would raise the lost revenue, but that is not a matter for me. However, my hon. Friend's figures are exactly right, as I believe he knows. We have a National Health Service as opposed to a national sickness service and one of the duties of the NHS is to draw to the public's attention the considerable health risks that they face if they smoke.
    Mr. Pavitt: Will the Minister do a little homework and examine the figures? Will he first examine the work of Sir George Godber, a previous Chief Medical Officer at the Department of Health? Secondly, will he examine the report of the Royal College of Physicians? Thirdly, will he read a book entitled "Smoke Rings", which was written by Mr. Peter Taylor? He will find in "Smoke Rings" that the contention that children in Glasgow are persuaded to adopt certain smoking habits as a result of watching snooker is fully justified?
    Mr. Patten: The evidence about the effect of advertising is not incontrovertible. For example, for the
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    past 10 years the advertising of cigarettes has been banned in Norway yet the decline in smoking in that country has been much less than in Britain over the same period.

    Hospital Appointments
    Mr. Adleyasked the Secretary of State for Social Services if he will indicate the percentage of patients with appointments at National Health Service hospitals who failed to turn up and were thus listed as not having attended for the last 12 months period for which figures are available; and if he will make a statement.
    Mr. John Patten: We do not collect this information at present, but the health services information steering group has recommended in its first report that the number of failed appointments should be recorded in future. Measures to encourage patients to keep their appointments are for local decisions by health authorities.
    Mr. Adley: Is my hon. Friend aware that doctors and consultants practising in the Wessex area who are known personally to me have brought this issue to my attention and that one of them described it as a scandal? It is extremely irritating to the medical people concerned and enormously expensive for the entire Health Service. Does my hon. Friend accept that this is so, and does he accept also that his Department, if it is considering ways of cutting costs, should be giving close and serious consideration to this problem?
    Mr. Patten: We must address ourselves to this problem. There are about 36 million outpatient appointments in any one year in the Health Service. Unfortunately, delays sometimes occur. The picture seems to be patchy. I am bound to say that sometimes the blame lies with the rather poor organisation of some hospitals. On other occasions patients fail to turn up on time for appointments, or fail to turn up at all. I wish that more consumers of the service would heed the advice of the Consumers Association that it is extremely important that they turn up on time.
    Mr. Campbell-Savours: Is the Minister aware that for many outpatients a hospital appointment means the loss of half a day's pay plus the cost of travel to the hospital? Should he not take that into account and arrange in special cases for some adequate compensation to be paid for those on benefit and for those who are at work but who cannot earn enough to live on?
    Mr. Patten: This is why it is critically important to have a good and direct management system within the NHS to ensure that arrangements for patient appointments are good and that the doctors and nurses deliver to the consumer the care that is required at the time of the appointment. It is up to us to deliver those goods. That is why the recommendations of the Griffiths report are so important.
    Mr. Rowe: Is my hon. Friend aware—I refer to my experience in recent months — that the variation in hospital practice is very wide? Where that practice is good, it is so much better than the worst that more steps could profitably be taken to generalise the best practice rather than leave it to the haphazard administration of individual hospitals.
    Mr. Patten: Just before Christmas that point was made by my hon. Friend the Member for Beaconsfield (Mr.

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    Smith) in a similar question. It is right that the best organised outpatients departments are extremely good and provide a model for other parts of the service. We need better information. That is why the Körner committee's recommendations will be adopted and why we intend to do all we can to disseminate good practice in the service.
    Mr. Skinner: Does the hon. Gentleman agree that, at any given time, the number of people who do not turn up for their appointments is small compared to the number of Members of Parliament who fail to keep their appointments and turn up for work, as was shown by the voting figures last week, when under one third of Members of Parliament turned up to vote?
    Mr. Patten: The force of the hon. Gentleman's question would be much stronger if he were supported by more of his hon. Friends.

    Health Authorities (Contracting Out)
    Mr. Michael Brownasked the Secretary of State for Social Services if he is satisfied with the progress being made by regional and district health authorities in contracting out ancillary services.
    Mr. Fowler: Reports are now being received from the regional health authorities. They summarise programmes for putting out to competition tender domestic, catering and laundry services. These reports are being studied and we shall decide what action to take in the light of them.
    Mr. Brown: Is my right hon. Friend not a little worried at some of those reports? Is he not frightened that some of those reports might show a lack of anxiety on the part of some regional and district health authorities in putting forward genuine proposals for contracting out ancillary services? When my right hon. Friend studies those reports, will he show firmness of touch in ensuring that those authorities that are not serious about privatisation are made to be serious?
    Mr. Fowler: I accept my hon. Friend's statement. The reports we have seen so far show that the health authorities are taking the exercise extremely seriously. I do not perceive the type of difficulties put forward by my hon. Friend.
    Mr. Meadowcroft: Given that once a service is removed from the NHS it is probably financially impossible to bring it back, will the Secretary of State enable the health authorities to insist on a bond against bankruptcy by a private concern?
    Mr. Fowler: Some contracting organisations already provide that facility, but I do not believe it is necessary for me to lay that down as a stipulation.
    Mr. David Atkinson: What studies have been made by my right hon. Friend's Department, or any health authority, on the savings that could be made and the greater and more efficient service that could be provided if individual hospitals were contracted out to the private sector?
    Mr. Fowler: We have not made studies of that type. Studies have been made inside the Health Service showing that substantial savings can be made if we contract out some of the ancillary services. That is the reason why the competitive tendering programme is going foward.
    Mr. Dobson: Does the Secretary of State accept that the proportion of services contracted out fell every year since 1979? It is only since the right hon. Gentleman started fiddling the rules at the behest of Conservative Members, who are hired consultants of the privatising companies, that the proportion of services contracted out has increased. Why will the right hon. Gentleman not publish all the representations he has received from Conservative Members in favour of contracting out, so that we know exactly what has been said to him, by whom and for how much?
    Mr. Fowler: I believe that, on reflection, the hon. Gentleman will accept that the statements he has just made do not in any way represent the true position. The allegation that we are in some way fiddling the rules, as the hon. Gentleman said, is entirely untrue and without foundation. The answer to the only basic point that the hon. Gentleman put is that over that period other contracted-out services, such as building maintenance and equipment maintenance, have increased substantially. I cannot understand why the hon. Gentleman, if he finds that savings can be made in the ancillary services and resources can then go to patient care, does not support that policy of common sense.
    Mrs. Kellett-Bowman: Will my right hon. Friend confirm that in-house tenders have been highly successful in securing jobs and that tendering has led to a great deal of economy?
    Mr. Fowler: Indeed, and not just in the Health Service, but in other areas as well, one of which is the Ministry of Defence, with its health responsibilities. All those instances have shown that we can provide better value. That is what we are trying to do, and that is the sensible way to run a health service.

    Pharmaceutical Industry
    Mr. Willie W. Hamiltonasked the Secretary of State for Social Services if he will make a statement on the further steps he intends to take to curb the profits of the pharmaceutical industry.
    Mr. Kenneth Clarke: I have nothing to add to the statement that I gave to the House on 8 December 1983 when I announced measures that we expect will save the National Health Service about £100 million on the drugs bill in a full year.
    Mr. Hamilton: Is the Minister aware that because of his constant pussy-footing around the problem drug companies are still making, and are likely to make, extortionate and indefensible profits at the expense of the National Health Service? Will he give an assurance that he will use the same energy on the scheme to get at the drug companies' profits that he and his colleagues put into the Bill to charge foreign visitors for their health care, which is an absolute disaster?
    Mr. Clarke: With respect to the hon. Gentleman, he was asking the same type of supplementary question before our package in December. Since then we have announced proposals to save the Health Service £65 million in 1984–85 and £100 million in a full year. If he meets people from the pharmaceutical industry he will find that the steps we have taken to contain sales promotion costs are having a marked effect on the companies. We

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    believe that it is in the interests of the Health Service to stop excessive sales promotions being financed by the National Health Service.
    Mr. McCrindle: No one would wish to defend excessive profits, but is not the hon. Member for Fife, Central (Mr. Hamilton) out of date in what he says? Are not the drug companies in this country experiencing falling profits on prescription drugs? Taking into account the possibility that they could take their research and manufacturing facilities to other European countries, do we not have to take a rather more balanced view than that expressed by the hon. Gentleman.
    Mr. Clarke: I entirely agree with my hon. Friend. We must strike the right balance between the interests of the National Health Service as a customer and the interests of the industry, which is a major employer and a major source of export earnings and inward investment. The revision that we carried out to the scheme that we inherited from the Labour Government has made substantial savings for the taxpayer, which is a considerable advance.
    Mr. Ashley: Is the Minister aware that some of these profits are made out of faults and misleading advertisements, which do not explain clearly the adverse effects of and the damage that can be caused by some drugs? When can we have some action on that gross dereliction of duty on the part of the drug companies?
    Mr. Clarke: There are strict rules in force about the advertising of drugs. There is also a voluntary code drawn up by the Association of British Pharmaceutical Industries, which is acted upon by its members. I take as serious a view as the right hon. Gentleman about misleading advertisements, and our Department and the industry ensure that we stop them.
    Mr. Beaumont-Dark: Does my right hon. and learned Friend agree that while profiteering should be curbed, if one were to adopt the attitude that it is immoral to make any profit out of drugs research would decline, which would be a real cost to the National Health Service and to the earnings potential of an industry which is valuable to this country and to sick people?
    Mr. Clarke: I agree. The pharmaceutical industry is one of the most successful research-based manufacturing industries in this country. The advances made by the industry have been of enormous benefit to patients throughout the world. We must protect that, while ensuring that we do not pay excessive prices for drugs through the National Health Service.
    Mr. Donald Stewart: How does the Minister defend that in the light of an answer from his Department to the hon. Member for Brent, South (Mr. Pavitt) which compared the costs of 12 brand names as against 12 generic drugs, and which showed that there would have been tremendous saving to the National Health Service bill?
    Mr. Clarke: The doctor decides whether to prescribe a branded or generic drug. He should prescribe a generic drug unless he believes that there is some definite therapeutic value to be derived from the branded drug. We are reinforcing that advice to doctors and will be following it with further training and education. All attempts to change to generic substitution, as some people called it,
    730
    led to great confusion and difficulty for the profession, and would have led to considerable confusion about liability in those cases where things 'went wrong.
    Mr. Soames: Will my right hon. and learned Friend reiterate that without profits there would be no research and without research there would be no new drugs?
    Mr. Clarke: I certainly reiterate that point. I give the House the example of the pharmaceutical industries of eastern Europe, where I assume that they operate without making any profit and where, so far as I am aware, they have made no worthwhile advances in living memory in the interests of their own or anyone else's patients.
    Mr. Meacher: Is the right hon. and learned Gentleman aware that drug companies' profits from the National Health Service, even after his December announcement, are likely to be about £250 million this year, which is grossly excessive, and that, from certain drugs, Glaxo and ICI are still allowed to make profits of about 30 per cent. from the National Health Service as a result of private deals with the Department of Health and Social Security? Is that not a scandal, when 2,000 people will die this year because of the alleged lack of public money available to buy the kidney machines that they need to stay alive?
    Mr. Kenneth Clarke: Whatever profit is made will be based on a drugs bill that is £100 million less in a year than it would have been had we left undisturbed the arrangements that we inherited from a Labour Government. The deals that the hon. Gentleman described are those made between our officials and the pharmaceutical industry following the rules laid down by the PPRS. Those perfectly proper rules have been tightened up so that a drug company cannot have a target profit of 30 per cent., as the hon. Gentleman claims.

  PRIME MINISTER

    Engagements
    Ql. Mr. Proctorasked the Prime Minister if she will list her official engagements for Tuesday 8 May.
    The Prime Minister(Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.
    Mr. Proctor: Will my right hon. Friend take this opportunity to congratulate the National Coal Board on winning a contract to sell coke to the United States of America worth 1,000 jobs? Will my right hon. Friend confirm that those jobs depend upon the coke being delivered?
    The Prime Minister: Yes, I believe that the National Coal Board is to be congratulated on securing a contract that will amount to about 400,000 tonnes of coal from a Durham mine. My hon. Friend is absolutely right to say that that contract will depend upon the first delivery of coke made from the coal being made by the end of May. It is worth reminding people that sales, rather than strikes, save jobs.
    Mr. Barron: Does the Prime Minister think that the money spent by the DHSS in supporting the families of striking mine workers, the money spent by the CEGB to

    731
    generate electricity from oil, the money spent by local authorities on policing the dispute, or indeed the money that the dispute is costing the NCB—far in excess of that required to keep open the pits that the NCB wants to close—is money well spent?
    The Prime Minister: I believe that it is right to spend money to enable those who wish to go to their place of work to do so. That is what has happened, and it will continue. As the previous question noted, jobs are waiting for those who work in the coal industry, if they wish to go to work and dig the coal to secure the contracts.
    Mr. Ashdownasked the Prime Minister if she will list her official engagements for Tuesday 8 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Ashdown: Is the Prime Minister aware that her comments on Sunday about the Government's signals intelligence were deeply damaging, because they drew further attention to the operation of GCHQ, and that what she said was deeply unconvincing as a reason for not having a full inquiry into the Libyan affair? Will the right hon. Lady give more mature consideration to holding a full inquiry into that affair?
    The Prime Minister: GCHQ was not mentioned on Sunday. The point that I was seeking to make in my interview was the danger of commenting on specific intelligence. The incident took place in the House and was reported and commented upon. It is fully in the public domain and there is nothing fresh to say.
    Sir Anthony Berry: Will my right hon. Friend remind the House, on the day when Her Majesty the Queen opens the Thames barrier, that a Conservative GLC under Lord Plummer gave the go-ahead for the scheme? Secondly, will my right hon. Friend remind the House that more than three quarters of the finance has come from the Government, which makes nonsense of the claim that if there were no GLC there would be no Thames barrier?
    The Prime Minister: The decision to go ahead with the Thames barrier was taken in 1974. It was felt to be important that a barrier should be built. I am afraid that the work has taken much longer than we expected and the cost has risen, but my hon. Friend is right to say that 75 per cent. of the money came from Government sources —the taxpayer— through the Ministry of Agriculture, Fisheries and Food.
    Mr. Strangasked the Prime Minister if she will list her official engagements for Tuesday 8 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Strang: Does the Prime Minister recognise that, given the background of mass unemployment, the cost of closing pits is greater than that of keeping them open? Will she bear in mind the social consequences of destroying thousands of jobs in areas in which the majority of school leavers have no hope of permanent work? Is she aware that, in Scotland and elsewhere, miners who have been treated as industrial gipsies are not prepared to see themselves and their children thrown on the scrap heap of mass unemployment?
    The Prime Minister: The taxpayer already pays about £1x00B7;3 billion a year in subsidies to the NCB. That means
    732
    that many taxpayers are finding nearly £1 per week with which to subsidise coal. Some other taxpayers have had to learn that they will continue to have jobs only if they produce goods that please the customer. The NCB will have a good future only if it is able to have high volume, low-cost coal that can be sold not only in Britain but in the export markets. Exports are there, if people will work to produce them.
    Mr. Ian Lloyd: May I congratulate my right hon. Friend on her courageous initiative in inviting the Prime Minister of South Africa to Britain? [Interruption]. Will she suggest to her more vociferous critics that they should examine—[Interruption].—some of the actions taken by some of the self-styled colonels, generals and comrades north of the Limpopo, which have been catalogued by Amnesty International in its most recent report, and compare them with some of the remarkable things done recently in South Africa, despite apartheid, such as the Pace school in Soweto?
    The Prime Minister: The Prime Minister of South Africa is visiting Bonn, Lisbon and Berne. I thought it right to invite him to this country in order to discuss matters concerning southern Africa with him. Many changes are taking place in southern Africa, and I hope that interview will be useful. We do not, of curse, approve of the system of apartheid and will repeat that point again.
    Mr. Kinnock: The Prime Minister said that "of course" she would condemn apartheid when she spoke to Prime Minister Botha. What has happened in recent years to make her think that Botha will not again tell her—as he has always done— to keep her nose out of South Africa affairs?
    The Prime Minister: I doubt whether Mr. Botha would do it in quite the language that the right hon. Gentleman has used—[Interruption.] He will naturally say that the internal affairs of a country are for that country. He is very well aware that we adhere to the Security Council resolutions, that we do not export arms to South Africa, and that we adhere, as a Government, to the Gleneagles agreement. Internal affairs are a matter for the internal Government, but it is quite possible for other Governments to hold opinions on those affairs, and to express them.
    Mr. Kinnock: With critics like the right hon. Lady, Mr. Botha does not really need any friends. Since the phrase that I employed earlier is frequently repeated by Mr. Botha, what earthly advantage can result for British people, or for the advance of human rights in South Africa, from accommodating Botha in this country as a result of the Prime Minister's invitation? Why is she allowing herself to be used for no other purpose than to support the South African Government's propaganda effort to prop up apartheid in its own country and its aggression against other countries?
    The Prime Minister: We talk to many countries whose policies we disapprove of, and, indeed, Opposition Members urge us to do so. I remind the right hon. Gentleman that during the Labour Government a Labour Foreign Secretary visited South Africa.
    Mr. Sims: Has my right hon. Friend had an opportunity to read Mr. Arthur Scargill's claim that the coal stocks at power stations will last for only eight weeks?

    733
    Does she recall that he made almost the same claim three months ago, on 6 February? Will she assure the House about the position of coal stocks?
    The Prime Minister: I was aware of both those facts. I assure the House that there are sufficient coal stocks at the power stations for many months to come.
    Mr. Alex Carlileasked the Prime Minister if she will list her official engagements for Tuesday 8 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Carlile: Is the Prime Minister aware that the decision to deport Mrs. Begum, who is 20 years old, and her little girl to Bangladesh shows incredible pitilessness and will reduce considerably the United Kingdom's reputation in Asia? Will she institute a thoroughgoing inquiry into immigration adjudication procedures?
    The Prime Minister: No, Sir. Many procedures must be followed before such a decision is taken. Immigration rules are made to be kept, and there are ample occasions for an appeal. I would not criticise the decision of my right hon. Friend the Secretary of State.
    Mr. Conway: Does my right hon. Friend accept that her defence of British interests in Europe and the attack on the Government by the leaders of the SDP-Liberal alliance—the Tweedledoc and Tweedledee of British politics—for the abandonment of the national veto in Europe means that she is on the right track?
    The Prime Minister: Yes, Sir.
    Mr. Concannon: I trust that the Prime Minister does not take joy from what she sees in my constituency of Mansfield. The miners there are as much against her policies and those of Mr. MacGregor as any miners. They are involved in an internal union affair. Will she use her great office to bring some of those people round the table to talk. as they soon must do?
    The Prime Minister: I am anxious to see a prosperous coal industry with a good future, both in the home and overseas markets. Consultation procedures exist, and they should be taken up.
    Mr. Tom Clarkeasked the Prime Minister if she will list her official engagements for Tuesday 8 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Clarke: When the Prime Minister meets the Prime Minister of South Africa, will she ask him why he did not lift a finger to release the 16 British citizens taken hostage in Angola by UNITA, one of whom was a constituent of mine?
    The Prime Minister: The hon. Gentleman knows of the agreement to release those who have been detained, and we hope that they will be released shortly.
    Mr. Jim Spicer: Is my right hon. Friend aware of the deep concern in the farming community about the future of farming in the next few years, especially among dairy farmers, who are worried that they do not yet have the full details of the milk quota scheme, which is to be allocated on an individual farm basis? Will she take an early opportunity to reaffirm her firm support for our farming community in the tremendous job it does now and intends to do?
    The Prime Minister: I accept that our farming industry, as is the case in all Western industrialised countries, must have support if it is to be prosperous. I accept its fantastic record on both productivity and investment, and acknowledge its great success in helping us with our balance of payments by increasing our food supplies. I recognise that farmers, especially dairy farmers, are having a difficult time because we must reduce the surpluses in Europe. The farming community recognises that and is fully prepared to co-operate. However, it is anxious to know the details of how the quotas, which it has had, will be put into effect. We are awaiting further details from the Commissioners about that and will do our best to speed them up.
    Mr. Adleyasked the Prime Minister if she will list her official engagements for 8 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Adley: Is my right hon. Friend aware that some of my constituents—parents with children at school—find that, as a result of the latest strike action by teachers, they cannot send their children to school because headmasters and headmistresses have advised them that the lack of lunchtime facilities means that the children should not attend? Is it not extremely sad that parents, and, worse still, children, should be in that position, and will she join me in regretting this latest example of public sector action that is disadvantaging the weakest members of society?
    The Prime Minister: I agree with my hon. Friend, and I think it quite wrong for teachers to take action that harms the education of their pupils. It could damage them for life, and I am glad that many teachers would not dream of going on strike or refusing to carry out their duties in that way.

  Questions to Ministers
  3.30 pm
  Mr. Dennis Skinner: On a point of order, Mr. Speaker. You probably noticed that during the past five years under this Tory Government the Department of Energy has answered questions on the amount of coal stocks at pit heads and behind power station fences. Every few months hon. Members on both sides of the House have asked questions to try to ascertain the amount of stocks of coal. During this present dispute questions have been tabled and accepted by the Table Office, but the Government are refusing to give the precise amount of coal stocks. It is pretty obvious that they are frightened to disclose to the people the fact that the miners have taken nearly 30 million tonnes of coal out of stock—
  Mr. Speaker: Order. May I ask the hon. Gentleman what is the point of order?
  Mr. Skinner: As, during the past few weeks, the Table Office has accepted questions to ascertain the amount of coal stocks at pit heads and power stations as being valid the Government should be doing what they have done throughout their period of office and before the mining dispute and print in Hansard the exact amount of coal stocks. The Government are refusing to do that, and I call upon you, Mr. Speaker, to ensure that the Government carry out normal practice and reveal what the coal stocks are. The truth is that they are frightened to death.
  Mr. Speaker: Order. The hon. Gentleman must know that I cannot possibly be responsible for the content of ministerial answers, any more than I can be responsible for the content of the questions. I would not know about that matter.

  Parliamentary Expressions
  Mr. Brian Sedgemore: On a point of order, Mr. Speaker. Last week my hon. Friend the Member for Linlithgow (Mr. Dalyell) was named and barred from the House for calling the Prime Minister a liar by implication—
  Mr. Speaker: Order. That was last week, and there would be no advantage to the House in raising the matter again.
  Mr. Sedgemore: Subsequently the Prime Minister has accused a right hon. Member of the House of treason. If the Prime Minister will not withdraw, what action do you intend to take?
  Mr. Speaker: Order. We have a very busy day ahead of us. As far as I am aware, no names were mentioned in this matter.

  Liberal and Social Democratic Parties
  Mr. John Maxton: On a point of order, Mr. Speaker. You will remember that last week there were elections throughout the United Kingdom. The Liberal and Social Democratic parties fought those elections as an alliance, not as separate parties. I ask you again, Mr. Speaker: when will we treat them in the House as one party, not as two?
  Mr. Speaker: I say to the hon. Gentleman, as I say to the House, that that is not a matter for me. If any group of hon. Members wishes to regard itself as making up two parties, or 15 parties, that is not a matter for me. When I call hon. Members, I call them to speak on behalf of their constituents.
  Mr. D. N. Campbell-Savours rose—
  Mr. Dennis Skinner: On a point of order, Mr. Speaker.
  Mr. Speaker: Order. No further point of order from the hon. Member for Bolsover (Mr. Skinner) on this matter.
  Mr. Skinner: It is a different point of order.
  Mr. Speaker: I shall call the hon. Member for Workington (Mr. Campbell-Savours) first.

  Questions to Ministers
  Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. I wish not to raise any particular or specific incidents but to ask for your general
  736
  guidance. If a Minister replies to a question—I am not identifying a particular question—by saying that it could not be answered because it would be available only at disproportionate cost, and it could be proved that the answer was not available only at a disproportionate cost and therefore the Minister had set out to misrepresent the position, would that constitute contempt?
  Mr. Speaker: Order. The hon. Gentleman does not specify any particular case, and the phrase has been used in ministerial answers ever since I have been here, and no doubt for many years before.
  Mr. Campbell-Savours rose—
  Mr. Speaker: Order. There is a heavy day in front of us, and to start the day with points of order that have no basis is a waste of time.
  Later—
  Mr. Campbell-Savours: On a point of order, Mr. Speaker. Is it fair to use precedent, in so far as Ministers may historically have used the reply of disproportionate cost, as a justification for that reply? Surely it is for you, as Mr. Speaker, to put the justification to the House if you are asked to do so.
  Mr. Speaker: I say to the hon. Member—and I am sure that the whole House will agree—that this is a hypothetical matter.

  Breaches of Privilege
  Mr. Dennis Skinner: You will recall, Mr. Speaker, that a few years ago there was a different arrangement in the House on the way in which breaches of privilege were drawn to your attention and subsequently put before the appropriate Committee. You will also know, because of your attendance over the years in the House, that breaches of privilege include those references made by one hon. Member in respect of other hon. Members who are unnamed. This means that every hon. Member is included in a slur made by an hon. Member. As the Prime Minister has not named the person concerned she is, according to the arrangements for breaches of privilege, guilty of a prima face breach of privilege by not naming the hon. Member concerned. Therefore, I draw to your attention, Mr. Speaker, the fact that this case should be investigated unless the Prime Minister does the decent thing and says exactly what she meant.
  Mr. Speaker: As I said to the House, no hon. Member, or hon. Lady was named in this instance, and if any hon. Member wishes to bring a matter of privilege before the House he or she must follow the usual procedures.

  NEW MEMBERS
  The following Members took and subscribed the Oath:
  Virginia Hilda Brunette Maxwell, Mrs. Bottomley, for Surrey, South-West.
  William Nigel Paul Cash, Esq. for Stafford.
  Ann, Mrs. Clwyd, for Cynon Valley.

Teachers' Pay (Dispute)
3.41 pm
Mr. Giles Radice: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that shoud have urgent consideration, namely,
"recent developments in the teachers' dispute."
The matter is specific because it is about recent developments in the dispute over teachers' pay. There is a day of action tomorrow and cover is being withdrawn in many areas. It is important because there are over 400,000 teachers in England and Wales, 70 per cent. of whom are paid under £10,000 a year and they perform a vital job —the education of our children. It is urgent because the Government's failure to support arbitration means that our children's schooling is likely to be disrupted.
Therefore, Mr. Speaker, I request that you give the matter priority.
Mr. Speaker: The hon. Member for Durham, North (Mr. Radice) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"recent developments in the teachers' dispute."
I have listened carefully to what the hon. Gentleman has said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.

Mrs. Afia Begum (Deportation)
3.45 pm
Mr. Jeremy Corbyn: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the deportation of Mrs. Afia Begum."
Mrs. Begum has a perfect legal right to be in this country as the wife of somebody who had permanent residence in the country. On 15 March 1982, her husband, Abdul Hamid, was tragically killed in a fire in their tenement house in the east end. Further to that, Mrs. Begum arrived in this country and was told by the Home Office that the basis on which she would be allowed to stay in this country had in fact changed. Since then, she has been the subject of an unremitting war waged by the Home Office to try to ensure that she is deported from this country. An unprecedented number of representations have been made by Members of both Houses of Parliament asking that she be allowed to remain permanently in this country in order to look after her baby and to care for her sick and elderly father. For the last year, she has been in hiding while the Home Office has been hounding her like a criminal throughout London.
Last Thursday morning, at 6 o'clock, a police raid was made on the house where she was staying with her daughter, and she was picked up. Further urgent representations were made to the Home Office by a number of hon. Members asking that she be not deported. Indeed, on Thursday evening, my hon. Friend the Member for Leyton (Mr. Cohen) and I attended the Home Office to plead her case. We were informed on Friday afternoon, after the House had risen, that our representations had fallen on deaf ears and that Mrs. Begum was to be deported the following morning.
We have since learnt that, during the afternoon of Friday, Mrs. van den Heuvel, the leader of the Socialist group in the Dutch Parliament, sent a telegram to the Home Office saying that she would be making an application to the Dutch Ministry of Justice yesterday morning to ask that Mrs. Begum be allowed temporary leave to remain in the Netherlands while her case was heard at the European Court of Human Rights.
My reasons for making this application, Mr. Speaker, are that it is unprecedented for somebody to be deported from this country while the case is before the European Court of Human Rights—it is due to hear the case later this month—and while there is a Bill before the House which, if it were carried—it has already been given a Second Reading—would have the effect of altering the law to prevent the Home Secretary from changing the basis on which somebody is regarded as resident in this country.
Those are the reasons, Mr. Speaker, together with widespread disquiet about the way in which this poor woman and her baby have been hounded by the Home Office and by immigration officials, and thrown out of this country, after being dragged from their home at 6 o'clock in the morning, and the fury that runs through the Asian and Caribbean community in this country that —compared with the way that the Government bent over backwards to bring Zola Budd here at the drop of a hat, because she was white and was from South Africa — Mrs. Begum, the widow of somebody tragically killed in

739
a fire who, if her husband was still alive, would have a perfect right to stay here, has been bundled out of the country as if she were a criminal. She is no criminal but a victim of circumstances.
I believe that a debate is necessary so that the Home Secretary can answer for his actions in this matter, and we can tell the House that we want Mrs. Begum back here until the case has been heard at the European Court of Human Rights and that we want her status as a resident of this country to be restored, instead of the disgraceful way in which she has been treated.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the deportation of Afia Begum from the United Kingdom last Saturday."
I have listened carefully to what the hon. Member has said, but I regret that I do not consider that the matter which he has raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House.
Mr. Harry Cohen: On a point of order, Mr. Speaker. I ask you to consider, Mr. Speaker, that, because of his action in deporting Afia and Asma Begum at the weekend, the Home Office Minister responsible be named—
Mr. Speaker: Order. Points of order must be to the Chair, and not a continuation of the application.
Mr. Cohen: I request, Mr. Speaker, that you consider naming the Minister responsible for this action and suspending him from the House. I will give you four reasons for doing that, the pre-emptive consideration—
Mr. Speaker: Order. The hon. Gentleman is doing what I asked him not to do. Under a Standing Order No. 10 application, hon. Members cannot make a further speech. I cannot allow that to happen.
Mr. Cohen: On a point of order, Mr. Speaker. I was asking you to consider naming and suspending the Minister responsible. I have four reasons. The Minister pre-empted consideration by this House either under my Entry Clearance (Change of Circumstances) Bill or by direct debate. He perverted the course of justice by deporting the woman and her child before their case had been heard by the European Court of Human Rights. He failed to use the agreed ways in which hon. Members and Members of the European Parliament can make representations. He has brought Britain into disrepute by victimising a poor woman and her child. On those grounds, the Minister should be named and suspended. The Minister's actions are those of a coward and a lout.
Mr. Speaker: Order. I allowed the hon. Gentleman to continue because he raised this matter last week. The lady in question is his constituent, but his point of order is an abuse. It is not possible to make a second speech on a Standing Order No. 10 application.
Mr. Gerald Kaufman: On a point of order, Mr. Speaker. I do not wish to question your ruling on the Standing Order No. 10 application or your reply to my hon. Friend the Member for Leyton (Mr.
740
Cohen), but may I put to you a matter which I believe to be within your jurisdiction? I refer to the protection from the Executive of the rights of the House of Commons. When my hon. Friends put to the Minister of State, Home Office their view that the matter should be reviewed and that Afia Begum should be allowed to remain in this country, the House was still sitting. The Minister made the decision that Afia Begum should be removed from the country after the House had finished its sitting on Friday. Afia Begum was removed on Saturday and the House has not been able to sit again until today.
It is certain that, if the Home Office had refused the justified and valid request that Afia Begum be allowed to stay, both of my hon. Friends who have an interest in the case would have come to the House and sought to raise the matter. If you, Mr. Speaker, had denied them their request for the matter to take priority—as you have a right to do and as you have done today — they would have sought to raise the matter in some other way before Afia Begum and her child were removed from the country.
By bundling Afia Begum and her child out of the country on Saturday, not only did the Government commit a crime against human values; they prevented my hon. Friends from using their valid parliamentary rights to raise the matter while Afia Begum was still in the country.
I ask you, Mr. Speaker, to advise the House on how the House of Commons can use its undoubted rights instead of those rights being pre-empted by an arbitrary, administrative act by the Executive, deliberately designed to bamboozle hon. Members out of their right to speak up for their constituents. I ask you, Mr. Speaker, to advise us on how the House of Commons can preserve its rights when Ministers seek to bypass them.
Mr. Speaker: The Chair cannot be responsible for administrative decisions on the part of the Government. The matter was raised on Thursday with the Leader of the House during business questions. The timing is not a matter for me. The hon. Member for Islington, North (Mr. Corbyn) correctly raised the matter at the first opportunity under Standing Order No. 10. The only decision that I have to make under the Standing Order is whether the matter should take precedence over the business set down for today or tomorrow. I regret that I cannot decide that it should.
Mr. Kaufman: Further to that point of order, Mr. Speaker. It was, I hope, apparent from my point of order that I fully understood that you had no role, and would not seek one, in an administrative decision by a Government Department. You pointed out that my hon. Friends had used the opportunity that was available to them to raise this matter in the House. The problem is that, because the Government made their decision after the House concluded its sitting last Friday and before it reassembled today, they pre-empted my hon. Friends, not from raising the case but from raising it while something could still be done to prevent Afia Begum from being removed from this country.
That is the point that I wish to put to you, Mr. Speaker. I am not suggesting that you have a role in administrative decisions or any right to say anything about them. The right of Parliment to intervene and stop the Government from doing something has been prevented by the Government surreptitiously and deliberately taking action while Parliament was not sitting.
Mr. Speaker: I am sure that, on reflection, the right hon. Gentleman will understand that it cannot be for me, as Mr. Speaker, to rule that no administrative actions of any sort can be taken while the House is not sitting or, specifically, during a weekend. I cannot help the right hon. Gentleman. There are other ways to raise this matter if, as it appears, the lady and her daughter are in Holland.
Mr. David Winnick: Further to that point of order, Mr. Speaker. One of the arguments used by the Government about extra-parliamentary action is that Parliament exists. Members of Parliament have been elected to raise matters. As my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) has pointed out, action was deliberately taken by the Government when Members of Parliament were not in a position to raise the matter with Ministers, which surely strengthens the view that Parliament is not able to carry out its functions.
I ask you, Mr. Speaker, to give careful consideration to the matter as two of my hon. Friends who are much involved with the case were not given any notice of the Government's action. The Home Secretary must take full responsibility for what has happened. I hope that he will not try to pretend that it was a decision of a junior Minister—he must take full responsibility.
The Home Secretary so deliberately organised matters that the lady was thrown out of Britain in a humiliating way, at a time when my hon. Friends were not able to do anything about it. When there is such a clear abuse of parliamentary democracy and customs, apart from anything else, that strengthens the hands of those outside who say that they must demonstrate, sit down and so on because Parliament has not carried out its functions. The Home Secretary is directly responsible for bringing the House into disrepute—
Mr. Speaker: Order. I can add nothing to what I have already said. These are not matters for me, and I do not see how they can possibly be so.
Mr. Corbyn: Could you advise us, Mr. Speaker, of what I can tell the family of Afia Begum and her friends and relatives in a number of London constituencies about how we are to obtain an answer from the Home Secretary about why he took his decision, why he bundled the lady and her two-year-old daughter out of the country without an opportunity for the matter to be raised in debate in the House, and why a matter which is entirely within the discretion of the Minister of State, Home Office is apparently not subject to debate in the House? Many people in my constituency and other constituencies find it amazing that hon. Members cannot raise matters relating to decisions taken by Ministers and make the Ministers answerable in the House for their actions.
Mr. Speaker: The hon. Gentleman has not been a Member all that long, but he will know that there are many ways of raising this matter. It is not for me to advise him on parliamentary tactics.

BILL PRESENTED
  LIMITATION OF SALES OF SOLVENTS
  Mr. Harry Greenway, supported by Mr. Alistair Burt, Sir Geoffrey Finsberg, Mr. Frank Haynes, Mr. Michael Hirst, Mr. Sean Hughes, Mr. Charles Kennedy, Mr. David Madel, Mr. Christopher Murphy, Mrs. Elizabeth Peacock, Mr. Reg Prentice, and Mr. Roger Stott, presented a Bill to make it an offence in England and Wales for a person to sell or offer for sale substances to young people under the age of 16 if such person knows or has reasonable grounds for believing that those substances are likely to be inhaled to achieve intoxication: And the same was read the First time; and ordered to be read a Second time upon Friday 6 July and to be printed. [Bill 172.]

STATUTORY INSTRUMENTS,&c.
Ordered,
That the draft Stock Exchange (Listing) Regulations 1984 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Neubert.]

EUROPEAN COMMUNITY DOCUMENTS
Ordered,
That European Community Documents Nos. 9706/82, 8024/83, 8296/83, 4987/83, 7804/83, 8925/83, 9865/83, 8110/83, 8051/83, 7809/83 concerning energy issues in the European Community is referred to a Standing Committee on European Community Documents.—[Mr. Neubert.]

EUROPEAN COMMUNITY DOCUMENTS

  Protection of the Constitution
  4.1 pm
  Mr. Patrick Cormack: I beg to move,
  That leave be given to bring in a Bill to make provision for electoral reform; to reform the House of Lords; to ensure that no constitutional measure shall be enacted without a two thirds majority of members of the House of Commons; and for purposes connected therewith.
  This is a simple but far-reaching Bill which consists of a series of what I hope the House will agree are relatively modest proposals which are designed to protect the fabric of our unwritten constitution and the liberties which it enshrines.
  The proposals have three aims. The first is to preserve our single-Member constituency representation here in the House of Commons while seeking to remedy the manifest unfairness which can lead to parties with a similar measure of popular support achieving grossly disproportionate representation. The second is to recognise that there is a permanent place for a second, non-elected revising Chamber. The third is to achieve a proper balance of power between this Chamber and the Executive by ensuring that no major permanent constitutional change can be enacted without the clearly demonstrated and genuinely full-hearted consent of Parliament.
  The first part of the Bill would seek to tackle the often scandalous "votes in relation to seats" anomaly but to tackle it by a far simpler and more readily understandable system than any of the variants of proportional representation, which are themselves often riddled with anomalies. Electoral reform and proportional representation are not necessarily the same thing and it is not necessary to advocate the second to achieve the first.
  The Bill would provide for two-round elections in the present single-Member constituencies. Where no candidate in the first ballot had achieved the support of 50 per cent. of those voting, or 33 1/3 per cent. of the total electorate, there would be a second round.
  Such a reform would not confront the electors with hypothetical and often unattractive choices and football coupon-type ballot papers. In any second round election there would be two candidates and there would have been at least a week during which voters could reflect on the merits, personal and otherwise, of the candidates remaining, and reflect, moreover, in the knowledge of what happened in the nation on the first polling day.
  The second part of the Bill would seek to deal with the question of the second Chamber by a series of simple and, I hope, not too controversial changes. The non-elected revising Chamber has served us well as a necessary brake on the Executive and a forum in which issues can be analysed on their intrinsic merits without too much regard for passing fancy.
  Equally, I accept that it is impossible to defend the principle that birth should give an automatic right to sit in Parliament or that there should be a built-in majority for one party merely because hundreds of hereditary peers who rarely attend debates remain eligible to do so.
  It is not illogical that in a monarchy there should be a hereditary element in the House of Lords. Under this Bill that element would be limited to a maximum of 200 peers, elected from their own electoral roll at the beginning of each Parliament, in proportion to the strength of the support achieved by the major parties in the election. Peers
  744
  not wishing to be on the electoral roll would be eligible for election to the House of Commons. In addition, there would be 400 life peers appointed to sit for 10 years, and no Government would be allowed to appoint more than a given number in any one year.
  There would be a third and important group of exofficio members—people sitting, as the bishops do at present, by virtue of the office they hold—and I would include in this category leading figures from both sides of industry and local government, so that Parliament would become, in a wider sense even than at present, the forum of the nation.
  The third and most important section of the Bill would deal with constitutional measures coming before this House. In many countries in Europe, the Commonwealth and elsewhere, major changes to the constitution can be enacted only if there is a large and specified parliamentary majority. Here a simple majority suffices, and there are two forms of simple majority, the numerical and the whipped.
  Under this Bill, there would be a Select Committee of Privy Councillors, presided over by you, Mr. Speaker, which would determine whether a Bill was or was not constitutional. Any Bill so designated would have to receive an absolute majority on its Second Reading, to be submitted to a properly time-tabled Committee stage on the Floor of the House and to receive a two-thirds majority on Third Reading.
  I am not foolish enough to suppose that this modest Bill will proceed to the statute book. I introduce it because the time has come for Parliament to address itself to these fundamental constitutional issues. The presence of an overwhelming majority in Parliament is something in which we can all rejoice if that majority happens to sit on our side of the House, but it is important for us always to recognise that humility is a rare but vital political virtue, particularly vital when a party with a vast majority of seats did not necessarily obtain a majority of the popular vote.
  I would not like to think that there was ever any truth in Rousseau's gibe about the British being free only at election times. Nor do I want there to be any truth in the suggestion that Back Benchers are enslaved thereafter.
  These are vital issues which deserve our careful deliberation, and I suggest that specific proposals should, at the least, be placed before the people by all parties at the next general election. I hope that the House will indicate its general agreement with that proposition, if not necessarily with the details that I have outlined, by allowing me to introduce this Bill today.
  4.8 pm
  Mr. John Home Robertson rose—
  Mr. Speaker: Does the hon. Member wish to oppose the Bill?
  Mr. Home Robertson: Indeed I do, Mr. Speaker, and I understood that I had given notice both to you and to the hon. Member for Staffordshire, South (Mr. Cormack) that I intended to oppose it.
  I have heard some quite ambitious ten-minute Bills proposed in the House, but this one takes the biscuit. The hon. Member for Staffordshire, South may be motivated by an entirely laudable desire to restrain an excessive and oppressive Government — a Government whom he happens to support—and there are a few elements in the

  745
  Bill which I might in other circumstances be willing to support. For instance, I might have agreed with the hon. Gentleman on the question of electoral reform had he suggested a different form of proportional representation from the one which he is suggesting, but that is a very broad issue. I certainly agree with him that the House of Lords should be reformed. I am sure, however, that all on this side of the House could think of something much more radical and drastic than the sort of hereditary electoral college about which he spoke.
  The point which concerns me profoundly is the implication of the requirement of a two-thirds majority in this House on any constitutional Bill. I am a member of the Scottish majority in this House. Fifty-one of Scotland's 72 Members here are committed to the establishment of a Scottish Parliament. Further, those 51 Members are implacably opposed to all the policies of the present Government. Only 28 per cent. of the Scottish electorate at the last general election supported the Conservative party, and there was an even bigger swing against the Conservatives in Scotland at the local elections last Thursday. The Labour party now controls Edinburgh, something almost unheard of.
  It is bad enough for the Scottish majority to have to endure oppressive administration and legislation imposed by the English majority in this House under a Conservative Government. It would be downright intolerable if a two-thirds rule were to prevent a future Labour Government from passing legislation to establish a Scottish Parliament, in accordance with Labour's well-established Scottish mandate. Scotland has already been cheated once by Mr. George Cunningham's 40 per cent. rule. The hon. Member for Staffordshire, South is now seeking to impose a 66 per cent. rule, which to my mind would be even more unfair, unreasonable and unwarranted than the 40 per cent. trick which was imposed by an unholy alliance during the administration of the previous Labour Government.
  I appreciate that the hon. Member for Staffordshire, South is rightly horrified by the attack on local democracy which is being mounted by the Government, but he and his right hon. and hon. Friends have the remedy to that problem in their own hands. I pay tribute to the hon. Gentleman for having voted against examples of the oppressive legislation which has been advanced by the Government whom he supports. However, I am sure that he will understand why Labour Members, especially Scottish Labour Members, feel that the Bill is the wrong way to go about improving the constitution.
  Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
  The House divided: Ayes 21, Noes 144.

  Division No. 282]

  [4.10 pm

  AYES

  Alexander, Richard

  Key, Robert

  Atkinson, David (B'm'th E)

  Knox, David

  Beith, A. J.

  Meadowcroft, Michael

  Bottomley, Peter

  Penhaligon, David

  Bottomley, Mrs. Virginia

  Price, Sir David

  Bruce, Malcolm

  Rathbone, Tim

  Carlile, Alexander (Montg'y)

  Steel, Rt Hon David

  Couchman, James

  Wainwright, R.

  Freud, Clement

  Gale, Roger

  Tellers for the Ayes:

  Hanley, Jeremy

  Mr. Patrick Cormack and

  Hunt, John (Ravensbourne)

  Sir Anthony Meyer.

  Kennedy, Charles

  746

  NOES

  Alison,Rt Hon Michael

  Hurd, Rt Hon Douglas

  Anderson,Donald

  Jackson, Robert

  Ashby, David

  Kaufman, Rt Hon Gerald

  Atkinson, N. (Tottenham)

  Kellett-Bowman, Mrs Elaine

  Barron,Kevin

  Lang, Ian

  Beaumont-Dark, Anthony

  Lightbown, David

  Beckett, Mrs Margaret

  McCartney, Hugh

  Beggs, Roy

  McDonald, Dr Oonagh

  Bermingham, Gerald

  McKay, Allen (Penistone)

  Biffen, Rt Hon John

  MacKay, John (Argyll & Bute)

  Biggs-Davison, Sir John

  Maclean, David John

  Blaker, Rt Hon Sir Peter

  McWilliam, John

  Boscawen, Hon Robert

  Major, John

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

  Marek, Dr John

  Boyes, Roland

  Marshall, David (Shettleston)

  Brandon-Bravo, Martin

  Mather, Carol

  Brittan, Rt Hon Leon

  Maxwell-Hyslop, Robin

  Brown, Hugh D. (Provan)

  Maynard, Miss Joan

  Brown, M. (Brigg & Cl'thpes)

  Meacher, Michael

  Bruinvels, Peter

  Mikardo, Ian

  Buck, Sir Antony

  Mitchell, Austin (G't Grimsby)

  Burt, Alistair

  Monro, Sir Hector

  Butcher, John

  Moynihan, Hon C.

  Butterfill, John

  Nelson, Anthony

  Campbell-Savours, Dale

  Neubert, Michael

  Carter-Jones, Lewis

  Nicholls, Patrick

  Cash, William

  Oakes, Rt Hon Gordon

  Clark, Dr Michael (Rockford)

  O'Neill, Martin

  Cocks, Rt Hon M. (Bristol S.)

  Page, Richard (Herts SW)

  Cohen, Harry

  Patchett, Terry

  Colvin, Michael

  Patten, John (Oxford)

  Conway, Derek

  Pavitt, Laurie

  Coombs, Simon

  Pawsey, James

  Cope, John

  Pike, Peter

  Corbett, Robin

  Powley, John

  Corbyn, Jeremy

  Prescott, John

  Crowther, Stan

  Proctor, K. Harvey

  Davies, Ronald (Caerphilly)

  Radice, Giles

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

  Richardson, Ms Jo

  Dewar, Donald

  Roberts,Ernest (Hackney N)

  Dickens, Geoffrey

  Robertson, George

  Dicks, Terry

  Robinson, Mark (N'port W)

  Dobson, Frank

  Rooker, J. W.

  Dormand, Jack

  Ross, Wm. (Londonderry)

  Douglas-Hamilton, Lord J.

  Rumbold, Mrs Angela

  Dubs, Alfred

  Sainsbury, Hon Timothy

  Duffy, A. E. P.

  Sayeed, Jonathan

  Eadie, Alex

  Sedgemore, Brian

  Eggar, Tim

  Sheerman, Barry

  Evans, John (St. Helens N)

  Sheldon, Rt Hon R.

  Faulds, Andrew

  Short, Ms Clare (Ladywood)

  Fisher, Mark

  Skinner, Dennis

  Flannery, Martin

  Soames, Hon Nicholas

  Fox, Marcus

  Spicer, Jim (W Dorset)

  Fraser, J. (Norwood)

  Stanbrook, Ivor

  Gardiner, George (Reigate)

  Stern, Michael

  Garel-Jones, Tristan

  Stewart, Andrew (Sherwood)

  Glyn, Dr Alan

  Temple-Morris, Peter

  Godman, Dr Norman

  Terlezki, Stefan

  Goodlad, Alastair

  Thompson, Donald (Calder V)

  Gould, Bryan

  Thompson, Patrick (N'ich N)

  Grylls, Michael

  Wakeham, Rt Hon John

  Hamilton,Hon A.(Epsom)

  Wardle, C. (Bexhill)

  Hamilton, James (M'well N)

  Watts, John

  Harman, Ms Harriet

  Weetch, Ken

  Hayward, Robert

  Wheeler, John

  Heffer, Eric S.

  Whitney, Raymond

  Hirst, Michael

  Winnick, David

  Hogg, Hon Douglas (Gr'th'm)

  Wolfson, Mark

  Hogg, N. (C'nauld & Kilsyth)

  Wood, Timothy

  Holt, Richard

  Home Robertson, John

  Tellers for the Noes:

  Howell, Rt Hon D. (S'heath)

  Mr. John Maxton and

  Hunt, David (Wirral)

  Mr. Tom Clarke.

  Question accordingly negatived.

  Cable and Broadcasting Bill [Lords]
  Order for Second Reading read.
  4.21 pm
  The Secretary of State for the Home Department (Mr. Leon Brittan): I beg to move, That the Bill be now read a Second time.
  The Bill marks a major step along the road of increasing opportunities for consumer choice in the provision of broadcasting services. The pace of technological change is such that we are no longer, as with earlier broadcasting legislation, talking about the addition of one new service but of the potential for a whole range of new services—some local, some national, some financed by advertising, others by various kinds of pay television.
  The Bill deals with two forms of programme distribution that have already been the focus of much debate: cable and direct broadcasting by satellite—DBS. Both create new industrial, technological and cultural opportunities. DBS is more obviously an extension of conventional broadcasting, with its ability to achieve universal coverage and its use of frequencies which are available in only limited supply. Cable, on the other hand, occupies more than a halfway house between broadcasting and telecommunications. There is no theoretical limit on the number of channels that can be provided and, unlike DBS, cable has the potential for providing interactive services. Cable services, however, can be provided only where cable systems are installed, and that means that it is bound to be a number of years before even half the homes in the country will have the opportunity to subscribe.
  The Government's approach to both those new developments is to create the framework within which investors can reach their own decisions on the risks and opportunities involved. The opportunities are real, but so are the risks. At the international level we have in recent times seen, for example, how some firms have made large sums of money out of the video cassette recorder while others have lost large sums of money with the video disc player. In the case of both cable and DBS the Government believe that the right decisions are more likely to be taken if assessments of market potential are taken.by those who stand to gain or lose by the outcome. For the Government to invest large sums of taxpayers' money would be quite wrong. That means that the Bill is not a blueprint for what will happen but rather an enabling measure designed to unlock the door to the future for whose who are willing to go through it.
  I should first like to concentrate on cable, which currently accounts for the lion's share of the Bill. The publication of the report of the Prime Minister's information technology advisory panel in April 1982 brought the whole question of cable development into the public arena; and since then we have had three opportunities in the House to debate the way forward. The foundations for part I of the Bill were laid by the inquiry chaired by Lord Hunt of Tamworth. Although a few of the details have changed, the broad approach is the one advocated by that inquiry. The Hunt inquiry recommended the setting up of a new Cable Authority, for which the Bill provides and which is to be responsible for issuing licences to cable operators, for exercising a modest degree of continuing oversight over their activities and for reviewing
  748
  their performance from time to time in the light of such other applications as might be made from aspiring operators.
  The Bill does not, of course, cover the telecommunications and technology aspects of the development of cable. The licensing of cable systems, as opposed to services, will be a matter for my right hon. Friend the Secretary of State for Trade and Industry and the Director General of Telecommunications under the Telecommunications Act 1984, which recently completed its passage through this House and another place. Together, those two pieces of legislation will provide a clear and settled regulatory framework against which cable can develop.
  We made it clear in our White Paper that we were most anxious not to lose the momentum that had already been created while this framework was drawn up. That was why we decided to launch the pilot project exercise. We were glad to be able to agree in principle to allowing 11 operators to go ahead with their proposals. In addition, I have now authorised a number of existing cable operators to offer new services under their present systems.
  Part I of the Bill establishes the new regime for the regulation of cable services. Clause 1, together with schedule 1, provides for the setting up of the Cable Authority. The authority is to consist of a part-time chairman and between three and 10 other members and will be financed out of licence fees paid by the operators. Our intention is to appoint a chairman and six members in the first instance, but the number can be adjusted if that proves necessary in the light of experience. I hope to be able before very long to announce the appointment of a chairman-designate.
  Clause 2 defines the cable programme services to which the various clauses of the Bill apply and, most importantly, those services that will be licensable. In general, licensable services will be those that are offered to the public, whether to two or more private homes, as in the case of diffusion services, or, as in the case of restricted services, to a place, such as a cinema or public house, where members of the public will come together to watch them. A private service sent from one point to one other where the general public do not have access will not be licensable, nor will a service which, broadly speaking, is not analogous to television or radio. The kind of services that will be subject to the competitive franchising procedures under later clauses will be prescribed by statutory instrument under clause 2. This is because, with ever-changing technology, it is necessary to retain some flexibility, but we have made it clear in the White Paper and elsewhere that we are talking about services provided over the new wideband systems. It is those services that, under clause 4(8), it will be the duty of the Cable Authority to promote.
  Clauses 3 to 9 set out the procedures to be followed by the Cable Authority in the licensing of cable programme services, including the detailed franchising process for diffusion services provided over new wideband systems. In the case of these prescribed diffusion services, licences will run for up to 12 years in the first instance and eight years thereafter. The Cable Authority is required to give an opportunity for competitive applications in each case and to allow for local views to be expressed before reaching its decision. It must also work in close consultation with the telecommunications licensing authorities. Of particular importance is clause 7, which

  749
  sets out the matters that the authority must take into account in considering the issue of a licence for a prescribed diffusion service.
  Clause 8 sets out restrictions on the holding of licences by particular individuals and bodies. The main objectives are, firstly, to prevent the control of licensed companies resting with foreign, political or religious interests; secondly, to guard against excessive concentrations of editorial control; and, thirdly, to forestall the possible development of anti-competitive and other practices that might be contrary to the public interest. In fulfilment of undertakings given in another place, we shall be bringing forward amendments to give the Cable Authority a duty to guard against excessive accumulations of interests in separate cable companies.
  Clauses 10 to 15 contain a number of key provisions that place certain duties on the authority in relation to the content of programmes and advertisements. Under clause 10, the authority must see that programmes maintain, among other things, proper standards of taste and decency, and accuracy and impartiality in the presentation of news. Of particular importance is the requirement on the authority to ensure that "proper proportions" of material to be included in programmes are of British or other EEC origin. There was considerable discussion on this provision in another place. I know that there are many who believe that there should be a fixed statutory quota from the outset, but the Government believe that the approach embodied in the Bill is the right one. There needs to be flexibility so that the Cable Authority can take account of all the relevant circumstances, including changes over time in the availability of suitable domestic material at a price that operators and the consumer can afford. It is our wish to see cable increasingly draw on, and generate, domestic programme material, but it is not in anyone's interest to try to impose unrealistic burdens at the outset.
  Clauses 11 and 12 deal with other programme matters and with the framework of rules which are to apply to advertising. These are less detailed than in the case of independent broadcasting and we believe that there will be greater scope for new forms of advertising and for sponsorship, subject to a code of standards laid down by the Cable Authority. Amounts of advertising on cable will be unrestricted, except where the nature of the service makes it appropriate for the ITV limits to apply.
  Mr. Gerald Kaufman: I do not know whether I heard the right hon. and learned Gentleman correctly. How does that chime with clause 12(3)? He seems to have turned that on its head by what he has just said.
  Mr. Brittan: That is not correct. On detailed consideration of the Bill, I believe that the right hon. Gentleman will find that what I have said is consistent with what has been said publicly, in the Bill and in another place, about what is proposed.
  Two further important duties are imposed upon the authority by clauses 13 and 14, which are designed to protect the position of existing broadcasting services. Clause 13 contains the "must carry" rule under which the existing BBC and IBA services will have to be transmitted as part of the licensed cable service. Clause 14 safeguards the position of viewers of existing services from the "creaming off' of popular events by cable. We shall be bringing forward in Committee amendments designed to
  750
  improve the drafting of both clauses; and in relation to the events covered by clause 14 we shall also introduce a new provision designed to reduce the risk of their being creamed off by foreign broadcasting services aimed at this country. We shall also, separately, be introducing new provisions to guard against the dishonest reception of cable and satellite services.
  Clause 15 imposes upon the Cable Authority a duty to consider and adjudicate upon complaints of unjust or unfair treatment or unwarranted infringement of privacy in cable programmes, the type of complaint which in relation to the existing broadcasting services is currently handled by the Broadcasting Complaints Commission. The Government have, however, been persuaded by the arguments in another place that this duty would be mare appropriate to the Broadcasting Complaints Commission, with its existing expertise, than to the Cable Authority. We shall accordingly be tabling new provisions to take the place of clause 15.
  That is a brief summary of the provisions which constitute the core of part I. They are supplemented by clauses which deal with the powers and finances of the authority and with various amendments to the civil and criminal law. Clauses 16 to 18 set out the range of enforcement powers which are available to the authority. Clauses 19 to 22 deal with the finances of the authority and the submission of its annual report to the Home Secretary. The authority will be expected to become self-financing at the earliest possible date; but for the initial period the Government are willing to make up to £2 million available to it on a loan basis as working capital. Clauses 23 and 24 make changes to the Copyright Act 1956 to take account of the development of cable. Cable operators are given a copyright in the material which they put out and the position of other rights holders with regard to the use of their works over cable is strengthened. This is a particularly intricate area of the Bill and some further drafting amendments will need to be made in Committee. We made it clear in the White Paper that cable operators would be subject to the general law on obscene publications, and clauses 25 to 29 clarify and extend the existing law relating to obscenity, as well as dealing with incitement to racial hatred, defamation and the use of wireless telegraphy apparatus. Clauses 30 to 35 make supplementary provision in relation to part I.
  Part II deals with broadcasting matters as opposed to cable. Before I come on to the major question of satellite broadcasting, I should like first to say a few words about a further new provision we propose to introduce. The spectrum available for VHF radio broadcasting will extend during the next decade or so and, as we announced last year, is likely to offer the facility for two new national networks in 1990. One of those will go to the BBC, so that Radios 1, 2, 3 and 4 will each have a VHF network of their own. The other will go to the IBA, to provide for the first time a service of independent national radio.
  Decisions on the precise arrangements for the service and its regulation are a matter for the future, but the creation of a national network of transmitters is a substantial task which, if it is to be carried out economically and still be ready for 1990, should begin in just over a year's time. I shall therefore bring forward in Committee brief enabling powers to allow the IBA to begin the programme of transmitter construction before a

  751
  contractor is appointed, just as it was empowered to install the transmitters for Channel 4 before final decisions on that service had been taken.
  I come now to the subject of DBS. Hon. Members who follow this subject in detail will be aware of a good deal of speculation in recent weeks about a possible new approach which would assure the initial stage of DBS for this country. Part of my task today is to tell the House of that approach and the implications for the Bill. First, I shall say a few words about the DBS provisions in part II of the Bill and the general policy background.
  As hon. Members will recall, DBS is a means of transmitting television and sound signals from a single transmitter in space direct into the home, where the signals are received with the aid of a small dish aerial and converter equipment. DBS signals can, and will, also be received at the head ends of cable systems and distributed like other cable programmes. However, cable is not necessary as a means of distribution—in contrast to the programme services which are now beginning to be transmitted by low-powered telecommunications satellite for distribution as part of the package of programme services provided by cable operators.
  The United Kingdom, like every other European country, has been allotted by international agreement five DBS channels. The Government's decision, announced in March 1982 by my predecessor, now Lord Whitelaw, was to allow and facilitate this opportunity to be taken, for technological and industrial as well as broadcasting reasons. Hence Lord Whitelaw said two years ago that the BBC would be authorised to go ahead with plans for a two-channel service, using a satellite system provided by the Unisat consortium. At the same time he looked forward to the participation of the independent sector in DBS once a legislative and regulatory framework had been created. That is what part II seeks to provide.
  Part II empowers the IBA to provide DBS services. The IBA will be the broadcasting authority and, wherever relevant, its powers and responsibilities under the Broadcasting Act 1981 will apply to DBS also. The IBA would provide DBS services, as it does terrestrial services, through contracts with programme companies, chosen through a franchising process. Each DBS franchise would last for 12 years, in recognition of the fact that the successful applicant would bear the full responsibility and liability for satellite provision. Services could be financed by subscription or advertising or both, and, as and when there was a sufficient level of profit, would be subject to levy. In terms of the IBA's finances, independent DBS will have to stand on its own feet. The rentals received from terrestrial television will not be allowed to subsidise the IBA's DBS operation unless exceptionally the authority applied for my consent and I made a direction to that effect. Any such direction would have to be laid before Parliament.
  The Government remain committed to the framework I have described, of permitting competing BBC and independent sector DBS services, for the longer term. We have, however, accepted the case that has been put forward that something different is needed for the initial stage of facilitating DBS. First, DBS is a high-risk, high-cost venture which would initially be a heavy burden for any single operator. Secondly, its viability will depend on the rate of build-up of its audience, who will have to incur
  752
  appreciable expense to equip themselves to receive a service. Financial projections suggest that a service will not break even until it can attract some 2 millon subscribers, and that will take some years. There are real doubts whether there is room, from the outset, for two services competing for an audience. These uncertainties led the BBC to explore the opportunities for partnership with others, latterly and in particular with the IBA and ITCA, the association of ITV companies. While the Government were not the prime mover in these talks, we have stayed in close touch with them, as we want to see an opportunity provided for a British DBS service to be established on a firm footing. We have seen our task as not to coerce anyone into a particular framework for DBS but to listen to the arguments and be ready to play our part in creating the conditions in which a venture worthy of support can go forward.
  Having reviewed the case put forward, the Government have concluded that the best hope of securing a good-quality British DBS service in the late 1980s lies in a joint project to bring together the talents and experience of those of the existing broadcasters who wish to participate, together with a significant proportion of outsiders. That will mean some additional legislative provision to create the necessary framework, and I shall be bringing forward in Committee detailed proposals for the purpose. Meanwhile, the House and those outside with an interest in the project will wish me to set out its main features today.
  Mr. Michael Marshall: Before my right hon. and learned Friend proceeds, may I welcome the step that he has just proposed to bring together the BBC and the IBA — the Minister knows of my commercial interests. Will my right hon. and learned Friend say whether he hopes to find opportunities for British Telecom to continue its business traffic? Will he also say whether he hopes that there may be opportunities for others besides British Telecom to become involved, if there is spare capacity in the new joint DBS project, to provide additional business services?
  Mr. Brittan: I am not sure whether I can answer my hon. Friend's question at this stage, but he may be more enlightened about the prospects when I have outlined the general nature of the project that we have in mind.
  It is proposed that the joint DBS project will be provided by a joint company or consortium whose participation will be divided between the BBC and the independent sector. The BBC will have a half share of the project. The independent sector will be in two parts. One part, which I would expect to be at least a quarter of the total project, would consist of those ITV companies wishing to take part. I stress that there will be no pressure or coercion. The companies must decide for themselves, because their shareholders' money will be at risk.
  The other part of the independent sector would consist of other companies or organisations that express a wish to take part on the terms stated and are judged suitable to do so. They might make up 20 to 25 per cent. of the total, but the proportions must remain flexible until we see the strength of those who wish to participate. It is in my view essential that an opportunity for participation in this important new broadcasting development should be given to those who do not currently hold ITV franchises. I shall need to be satisfied at the end of the process of selection

  753
  and negotiation that a suitable consortium has been put together. I shall, therefore, be inviting the House to confer on me as Home Secretary a power under the Bill to set the seal on the consortium by formally designating it. That does not mean that I see myself, or my Department, playing a substantial role in the selection of the new element in the consortium, which is neither BBC nor franchise holder. Some mechanism—
  Mr. Richard Shepherd rose—
  Mr. Brittan: Some mechanism will be needed to invite would-be participants to come forward, to sift them and to judge the strength of their claim to participate. I propose to seek the help and advice of the IBA, whose experience and background make it an obviously appropriate body for the purpose. The authority will be inviting interested organisations to get in touch with it shortly for this purpose. I do, however, stress that this is in no sense a normal franchising operation. I shall be asking the IBA to offer me its views on the suitability and financial soundness of private sector participants and the share of the project that they might appropriately bear.
  Mr. Robin Corbett: Will the right hon. and learned Gentleman give way?
  Mr. Brittan: I shall finish this passage. In framing its advice, the IBA will consult with the BBC, whose attitude to potential members of the consortium is a factor to be taken into consideration.
  Mr. Corbett: I am grateful to the Home Secretary for giving way. Is this the same IBA that turned a blind eye when TV-am virtually tore up the basis on which it launched its programme, although that IBA had statutory authority to ensure that TV-am abided by its original agreement?
  Mr. Britton: I do not propose to make changes to the IBA in the Bill. The existing authority will be undertaking the task.
  Mr. Kaufman rose—
  Mr. Britton: Could I proceed a little further in explaining this aspect? Then I shall give way to the right hon. Gentleman. Perhaps the point that I am making will deal with what the right hon. Gentleman would like to know.
  I was going on to say that potential participants will not look to the IBA for firm financial information about the project on which to base their judgment whether to participate. That information can come only from other members of the consortium with whom, at a second stage, third-element participants must negotiate.
  At this stage, before any approaches are made, it would be a mistake to be too precise about the kind of contribution that independent participants might make. I should not want to rule out anything in advance. But I hope that some at least would not merely be seeking an investment opportunity but would have the ability to make a positive contribution in an area such as programme provision, financial management, manufacture or rental of equipment.
  Mr. Kaufman: The Home Secretary's announcement about the proposed consortium is, of course, not what was expected, in the sense that we awaited the announcement of two DBS channels for the BBC and possibly two DBS
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  channels for ITV. The Minister is saying that there will be a full consortium between the two organisations, possibly with other outside participation. Can he tell us, because it is a matter of some importance, whether the DBS provision, in so far as it includes BBC participation, will include provision for channels without commercial advertisements? Will all DBS channels under the consortium arrangements have provision for commercial advertisements?
  Mr. Brittan: Advertisements will not be excluded, but in the first instance it is proposed that the project should be financed by subscription.
  Before I move on from independent participation in the project, I should say that I am well aware of the keen interest in the proposals that is being shown by some of the independent production companies, whose growth has been much stimulated by the outlet for their product provided in the statutory framework for Channel 4. They now seek further outlets. For some of them, possibly in consortium, there may be the option of participation as part of the independent element in the joint project, but I recognise that the scale of investment required may make that difficult. They have suggested, as another possibility, a clear place in programme provision for the joint project. That is a suggestion with which I have much sympathy. I do not at this stage have a specific proposal, but I shall be considering how effect might best be given to it and I invite others who are, or will be, concerned with the joint project to do likewise.
  Mr. Richard Shepherd: Earlier, it was said that the Home Office was considering the relaxation of section 19 of the Broadcasting Act, or rather that representations had been made to the Home Office that that might be the quid pro quo for commercial involvement in the Unisat project. Is my right hon. and learned Friend considering extensions of existing licences to the independent television companies as a quid pro quo for their involvement in the scheme?
  Mr. Brittan: I shall elaborate on those matters later, if my hon. Friend bears with me.
  I turn now to some other aspects of the joint project. Like the BBC project from which, in a sense, it springs, it would use the Unisat satellite system. Some fresh negotiation between the consortium when formed and Unisat will be necessary, for various reasons. For example, it is envisaged that the joint project will provide three channels: one films channel and two of mixed programming. That would mean a change from the proposition being negotiated between the BBC and Unisat.
  I envisage that the joint project should have a maximum life of 10 years from the date of launch; provisions to be added to the Bill will so provide. Ten years is chosen so as to provide an adequate period over which the project can build up an audience, recoup its initial outlay and move towards profit. I have particularly in mind the needs of the independent sector. Whether the project will last 10 years must depend upon the arrangements regarding satellite provision that the consortium will make with Unisat.
  On other financial matters, I wish to make it clear that no public money whatsoever is being invested in or pledged for the project; nor will it be in the future. The Government are in no sense underwriting any part of the costs. The BBC's share of the cost will come not from the licence fee but from borrowing on the money market,

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  under the extended borrowing powers granted to the corporation by an amendment of its royal charter last year. If the worst came to the worst and the project collapsed, it might be necessary for the corporation to draw upon licence fee revenue, with my consent, to settle its debts; but the BBC understands that such a use of licence fee funds would not be recouped through a subsequently enhanced fee. Expenditure of the ITV companies participating in the consortium, just as under part II of the Bill, would not be an offset against the levy payable upon the profits of their terrestrial broadcasting operation.
  Turning to the actual programme provision, the House will appreciate that, since neither the BBC nor the IBA as such will be responsible for providing the service, if it is to fit into our pattern of broadcasting arrangements, some responsible joint body will have to be brought into being. That will require another addition to the Bill. But I do not intend that the creation of this joint body, to bear responsibility for the transmission of the programmes and for their standards and content, should involve a large new bureaucracy. I envisage that its members will be drawn equally from the BBC's board of governors and the members of the IBA. It must have a separate statutory existence, since its responsibilities are not precisely the same as those of either of the existing broadcasting authorities; but, nevertheless, I believe that the board's activities can be viewed as a logical extension of those of both the BBC and the IBA. The standards which the service will be required to meet will be those which would apply to a service under part II of the Bill.
  As I have said, the project involves high risk and a substantial investment. The financial projections which the existing participants have carried out show that the venture will have to work hard in its early years to gain audiences and revenue. Substantial losses will have to be borne. Even on favourable assumptions, the project will be making losses, year on year, in the fourth and fifth year of its operation and will do little more than break even after seven years. Two particular consequences flow from this.
  First, while I am anxious that a competitive regime should not be postponed for any longer than is strictly necessary, our objective of establishing a British DBS service on a firm footing could be jeopardised if competition for audiences and revenue fragmented them before they were surely established. Some protection of the project in its early years is therefore justified. In the Government's view, it would be right to postpone bringing part II of the Bill into force until three years have elapsed after the launch of the joint project's services. At that point, the IBA would invite applications under part II and, provided suitable applicants were forthcoming, would issue contracts; so that during the second part of the life of the joint project there could be competition from other DBS channels—in addition, of course, to competition from other cable-borne services, which can of course use telecommunication satellites as a method of distribution to cable headends, and alternative systems of delivery such as video-cassette recorders.
  Secondly, the ITV companies, which have throughout made clear their wish to be associated with DBS, have stressed that they suffer the particular disability of facing the risk of losing overnight their reason for existence, and hence their ability to raise and service capital, not through any commercial failure but through the operation of the
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  franchising system; the present franchises terminate in 1989. Without some relief from this uncertainty, they have argued, they would not have sufficient financial confidence to engage in a DBS venture beginning in 1987. I have considered this point carefully and have concluded that I would be justified in making some — but the minimum—departure from the normal arrangements for franchise renewal. I therefore propose to add to the Bill a provision that for 1989, but on that occasion only, the IBA will not be under an obligation to readvertise ITV contracts, but it will retain a complete discretion as to whether to do so or not. This will preserve the general franchising structure, to which we remain committed, and leave the IBA with full powers to do what is necessary to ensure a satisfactory standard of performance. I stress that it does not give any ITV company any guarantee whatsoever that its franchise will be renewed in 1989; it leaves the IBA free to renew without readvertisement if it considers that the company's level of performance is satisfactory. Alternatively, the IBA may readvertise if it chooses.
  Mr.Gerald Bermingham: Does the Home Secretary agree that, effectively, he has just said that, if the ITV companies participate, he will consider extending their period of time? Might not some interpret that as almost an inducement to participate and as against the public's best interests, as they may well want to challenge the various franchise holders of the current ITV systems in 1989?
  Mr.Brittan: The hon. Gentleman is mistaken and must have misheard me. I did not in any sense say that the existing companies would be given an extension of their franchise. I said that the obligation on the IBA to re-advertise would not apply but that it would continue to have a discretion to do so. Therefore, if there was any reason to believe that an alternative service was available, it would be entirely open to the IBA to go through whatever procedures it wished in order to consider renewal of the franchise.
  Mr.Tim Brinton: Perhaps my right hon. and learned Friend will clarify that point. Does he mean that the obligation not to readvertise would be withdrawn for all ITV companies presently franchised, or only for those that invest in DBS?
  Mr.Brittan: I must stress that it is not an obligation not to readvertise. [Interruption.] I am trying to answer my hon. Friend, as I know that he wants to understand the position. The proposition is that for 1989, and 1989 alone, the IBA will not be under an obligation to readvertise. It will have a discretion to readvertise if it so wishes—I am talking about all the ITV companies—but it will not be under an obligation to do so.
  Mr.Richard Shepherd rose—
  Mr.Brittan: I must get on.
  Mr.Shepherd: I am sure that my right hon. and learned Friend appreciates that I am greatly disappointed that he should have taken that view. Has he considered the American experience, where DBS has not necessitated the extension of monopolies, contrary, perhaps, to the results that will flow from the statement that he has just made in connection with, I believe, section 18 of the 1971 Act? Will he reconsider his decision to give those companies the

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  chance of continuing their monopolies without full-scale readvertising of their licences when they come up for renewal?
  Mr.Brittan: I understand my hon. Friend's concern, and there will be ample opportunity to debate that point in Committee.
  To sum up this account of my proposals regarding the DBS joint project, I believe that the consortium approach offers the most realistic chance of getting the British DBS service into action within the next three or four years. If those who are negotiating have come to this same conclusion and wish to take this chance, I believe that we should not deny them the framework to make it possible. There will be the opportunity of a stake in the first DBS service both for the BBC and for those who might have sought to participate in an independent DBS franchise. It has a limited life; and the competitive regime, which remains our ideal, will not be long delayed. The choice of independent participants will begin very shortly. Work is already in hand on drafting the additions to the Bill which I have listed as necessary—to provide for the formal designation of the consortium; for the joint broadcasting body and its length of life; and for the changed arrangement regarding the readvertisement of ITV franchises. By making these provisions we do not, of course, guarantee that a joint project will come into being. That will be for the potential participants to determine. What we do is simply to play our part, as Government and Parliament, by creating the framework and opportunity. But, of course, having done this, we hope that the participants will consider that it is an opportunity which should now be taken.
  The Bill creates an important opportunity to harness the new and exciting developments in technology in the fields of both cable and satellite. In so doing it provides a stimulus to our manufacturing and service industries and facilitates an extension of the range of choice in entertainment and other services to the individual consumer at home. The development of a new communications infrastructure has profound implications for the workings of our society in the years to come. The Bill has an important part to play in making that development possible. As such, it is a measure of far-reaching consequence, which I commend to the House.
  5 pm
  Mr.Gerald Kaufman: Nobody would deny that the Bill has far-reaching consequences. It is clear from the Secretary of State's extraordinary speech that the consequences will be more far-reaching than those of us who studied the proceedings in the House of Lords anticipated.
  The Bill that the Secretary of State presented is not the Bill which the Government seek to enact. They will amend it root and branch and make fundamental changes in broadcasting policy, which have not in any way been foreshadowed. There are already reasons for disquiet about the way in which the structure of broadcasting will be changed by the introduction of cable television.
  The Secretary of State announced the Government's proposals for direct broadcasting by satellite and, almost in a throw-away sentence, for a national system of commercial radio. He has, therefore, announced a completely new structure for broadcasting, on which there has been no consultation and no discussion, which will
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  replace the properly structured broadcasting system from which the country has benefited for the past 60 years. At most, we shall have a semi-regulated and possibly an unregulated tower of Babel, in which people will plunge their hand to make profits at the expense of taxpayers and consumers. The disquiet on the Conservative Benches demonstrates that. That policy stands apart from the policy in the Bill which we have been discussing for several months and for which we have been preparing since the Bill was introduced in the House of Lords at the end of last year.
  When we debated the White Paper, we made our position perfectly clear—that we were opposed to ihe Government's policy. The Bill is a direct consequence of the policy in the White Paper. We demonstrated our opposition to the policy when we voted against the White Paper embodying it. Before the Secretary of State's statement today, we thought that the Bill sought to mitigate the damaging effects of the policy, and for that reason we decided not to divide against it.
  However, some of the safeguards in the Bill are far from adequate, and we shall seek to strengthen them in Committee. If we had known of the Secretary of State's approach to the Bill, we would have come to the Chamber prepared not for a debate of a fairly anodyne nature but to debate a contentious measure. If the Bill returns to the Floor of the House after Committee without the safeguards having been strengthened and with some of the extraordinary material foreshadowed today by the Secretary of State, we shall oppose it with all the rigour at our command.
  If the Secretary of State participated in legislation instead of merely reading from his brief and disappearing to deport defenceless Asian women, we might get information from him. We had 59 sittings on the Police and Criminal Evidence Bill, yet the Secretary of State attended for only three of the 147 hours. Therefore, we must deal with him on the rare occasions when he is present.
  As evidence of the good will that we felt before the debate and as a token of our good faith, we shall donate to the Home Secretary one amendment free of charge--that is, the need to correct the misprint in clause 39(2), on page 33, line 34. Furthermore, we hope that the definition of "local authority" in clause 35(2) will not be amended
  because the present definition includes the Greater London council as a local authority. Long may that continue.
  We hope that the Government are sure that they have the Bill right. It is grotesque that under schedule 3 the Bill will repeal part IV of the Telecommunications Act 1984, which received the Royal Assent only three weeks ago. That is the quickest repeal of a parliamentary statute that I have ever come across.
  The cabling of Britain is a development as inevitable as the construction of the canals, the building of the railways, the spread of the electricity grid and the expansion of the telephone network. From it, great benefit will accrue to the nation in terms of more work opportunities, less drudgery, and an easier and more productive life, with greater scope for leisure.
  A short time ago, the Government seemed to be fully committed to cabling. There was a grand ceremonial launching under the auspices of the Prime Minister. I am sorry that the Minister for Information Technology—if such a department exists—is not present, because his heart was set on cabling. The trouble is that it has been

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  postponed. In the words of Lord Beaverbrook, it will not take place this year or next year either. Unfortunately, the Government's ideology is frustrating their aspirations.
  Paragraph 177 of the White Paper sets out how cabling could be accomplished. It states:
  "BT (or BT and Mercury)"—
  the Opposition reject "Mercury"—
  "should be permitted to install wideband cable systems and that they should be required to operate them on a common carrier basis, that is by providing channel space to anyone who sought and could pay for it. If BT were given an exclusive role as common carrier it could ensure that cable systems were developed as an integral part of the national telecommunications infrastructure and that profits earned in densely populated areas would help finance the provision of services in less populated regions".
  That is a sensible approach. However, six paragraphs later, in paragraph 183, that course of action is rejected. The White Paper, without providing a convincing reason for it, continues:
  "the Government has decided that BT and Mercury should not be given the exclusive right to run cable systems".
  Accordingly, motivated only by dogma, the Government have decided that, instead of a national cable network provided by a publicly owned British Telecom, the system—if what arises from the Bill can be described as such — should be constructed piecemeal by private enterprise.
  That arbitrary decision leads Ministers to state a tremulous hope as a confident conclusion. The White Paper states:
  "The private sector should be able to finance it"—
  the cable network—
  "without any special difficulty from its normal sources."
  But the problem is that demand-led investment depends upon the existence of demand. At present there is no ascertained demand for home banking, home shopping or the other wonders consequent on a national cabling system, although it is hoped that the provision of a system will foster that demand. Since there is clearly a massive appetite for electronic visual entertainment in Britain, the Government pin their hopes on the assumption that entrepreneurs, anticipating large profits from cable television, will provide for the Government the cable network that the Government are unwilling to commission from the public sector—a public sector which, in any case, the Government are about to hand over to the scavengers of the City of London.
  The Government hope that utility will ride pickaback on entertainment, and the White Paper is refreshingly frank about what they hope will happen. It states:
  "Wideband cable systems offer the opportunity for non-entertainment services to be made available to subscribers at marginal price levels, since the basic system and infrastructure costs will have been absorbed by the entertainment services."
  To put it even more crudely, again in the words of the White Paper, it is
  "the Government's wish to see new types of service develop on the back of programme services."
  That means that what was once trumpeted as the cabling revolution will be, at best, a series of sporadic local risings. There is something almost wistful about the White Paper's meek expectation when it states:
  "The cabling of Britain will almost certainly take place gradually in the years ahead."
  I like the phrase, "almost certainly". A leading article in the Financial Times stated the position somewhat more brutally and certainly much more honestly:
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  "There is a view in the telecommunications industry that the dream of an efficiently integrated communications system is looking increasingly unreal. This is because such a goal may be incompatible with the Government's strategy that cable investment should be privately financed and market led."
  The Home Secretary said today that DBS was a high-risk, high-cost venture. If DBS is such a high-risk, high-cost venture, I cannot even think of adjectives to describe the cabling policy which the Bill will make possible. The fact is that the poor old Minister's dream of the harvesting of information technology looks more and more like the exploitation of entertainment technology, with the availability of next year's electronic marvels dependent on the appetite for last year's Hollywood movies.
  The leading article in the Financial Times summed up the position well:
  "The idea, at least for the short-term, is that viewers of popular television programmes will fund the investment that will lead to a new world of two-way interactive communication."
  Our hopes of a growing national cable system depend on the estimates of profitability made by potential holders of cable television franchises. It is certain that cable can be profitable only in densely populated areas, which means that under the Government's arrangements not much more than half the country—perhaps 50 to 60 per cent.—can expect to be cabled, however many other areas might wish to be cabled. More likely is the prospect that only about half at most of those 50 to 60 per cent. of households will pay hard cash to be linked to cable television. That makes the economics of the endeavour highly problematical, although the confusion about investment allowances for constructors has, I hope, now been cleared up.
  A research organisation has considered 10 areas chosen by the Government for new cable television systems and has found that, with a subscription of £9 a month for a basic service, a cable company can expect to sell its services to one home in three. The inclusion of other services would increase the average subscription to £16.50, giving an annual revenue of about £7.25 million. At best, that would put viability on the borderline, with profits having to be earned from advertising and other services. Naturally, the same market forces which dictate the Government's policies mean that the bigger the subscription, the fewer who will subscribe.
  Ironically, the one big assured profit-maker is the single area of activity from which the Government have firmly excluded the cable operators —voice telephony. The White Paper said flatly that voice communication would remain the exclusive privilege of BT and Mercury. I hope that when the Minister of State replies he will reiterate that commitment with the utmost clarity, since other commitments seem to become blurred as they are transferred from White Papers to Bills.
  How will cable operators be lured into doing the Government's cabling for them? That restrictions must be imposed on those operators is recognised by all, but safeguards that are too strict will rule out for good the prospects of profit for the operators. They will face the dangers of bankruptcy that have already afflicted some of their powerful counterparts in the United States—counterparts with access to far greater resources than many of the people who will try to become cable operators in Britain. The need to maximise the prospect of profits means that the safeguards must be watered down. Brittan's law becomes Gresham's law. The danger is, literally, that the bad will drive out the good, because the fear is that, without much firmer safeguards than those contained in

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  the Bill, cable operators avid for profit will buy dumped American programmes—material that has paid for itself in its home market and can accordingly be provided cheaply for our viewers.
  The White Paper spelt out the economics clearly:
  "For ITV the average cost per hour of transmission (excluding advertising) in 1981 was just under £40,000 averaging out original productions, repeat and bought-in material. In 1981–82 the BBC's operating expenditure for its two television channels was about £30,000 an hour. Channel Four is operating on a tighter budget and is spending around £25,000 an hour. An hour of original material can range from around £20,000 for a current affairs programme to £200,000 for drama (or even more in the case of prestige projects). Bought in material from the USA"—
  remember that this is the Government's White Paper—
  "where the productions costs have already been largely if not wholly recovered on the domestic market, can be obtained by the broadcasters for as little as £2,000 an hour."
  The White Paper promised a remedy:
  "The Cable Authority in considering competing applications will be under a specific duty to give weight to plans for using British/EC material and for stimulating new domestic production. It will moreover be required to satisfy itself that a proper proportion of such material is shown on each channel."
  At present the existing suppliers of television programmes—the BBC and the commercial ITV organisations—are restricted to transmitting 14 per cent. material of foreign origin.
  When the White Paper was published in April last year, Lord Whitelaw told the House of Commons:
  "On foreign programme material … the cable authority will be required to see that a 'proper proportion'"—
  of British programme material—
  "is shown on each channel as appropriate, to work towards a progressive increase in that proportion as United Kingdom production capacity grows, and to report progress regularly to the Government. We are anxious to maintain and develop the strong national production capacity that the BBC and ITV have helped to create."
  He said even more specifically:
  "The cable authority … will have to show that there will be a progressive reduction in the amount of foreign material that is used. That duty is not placed on the IBA but it would be placed on the cable authority." — [Official Report, 27 April 1983; Vol. 41, c. 867–70.]
  The present Home Secretary, on this as on so many other matters, is much less satisfactory than Lord Whitelaw. He said casually last July:
  "the Government accepts that in the earlier years cable operators may need to use a significant amount of overseas material, if cable is to get going".
  However, the Bill does not say that. It simply asks the new Cable Authority to do all that it can to secure
  "that there are included in the programmes proper proportions of recorded and other matter which originates within the European Economic Community and is performed by nationals of member States."
  Clause 7(2)(b) requires the authority to take into account
  "the extent to which the applicant or each applicant proposes to include in the programmes matter which originates within the European Economic Community and is performed by nationals of member States".
  There is nothing there about working towards a progressive increase in the United Kingdom proportion, or about a duty to show such a progressive increase, or about a duty to report on progress in achieving the increase to the Government. That is not in the Bill. The Bill seeks to enact the unsatisfactory vagueness of the present Home Secretary rather than the reassuring commitment of his predecessor.
  Mr.Roger Gale: A few moments ago the right hon. Gentleman gave the House the impression
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  that a restriction of 14 per cent. was imposed on the IBA and BBC. Will he concede that that is incorrect and that that is a self-imposed restriction, couched in the same terms as those in the Bill?
  Mr.Kaufman: No, I do not accept that. Even if the hon. Gentleman were accurate, it would not matter. However the limit is imposed, we want the same limit for the cable operators—that is the principle. Therefore, we are saying that, however the limit is assumed, whether it is a voluntary or compulsory one, it is intolerable that the same limit accepted by the BBC and the IBA should not be imposed on cable operators.
  The Minister of State, Home Office (Mr. Douglas Hurd): I assure the right hon. Gentleman that the passage in the Bill that he is criticising is taken directly from section 4(1)(c) of the Broadcasting Act, which imposes a similar duty on the IBA.
  Mr.Kaufman: However, the commitment made by Lord Whitelaw was not the commitment made for the IBA. His commitment—
  Mr.Gale: The right hon. Gentleman should admit that he was wrong.
  Mr.Kaufman,: I am not wrong. The statement made by Lord Whitelaw was a promise that the proportion employed by the cable operators would be reduced—
  Sir Paul Bryan (Boothferry): From what?
  Mr.Kaufman: From the original proportion. I am happy to read Lord Whitelaw' s words again. I am sure that he would be glad to hear his pledges reiterated in the House, even if the Government have rescinded. He said in April a year ago:
  "The cable authority will be required to see that a 'proper proportion—
  of British programme material—
  "is shown on each channel as appropriate, to work towards a progresssive increase in that proportion as United Kingdom production capacity grows, and to report progress regularly to the Government."
  He said later that the Cable Authority
  "will have to show that there will be a progressive reduction in the amount of foreign material that is used. That duty is not placed on the IBA but it would be placed on the cable authority."—[Official Report, 27 April 1983; Volume 41, c. 867–870.]
  He spoke of a duty, but there is no duty in this Bill.
  Mr.Hurd: There is a duty to report, in clause 22.
  Mr.Kaufman: There is a duty to report, but not a duty to report on reduction. There was a commitment by the Home Secretary of the day that there should be a progressive reduction and that the Cable Authority should have a duty to report progress on that reduction to the Government. The Bill does. not include that. As the Minister says, it has a provision for a report on the requirements of clause 10(1). That clause does not impose the duty to reduce that the previous Home Secretary promised. I am glad that we now have it clear that Lord Whitelaw as Home Secretary gave a promise to the House of Commons and the present Home Secretary has not included it in the Bill.
  As the Minister has given me the opportunity, I shall quote clause 10(1)(d), which provides
  "that there are included in the programmes proper proportions of recorded and other matter which originate within the European Economic Community and are performed by nationals of member States."
  Clause 7(2)(b) requires the authority to take into account

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  "the extent to which the applicant or each applicant proposes to include in the programmes matter which originates within the European Economic Community and is performed by nationals of member States".
  We have none of the control promised by Lord Whitelaw but simply a pious hope. It is a hope that is likely to be extinguished in the rush to ensure profitability by cable operators who may become increasingly desperate to recoup their investment.
  We shall seek to amend the Bill to secure a much more precise quota requirement, and we shall seek to amend schedule 1 to ensure that at least one representative of British entertainment or artistic interests must be appointed to the authority. We shall also seek to foster employment prospects in cable for United Kingdom workers and to protect their working conditions. This is especially important in the light of the disreputable clause 42, which repeals the provisions of the fair wages clauses for workers in the cable industry.
  We believe as well, particularly in the light of what the Home Secretary has said about relieving the IBA of its responsibility for advertising, that it is about time that this authority—and the IBA—should be required to publish the reasons for its award of franchises to the chosen operators. The cable network should not become yet another old boy network.
  We also want a stricter definition of the standards required of news broadcasts. Clause 10(1)(c) requires
  "that all news given (in whatever form) in programmes which originate in the United Kingdom is presented with due accuracy and impartiality".
  The words
  "originate in the United Kingdom"
  are not precise enough. They leave a loophole which could be exploited.
  If operators are unable to get rich quickly, they will seek at any rate to get poor slowly. Not only will they want material for which they pay as little as possible—I hope that this will impel them to draw on local groups which can provide programme material as cheaply as Hollywood and with much more relevance to our circumstances—but they will also want to scoop as much advertising revenue as possible. At present, commercial television stations can transmit an average of six minutes of advertising per hour, with a maximum of seven minutes in any one hour. The White Paper, satisfactorily enough, gave this commitment:
  "It would be inequitable if these channels"—
  the cable channels—
  "were free to take an unlimited amount of advertising while IBA channels continued to be subject to restrictions. Accordingly the Government proposes that the Cable Authority should have a duty to ensure that on those cable television or sound channels which it considers to be broadly comparable with IBA television and sound services the amount of advertising should not exceed the maxima (both overall and in any one hour) for the time being set by the IBA for independent broadcasting."
  That is a pretty precise commitment. How is it to be honoured in the Bill? It is dealt with in clause 12(3), which says:
  "The Authority shall do all that they can to secure that, subject to such exceptions as may be agreed between the Authority and the IBA or, in default of agreement, determined by the Secretary of State, the amount of time which, in the case of any licensed service, is given to advertisements in any hour or other period in any particular circumstances does not exceed the maximum amount of time which could be so given if that service were ITV."
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  That contains two massive loopholes. First, the authority is enjoined only to do all it can. Secondly, the Secretary of State can interfere to dilute the commitment. What the Secretary of State told the House today when I questioned him about this matter must add to the disquiet that already exists about the proportion of advertisements that will be permitted in cable transmissions. It is all the more important to amend the clause in order to assist the Government to ensure that their original promise is kept.
  Audiences for television programmes are, by definition, finite, particularly in a country such as ours, where television set ownership penetrates almost to the whole of the population. When cable is operating, audiences will have four other possibilities of television entertainment. There will be the terrestrially transmitted BBC and ITV programmes. There will be the DBS satellite programmes, provided by the new consortium about which we have just been told. The country will come to regret the way in which the Government are opening wide the doors to increasing commercialisation of television in Britain. There will be the entertainment provided by video tape recorders, which will soon be present in half the nation's homes — a higher penetration than anywhere else in the world. The market into which the cable operators will seek to insert themselves is highly competitive, not to say cut-throat.
  The quantity of advertising, while not finite, is certainly not infinitely flexible. The Secretary of State's extraordinary announcement today about a national system of commercial radio will put that source of revenue under even greater pressure in future. It is likely that more advertising on cable, even if the current ITV quota is enforced on cable operators, will reduce the amount of advertising for ITV itself. It is certain that if cable is allowed to include a higher proportion of advertising than ITV—as the Secretary of State seemed to imply today—the commercial television companies will press for their quota to be increased. It will have highly undesirable consequences for the quality of ITV programmes.
  Of course, the quantity of ITV advertising depends on audience ratings. Even though British viewers watch television for more hours in the day than any viewers except those in the United States, if cable takes a sizeable proportion of the total audience ITV will be tempted to go down market in order to protect its ratings. We saw in the early and not very edifying days of ITV that the response of the BBC was to follow its commercial competitors down market as well.
  If cable, in its attempt to gain an appreciable share of television audiences, goes for the most accessible and undemanding dumped American entertainment—the Bill gives it the scope to do that—ITV, and then the BBC, will feel impelled to follow down that road. The domino theory will dominate the home screen. It is a proud fact— a fact that everyone in the Chamber cherishes—that British television programmes are of higher quality than those anywhere in the world. One reason for that is the concept of structured programming. The concept of structured programming broadcast terrestrially is already in jeopardy and may not long survive. Indeed, breakfast television on both channels has already brought in sequence rather than structured broadcasting to British television, as commercial radio did when it started.
  Labour Members — I trust, all hon. Members— believe that the concept of public service broadcasting in

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  Britain must survive and flourish. If cable, in a single-minded drive for profit, drives its public service competitors down market, we shall all be the losers. I for one shudder at the prospect that the enviable standards of British television should be driven by the pressures of unbridled commercialism down to the abysmal level of most American television.
  Labour Members certainly welcome the prospect of greater choice for viewers. We welcome the prospect of more entertainment opportunities. We want to see more local news, more services for the ethnic minorities, and more community television. We wish cable well and, despite the limitations imposed by the Government's dogmatic approach, we hope that the cabling of Britain will succeed. But as that process proceeds, we do not want to sacrifice what we already possess and what we rightly value. It is in that spirit that we approach the Bill.
  5.36 pm
  Sir Paul Bryan (Boothferry): I declare my interest in the Granada group of companies, whose activities are affected by the Bill.
  Today's debate is taking a different form from the Second Reading debate only five months ago in another place. That debate was dominated by cable and its problems. Today DBS has taken the stage. Twelve months ago we were all cable optimists. Now, few of us would go as far as that.
  The speed of change which has clearly been suggested by my right hon. and learned Friend the Secretary of State today is not what we are used to in broadcasting. The BBC came on the air in 1936. ITV did not arrive until 18 years later, in 1954. Nine years after that we had BBC2 and 14 years later the fourth channel. Each of those was regarded as revolutionary at the time, especially the advent of ITV, and we had plenty of time to digest them. Despite the prophets of doom, especially on the advent of ITV, our television is, if not fully appreciated in Britain, certainly coveted by most of the English-speaking world.
  That leisurely development is at an end. The award of the first 11 cable television franchises, followed by the Bill with its cable and DBS implications, sets in train nothing less than a total, if long-term, recasting of the traditional pattern of British broadcasting. We now foresee with complete certainty the breaking down of the BBC-IBA duopoly that has governed our broadcasting for the past 30 years; a further dilution of the public service element; the concept of public service broadcasting; the end of the advertising monopoly of the ITV companies which has supported their heavy overheads and financed such costly productions as "Brideshead Revisited" and "The Jewel in the Crown"; and the diversification and internationalisation of ownership and of the means of distribution and sources of programme. All these developments are inevitable, but the time scale is anybody's guess. It would seem that, in the end, cable will become the natural medium of local distribution in areas which financially justify multiple services, and DBS will offer basic television channels from home and from abroad to all other areas.
  Against that background, I am sure that the Government were right to go boldly for cabling of this country at the earliest possible moment and for the establishment of DBS. To try to achieve this on the back of entertainment programmes was a challenge to private enterprise, in which the Government believe. But this is
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  a free country, and nobody has a duty to enter this tricky and competitive field, or is likely to do so, unless the prospects are good.
  To start with, the prospects looked good. My right hon. Friend the Minister for Information Technology has been a magnificent champion for the cause and had no difficulty in selling the idea to many prospective operators; but the truth is that cable looks unlikely now to fulfil the promise that it offered two years ago. The argument then was that Britain's technological future depended on moving into the new world of interactive communications, with all the advanced equipment that could be sold abroad and the creation of employment at home.
  A combination of factors has caused a general rethink. The cost of the equipment, far more sophisticated than is required for entertainment, has shocked some people. This has been compounded by the Budget provisions for the abolition of the 100 per cent, depreciation allowance. The suspicion is also dawning that the programme services now on offer to cable television operators may be insufficient to attract sufficient consumer interest in our circumstances. The movie channel has done very well on American cable, but in this country there are already 32 films a week available free on BBC and ITV, and we know that the video cassette recorders now installed in nearly one third of all our homes account for rental of 4 million cassettes a week, a large proportion of them movies. The cable sports service may prosper, but BBC and ITV do a pretty good job in their coverage of most established sports.
  In my view, cable needs a stimulant. My general advice to the Government is as follows. First, do not be afraid that people will make too much money. In the unlikely event that they do, all that the Government have to do is to slap on a levy, as happened in independent television. Second, keep restrictions to a minimum. I asked the chairman of the American FCC what regulations he would introduce if he, like us, was starting a new cable set-up. He said, "I would impose no regulations to start with, and then introduce them as they were required."
  In the early days, when little money is coming in, there will be insufficient money for programme making, and the programme contractors will have to buy foreign programmes to stay in business. This is not because they want to buy American "rubbish", as it is said, or the other emotive words that have been used, but because, if one puts on half a dozen more channels, many more programmes must be available quickly. Therefore, the programme contractors will have to buy programmes, and they will buy a great many. As time goes on and they get established, I would expect Lord Whitelaw's recommendation to come about, the number of such programmes will be reduced, and there will be an ever-increasing proportion of programmes produced on the home front.
  Mr.Bermingham: Would the hon. Gentleman explain—and one appreciates the aspect of the problem to which he addresses himself — just what market the independent producers, who service a large export market at present, are meant to service in the period when these local cable programmes are destroying their very base by the importation of cheap American trash?
  Sir Paul Bryan: Since the advent of Channel 4, the independent home producers have already done particularly well. Few people forecast how well they

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  would do. From now on, with cable, there will be many more opportunities and a considerable growth on that front.
  Mr.Gerrard Neale: Will my hon. Friend confirm that when home-based programmes by existing channels—BBC or ITV—are sold abroad they, too, are sold very cheaply by comparison?
  Sir Paul Bryan: That is quite true. As soon as programme makers, whether they are American or British, have recouped the original costs, they are able naturally, and rightly, to sell them more cheaply.
  The critical times in these early days of cable will be next autumn, when the Cable Authority has been established and when potential aspirants decide whether they will apply for franchises. If there is a long queue of applicants, all is well. If there is no queue, that is the end of the programme companies. They cannot go on producing programmes at a loss with no prospect of an expanding market. By then, the 11 companies which have been granted franchises will be in business, apart from those that do not reach the starting post. Their experience will not yet have provided any indication of cable prospects. It is important for the Government to do everything they can between now and then to promote a more buoyant mood in the cable industry.
  As to DBS, I consider that the Government have been sensible and brave. Once the BBC had established that DBS was beyond its means, the only other possible source of money and expertise was the ITV companies and the other support that the Home Secretary described. The companies clearly could not enter this field if, during the period of the first satellite, they all had to go through the traumas that accompany the reallocation of franchises. Hence the concession that they are receiving in the possible extension of their franchise periods. I think that that was inevitable and right.
  I said that the Government were brave because they laid themselves open to the sort of charge that we have heard from the Opposition, with the obvious criticism that broadcasting will remain with the same old gang, and so on. However, the hand was so overplayed by the right hon. Member for Manchester, Gorton (Mr. Kaufman) that I do not think that much bravery was required to counter the argument.
  In fact, it will not be quite like that. One of the certainties that I predicted in the first sentence of my speech was the internationalisation of broadcasting, with satellites broadcasting into our homes from the continent, in particular from Ireland. The idea that our broadcasters will continue to have the country to themselves is quite false. It also puts into another perspective the restricting foreign films, but they will come in over our borders in any case. The huge cost of DBS would have kept the television companies out of this medium; the new arrangement means that probably all of them will be involved, to their own benefit and to that of the viewers.
  As I have shown, making projections of forecasts in the broadcasting world is not a rewarding exercise. Nowhere can this be more unpromising than with DBS, in which there is no experience to go on. All I ask is that the Government learn from their early cable experience, economise as much as possible on the sophisticated technology, and allot a maximum sum for programmes.
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  There is no bottomless pit of interesting material from America to be imported. New programmes will have to be made by the BBC, ITV or other companies. They will have to be complementary to those available free on the BBC and ITV, and in cassette form from the local garage.
  The proposal suggests in quality and sophistication a Concorde-like standard. What is really needed is a first step to our celestial broadcasting, something on which we can all afford to ride. Once DBS is on the air, given good programmes, the task of attracting viewers will be less forbidding than it is for cable. We are told that to break even a cable operator must attract 40 per cent. of the homes passed by his cable. On the other hand, DBS needs to be used by 1·5 million to 2 million houses to break even. That represents only 8 to 9 per cent. of homes in the country—the area covered by the satellite.
  I did not realise that a statement was to be made about the future of independent radio. We are to have a national independent radio frequency. Will that frequency be given to one operator covering the whole country, or will the franchise be regionalised? Will there be straight competition in the advertising world between local radio stations and a single national body? That is of interest to the whole radio world.
  Earlier I contrasted the differences surrounding today's debate with what happened a few months ago when the Bill was introduced in another place. I wish the Government every good fortune in this exciting and changing scene.
  5.52 pm
  Mr.Clement Freud: The Bill is another monument to the Government's policy of free enterprise and the efficiency of competition; but in this instance the myth that competition will decide and allocate, let alone do that efficiently and well, should be speedily debunked. In short, the Government appear to be actively intent on allowing monopolies to develop whilst publicly hoping that, miraculously, they will not.
  There is already a high level of concentration in the industry. Even the initial measures taken by the Government to introduce cable operations—in the 11 private franchises granted — have illustrated the concentration potential, since three of the 11 franchises have been given to one group—Thom-EMI. If steps are not taken to prevent the acquisition or buying up of neighbouring franchises, area and regional monopolies are likely to develop without any positive good to the consumer. I am aware that there may not be any positive good to the programmer either financially or otherwise.
  One must question the wisdom of seeking to exclude cable companies from the scrutiny of the Director General of Fair Trading and ask whether there is any justification for that. I have no doubt that we shall discuss that at length in Committee.
  What will emerge in the wake of the Bill is the creation of another quango in the shape of the Cable Authority, the membership of which is to be in the gift of the Home Secretary. It will be another unelected body which may even be unrepresentative of those most intimately involved in the industry, let alone of the public at large. None the less, it will enjoy considerable discretionary powers, with few obligatory duties.
  The Bill fails to guarantee representation of local interests, of the voluntary organisations which are being urged to look favourably on cable television, or of any part

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  of the broadcasting and entertainments industry. A membership of 10 for such an ell-embracing authority seemed to be sensible. The Home Secretary mentioned the chairman and six members. I shall not argue about numbers; I would rather there be seven good men and women than 10 chosen because they happen to be closely related to, or friendly with, a particular Member on the Government Front Bench. We believe that calibre is more important than numbers, although, unlike the Government Front Bench, we do not believeas does the president of the Fiat corporation of Italy—that the number of directors of a company should be uneven and that three is too many.
  We know that the Government are not in favour of open government, let alone the encouragement of public scrutiny of quasi-official goings on, but consultation procedure for franchise applications, and later appraisals of how each franchise is operating, must be there for all to see. I suggest, as does the National Consumer Council, that there should be an obligation on the cable companies to be open to public scrutiny so that the public can be reassured that the operator is among the best of the applicants.
  We have talked much about quotas. The Home Secretary said that a proper proportion of foreign films was 14 per cent. Surely it would be better to lay down what is an improper proportion and to set a ceiling on the percentage of material that can come from foreign countries. Those of us who have been in the House for a long time and have taken part in similar debates know that if we are to have rubbish it is better for it to be our rubbish. If it cannot he British rubbish, let it be EEC rubbish. We all know that the older the material, the cheaper it is. Our old rubbish is better than their old rubbish.
  An important issue is programme standards. I am bemused that the Home Secretary should believe that programme contents beamed from on high or channelled from beneath the ground should be subject to different criteria from material transmitted by existing methods. Most hon. Members will agree that, under the monopoly of 60 years ago and the duopoly which has existed for 30 years, the monitoring of standards has gone quite well. Suddenly, because people are not keen to come forward and provide a service, the Government are to offer inducements, either financially or by extending a franchise. That must not be allowed to change standards.
  Cable television programme standards should be protected on the same basis as those already laid down for the broadcasting authorities. There is no reason why violence, obscenity, filth, or even rubbish, delivered by cable should be more or less acceptable than material brought to us in the traditional way.
  Control also needs to be tightened in advertising. I urge that the rules currently operated by the IBA in one section of the broadcasting media be similarly applied to cable broadcasts. The control of sponsored programmes on cablevision should be no less stringent than on broadcast television.
  If the greatest public good is to be extracted from the opportunities that cablevision offers, we must look more carefully at the question of responsible monitoring and access by local groups. Most voluntary organisations have emphasised the need for resources and relevant expertise to be apportioned to them if they are truly to benefit from cable broadcasting.
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  I remind the Home Secretary that the nation awaits with eagerness the advance determination of what shall and what shall not be "protected events" of national significance. I am not suggesting that a new quango be set up to gauge the ongoing events that shall be protected or unprotected. But I feel that with the Bill there must be a schedule that includes a broad range of events that the public, whether or not they pay for cable television, whether or not they are able to view cable television, will be guaranteed on the existing channels. That must include not only the existing classic races and international football matches but a fair proportion of minority sports that have their adherents who deserve to look forward to rugby football, rugby league, ice dancing and the many other events that are now shown on television and which are dear to their hearts.
  6.1 pm
  Mr.Tim Brinton: As a cautionary measure, I declare my interests, although as far as I know none of them has any direct connection with cable or satellite. I am a director of Airtime Publicity Limited, a consultant with the British 'Videogram Association and a firm called Communications Strategy.
  I wish to introduce a slightly novel note into the debate. With one exception, all the speeches have appeared to suggest that we are considering an extension of public service broadcasting in the development of cable. That is the wrong way to approach the subject, because we arrive so often at the wrong arguments. Some have defined cable as narrowcasting—it is the deal between the man who provides the cable and the individual customer, multiplied many times, just as a library deals in books. It is not transmitted out into the ether and spread over everyone who has the capacity to receive it; it is done individually. It is a novel form of service and a whole new ball game in inventing a new technology device to provide communication and picture in the home, office or wherever. Therefore, immediately to relate the problems of providing cable—only one part of which concerns public service broadcasting or entertainment—with what goes on now tends to produce a difficult argument.
  Another difficulty has become especially apparent today, although many hon. Members have noticed it during the past two years. If there was one Department in Government responsible for the whole of the arts and the media and the problems connected with them, we would have a simpler time. Half of the Bill to regulate cable and DBS depends on the activities of the Department of Trade and Industry, yet it is introduced by the Home Secretary. So much depends on what the other Department is doing as the operation proceeds. For instance, as I understand the Bill, the new Cable Authority will not stand a chance of getting its fancied runner appointed to a contract if that fancied runner has not already been given the go-ahead, through licences, by the Department of Trade and Industry, which therefore has the whip hand. Of course, negotiations will take place, but it is vital for the licence to be granted before or during approval by the new Cable Authority in terms of standards and so on.
  The White Paper suggested that we follow the light touch suggested by Lord Hunt's committee. The Bill strives genuinely to preserve that light touch but, here and there, that light touch has been tightened quite significantly. That worries me. Innovations in the entertainment business have had to start in freedom and,

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  as the hon. Member for Cambridgeshire, North-East (Mr. Freud) said, with a certain amount of rubbish. It is from a great deal of rubbish that they developed into what we know today.
  There was a great deal of rubbish in the theatre, in film and in cinema when they began. Certainly on the question of standards, about which much has already been said, and much more will be said today, there was a great deal of low standard television before the advent of commercial competition through ITV. I accept that some first-class plays were broadcast by the BBC when it was a monopoly. However, I worked there and I know that there was also plenty of bad-quality television, as there always will be. I freely admit that I appeared on some of it, but that is of the very nature of the game. The assumption by hon. Members that the potential audience, if it materialises—and it is a big "if' for cable—will be grabbed and hooked for years and years if it is offered nothing but cheap American rubbish is wrong.
  I began by saying that I envisage cable as a new technological facility. If a householder is to pay —9 basic a month and a little extra for this, that or the other channel, and he is offered only American rubbish, after a few months he will become supremely bored with paying extra for something that he could get a great deal of on both the major channels.
  The quota for ITV and BBC, which is self-divined at 14 per cent., looks different if we study the prime broadcasting times of 6 pm and 10 pm. If from the Radio Times and TV Times we worked out the proportion of foreign and non-EEC material during those times, we would see a different picture. That is what people are really talking about when they refer to that magic figure quota. A great deal is already broadcast and received in that popular way.
  Last night I was riveted by BBC 1, as, I suspect, was any hon. Member who was at home. [HON. MEMBERS: "No."] Well, some watched snooker, but I watched BBC 1. A four-hour schedule featured five winning programmes. I am sure that the broadcast was intentionally timed, by the new managing director, who is an excellent operator, to go out before our debate. It was interesting to note that three of the four hours featured essentially down market, popular material, linked by a professional presenter, and the whole demeanour—
  Mr.Roger Stott: Why are they down market?
  Mr.Brinton: I am glad that, for once, I can respond to an Opposition intervention made from a sedentary position. I consider them down market because they are essentially popular programmes. I am not criticising them, but praising them—
  Mr.Corbett: Snob..
  Mr.Brinton: I am not a snob. I am trying very hard—and I am glad to receive support from the Opposition Benches—
  Mr.Corbett: Is the hon. Gentleman saying that simply because millions of people are riveted to their television sets watching the Olympic Games there is something down market about that? Why does he make such snobbish judgments?
  Mr.Brinton: By "down market" I meant popular, and by "popular" I mean good popular programming of excellent quality. I was not running them down. The popular programme need not be of bad quality.
  Mr.Kaufman: Perhaps I might give the hon. Gentleman a pocket definition. The Daily Mirror is popular, The Sun is down market.
  Mr.Brinton: As one who takes equal glances at both, I would not dream of giving a judgment on the right hon. Gentleman's view.
  Having, I hope, established that by good quality we do not mean something that is of only minority interest, but which can also be popular, I am making headway with my argument, for there is a great deal of useful, high-quality, popular programming which has not yet been explored in Britain.
  It has been suggested that there should, as of right, be on the new board of the authority a representative from one of the entertainment unions. I see cable development fundamentally as being business-led. I hope that when the Home Secretary considers the people who will represent our views on the authority, he will put business expertise first and foremost. A mistake that we have made in broadcasting for too long has been to talk about it as though it were some sort of religious proceeding. It is not. It is real, and it is becoming more real and sophisticated. Cable will not succeed if too many members of the authority are concerned with the more philanthropic side of life. The authority must be tough and know exactly what it is saying to the various consortia that will be spending huge sums.
  The statement in clause 10 that
  "all news … is presented with due accuracy and impartiality" is right in terms of hard news. However, I have noticed in previous debates, notably in connection with video recordings, that sometimes we used the word "news" too loosely. For example, if that provision were to include current affairs, I should be worried about the toughness of the impartiality rule because cable, with its multi channels, presents an opportunity for all shades of opinion to be heard and seen.
  For example, there is the possibility of trade union organisations getting together to put over their point of view. The possibilities for business and other interests are huge. We have come away, as we go through this window, from the four channels, the duopoly. We are going in for the sort of multi newspaper set-up that we have in Fleet street, and newspapers can allow opinions in editorialising.
  I believe that there are plans by cable operators to provide, in effect, closed information channels. Again, the trade unions or other interest groups might wish to speak to only their members. If they are putting one point of view, must we ask somebody along the following week to balance that point of view, as we do now with the BBC and IBA? To do so would be wrong.
  I have dealt with the quota question. As I say, the British people will themselves ensure that British material in enough quantity is put on, otherwise cable will fail.
  The position of advertisements is, some would say, too tied to the IBA. I have no objection to the broad idea that, where programme material is similar to that being put out by IBA contractors, the amount of advertising should broadly be the same. However, I notice in the Bill that the letters "IBA" occur with increasing frequency. Indeed,

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  there is an instruction to the authority to consult the IBA —no other body is mentioned in relation to consultation —before determining advertising policy.
  The authority should certainly consult the IBA, but it should consult the advertising and other associations and bodies involved. I should like to see the specific instruction to consult the IBA made more general. While no authority concerned with television advertising could fail to consult the IBA, I fear that at present it looks as though the IBA's word will go forward.
  Direct broadcast by satellite is as risky, if not more so, as the cable venture. We are talking about a very high-risk investment. I suppose that when my right hon. and learned Friend was considering the present position on satellite broadcasting—being a believer in the free market and free competition—he had various options open to him when the BBC decided that it had to go in with one or more other bodies to succeed.
  For example, he could have said, "No BBC or IBA contractors. Let us open a new free market and compete absolutely fairly." He did not say that. He chose, instead, to give 50 per cent. of the operation to the BBC and the new consortium, about 25 per cent. to the IBA contractors —if they will take it, and that is still a big "if'—and about 25 per cent. to others.
  The competition should be fair, and to give the lion's share to the BBC and split the other two in the way proposed is not completely to my liking. If we must split it, I would prefer it to be 33 1/3 per cent. to each, and then we should have fairer competition.
  As for the concession—I suppose that "concession" is the word we must use—which my right hon. and learned Friend announced today, it had been rumoured that the present franchises might be extended. I gather that he decided not to take that view but to say that the IBA shall have the freedom to choose not to readvertise the present contracts in 1988–89, when they become due.
  I hope, if inducement it be, that it is enough inducement for this huge investment, for I could hear some of the contractors whispering behind me, as it were, "If in 1988–89 the IBA chooses to make me readvertise, I shall have put a great deal of money into satellite and I am in exactly in the same situation as I might have been before. In other words, I might lose my licence almost on the day that my money starts to work for me on satellite." That is a big difficulty that I trust we shall consider in more detail during a constructive Committee stage.
  I am a believer in cable and in satellite. They can both work. Our job is to give them the freedom to work, to stand back and not get too involved with excessive regulation.
  6.20 pm
  Mr.Gerald Bermingham: The hon. Member for Gravesham (Mr. Brinton) advanced an interesting theory on how the cable system could be financed and got off the ground. The concept is to give the public trash at first to make it easier for the cable stations to get off the ground. Subsequently the great British public will say, "We have had enough trash now, please include some quality programmes." The hon. Gentleman suggests that at that stage the standard will start to improve. That is the argument of the naive. It does not take into account the possibility of independent producers who have built up expertise going bankrupt because no one will buy their product as a consequence of all the cheap trash that is
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  available on the world market. The cheap stuff costs about £2,000 an hour in product time as opposed to the very much higher price of the decent quality programmes.
  Sir Geoffrey Johnson Smith: Why does the hon. Gentleman assume that something that can be purchased at a very moderate price should automatically be classified as trash? There are many ancient productions when judged by modern yardsticks which are classics of their kind and are available on very easy terms commercially. Would it not be to the advantage of many people to be able to see those productions?.
  Mr.Bermingham: I accept that unreservedly. "Gone with the Wind", for example, has circulated through the cinemas and has appeared on the television screen. A video recording of the film is available and the film is available in various forms from all sources. It may well be possible for a cable station io buy a copy of that film at a low price. No one would dream of suggesting that "Gone with the Wind" was trash.
  I have much more in mind the secondary product that one sees on American cassettes that have been used to record some of the products that are shown by American cable stations. The quality of production in that sector does not depend on age. It is often quite modern stuff— it might well have been made in the past six to eight months—and, because of the large market in the States and in other countries, it is possible to reduce the product price. That is the result of being able to sell a large number of units. Units will be sold to the American cable stations arid to many others and the unit product price in Britain will be very much less than the unit product price of a similar product in this country. This constitutes a form of unfair competition because the marketing possibilities of the American product will have been exploited to the full and production costs will have been recovered. The quality of many programmes of that type is trash and I make no apologies for saying so.
  Mr.Neale: I suggest with the greatest sincerity that the hon. Gentleman considers further his argument in respect of British productions which, I am sure, both he and I would not consider to be trash. Indeed, I am confident that he will agree that the majority of them are of an especially high standard. If the hon. Gentleman wishes to serve on the Committee that considers the Bill, and if he is selected to do so, will he direct his attention to productions such as "Brideshead Revisited" and series such as "Upstairs Downstairs" to ascertain the price that they have been able to command when sold to overseas companies? I can assure him that they sell for a piffling proportion of what they cost per hour to produce. The same argument applies to productions from overseas that are sold to the British market. The hon. Gentleman must accept that there are films that can be acquired cheaply from overseas that are of a high standard and that there are others that are trash.
  Mr.Bermingham: I accept the hon. Gentleman's argument. I accept also that English products, once they have been sold within our own system, may well sell abroad for smaller sums. I am advancing the simple argument that, unless we allow a home market to continue and in some form to be safeguarded, the product of our producers, which subsequently becomes an export product, will not get off the ground. If we do not have a home market we shall be unable to build an export market.

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  The product price externally will be very much higher because of the absence of the home market. It is vital to ensure that quality of production is of a high standard and that basic production is safeguarded, and there lies my quibble with the Bill.
  I accept the Bill in principle and I accept, too, the concept of development in the entertainment industry, whether it be by way of satellite 1 or the BBC satellite. We have heard this afternoon that there is to be commercial radio nationally and goodness knows what else. I do not object to diversity, but who will pay for all these developments? What equipment will the average householder need in his house if he is to benefit from all the new systems that will become available? A secondary argument can be developed when we consider how the programmes will be funded.
  If the average householder is to benefit from all the developments that we are discussing— I concede immediately that it will be necessary to produce domes to be placed on roofs to receive the signals and that additional fees will have to be paid—the cost at current prices of the initial equipment will be about £450. I suppose that every good household will have to have its video machine, which will cost about another £400. In addition, the average householder will have to pay his television licence and pay to join a video club. I accept that the membership fee for a video club can be as little as £1 a year. All this means that the man in the street will spend more than £1,000 if he is to benefit from the proposed developments. The number who will be in a position to spend all that money must perforce be somewhat limited. Not everyone will be able to spend £1,000 in this way. Many of them will go either for the cable system or for the "dish" system, the satellite alternative.
  The audiences for each of these types of programme will fall, and when that happens the advertising rates will also fall.
  Mr.Brinton: Does the hon. Gentleman agree that the magnitude of the challenge will be faced by the advertising industry as well as the programme maker and Parliament, which will regulate what should appear? Many enlightened representatives of the advertising industry accept that they will have to change their attitude to media advertising and target it to individual groups in a very different way.
  Mr.Bermingham: I am grateful to the hon. Gentleman for intervening, because he has taken exactly the road on which I set out to travel. He has referred to an area that causes me to have the greatest reservations when I consider the contents of the Bill. If I am lucky enough to be selected to serve on the Committee that considers the Bill, I shall travel along this road at much greater length. The Minister knows from experience what that might mean for him.
  I return to the road on which I have taken only a few gentle steps. As I have explained, advertising rates will fall, the advertising base will contract and the funding from the companies that purchase the various "products" will decrease. If royalties are to be maintained, quality must also be maintained. If quality is to be maintained, a standard of product that is similar to the present standard must be maintained. We could not say that we had a particularly high standard if the world did not choose to
  776
  prove us right. Whenever there is a television award competition — I am no expert on these matters — we seem to win. In this sector we enjoy the almost un-British pastime of winning. By that means we say to the world that we have a product that is worth having and the world actually agrees with us.
  Why do we have a product that is worth having? The answer is that the quality of our producers and directors and of others involved in the industry is very high. How do we manage to achieve that level of excellence? We have not attained it by producing cheap, second-rate trash. We have done it by maintaining a home market for our people. As I have said, the way to ensure the continuing quality of our products is to ensure that our home market and our producers are to that extent protected.
  I am not suggesting that we protect the incompetent and imbecilic. I am talking about protecting the quality of present standards. I concede that there may be a difficulty with cable services. I agree that we are in a different media game today compared with 30 years ago when independent television was first introduced and almost became a licence to print money. Cable must not be seen in that way.
  People must go into the cable industry with their eyes open. Similarly, those who go in for DBS must have their eyes open. The House must not permit those systems to be considered as a means of printing money. Cable services must be a means of offering quality in programmes that we can subsequently export. The only way in which we can do that is by protecting our home base from the word go. The IBA and the BBC have a self-imposed quota system on the amount of imported material they use, and that process must flow into the cable system. I accept that we have a hard road to follow, but the end products will be worth it.
  Clause 10 deals with the quality and impartiality of our news systems. Subsection (1) states:
  "The Authority shall do all that they can to secure"
  various requirements. Subsection (1)(c) uses the words
  "that all news given (in whatever form) in programmes which originate in the United Kingdom is presented with due accuracy and impartiality".
  The cynic in me says that it would be a good job if we started with the present news service. I note that the hon. Member for Gravesham looks horror-struck at the idea. I remember his performance some years ago. I concede that a newsreader is only as good as the piece of paper in front of him, but I am worried about those pieces of paper. We cannot always say that news services are as impartial as we would like. It is all very well when setting out on the road to say that we will have impartiality, but we need a means of enforcing standards of quality and taste and the other requirements in clause 10.
  I have read the Bill as carefully as one can at this stage, and I accept that the debate perforce has taken on a different flavour because the Home Secretary mentioned many matters not dealt with in the Bill. I shall deal with the Bill as those who prepared it first read it. Clause 10 does not have the necessary teeth. There should be a controlling body, with the teeth necessary to enforce what Parliament wishes. I do not believe that any hon. Member wants bias in the news media.
  The hon. Member for Gravesham may believe that I have an argument with him about these matters. He may think that he picked an incorrect example in referring to

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  editorial control of newspapers. There is much to be desired in the editorial quality and control of English newspapers.
  Mr.Brinton: I can best illustrate my statements by saying that Channel 4 has introduced a daily commentary spot. An invited guest is free to editorialise and opinionise as much as he or she wishes. That has been a refreshing approach in broadcasting. I was distressed to hear the hon. Gentleman's suggestion that the writers of the hard formal news take their pens in one direction and not another. The hon. Gentleman would be more profitably employed in looking at the inevitable selection caused by one camera lens photographing a scene. That is the most dangerous part of television news, although it is something that this country does better than any other country.
  Mr.Bermingham: I accept that the hon. Gentleman's experience gives him a particular knowledge which I would never have. I ask the House to accept that I am trying to paint roughly with a broad brush a particular problem. We learn of proprietorial interference occasionally in editors' duties so that views are directed to one stream rather than another. I do not wish to make a party political point; I am pointing out a general set of principles.
  I do not mind presenters giving their view—that is fair and right in a democracy—but there should also be the right periodically to put the opposite view. There must be checks and balances. The Bill fails because it does not allow those aggrieved or disadvantaged by a presenter or channel to put their views. I cite the example of Channel X17, whose news presenter night after night thunders home his view on the availability of public wash-houses. There may well be people in the locality who take the opposite view. There is no avenue for their view to be equally presented unless the Bill provides, once aggravation is shown, that the authority can enforce its adjudication. That is an important point, which I raised in June when the White Paper was first debated. That view has been raised by other hon. Members. The Bill does not fully overcome that difficulty.
  Although I shall not oppose the Second Reading, I hope that in Committee the Bill will be tightened up with regard to programme protection, balance of programmes and complaints. At the end of the day, we shall doubtless have a system of programme presentation that not only maintains current quality but enhances the spectrum of programmes available so that programmes are fair and balanced and have a proper content.
  6.38 pm
  Mr.Roger Gale: I am sure that Conservative Members congratulate my right hon. and learned Friend the Home Secretary on the Bill, although I am bound to say that the legislation was not heralded as ushering in a new era. It was presented in a more enthusiastic fashion than was shown by the right hon. Member for Manchester, Gorton (Mr. Kaufman), who managed to make the sentence, "We wish cable well", sound like an epitaph.
  Eleven franchise holders understand that they have been awarded franchises and are now waiting in the wings before going into action shortly. I hope that Ministers will reassure those franchise holders that the Government are
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  as fully committed now to the future of cable television as they were when the franchises were announced at the end of 1983.
  My hon. Friend the Member for Gravesham (Mr. Brinton) said that cable was a different animal from broadcast television. The House should consider that point and understand that we are dealing not with anything broadcast, in the terms of part I, but with a completely new medium—narrow casting. It has the potential to take a series of signals into someone's home and to offer him an interactive service. The word "interactive" is not used in the Bill, despite the fact that the thrust of the original concept was high technology.
  A person is being offered the possibility, for example, to watch in his own home a programme about foreign holidays, to see an advertisement for a holiday that takes his fancy, to choose not to do anything about it at that moment, and to watch the rest of the programme. By pushing a response button on a machine held in his hand, that person will be able to store that information and wait until the end of the programme, or the following day, if he so chooses, to recall and rerun it. Having seen an advertisement that extols the joys of holidays in Margate or Herne Bay, in my constituency, and no doubt enjoyed the prospect, the person will be able to call the advertisement through the same system as written information which he can read and re-read it as a newspaper. If that person is still interested, he will be able to call another number and place an order. With the same system, he will be able to pay in advance for that holiday. That, and a great deal more, is the potential of cable.
  Cable will have a potential for home education—the facility, once the correct chip is inserted in a television receiver, for a receiver to be fed with a series of educational programmes overnight while the house is asleep. At the push of a button the following day it will be possible to recall all or any of those programmes and to run them as often as one wishes. Cable has a potential for home shopping. It is a facility that could be an enormous asset to the housebound, the disabled and the elderly. There could be the opportunity to call up a catalogue from a local store, to decide what one wanted, to order it and, if one chose, to pay for the article and have it delivered. Those are all practical possibilities that could be achieved at present.
  It is being suggested that the installation of such a system will take a long time. The installation of interactive fibre-optic cable in every home will clearly take a long time. That is what we are dealing with. That is why I am dismayed that so few hon. Members are present. I believe that we are talking about the most exciting advance in the communications industry for many years, and possibly ever.
  Given that we are dealing with a completely new concept, completely new standards should be applied. Therefore, many of the arguments that we have heard this afternoon are outdated and archaic.
  I come now to the composition of the Cable Authority. The authority, as the Bill now stands, will be required to lean heavily on the advice of existing authorities—the Independent Broadcasting Authority and, in the fine print, the ITCA for advertising standards. I hope that that will not be the case. I hope that the Cable Authority will be composed of qualified people who can exercise the right professional judgment to give this new service the opportunity and the freedoms that it needs.

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  The right hon. Member for Gorton suggested that there should be a special person appointed to the body to represent the entertainment interests. That sounds as if he has been attending too many debates held by British Actors Equity, where the Left wing has sought to introduce a box for almost every category of expert. I hope that that will not happen. I hope that the Cable Authority will be composed of those people who are judged the best qualified to do the job and that they will be allowed to do it unfettered by advice from the ITCA, the IBA, the BBC, the Home Secretary or anyone else.
  I should like to deal with the controls over advertising standards and remind the House that we are dealing not with cable broadcast television but with a cable service capable of infinitely more than the television in the corner of the room. The programmes that will be carried will include not just the four currently broadcast terrestrial networks and the DBS channels but a great many other specialist items as well. I have mentioned facilities for home education, home banking and home shopping, but there is a great potential for specialist programmes, and also, for example, for a shopping magazine. When independent television was first introduced many years ago, there was a programme called "Jim's Inn". In due course it was decided that the advertising standards of that programme were out of order under the IBA regulations.
  Mr.Austin Mitchell: Jim was out.
  Mr.Gale: As the hon. Gentleman says, Jim was out.In the context of sequential broadcast television, that was probably a correct decision. We now have the opportunity to have an entire channel devoted to a comparative magazine—a cable "Which?" . There is no reason why such a programme should not be sponsored and carry an infinitely greater volume of straightforward advertising than the current six minutes to an hour carried by independent television.
  Mr.Corbett: Will the hon. Member accept from me that it would be inaccurate to describe such a channel as a cable "Which?"? As he is aware, "Which?" has nothing to do with any sponsorship or co-operation with any manufacturer or provider of services that it investigates.
  Mr.Gale: I accept the hon. Gentleman's point. "Which?" is a comparative magazine. I believe that that was the phrase I used.
  It would not be improper for such a comparative magazine to be sponsored. I accept that it might be invidious to include advertisements for individual products. I am sure that the hon. Member understands the drift of my remarks.
  We are dealing with a different service. I believe that it requires, and must be allowed to have, different parameters within which to work. I hope that in Committee it will be possible to reconsider the clauses restricting permitted advertising.
  Under the franchise arrangements, the Bill provides for community access programmes, but it is not clear who will have editorial control. Will the cable operator be able to say yea or nay to the programmes produced by the local community, or will the franchise holder be compelled to take, within a given slot on a given cable, whatever the community produces? As we all know, especially those of
  780
  us who have produced and directed programmes, some community programming is very good. Some, however, is lacking in technical quality and often, frankly, in artistic merit.
  It is right that community access should be provided to cable television, but if we require cable operators to carry that material, they must have some right to reject material that they consider is unsatisfactory. I suggest, therefore, that the final arbiter of what is satisfactory, acceptable and transmittable on cable should not be the cable operator or the community programme provider but the Cable Authority. That is the only way to give just access and to ensure that cable operators are given the correct amount of editorial control, to which they have a right.
  Much has been said about the quota of British programming within a schedule. I have made many British programmes, and I should like to comment upon that aspect. Opposition Front Bench spokesmen have said that television costs about £20,000 an hour in news terms. A rough yardstick for producers in British television is a total production cost of about £1,000 a minute. Much of British television is sold overseas as cheaply as the £2,000 an hour for which it is bought in. Many independent producers already make programmes for, say, Channel 4 at costs that it cannot afford to pay. Those independent producers make the programmes in the certain knowledge that, by doing a deal with the television company to retain the sales rights, they can give first outlet to the home-based television networks and subsequently recoup the production costs and make a profit by selling the programme worldwide.
  The advent of cable will create a tremendous market for the independent producers, who will make programmes on that basis. Programmes will be shown in this country on many cable stations. The rights for overseas sales will be reserved by the programme maker and subsequently sold overseas. I believe that programme financing will work in that way, at least initially.
  There is no question but that most, if not all, cable operators will be unable to commission the sort of programming that was referred to earlier this afternoon. Equally, it is true that much good material is generated overseas. Much of that will be needed. It will be highly desirable, and cable will give an opportunity for highly specialised and specialist programmes to be watched by minority audiences.
  The hon. Member for St. Helens, South (Mr. Bermingham) asked who will pay. He would probably accept that there is great potential for target advertising to hundreds of people, if they happen to be right for the advertiser. It is more worth while in advertising terms to sell a product to those to whom the companies wish to sell than to sell it grapeshot and hope that some will buy.
  Mr.Neale: Would my hon. Friend agree that the consumers will pay their subscriptions to the network that carries the advertisements? If a cable system is unable to attract sufficient paying members to its cause, it will go out of being. The network must consider its audience.
  Mr.Gale: It is true—I believe that the hon. Member for St. Helens, South was trying to make this point—that the system may attract too few people to appeal to advertisers, who will be an important source of revenue to cable stations. I stress that, because of the fine targeting possible on cable networks, the necessary number of

  781
  advertisers will be attracted. As a consequence of being able to buy specialist programmes, the subscription rates for specialised channels will be fairly high.
  Mr.Bermingham: Does not the hon. Gentleman agree that, in an area that receives cable television, there will be a maximum audience of, say, half a million, the nature of which will depend upon how many of those living in the area take up the option to use the cable service from the local distributor, if I can so describe it? If advertising firms wish to target, the sample audience to which they direct their advertising will be fairly small. Companies will not know the exact nature of the sample unless the cable company makes that information available to them. That in itself has inherent dangers. Advertisers will also face the problem of not knowing who within the sample will have their sets switched on at the right time.
  Mr.Gale: It is technically possible, and may soon happen, that a microchip can be installed in a television set so that a cable or broadcast operator can send out signals to be stored by the set for later retrieval. It would be possible for a cable or broadcast operator to transmit a programme on subscription to each farmer in my constituency, where there are between 50 and 100 farmers. That is an important market for firms selling a specialised product.
  There is scope, perhaps on a section-by-section basis, with coverage every 15 or 20 minutes, rather than a long-term programming basis, for that sort of highly specialised work. That is what cable is about. The service is not concerned just with entertainment. It is an interactive service that is capable of doing many things. Incidentally, a chip that can time-expire will become available shortly for installation in television sets. Those who are worried about the collection of TV licence fees will be pleased to know that, should the Home Office choose to take up that opportunity, it will be possible to de-activate a television set at the end of a year unless the licence fee has been paid. All of those things are technically possible now.
  I am totally opposed to the imposition of any sort of fixed quota. The right hon. Member for Gorton said that the IBA and the BBC were restricted to 14 per cent. of bought-in programmes coming from overseas. That is incorrect. He sought to deny it when I raised the matter at the time, so I shall repeat that those quotas are self-imposed. In fact, the legislation that applies to the IBA and the BBC in that respect is broadly the same as that to be applied to cable operators.
  It is desirable that cable operators should be given access to as much material as possible, not only in the early days but for ever. British home production will be generated and stimulated in that way. I also believe that a significant amount of overseas material is well worth watching. I should like to see it made available in this country. Given the 35 channels that it could be relayed on, I do not think that there is likely to be too much material available.
  Like a bolt from the blue, my right hon. and learned Friend the Home Secretary said, in the middle of his speech, that he intended to see established a national commercial radio network. On behalf of many of those who have fervently supported local radio, and who believe, paradoxically, that many of the products of local radio should be given a network outlet, I should point out that that is very heart-warming news. However, I am
  782
  surprised and disappointed that an independent local radio network has not been established before, and many of us believe that it cannot come too soon.
  I welcome the Bill and hope to have the opportunity of working on it in Committee. It is a significant piece of legislation, whose effects will be felt in every home in this country.
  7 pm
  Mr.Robin Corbett: I remind the House of my interest as a member of the National Union of Journalists.
  I should like to underline the remarks of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) in making the strongest possible protest about the Home Secretary's abuse of the House by making, in his Second Reading speech, wide-ranging announcements about changes to the shape of broadcasting in this country. If he had had any courtesy, he would have recognised that they merited a separate statement from the Dispatch Box and that they should not simply have been piggy backed on to this Second Reading debate. However, I shall not pursue that point, Mr. Speaker, and I suspect that you would not allow me to do so anyway.
  Mr.Hurd: The hon. Gentleman is being ungenerous. Part II deals with DBS. It would have been very wrong if my right hon. and learned Friend had spoken on Second Reading without telling the House that because of the developments that he explained we would find it necessary to add to part II. My right hon. and learned Friend handled the matter in a perfectly orderly way.
  Mr.Corbett: I understand what the Minister says, and it is typical of him that he should spring to the Home Secretary's defence. However, I stick to what I said: the announcements made by the Home Secretary were serious enough, because of their effect on the whole pattern of broadcasting in this country, to warrant a separate statement being made to a House which, as he knows, would probably be much fuller than it is today. He could then be questioned on it by both sides of the House.
  We are talking not about whether there will be cabling but about how it should be done. We say that it should be done with sensible regard for standards and the range of services and that there should not be some commercial free-for-all in which yet another promised pot of gold is held up for people with the longest arms and the biggest bank balances so that they can grab what they can. I remind the House that when speaking about the introduction of commercial television Lord Thomson said that it was a licence to print money.
  Sadly, the Government seem to want some sort of almost wholly unregulated free-for-all. In a democratic society, that is wrong. We are not talking simply about another arm of the entertainment industry. Some of the programmes will, of course, involve entertainment, but I hope that much of the content will be of a more serious educative and informative nature. However, that should not imply any dullness. As an electorate, our need is still for more relevant information to nurture and extend democracy. That may sound a little dull but it is not. If democracy is to survive and grow, it must be on the basis of more people having a fuller and thus better understanding of what is going on.
  As has been said, cable is a. two-way street. It can take programmes into homes that sign up and, through the tree

  783
  and branch system, can offer communcation between the home and, for example, banks, supermarkets and businesses. I have even seen it suggested that it could be used for voting, although I very much hope that that does not come to pass. Cable, as with other forms of broadcasting, suffers from one major fault, which is that one cannot ask it questions and receive answers. To the best of my knowledge, that facility is confined to those who attend meetings and who listen to human beings rather than to machines.
  The development of cable is crucial, both directly and indirectly, for jobs. There is potential for jobs in the laying of the cable and in the manufacturing and supply of the equipment used. As recently as last Friday, a report from Paris in the Financial Times said:
  "The French Government intends to keep foreign communications equipment manufacturers out of the country's new cable television industry for the time being."
  I know that that will be of particular interest to the Minister. The French Government have made it clear that foreign equipment makers would be allowed to take part only on the basis of reciprocity. The report states:
  "in the absence of major agreements ߪ France 'will construct its cable networks on its own'".
  I think that there is a message there, even for this Government, given that they crow on about the need to create new and real jobs. The Government now have a chance to put what they preach into practice. There are other areas of potential job creation or job loss. I refer, for example, to the jobs of all those concerned on the technical side of making programmes, and to the scriptwriters,actors, actresses, artistes, musicians, songwriters,authors, writers and journalists. There is a long list of such people.
  In his laid-back and detached style, the Home Secretary did not deal anywhere near seriously enough with the argument for the imposition of a quota. I am arguing not about the size of that quota but, in principle, for a quota. My right hon. Friend the Member for Gorton reminded the House of the absolute assurances given by the former Secretary of State about what he expected to be achieved by the Cable Authority. He laid upon it a duty to report.
  He said that the Cable Authority
  "will have to show that there will be a progressive reduction in the amount of foreign material that is used."— [Official Report, 27 April 1983; Vol. 41, c. 873.]
  That duty is not enshrined in the Bill and there was no sign today from the Home Secretary that he had even taken that point on board.
  Of course, we are used to Governments claiming the parenthood of White Papers and then proceeding to ignore what they say or to claim that they have had not just later but better thoughts. Paragraph 119 of the White Paper of April 1983 states:
  "There is little doubt that the existence of the quota for television has contributed to the establishment of a strong domestic production capability, within both the BBC and independent television."
  It went on to say:
  "the quota has ensured that foreign material has not flooded the screens and that what has been shown has generally been the best of what is available."
  I suspect that what is at issue is where we should start. The Government argue that we should start from the bottom and hope that cabling will be such a rip-roaring commercial success that when more money is available in
  784
  future years standards will rise. But what happens if, after the best efforts of those involved, the project goes wrong and it is proved that it does not work on the scale that some people expect? Opposition Members and, more important, people whose jobs, livelihoods, futures and careers depend on it fear that, should that happen, standards in the existing broadcasting organisations will have been so lowered that it will be impossible to raise them again.
  My hon. Friend the Member for St. Helens, South (Mr. Bermingham) said that there would be only a limited audience available. There are not millions of people who do not currently watch television programmes but who wait for the advent of cable to switch on. The existing audience will make choices which will inevitably take viewers from the public broadcasting and commercial sectors.
  I hope that the Government will not remain deaf to the arguments of those in the industry who fear the consequences if an understanding about quota is not reached, whether enshrined in the Bill or worked out by the Cable Authority in the form of a gentleman's agreement, as the hon. Member for Thanet, North (Mr. Gale) described it. The Government will say to the Cable Authority that they expect it to do its best to reach an agreement and to draw a bottom line. There is no need to go into detail about quotas because we are considering them in the context of the European Community.
  We have debated the cost of buying foreign material, mainly American, and the cost of originating it in Britain. I accept that comparisons are not as easily made for the second or third showing as for the originating cost of the programme or of buying it after it has been exhausted on the American market. Nevertheless, given the initial investment, there must be an obligation under the Companies Act on those responsible to run the companies in the way that best serves the interests of the shareholders. That is their first obligation. They will receive no thanks or medals for losing money. They must ensure that those who make an investment in cable television receive a return on that investment in a foreseeable period.
  Many of those involved in the early days of cable television will be tempted to see how they can fill the hours — we are envisaging a continuous service — when audience ratings are extremely low or the viewers are not attracted to advertisements.
  The Entertainment Network sent us an interesting document called TEN. It states:
  "United Cable Programmes Limited is owned 55 per cent. by four British companies — Plessey, Rank, Rediffusion and Visionhire, and 45 per cent. by UIP, a consortium of Paramount Pictures, MGM/United Artists and Universal Pictures".
  I am told that there is no such thing now as films being made exclusively for showing at the cinema—big screen pictures. The organisation has an extremely interesting line-up which includes four of the former giants of the old-fashioned cinematographic industry. Its advice on quota is that it is
  "entirely proper that the Cable Authority should have the obligation of ensuring that proper proportions of programming orginate from the EEC."
  It adds:
  "We would, however, regard as disastrous anything being written into the Bill by a Commons amendment requiring a specified proportion of programmes to be of EEC origin."

  785
  That view is not surprising as the organisation has a vested interest. Precisely because vested interest has spoken with such clarity, we should pause for decent thought about where that road will lead.
  The general fear, about which the Government are sensitive or with which they disagree, is that once quality has been lowered in the existing outfits they will be unlikely to recover. A further aspect is that the NUJ rightly fears that in the important news and current affairs programmes from the EEC, America or elsewhere there will be no requirements to achieve the accuracy and balance at present achieved by the BBC and commercial stations. Clause 10(1)(c) states:
  "that all news given (in whatever form) in programmes which originate in the United Kingdom is presented with due accuracy and impartiality."
  That is precisely the point. We cannot legislate for programmes from other countries, only for programmes originating in the United Kingdom. A fairly large number of programmes, especially in current affairs, will originate in other EEC countries or the United States of America and will touch on issues of interest in Britain, but we shall have no control over their standards, accuracy and impartiality.
  Despite criticisms from time to time, accuracy and impartiality distinguish what are recognised to be generally first-class programmes, especially by the BBC, but also by the commercial companies, from some of the tripe which is churned out on about 100 channels in most major cities in the United States. Any hon. Member who has entertained first-time visitors from the United States will know that when they watch our television they can hardly believe their eyes. They can hardly believe that they can watch television for an hour and three quarters without regular 10-minute interruptions during which people try to flog them goods. They cannot believe the controls that exist even on the commercial channels.
  The NUJ makes another point of which we should be aware. I do not wish to sound Luddite, but it is possible that cable will pose a real threat to local radio stations — both the BBC and commercial ones — to local newspapers, and hence to jobs. I suspect that hard up against the union's concern is the threat to the existence of those outlets for views, news and opinions. Local newspapers generally serve their communities well, and they have adapted and adjusted to the competition from local radio so that now, by and large, they manage to live side by side.
  Unless there is a sustained and rapid development of British—originated material, cable might pose a threat to the nursery end of the business. We must continue to provide and to expand opportunities for new entrants to learn and refine their skills and obtain experience. If there is a cut—some of us fear that there may be—in British programmes, or a lowering of standards because of the over-use of foreign material, the authors, scriptwriters, musicians, songwriters and the rest will find it extremely difficult not just to earn a living but to obtain the experience that they need in order to flourish.
  The Society of Authors argues that the provisions for copyright in the Bill still contravene the Berne copyright convention. The society states:
  "Most serious is the lack of copyright protection given to creators of works transmitted via point to point satellites."
  I should be grateful if the Minister of State would say something about that when he replies.
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  I shall need much persuading that the new Cable Authority stands any chance of being even half effective, in view of our experience with the IBA. On two recent occasions the IBA either connived at or turned a blind eye to those granted franchises for television stations tearing up the contracts on which they were granted the franchises and doing many things which were not proposed in their submissions. I understand the reasons for it, but it demonstrates the ineffectiveness of the IBA. Both cases arose because of cash crises.
  The first case was with London Weekend Television and more recently a similar thing happened at TV-am. Such were the changes made by those contractors that it would have been far wiser and in the best interests of the industry had the IBA either called in the franchises or at least imposed a moratorium while matters were sorted out. It is possible that the applications of some companies were turned down because they wished to do precisely those things, but some months later those who were granted the franchises said to the IBA, "'We have run out of cash and unless we do this we shall go to the wall." To that extent, they got away with it.
  I remain extremely sceptical about the likely success of cable, but I know that my opinion will not influence anyone's commercial decision to invest money in it. It has already been said that there has been an astonishing growth in the private ownership of home videos and that several millions of people hire videos each week. I am not an enthusiast for the Bill, but nor am I a Luddite. My point is that the introduction of this new technology with all its potential should be handled in the public rather than the private interest.
  7.25 pm
  Sir Geoffrey Johnson Smith: I listened with great interest to the hon . Member for Birmingham, Erdington (Mr. Corbett), who, typically, in his candid way, revealed his doubts and fears about the possible success of cable, but who equally was kind enough o suggest that it is not a matter on which we should put up a token resistance or resist on Luddite grounds. He is right to take at least some encouragement from the fact that some people are willing to risk their money, not the State' s money. Had taxpayers' money been involved, I believe that I know how he would have voted. I cannot predict with confidence how this venture will develop. All that I know is that most of the predictions that were made about commercial television were completely wrong.
  I declare an interest in that I am a non-executive director of the holding company of London Weekend Television. I heard what the hon. Member for Erdington said about London Weekend, and I assure him that it happened long before I became involved. He will be aware that the IBA insisted on a considerable management shakeup in that company, and we can all agree that the company as constituted has provided British television audiences with a high standard of programmes.
  Last year I congratulated the Government on their White Paper. The Bill, which has had the benefit of being improved in the other House, largely meets the objectives of the White Paper. However, it will need further amendment if it is to meet the practical needs of prospective cable operators. The amendments which I wish to propose deserve consideration because we must examine cable in an up-to-date context. Much has happened since the White Paper was published and the Bill

  787
  was drafted. We have all developed a clearer understanding of the scope and limitations of cable and its likely impact on the traditional methods and existing patterns of broadcasting.
  I do not wish to go into too much detail now, but later I shall develop the thought that since March the prospective cable operators have expressed considerable shock at the Chancellor's proposal to phase out capital allowances.
  Following last year's debate on the White Paper, much has been heard about the expense of providing cable television, and many hon. Members have referred to it. It has led some to say that it will force cable companies to appeal to the lowest common denominator in an attempt to attract mass audiences. We have been warned that the knock-on effect on existing commercal companies and the BBC will be severe and will change the entire ecology of broadcasting. These fears have run through the debate today. It is argued that the IBA companies will be shorn of their advertising revenue by cable, that audiences will be seriously fragmented, and that this will cause a further decline in revenue. The BBC will feel a renewed urge to justify its licence fee and, together with the IBA companies, will plunge into a mad struggle for ratings, leading to an inexorable decline in standards.
  I have never subscribed to this gloomy scenario, which was often, although not exclusively, adumbrated by those who seriously entertained the idea that this Government would introduce a monster of unregulated television. I can recall many occasions when I have been involved in debates outside the House, when people have said that the whole thing would destroy the ecology of British broadcasting because the Government would introduce unregulated broadcasting. No Government, even those who embrace the philosophy of a free market, would dare to do such a thing, at least for many years to come. They are too keen to ensure that there is a framework of control and regulation, sometimes for laudable reasons, sometimes for less laudable ones.
  It is true that we have benefited from the framework that has been successively introduced by Governments. However, I believe that if we are not to have an unregulated form of broadcasting through cable we should be equally careful not to smother it with misguided kindness through new forms of regulations that might make it impossible for the infant to survive. The Bill has slain the spectre of unregulated broadcasting. Although it will not satisfy those who are irreconcilably opposed to cable, it goes a long way to reassuring those who seek to ensure that the present standard of broadcasting is not undermined. I congratulate my right hon. and learned Friend the Home Secretary, his colleagues at the Home Office and their advisers on what they have done in trying to get the balance right.
  The rejection of the so-called adult movies, the opportunities for independent television companies and the investment in private programmes for cable are all measures that I welcome. So, too, is the provision which, by permitting cable operators to provide sponsored programmes and pay-per-view, will reduce the pressure for more advertising material, on which IBA companies are completely reliant for their revenue.
  More important than anything else in the Bill is the realisation—this has not been sufficiently appreciated by
  788
  some hon. Members who have spoken today—that half of Britain is unlikely to get cable. Even if the proportion is as high as 50 per cent., such is the cost of investment that it is unlikely that we shall achieve 50 per cent. for many years. This has important implications for the existing broadcasting organisations. Surely it means that they will retain their universality and, with it, their dominance of the market. If they fail to retain it, there will be something wrong with their competitive powers as well as with their creative abilities.
  In addition, the experience in the United States has demonstrated that cable is not a licence to print money, so it will not have the resources to steal the existing talents and wipe the floor of competition. Some people use the argument the other way. They say that it will be so difficult to make money that cable will rely on cheap imports. That argument was advanced by the hon. Member for St. Helens, South (Mr. Bermingham).
  As my hon. Friend the Member for Gravesham (Mr. Brinton) said, cable is not just ITV in another guise, nor is it another form of public service broadcasting. In fact, those of us who have studied it closely have come to realise that it is not even broadcasting as we know it because it is not openly available to off-air transmission. Increasingly we have come to recognise it as offering a challenge to us in terms of legislation. It is something new and unique that deserves safeguards, particularly in its infancy, just as public service broadcasting deserves its own safeguards. It is our hope that the two will live side by side, and the Bill goes a long way to recognising it.
  Cable has a potential that offers an interesting financial and intellectual challenge. It has inter-activity and a multiplicity of channels, should be able to harness the financial resources of international consortia and should, with all these changes, provide a worthwhile service that is different. Most importantly, we should encourage the development of cable in the hope that entertainment-led investment will open up the possibility that people will be able to buy, sell, bank, shop and work from their own homes using their link with cable, just as we hope that cable will provide new jobs for British industry.
  However, in the world of communication—it is not unique in this—entrenched interests and habits take a hold of even the most imaginative people. It is understandable that some fear the technical effects that this can have on their well-established practices. As I have shown, the risk is worth taking. There are those in broadcasting and outside in the theatre and movies who recognise that cable offers a challenge that is worth taking.
  I congratulate the Government on taking a positive approach. However, problems face the industry. It must have a benign financial climate. I make no apology to the Minister for touching on some of the recommendations voiced in the other place, because some of the suggestions demand further investigation by the Government with the object of trying to improve the investment climate and make the prospect more interesting for those who wish to take a licence.
  For example, there is the varying of licences. We all know that if it is to work cable television and cable services must be operated on a light rein. I do not know of anyone who fundamentally objects to that. However, if it is worked on a light rein, it seems to those who want to participate that the power to vary licences is very wide and that the power on the authority to vary the licence should be strictly prescribed.

  789
  The Government have given the impression elsewhere that they intend to amend clause 4(7) so that the period of a licence cannot be varied without the consent of the licensee. It will be in the Government's knowledge that the Cable Television Association does not believe that the amendments that it thinks the Government have in mind will go far enough, and that the Cable Authority's power to vary the licence goes too far. I express no personal opinion on this, but I hope that the Government will give consideration to that point, if not when my right hon. Friend replies, when the Bill goes to Committee.
  All along, before the White Paper and running through the debate in the other place, there has been a fear that the Government might be tempted to give increasing powers to the Cable Authority because we are used to strong authorities such as the IBA and the BBC's board of governors. We all know that there is an administrative cost. It is troubling that those who are thinking of seeking a licence are concerned that when the Cable Authority is set up it may not be sufficiently limited by the Bill to ensure that they take only a fair proportion of the administrative costs of the authority. They want to be sure that in no way can the authority indulge in excessive expenditure and that it should not be permitted to cross-subsidise between franchise areas — the authority charging excessive fees in profitable areas and uneconomic fees in unprofitable areas.
  That was thought to have begun to creep into the development of independent radio. We all know how eventually we had to be rather more careful in the way in which franchises were given in independent radio as some of the more prosperous companies began to think that they were in danger of acting as subsidisers of the less prosperous areas. That is a worthy social purpose, but we are not engaged in this business in social engineering. Either we look upon this as a straightforward form of private enterprise investment or we do not. If we saddle the authority with the feeling that it has some great social purpose, I fear that we shall fall between two stools.
  The other complaint will not be new to my right hon. Friend—the protection of sporting events on pay—perview terms. Everyone to whom I have spoken who contemplates seeking a licence recognises that there must be protected sporting events. At the same time, one is disturbed to hear that they believe that the terms remain unduly restrictive. They argue that there can be no objection in principle to an operator showing events on pay-per-view terms, providing that he does not obtain exclusive rights to those events and that broadcasters are able to continue to broadcast the same events. That is how they put it and I agree with them. I see no reason why we should not be allowed on a pay-per-view basis every ball that is bowled in any test match. I do not see that the preemption on an exclusive basis of the centre court at Wimbledon and the finals there by the BBC or ITV should preclude the possibility of a pay-per-view of Wimbledon through cable. If people think that it should not include the kial of Wimbledon, there is plenty of Wimbledon that Oople would be willing to pay for which is not covered by the existing channels. That matter needs looking at.
  I congratulate the Government on not yielding to the deceptive voice that we would have better cable if we had a fixed quota. The simple truth that many often do not like to admit is that Britain does not produce enough to satisfy the different demands of existing channels and we have to rely on imports, many of which are of an extraordinarily
  790
  high standard. To expect cable operators to rely on the exclusive or heavy supply of British material will soon lead to it running out. In any case, a large proportion of it would be just as bad as some of the programmes that we already import. We are right to insist that there should be no quota. I should not mind if there were a fair proportion of what some hon. Members might regard as rubbish. If it has appeal, if it is a way of helping to make money, as someone once reminded me, in the words of Horace, "First acquire wealth then practice virtue."
  A point that is often missed is that even supposing the cable operators, for some misguided reason, decided that
  the best way to attract their audiences was to rely on the lowest common denominator, would that have such a sensational or dramatic effect? Would it have any effect on the taste of British audiences for existing ITV and BBC productions? After all, we are not talking about a network. We are not even talking about something the size of Channel 4. We are talking about small organisations which are serving a limited audience in certain areas of Britain. Over a period, given a favourable investment climate, entrepreneurial sense and good marketing, providing people with what they want, they might at some time. achieve—goodness knows when—a target figure of 50 per cent. of people who live in Britain. Therefore, even if I were to put forward the argument of the lowest common denominator, it would not say much for the existing standards or tastes of the British people to assume that the audiences which have been built up by existing companies would wither away as people made a mad scramble to try to get hooked up to cable, always supposing that they could. To persist with a demand for a quota of British programme material, though it may have the worthiest objectives, is not rooted in the practical facts of the development of cable.
  I turn to the question of capital allowances. Every industry — shipbuilding, films and many more — has written to the Chancellor arguing for relief from this measure that he has introduced in his Budget. In today's mail came a letter from a well-known firm, Ladbroke, which is worth bringing to the attention of the House. It says that a distinguished firm of chartered accountants,Messrs. Deloitte, Haskins and Sells, has
  "carried out an evaluation of the implications of the Budget proposals on a typical cable television system. Their findings, which appeared in the Financial Times on 12th April 1984, show that for a company making maximum use of tax relief the yield over a 12 year period falls from 13·5 per cent. to 7·5 per cent. and the breakeven point does not come until year 9."
  Later, the letter draws my attention to a speech made by Mr. Peter Laister, chairman of Thorn-EMI, giving the Fleming memorial lecture to the Royal Television Society. In that speech Mr. Laister refered to the decision by the Chancellor of the Exchequer to cut corporation tax and to remove 100 per cent. capital allowances. Mr. Laister said that that is fine for established industries which are already well into profit but the effects of that on cable and satellite might tip the balance of decision in all marginal cases. He says:
  "if ever there was a case for enlightened Government support for emerging industries, then this must be it . . . it is clear that unless the substantial cabling costs which form such a large proportion of the fixed investment"—
  that is true—
  "can be either sheltered or shared then the investment programme will be somewhat uncertain."
  We are all accustomed to receiving such letters. Some hon. Members might develop a scepticism as a

  791
  consequence. But we know that there is a heavy initial capital investment. Mr. Laister said that if areas of half a million homes were considered in the second round of cable franchises the capital expenditure for a single franchise might be as much as £150 million. At this stage, I cannot give an informed judgment in which I would have any great confidence, but I do not think we should ignore the warning when it comes from such a source. I do not think that Mr. Laister is chairman of Thorn-EMI without knowing something of the cost of such investment.
  I hope, therefore, that the Government, if not tonight, at some future date, will bear in mind this kind of representation. It brings us back to the simple point that, if the Government are to encourage new entrepreneurial energies, they must create the framework in which new investment is to take place, otherwise we shall not have entertainment-led cable with private money put into it instead of State money.
  I deal finally with a different matter. I apologise to my right hon. and learned Friend that my duties in another place made it impossible for me to hear his speech, or, indeed, that of the right hon. Member for Manchester, Gorton (Mr. Kaufman). I understand that there is to be a consortium of which the BBC would have half, while the other half would be divided between some ITV companies and some new independents which may want to participate. The project will be responsible for three-channels, one film and two channels of mixed programmes. We want to know how that will be done, which ones will carry advertising and which will not, and whether all three will have responsibility for providing films. I believe that this three-channel mixed consortium will present a complication to those who have been accustomed to working in separate compartments. I hope that my right hon. Friend, in winding up, can give some guidance on how he foresees the development.
  I am concerned, too, about the proposals to enable existing ITV companies to take part in the new project. We all know that their present franchises run out in 1989. It is proposed that the new satellite project should get under way at the end of this decade. If the IBA will not be under an obligation to readvertise contracts but will retain a complete discretion as to whether to do so, this will give no guarantee to an ITV company that its contract will be renewed. At what stage before 1989 will an ITV company know that it will not be able to take part in the new consortium, but will know that, come 1989, its franchise will be renewed? From what the right hon. Gentleman has said today, that has not been made sufficiently clear. I cannot see any independent company seriously negotiating with the BBC and talking about satellite television until it is sure that its franchise will be renewed. If such a company goes down the track of talking to the BBC and, after six months of talks, goes to the IBA and is told, "Sorry, chum, you've had it, you will not be allowed to have your franchise renewed", I cannot see this getting off the ground. It is possible that, my having been absent, I have been insufficiently informed of the Government's intention.
  I am delighted that my right hon. and learned Friend was able to instil new confidence by announcing the radio network. Whatever reservations one might have about the climate that is being created by the Government for this new venture in cable or direct broadcasting by satellite, I
  792
  think that most hon. Members would agree that the Government, in a remarkably short time, have taken encouraging and important initiatives that bode well for British broadcasting and for those who make their contributions technically or artistically.
  7.55 pm
  Mr.Gerrard Neale: If I may join my hon. Friend the Member for Wealden (Sir G. Johnson Smith) in his remarks about the Bill, and about the attitude of my right hon. and learned Friend the Home Secretary to the subject, I think that the Government, by their reaction to the initial Hunt inquiry and by the way in which they have accommodated amendments in another place, have shown a willingness to accept the possibilities in cable. The two aspects that deserve most congratulations are, first, that they have resisted becoming involved in any way on behalf of the taxpayer and, secondly, that they have resisted the regulatory overkill, which is always tempting in such subjects and which would have been disastrous for the future execution of cable projects.
  Having listened to comments by Opposition Members, one is mindful of the doubts expressed about video. Various projections were given of the number of video recorders there would be in this country and of the amounts per month that people would have to pay, and gloomy estimates were made of how few people would take up the opportunity. One third of homes in this country now have video, and many have home computers. One aspect of which I am sure my right hon. and learned Friend is aware—an aspect of which I know my right hon. Friend the Minister for Information Technology is aware—is that the interactive services that will become available on the cable system will draw together the potential of video and home computing in a way that could not have been imagined five years ago.
  As some of my hon. Friends have said, it would be possible not only to have a two-way process of information but to call up information on one's video overnight through the cable system, at a time when no programme was being transmitted. The following morning, one would be able to digest it and call up the concern from whom the film matter had come and order holidays from a travel agent, and so on.
  I wish to support what my hon. Friend the Member for Wealden said. I shall refer to several of the points that he made and seek to reinforce them. The first is the change in tax provisions announced in the Budget. My hon. Friend read out certain information that he had received. I hope that representations will be made so that the Chancellor of the Exchequer will understand that, whatever may be said about potential for cable, about the potential for programme makers in the country, and about the chance for people to enjoy these interactive services, and for educational purposes to be improved, none of those things will happen unless those who have an interest in installing cable systems can see a return from their investment.
  The Home Secretary made it plain that he wanted the minimum regulation and the maximum incentive for the systems. The Treasury must think more seriously about the effect of the changes. I do not suggest that the allowances should be continued, because that would be inconsistent with other fiscal policies, but, as an alternative, the 12-year term for licences under clause 4 should be

  793
  extended to 15 years. Licences for longer terms have been offered in the telecom business, bearing in mind the considerable investment sums involved.
  When it comes to amending a licence, the risk involved must be considered. If anyone wishing to enter the cable business believes that the authority has too great a power to amend the licence at will, confidence will be affected. An amendment was made in another place to enable representations to be made, but the major anxieties still exist.
  I congratulate the Government on their attitude to the programming quota. We do not feel any less strongly than Opposition Members about the need to promote a home-based film industry, but in the early stages of the development of the cable industry in Britain we cannot impose a quota of British-made programmes—in so far as one is able to judge what is British-made—without endangering the future of the industry. Those interested in promoting a home-based programme-making industry must want to ensure that the cable systems are established on a viable basis to ensure a long-term future. Those interested in investing believe that they must be free from any set proportion of British-made programmes. We should consider that view seriously.
  Another aspect touches upon the standards of homemade and foreign-made programmes put out on the cable systems. It is clear that, if cable systems are to succeed in Britain, the cable operators will need much more information about viewers than is currently available to the existing channels. Consequently, sophisticated analysis is already being adopted to establish what makes an individual viewer watch a particular channel and—more important—what makes a person switch away from a channel or stop paying the cable operator for a service. The cancellation rate is as high as one third in any one period. It is as important for cable operators to discover why they lose custom as it is to know why they gain it. In that way, cable operators should be able at all times to analyse the quality of a programme as assessed by the people who pay to watch it.
  The Bill is excellent in that it brings before the House a series of measures which will allow the industry to develop in a way suited to the demand in the country. The right hon. Member for Manchester, Gorton (Mr. Kaufman) was depressing about the Opposition's view of the Bill. The right hon. Gentleman delivered an extraordinary speech. He seemed to argue the case from all sides against the middle. First, he made out that there was no evidence of any demand, and then he suggested that British Telecom should be given the exclusive rights to cable Britain. His speech was extraordinarily difficult to follow.
  I am convinced that if the Government consider limited amendments in Committee they will have a Bill that will offer the cable industry the opportunity to cable Britain and so provide many people with a wide range of services.
  Perhaps it is strange to mention the rural areas, since it is suggested that the cable system will be of little use to them. A number of places in my constituency will benefit from the Bill. I have in mind areas which previously found television reception almost impossible unless localised aerials and transmitters were provided to communicate with villages deep down the steep hills. Such villages will be offered the opportunity under the DBS system to use dishes which will not necessarily be available to other
  794
  areas. Even in an area such as north Cornwall there will be a gain, and I am grateful to my right hon. and learned Friend for providing it.
  8.8 pm
  Mr.Austin Mitchell: I am surprised that the hon. Member for Cornwall, North (Mr. Nealle) concentrated on the benefits for his constituents, because the possibility that north Cornwall will be wired is remote indeed. I am surprised that he did not mention his own interests as a director of Telecom Rentals, the clients of which are Air Call Ltd. He should have declared that interest. I declare my interest as a member of the National Union of Journalists, but I have no intention of agreeing with what Government Members have said in that connection. We have heard a procession of hon. Members praising the Bill with faint damns or clutching at it with open hands because of the money involved.
  I agree with what my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) said about the impropriety of introducing the measure with a sweeping and wide-ranging announcement about a national commercial radio channel which will have an enormous impact on the media scene. That seems to me to be one of the most unnecessary innovations that one could announce. The contracts for ITV are being set in aspic. The Home Secretary has made a momentous announcement for the future of independent television which has little to do with the Bill. It is not desirable to sneak in such announcements in the introductory remarks on a Bill.
  Inevitably, the Opposition in general welcome the advent of cable television because we welcome anything that widens choice, offers more diversity and encourages the move towards a more pluralistic society with more sources of entertainment and information at its disposal.
  One section of the people would welcome the advent of cable television. A survey carried out by the Consumers Association, and published in the February edition of Which?, shows not only that there is a high level of satisfaction with current television — which represents good value for money—but that a substantial majority of viewers want greater choice of television programmes and that a small, but significant, minority are prepared to pay for that either through subscriptions, pay-per-view or an increase in the BBC licence fee.
  The bugbear of video has been mentioned. It is interesting to note from the survey that although one in four households owns a video, and there is a demand for a wider range of programmes, video owners are most attracted to cable television. They have been caught by the bug and are now avid for more variety. I accept that demand exists, although it is a minority demand and the service will be provided for only a minority of that minority. Only the urban areas will be catered for, but as the demand is there it should be met.
  Pluralism in media is a solution to many of the problems of the media, which are so often debated in the House. Less obsessive attention would be paid to the accusations of bias by the BBC and ITV if there was a diversity of media. Attention would shift to a wider area and different points of view would be put, which is all to the good.
  The problem is whether the Bill is the proper way to proceed or whether it will simply move us towards the lowest common denominator. Will it do for the existing institutions what The Sun did for tabloid newspapers? Will

  795
  it drive the service down to the lowest common denominator and weaken the existing institutions, of which we are rightly proud and which have made such an important contribution to entertainment, information and our way of life?
  Given the clear confusion in the Government, we wish that they would hold the measure and reconsider it at greater length, if only to clarify their own thoughts. It is not the Opposition who need to get their thinking clear; it is the Government. The whole progress of the measure has been one of steadily changing assumptions. The Government attempted to rush cable on to the country and the House, which was a disgraceful piece of social engineering and impetuosity.
  The rush has now slowed to a Gadarene amble, but the speed with which the Government embarked upon the measure led to undesirable developments. For instance, the information technology advisory panel provided the original initiative. It comprised a collection of vested interests invited to be judge and jury of their own case. Its report was inevitably slanted in the direction that was to be expected from the composition of the panel — it recommended the rapid, deregulated development of commercial cable systems. Following a note of dissent from the Opposition, that was followed by the Hunt committee. It was one of the less successful committees of inquiry. It was as though the good Lord Hunt set out deliberately to put his mistress's voice into the report. It effectively took the industry at face value and moved, although more ploddingly, along the same road as the 1981 ITAP report.
  We then had the Government's declarations of enthusiasm, which were the impetuous stage. We have now moved to the cooler stage when it is clear that the assumptions on which the initial rush was based have not been justified. One section of the Government does not know what the other section is doing. The atmosphere has chilled. The commercial prospects for cable television have become harder. The Government originally wanted to carry through the cabling of the country—the second railway era—on the back of the private finance capital lured by the prospect of returns on entertainment. That prospect has faded.
  There have been a series of mergers in the industry. Goldcrest, which, with high enthusiasm, proposed to establish a 24-hour-a-day news service, now says that only ITV and BBC can do that and that it is not a viable proposition for an independent company. The music channels have merged—one of the big hopes—and their prospects have shrunk and become bleaker. Indeed, it is rumoured that three of the 11 contractors with initial franchises are in financial difficulties. I hope that notes are being kept faithfully for the Minister and that, when he returns to the Chamber, he will tell us whether those reports are correct.
  The CIT report has downgraded the forecasts for the growth, financial return and prospects of cable, not only in Britain but throughout Europe. That has been capped by the Government's contradictory position in the Budget, which swept away the 100 per cent. capital investment allowances. That was a curious spectacle. In the same week the Chief Secretary to the Treasury told the cable companies to rejoice because they would have 100 per cent. first year capital allowances on plant, but the
  796
  Chancellor announced that he was phasing out and abolishing those very same allowances. One of the basic assumptions on which the companies had worked out their financial calculations was swept away, in one fell swoop, by the Chancellor.
  That is typical of what is happening in the Government. The Treasury, which is committed to the rigours of the free market, is working against the interests and developments cherished by the Department of Trade and Industry, which believes in a more interventionist approach and which is prepared to back new technology and provide financial incentives. Indeed, the Home Office is prepared to provide non-financial incentives to invest in optical cable or star cabling, as opposed to tree and branch cabling. Yet the Treasury, with its belief in free markets, sweeps all that aside and announces the abolition of the very basis of the companies' financial calculations. As a result, the expected yield of cable contracts has been halved in one fell swoop. The break-even point, which was always hypothetical, has been substantially put back.
  Does one half of the Government know what the other half is doing? Did the Home Office and its officials who were negotiating with companies know what the Chancellor intended? Did the Treasury make any assessment of the effect of the slashing and abolition of the allowances on the financial projections of the companies? Was the Home Office consulted? The Government's insistence that this should be done on the basis of a free market did not seem likely to be sustained in the face of the facts of the market, the low return and the difficulties that cable would inevitably face.
  That approach has not been adopted by the continental countries. For example, the French have gone in for direct Government finance, and in my view such an approach is inevitable because the market is not strong enough to bear the burden that it is being asked to carry in the cabling of the country and providing all the other services. If it is not strong enough to carry that burden, disastrous consequences must follow, a subject to which I shall return.
  It is interesting to note the way in which the French have decided to go down the other road, beneficially for them in many respects. They have gone in for fibre optics, whereas we have gone in for the old-fashioned coaxial cable. A stimulus to the British fibre optics cable industry will not exist, whereas there will be that stimulus in France, provided by Government money.
  By going in for the star formation, rather than the tree and branch — we have provided only a slight, non-monetary incentive for that course — and by direct Government finance to provide the incentive which private capital will not, in my view, provide on the scale required, the French, by the intervention of 1 billion French francs, or about £87 million, to get the system under way, can project 1.4 million homes being cabled by 1985.
  In other words, the French plans—and I emphasise that they are plans—are much bigger than ours because they are aiming by 1986 for an annual rate of cabling of 1 million homes, which is beyond the dreams of the companies which are involved in this country. The French are right in their approach, and the British Government are wrong, because entertainment does not have a broad enough financial back to carry the burdens that the Government are placing on it.
  If the Government's hopes for a free market effect, by luring investment into this sphere and providing a viable

  797
  industry, are not justified, there will be two results. The first is that the companies will abandon standards and cut back, and we have seen what happens in the face of financial difficulties. In the case of London Weekend Television and TV-am, the initial prospectuses were chucked overboard without any scruple of conscience and the IBA—it had no power to do otherwise—let them get away with it.
  They will not be driven in the direction which they might logically go—of the increasing provision of pornography or sport, for which there would be a popular demand, not that they are two versions of the same activity — so they will be forced to cut standards and programme costs, with disastrous effects on the production industry in Britain.
  The second consequence is that the Government will be forced to allow them further latitude by way of telephonic communications through cable networks — in other words, to turn them, in effect, into competitors of the newly privatised British Telecom. That means allowing them financial inducements by taking on other financial activities because entertainment will not have yielded the benefits that were prophesied.
  There will be those two changes consequent on financial failure. It looks from the calculations that financial failure is the more likely possibility—I would call it a probability—and if that happens because the Government do not have their facts and figures straight, and if their expectations are not justified, we shall be lowering standards and carving out more areas to hand over to the cable companies. We have here proposals for an entirely new structure and regulatory authority. One must, therefore, ask why this function cannot be handed over to the IBA to perform. Why must we go to the expense of setting up yet another quango in this fashion?
  As the point was raised in the Minister's speech, may we be told why the Government are now trying to lure the commercial television companies into investing in direct broadcasting by satellite with the prospect of automatic renewal of their contracts? I accept that the provision for periodic renewal had many faults and that it was not carried out in the most effective way on the last occasion. Mistakes have been made; there will always be mistakes and complaints.
  Nevertheless, the idea of bringing all the contracts to a close at the same time and considering them anew had the great advantage of reshuffling the whole pack of cards. It provided for the infusion of new talent and it was an incentive to people to challenge existing incumbents. That revivified the system and made the incumbents improve the quality of their programmes, especially local offerings such as current affairs.
  If that is now to be abandoned so as to lure companies into investing in direct broadcasting by satellite—with the promise that if they put their money into that venture the IBA will abdicate its responsibility for the periodic reshuffling of the cards—there will be a weakening of the IBA and an unjustified weakening of the check that exists for the benefit of the public.
  Mr.Hurd: It would be a weakening, but what the hon. Gentleman has described will not happen. The arrangements—the situation in 1989—remain and the IBA retains complete discretion to readvertise if it wishes. The only change is that there will no longer be an obligation to readvertise.
  Mr.Mitchell: The Minister concedes the essential point. That obligation kept companies up to the mark, allowed the infusion of new talent and meant a shake-up periodically, which was all to the good. The IBA is always in danger of entering into a cosy conspiracy with the companies that it is nominally designed to supervise and superintend. It wants a quiet life. It does not want all the difficulty and embarrassment. Faced with that permission from the Government—who want the money from the television companies in terms of direct broadcasting by satellite — it will opt for a quiet life. That is a real danger because the periodic opening up of the floodgates of competition, of new talent and of new bids for areas kept the companies on their toes.
  If there is to be the same sort of contract as we have had in commercial radio, with all the contracts continuing on without being unrolled, it might be sensible, given the Government's attitude to privatisation, to scrap the IBA, which will have no real role if it is not to reshuffle the pack of cards periodically, and flog the transmitters to the companies as an extension of the Government's programme of privatisation. They could be sold to the companies at a 20-year rental purchase price, the Government would have the money and the whole pretence that there will be renewal and that a check will continue to exist could be abandoned.
  That slight detour was caused by part of the Home Secretary's opening speech. The rhetorical question is "Why do we need another quango?", and I do not think that it has been answered effectively by the Government.
  I am concerned about the effect of the Bill on domestic production. The Government are obsessed with free market economics, but those economics do not apply in television and film production. Our small market competes with a much larger and highly developed industry in the United States. If there is a financial desperation to move down market and to buy programmes at the lowest possible cost, the programmes bought will be the surplus production of the American industry. That is the Coca-colonialism which is complained of in so many parts of the world and which we have managed to avoid in Britain by maintaining a quota of British programmes. The quota applies to both the BBC and ITV.
  The financial predictions for the companies and production costs are dire. In a publication entitled "Cable and Satellite—Choice or Overkill" from the Association of Independent Producers there is an article by a director of Cable and Finance Ltd., a firm of ex-bankers that is undertaking research into export possibilities. It is estimated that the cable companies will be able to pay an average of about £2,500 an hour for production and that there will be an industry budget of £4,800 per hour for production costs. The average of £2,500 is a measly sum when set against the scale of production costs for the BBC and ITV. However, the sum will probably be less than that because there will be a wish to buy films to recruit orders, Those films will be expensive and the financial allocation for domestic production will be extremely small.
  It is not possible to support: a viable British television production industry by means of a few quick pop promotions, a few studio quizzes and sets with people talking to camera. It is necessary to have the entire panoply of production, and the cable system will be unable financially to carry that burden. It will not be able to afford British production and it will not, therefore, be able to make a contribution to the British industry. It will be

  799
  compelled to buy surplus American production, and the American industry will be in a good position to supply Britain because it will have amortised its costs on the American market, which is extremely profitable, and anything else will be pure cream. The extra market will be a pure bonus. That will be the consequence unless we have a British quota, which I think is desired by both sides of the House.
  We must have a viable television production industry. If there is to be an audience for cable television, the audiences of the existing institutions will decrease and they will have less money available for production. There will be an adverse effect on television production and the cable system will be unable to compensate for that because it will not have the money to finance production, or even to buy surplus production, on the scale that is necessary to compensate for the decline of the institutions.
  We are justly proud of our television industry, which has won a series of international awards at Montreux and in the Prix Italia competition. ITV alone has won eight out of 10 awards in the Prix Italia over the past seven years. The industry's net earnings from overseas transactions were £81 million in 1980 and £78 million in 1982. The industry is an essential part of our national culture and it will be threatened by the cheap-jack operation that is almost certain to develop.
  What guarantees can be given to the industry? If the companies are driven remorselessly by financial considerations down market into imported products that are surplus to the production of the American market, what support will the Government provide to the British production industry to maintain its viability? If it is not a competitor to the American industry it will be taken over, for that is the logic of the Government's free market economics. There is the danger that our market will be driven out because the American market is so much larger as a result of having a much larger home market to which it can appeal.
  What calculations have been made of the likely advertising revenues for cable television? A huge burden is being placed on the back of advertising. If we are to have a national commercial radio network in addition to the local commercial radio network that provides essentially the same fare, where is the advertising to come from? The essence of commercial radio must be pop music. I know that that is so as I am a failed disc jockey; I played brass-band records on my programme and the audience plummeted. Commercial radio means commercial music, and it will duplicate much of that which is provided by the local commercial radio network. If, in addition, we have direct broadcasting by satellite, which will be advertising-based, will the advertising budget be able to support the burdens that are placed upon it? What projections have been made for advertising revenue and expenditure over the next few years?
  The future of the advertising base is linked to the future of the British economy, and my predictions for the economy are not particularly gloomy. If we are to maintain a British domestic manufacturing base, advertising will be cut slightly, for the biggest advertisers are the importers who are competing for the domestic market. It is important for the Government to state the financial basis of their calculations of advertising revenue.
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  It is a matter of regret that the same attitude is being taken to impartiality and politics. Apparently that attitude will permeate cable television as it has permeated the existing institutions. My personal view is that the existing institutions have been castrated by the requirement of impartiality. To explain is to take a point of view, and it is far easier for the existing channels to present two Members arguing with each other—and, incidentally, completely confusing the public—than to provide an explanation or a committed viewpoint.
  One effect of pluralism should be to allow a diversity of viewpoints. I am not suggesting that people should be allowed, as they are in the United States, to buy time during which they can put over their points of view. To allow that is to hand power to the large financial battalions. However, it is important that we have a greater diversity of view points and not merely the access television which has been offered in mere deference to politicians. There should be a genuine openness to different viewpoints on cable television, especially access to Members to their constituents. This would be a prime use of interactive television, which has already been used effectively in the United States. Some of the clippings from the New York Times reveal how American politicians have used that form of television to talk to their constituents. It provides a constituency surgery of the air. Why should we not be able to have that form of television in this country as a means of communication with our constituents who return us?
  The way in which the arrangements for direct broadcasting by satellite have been promulgated has produced a whiff of scandal. It was clear that the BBC did not want to take on the financial obligation. To save their project, the Government lowered ITV in. The carrot was the prospect that ITV's contracts would be renewed automatically by a compliant IBA. We have already gone over that argument. It is clear that private interests are to be allowed in for 25 per cent. and the BBC will not have the two channels it was promised at the beginning. The system will be operated by a consortium, of which the BBC is a part.
  The BBC is being asked to provide the financial base for a commercial consortium and is not being given the two channels that would allow it to compete effectively. A consortium will operate all the available channels. That is an undesirable arrangement and a financial imposition on the BBC, which will not be permitted to raise money from its licence fee. The BBC will be forced to raise money on the market to provide financial backing for commercial interests. That is the final outcome of the long process of closed—door negotiations.
  The measure is welcome in proposing the advent of cable television and a greater diversity, but it is unsatisfactory and should be reconsidered until the Government clarify their thinking on the financial basis of cable television. We need big thinking. Small men are thinking puny, short-sighted market-oriented thoughts in a system that demands intervention and leadership by the Government so that the matter is not handed over to vested interests. We want what is right, and this legislation is not that.
  8.41 pm
  Mr.Hugh Dykes: The hon. Member for Great Grimsby (Mr. Mitchell) gave us the benefit of his wisdom and advice for almost 35 minutes. It is a

  801
  reflection of our quaint habits in this mother of Parliaments that, because of an over-enthusiastic floor manager rampaging around the Benches at the beginning of the debate, exhorting all hon. Members to speak for 25 or 30 minutes, each hon. Member has spoken for far too long, and now there is insufficient time left for speeches before the Minister's reply. Perhaps that is the normal habit and tradition of this place.
  I partly forgive the hon. Member for Great Grimsby, because he knows something about this subject. Other hon. Members from both sides of the House also know something about it. The hallmark of their contributions of varying qualities and content has been their knowledge about television. But by definition no one knows yet about cable television in Britain; we know a little about the experiences in other countries. That should have been revealed more in the tenor of the Opposition's remarks.
  I congratulate the Government on the way that they have prepared the ground for a difficult exercise. I, like many other hon. Members, am seriously disappointed that the Opposition, who were caught between a confusion of attitudes and a lack of knowledge on how to respond, acted in the traditional way. They repeated their old and now very tired and exhausted arguments about the early days of commercial television. The remarks of Opposition Members, perhaps not so much those of the hon. Member for Great Grimsby, were typical of the general debates on broadcasting in the old days when ITV began. The scene is totally different this time. This industry is completely new, except that it comes through a television set. Because it is so difficult to get the new system off the ground, the Government must consider the framework of the Bill. The legislation must strike the right balance between serious social, moral and organisational controls and the need to get this exclusively private industry off the ground properly. That is the priority for the House on Second Reading and in Committee.
  I, like other hon. Members, am worried about a number of clauses, but time does not allow me to go into them in detail. I am anxious about the provisions of clause 4 stipulating 12 years for a licence period. A longer period might be a good idea. I hope that that point will be considered.
  The new authority should be modest in its requirements on licence fees. or another too onerous condition will be applied in terms of those fees. The other terms and conditions of licences should be reasonably flexible. Clause 14 is also too restrictive. I, like other hon. Members, fear the excessive role of the IBA, rather than the other way round. I am concerned that pay-per-view on sporting programmes should mean what it says and not carry an unduly onerous restriction, as now provided in clause 14.
  I am disappointed that this exercise is getting off the ground more slowly than we expected at the end of 1983. One Opposition Member said that the Government were going too fast, but I do not believe that. From the time of the Hunt report and the White Paper, there was a notable celerity in the Government's response. The Home Office moved quickly to get the industry off the ground. We have noted with nervousness that it is harder to get the industry launched than was anticipated.
  I agree with the statements of the hon. Member for Great Grimsby about the confusion caused by the Treasury action a week after the Inland Revenue service finally decided that ducting and so on could be a capital allowable
  802
  item, although the IRS had previously given an ominous hint that such items would not be allowable. The capital allowance is now to be abolished. Not only did the Treasury, the Home Office and the Department of Trade and Industry swirl around one another, to some extent, causing additional confusion but the 11 interim franchises, many of which are now nervous because the talks have lasted longer than expected, are worried about the unnecessary delay. Every assistance, short of actual help, literally must be given by the Government to get the interim exercise off the ground in round one and later in the autumn in round two.
  I am disappointed that it has taken so long for the Cable Authority to be established and for the chairman and the rest of his team to be appointed. It is a pity that my right hon. and learned Friend the Home Secretary did not put more flesh on the scheme in his opening remarks, but perhaps my hon. Friend the Minister will do so when replying.
  This is a difficult exercise. Interim franchises and others thinking of applying for licences in later rounds fear that the rate of return will be so far removed as to make the exercise not worthwhile. Various feasibility studies are being conducted in private industry. I point out that I have no direct interest in this matter. I am a shareholder in a number of large companies that are also probably involved in cable television, but that is a rather remote connection Many doubts have arisen about those who were originally thought to be enthusiastic activists in the industry—small, medium and large companies—about the feasibility of the exercise. Many problems will arise also from DBS. I am glad that a Government framework in DBS is at least beginning to be established. We must encourage the exercise to a greater extent, and the Opposition should recognise that fact.
  This is not a state exercise with state money, but a private exercise. Of course, standards must be maintained. It is easier to frame legislation and pass it in Committee than to get the industry started. I was especially disappointed with the curmudgeonly speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman). At the weekend, in an article in a Sunday newspaper, the person who wrote the biographical notes said that the right hon. Gentleman was mercilessly teased at school. It is understandable that that was so, when one notes his remarks in a serious debate about starting an extremely difficult industry.
  I hope that the Minister will encourage us with the belief that the cable television industry will get going and will incorporate the best traditions of the high standards of British television. This country is fortunate in its television services in that a type of historical accident has come together in a positive way to produce not only high standards but a good, semi-state framework. The Government need to take the Bill to Committee to start the industry as soon as possible. I hope that that will be the spirit of the end of the Second Reading debate.
  8.48 pm
  Mr.Clifford Forsythe]: I am not an expert on this subject, but I am someone of equal importance because I am a potential customer of cable television. I welcome the Bill generally. It will provide greater choice. We will have many more programmes on more channels. I imagine that we will be able to watch the

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  Irish cup final and other events with a local character as well as those national events that are shown on national television.
  Cable television will show different entertainments and offer other related services such as banking and business computing. There will be benefits for the handicapped, those who are housebound, and the elderly if shopping or home security is included in the related services. Medical services could be summoned into the home, and the system could be of use to doctors and other members of the medical profession when dealing with people who are tied to their homes.
  While I generally support the idea of cable television, like many other hon. Members I have reservations about the Bill. One takes such a view about any new system. It takes time to have it as one would like it.
  What powers and functions will the chairman, the vice-chairman and members of the Cable Authority have?
  Northern Ireland is an outlying part of the United Kingdom, and I have reservations about how the system will operate there. If there is no tight control of special events, people who do not have cable television may lose out if such programmes are shown only on cable television. Will cable be given equal rights in respect of special events? Will it be allowed to show all the special events in the same way as the BBC or ITV?
  One must consider the programme standards on cable television. There could be different standards on different channels. It is essential that the safeguards in the Bill should be strong enough to prevent programmes similar to video nasties from being shown on the channels. The Cable Authority should have proper powers to ensure that.
  It has been said that if we do not have an 85 per cent. quota for United Kingdom and EEC programmes we will have rubbish from other parts of the world. We already have rubbish shown on television. It does not necessarily follow, however, that all foreign programmes are rubbish. Some good programmes come from outside the United Kingdom.
  Other hon. Members have asked whether the 12-year starting period is long enough to give new companies the opportunity to get into the system and get back a little profit. Companies are putting their own money into the operation; public money is not going into it. The point may have been mentioned at the beginning of the debate, and I may have missed it, but is the initial starting period before the company goes into the service included in the 12 years or is it in addition? I know that the new service will not be a public service, but we expect standards as high.
  I am not sure about the make-up of the Cable Authority. Will Northern Ireland have some input? Will there be representatives from Northern Ireland on the authority? How will our interests be safeguarded?
  I support the "have to carry" clause. I agree that scheduled programmes should be included in the broadcasts.
  The star system will probably be used in the Belfast area. We hope that that will create jobs. It should be an incentive to job creation.
  I hope that the outlying areas will not lose out, and that cable will encourage local talent in drama, sport and other entertainment. I look forward to the introduction of cable television.
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  Will the licence fees to be charged by the Cable Authority be different in different areas or will there be an overall charge for all parts of the United Kingdom?
  I welcome the idea of cable television and the fact that, as I understand, all the components to be used in Belfast and other parts of Northern Ireland will be British made.
  8.56 pm
  Mr.Robert Key: I made my maiden speech last June on the subject of cable television. I am delighted to report that there are far more hon. Members in the House tonight than there were then. There are still perhaps not as many as there should be when such an important subject is being discussed. I said then that cable operators
  "should do more than cream profits from limited services in densely populated areas. They should assume wider responsibilities in developing all the opportunities offered by interactive systems".—[Official Report, 30 June 1983; Vol. 44, c. 743.3
  That is even truer today than it was then.
  Events have moved fast since last June. They have moved so fast that I must now declare an interest to the House as a modest shareholder in Salisbury Cable Vision Limited, a company born out of hope more than a large bank balance.
  It is symptomatic of the way that matters have moved that many people are interested in this development. It is a new industry, as my hon. Friend the Member for Harrow, East (Mr. Dykes) said. Although my attention during the past year has been given primarily to how cable might affect my constituency, a number of hon. Members have tried to assess the impact of cable television on rural communities. I am not convinced that it will touch only densely populated areas. It may take us longer, but it has not so far been popular to consider other factors in the debate. It has been said that a population of less than about 100,000 is not enough to support a cable system. I am not sure that that is true, although it is undoubtedly true that existing IBA companies have gone to great lengths to persuade people that it is not true. It has not persuaded all of us.
  A large market will be needed to attract advertising. It is also true that some of the existing IBA companies have much inflexibility in, say, their editorial areas, which is a great menace to their future. They have much to be worried about from interactive services on cable.
  The interactive services will be the most important feature of cable television development. Entertainment will be available but, although it will be an important aspect, let us not under-estimate the commercial and industrial uses of interactive systems. Many specialist groups will be catered for. They have been merely touched on by some hon. Members. After sitting on the Benches for about five hours and listening to other speeches, hon. Members might have thought that there was nothing left to say and that it would be amazing if something new were discovered. Therefore, I hope to amaze, although I may not succeed after such a long time.
  Because the traditional terrestrial television and radio services, satellite and subscription television, can provide other specialised subject channels for news, education, religion and health and the specialist audience channels for ethnic groups that were mentioned by the right hon. Member for Manchester, Gorton (Mr. Kaufman)—in one of the more realistic passages of his otherwise dreamy

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  speech—specialised audiences have been predicted for different age groups, for those with impaired hearing and other groups, including many channels for local information. A whole range of other services ranging from fire and burglar alarms to meter reading and opinion polling can be foreseen.
  Business-led interactive services will be the key to the success of the project. Household consumers will be a priority audience and the traditionally high standards will be expected of BBC and IBA programmes. Much worry has been expressed about imported United States trash programmes, with arguments about the dangers of down-market television. But we may be able to lead the world as manufacturers of specialist programmes for cable television, which we are uniquely able to do with our wealth of talent in television production and direction, as well as acting.
  Some of the specialist services that have been underestimated so far are, for example, farming channels, which were mentioned briefly in the debate. These days, farming is a hard-headed business operation. It is not the romantic, straw-sucking and gatepost-leaning hobby that it is often portrayed as.
  Security channels could be used in county towns and other areas to safeguard factories, farms and city centres, and to give protection against vandalism and mugging. There is great potential for estate agents, who are already conducting experiments in this area. Shopping has been mentioned. Radio and television programme guides may presage the end of the Radio Times and the TV Times.
  The systems might be developed for special, remote areas such as military camps. Those areas could well be served better by cable television than by any other system. My hon. Friend the Member for Cornwall, North (Mr. Neale) said that some of the remote rural areas might be fairly high on the list of priorities for service by cable systems, because they would be the best, and possibly the only, way in which those areas would receive television.
  I should like to mention something that has not been discussed so far: a possible new life for our provincial theatre and arts. They have a great future in cable television. Perhaps the channels will be able to produce theatrical performances. There may be greater potential for the full-time use of their studio facilities and production facilities, using the technology that is increasingly found in the provincial theatres.
  We have the technology to provide cable systems. Business and industry will undoubtedly use them and will be prepared to pay for the services. As an example, many cable television companies have proliferated, often with local and national backing. I have not discovered how many there are, but they are many.
  The consuming public also wants cable television. The hon. Member for Great Grimsby (Mr. Mitchell) referred to that aspect and quoted the researches of the Consumers Association. It has shown that video owners are most attracted to cable television. They are also most prepared to pay for it. The hon. Gentleman might have pointed out that the Consumers Association has shown beyond doubt that by allowing cable television to compete with and attract audiences from existing channels the quality of public service television should remain protected. That is because the new channels will be available only to a minority and because the present service is held in high regard by most viewers.
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  The question of standards is paramount. I have seen little evidence that there will be a drop in standards, but it will undoubtedly be a high-risk industry. It will flourish only if the Government adopt a regulatory approach quite different from that for traditional public service broadcasting. No one is suggesting a free-for-all, least of all some pot of gold. There is no pot of gold in cable television, and if hon. Members do not know that they have not paid attention to the developments of the past year. There is certainly no licence to print money in cable television.
  It wil take all the inventiveness of the market place to breathe life into this privately financed, market-led industry. As my hon. Friend the Member for Harrow, East has said, it is an entirely private industry. The Government must therefore be very careful not to stifle entrepreneurial courage at birth. I was a little upset to hear that the BBC is to have 50 per cent. of EBBS services. I would have preferred one third each in this particular form of consortium.
  The Government Can Be Helpful. The Changes In Capital Allowances Have Undoubtedly Delayed The Profitability Of The Companies Involved. I Support The idea that the initial licence period should be extended to 15 years. Financial incentives are important and necessary. After all, the Government moved the goal posts after the first whistle—as we have seen in the Budget—by their action on capital allowances, after many of us had been trying very hard to get some movement on that front.
  Consideration should perhaps be given to interim or installation licences to cover the transmission of test programmes. As it is a completely new industry, there will be technical problems and it will take many weeks or even months for cable companies to get around to providing a service that is fully operative for the whole of their franchise areas. There will inevitably be a long introductory period, and that should not be counted at the same rate as the full provision of services.
  It is most important that licence fees should be announced as early as possible. That is crucial for all budgeting, and must be done if cable companies are to put in realistic applications in future. It is also important that licence fees should not be a burden, or another form of hidden tax on the profitable companies. I am concerned that, for example, the authority might use the licences as a means of subsidising the less profitable areas. If the market will not bear a high licence fee in the first place for a given area, a high licence fee should not be sought in the first place. There should not be any attempt to subsidise services around the nation.
  In seeking to control cable licence holders, I beg the Government not to kill the goose that lays the golden egg. Twenty years ago it was said that local radio would kill the local and provincial press, but it did not do so. The newspaper industry is resilient and inventive, and has contributed much to local radio. I am concerned about clause 8 in that respect, because there is an even more natural affinity between the local press and cable television. I think that some of those Opposition Members who belong to the NUJ have pointed out that journalists are concerned that a screened information service and, perhaps more importantly, a news service that uses local reporters based on local newspapers may lead to the end of local newspapers. However, it need not do so.
  It is natural, and common sense, that local newspapers should provide a news service for potential cable television

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  areas. Therefore, I accept that, although cable television has a unique potential for monopoly —I agree that it would be undesirable for a local newspaper to hold a monopoly licence in its own area—it is common sense, and professionally sound commercial practice, for newspapers and publishers to play their proper role in the development of a cable network — for instance, as minority shareholders in local companies. I urge the Government to clarify their thinking as soon as possible, so that newspapers and publishing houses are not squeezed out of their rightful place in the natural development of the industry.
  I welcome the Government's announcement of a national independent radio network, and urge them first to complete the gaps in the existing local radio systems. There are large gaps, and my constituency is one of them. The Government should consider all possible means of increasing the funding of local radio—for instance, by allowing private finance for the establishment of transmitters.
  Many technical and financial considerations have been and will be made, but it is more appropriate to do that in Committee. Bearing in mind the technological changes in DBS services and cable technology, and the shifting sands of public opinion and of opinion in the industry since the Government introduced the White Paper, I congratulate the Government on their resolve to bring in the Bill, and I beg the House to support it.
  9.11 pm.
  Mr.John Golding: I say without regret or malice that since I last spoke about cable television I have not been offered chairmanships or directorships, nor do I have a new interest to declare—only my old interest of the Post Office Engineering Union.
  For many years I have stressed the need for an integrated telecommunications system. The last time that my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) and I sat together on a Bill—it was about commercial radio—it took five months to pass through Committee. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) is to be the Opposition Whip in Committee and, having heard him speak tonight, I think that he will need five months for himself alone. The Government are late in introducing the Bill and, as my hon. Friend will serve in Committee, I hope that the Committee of Selection will not also make me serve on it.
  I regret that the Government have chosen not to split the running of the physical system from the programmes. They are wrong. The physical system should be run separately and integrated into telecommunications. It should then be controlled by one body, and whether privatised or non-privatised—preferably non-privatised —it would be better for the cable system to be given to British Telecom, or, at least, British Telecom should be involved in each consortium. The Government's separation of the transmission of information does not make sense.
  Under the system Oftel will grant licences. It appears that it will be forced to grant licences to operators who have received a Cable Authority operating licence, unless there are good reasons for not doing so.
  I agree with the hon. Member for Salisbury (Mr. Key) that entertainment may prove of negligible value to cable
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  in Britain. We shall come to see that the sort of technological system provided is more important than the entrepreneurs providing the entertainment programmes.
  I do not pretend to have the high cultural standards of my right hon. and hon. Friends on the Front Bench. I am a philistine and enjoy watching television rubbish, but I shall not make a big issue of that. The public will not care which group of entrepreneurs provides which rubbish. However, it will be important to know about the technical systems, since interaction and, to a large extent, the development of data transmission and telecommunications will depend upon them. Jobs and prosperity will depend more on technology than on quality control. It is regrettable that the technical systems have been relegated to such a minor place in the Government's thinking.
  It is clear from having listened for years to Ministers from the Department of Trade and Industry about the privatisation of BT and having read the Bill that the Government have not formulated a cohesive telecommunications policy. At present it is fragmented. The Government are wrong to try to hurry cabling under the pretence that it will provide jobs. They should have waited for two or three years and then they could have relied on the most modern technology. They have been wrong not to insist on the most modern technology, but they have at least acknowledged our argument by modifying their original position and by ensuring that the majority of franchises have gone to those who will provide the most up-to-date systems.
  I agree with the hon. Member for Salisbury—I shall ruin the hon. Gentleman's career if I say that he made my speech for me—about the importance of rural areas. The Government are in danger in this matter, as in telecommunications generally, of creating two nations. They are not yet conscious of the importance of national provision.
  The Bill also offers the possibility of alternative local telephone systems, although the Government have ruled out further competition to BT. It is obvious that the Department's policy on cable is designed to prop up Mercury by pressing cable operators to carry its business. It will enable Mercury to cream off business in Birmingham, London, Manchester, Leeds and Liverpool. That is entirely undesirable. Neither the Home Office nor the Department of Trade and Industry should be concerned with short-term commercial advantages in cable or short-term advantages to Mercury. They should work out what is best in the long-term interests of Britain and British manufacturing industry. There is no doubt, because of the rush to cable, that British companies will suffer at the hands of the Dutch.
  It is now 9.18 pm and I know that my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) is anxious to address the House on the high standards of programme content required for his constituency, so I merely ask the House to note that the technological basis of the Government's decision is faulty.
  9.19 pm
  Mr.Denis Howell: I am grateful to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) for not continuing beyond 9.19, which would have deprived me of the opportunity to talk about small businesses.
  I start with a general welcome for the debate and for cable television itself. As I shall be critical of some aspects

  809
  of Government policy, such as implementation and mechanics, and about the statement that the Home Secretary has made, it is important to say that there are good reasons for the Opposition supporting cable television. The technical advance envisaged in cable television—about which my hon. Friend has just been talking—the jobs, the services, the new opportunities that we hope will come about as a result of the interaction and the welcome new cable television services that can do much to the advantage of musical programmes and programmes for schools, sport, arts and local affairs—all these things are positive, to be welcomed and are an advance.
  I am sorry that the Home Secretary decided to make a rather sensational and deplorable statement at the beginning of the debate.
  Mr.Brittan: The right hon. Gentleman should read the Financial Times.
  Mr.Howell: I see that the Home Secretary is now falling back on the excuse that his speech was written about in advance in the Financial Times. That is a remarkable statement. Leaks from Cabinet Ministers are now officially stated by the Home Secretary to be all right. The right hon. and learned Gentleman is right—I do not often read the Financial Times, but I shall be quoting from it.
  The Home Secretary's announcement today has transformed the nature of the debate. While I accept that he was legitimately giving us information, as the Minister said in an intervention, about part II, perhaps the Home Secretary should have thought on reflection that it would have been better to give us advance notice of that part of his statement—probably last week. However, as the other place is still part of our parliamentary procedures, and as the Bill has gone through its stages there, I do not know what he thinks their Lordships will think about having debated the Bill without the benefit of any of the information that the Home Secretary has now given us about the changes in the rules of the game in the middle of the match. He has transformed the debate, and I should have thought that was more discourteous to the other place than to this place.
  Mr. Brittan: Is the right hon. Gentleman now supporting the House of Lords?
  Mr. Howell: I am always anxious to help the Government in their protection of the second Chamber. As we have one, it is as well that we take account of the courtesies of Parliament for it.
  The important thing is that the Home Secretary, by introducing a new power for the IBA, to enable it not to readvertise in 1989 for regional television contracts, is giving it a licence to reprint money, to change the old phrase. He is now saying that any television company, if it takes a stake in the new arrangements for satellite television, will automatically get itself an extension of contract.
  Mr.Brittan: No.
  Mr.Howell: I am afraid that that is what the Home Secretary is saying. It is inconceivable that the IBA, faced in 1989 with a programme company that has invested substantially in the new satellite arrangements, would not take advantage of the powers that the Home Secretary has told us that he is prepared to give to it. If it does not take
  810
  advantage of that power, what is the point of the Home Secretary announcing that power today? Perhaps the Minister can tell us, if the IBA does not have to readvertise for programme contractors in 1989, what will be the period before the contract is readvertised. Is it to be the full period, for three years or four years? We are entitled to know.
  Similarly, I have grave concerns about the financial arrangements that the Home Secretary announced about the Cable Authority. If I got it right, he said that he is allowing it to borrow £2 million working capital. Presumably, if the BBC is not to finance the operation out of licences it will have to borrow money. If there is a flop which cannot be charged against licence holders, that can only mean one thing — dramatic cutbacks and the reduction of standards of BBC programmes.
  I welcome the Home Secretary's acceptance of points that have been put to him else where that he should use the existing television complaints machinery. We are glad that the Home Secretary has reconsidered the matter and proposes to put it right.
  There are three areas of profound concern about the arrangements that are evolving. First, the Government are botching a great technical opportunity for Britain. I need not go into that in great detail because my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) has just dealt with it. It is interesting to learn from the Financial Times of 4 May that the French Government have taken a completely different and much more realistic approach. They are going to insist on a system of optical fibres which is what we should be doing because it is there that the technological advance is to be found. They are proposing to connect up 200,000 homes a year with optical fibre systems going up to 300,000 or 400,000. In the Government's haste to get the capital ahead of the programmes and the subscribers, they have gone for a second-class system. They have done it in a way which is much to the disadvantage of British Telecom which ought to be the agency responsible for the establishment of the cables.
  Our second objection is to the financial arrangements which now apply. The financial arrangements now on offer for cable television are a shambles. People in cable television, some of whom I have spoken to this weekend, particularly in the midlands, say that it is a shambles. They say that they do not know where they stand and that they cannot possibly recoup their money in the time scale available to them. On top of that, along comes the Chancellor of the Exchequer and produces a disastrous proposal for capital allowances which means that they cannot make any profit on the deal for 10 or 12 years or even longer. Those are the people who have already been chosen by the Home Office to act as licence holders. I ask the Home Office, as a matter of urgency, to look into all the financial arrangements. Those of us who want cable to succeed do not want it to be bogged down by the financial restraints which are now much in evidence.
  Cable will not be the bonanza which many think. There are stories of disaster now being told in the United States and Canada. Even CBS with a 5 million viewing audience has lost £35 million and many companies have closed down. In Canada two out of the six cable television companies have closed down. That is important to note. There are various stages—the building up stage and the running in stage—before the programme companies get under way. Satellite TV News, the trade paper for the

  811
  industry, said in its May edition the very things that hon. Members on both sides of the House have been saying about the great financial difficulties which everybody now faces.
  The next question concerns the dilemma of quality and standards. We have not been told by the Government how they intend to protect the quality and standards of the existing programmes made by the BBC and the IBA. The hon. Member for Cambridgeshire, North-East (Mr. Freud) said that, if we are going down market, as we inevitably will with cable television, if we are to have rubbish, at least let us watch British rubbish. I have a great deal of sympathy with that sentiment from the point of view of the creative arts, the musical world and sport, as well as from the point of view of viewers.
  The Bill states that the Cable Authority must ensure that there is a proper proportion of British material. What on earth is a proper proportion? This must be defined, as it will be necessary to refer back to the clause. This criticism applies to a great deal of the Bill. Clause 10 says that standards of decency must be maintained. What is a standard of decency? There are about 40 hon. Members in the House, and every hon. Member will have a different idea of what this is. Indeed, one knows of the concern that there is on this question from what happened on Channel 4 when the company was proposing to show sexual intercourse under the disguise of education. Every hon. Member who has served on the Video Recordings Bill, on which the Home Secretary, I and other hon. Members have joined to protect standards in the country, will have some concern on this matter. Clause 11 contains an attempt to rectify the omission. I hope that the clause will be realistically considered.
  It is most important to say, as the IBA and the BBC have said, that 86 per cent. of the total content should be British manufactured. I cannot understand why the Government are not insisting upon this, since the figure of 86 per cent. was arrived at as a result of the long working experience of the IBA, and was worked out in association with the unions and other interested people. I notice that people like John Gielgud, Michael Dennison and many other actors have been saying the same thing. It should be a matter of concern to us all.
  I am pleased to note that in parts of the Bill powers are being taken to ensure that exclusivity is not bought by cable television, particularly with respect to sport. That is welcomed by me, and by the sporting organisations. In view of the fact that cable television will go to the lush urban areas, and that large parts of the country will not have it for a long time, it will be indefensible to allow events like the Olympic Games, the Cup Final, the Grand National, the Derby and similar major sporting events to be bought exclusively, and then projected to only one or two areas of the country.
  I deal last with the question of impartiality which is covered in clause 10, together with the question of good taste and decency. Clause 10(1)(a) deals with good taste and decency, and will require a constant monitoring operation by somebody. That will be an expensive operation for the new authority to undertake. I hope that we can be assured that the resources will be available to the authority.
  On the question of the impartiality of news, I was interested that the hon. Member for Gravesham (Mr.
  812
  Brinton) welcomed that but went on to say that he did not approve of it with regard to current affairs programmes. Current affairs programmes are a cause for some concern. Our experience is that the news is generally fair but that current affairs programmes depend very much on the editor of the programme, and on the sort of interviewers. We have all observed the Prime Minister being interviewed for 40 minutes, and being asked not one single reasonably hostile question in the course of the interview. I do not think that the Prime Minister should be interviewed by somebody whom she has knighted, but that is a personal prejudice. I do not think that journalists should accept honours from Government until they retire. Following such a principle might improve the health of all our newspapers and television companies.
  I hope that the Minister can confirm that the impartiality of cable television will apply not only to the news, but to current affairs. That should be written into the Bill.
  The Bill provides a great opportunity. Most important, it will extend choice for the people. Apart from the technological innovations, the news services, the new jobs and the new technology, the most important aspect of the Bill is that the British people will have greater choice in their television programmes.
  Subject to proper safeguards, the Bill deserves a welcome. I assure the Minister that in Committee we shall approach the Bill in a constructive spirit and hope to make improvements in it.
  9.35 pm.
  The Minister of State, Home Office (Mr. Douglas Hurd): I am glad to hear that the right hon. Member for Birmingham, Small Heath (Mr. Howell) supports the Bill in principle. We have had an interesting debate, but we have only just begun to scratch the surface of the subject, in the House and outside. I agree with the thrust of the excellent speech of my hon. Friend the Member for Thanet, North (Mr. Gale) who tried to jerk the debate out of the rut of ordinary broadcasting debates. He reminded us of some of the unknown possibilities with which we are only just beginning to deal.
  The right hon. Member for Manchester, Gorton (Mr. Kaufman) was in a different mood. He was obviously itching to take his place on the Standing Committee. He advertised his celebrated service of correcting misprints and we look forward to his contribution in Committee. The speech of the right hon. Member for Small Heath was similar. He was longing to set up a nationwide, nationalised cable enterprise. Both right hon. Gentlemen described in mouth-watering terms the inevitable losses which such an enterprise would meet. It is characteristic of the Opposition, even to two relatively robust Members of it, that when they see a loss they want to make absolutely sure that the taxpayer will suffer it.
  We believe that cable can be profitable. Others obviously believe that, because otherwise we should not have received 37 applications for the pilot projects. The decision about whether it is profitable should not rest with the House, with politicians or with Governments. It must be taken by the cable operators and the customers. The risk should fall upon private enterprise.
  The right hon. Member for Small Heath talked about chaos in our approach. There was a certain amiable chaos in his speech, short though it was. He started by saying that we were giving a licence to our friends to reprint money

  813
  and then he described conditions so hard and hostile that they would never be able to make it. I am not clear whether the right hon. Gentleman thinks that we are creating a honeypot or a mousetrap for applicants. I think we should be told.
  Mr.Denis Howell: I was saying that by the Home Secretary's announcement the existing ITA programme contractors are given the right, if they buy into the new satellites, of automatic extension. That is a totally different consideration from whether satellite and cable television itself will pay. In some circumstances it will pay the companies to buy their way in, even if the systems fail, to get over the problem of having to reapply for their contracts.
  Mr.Hurd: We shall be able to queue up for Hansard in the morning and interpret the right hon. Gentleman's argument.
  I shall not be able to cover all the points made by hon. Members, but I am sure that we shall have an opportunity to go into them in detail in Committee. I shall deal with the main points that were made in the debate.
  One main argument was about British and other European material. The right hon. Member for Gorton began by saying that the provision should be the same for cable as for broadcasting. My hon. Friend the Member for Thanet, North had to say twice, and I had to say once, that that is exactly what is in the Bill. The formulation in clause 10(1)(d), which provides that the Cable Authority is under a duty to do all that it can to secure that cable programmes include proper proportions of British and EEC material, is taken direct from section 4(1)(c) of the Broadcasting Act, which imposes a similar duty on the IBA. If the House approves the Bill, the statutory basis will be the same for cable as it is for broadcasting. We want to see a substantial and growing proportion of British and European material on cable.
  The question for the House—which the Opposition have not yet addressed—is whether it is sensible to lay down in the Bill a precise proportion, even though we are at the beginning of a new enterprise, whose pace and exact course we all agree it is impossible to predict. If we put into the Bill a precise proportion, we should impose on cable a precision that the House has never imposed on broadcasting. On the whole, that would be wrong.
  Therefore, we have included three specific obligations on the Cable Authority. First, at the application stage, under clause 7(2)(d) it must consider the extent to which each applicant intends to use programme material from this country and elsewhere in the Community. Secondly, under clause 10(1)(d), it must include conditions in each licence in pursuance of its duty to secure that a proper proportion of domestic material is included. Thirdly, under clause 22(3), it must report to the Home Secretary each year on how it has carried out its duty in that respect. That last obligation does not exist for ITV.
  There was much discussion in another place whether the proper proportion requirement was sufficient. We are not persuaded by anything that has been said so far that it would be better to introduce into the Bill, into statute and into law a precise proportion at this stage of the cable experiment. It should be for the authority to decide whether to carry out the statutory duty that we propose by setting particular figures, whether for particular channels or across the totality of the service.
  Mr.Corbett: The right hon. Gentleman has quoted from clause 10(1)(d) about proper proportions. Does he accept that that conflicts with the pledge given by the former Home Secretary about a rising proportion? The Bill makes no reference to a rising proportion and a duty to report about British originated material.
  Mr.Hurd: I said that we wanted to see a considerable and growing proportion of British material—
  Mr.Corbett: It is not in the Bill.
  Mr.Hurd: If the hon. Gentleman wants to put a towel around his head and put that into statutory language, he would find it very difficult. My noble Friend Lord Whitelaw was not drafting a Bill—he would be the last person to pretend when he used those words that he was drafting a Bill. The policy is as he stated, and 1 have repeated it. I have explained the reasons why we believe that statutory provision is best left as it is in the Bill.
  My hon. Friend the Member for Thanet, North was entirely right to stress the importance of the quality of the membership of Cable Authority. That touches on a point made by the hon. Member for Antrim, South (Mr. Forsythe) in his interesting speech. We do not want on the authority people who are there simply because they represent other people. It should not be that sort of body. We need to find persons of substance and experience in their own right.
  The hon. Member for Cambridgeshire, North-East (Mr. Freud) made a foray against porn and violence. If he serves on the Committee we shall have the opportunity to study the provisions in some detail.
  Clause 10(1)(a) gives the authority the same duty as the IBA as regards taste and decency. Clause 11(1) goes further than the White Paper in requiring the authority, like the IBA, to draw up a code on the portrayal of violence and programme standards generally. Clauses 25 and 26 amend the English, Scottish and Northern Irish law to make cable programmes subject to the criminal law of obscenity. Incitement to racial hatred by cable will also be an offence under clause 27.
  These provisions taken together are a sufficient armoury. If hon. Members do not agree, we can argue that through. I would not like the House to have the impression from what the hon. Gentleman said that we are leaving a gate open for pornography or violence on cable, because that is not the case.
  Mr.Freud: The point I made was that there should be no difference in standard simply because the message came by a different medium.
  Mr.Hurd: We shall be able to examine our provisions against that test.
  The hon. Member for Birmingham, Erdington (Mr. Corbett) was on to a good point on behalf of the Society of Authors about copyright protection. In Britain, the rights holder's position is safeguarded up to a point, because the services are intended for inclusion in cable services. But he was right to draw attention to other difficulties which can arise if the services are received and distributed abroad. We have discussed this with some of the copyright organisations and we are considering whether it may be sensible to amend the Bill further during its passage through the House. It is not easy and the problems of definition may be so difficult that the matter

  815
  may have to wait for the current general review of copyright. If we can sort out the matter in the course of the progress of this measure, it would be sensible to do so.
  My hon. Friends the Members for Wealden (Sir G. Johnson Smith), for Cornwall, North (Mr. Neale) and for Harrow, East (Mr. Dykes) made cogent speeches on a theme which my hon. Friend the Member for Wealden defined as the need for a benign financial climate, and I agree with that. He raised a number of specific points that he will not expect me to pursue in detail now. He was worried, as were others of my hon. Friends, about the authority's freedom under the Bill to vary licences. We believe that there must be some provision for licences to be varied after they have been issued. We are at the beginning of something new, to some extent unpredictable, and the authority would be lucky if it could foresee all eventualities from the beginning, particularly in the early years. However, variation need not only be in the direction of greater restriction. It could be the other way round. The authority's duty is to promote the development of cable, not to impose unnecessary obstacles in its path.
  We accepted in another place that the authority's power to vary licences should not be entirely unfettered and we agreed in principle to two changes, one of which has already been made and the other of which I hope we can make in Committee. First, the Bill now provides that the authority cannot vary a licence without giving the licensee the opportunity to make representations about what is proposed.
  Secondly—I do not know whether my hon. Friend the Member for Wealden had taken this on board; it may not have been public before now—we intend to bring forward an amendment which will prevent the authority from varying the length of a licence without the licensee's consent. It seems right that, if the authority is dissatisfied with an operator's performance, it should use the other sanctions available to it, including, in the last resort, revocation, rather than attempt to vary the length of the licence.
  Mr.Corbett: Are there any more threepenny bits in the Christmas cake?
  Mr.Hurd: I am trying to give the House full information about our intentions, and we should be given credit for that. Every time we say something new we are told either that we should not have said it or that we should have said it a long time ago.
  Mr.Bermingham: On a point of order, Mr. Speaker. I shall not comment on a sedentary remark by the Home Secretary about spurious points of order, a comment to which I take exception. My point of order is extremely simple. This is a Second Reading debate. Surely the House should know at this stage of a Bill whether there are new matters which were not debated in another place but which have arisen from the discussions in another place and in respect of which the Government intend to alter the Bill, either now or in Committee. If it does not know, it cannot be properly asked to give a Second Reading to the Bill. We are entitled to know at this stage exactly what the Government have in mind in bringing the Bill before the House for its Second Reading.
  Mr.Speaker: Order. I think that the Minister of State will answer for himself.
  Mr.Hurd: The hon. Gentleman's comment would be apt if the debate had proceeded to this stage without the Government having said what their views were about DBS and the joint project. He would then have had the right to make the remarks which he included in his point of order. However, as my right hon. Friend the Home Secretary gave a careful account of the Government's proposals on DBS in his opening speech, the hon. Gentleman's comment is otiose.
  Mr.Berminghamrose—
  Mr.Hurd: No, I shall not give way to the hon. Gentleman again.
  I cannot hold out much hope to my hon. Friends of my right hon. Friend the Chancellor of the Exchequer changing his mind about capital allowances and treating cable television as a special case. The cable industry now has the assurance that, while the special allowances are being phased out over the next two years, all cable installation, including ducting, will qualify. That removes a previous uncertainty. Changes in the consortium relief rules will similarly benefit cable companies. For tax purposes consortia will now be able to number up to 20 members and include foreign participants.
  My hon. Friend the Member for Thanet, North and other of my hon. Friends, including my hon. Friend the Member for Harrow, East, who is unable to be in his place at this moment, are concerned about the delay which they saw in licensing the pilot projects. When my right hon. Friend announced the results of the scheme in November he said that some specific points would be discussed with the 11 applicants before licences would be issued. The discussions are in general well advanced. They have been concluded satisfactorily with certain applicants but others are not yet in a position to put definite proposals to the Government because of changes, for example, in the supply of equipment. Nevertheless, all the applicants have been able to make progress with their plans in the meantime.
  It was always clear that those applicants who thought it important that they should benefit from the powers of the telecommunications code would have to wait until the Telecommunications Act 1984 came into force and for the procedures that it provided to be operated. It is not within the Government's power to issue licences bestowing such powers until later in the year.
  I discussed recently the present position with my right hon. Friend the Minister for Information Technology and representatives of the pilot projects and I expect the first interim licences to be issued shortly. A draft of the licence which the Home Office proposed to issue has already been sent to all the applicants. I am keen to proceed with this procedure as soon as possible.
  Some surprise was expressed following my right hon. Friend's statement about independent national radio. It is over a year since the previous Home Secretary, Lord Whitelaw, announced that the Government had found the IBA's proposal for an independent national radio service an attractive one provided that satisfactory financial arrangements could be developed. So it is not surprising that today we are making proposals to enable the IBA to begin construction of a network of transmitters for such a service.
  We cannot predict now what the service will be like. The IBA's has not yet put proposals to us and the precise

  817
  arrangements for the service and its regulations are for the future, but it will be a national service. It is the only area of broadcasting in which there is at present no competition. If we follow the traditional pattern, the competition will be provided by one contractor. These are all matters for separate and subsequent legislation. At present we are concerned only with enabling the IBA to begin construction of the network of transmitters.
  It is clear from the Opposition's comments that there is still a certain amount of misunderstanding about the DBS proposals. There have been two strands in the Government's thinking on them. There was the announcement in 1982 that the BBC would be able to go ahead with two DBS channels. That was followed by the undertaking that was given last year by my right hon. Friend that there would be provision for independent DBS. That undertaking is implemented in part II. Negotiations between those immediately concerned produced a possibility of agreement on a joint project on a basis slightly different from either of those I have sketched. As we are not providing public funds for the joint project, we have never been in a position to dictate the outcome of the negotiation.
  The Government had to consider whether it was in the national interest for the negotiations for the joint project on DBS to collapse, with the possible disintegration of Unisat and the probability that there would be no British DBS this decade, or whether it was better to shows a willingness to listen and to adapt our ideas. The Government took the second view, and my right hon. and learned Friend explained the consequent details of our policy.
  There are four points I should like to make in repetition and illustration of that point. First, we have insisted all the time that no ITV company could be constrained in any way to enter the joint project. Secondly, we have emphasised throughout—this point is accepted—that there must be ample scope for others to join in. I refer not to the BBC or existing ITV companies, but to other companies which have something worth while to contribute.
  Thirdly, we have retained the structure of terrestrial franchise in the 1980 Act. We agreed that in 1989 alone the obligation to re-advertise the terrestrial franchise should be suspended. During the debate we have been criticised for going too far in removing competition and, by my hon. Friend the Member for Wealden, for not going far enough in giving assurance to the ITV companies concerned. In the middle of that conflicting criticism, we may have got the balance about right. We have not gone
  818
  for a rolling franchise. We have not gone, despite the frequent assertions of the hon. Member for Erdington, for an automatic extension of the franchise. We have not ruled out the possibility of newcomers coming in in 1989. Those matters will be left to the discretion of the IBA.
  Fourthly, we propose to retain—this point has not been mentioned in the debate since my right hon. and learned Friend's speech—the provision in part H for an entirely independent DBS to follow. That was the correct decision, and we would have been much criticised, rightly, later if Britain had been held back because we had failed to take that decision and if other countries, especially Ireland, had proceeded on a different basis and we had received their programmes. On balance, after much thought, we decided that it would be sensible to provide the framework outlined by my right hon. and learned Friend.
  The Bill covers one of the most lively and talented sectors of our economy and society. We have seen the talent in developing technology, whether of cable, satellite or transmission. We have seen the talent in creating programmes, as my hon. Friend the Member for Boothferry (Sir P. Bryan) illustrated, not just by the BBC or ITV, but in the independent sector growing up and clustering, to some extent, in London and Cardiff around the two fourth channels. The success of our talent has put us into a process of rapid and unprecedented change.
  It is not the Government's role to dictate how the talent should be used. The public, not the politicians, should choose. The public will decide which of the new opportunities they propose to take. The Government's jot) —I do not believe that the Opposition have yet grasped this point—is to provide a sensible framework within which those public choices can be made. We do not mean to regulate with a heavy hand.
  The Bill illustrates our view that as choice multiplies the need for regulation grows less. Detailed controls are necessary when one is dealing with a monopoly, as my hon. Friend the Member for Boothferry said, but such detailed controls are too burdensome when one is dealing with a choice of 20 or 30 channels. The purpose of the Bill is to encourage the rich talent which Britain possesses to enable the public to make their own choices, and to sustain the high and deserved reputation this country's broadcasting has achieved in the world.
  Question put and agreed to.
  Bill accordingly read a Second time and committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).

  Cable and Broadcasting Bill [Lords] [Money]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act resulting from the Cable and Broadcasting Bill [Lords] (`the Act'), it is expedient to authorise—

  (a) the payment out of money provided by Parliament of advances to the Cable Authority, subject to a limit of £2 million on the amount for the time being outstanding by way of principal in respect of such advances;

  (b) any increase attributable to the provisions of the Act in the sums payable under any other Act out of money so provided or out of the Consolidated Fund.—[Mr. Major.]

WAYS AND MEANS

  CABLE AND BROADCASTING
  Resolved,
  That, for the purposes of any Act resulting from the Cable and Broadcasting Bill [Lords] (`the Act'), it is expedient to authorise

  (a) any increase in the sums payable into the Consolidated Fund under the Broadcasting Act 1981 which is attributable to provisions of the Act which—

  (i) have effect for the purpose of facilitating, or making special provision in connection with, the provision by the Independent Broadcasting Authority, by means of the technique known as the direct broadcasting by satellite, of television broadcasting services additional to those already provided by them; or

  (ii) extend the period during which television and local sound broadcasting services are to be provided by the Authority;

  (b) any increase in the sums so payable under any other Act which is attributable to provisions of the Act;

  (c) the payment into that Fund of any sums required to be so paid by or under the Act.—[Mr. Major.]

European Regional Development Fund
10 pm
The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): I beg to move,
That this House takes note of European Community Documents Nos. 10705/83 for a Council regulation amending regulation(EEC) No. 724/75 establishing a European Regional Development Fund, together with 8833/81, New Regional Policy Guidelines and priorities; 12104/82, Special Report 5/82 of the Court of Auditors; 11232/82 and 9938/83, second series of specific Community regional development measures; 9361/83, eighth report from the Commission to the Council on the activity of the European Regional Development Fund in 1982; and 9449/83, proposal for a Council decision enabling grant aid from the European Regional Development Fund for infrastructure investment projects to exceed the 70 per cent. limit for the period 1981–83; and supports the Government's intention to press strongly for the early adoption of a new and improved regulation for the better administration of the European Regional Development Fund.
I welcome the opportunity to review the recent activities of the European Regional Development Fund. I well understand that the House may feel that a debate on these matters is somewhat overdue. A good many instruments and draft instruments to do with the ERDF have emerged within the last year or two and perhaps it would be for the convenience of the House if I were to place them first in the context of the history and purpose of the ERDF.
I should point out to the House that the Community's anxiety to reduce the differences between the various regions and improve the position of the less favoured regions is given a very high priority in the preamble to the Treaty of Rome; indeed, it even appears ahead of the preservation and strengthening of peace and liberty. Whatever that may say about the priorities of those who drafted the treaty, the concept of the ERDF has been strongly supported by successive Governments and is no less strongly supported by the present Government.
When the fund was established in 1975, its expenditure amounted to some£125 million; by 1983, it was committing £1,160 million, of which £250 million was allocated to the United Kingdom. That is no mean growth rate, and we have supported it. Although we should like to see the fund continue to grow in real terms, the constraints on overall Community spending suggest that this rate of growth is unlikely to be maintained.
The fund was given the objective of
"correcting the principal regional imbalances within the Community."
Perhaps this was slightly overambitious given the size of the fund. The latest proposals sensibly lower the sights a little by providing that the fund should simply "contribute" to the correction of those imbalances.
Community regional policy is essentially made up of the national regional policies of its members; and, collectively, they represent a far greater financial contribution towards regional policy than does the ERDF, the principal role of which has been, and will continue to be, contributing to and supporting member states own regional policies.
This does not mean to say that there is no role for the fund in providing for special Community policies, and this fact was recognised in 1979 when, for the first time, 5 per cent. of the fund was set aside for special Community
822
programmes. This provision has become known as the "non-quota section". The reason for its being called the non-quota section is, of course, the fact that the other 95 per cent. of the fund has normally been divided between the 10 members of the Community in terms of predetermined percentage shares, or quotas under Council regulation No. 724/75 which established the ERDF. The United Kingdom's quota was set at 23·8 per cent. having been modified in 1980, along with everyone else's to accommodate Greece. Further accommodations will have to be made in due course for Spain and Portugal, whose proposed accession we welcome and want to see at the earliest opportunity.
Coming now to the operation of the fund, a member state's call on the ERDF must be supported by a regional development programme, drawn upon lines laid down by the regional policy committee. The latter is a body composed of senior officials of member states, who are appointed in an independent capacity, and who elect a chairman from among themselves. It provides advice to the Commission on a variety of matters to do with the operation of the fund.
In relation to the quota section of the fund, all United Kingdom receipts go towards the support of projects and activities in assisted areas, in certain inner urban areas that receive assistance under the Inner Urban Areas Act and in the rural areas of mid Wales covered by the Development Board for Rural Wales. It is, of course, an essential feature of the fund that only projects receiving some form of national public assistance are eligible for its support. This further underlines the fact that the fund's principal role is the support of domestic regional policies.
The support is given for both infrastructure and industrial projects. Regulation 724/75 provides that at least 30 per cent. of the fund should be allocated to industrial projects, unless the Council should decide otherwise. The downturn in industrial investment throughout the Community has meant that in practice the Community has not been able to meet that objective. For this reason, the Council decided unanimously to waive the requirement in 1983; hence document 9449/83, which allows the 70 per cent. ceiling on infrastructure support to be exceeded for the three years ending 31 December 1983.
It is appropriate to note at this point that the Commission has proposed to drop that binding requirement in its proposals for the future, although it will remain the case that all member states will be requested to continue to do their utmost, as desired both by the Commission and the European Parliament, to devote as much as possible of the fund's resources to industrial support.
Regulation 724/75 also provides that fund aid given towards industrial projects may be retained by member states as a partial repayment of their own aid. That is an important factor in maintaining the level of regional industrial support that member states can give. There can be little doubt that, without this support, the level of regional aid throughout the Community would be lower than it is today.
Aid towards infrastructure projects, on the other hand, is passed on to the local and other public authorities that undertake the work. That currently accounts for about 80 per cent. of the fund. In the United Kingdom last year, to quote just a few examples, the fund contributed to the construction of coal handling plant at south Shields and a dual carriageway road link for Grimsby—
Mr.Nicholas Budgen: Before my hon. Friend gets involved in the minutiae, which the House must find of gripping importance, will he explain in general terms whether the Government approve of the fact that the regional fund should extend its activities and enjoy the support of more money?
Mr.Lamont:We welcome the fact that the fund should grow in real terms. I shall explain the Government's attitude to the regulations
I was saying that the fund has contributed to several projects, including the national exhibition centre in Glasgow and the entertainment and leisure complex at Swansea. I recognise the importance that public authorities attach to these receipts. The United Kingdom is also benefiting substantially from the first series of ERDF "non-quota" measures that were approved in 1981.They include fiv-year programmews from 1981 to 1985 to help to promote alternative employment in shipbuilding and steel areas and to improve the economy in the border areas of Northen Ireland. We expect that these measures will bring about £35 million of ERDF assistance to yhe United Kingdom
I come to documents 1132/82 and 9938/83. Arising from those documents the Council of Ministers adopted regulations in January setting up a second series of non-quota measures, from which the United Kingdom should benefit to the extent of £89 million. These regulations came before the Council at short notice and unexpectedly, following 12 months of consideration in the Council's working group. I regret that these circumstances led to the measures being adopted before they had been discussed in the House. As we had been pressing for the measures for two years, the Government felt bound to give their agreement. I explained the circumstances to the House in a statement on 1 February, and to the Chairman of the Select Committee.
The measures will provide further aid of £19 million and £10 million respectively for eligible steel and shipbuilding closure areas, plus, for the first time, about £60 million for textile closure areas. The aid will be available over a five year period, though it will be some time before it begins to flow, because member states must first prepare special programmmes for Commission and management committee approval, showing how they intend to implement the measures for which the aid is available. Subject to the agreement of the Commission and the management committee, the aid will be available for projects for the improvement of run-down areas and the conversion of disused buildings into premises for small and medium-sized enterprises, as well as for providing consultancy and common services for such undertakings. Help on innovation will also be eligible, as will the establishment or extension of economic promotion agencies. Eligible steel closure areas in Scotland, Wales and England will benefit. The shipbuilding area assistance will go to Strathclyde, Cleveland, Tyne and Wear, Merseyside and Belfast. The textile provisions will help areas around Manchester, west Yorkshire, Lancashire, Northern Ireland and Tayside in Scotland. We welcome these non-quota measures which will help to combat the worst effects of decline in all these areas, and we are getting on with the work of preparing the required programmes.
Finally, document 9361/82, the eighth report from the Commission, covering the activities of the fund, offers a
824
detailed picture of the fund's operations and of how the fund's resources were used and monitored. The Community has been reassessing the operations of the fund in the light of changing circumstances. In July 1981, in pursuance of a Council resolution, the Commission published proposals for new regional policy guidelines, document 8833/81. The Commission proposed that there should be greater concentration of quota section aid in areas of the community suffering from structural underdevelopment, and that the non-quota section should account for a larger proportion of the fund's expenditure. This was followed by the Commission's proposals for amending the ERDF regulation itself.
These 1981 proposals envisaged, among other things, concentration of quota section resources on Greece, Ireland, Italy and the United Kingdom; financing of national programmes rather than individual projects; an increase in the non-quota section's share of the fund from 5 to 20 per cent; and the further development of what are called integrated operations—that is, those that combine different sources of Community finance. We welcomed these proposals as a constructive approach to the further development of the ERDF, whilst having reservations about certain administrative aspects.
It is probably fair to say that agreement had been achieved on some 90 per cent. of the text of a new regulation. Unfortunately, discussion foundered on the principal issue of concentrating the quota section exclusively on the four less properous member states as judged by the Commission at that time; and it is clear that the majority were unable to agree to this. The House should note that from the beginning of 1982, that part of article 2 of the present regulation which lays down quotas has expired—so that 95 per cent. of the fund is now distributed solely at the Commission's discretion. Whilst we are confident that the Commission will administer the fund fairly and equitably, it is a situation which all member states would prefer to see ended.
The 1981 proposals were still on the table when the Council met in June last year. The Council asked the Commission to report on ways of increasing the effectiveness of the Community's funds, including the ERDF. In its report at the end of July, the Commission suggested a new approach to the operations of the ERDF and in November 1983, the Commission withdrew its original proposals, and sent to the Council an entirely new proposal for amending the ERDF regulation, which is document 10705/83. Although the 1983 proposals down draw to some extent on the work done on the 1981 proposals, there is much that is new.
Going through them in order, the new arrangements would abolish both the distinction between the quota and non-quota sections, and the arrangements by which the quota section is allocated according to predetermined, fixed quotas. Instead, each member state would have a quota range based on the quotas set in 1981. The United Kingdom's 1981 quota was 23·8 per cent. and the proposals would give a quota range from 20–23 per cent. to 28·56 per cent. of the fund. For more prosperous member states, the base point would be their 1981 quota, less 10 per cent., thus providing a potential concentration, of aid in favour of less prosperous member states. As an example, the proposed range for Germany is 3·55 per cent. to 4·81 per cent. compared with its 1981 quota section share of 4·65 per cent. The United Kingdom would have the possibility of increasing its share of the fund to 28·56

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per cent., but the final allocation of a member state's quota within its range would depend, among other things, on a member state's ability to submit acceptable qualifying programmes and projects of interest, and on the extent to which it could benefit from any special Community programmes proposed by the Commission and approved by the Council. The United Kingdom is, however, currently a net beneficiary from the ERDF and it is the Government's firm intention that this should continue to be the case under the new arrangements.
Mr.Budgen: Why?
Mr.Lamont: Obviously, if we are in the fund, it is far better to be a net beneficiary than otherwise.
Sir Anthony Meyer: The Minister hopes that the United Kingdom will continue to be a net beneficiary, but earlier in his speech he said that regions, which were not classified by the United Kingdom as assisted areas, would not qualify for aid from the ERDF. Does that mean that if there were either a revision or a reduction in the assisted areas under the Government's proposals, it would militate against receiving a larger share of the ERDF globally?
Mr.Lamont: The purpose of the ERDF is to support regional policies. If an area is not assisted, it will not benefit from the ERDF. The changes that we are making to the regional development grant will make eligible the automatic element in our regional policy, which is not at present eligible for support from the ERDF. There will be a greater possibility of taking up money from the ERDF as a result of those changes. If the area is not assisted, it cannot qualify for assistance, unless it is one of those rural areas in Wales which qualifies under the Inner Urban Areas Act, which benefits certain city areas.
Mr.Budgen: Are the Government in favour of the principle of economic convergence because they believe that it will provide an excuse for always being a net beneficiary? If, by chance, the United Kingdom became one of the richest countries in the EC, would the Government then be against economic convergence because the United Kingdom would no longer be a net beneficiary?
Mr.Lamont: That is a theoretical question, because the United Kingdom is a long way from being the richest member of the Community. We are in favour of being a net beneficiary from the fund because it is in the interests of the United Kingdom and helps us to strengthen our regional policies.
Mr.John Prescott: What happens when Spain and Portugal join the Community?
Mr.Lamont: That is a fair point. Obviously the regulation will have to be amended when they join. The impact of the ERDF on the United Kingdom after their accession requires a considerable amount of consideration and thought.
The Commission proposes that a growing proportion of fund aid should be authorised in support of programmes of expenditure rather than individual projects, rising to 40 per cent. at the end of four years. The Commission also proposes increases in the rates of grant—examplefor example, up to 40 per cent. for the usual infrastructure projects instead of the present 30 per cent. maximum. For individual project applications, the present maximum
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contribution of 50 per cent. of the national aid would remain. The additional provision that aid from the fund should not exceed 20 per cent. of total investment cost would, however, be deleted.
The Commission also wants grant rates higher than this for projects incorporated in programmes or forming part of integrated operations which combine different sources of Community finance, and up to 15 per cent. of a member state's receipts from the ERDF could be used for measures to help promote—I apologise for this jargon—what is labelled as "internally-generated development" —measures available on a local basis to help local development, especially small and medium-sized enterprises.
That is the main outline of the proposals. I sense that the hon. Member for Bolsover (Mr. Skinner) is not very enchanted by all this detail which I thought it proper to give the House, but I assure him that it is extremely important that the House is aware of the detail of the instruments. The Select Committee believed it important that the House should have an opportunity to comment on the voluminous and detailed documents.
Mr.Dennis Skinner: The Minister will be pleased to know that I have been listening to him as he read almost every word from his script. If he had had to speak on his feet, based upon only a few notes, he would have been finished 10 minutes ago. He is just reading it out and making a boring speech, and because I made a comment about the Common Market catastrophe, and the fact that it is bankrupt and is calling on British taxpayers and others in the Community to find another £1,600 million, he has to make remarks about not following the detail. The fact is that the Common Market is crumbling into little pieces and the sooner it goes, the better it will be for the British people. This is the time for Britain to get out.
Mr.Lamont: I do not know what has got under the hon. Gentleman's skin, but I am glad that he has got the poison out of his system. It is important that the details of the new proposals and regulations should be laid before the House. I assure the hon. Member for Bolsover that I am looking forward to replying to the debate and to the contribution that I hope he will make.
The Government have welcomed these new Commission proposals as a constructive effort towards reaching agreement on the future of the fund, although we regret the inability to reach agreement on the 1981 proposals. Detailed discussion is proceeding within the Community, and the French Presidency's aim is that the new proposals should be discussed at the Foreign Affairs Council on 14 May. That does not mean that they will be agreed then.
In these discussions we have accepted the idea of quota ranges in principle, as a basis for negotiation. We are also ready to consider the introduction of programmes for an experimental period; the introduction of Community programmes; integrated operations and activities to support development from within the regions. Financing by programmes, instead of by individual projects, seems to us to be a useful idea, especially if it reduces the very considerable administrative burden in member states and the Commission, and so helps the fund to operate more efficiently; but it would involve a new approach and new procedures which we would prefer, in common with other member states, to be developed gradually and experimentally.

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However, we share other member states' concern about the unpredictability involved in the Commission's proposals and also the extension of Community competence. Some modifications can be made to help with this problem, and the possibilities are being explored in the negotiations. For example, we should like to know more about what would be taken into account in the allocation of quotas within the ranges. It could also help if the quota minimum were higher, thus giving a larger guaranteed share than that proposed by the Commission and reducing the width of the ranges. There is also uncertainty about the extent of the Community programmes, and it will be our objective to limit these to the lowest realistic proportion of the fund, precisely because we are concerned about the extension of Community competence.
Mr.Paddy Ashdown: Before the hon. Gentleman leaves the largest guaranteed share and predictability, is the reason why he wants more predictability and a larger guaranteed share that the Government will then cut national programmes commensurately?
Mr.Lamont: The reason is the obvious one that if one has the range, it is no longer guaranteed that we would be a net beneficiary out of the fund because the bottom point of the range is below the point at which our quota is fixed. If we raise the minimum, that will also have the effect of lowering the maximum. One cannot do the one without the other. If one narrows it, there will be a greater certainty and a greater possibility of getting a net benefit out of the fund. I hope that the hon. Gentleman will not have the impression that we are unconfident that we shall be able to put forward proposals that will be approved by the Commission. We should like that uncertainty to be lessened.
Mr.Ashdown: I am grateful for that clarification, but is it not the case that the Government have cut back national funding precisely commensurate with the amount of input from the European development fund, and the Government are the most guilty in Europe of additionality? That is what has happened in the past. What guarantees are there that this will not continue to happen in the future?
Mr.Lamont: The House knows that regional assistance has been cut back in real terms. Additionality has been maintained at the macro level. More money has been spent on regional policy than would otherwise have been spent. The hon. Gentleman questions what I mean by "macro level"—it is simply the concept of additionality as applied to the totality of Government spending rather than to the level of the individual project. That is the right way to approach it.
Before the hon. Gentleman intervened, I said that it would be our intention to keep the Community programme as part of the new regulations to the lowest realistic proportion that we could get. At the same time, we shall wish to ensure that the approval procedures preclude any Community programme being imposed on a member state against its will. Again, although the Community programmes might not be very different from the present non-quota section arrangements, we want to know more
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about the criteria by which a proportion of the fund's resources might be allocated for this kind of assistance. That is the criteria that will be used within the range.
Mr.Budgen: What percentage increase in the funds used by the regional fund are anticipated in the next year?
Mr.Lamont: The fund is expected to grow by some 5 per cent. in real terms.
Our view on the integrated operations is that they should in the first place be able to stand on their own merits. Integrated operations, are those that are being financed from several resources. The draft regulations put forward the idea that they should have an extra grant because they are integrated operations. A grant bonus such as that proposed in article 34 of document 10705/83 would involve some further benefit for those projects. If those operations are of benefit they should not require an additional grant.
Lastly, one change we are particularly glad to note is that all United Kingdom areas receiving domestic regional assistance would in principle be eligible for ERDF aid. That was not as some of my hon. Friends will recall, the case with the 1981 proposals, which would have excluded assisted areas in the south-west, Yorkshire, Humberside and the east midlands from the benefits of the quota section. We resisted that and I am sure that those hon. Members with constituencies in those areas welcome the Commission's amendment.
The only document in the motion that I have not referred to so far is 12104/82, the special report by the Court of Auditors dated November 1982, on job creation and maintenance in the granting of Community and national regional aid. This considered the difficulties of estimating jobs created under the different approaches used by member states and concluded that not all jobs foreseen necessarily came into existence in the longer term. In its reply, the Commission noted that differences of treatment between member states were to be expected and that economic conditions made it very difficult to make reliable estimates of job creation possibilities. The Government are, as the House knows, committed to making our national regional policy more job related.
Finally, although it is not strictly within the terms of the motion, I should perhaps draw the attention of the House to the fact that during 1983 the Commission accepted that inner city areas eligible for support under the Inner Urban Areas Act 1978 are eligible in principle for ERDF aid. While the Commission has said that it intends to use its discretion to limit the areas which will benefit in that way, assistance of about £5 million for infrastructure projects in the west midlands, Blackburn and Rochdale has already been approved. I am sure that my hon. Friends will agree that that is a welcome development. Obviously, we shall be pressing hard to have that assistance extended to other areas.
I apologise to the House if I have wearied it with overmuch detail on the documents. I agree that some of them are not exactly the most digestible pieces of literature. But it is important that their detail, which is highly complex, should be available to Parliament. I hope that I have outlined the Government's general approach towards the new regulations, particularly the range of aid that will be available to us and how we intend to take up a negotiating position which we hope will lessen the uncertainty inherent in the proposals.

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In general, the proposals that are being put forward should be welcomed. They are in the interests of Britain and are compatible with national policy. With the examples of the ways in which the fund has developed and provided assistance for our regions, I commend both documents and the motion on the Order Paper in the name of my right hon. Friends to the House.
10.32 pm
Mr.Geoffrey Robinson: All Members on this side of the House felt that the Minister of State did neither himself nor the Government justice this evening. He scampered through the draft with a great deal of unease, the sort of unease we saw in Committee, to which we shall be returning probably next week. I well understand his unease because it is on precisely those technical and difficult details that he frequently tied himself and tried to tie the Committee in knots.
It is not my purpose to do that this evening. We owe it to the House and the Select Committee on European Legislation, the Chairman of which is present this evening, to try to get to the heart of what the Commission is trying to do and the extent to which it is being helped, quite disgracefully, by the Government in restricting the amount and purposes for which the ERDF money can be used. Those restrictions and pressures are coming not so much from the directorate for regional policy, but increasingly from the directorate for competition policy.
What the Minister failed to tell the House was that the rot set in in 1980 when the then Secretary of State for Trade and Industry, now the Secretary of State for Education and Science, suddenly thought that, if he could in some way adapt our RDG system to meet the criteria of the directorate for competition policy, some El Dorado of Community regional funds would be available to us. Since that fateful decision was made, effectively to get rid of RDG, the Government have been on the defensive. They have reeled from one humiliation to another, from having capitulated to the directorate for competition policy in 1980, published in the report of 1981, to losing out completely on a set of potentially hopeful regional development policies in 1981, and to the set of documents before the House tonight which make sorry reading for those committed to, and interested in, an expanding and constructive regional policy for the country.
Some hon. Members, notably the hon. Member for Wolverhampton, South-West (Mr. Budgen), do not believe in regional policy, and have the honesty of their convictions in saying so. It is the sheer hypocrisy of the Government that is astonishing. After the fine flow of words of commitment to the reduction of disparities among the regions, and to the original highly constructive and moral tone, as the Minister himself said, of the treaty of Rome in respect of the regions, we now have a Government obsessed with one idea and one idea only —to cut the level of Government expenditure on the regions. If they can in some way camouflage this by saying, "Look how clever we are at getting money out of the ERDF," they hope, by that sleight of hand, that the fact will go unnoticed, that, while saying that they are committed to a regional policy, they are doing the opposite.
I assure the Minister of State and the House that, when we debate the Bill in Committee, on Report, and on Third Reading, we shall expose the Government's policies for precisely what they are. I do not wish to get dragged into
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that debate now. It would be wrong, in the interests of the purpose for which the Select Committee has chosen these seven important documents and instruments, to do that.
Before I come to those documents, it would be sensible and appropriate for the House to examine what we are considering in terms of the ERDF in the context of the whole budget of the Community. We are discussing tonight over 200 pages, contained in seven documents with detailed technical, legal and administrative implications. We must not lose a sense of perspective as to what they and the ERDF represent. In the last three years, agricultural spending has increased its percentage of the total Community budget from 65·7 to 67·7 per cent . , or a staggering £10 billion in 1984. From The Financial Times of Friday 4 May, one understands that, for 1985, there will be a further overspend in the total Community budget of £1.2 billion on top of the massive spend that we know is already occasioned by the Prime Minister's failure to secure long-lasting adjustments to the way in which agricultural spending is administered, and by the fact that the agricultural spend budget will be exceeded yet again by a further £1 billion.
Against that, the ERDF is a humble 5·6 per cent. of the EEC budget in the current year—only £817 million of money being made available for the entire Community. Despite the quixotic forays of the Prime Minister, always accompanied by her indefatigable Sancho Panza, the simple fact is that the British net contribution to the budget has increased in each of the last three years. In 1982 it was £605 million, in 1983 it was £658 million and I understand from the Library that it is likely to be £719 million this year. When one compares those figures with the total regional policy fund, one realises that the United Kingdom's net contribution to the EEC budget is almost equivalent to the entire ERDF for the last three years.
I understand that our allocation is about 23 per cent. Will the Minister confirm that the United Kingdom's receipts from the ERDF in the last three years were under 20 per cent? Can the Minister be certain that we shall achieve the take-up even of the lowest of the low figures which already represent a reduction on the original quota for the United Kingdom?
The seven documents represent an enormous amount of legislation for the House to consider this evening. It is inappropriate to try to hide our lack of grasp of the issues by dealing with abstruse detail. That is not the purpose of the documents being brought to our attention. They were drawn to our attention for the opposite reason—so that we can understand what is happening to regional policy in Europe and the extent to which we are, or are not, complying with it. We must consider the priorities, the guidelines, the administration, and the ceilings associated with ERDF assistance. We must also be aware of where we are going with our own policy.
How does the Minister expect that he can take up over 20 per cent. of the allocation when we have already operated at under that figure? The Minister proposes to eliminate at a stroke no less than £200 million of regional development grant. That decision was announced in advance of any consultation. The consultation was meant to last until 31 May, but the Government have already eliminated that £200 million from regional policy.
It could be argued, but not in terms of document 10705/83, that replacement investment is inappropriate, unacceptable or inevitable within EEC legislation. It is clear that modernisation is not construed that way: that is

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spelled out with appalling regularity in each of the seven documents. They state that the Commission will contribute to the modernisation of an industry in a region, even if it leads to a loss of jobs, provided that it involves restructuring and re-investment to make the industry viable in the long term.
Will the Minister reconsider the unnecessary cut which he has imposed upon the aid budget for the regions by eliminating modernisation? Is the Minister confident that he will be able to meet the take-up envisaged?
Document No. 10705/83 suggests several new ceilings for the level of aid that can be given by the ERDF towards any one Government's regional programme. To what extent has C31/9, the original document which set the limit, been modified by the proposal in document 10705/83, the first document put to us for our consideration?
I note that the ERDF can come up with 65 per cent. of a total national programme, but it can be only 50 per cent. of a total national regional programme. Why is there that difference? Even if it is only 50 per cent., why is the Minister so anxious to impose the second of his very heavy cuts in regional policy on the cost-per-job ceiling? Why cannot he accept the original levels of Government grant and allow the Commission to impose its ceilings, which are tight—50 per cent. for industrial grants and between 20 and 40 per cent., although it can be up to 50 per cent., for infrastructure programmes?
The Opposition feel that the first document raises worrying questions. We will move away from national programmes with Community objectives towards Community programmes. It is intended that within four years the Community programmes will draw on more than one source of finance and may, therefore, come to imitate th programmes of draconian reductions that have occurred for steel, textiles and shipbuilding. Is that the sort of integrated programme that the Commission has in mind? Will the Minister go further and say that we will not go along with so large an increase in the Community-administered programmes at the behest of the Commission without an annual review being put to the House to show that it is not working against the interests of British industries?
The Opposition regard with the utmost reserve the 40 per cent. total that will come under direct Commission discretion. We cannot easily agree to it tonight, but we shall not stand in the way of anything that will enable us to take up our full share of ERDF funds—given the extent to which the Government are committed to reducing their contribution to regional policy.
Will the Government's job-capping limit on the ceiling of the cost per job, about which the Court of Auditors report on the ERDF was caustic, be applied to the Community programme? If so, will that not mean that we may qualify for programmes that bring some money with them, but because of the ceiling we have imposed on our programme we would have to tell the Community, "No, we cannot take that much money from you."? We need a clear answer to those questions.
Document 8833/81 deals with the new regional policy guidelines and priorities which, I understand, have been amended to some extent by document 10705. The four criteria in the first paragraph are acceptable to the Opposition, although they may not be acceptable to all
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Conservative Members. We believe in regional policy; we believe even in what the Treaty of Rome originally said about regional policy. The Government do not. The figures for what has been made available and what has been cut back show that. The Minister should not be so churlish about what his Government are doing. He should have some insight and recognise that they are trying to reach out to him without admitting it.
In the new policies on guidelines and priorities, page 3 states clearly that the new criteria do not
"preclude restructuring that involves labour-shedding where productivity can thereby be improved."
Modernisation, without any increase in employment, is entirely in line with the criteria and consistent with the Community's thinking and, therefore, eligible. The Minister could not have it clearer than that.
The document also says that some of the recession that is taking place is accentuating factors
"that generate imbalances"—
referring to regional imbalances—
"further impeding the flow of capital to the less favoured regions." It is concerned about the flow of capital. It is not concerned about linking it arbitrarily, to unilaterally, the creation of jobs. It is saying that these are important considerations that have a role to play in regional policy. I ask the Minister, therefore, to consider those points in the context of the elimination of modernisation and the £120 million that that will cost, in relation to what his cost-per-job ceiling will do to our ability to take up national and Community programmes.
The audit commission report—the special report of the Court of Auditors, as it is technically termed, document No. 2104—makes interesting reading and is at its most sceptical about the policy of this—indeed any—Government who try to relate their regional policy to the creation of directly related jobs. The Minister has there a totally dispassionate view of the policy on which he is about to embark; far from being vindicated, it is viewed in a highly dubious light. The report says:
"The creation of a new undertaking represents a simpler situation in this context. To ensure its operation, the new undertaking requires staff . . the total number of staff plus a given number of jobs created."
These are the criteria that the Minister is adopting. But the report goes on:
"In a number of cases, the desire to create or maintain jobs must give way before the necessities of preserving the undertaking, since technological and economic developments may, in fact, mean that to establish or regain its competitive position, a firm or a sector activity may have to shed jobs."
We on these Benches are not embracing a policy of shedding jobs. We are telling the Minister in the simplest possible terms that the policy on which he has embarked will harm the competitive position of vast sectors of industry in the regions.
On the non-quota measures, we must view with grim humour the terms in which they are presented. What is contained in them as mitigating the impact of the recession on some of our hardest-hit industries has proved to be nothing for them but a savage reduction in capacity and employment.
Considering the three industries to which the document refers, in iron and steel, the number of employees has been reduced from 325,000 to 178,000. This has all happened under the measures agreed by the EEC and the ERDF. Textile employees have been reduced in number from 439,000 to 286,000, and in shipbuilding and marine engineering, from 166,000 to 131,000. The reductions in

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the output of those sectors show precisely what is meant by Community aid to some of the hardest-hit regionally based industries in the United Kingdom.
What have we received in response to that? The funds announced—by surprise; another piece of policy in the making, no doubt—are higher than those I have documented. We have had about £6 million a year for steel, about £3 million a year for shipbuilding and between £10 million to £12 million a year for textiles. That, by way of compensation for the massive loss in jobs and capacity, is the worst possible deal the Government could have made. It would have been better for us to hang on to the jobs and not to have the money. Other European countries hung on to jobs much more successfully than we did. We should have done the same in these key industries.
The seventh document on the Order Paper—I shall take it out of order—proposes that a decision be taken to allow infrastructural aid to amount to 70 per cent. of total aid. We are committed to taking up a higher percentage than hitherto, despite the cuts that the Minister is imposing, which will have an inevitable effect on our ability to take up a higher percentage. The contribution of the service sector, welcome though that is, will not make up for the massive £200 million reduction in RDG to which he is already committed.
We have never approached the 30 per cent. level which industrial aid is meant to take up, and the new policy guidelines are designed to encourage us to take up 40 per cent. We shall agree willingly, of course, that the 70 per cent. proposal be waived. I do not think that it has ever been met since it was established. We hope that we can find some means by which the non-industrial infrastructural aid can make up the gap between what has been agreed for the ERDF and what can be spent by it.
Bridging that gap will not solve the Minister's problem. Let him be clear that the problem will not go away. He is compounding his own problem. Every time he submits new proposals to the Commission that are meant to enable us to take up a higher percentage of what is available, the emphasis will always be put on infrastructure. We are not cutting back on our ability to spend on the industrial side through a reduction in RDG and through the imposition of a ceiling on the cost per job, but at local government level, through the abolition of the metropolitan counties, the ability to submit to the EEC credible, integrated, large-scale regional policies on infrastructure will be severely reduced.
We have seen in the administration of the aid policy that the United Kingdom has been successful—it has been more successful than many other member states—in advancing well-argued cases that have led readily to the obtaining of Commission and ERDF funds.
The sixth document relates to the eighth report of the Commission to the Council of the ERDF. The Minister was keen on detail in his speech, so I shall put a point of detail to him. I am sure that he has read paragraph 14 of the report with great interest. I should like to know why no member state has made use of the possibility that is afforded by article 4(2)(b) of the ERDF regulations. The paragraph provides:
"Fund assistance for infrastructural projects may consist wholly or in part of a rebate of three percentage points on loans made by the EIB. This is because member states prefer to obtain ERDF assistance under their quotas within a relatively short period"—
that is reasonable enough—
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"in the form of an amount based on the progress of the projects rather than in the form of an interest subsidy comprising payments spread over a relatively longer period, i.e. the term of the EIB loan."
The paragraph is fairly clear until that point, and I think that I carry the Minister with me.
Does the hon. Gentleman agree that making use of that possibility would increase the impact of the assistance provided by the two financial instruments by allowing a number of investors easier access to credit and, secondly, by allowing more resources to be channelled to regional development through the fund? This is a technical matter, but the Minister, with his merchant banking experience, will readily take it on board. There is a cash flow implication to be offset against an eventual total flow of funds. The cash flow advantage would be considerably outweighed if the DCF calculation were made.
More importantly, and more central to the issues that we are discussing, are two other parts of the ERDF review of the eighth report of the Commission on the working of the ERDF for 1982. The first paragraph of the 1982 review makes it clear that the purpose of the ERDF is to buttress national regional development measures, not to replace them, or to make up for the cuts the Government wish to impose. In paragraph 2—hardly into the report—with a shrewd eye on the United Kingdom, the Commission states:
"It is no coincidence that the countries with the greatest regional disparities are the very ones that are least able to solve them, since they are also faced with the most serious economic problems."
That is a succinct description of the United Kingdom's position.
Where are we after five years of Conservative Government? I refer to page 78, paragraph 10, and a survey of the progress and achievements of each country in the year under review. After five years of coherent clear strategy for the economy, the regions, inflation and high interest rates,
"New programmes for 1981–85 were notified to the Commission in 1981".
That was the year when the Government thought that they were on the way to a new deal, to something worth having. What happened? The report states:
"the Regional Policy Committee deferred consideration pending the submission of further information. The United Kingdom. Government has undertaken to submit new revised. programmes."
Of course, the Government had to do so. The sad truth is that after five years of regional policy, the Government are back to square one. All our regions have their highest ever rates of unemployment.
Unemployment in the prosperous royal county of Berkshire stands at 106 per cent. of the average in the Community as a whole. Surrey barely rates par, at 101 per cent. That occurs in a Community that includes Greece and the Mezzogiorno in their entirety. That is the Government's achievement—a record lack of investment and the lowest rate of growth, output and investment. The Government's answer to historic, deep-seated regional problems has been to cut further, and now to hand over the whole problem to the EEC and hope for the best.
The Government are going way beyond any measures in the ERDF documents or anything that the regional policy directorate wants. The Government's words on the Order Paper—

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"this House … supports the Government's intention to press strongly for the early adoption of a new and improved regulation for the better administration of the European Regional Development Fund"—
deserve severe reservations. The Opposition do not support the Government's regional policies, as we shall make clear shortly. In the meantime, we hope that the country gets everything on offer from the ERDF, and we shall do all we can to ensure that that is the case. We cannot yet accept that the EEC has a coherent, constructive or convincing regional policy. For that, we must wait for the return of a Labour Government to back the regions with funds, agencies and policies that will reverse the regional and national decline of the past five years.
11.3 pm
Mrs.Elaine Kellett-Bowman]: I shall put the hon. Member for Coventry, North-West (Mr. Robinson) right on his observations on paragraph 2 of the eighth report from the Commission to the Council. The Commission was referring not to the United Kingdom but to Greece and Italy. If the hon. Gentleman knew anything about regional policy he would be well aware of that fact.
I regret that this debate on the ERDF, which is crucially important to the less prosperous parts of our country—
Mr.Burden: What?
Mrs.Kellett-Bowman: Yes, crucial. My hon. Friend comes from a different part of the world, but this debate is crucial to the part of the world from which I come. I regret that the debate is taking place so late at night and covers so many documents, any one of which—
Mr.Budgen: Will my hon. Friend give way on the word "crucial"?
Mr.Kellett-Bowman: No, I shall not. My hon. Friend may make his points later. He can bicker about words here and there. I am interested in getting at the bones of this policy, and in getting the best deal for this country and our region. I shall not argue semantics with my hon. Friend, who constantly interrupts these debates.
The amending regulation is soundly based on the experience of the working of the first two regulations and seeks to concentrate aid, as my hon. Friend the Minister of State said, on areas needing it most. For the first time, as the Minister said, quotas have been been abandoned in favour of a more flexible "range" or "bracket" of aid for the different countries.
The Minister said that he would have liked a higher level of guarantee. I believe that the European Parliament voted wisely to concentrate the aid still further by allocating a higher proportion of the fund to the four least well-off countries and raised the floor and ceiling levels for the United Kingdom substantially to 21·66 per cent. for the lower limit and 30·45 per cent. for the upper limit. I hope that those increases will be accepted.
Article 2 of the fund regulation referred to the Periodic Report. Until these reports were produced we had no objective method for comparing one region with another. We had no statistics that covered the whole Community. We were working in the dark. It is now possible to make those comparisons. Although it was dated earlier, the second periodic report was published only two weeks ago, and it is a far better tool than the first report, especially for the United Kingdom, because for many purposes it
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uses level 3 statistics—roughly county level—instead of the much bigger level 2 planning regions which failed utterly to pinpoint problem areas, and made matters extremely difficult. Less prosperous areas, particularly in the south-west, were linked almost as far as London. It completely disguised the problems faced by those areas.
The league table contained in the second periodic report gives an index based on productivity per head and unemployment. On that so-called synthetic index, Lancashire is 31st in order of need with an index at 80·7 — roughly one quarter of the way down the list. It is most important that when the Government decide — I have made these representations to the Minister, as has my city council and the borough of Wyre — on their new map for regional assistance, they should not so narrow the area eligible for aid that there will be insufficient projects — the Minister dealt with this point — to absorb our share of the Regional Fund and, what is also very important, to take full advantage of the assistance offered by the European Investment Bank, which has done immense good in Cumbria, Lancashire and throughout the north-west. Many projects which have been assisted by the European Investment Bank would no longer be eligible if they were not assisted areas.
Factors such as the age structure of the population and distance from markets are crucial matters to be considered. The revised regulation stresses the importance of all policies working together to promote the prosperity of the regions and the need to ensure that all funds are properly co-ordinated and that no policy undermines another.
In the past it has seemed that some of the agricultural policies were working in direct variance to the regional policies. We are trying to eliminate that and we must continue so to do.
Experience has shown that the upper limit of 70 per cent. on infrastructure projects — it is done over three years and not annually—is too inflexible and could lead to underspending of the fund, not just for this country but of the overall resources of the fund, while useful infrastructure projects queue up and wait for funds, which would be highly undesirable. It would be damaging to the more distant regions, such as the north-west, because the further one goes from markets, the more important road improvements become to lessen transport costs.
Roads such as the Brierfield link road and many others in the north-west have been built with aid fom the ERDF, but many more are needed and the lifting of the 70 per cent. barrier will be helpful. I am glad that the draft due fund regulation does not include a specific limit on infrastructure projects.
I should be less than human if I did not welcome warmly and wholeheartedly the second series of non-quota proposals for aid to the textile industry. I and my husband, in another place, have been pressing for these for many years. These proposals deal generously with Lancashire. They give the lion's share of the £58 million grant—I do not know where on earth the hon. Member for Coventry, North-West got his figures, as he had them only half right—will go to Lancaster, Accrington, Burnley, Nelson and Rossendale, as well as Rochdale and other parts of the greater Manchester area. Those areas have been hard hit by the recession in the textile and shoe industries. The Conservatives have never made any bones about that. The rot started when the Labour party was in Government, and we have been doing our best to clear up the mess that they left. The aid will be very welcome. All

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in all, I believe that the series of documents represents a positive degree of help for our region and I wish the Minister well in his negotiations with his Community colleagues.
11.10 pm
Mr.Paddy Ashdown]: I looked forward to the debate with a degree of enthusiasm not usually associated with European Community documents not because I expected to hear too much that was new from the Government—many of the details are in the voluminous documents before us—but because, with the impending European elections, I thought that the hon. Member for Coventry, North-West (Mr. Robinson) would reveal some of the great vision and expansive ideas about the new Messina and the developments which they envisage for Europe.
I have no doubt, Mr. Deputy Speaker, that you would have been indulgent enough to have allowed Labour Members to put some of that broad picture to the House, provided that they had been clever enough to relate it to the context of the development of a European regional development fund, and how that might be reformed. Indeed, the hon. Member for Coventry, North-West touched upon that aspect at the end of his speech. He said that we must wait for a Labour Government and a Labour concept of Europe and of how these matters could be developed. Yet we have heard no details so far.
I should have thought that, in a three-hour debate at this time of night on such important matters, we should have seen a glimpse of the vision that has been resuscitated recently in the Labour party as to how Europe might develop. We heard nothing of that.
It is deeply revealing to me as well as to those outside the House that the talk of a new vision for Europe is revealed merely as an attempt to paper over the massive cracks within the Labour party about the true nature of that vision. I can agree with some of the points made by the hon. Member for Coventry, North-West, but his speech was revealed as essentially non-productive, non-positive and wrecking in its nature. There is no true vision to put to the British electorate. The Labour party is committed, whatever its leader might say, to a narrow vision of Europe.
I came into the Chamber in the hope of hearing something about a broader vision in the speech of the hon. Member for Coventry, North-West, but I have heard nothing of that. It is, therefore, incumbent upon me to say that the alliance believes that the European regional development fund is at the heart of the best that Europe can produce. The policies of the Liberal party and of the SDP are clear on the matter.
They have been set out for some time. The objectives of the regional development fund are to help the regions with older industries to adjust to industrial change, and to help the poorer and less developed regions to catch up with the more developed areas. The fund is designed to extend to the social infrastructure capital projects such as housing, hospitals and schools.
We wish to see a significant increase in the regional fund. I am glad that the Minister of State said that the Government wish to see an increase too—of about 5 per cent.—in the regional fund as part of the overall system of budgetary reforms that we should like to see in operation.
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We should like regional aid to be additional to assistance from national sources. Regional and local authorities should have the right to apply directly to the regional fund and to be consulted directly by the Community to establish regional needs. We agree that the proposals go some way towards achieving that. We still want to see more permanent publicity on site for projects supported by the regional fund.
It naturally follows from what I have said that we largely agree with the proposals. We have some reservations, which I shall come to, but I should like first to dip into the history of the matter, as the Minister and the hon. Member for Coventry, North-West did. It is a pity that the 1981 Giolitti proposals, mentioned by the hon. Member for Coventry, North-West, were not fully supported, and did not go through then. We are somewhat bewildered about why those proposals were torn up, or did not come forward. We see some elements of them in document 10705/83 and some of the other proposals. They are, of course, welcome, but they are not as good as the 1981 Giolitti proposals, and we are sorry that they had to be removed.
We are also somewhat bewildered, because document 1070583, in particular, has been produced, not by DG16 or the regional affairs directorate in Brussels, but by the Secretary General. Perhaps the Minister can help us, because we hear rumours from Brussels that DG16 is not entirely happy about some of the proposals. However, we generally support them, and they have received support from academics, local government organs, MEPs and from across the broad European spectrum. We too go along with them.
I shall outline why we welcome some of the proposals in particular. I think that the Minister will disagree with me when I say that we find them of benefit precisely because they give the Commission greater discretion. I make no secret of the fact that we would have greatly preferred greater discretion not for the Commission, but for the European Parliament We believe that Europe will never develop appropriately until power is in the hands of the democratically elected representatives, and that Europe will always be blighted if that power is limited. However, it is far better that that discretion should lie in the hands of the Commission than in those of the national Governments. In that way, we shall see less and less of the pork barrel politics of which Europe has recently seen more and more. I refer to the sort of politics that is concerned not with Europe's greater needs, but with the trading off of advantage and disadvantage between nation states, which will always pursue their most selfish interests.
The Minister revealed that most clearly when he said that it was appropriate that we should get out more than we put in. When he was asked what would happen when the EEC was enlarged, he said that things might change. But the reality, as he knows, is that Britain's share of the ERDF is bound to drop and should drop, because our needs will be fewer compared with the relative needs of others in the enlarged Community. The Minister knows that perfectly well, and I am surprised that he is not prepared to admit it. It is indicative of the Government's selfish and narrow attitude. They will only support something in Europe that they know that they will get more out of than they put in. If there was ever a recipe to ensure that the grander concept of Europe would not succeed, that must

839
be it. Greater discretion on the part of the Commission may mean that the ERDF will now tend to achieve the things for which we hoped in the long term.
We also believe that until now the quota system—which we are happy to see abolished—has been too inflexible. It became too predictable, and national Governments could then reduce their own national fundings accordingly. Whatever the Minister says, he knows as well as I do that the question of additionality is central to the success of the ERDF. He said that the macro view was adopted. Taking account of that macro view, can he tell us what the net increase in funding from the ERDF is? What is the net increase, after the Government have reduced national spending in line with those areas that have received funding from the ERDF? The Commission has shown some expertise in its administration of the non-quota, 5 per cent. sector. That leads us to believe that it has someting to offer under the new system.—
We welcome the award for the co-ordinated programmes, the fact that they will become more important than the projects, and that they may become more geographically concentrated. There is something to be said for the new possibilities in the proposals for a direct liaison between the Commission and local government or regional organisations. We are happy that the infrastructure to industry split—the 60–40 split—will be more flexible in the immediate future than it was in the past and, indeed, that it will be abolished in the long term. We support those proposals.
The Commission assumes the existence of a regional structure—a point touched on by the hon. Member for Coventry, North-West —which will relate to national regional programmes. It is sad that the United Kingdom does not have a regional structure. The Liberal party and the SDP have long believed that we should have a stronger regional structure which more effectively matches the European systems.
Although we have none, the proposals depend on such a regional structure. Article 2 of document 10705/81 states:
"The regional authorities concerned shall be involved as much as possible in their preparation … including expenditure in each region under their infrastructure budgets."
The document refers throughout to regional structure. Article 15 states:
"The Commission shall supply national and regional administrations which so wish with technical assistance to help them in the preparation and implementation of the programmes."
There are no such effective regional structures in Britain. Such structures as there are—the metropolitan councils—are being abolished. For that reason, West Yorkshire county council recently gave evidence in the House of Lords to the effect that after the abolition of metropolitan councils no structures will remain, which could ensure the effectiveness of the proposals. The district councils are too small. I hope that the Minister will address his reply to this key area. What regional structures will there be? How will the proposals be affected after the abolition of the metropolitan councils?
The West Yorkshire authority set up an effective system under the 5 per cent. scheme in Colne Valley and Calderdale for the textile industry, and expressed serious doubts about whether the regional structure would be sufficient for the proposals in document 10705/81. Its opinion should be greatly respected.
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But the main question which I wish to address is the question of additionality. It is because of this that the whole edifice of the ERDF is in danger of crumbling. The British Government are undoubtedly the worst in Europe regarding additionality. We have always sought to reduce national funding commensurate with our funding from Europe. The fact that that practice has become more widespread in Europe is only because others have followed our lead. We have a disgraceful reputation. The hon. Member for Coventry, North-West may nod, but the Labour Government before 1979 were just as bad. They did not move towards a more reasonable structure. The United Kingdom policy is clearly against the spirit of the European regional development fund.
As the hon. Member for Coventry, North-West said, a procession of local authorities have gone to Europe to make use of the funding available to them. How much longer will they continue to go if that money is then clawed back by the Government?
More importantly, the more that the United Kingdom does not play the game on this issue, the more that we ignore the spirit of the proposals — the more that Britannia waives the rules on this matter—the more others will join us in undermining the system. The more they do so, the less is the likelihood that when the Community is enlarged more money will be put into the ERDF. That must be of considerable concern to the United Kingdom, because, as I am sure the Minister and other hon. Members know, the United Kingdom does very well out of the fund. With 23·8 per cent., it is the second largest recipient. Unless the ERDF works properly, begins to get more resources, and enlarges with the enlargement of the Community, it is inevitable that the British contribution will fall off the bottom of the table when the Community is enlarged. By any criterion, we will no longer occupy our present position.
The attitude of the United Kingdom, and the nations which have followed our suit, to additionality is the biggest threat to the long-term development of the ERDF system. We have always believed that additionality is a key factor, so I researched into the view of the Conservative party on that matter. The handbook for the 1979 European elections stated:
"It is clearly necessary to ensure that · funds are used in addition to those sums already being spent on regional aid by national governments."
I could not agree more with that. That is precisely the attitude that we wish to see adopted.
However, the 1979 Conservative manifesto says something entirely different:
"Where the Community's institutions clearly can discharge a · task more effectively than national governments, there is a strong case for responsibility to be borne at Community level. In most cases it should be a genuine exchange in which an increase in Community spending is accompanied by a saving in likely costs at national level."
I must ask the Minister: where does the Conservative party stand on this? Here we have a handbook and a manifesto, published within months of each other, taking diametrically opposite views. The Minister should come clean on this.
The Conservative party criticised the 1979 Labour Government and said:
"It is not wasteful to add European Regional Development Fund assistance to projects which are going ahead anyway."
They were clearly in favour of adding them, yet five years later Community funds still flow directly into national

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coffers, giving the Government the chance to flaunt Community prohibitions by cutting spending on regional development.
It is important, when the British public are about to vote in crucial elections, that the Government should come clean about those statements and should tell the people what attitude they take.
The motion commends document 8833/81 to the House. Page 6 of that document—this is a hope with which we agree—states:
"In this way, Community assistance will at last be seen to be additional to national aid."
Does the Minister support that statement? Whatever his plans for the ERDF, and whatever brave words he utters, unless the Government are genuinely prepared to consider this funding as additional to that which the Government provide—unless they consider it as a mechanism for counterbalancing the deprivation in some areas, not as a way of clawing back more money into the Government's coffers—the ERDF will not completely fulfil its potential. What is more, Europe will never completely fulfil its potential. That is the reality, and if the Minister does nothing else I hope that he will point the way towards a future brighter than the mean-spirited and narrow-minded vision that we have had so far.
11.30 pm
Mr.Nick Budgen: The hon. Member for Yeovil (Mr. Ashdown), as one expects, has attempted to inspire the House with his vision of the unity of a federal Europe. We know that the Liberal party is as good as its word in this respect and wishes that, in the future, the own resources of the EEC may be increased to 2 per cent. take from VAT. While I understand but, sadly, disagree with the hon. Gentleman's view, I find it difficult wholly to understand the Government's position. When I compare the Government's attitude towards regional policy funded from national resources with their attitude towards regional policy in Europe, it seems that there is some inconsistency between the two.
The great advantage of the Government's position on regional policy on the national scene is that they say, robustly and openly, that regional policy is pursued principally for social purposes. They do not pretend that there are great economic advantages, for instance, in building a factory near Linwood and taking work away from the west midlands. They say that this has to be done on occasions for social reasons, or, in small brackets perhaps, for political reasons. There is little economic justification for such industrial intervention. The Government are now promising, although they may not be as good as their word, that the money spent on industrial intervention over the next few years will be considerably reduced.
In the recent White Paper on expenditure, the Government say in volume II, page 27, that in 1982–83, £928 million was spent on intervention, and they hope that by the year 1986–87 that will be reduced to £600 million. That is jolly good. That shows that the Government are anxious to diminish expenditure for these social reasons.
However, when the Government come to introduce these measures, they say that, broadly speaking, the measures are to be welcomed. I suspect that we do not wish to get involved in the minutiae of each and every one of these measures, but the first document that the House is invited to consider, and the communication from the
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Commission, is based on two main propositions. The first is the belief in economic convergence, and the second is the idea that the European development fund should have a vastly increased role in the future.
I hope that, if the Government are broadly to welcome these proposals, they will explain, for instance, why the expenditure of national funds on industrial intervention is something that they wish on the whole to diminish as far as is possible within the constraints of the promises that have been made in the past while they welcome a document that envisages a larger role for industrial intervention in the EEC. Most of all, I should like my hon. Friend to be good enough to explain to the House why a Conservative Administration are in favour of the idea of economic convergence. Of course, I understand why a Liberal or a Socialist devoted either to the brotherhood of man or to equality, wherever it can be seen, would be in favour of economic convergence. I can understand how a Liberal or a Socialist might say, "Let us bring the beauty of Greece to the west midlands" or "Let us bring the vulgar griminess of the somewhere in the black country down to the Peloponnese". Those are, no doubt, great ideals. They may not be easy to carry out but no doubt with the application of other people's money and our own hypocrisy we may be able to progress towards them in a modern and purposeful way. But I do not understand how a Tory Government can be in favour of that.
Sir Brandon Rhys Williams: Is not my hon. Friend making his habitual mistake of thinking that the Conservative party is in fact the nineteenth century Liberal party? Are we not, in fact, the Conservative and Unionist party, and do we not revel in working together for other people?
Mr.Budgen: My hon. Friend and I have had this argument many times. That is why it may well be that I tend more towards the Gladstonian element in our party and he more to the—[Interruption.] Gladstone started as a Tory. It may be that I am more, as my hon. Friend would wish to accuse me of being, a Gladstone Liberal, and he more of a high Tory. That is way I am prepared to support: on a national level regional policies provided that they are expressed to be for social purposes—that is to say, for proper Tory reasons. I am not prepared to support regional policies on the basis that they make economic sense.
The Government's support for the measures is dangerous because it is based upon what was no doubt seen originally as a clever if hypocritical support for the idea of economic convergence because it was believed that that would always provide us with a useful way in which we could hold our cap out to receive funds from the rest of the EC. It was anticipated that for the foreseeable future we would be one of the poor men of Europe. But the Government should be careful. All this clever Socialism and clever Liberalism may catch them out in the end. With the enlargement of the EC we shall cease to be one of the poor men of Europe. We shall be one of the middle ranking men of Europe. As such it is possible that we may be able to take funds out of our left hand pocket and put them into our right hand pocket. But it seems unlikely that we shall be net beneficiaries.
I hope that in future the Government will put our attitude towards the European intervention in industrial matters in a more limited light. I hope that they will not put it in terms of economic convergence or the creation of

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a Socialist federal Europe. I hope that the Government will be able to say that there is in Europe a pork barrel. It is not politically possible to abolish the pork barrel. We know, because we are mature politicians, that pork barrels are much loved by all politicians. We say that so long as the pork barrel exists we would like to have our share of it. We shall from time to time put forward various inconsistent arguments as to its distribution. But we just want a cut out of it. I suggest that it would be a great deal better to put it on that narrow and realistic level than to try to elevate the matter into an issue of high principle.
11.39 pm
Mr.Nigel Spearing: The hon. Member for Wolverhampton, South-West (Mr. Budgen) has characteristically introduced a tone of philosophical merit into his speech which I fear I will not be able to follow. As Chairman of the Select Committee on European Legislation, I think that I had better remain within the remits of that Committee. However, his comments on the reasons and the purposes of public expenditure unite both sides of the House. We are all concerned with public expenditure, in diminishing it, in making sure that it gives proper value for money, and in directing it in different directions. Whether that expenditure can be described as pork barrel or not, it is part of the modern state.
No hon. Member has yet pointed out — and the Minister will correct me in his winding—up speech, if I am wrong—that public expenditure in respect of the EEC regional fund is a non-obligatory expenditure under the Treaty of Rome. If I am right, as I believe that I am, it could be that this particular pork barrel gets rather less in volume, unless the own resources problem is resolved. I make no prognostications in that matter. The assumption so far made by hon. Members on both sides of the House that the fund will be maintained, or even expanded, may not prove possible.
The scrutiny of public expenditure by Parliament is perhaps the basis of the power of the House. As has been pointed out, we have not just six proposals before us, but six reports thereon by the Select Committee, six voluminous documents from the Commission, and six explanatory memoranda from the Government, so there are no fewer than 18 documents before the House.
Were we debating British public expenditure, I suppose that we would have before us a page of the Estimates, which I think might set out the dilemmas and the problems before the House in a rather more succinct and efficient way. It has been the task of the Scrutiny Committee, whose job is to look at the legal and political importance of EEC legislation, to try to summarise these proposals as they come to us from Brussels. Indeed, they have come to us over a considerable period of time. The first of the documents was reported to the House as long ago as 2 February 1983. Some of the six are not major but are amendments to what has come previously. One of the problems of the House and the Committee is that a statutory instrument or an amendment in Committee can be equivalent to a Bill. There is no major distinction in the documents that come before us.
As the Minister said in opening, it was very late in the day and somewhat unexpectedly, that the main proposals, which I take to be the ones in Document No. 10705/83,
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came forward for agreement at the Council of Ministers. Although the document had been recommended for debate some time before the 11th report of the Scrutiny Committee, in session 1983-84, had recommended Document No. 10705/83, the Minister, as he has hinted, had to agree that document before the debate took place. Indeed, it is not taking place until tonight. That was unfortunate, because on 30 October 1980, in the course of a long debate setting up the new procedure for Standing Orders, the House passed a resolution that I should like to read:
"in the opinion of the House, no Minister of the Crown should give agreement in the Council of Ministers to any proposal for European legislation which has been recommended by the Select Committee on European Legislation, etc., for consideration by the House before the House has given it that consideration unless—

(a) that Committee has indicated that agreement need not be withheld, or

(b) the Minister concerned decides that for special reasons agreement should not be withheld;

and in the latter case the Minister should at the first opportunity thereafter, explain the reasons for his decision to the House." —[Official Report, 30 October 1980; Vol. 991, c. 838.]
I quote that in full because I do not think that it has appeared in Hansard since that date. It is an important resolution.
The Minister was in a difficult position. The development of the new proposals for the European regional development fund were not known when it would have been relatively easy for the Leader of the House to arrange a debate. What was the use of debate until the proposals were known? I believe that the proposals suddenly appeared at high speed and the Minister left with an invidious choice. He agreed in the Council of Ministers before debate had taken place. Properly, conforming to the resolution, he told the House why he had done so.-
That is history, but it illustrates the problem for the House, not just in the voluminous nature of the proposals, but in the question of timing. I have no doubt that discussions will take place about how that can be improved.
I should like to be clear. In Document No. 10705/83, the Select Committee said:
"The principal feature of this instrument, developed on the basis of the earlier proposals, is the gradual replacement of individual projects qualifying for fund aid by 'programme contracts', (i.e. agreements between the Commission and Member States). Such programmes would be either national programmes of Community interests or Community programmes linked to the development of other community policies. The Commission envisages a progressive trend in favour of Community programmmes which would eventually absorb the greater part of the Fund allocations."
Leaving aside the question of whether those funds are available I should like confirmation that a double change is involved—not only a change from quota and national programme, but a change to a Community programme decided by the Commission. I see that the Minister nods his head. That is a major change and it is unfortunate that the House was not able to debate it before it became part of our legal system.
The Community has passed discretion on to the Commission.
Mr.Norman Lamont: I am sure that the hon. Gentleman does not want to mislead the House, but he is referring to the wrong document. The document approved

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in the unfortunate incident is that which relates to the non-quota measures. He is talking about an important matter, but that matter was not approved in the circumstances to which he referred.
Mr.Spearing: I am grateful to the Minister. I was hoping that he would correct me if I went wrong because it is important to get this absolutely right. I am relieved by the Minister's correction. Nevertheless, there was a change from the quota and to that extent I was half correct. That is serious enough, because it means that he had to approve a different system on his own.
There is a change to programmes to which the Minister referred. It is a pity that there is a change because the twelfth report of the Court of Auditors states:
"After considering the different systems of national regional aid schemes and the difficulties inherent in the use of job-creation criteria in determining the level of regional assistance, the Report suggests, on the basis of selective on-the-spot audits, that perhaps only half the jobs planned are achieved within the stipulated time limits."
The change to programmes may mean that that matter will be more difficult to deal with than if the ERDF was confined to dealing with specific projects that were not altogether satisfactory, as the auditors' report points out.
The Select Committee has attempted to present a coherent picture to the House in six different reports over a period of 15 months. It has not been the wish of the Committee for the reports to be so disparate and not all that easy to follow. Its difficulties, and, indeed, those of the House and the Minister, have arisen from the political position. It is clear that the ERDF has changed direction. All we need to know is whether, and on what terms, its volume of aid will be maintained.
11.51 pm
Sir Brandon Rhys Williams: This debate will give a wrong idea of the general feeling of the House if somewhat warmer appreciation is not expressed of the speech of my hon. Friend the Minister and the general movement of Government policy on the regional fund. The setting up of the regional fund was the result of a British initiative. It is right that the Government should now continue to support the evolution of the fund.
At the time when the fund came into being, the Government were more cheerfully interventionist than they are now. There is always time for second thoughts and further examination of policy for the avoidance of waste and to ensure that funds are used to achieve the required results; but the fund was intended to deal with long-term programmes, and that is something that the EEC needs now as much as it did 10 years ago. The feeling at that time was that if we did not proceed towards economic integration, we should certainly not solve our problems of regional disparities, but that even if we did make progress towards a more integrated economic Community, there would still be a need to assist the black spots and areas in special difficulty that could not progress as fast as the rest.
It was thought then, and it is right to continue with that policy, that it was good to adopt practical initiatives to accelerate investment in the areas suffering particularly from the years of intermittent neglect of investment, which is all part of the history of western Europe in the 20th century. We need especially to assist the public sector with the ambitious, modern schemes of infrastructure investment that are not entirely within the scope of local or national Governments to carry through. While we continue with distorting factors such as the unnatural
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structure of exchange rates within the Community, there must be a deliberate attempt to correct those distortions when they create hardship and areas of uneven opportunity.
I wish to take this opportunity to challenge my hon Friend the Member for Wolverhampton, South-West (Mr. Budgen) because, as usual, there was so much ambiguity in his apparently thoughtful attitude. He speaks from these Benches, but in fact he speaks from the past. In a voice of great clarity but rather mysterious quality, what he told us from the past came from the mouth of Gladstone rather than Disraeli.
Are we to look back on economic history and decide that Disraeli was really a pupil of Gladstone and that occasionally he made hostile speeches through some sort of personality quirk and not because Gladstone was wrong? Or is there perhaps a Disraelian tradition in the Conservative party which should just occasionally be expressed? We might give a wrong impression to people outside the House if we constantly reiterated Gladstonian thoughts and forgot the old Conservative tradition. After all, we spent the entire 19th century combating what we thought were the obvious untruths of the Gladstonian economic position. From time to time, someone should express a Disraelian thought in the context of the European Community.
We are moving shortly to elections throughout western Europe, the second direct elections to the European Parliament, and all the parties in the different European states are preparing their manifestos and schooling their candidates to come forward with ideas to attract the voters.-
However, when all is said and done, there is really only one issue in the coming European elections: do we want more progress towards integration in the Community, or do we prefer to fall back on states' rights? That is the issue behind our debate on the regional fund; do we want a regional fund to promote the integration of the Community or do we want to diminish the activities of such a fund so that we can fall back into economic nationalism?
Mr.Budgen: As the hon. Baronet understands the position, are the Democrats in the European Parliament in favour of states' rights or of progress as he defines it?
Sir Brandon Rhys Williams: I prefer to speak for myself. I am a Conservative and Unionist. The Unionist theme will be important in the coming elections because, since we signed the treaty and are still committed to it, we must work with the other member states to make the best of it. We should not work secretly to undermine the treaty by constantly finding fault with the basic conceptions of economic unity as a source of strength.
If one believes in laissez-faire economics, as my hon. Friend the Member for Wolverhampton, South-West clearly does, how can one tolerate national barriers to trade or national subsidies to investment? It must be wrong to promote economic nationalism and then pass it off as a development of the gospel of free trade. Free trade might have worked if it had ever been tried, but it never was; and although there have been attempts at free trade, because it has never been implemented fully, the world in which we live is full of economic distortions of every kind. Do we allow those economic distortions to persist, particularly when they affect large pockets of our own people. or do we work to get rid of them by conscious effort? That is at the heart of much modern economic argument.

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It is right, as the House has given itself a three—hour debate, for me to comment on some of the theories which we must examine if we are to give a welcome to the Government's initiative over the regional fund. Free trade and the management of policy in the private and public sectors should expand over the widest area possible to obtain the potential benefit of the division of labour and the operation of market forces without distortion. I should have hoped that my hon. Friend the Member for Wolverhampton, South-West and people who feel the way he does about the benefits of free trade would welcome the creation of a large free-trade time-zone in western Europe and should not constantly be carping and falling back into economic nationalistic attitudes.
But they are doing so, not only in this country but in other countries of the Community, and they are having alarming success. If we consider the progress of the Economic Community in the last few years by comparison with Japan and the United States, we cannot be particularly proud of ourselves. The reversion to economic nationalism in the last few years in the Common Market has not produced satisfactory results. The Commission has given us a good deal of figures over recent weeks in the economic analysis of the present state of the Community. World imports in 1984 could increase by 5 per cent., as against only 1·7 per cent. in 1983; but the European Community's share of the increase in trade is expected to continue to diminish. The United States is pushing ahead, as is Japan and the yen area; but our revival is going ahead less fast than theirs and the EC's share of world trade is diminishing as a result. I do not think that that is because the EC states are too closely united. The reason must be that we are still Balkanised by our national policies and nationalistic traditions.
Unemployment in 1984 is likely to rise less fast in the Community than it has done over the past few years. That is to be welcomed, but in the United States a fall in unemployment is taking place. It should fall in 1984 to about 7 per cent. in the United States and in Japan it should fall to about 2.5 per cent. It may well be said that those countries measure unemployment in a way that is quite different from ours—there may be much truth in that—but if there is a fall in unemployment taking place in the United States and Japan while unemployment in the Community is still rising, there must be something fundamentally wrong with the way in which the Community is operating its affairs. We should ask ourselves what it is. Once again, I do not think that any rational person could say that our poor economic performance is because the Community is too united, too closely harmonised or has gone too far with integration.
Mr.Austin Mitchell: The hon. Gentleman might concede that in 1970, before the United Kingdom had entered the Community, we had a handy surplus in our industrial manufactured trade with the EC and that last year the deficit, which has increased every year, was over £8,000 million. Surely that has some connection with our comparative industrial decline and has had an effect on our industrial performance. We took down a greater tariff barrier against the other member states than they removed for us and it was easier for them to penetrate a small market than it was for us to penetrate a large one.
Sir Brandon Rhys Williams: That problem would not have been overcome by our remaining a smaller and more isolated market. The problem that we have suffered since joining the Community has been the persistent overvaluation of the pound. That is not the invention of this Government or the previous Government. The pound has been over-valued for 60 years, ever since we went back on to the gold standard after the first world war at too high a rate of exchange. It has been the policy of the Bank of England and of those who have guided policy in Britain to ensure, for years, that the pound should be kept at as high a level as possible for prestige reasons, with the result that our export trade has declined so that we are ashamed of our exports of manufactures. We have encouraged imports from throughout the world and we have increased our standing in the world of invisibles—no doubt the City of London has benefited—but it has been a setback for Britain that we have constantly enjoyed cheap imports while making our export trade so difficult. This is a matter of over-valuation and it has nothing to do with our membership of the Common Market. If we had corrected the over-valuation 10 years ago when we joined, as the French did to a great extent, we would have had the same benefit from joining the Common Market as the founder member states.
I do not want to speak at too great length, but I want to give a warm and encouraging welcome to the Government in proceeding with the development of the regional fund. Investment intentions in the Community are up but gross capital formation should expand in 1984, according to the Commission, by only a little over 2 per cent. That is a disappointing figure if we are giving ourselves the vision of the European Community recovering rapidly from the world recession. There is a recovery taking place, but it is not moving nearly fast enough. If we want investment confidence to revive, I do not think that we shall do anything to strengthen it by—for example — national economic policies that enable member states to retain their own tax structures for business and to make changes in tax structures without any warning or consultation. It does not help that our national economic policies result in persistent distortions in the exchange rates, so that there is no pretence of purchasing power parity in the Community, and that we follow on with sudden, unpredictable changes under the aegis of the European monetary system, which can leave traders greatly exposed to loss through no fault of their own.
I reiterate my commitment to a unionist policy for the EEC. The handicap of all Community expenditure is that the timespan of discretion for the Commission in planning Community expenditure is far too short. I have often said that the European Community is still living in the Stone Age with its economic planning because the Commission is virtually bound to consider expenditure yearly, and cannot make an expenditure plan in the confidence that it will be executed over a long period. The regional fund should be able to deal with projects that cannot be carried through in the scope of an annual budget.
We have of course the European Investment Bank and the beginnings of the Ortoli facility for dealing with the Community's capital needs. Everyone agrees that the European Investment Bank is a tremendous success and I very much admire it as an institution; but only about 2 per cent. of its total advances are for a period of more than 15 years. Capitalism does not thrive on the basis of investment that must mature and be paid for in five, seven

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or 10 years. To receive the full benefits of our investment, we must look for timespans of 25, 30 and 50 years. I hope that the regional fund can involve itself in rectifying the deficiencies of the areas falling behind, and those projects and industries that have been neglected. I hope that the difficulties and problems that have accumulated over long periods can be rectified and that sufficient time will be given to carrying through those policies so that they bear fruit. Regional policies should not be abandoned when they have only just begun.
Additionality has limited the extent to which the British Government have benefited from the return of funds from the Community. My hon. Friend the Minister of State said that in regard to Community competence we shall go for the lowest realistic proportion we can get. In that it seemed to me that he was lapsing into blatant economic nationalism. His assumption is that local expenditure decisions are better than decisions at the Community or federal level. I do not believe that I am misinterpreting my hon. Friend's intentions.
Do we apply the same policy to local government? Is it better to take a national view on local expenditure, to remove anomalies and inconsistencies that may appear in the application of expenditure policy in various places? In dealing with federal expenditure in the Community and its conflicts with national economic policies, we are simply reproducing at a different level the policy conflicts in which we are engaged between the national Government and the organs of expenditure at local level that are not in accordance with the national Government's policy. Is national Government the perfect level at which to take the big decisions on economic policy? I doubt if that is right. We should be planning many actions at the federal level. I do not think that we are erring on the side of giving too much money to the Community, in view of the relative failure of the western European economy to pull itself out of recession. We shall not solve our national economic shortcomings by acting alone. We know how to solve our economic problems, because, after the 30s and the crisis of the war, we joined with the other western European economies and democratic countries in other parts of the world, notably the United States, to set up a world economic order. It was a highly fruitful success and it lasted for many years. Tragically in the early 1970s, it broke down. Now other parts of the world are putting their act together again, but in western Europe we are clinging to economic nationalism. The result is shown in rising unemployment, a loss of investment confidence, and a failure to put money into research and to develop our resources in the way that we should.
I want to encourage the Government to persist with their unionist policies, and I welcome the Minister's approach tonight.
12.
10 am
Mr.Austin Mitchell: I shall not follow the hon. Member for Kensington (Sir B. Rhys Williams) all the way, largely because I could not follow his arguments, which seemed to have more to do with theology than with economics, very far. I do not know whether he is standing for the European Parliament this time, but I hope that Conservative candidates stand on his new definition of unionism. If they do, they will surely be massacred by the British people, who want no more of this European union but who know that the only effective
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framework in which democratic control of the economy can operate, and through which people can control their own destinies, is that of the nation state.
Although the hon. Member for Kensington was critical of economic nationalism, that was the only solution that emerged from the 1930s and the problems of the depression. Devaluation, protection and cheap money produced the massive drop in unemployment in this country from 1931 to 1936.
Sir Brandon Rhys Williams: The hon. Gentleman is recommending National Socialism. That did not do Germany any good.
Mr.Mitchell: I am recommending national expansionism, national Keynesianism. Keynesianism in one country, if the hon. Gentleman likes—which worked in the 1930s and which would work again for a country that has the massive oil resources that we have.
If the hon. Gentleman advocates free trade, why does he not pursue the argument to its logical conclusion and advocate industrial free trade between this country and Japan? If free trade is the virtue that he describes, there would be no harm in hitching ourselves to such a rapidly growing market and major industrial power. On the logic of his arguments, we should benefit from it.
By joining the Common Market, we have coupled ourselves in industrial free trade with the Japan of western Europe—West Germany — and taken on the added burden of supporting French agriculture. The joint burden is too much for us.
Although the hon. Gentleman was correct to say that one of our major problems has been the over-valuation of sterling—I agree with him completely on that—the fact that escapes him is that entering the Common Market has made it imperative that we devalue more than we would have had to outside the Common Market, to improve our competitive position within the market.
As my right hon. Friend the Member for Leeds, East (Mr. Healey) said in 1972, a concomitant part of entry to the Common Market is a substantial devaluation, because that is the only way in which we shall be able to preserve our industrial base. That devaluation is more massive inside than would be necessary outside, where we can rebuild behind our own, comparatively minimal, tariff barriers. I do not want to pursue that argument, because it is something of a detour from the main business.
I speak with some diffidence, because the documents before us are in Eurogluck, so far as I can see—difficult for us to follow and almost incomprehensible for our electors. The ERDF is difficult for the public to understand. That is the way that the Market wants it, because, to a large extent, this is a European confidence trick. We are being given back our money, because we contribute to the ERDF to the tune of about 90 per cent., yet we receive only about one fifth of the expenditure. In all these projects we are getting back our own money, with strings attached, filtered through the Commission for the greater glory of the Market rather than for the benefit and improvement of this country. To that extent, it is undoubtedly welcome to the Commission that the provisions are difficult to follow. If the confidence trick were easy to follow, it would be clearly revealed for all to see.
The regional fund is not a benefit to us, although it is heavily advertised as such in local media. As soon as a

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grant is received from the fund for a project in any area, the Common Market appears in the headlines, but it is not said that the grant is for much less than we had contributed. We get back a small proportion of our money, with strings, reservations and control by the Commission attached. However, I do not want to pursue that argument too far.
I was reminded of the way in which the fund works by a visit that I made with a delegation from the Great Grimsby borough council to see an official of the regional fund in Brussels. We were told that we were the sixth local authority delegation that he had seen by 2 o'clock that afternoon. Clearly, Brussels is becoming the new Mecca, the centre of pilgrimage to which delegations from local authorities from all over the country are lured by the possibility of obtaining grants for their projects.
To my mind, that heightens the confidence trick. The Commission's officials say, "Here we are. Come to us and talk about your projects. We can help. Talk to us about it." When delegations return to Great Britain, however, the Government say, effectively, "No. You must go through us. There is no point in going directly to the Commission. Projects must be authorised here, as well as participant funds. We are the prime source of supply." That conflict between the Government and the Commission is doubly confusing for local authorities.
I want to make three simple, clear and straightforward points in the main part of my speech. The Select Committee on European Legislation report for the session 1982–83 lists the non-quota elements in the regional fund. The money goes to mitigate the adverse effects of the restructuring of the steel industry in certain zones of the United Kingdom, and to mitigate the adverse effects of the restructuring of the shipping industry, textiles and clothing industries in certain zones of the United Kingdom. I am concerned that nothing in the fund—if I am wrong, I hope that the Minister will tell us the extent of the provision when he replies to the debate—goes to help the fishing industry through the crisis that it has faced, as a direct consequence of the restructuring that was imposed by membership of the Common Market.
The fishing industry has been crippled by the burden of Community membership in the sense that, expelled from Icelandic and other waters by the world trend towards setting 200-mile limits, we were unable to rebuild our industry in a way that most other countries did—the Labour party would certainly have done it—behind our own territorial limits, in order to catch fish from our own vessels. Ours are still among the richest fishing grounds in the world. We were unable to restructure our industry because of the Common Market's insistence on an agreement reached a few days before we started negotiations for entry, saying that fish was a common resource and that European vessels should have access to it. As a result of that and of the common fisheries agreement that was reached by the Government 18 months ago to a fanfare of trumpets, our fishing industry has declined rapidly.
The industry has shrunk to a shadow of its former self. It is probably catching about one third of the catches achieved before we entered the Common Market. The number of vessels, certainly of distant water vessels and freezers, has been drastically reduced from more than 100
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to perhaps less than a dozen still fishing. About five of those are on Humberside. We have seen a cataclysmic fall in employment in the fishing industry.
That devastating effect has been localised in ports such as Grimsby, Hull and Fleetwood, but especially in English ports. We have not had the benefit of aid from the EEC's regional fund to help us to face the problems and the agony of restructuring. That is a crime against the fishing industry and a dereliction of duty by the Commission and our Government. They should have been urging the claims of that industry and the areas affected by it. For some peculiar reason, areas north of Flamborough Head are classified as north Britain, whereas Grimsby and Hull are not. The latter are both fishing ports; Grimsby was Britain's premier fishing port and is still the premier fishing port for England. As Hull and Grimsby are not classified as being in north Britain, they do not qualify for special aid from the fishing fund. In addition, they have not qualified for any aid from the regional development fund. Indeed, we have not even qualified for any aid from the social fund.
Fishermen have been thrown out of work and made redundant, but they have not received any of the massive compensation or redundancy payments paid to those in other industries. They have been thrown out of work without any compensation, because it is assumed that they are casual labour, so they do not qualify, under the two years continuous employment requirement, for redundancy payments. The Government would not help, and would not even deduct the money from the redundancy fund. The Commission has effectively washed its hands of the fishermen, because our applications to the social fund on their behalf have received no offer of help. The applications to the regional fund for help for the areas in which those fishermen live have beeen treated similarly. Thus, my first point is that there has been a failure to help an industry that has been restructured following the bankruptcy that was a direct result of membership of the EEC.
My second point is that, although I do not want to stay in the Community for any longer than a week, or possibly a fortnight at the most, it could be said that the Community will have no relevance for our people until its true priorities are shown in its financial allocations. An institution that allocates 67 per cent. of the Community budget to 8 million farmers, when there are 13 million or 14 million unemployed within it, must have its priorities wrong. Regional aid amounts to only about 5 per cent. of the Community's expenditure, the percentage that benefits the unemployed is minute. Until the unemployed are treated better than the farmers, who are already well off, there can be no justice in the Community. It is another Euro-farce if we talk about the regional fund without recognising that those should be the EEC's real priorities, if it is to be relevant to this country. We have a greater burden of unemployment and regional decline to bear than any other member state. That is not our fault, but it is a recognisable economic fact. However, we shall suffer now in comparison with the new members, because they will also have claims for regional poverty, which might be regarded as stronger than ours.
My third point is that although it is important to have a regional fund, which should be bigger than the agricultural fund—which itself began as a means of helping regions, and was just perverted into a means of helping farmers and agriculture—and although it could

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be regenerated with massive injections of money that make it relevant to the problems of this country, it cannot be accepted by Opposition Members, or any other hon. Members as a quid pro quo for any increase in the Community's own resources. We all know that the settlement is coming; it is just that it cannot be announced until after the European elections, because it amounts to a Government sell-out. We know that own resources will be increased. What frightens me is that they might even be increased without being accepted by the House in the form of primary legislation. Here is a major constitution innovation and a strengthening of the EEC—
Mr.Budgen: The hon. Gentleman can take comfort from what has been described as the Whitelaw undertaking. On 20 November 1977 Lord Whitelaw gave the clearest undertaking that if the powers of European institutions were increased—along the lines suggested by the hon. Gentleman—it should be done only by parliamentary legislation.
Mr.Mitchell: That is an important point. An increase in own resources would be a constitutional change, because it would involve a substantial transfer of authority from this Parliament to the European Parliament. It is unacceptable for the European Parliament to have more control over that than we have, and such an increase should be undertaken only by parliamentary legislation.
I fear that an increase in own resources will be permitted after much huffing and puffing. It will be kept quiet until after the election, because it would be discreditable to announce it before. An increase in the regional fund cannot be a satisfactory quid pro quo for concessions on own resources. I would make no concession, as that is the only way to impose discipline on agricultural spending. That is our only negotiating card. I hope that the Government will hang on tightly to it, and not give way. If the Government think that an increase in the regional fund would be a satisfactory solution, I must disillusion them.
My most pressing question to the Minister is: what have the fishing areas, especially Grimsby, had from the regional fund, and what can they hope for?
12.23 am,
Mr.Norman Lamont: The hon. Member for Newham, South (Mr. Spearing), who has unfortunately left the Chamber, asked about the circumstances in which documents Nos. 11232/82 and 9938/83 were approved without a debate in the House. I made a statement in the House and wrote to him as Chairman of the Select Committee, and he graciously accepted my explanation. The Government regret that those circumstances arose. I feel strongly as an hon. Member, that the House should wherever possible be given the opportunity to debate instruments in advance. We try to adhere to the principle which the hon. Gentleman read out.
The hon. Gentleman also referred to the document specifying that Community programmes might take over the major part of the resources of the ERDF, and asked what the Government's attitude to that was. I made it clear in my introductory remarks that the Government are worried about the extension of Community competence in this matter and would like the Community's programme on the ERDF to be kept below the level proposed by the
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Commission. However, my hon. Friend the Member for Kensington (Sir B. Rhys Williams), in his interesting speech, took a different view.
The hon. Member for Newham, South also asked whether the expenditure was non-obligatory. It is non-obligatory under the treaty, but that has not stopped the expenditure from continuing to grow.
It gives me great pleasure, as I come from Grimsby, to reply to the questions of the hon. Member for Great Grimsby (Mr. Mitchell), although I fear that I cannot do so in a dramatic way that will make the headlines of the Grimsby evening newspaper. The hon. Gentleman was not here when I said that the ERDF had assisted some programmes in the Grimsby area. He asked about fishing, which has not benefited from the non-quota section of the fund. It has been restricted in the United Kingdom to steel, shipbuilding and textiles. However, I understand that the Commission is considering introducing ERDF non-quota support for the restructuring of areas that depend upon fishing, so there might be a pronouncement on that.
Several hon. Members, my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) among them, asked about the take-up of quota and some were anxious that Britain might not take up its full quota in future. Of course, in the past we have succeeded in taking up our quota; indeed, in some years we have put in applications for rather more than our quota. Because of that, applications have been carried forward into the following years. As a result of the changes made to regional development grants, they will qualify for ERDF support, whereas they do not at present. That will help to alleviate the problem. The fact: that the Community is proposing grant increases will also help with any problems.
The hon. Member for Coventry, North-West (Mr. Robinson) implied that because we were now making changes so that regional development grants could come into the qualification for support from the ERDF, that must mean that ERDF support for other areas would be cut. But that does not necessarily follow, because, as I made clear, the ERDF will grow. Of course, we would expect, as the economy picks up, that more industrial applications will be made and that perhaps the balance will alter between local authority and industrial spending. It must be in Britain's interest to put in the largest possible application.
Mr.Geoffrey Robinson: The Minister has not answered the substantive question that I put to him:; how can a 50 per cent. reduction of £200 million in regional development grant be made good by a 5 per cent. increase—the figure that he gave—in the ERDF? That cannot be possible, and the difficulty of meeting our take-up will be greatly increased.
Mr.Lamont: At present regional development grants do not qualify for support from the ERDF, so there can be no question of making up the difference. Furthermore, although regional development grant will be cut, we have made it clear that part of the cut will be replaced by selective assistance.
Mr.Budgen: Does my hon. Friend agree that the Government's overall aim is to reduce expenditure on these projects?
Mr.Lamont: Yes.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) asked about growth in the

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ERDF, and I confirm what I said in response to his intervention: that we expect it to grow by at least 5 per cent. in real terms, although the Commission would prefer it to grow faster than that.
The hon. Member for Yeovil (Mr. Ashdown), who, alas, is no longer in the Chamber, enlivened our proceedings by giving us some vision, which reminded us that the European elections are upon us. The hon. Member for Great Grimsby took a less visionary approach, and described the ERDF as simply giving our money to the EC and then giving it back to ourselves in the form of regional funds. That was a healthy antidote to some of the rhetoric and vision from the hon. Member for Yeovil.
We take the more mundane view that the ERDF is underpinning and supporting our national regional policy. I could not agree with the easy way in which the hon. Member for Yeovil said that he would be happy for the ERDF to grow, even if we were not to continue to be a net beneficiary of it. That is something that we should have to consider. The hon. Gentleman was clearly revealed in his federalist clothes. He has now returned to the Chamber. I am sorry that I had to answer some of his points while he was out, but I shall be coming to his points about additionality.
The hon. Member for Coventry, North-West used the debate not to talk about EEC documents before the House, but to make a Pavlovian attack on the Government's regional policy, whether that had any relevance to the documents or not. Just as Pavlovian was his ability to get the facts wrong. He started by saying that we had managed to take up less than 20 per cent. of the available ERDF quota. That is incompatible with our having been a net beneficiary of the fund. In 1980 we took up 32·1 per cent. of the quota, in 1981 32·2 per cent., and in 1982 28·5 per cent.
The hon. Gentleman also raised, yet again, the question of the ERDF and the net grant equivalent, something that he raised in Standing Committee again and again. Despite many attempts to enlighten him, he fails to understand that the regional development grants are subject to rules governing competition and state aids. Whatever ERDF documents say about limit, competition and the state aid rules surrounding article 92 of the treaty are the things that bite on our regional aids. This point has also been explained to the hon. Gentleman several times.
The hon. Gentleman referred to the proposed job limit. This limit is being introduced by the Government to focus RDG on job creation. It is not an EEC requirement, and I have made that clear again and again to the hon. Gentleman. He referred also to modernisation projects. Those that do not create jobs may be eligible for ERDF where they safeguard or maintain jobs. These projects will still be eligible for selective regional assistance. They will not, except for small firms, be eligible for RDG. This is again ground over which we have been many times in Committee.
The hon. Member for Yeovil raised various points about additionality. The Community's intention is that ERDF aid should not be used as an excuse for reducing domestic aids. The Government take into account the expected Community contribution in determining their level of expenditure on various programmes, and expenditure ceilings are higher as a consequence than they would otherwise be. The hon. Gentleman questioned what-
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I said about the level at which additionality applies. In our view, that is the proper level at which additionality should be taken into account, for this reason. The Commission wants us to put forward applications for projects that are almost certain to go ahead. This means that they have to be projects that will probably go ahead even if the ERDF grant is refused. Planning for projects has to be done well before it is known what ERDF aid will be available, so ERDF receipts passed on to local and public authorities have already been taken into account in the overall level of expenditure.
For industry projects United Kingdom domestic assistance is pitched to provide only the assistance necessary to achieve viability. It would obviously be wasteful to provide more and that is why ERDF receipts in respect of industry projects are used to provide partial reimbursement of aid already paid by the United Kingdom.
Mr.Ashdown: The hon. Gentleman said that it would be wasteful to provide more. May I draw his attention again to the Conservative party's 1979 manifesto which said that it is not wasteful to add European regional development fund assistance to projects that are going ahead anyway? How does he square his statement with that?
Mr.Lamont: I have just done so. I have explained that the projects may be ones that will go ahead and that the fund means that more money is spent on regional policy than would otherwise have been the case.
My hon. Friends the Members for Wolverhampton, South-West and for Kensington led us on to the high ground of principle. I am not sure that I want to take up their argument about Disraelian politics against Gladstonian economics, nor indeed about the pros and cons of economic convergence. That is referred to frequently in the documents, but it is rather like parallel lines. Unless we have monetary union, it is difficult to see convergence in any real sense. We are a long way from monetary union and many people have strong opinions against it. I prefer not to go further into the argument between my two hon. Friends.
My hon. Friend the Member for Wolverhampton, South-West sought to make a wrong antithesis between the justification for regional policy that my right hon. Friend the Secretary of State for Trade and Industry gave when he described it as having a social objective although it is economic in character and in means of adminstration. That description applies equally to European regional policy. With great respect to my hon. Friend, there is no difference between the two. The objective is the same.
I am grateful to my hon. Friends the Members for Lancaster and for Kensington for drawing attention and responding so positively to the documents. As my hon. Friend the Member for Lancaster said, the hon. Member for Coventry, North-West somewhat underestimated the figures. I am not sure where his figures came from relating to the non-quota section. In the latest round of measures we shall benefit to the tune of about £89 million. My hon. Friend is right to refer to the considerable aid that is going to the textile areas in Yorkshire—Bradford, Dewsbury, Halifax, Huddersfield, Keighley and Todmorden; in Lancashire — Accrington, Blackburn, Burnley, Lancaster, Nelson and Rossendale; and in Greater Manchester—Ashton-under-Lyne, Bolton, Bury, Leigh,

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Oldham, Rochdale and Wigan. Those are considerable sums covering a significant part of the country where there have been problems and contraction in the textile industry.
The hon. Member for Coventry, North-West contrasted the report in one of the documents on job creation and the uncertainty that can sometimes arise in regional policy in trying to estimate the job effect of particular regional instruments with the policy being followed by the Government in their new proposals. Article 20 of the Commission's new proposals provides that industry projects, to be eligible for ERDF assistance,
"shall relate to … activities which are intended to create or preserve permanent jobs".
I do not dissent from the view that obviously the calculation of jobs in regional policy is difficult. Difficult though it be, I am sure that the Government are right to make regional policy more job related. Far too much of our regional assistance has gone on capital intensive projects and has not done good for the regions. Whatever anybody else may think about it, we are firm in our view that our domestic regional policy ought to be geared to the creation of jobs and that is its main purpose.
The hon. Member for Yeovil—I regret that I have not referred to all his points—dragged in the metropolitan counties. Again, that was perhaps a slight electioneering touch. We do not envisage any great difficulty from the abolition of the metropolitan counties as regards the ERDF. We expect that the districts and others will take over from the metropolitan counties some of the projects that will be put forward for ERDF support, and it will be for the Government, as they have done before, to formulate the programmes, and to draw together the different strands and programmes to make a programme that can be put to the ERDF on behalf of this country.
The new proposals do not guarantee this country an increased share, as I have made abundantly clear. However, there is a good chance that we can continue to be a net beneficiary. We will use our best endeavours to narrow the range that is being put forward.
Mr.Geoffrey Robinson: Will the Minister confirm that the figures I gave, which I obtained this afternoon
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from the Library, show that, of the total ERDF about which we are talking, because that part which was non-budget related will disappear under the new arrangements, the take-up has been 17.6 per cent., 18 per cent., and 19 per cent. of the total? Does he agree that unnecessarily, as he has admitted tonight, cutting out modernisation of over £100 million a year will make it much more difficult for the Government to get the upper band of the percentage availability for this country?
Mr.Lamont: No, because the hon. Gentleman's figures are incorrect. As I pointed out earlier, this country has taken up its quota in the past and achieved the 23·8 per cent. share of the fund. The hon. Gentleman shakes his head, but I assure him that that is so. We have succeeded in taking up our quota. We believe that the changes that we are making in regional policy will strengthen our ability to take up our quota. We want a system of regional development grants that can qualify for support from the ERDF, and that change should be seen in a positive light.
I commend the documents to the House, and I commend to the House the line that we propose to take at the Council of Ministers when the proposals are put forward. I have endeavoured to explain our general position and what our negotiating stance will be. I believe that this is in the interests of the country, and should be commended to the House.
Question put and agreed to.
Resolved,
That this House takes note of European Community Documents Nos. 10705/83 for a Council regulation amending regulation (EEC) No. 724/75 establishing a European Regional Development Fund, together with 8833/81, New Regional Policy Guidelines and priorities; 12104/82, Special Report 5/82 of the Court of Auditors; 11232/82 and 9938/83, second series of specific Community regional development measures; 9361/83, eighth report from the Commission to the Council on the activity of the European Regional Development Fund in 1982; and 9449/83, proposal for a Council decision enabling grant aid from the European Regional Development Fund for infrastructure investment projects to exceed the 70 per cent. limit for the period 1981-83; and supports the Government's intention to press strongly for the early adoption of a new and improved regulation for the better administration of the European Regional Development Fund.

Northumbrian Water Authority
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mather.]
12.47 am
Mr.Michael Fallon: I thank my hon. Friend the Minister not only for volunteering to reply to the debate but for the personal attention and time that he has given to the Northumbrian water authority. His visit to Broken Scar in my constituency and to other installations was much appreciated. I hope that my hon. Friend will accept that the twin sources of funding of the authority from the taxpayer and, last year, from the Government are of great concern.
I begin with the authority's funding by its users. My hon. Friend will be aware of the enormous increase in charges this year. Charges have increased to my constituents and to other consumers in the north by an average 18 per cent. this year, following an increase of 12 per cent. last year. I said average, because average is how the Northumbrian water authority describes it. What it calls a typical household is one with a rateable value of £150. Below that, the increases are even greater. A property with a rateable value of £55 will have an increase this year of 39 per cent; for a property with a rateable value of £67 the increase will be 34 per cent. and for a rateable value of £80 the increase will be 29 per cent.
My own modest terraced house in Darlington is well below the water authority's idea of an average house with a rateable value of only £107. The increase for my house this year will be 50 per cent. My water bill went up from £48.62 last year to £59·57—an increase of 23 per cent. Worst of all are the standing charges, which I discussed in a debate last July. The standing charge for all domestic consumers in the area has increased from £6 to £16 this year. That is a 166 per cent. increase.
In a leaflet the Northumbrian water authority declares that it provides a
"non-stop, round-the-clock water service—that's a bargain".
At over £50 a year for a modest terraced house, that is no bargain.
For the first time in many years, water issue now an expensive commodity. For the average family in a modest terraced house in Darlington, water is now a more expensive part of a family's budget than milk. Pensioners, single people and others who live on their own and consume little water are at the mercy of the monopoly supplier which can, of course, charge monopoly prices.
It is right to ask at least one searching question on behalf of my constituents about the funding of the water authority. Why have operating costs increased by about 20 per cent. annually in the last five years? The water authority owes it to its consumers to ensure that this year it meets the Government's target of a 5 per cent. reduction in operating costs. I suggest that it should beat that target—and do better—by searching for more efficiency, by the better use of its manpower, by a more flexible approach to contract work where necessary and by selling more water overseas.
I do not dispute the size of the authority's financing problem. Over half its revenue—about £51 million—must go to service its debts. Interest charges alone are twice as high as those of the next largest English water authority.
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Nobody disputes that, in the Northumbrian water authority area, the drop in industrial demand because of the recession has caused problems. The demand is half that forecast when the Kielder dam and its associated schemes were originally planned in the early 1970s. Nobody disputes that industrial demand is peculiarly important for the authority, because 40 per cent. of its volume is for industrial use, compared with 20 per cent. on average for the other English water authorities. The Northumbrian water authority is particularly vulnerable to the recession.
The Government do not dispute the facts. Last year they made a special repayable grant of about £5 million to the authority, in recognition of its special problems. This year, despite appeals, special working parties and reports, no such help has been forthcoming. No permission has been granted to the authority to restructure its debt to allow it to do what any commercial company faced with such a position would have done—locked into interest rates of 17 per cent. negotiated in the early 1970s, any commercial company would have gone to its bankers and been allowed to reschedule its debt over a different period at different rates of interest.
Nor has there been any agreement on the refinancing of the Kielder dam project and the associated investment. I understand that it was suggested that such refinancing might have been possible with the co-operation of some City institutions. An equity loan might have been arranged whereby the Government would have recovered some dividend based on the use of the assets. The rescheduling would not have cost the Treasury anything. An equity loan might have cost it some money, depending on the extent to which the Kielder dam project was fully utilised. Either way, a more imaginative response is required, although not from my hon. Friend, who I know has wrestled with these matters during the past few months. His Department has co-operated with the authority in seeking ways to resolve the problems.
The Treasury should by now be able to come up with a more imaginative and flexible solution to the problems. I cannot help wondering whether, if the Treasury's imagination was equal to its wisdom, some of our public utilities would not now be locked into a straitjacket. After all, public utilities in other western countries have faced similar problems, but they have not been bound by artificial straitjackets imposed by central Government, such as the borrowing requirement or the strictures of the national loans fund, but have been financed either in partnership with the private sector or by drawing on the resources of the local community.
I ask my hon. Friend whether there is any way in which the consumers of the Northumbrian water authority, who are now bound to pay the very steep increases for their water, can at least have some stake in the infrastructure that has been provided. I should like to know whether there is any way in which the Kielder dam project could be refinanced at least to give consumers who continue to pay these ridiculous standing charges — a form of rent —some stake in the project for which, year after year, they will have to pay through increased charges and that artificial form of funding to which I have sought to draw the attention of the House tonight.
12.58 am
The Minister for Housing and Construction (Mr. Ian Gow): I congratulate my hon. Friend the Member for Darlington (Mr. Fallon) on having secured this

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Adjournment debate, on the characteristic concern that he has shown for his constituents who are customers of the Northumbrian water authority, and on the characteristically lucid way in which he presented his case to the House. I hope that my hon. Friend will accept that the reply that I give on behalf of the Government recognises to the full the strength of his case and the special difficulties that face the Northumbrian water authority.
During his speech, my hon. Friend referred to the potential for exporting water by the Northumbrian water authority. I was pleased to see the report in this month's edition of Water Bulletin, which my hon. Friend may also have seen, that confirms my hon. Friend's hope that the Northumbrian water authority is now in the export business, and that 20,000 tonnes of water are being exported to Gibraltar. It is hoped that that first consignment and later consignments will produce income for the Northumbrian water authority of about £250,000 a year.
There is a tendency for the House to concern itself with matters of national importance and sometimes to overlook the problems of the regions. I hope that my hon. Friend and the House will accept that, in the case of the problems of the north-east, the Government have paid particular and special attention to the problems of the region part of which is represented by my hon. Friend.
The closest consideration has been given by the Government to the problems of the Northumbrian water authority. My right hon. Friend the present Secretary of State for Employment instituted a review of the authority's financial position more than a year ago. As a result of that review, as my hon. Friend reminded us, a repayable grant of £5 million was agreed for 1983–84. In November, the Parliamentary Under-Secretary met Sir Michael Straker, the chairman of the authority, to assess progress. I agreed that further review should take place and I visited Newcastle on 6 January and had discussions with the chairman and the board.
No account of the authority's position would be complete without consideration of the major development, to which my hon. Friend referred, known as the Kielder scheme. Against the background of forecasts that there would be a doubling of demand for water in the north-east by the turn of the century, public inquiries were held in 1972 and 1973 into a proposal by the Northumbrian river authority to develop a major impounding reservoir and associated works at Kielder. The scheme included a tunnel to augment resources at Teesside, where steel and chemicals are important industries using a considerable volume of water.
The Northumbrian water authority was formed in 1973 and assumed responsibility on 1 April 1974. It took over, and continued with, the Kielder scheme. The statutory order was signed by the then Secretary of State for the Environment, the late Mr. Anthony Crosland, on 4 April 1974 confirming the previous Government's consent, which had been given in October 1973.
The final cost of the Kielder scheme was £167 million, a very substantial sum—
Mr.A. J. Beith: Absolutely. Mr. Gow: Does the hon. Gentleman wish to intervene?
Mr.Beith: I was merely lamenting the appalling waste involved in the commitment that was entered into on that fateful day.
Mr. Gow: As I said, it was a substantial sum, and with the benefit of the knowledge that we now have, 1 agree with the hon. Gentleman that an over-provision was made. Of the total of £167 million, £60 million was met from EEC and British Government grants to promote regional development.
The difficulties which Northumbrian water faces today arise principally from two circumstances. First, the authority borrowed heavily in the 1970s to finance major projects, including not only Kielder but the Tyneside sewerage scheme. As a result, the authority's debt stands at over £350 million and interest payments of about £50 million a year have to be met.
Secondly, there has been a 20 per cent. drop in industrial demand for water in the region, and the industrial demand is a higher proportion of total demand in that region than in any other. This means that the authority's costs, which are largely fixed, must be recovered on a reduced charging base, leading to increases in charges well above the national average. When the position was reviewed again early this year, the Government decided with great reluctance that they were not able to give further assistance. In reaching that decision, the Government took account of the following factors: first, the major projects undertaken by the authority had benefited from substantial regional grants and other assistance so that the costs remaining with the authority have already been mitigated to a significant extent—about one third of the full cost; secondly, even after this year's increases water charges in the Northumbrian region will still be below the national average; thirdly, the increases are significant in percentage terms but less so in cash terms — the increase for a typical household is about 22p a week; fourthly, the authority has, in my view wisely, structured its tariff to minimise the adverse effect on industry in the region. It is unfortunate that the authority has had to face these difficulties for reasons largely outside its control, but in the Government's view it would not have been appropriate to ask taxpayers generally to bear the burden that would have been involved in further relief or assistance from the Treasury.
When we consider water authorities' charges, the House has rightly asked whether an authority can do more to control its own costs—this issue was raised by my hon. Friend—and in so doing moderate its own charges. Improved efficiency has been our first priority in dealing with water authorities since 1979. Their budgets have been reviewed by consultants, there have been two reports from the Monopolies and Mergers Commission and most recently the Water Act 1983 has established smaller more business-like boards. There has been a most encouraging response from the industry and real progress is being made. For the industry as a whole, there has been a reduction of over 13 per cent. in manpower since 1979 and performance last year met the targets agreed with the Government. Performance aims for the three-year period to 1986–87 have recently been agreed and these will secure a reduction in operating costs of about 7 per cent. in real terms since 1979–80.
The Northumbrian water authority has made significant progress in achieving greater efficiency. The consultants who reviewed its budgets for 1981–82 and 1982–83 reported favourably on the authority's efficiency. The performance aim agreed with the authority for 1983–84 resulted in a 4 per cent. reduction in real operating costs.

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compared with 1979–80. The authority's manpower has decreased by 20 per cent. since March 1979, and the performance aim agreed for 1986–87 will bring about a further 5 per cent. reduction in operating costs. In an industry in which services must be maintained throughout each region because they are vital to the community, I consider that the performance of the Northumbrian authority is very creditable.
Nor has the authority neglected revenue-raising possibilities. The recreational potential of Kielder is being developed and a hydroelectric station to supply power to the national grid has been established there. I have referred already to the exports to Gibraltar which have been achieved by the authority.
My hon. Friend asked why the authority could not be permitted to renegotiate its borrowing from the national loans fund. That is a proposition with which I have considerable sympathy, but water authorities, like the nationalised industries, have access through the national loans fund to long-term capital finance on terms that are usually more favourable than they would be able to obtain if they went to the market direct. In fact, I doubt whether 25-year debentures at a rate of interest only a fraction above the rate at which the Government themselves borrow would be available at all. Such finance is appropriate to the long-term investments which make up the bulk of the authority's programme. For its part, the national loans fund is required by statute to conduct its affairs so that no loss is incurred.
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If the fund were to allow renegotiation whenever there was a favourable movement in rates it would be left with an uncovered difference. For that reason, the fund requires a premium on early repayment of loans so that no loss is incurred on the unexpired portion of the loan.
Another question asked by my hon. Friend was why the authority could not be permitted to substitute commercial borrowing in the market for its national loans fund borrowing. Apart from the difficulty about early repayment which I have mentioned, that would be contrary to the Government's general policy that borrowing by public sector bodies for capital purposes should be within the public sector for reasons for PSBR management. Access to private sector finance is considered only where there has been a clear transfer of risk to the private sector and where there are efficiency gains commensurate with the extra cost of that method of financing. Those conditions are not met in this case.
I know that the Northumbrian water authority may be making further suggestions, perhaps through the Water Authorities Association. I assure my hon. Friend that the Government will give sympathetic consideration to any further proposals made to us. I am grateful to my hon. Friend for having drawn this important matter to the attention of the House. I assure him and his constituents that we shall continue to watch the authority's progress and the interests of its customers with the greatest care.
Question put and agreed to.
Adjourned accordingly at eleven minutes past One o' clock.