Commons Sitting of 10 December 1985

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

    Pension Ownership
    Mrs. Currieasked the Secretary of State for Social Services what progress is being made with the extension of pension ownership.
    The Secretary of State for Social Services (Mr. Norman Fowler): Major improvements in benefits for early leavers from pension schemes in the Social Security Act 1985 will come into effect on 1 January 1986. These will mean that early leavers' rights are protected against inflation and there will be a new right to a transfer value. These measures correct a major injustice affecting members of occupational schemes.
    Mrs. Currie: I thank my right hon. Friend for that reply. Would he care to hazard a guess as to how many more people are likely in future to have their own pensions as a result of legislation passed in this Parliament?
    Mr. Fowler: I wish to make it absolutely clear that we want to see a major extension of occupational pension schemes. About 11 million people who are already in schemes will stand at some stage to gain from the reforms which we have already passed into legislation.
    Mr. Kirkwood: Will the Secretary of State reward those who have provided themselves with small private pensions by withdrawing the proposal to reduce housing benefit by £500 million, as that proposal will strike at those very people?
    Mr. Fowler: The hon. Gentleman must wait to see what the White Paper states about housing benefit. He need be in no doubt that we intend to expand and extend occupational schemes so far as it is possible for that to be done.
    Mr. McCrindle: Does my right hon. Friend agree that any move into the desirable area of personal portable pensions will rely to a considerable degree on the tax inducements which may be forthcoming? May we have an assurance in advance of the White Paper—I appreciate that my right hon. Friend cannot say much about that today—that consultation will take place between himself and the Chancellor of the Exchequer?
    Mr. Fowler: I pay tribute to my hon. Friend's interest in pensions. He will appreciate that the Chancellor and I share the aim of seeing a further extension of occupational pensions.
    Mrs. Beckett: Does the right hon. Gentleman recall that when he issued his consultation document on personal pensions he was careful to draw attention to the fact that under the proposals employees would bear the risk that is now borne either by employers or by the state? While lie understandably wishes to concentrate on what people stand to gain from what the Government have done, will he acknowledge that many people stand to lose from the changes that he proposes to make?
    Mr. Fowler: No, I will riot acknowledge that. The hon. Lady should refer to one of the original documents that we published at the time of the inquiry on retirement, which showed that it was the ambition and aim of the vast majority of people in Britain to have an occupational or personal pension of their own, and that is what the Government desire.

    Community Social Services Support
    Mr. Maddenasked the Secretary of State for Social Services what steps he takes to seek to secure that community social services support is provided to a common standard throughout the United Kingdom.
    The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Ray Whitney): The primary responsibility for providing adequate and appropriate social services rests with the local authorities. The Department issues national policy guidelines and our social services inspectorate is active in identifying and promoting good practice among social services departments.
    Mr. Madden: Is the Minister aware that those in Bradford who are dependent on community social services believe that they are receiving an extremely raw deal? Is he further aware that there are 140 severely mentally handicapped people in Bradford who are being cared for by people who are themselves 65 years old, or older, and that Bradford will have no resources to make proper arrangements for those severely mentally handicapped people when those now caring for them are no longer able to do so? Will the hon. Gentleman stop displaying the complacent attitude that he has displayed at the Dispatch Box and announce that extra resources will be made available to places such as Bradford so that they can make proper arrangements for the care of those who are extremely dependent on the social services?
    Mr. Whitney: If the people of Bradford are dissatisfied with their social services they should direct their complaints to the local authorities in Bradford. The personal social services under Conservative rule have increased by 20 per cent. in cost terms. The hon. Gentleman will be aware that national spending on the National Health Service has increased by 20 per cent. so far and will increase by the 6·7 per cent. forecast as a result of the latest statement by my right hon. Friend.

    NHS Funding
    Mr. Hirstasked the Secretary of State for Social Services what has been the growth in real terms in the funding of the National Health Service since 1979 to the latest convenient date; and if he will make a statement.
    Mr. Fowler: Spending on the Health Service in Great Britain has risen from £7·75 billion in 1978–79 to £17·5

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    billion in 1985–86. That is an increase of 21 per cent. in real terms. Over the same period, public expenditure generally has increased by only 10 per cent. We plan further real increases in health spending in each of the next three years. These figures demonstrate the Government's continuing commitment to improving the National Health Service.
    Mr. Hirst: I am grateful to my right hon. Friend for his reply. Does he agree that it completely rebuts the claim of those who assert that the Government have imposed cuts on the Health Service, and shows that in recent years the only Government who did so were the Labour Government? Will he take this opportunity to remind Health Concern and others that inefficiency and waste in the operation of the Health Service are the enemies of proper patient care?
    Mr. Fowler: I entirely agree with what my hon. Friend has said. I also agree that the challenge to the Health Service is to use its resources to the fullest extent. My hon. Friend is also right to say that the Labour Government presided over cuts in the Health Service. They were the largest capital cuts in the history of the Health Service, never mind in the last 10 years.
    Mr. Kennedy: The Secretary of State talks about the Government's expenditure on the Health Service. Will he clarify exactly what measurement of inflation is taken into account? Is it the retail prices index, or the internal mechanisms of inflation within the Health Service, which, for reasons of technological pressure and demographic change, are significantly higher?
    Mr. Fowler: The measurement is the RPI, as I said in my answer, and that is the effective measure of the resources that the Government have to make available. But there is also an increase compared with NHS pay and price increases. However the hon. Gentleman wishes to calculate the figures, the fact is that this Government are devoting more resources to the Health Service than any other Government in history.
    Dr. Mawhinney: In addition to the welcome real increase in growth in the Health Service, how much extra money has been made available for patient care as a consequence of the Government's policy of requiring health authorities to use the money more cost effectively?
    Mr. Fowler: The Health Service is at present providing about £150 million a year from cost improvements. That illustrates that the Health Service is now using resources more effectively than at any stage in its history.
    Mr. Pavitt: Is the right hon. Gentleman aware that the figures he gave reveal savings but no efficiency? Let me give three examples. First, because of a cut in the number of acute beds, three hospitals in this region are taking their emergency cases to three teaching hospitals not far from this place. Secondly, two hospitals in my constituency have been closed. Thirdly, because of the Government's privatisation policies, I know of two hospitals in which patients are scrubbing out the lavatories.
    Mr. Fowler: More resources are being devoted to the Health Service, but a better measurement is the use made of those resources, which shows that the Health Service is now treating more inpatients, more day patients and more outpatient cases than ever before —dramatically more than when the Labour Government were in power.
    Mr. Robert B. Jones: Is my right hon. Friend aware that the new hospital now being built in Hemel Hempstead was cancelled by the previous Labour Government? Is he further aware that within over-resourced regions there are areas that are suffering from lack of resources? When will he make more resources available to those areas, at the expense of the over-resourced areas in inner London?
    Mr. Fowler: The policy of reallocating resources is continuing. I do not think that there is any disagreement in the House about that. My hon. Friend is right about capital spending. The Government have restored the capital programme, and we shall now develop it further.
    Mr. Dubs: Is the Secretary of State aware that many people who live in deprived inner city areas, especially inner London, will fail to understand what he has said today, when all around them they see ward and hospital closures?
    Mr. Fowler: I am sure that the hon. Gentleman will explain to them the reallocation of resources proposal which was supported by the Labour party and with which, as far as I know, the Opposition spokesman on health matters does not disagree. The policy aims to put resources where people are. That is sensible.
    Mr. Conway: Is my right hon. Friend aware that Shropshire warmly welcomes the substantial increase in health spending, especially in hospital provision? Will he give a thought to the speed with which the region transfers resources to the area health authority to take account of the fact that Shropshire now has the fastest growing population in the west midlands?
    Mr. Fowler: That is one of the issues about which I shall talk to the regional chairman of the west midlands.
    Dr. Marek: So that the British people can make a balanced judgment on these figures, will the Secretary of State now dare to write to the chairmen of district health authorities and ask whether they have sufficient funds to provide adequate funding of the NHS in 1986–87, and publish the replies?
    Mr. Fowler: It would be more useful to do what we are already doing—[Interruption.] Rather than write, we prefer to talk to them. That is what we are doing. We do not believe in government by circular, which is what the Labour party stands for. As far as I am aware, district health authority chairmen understand our policy a darned sight better than does the Opposition spokesman.

    Renal Failure
    Mr. Patrick Thompsonasked the Secretary of State for Social Services how many patients have been treated for end stage renal failure; and how this compares with the situation in 1978–79.
    Mr. Whitney: The latest available figures show that there were 11,270 renal patients receiving treatment in the United Kingdom at 31 December 1984. This compares with 6,167 on the corresponding date in 1979, an increase of 83 per cent.
    Mr. Thompson: I am grateful to my hon. Friend for that reply. Does he agree that this encouraging news is a further sign of increased efficiency in the Health Service and contradicts utterly the continual whingeing that we hear on this subject from the Opposition?
    Mr. Whitney: I am happy to agree with my hon. Friend.
    Mr. Carter-Jones: I congratulate the Minister on the increase in the number of patients receiving treatment. Does he consider 50 per million new patients per year for end stage renal failure as a distinct possibility by, say, July next year? Will he consider putting the names of people who carry kidney donor cards on a computer to which they can contract in or out, as transplantation seems to be the best method of resolving end stage renal failure?
    Mr. Whitney: We are constantly improving our achievement in terms of take-up. The take-on rate has increased by 50 per cent. since 1979. We have a long way to go, but we are making progress. We are ready to consider every possible way of promoting the transplant campaign.
    Mr. Michael McNair-Wilson: Can my hon. Friend given us any idea of the length of the waiting list for kidney transplants? What thought has he given to changing the present system whereby, although a deceased person carried a kidney donor card, his or her wishes are not carried out unless the next-of-kin gives permission? If such people's wishes were carried out, many more kidneys would be available and there would be many more transplants.
    Mr. Whitney: We do not have central figures for the transplant waiting list. That is a matter of clinical judgment in individual cases. We shall continue to consider every possible way in which to improve the system and to reinforce the transplant service.

    Social Security Reviews
    Mr. Nellistasked the Secretary of State for Social Services what recent representations he has received on the social security reviews.
    Mr. Fowler: We have received more than 7,000 responses to the Green Paper.
    Mr. Nellist: Will the Secretary of State confirm that more than 80 per cent. of those representations were against his proposals and that they included a petition with more than 20,000 signatures, the largest petition ever raised by the people of Coventry? Is it not ironic that the Secretary of State plans to increase temporary staff at the DHSS by more than 10,000 to deal with the proposed cuts, but refuses to increase the permanent staff to deal with the present work load? Is he aware that in some inner city offices the turnover is between 50 and 60 per cent. due to the work load and the low pay, and that my constituents are suffering severe delays in the payment of benefit?
    Mr. Fowler: The overwhelming view is that very few respondents are satisfied with the present system. As I have said, the Government's proposals will be set out in a White Paper very shortly.
    Mr. Neil Hamilton: Is my right hon. Friend aware that many Conservative Members are hoping for a radical review of the social security system and look forward especially to the abolition of SERPS because it is no part of Conservative policy to provide a nationalised earnings-related pensions system?
    Mr. Fowler: My hon. Friend has only a short time to wait before all will be revealed.
    Mr. Pike: Does the right hon. Gentleman appreciate that many families are concerned about the changes in housing benefit, which will affect the most deprived families, and that local authorities will be hard hit because they will have to pick up the additional burden? Will he ensure that those families do not suffer and that local government is not further penalised financially by the Government?
    Mr. Fowler: There is not a great deal that I can acid to what I have already said, save to point out that housing benefit goes further up the income scale than basically arty other income-related social security benefit.
    Mr. Favell: What proportion of the representations were from professionals employed by welfare organisations with a vested interest in the status quo?
    Mr. Fowler: No breakdown of that kind has been done, but I will see whether it can be done.
    Mr. Soley: Will the Secretary of State respond to the representations from the Hammersmith Unemployed Workers Centre, which objects strongly to the suggestions in the review? Is he aware that people have to sleep on the floor at the centre because the supplementary benefit offices cannot provide a proper service, not least because one office has been smashed up as a result of pressure on claimants and staff in the area? What does the right hon. Gentleman intend to do about that, and what message does he wish me to convey to those people'?
    Mr. Fowler: I shall look at the problem raised by the right hon. Gentleman and seek to reply to him.
    Mr. Michael Morris: Is my right hon. Friend aware that on Friday I attended a meeting called by the TUC Week of Action, at which 35 people were present, and that, apart from the representative of the Child Poverty Action Group, who made some valid comments, the majority of the remaining 34 people favoured combining supplementary benefit and family income supplement? Is he further aware that the vast majority of my constituents look foward to the White Paper and to a simplified system for those in need?
    Mr. Fowler: My hon. Friend is entirely right. Very few people are satisfied with the social security system. The present system is indefensible. It is far too complex and help does not always go to the right people. The time for reform has come.
    Mr. Meacher: Is the Secretary of State aware that relief at the preservation of SERPS will be premature and wrong if he makes major cuts in pension benefit for which the Government Actuary has found not an ounce of justification? Is the right hon. Gentleman aware that this is a national insurance scheme for which people have paid in full and in which they have entitlements and full rights to benefit? Does he agree that any private insurance company which unilaterally reneged on its obligations in the way that he seems to intend would be taken to court for bad faith and breach of contract?
    Mr. Fowler: The hon. Gentleman should not rehearse his speech before he has seen the proposals. Perhaps he will now publish the Labour party's proposals on social security and tell the British people whether he still intends to abolish mortgage interest tax relief, because the public want to know.

    North Middlesex Hospital (Cancer Treatment)
    Mr. Norman Atkinsonasked the Secretary of State for Social Services if he will refuse his consent to the ending of treatment for cancer at the North Middlesex hospital.
    Mr. Whitney: No, Sir. This is a matter for the health authorities concerned. The current review by the North-East Thames regional health authority of its cancer services is about finding the best way of improving services to patients. If the review leads to changes which involve the closure of the North Middlesex radiotherapy unit and re-provision of the service elsewhere, there will be full local consultation. If the community health council objects to any such proposal, the matter will be referred to Ministers for a final decision. Further comment from me at this stage would not be appropriate.
    Mr. Atkinson: Is it not a fact that the proposed changes are of some size? The suggestion is that five cancer centres should be created in London and that the North Middlesex hospital should be merged with the Royal Free hospital. If that happens and there is the creation at the Royal Free of a cancer centre, the linear accelerator that has already been ordered for the North Middlesex hospital and the building which has already been constructed there will be scrapped. It will make nonsense of the travelling arrangements that people in both north London and the outer areas will have to make to get to the centre should it not be established at the North Middlesex hospital. To provide a rationale, will the Minister intervene before the consultations take place so that a sensible plan can be devised for the cancer centres in London?
    Mr. Whitney: The hon. Gentleman gives currency to completely unfounded scare stories. This is a consultative proposal about the possibility of providing a better service for patients. It is not a question of saving resources.
    As for the future of the North Middlesex hospital, as opposed to a possible rationalisation of cancer treatment services, the hon. Gentleman ought to be aware that the latest plan suggests additions of about £8 million in the next few years for the North Middlesex hospital, including three new geriatric wards. If that suggests the closure of the North Middlesex hospital, it seems to be a very strange way of going about it.
    Mr. Hayes: I hope my hon. Friend appreciates that there is considerable feeling and outrage on both sides of the House about this report, which has been pilloried by the medical profession. I am not prepared—and I am sure that many of my hon. Friends are not prepared—to stand idly by and see some of our cancer patients, who are suffering enough as it is, having to travel long distances.
    Mr. Whitney: I hope my hon. Friend agrees that it is entirely right for the health authority to take every possible measure to seek the best method of delivering these services to their patients.
    As for medical opinion, I remind my hon. Friend that this inquiry was conducted by Professor Whitehouse, Professor of Medical Oncology at the University of Southampton. I repeat that this proposal has not yet been considered by the authorities.
    Mr. Dobson: Does the Minister recognise that there is concern, both within London and in those parts of the North-East Thames regional health authority that are outside London, about the proposals? Does he also
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    recognise that it is necesary for him to intervene so that cancer treatment provision in Greater London and outside that area can be seen as a whole? The North-East Thames regional health authority should not be permitted to go ahead with its piecemeal proposals without bearing in mind what is happening in other parts of the south-east.
    Mr. Whitney: I am well aware of the concern, as is the regional health authority. However, I am also aware that the regional health authority has a responsibility to study this proposal and that it has every right to do so. I hope the hon. Gentleman recognises that should this procedure go a step further, we should then enter into a consultation process in which my right hon. Friend the Secretary of State for Social Services and other ministerial colleagues would be involved.
    Dr. Michael Clark: Is my hon. Friend aware that the proposal to close the cancer treatment unit at the North Middlesex hospital is part of an overall package, put forward by the North-East Thames regional health authority, which will also affect the cancer treatment unit at Southend? Is my hon. Friend also aware that the report is riddled with errors and inaccuracies and that it is no more acceptable to the people of Southend than it is to people in the North Middlesex hospital area?
    Mr. Whitney: I am well aware of that concern. I have no doubt that the regional health authority will take note of that concern in reaching its conclusion on the report.

    Heating Additions
    Mr. Winnickasked the Secretary of State for Social Services what proposals the Government intend to bring forward over heating additions for those on limited incomes.
    The Minister for Social Security (Mr. Tony Newton): We have recently again increased the supplementary benefit heating additions which go, for example, to all supplementary pensioner householders over 65. The total now spent on such additions is some £400 million a year. In the social security Green Paper proposals, expenditure on heating additions would be included in resources for the income support scheme and their pattern would be taken into account in setting the income support premiums for pensioners and for other groups, such as the disabled.
    Mr. Winnick: Is the Minister aware, and do the Government care, that so many people, especially pensioners, cannot afford to heat their homes during the winter months and dread the nightmare of those months? Many such people receive no assistance because they do not claim supplementary benefit. Does the Minister wish to deny that if the Green Paper proposals are put into effect fewer people will receive help with their heating bills?
    Mr. Newton: The improvement in heating additions for recipients of supplementary benefit, including pensioners, is now much greater than it ever was under the Labour Government. That reflects the Government's concern about this matter. I cannot add to what I have said about income support premiumns. As all supplementary benefit pensioners transferring to income support would receive a premium under the proposals, and as those premiums would take account of the current pattern of heating additions, the hon. Gentleman can draw his own conclusions.
    Mr. Watts: Is my hon. Friend aware that the proposal to incorporate heating additions and other allowances in the premium rates of income support will be widely welcomed by many pensioners as a simplification that increases access to benefit? Will he ensure that the premium rates payable to pensioners fully reflect the energy costs that pensioners necessarily incur?
    Mr. Newton: It is certainly our intention that the premium rates in the proposed income support scheme will take account of the additional costs falling on pensioners generally and that heating costs will be an important part of our consideration of those premiums.
    Mr. Wilson: Has the hon. Gentleman seen reports in today's Scottish papers to the effect that the Secretary of State for Scotland has been pressing for a special social fund for Scotland from which payments could be made for heating allowances to cope with the cold climate? If the Secretary of State finds it necessary to press for such a fund because he cannot accept the prospect of Scottish pensioners having to decide between eating or heating, will the hon. Gentleman support that decision? This would mean that people in Scotland, with its colder climate, would have sufficient heating to enable them to live in comfort.
    Mr. Newton: I shall certainly consider any views attributed to my right hon. Friend the Secretary of State about the development of our social security proposals. We shall take any such points into account in working out the proposals for the social fund.
    Mr. James Hamilton: Will the hon. Gentleman concede that last year Scottish pensioners got the rawest of raw deals from the Government? Does he recognise that climatic conditions in Scotland are worse than in any other part of the United Kingdom? Will he take cognisance of that fact and ensure that on this occasion those pensioners get a fair deal?
    Mr. Newton: I can at least assure the hon. Gentleman that supplementary pensioners and other supplementary benefit recipients in Scotland, including the long-term sick and disabled, will have benefited, as in other parts of the country, from the large increases in heating additions made by the Government, which were increased again just a couple of weeks ago at the time of the uprating.
    Mr. McCrindle: Does my hon. Friend accept that there is no particular virtue in paying these heating allowances separately? Does he accept also that the idea of embodying them in a general needs assessment will be warmly welcomed by many hon. Members on both sides of the House? Will he confirm that, in moving towards that system, it is proposed to wind up the special weather allowance, which has caused great concern because it has been paid in one constituency and not been paid in another just a few miles away?
    Mr. Newton: I welcome the first part of what my hon. Friend said. As about 90 per cent. of supplementary benefit pensioners now receive a heating addition, it is obviously more sensible to give such benefits in a more generalised way, along the lines of the premiums that we have proposed. As to the exceptionally severe weather payments, my hon. Friend will be aware that the chief adjudication officer issued new guidance on the administration of those regulations last week. Ministers
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    continue to consider the matter in the light of the guidance and the commissioner's ruling, but I cannot add anything to that.
    Mr. Ashley: Is the Minister aware that there are ominous signs that many old people are losing the battle to keep warm, as is shown in Stoke-on-Trent, where the major hospital already has a red alert because many old people are suffering from chest diseases and cannot keep warm? The Government are responsible for people who are old being cold.
    Mr. Newton: I have always hesitated to be overaggressive with the right hon. Gentleman, but, in the light of what the Government have done to increase heating additions, not only for pensioners but for many disabled people, it is ridiculous for anybody who supported the miserable provision by the last Labour Government to be attacking this Government.
    Mrs. Beckett: Is the hon. Gentleman aware that it is fairly outrageous for a Minister in this Government to talk about the increases in heating additions without also referring to the increases in fuel prices imposed by the Government? Will he accept that if there is any truth in the rumours—I hope that he will take this opportunity to deny them—that it is intended not to reform but to restrict the operation of the severe weather allowance, such behaviour by the Government will be regarded as a disgraceful act?
    Mr. Newton: I sometimes wonder where Labour Members were during the period of the last Labour Government. If anybody has more nerve than the right hon. Member for Stoke-on-Trent, South (Mr. Ashley), it must be the hon. Lady, who has forgotten the deplorable record of fuel price increases under the previous Labour Government.

    Social Fund
    Ms. Harmanasked the Secretary of State for Social Services if he has discussed the social fund proposals with the British Association of Social Workers.
    Mr. Newton: The British Association of Social Workers and local authority associations gave evidence to the review of supplementary benefit, and have submitted their comments on the Green Paper on the reform of social security. In addition, I attended a seminar on the reviews organised by the Association of Metropolitan Authorities on 26 July, and addressed the joint social services annual conference on 27 September.
    Ms. Harman: Did the Minister have second thoughts about the social fund when he faced enormous criticism at the joint social services annual conference, at which not one Conservative councillor would speak up publicly in his support and in favour of the social fund? Conservative councillors in Coventry have told me that the Secretary of State has said that the social fund will not be cash limited. Will the Minister either confirm or deny that? If he denies it, we can tell the Conservative councillors in Coventry that they have been misled.
    Mr. Newton: My right hon. friend the Secretary of State has asked me to say that he cannot recall having made such a statement. We are continuing to consider the detailed proposals for the operation of the fund, and further proposals will be set out in the White Paper before long.
    Mrs. Kellett-Bowman: Will my hon. Friend accept that there are certain aspects that concern others besides the British Association of Social Workers? Is he aware that today I received a letter from one of my constituents who had been expecting the restoration of the 5 per cent. rebate on the invalidity benefit, but did not get it? Why is this so, and if it is deliberate, will he take care of this in the new review?
    Mr. Newton: My hon. Friend's question strays a little from the social fund. The 5 per cent. rebate on invalidity benefit was restored, but there have been a number of other changes to some invalidity benefits, which may have affected the position of my hon. Friend's constituent.

    Family Income
    Mr. Ralph Howellasked the Secretary of State for Social Services at what level of gross income a man with a wife and two children aged 10 and 15 years, who was claiming all benefits and allowances to which he and his family are entitled, would be as well off in net weekly spending power while working as he would be if unemployed (a) before the recent uprating and (b) after the uprating.
    The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Major): Before the recent uprating the man's gross earnings would have needed to be £40·55 compared with £40·68 after the uprating.
    Mr. Ralph Howell: Is my hon. Friend aware that I am disappointed with his reply, because although he has told us the point at which such a person would enter the poverty trap, he has not told us at what point he would escape from it? Is he aware that such a person needs an income in excess of £130 a week to make working worth while before the uprating, and that the greater part of the work force falls into a similar category? Is not the only way to escape from this depressing situation to raise the tax thresholds well clear of the benefit cut-off points, by ceasing to index benefits and by a co-ordination of the taxation and welfare systems?
    Mr. Major: It is true that the gap between income, whether in or out of work, does not become significant until gross income exceeds £110. My hon. Friend is aware that one of the main objectives of the Green Paper is to ensure that people are better off in work than out of work. We can study the proposals in the White Paper shortly. My hon. Friend is aware that income tax thresholds have risen by 20 per cent. since 1979, taking 1·25 million people out of tax.
    Mr. Tony Lloyd: The Minister referred to £110 being the significant level at which wages and benefits diverge. Is he aware that fewer than one in five adult manual workers earn below that level of income, so we are talking about very low wages indeed? Is the Minister aware that that level of income is only two thirds of what one of his hon. Friend's last night boasted had been paid to him, on an annual basis, for his support of one of the fixed Channel link propositions? Is that not the real measure of the division in our society?
    Mr. Major: I have no comment to make on the hon. Gentleman's second point. On his first point, I hope that, in view of what he said, he and his party will support the
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    proposals in the White Paper—which, to a substantial extent, will be geared towards meeting the problem that he outlined.
    Mrs. Virginia Bottomley: Is my hon. Friend aware that many of those concerned about the potential disincentives to taking paid employment because of our welfare and taxation systems believe that the maintenance of child benefit at realistic levels is one of the most effective ways to counteract the unemployment and poverty trap?
    Mr. Major: My hon. Friend is a powerful lobbyist on that point. She knows that we have given strong support to the child benefit system in recent years. I hope that she is satisfied with what has been achieved.
    Mr. Meadowcroft: The question asked by the hon. Member for Norfolk, North (Mr. Howell) highlighted the problems of the take-up of benefits. What is the Minister doing to increase that take-up, without which there is no point in having benefits? Is not a great deal of poverty caused because people do not claim the benefits to which they are entitled? Does the Minister intend to increase publicity to help to alleviate that problem?
    Mr. Major: The answer to increased take-up of benefits is not simply one of publicity. One substantial difficulty has been the complexity of the system. I hope the hon. Gentleman has noted that we have reviewed the system, one of the benefits of which may be substantially higher take-up. For example, we expect the family credit system to have a much higher take-up than family income supplement.

    National Health Service
    Mr. Tim Smithasked the Secretary of State for Social Services what are the responsibilities of the chairmen of the regional health authorities, the National Health Service management board and himself, respectively, for the running of the National Health Service.
    The Minister for Health (Mr. Barney Hayhoe): The powers and duties of the Secretary of State in relation to health authorities, and the functions of regional authorities, are set out in the National Health Service Act 1977, as amended by the Health Services Act 1980. The regional authorities are accountable to the Secretary of State.
    The National Health Service management board has been set up by the Secretary of State to give leadership on his behalf to health authorities, so as to secure the better provision of hospital and community services to patients.
    Mr. Smith: Is my right hon. Friend satisfied that this rather complex system at the top of the NHS will be sufficient to encourage effective and decentralised line management at unit level?
    Mr. Hayhoe: We are certainly seeking to get the relationships and strategies that will enable downward delegation to take place, as well as upward accountability. The Griffiths reforms and their successful implementation are essential to that end.
    Mr. Dobson: Can the Minister confirm that when a private cleaning company falls down on the job of cleaning a hospital, the whole NHS hierarchy swings into operation? Is it not true that the district health authority is

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    not allowed to sack that firm? The authority must make representations to the regional health authority, which then takes up the matter with the private cleaning company. If that does not work, the Minister gets in touch with the directors of that cleaning company's holding company, rather than simply allowing the contract to be terminated?
    Mr. Hayhoe: If anyone falls down on his job within the NHS, it is essential that management takes appropriate steps to remedy the deficiency.

    National Health Service
    Mr. Pavittasked the Secretary of State for Social Services how many manager's posts still remain vacant at regional and at district level within the National Health Service.
    Mr. Hayhoe: All regional general managers are in post and have been for some time. Of the 191 district general manager posts, just one remains to be filled, and I am confident that this appointment will be made soon.
    Mr. Pavitt: Is the Minister aware that the administrative system has been devastated and that that has been disruptive to the morale of nurses? Will he ensure that in the new unit management structure that is being established the bedside nurse will be responsible to the head of nursing services and accountable to her, and that she will be a qualified nurse? Will he make a statement about the 17 district health authorities and his vetoing of their plans for the filling of managerial posts?
    Mr. Hayhoe: I do not accept the hon. Gentleman's strictures. It is right that doctors and nurses should continue to play an important part in the management of the NHS, and I am glad that they are being appointed in significant numbers to general managers' posts. The new arrangements at district and unit levels should command the confidence and commitment of the professional bodies involved.

  PRIME MINISTER

    Engagements
    Mr. Yeoasked the Prime Minister is she will list her official engagements for Tuesday 10 December.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others, including one with Secretary of State Shultz. 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. Yeo: Has my right hon. Friend noticed some of the alarmist reports today about the possible consequences of a fall in oil prices? Does she share my view that the gloom is largely misplaced? If the price of oil declines and that leads to a reversal of the recent strength of sterling, there will be a direct benefit to British exporters and a general boost to international trade. Does my right hon. Friend agree that the most likely overall consequence will be a further strenthening of Britain's already healthy balance of payments?
    The Prime Minister: I believe that large disruptive movements in the price of oil would not be in anyone's interests. I agree with my hon. Friend that comparatively
    758
    small movements would reduce world inflation. The autumn statement took into account the possibility of a small fall in world prices.
    Mr. Kinnock: Has the Prime Minister seen the report of the Select Committee on the Treasury and Civil Service on the autumn statement? Will she tell the Committee and me why she is so coy about explicitly admitting to the major changes in economic policies that have made everything dependent on high interest rates? How will she respond to the CBI's call for an immediate cut in interest rates? Do her Budget intentions still include tax cuts, as the Chancellor of the Exchequer has repeatedly implied? Does she intend to continue to sell off public assets to finance the consequences of her economic failures?
    The Prime Minister: Government policy depends upon the factors which my right hon. Friend the Chancellor of the Exchequer has frequently set out and which were set out in his autumn statement. He did not provide a fiscal adjustment. There used not to be a fiscal adjustment given in the past, but the practice was changed temporarily. My right hon. Friend has returned to previous practice, which I believe is thoroughly wise. The privatisation programme will go ahead. The public sector borrowing requirement, either including or excluding the assets of the privatisation programme, is still a smaller percentage of gross domestic product than it has been since 1971–72. Therefore, policies will continue as formerly. I think that the right hon. Gentleman will agree that right now is not the time to lower interest rates.
    Mr. Kinnock: The Select Committee on the Treasury and Civil Service was not convinced by the replies of the Chancellor of the Exchequer, and I do not think that anyone can be convinced by those of the Prime Minister. Will she tell us how she will respond to the CBI's call, and the call of manufacturers and employers throughout the country, for an immediate cut in interest rates?
    The Prime Minister: On further reflection, the right hon. Gentleman will realise that today is not the time to call for further cuts in interest rates. I also point out to him and the CBI that although a 1 per cent. cut in interest rates would benefit industry to the order of £250 million, a reduction of 1 per cent. in wage rate increases would benefit industry by £1 billion. Thus, it will know where to get the greater amount.
    Mr. Ian Lloyd: Would my right hon. Friend care to express a view, in her role not only as Prime Minister but as the nation's science supremo, on the breach that has recently occurred of the fundamental principle of the freedom of members of the Association of Scientists, irrespective of the political views of the Government for whom they work? Does my right hon. Friend agree that the recent decision at Southampton is most regrettable? Can anything that follows from that be of any possible benefit to all the countries in sub-Saharan Africa that are dependent on the high quality of science that must be observed, not least in South Africa itself?
    The Prime Minister: As usual, my hon. Friend makes his point well. Scientific talent must depend on scientific ability, not on political views.
    Mr. Steel: Does the Prime Minister recall the thoughtful speech by the Foreign and Commonwealth Secretary in March about the strategic defence initiative? If so, will she tell the House what answer she has given

    759
    to the question that he raised about whether the enormous funds to be devoted to such systems might be better employed?
    The Prime Minister: I believe that that is a matter for the United States. It is for them to decide what funds will be devoted to the system. I believe that it is right to go ahead with the strategic defence initiative, and it is right that the Alliance should be well ahead in the latest scientific and technological advances in defence. That being so, I believe that we were right to take part in SDI. Other countries will follow us. They may not like it, but, as usual, we went ahead first.
    Mr. Andy Stewart: Is my right hon. Friend aware that her support for the coal industry has seen the creation of Britain's newest trade union—the Union of Democratic Mineworkers? I am proudly wearing its lapel badge today. On the badge it says, "Democracy reborn 1985". Is my right hon. Friend not surprised that she cannot see the badge being worn by any Labour Members?
    The Prime Minister: I agree with my hon. Friend, and congratulate him on the way in which he put his question.
    Mr. Flanneryasked the Prime Minister if she will list her official engagements for Tuesday 10 December.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Flannery: Will the Prime Minister explain to us what priority she has when, to use her own language, she can throw £250 million of taxpayers' money at the festering abscess of Johnson Matthey and yet refuse to pay a professional wage to the teachers who are carrying out a vital task for the community? Does she not realise that they have a deep feeling of frustration because of the Government's conduct? That moderate section of the community has struggled alongside most of the people in Britain for a living wage, yet, in her obdurate intransigence, along with the Secretary of State, the Prime Minister refuses to give them a professional wage when they have proved over and over again that the gerrymandering of the Burnham committee will not solve the problem of getting our children back to school.
    The Prime Minister: I share the view of my right hon. Friend the Secretary of State for Education and Science that in dealing with teachers' pay it is vital to set out a statement of their contract of service so that there can be no other argument about it. It is also vital to have a pay structure that means that the better teachers will be paid more. Subject to those two things, as the hon. Gentleman is aware, some £1·25 billion over four years, over and above the normal pay increases, has been offered to the teachers. That would result in a pay structure starting at £7,500 for a new graduate rising to £24,000 for the headmaster of a large secondary school. We believe that that is reasonable.
    Mr. Leighasked the Prime Minister if she will list her official engagements for Tuesday 10 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Leigh: Given my right hon. Friend's responsibility for Government publicity, will she reject the cynical advice offered to her by the dirty tricks booklet from the Association of Liberal Councillors? Does she agree that,
    760
    whatever else may divide us from the Labour party, we fight on the real issues, not on character assassination and cynical appeals for tactical voting on behalf of what has become the refugee camp and dustbin of British politics?
    The Prime Minister: I am not responsible for the propaganda of the Liberal party. I have fought the Liberals all my life in my constituency, and beaten them every time.
    Mr. Lofthouse: Is the Prime Minister aware that some hon. Members are receiving financial rewards from companies interested in the Channel tunnel? Does she agree that if votes are cast by those hon. Members in connection with the scheme, it must be bordering on corruption?
    The Prime Minister: Whether hon. Members cast votes in connection with something in which they have an interest is a matter for the House. Many and varied interests affect both sides of the House.
    Mr. Spencerasked the Prime Minister if she will list her official engagements for Tuesday 10 December.
    The Prime Minister: I refer my hon. and learned Friend to the reply that I gave some moments ago.
    Mr. Spencer: Is my right hon. Friend aware that the district health authority in Leicester has saved over £400,000 by putting out to competitive tender cleaning contracts at the Glenfield hospital and Leicester general hospital? Does she agree that in the Tory party it is the patients who come first?
    The Prime Minister: I agree with my hon. and learned Friend that contracting out some of the domestic, catering and cleaning services in the National Health Service has already saved a good deal of money, and that money is now being put towards extra patient care, which is a good thing. There are about £1 billion worth of such services, which leaves a lot of scope for more contracts going to the private sector.
    Mr. Amessasked the Prime Minister if she will list her official engagements for Tuesday 10 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Amess: Last week I presented the Unborn Children (Protection) Bill on behalf of my hon. Friend the Member for Hyndburn (Mr. Hargreaves). Will the Prime Minister join me in hoping that the Bill enjoys a swift passage through both Houses and that its opponents do not talk it out?
    The Prime Minister: If I did that on every Bill that I may or may not support, I should soon be in acute difficulty. I hope that my hon. Friend will have a good debate on those important issues.
    Mr. Douglas: I revert to an earlier supplementary question. How will the Prime Minister ensure a small reduction in world oil prices in view of her profligancy in producing 2·7 million barrels per day from the North sea at present?
    The Prime Minister: I said that the autumn statement had already made provision for a small change in oil prices. The hon. Gentleman knows that it is not for any one of us to be able to effect a change in world oil prices —up or down.
    Mr. Cockeramasked the Prime Minister if she will list her official engagements for Tuesday 10 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Cockeram: Does the Prime Minister share the concern of the general public at the depths to which the BBC will now stoop to present a "good" programme, as demonstrated by the intimidation and threats to the witnesses in a recent case featured on the programme called "Rough Justice"?
    The Prime Minister: The Lord Chief Justice made his strictures very clear, and as far as I can remember they are absolutely unprecedented. I feel sure that the BBC will take them very seriously. Indeed, it should do so.
    Mr. Canavanasked the Prime Minister if she will list her official engagements for Tuesday 10 December.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Canavan: Now that the 1922 Committee has ruled that only Members of Parliament representing Scottish constituencies can vote in the Scottish group of Tory Members, will the Prime Minister consider extending that good democratic principle to all Scottish business in the House to bring to an end once and for all the undemocratic practice whereby the majority of Scotland's elected representatives are often outnumbered and outvoted when the Lobbies—
    Mr. Dickens: On a point of order, Mr. Speaker.
    Mr. Canavan: —are infiltrated by Tory extremists from the deep south?
    The Prime Minister: The rules of the House are for the House and the hon. Gentleman would be the first to criticise me if I were to arrogate them to myself.
    Mr. Skinner: On a point of order, Mr. Speaker.
    Mr. Speaker: Does it arise directly out of questions?
    Mr. Skinner: Yes, Mr. Speaker. You will recall, that during Question Time there were at least two references to the Register of Members' Interests, with specific reference to the Channel tunnel. You may also be aware that last night it was revealed on BBC television's "Newsnight" that certain Tory Members of Parliament were not entering their names on the Register in time. Indeed, it was suggested that one entry on the Register was made only after the challenge had been made on television by the interviewer.
    As you, Mr. Speaker, are ultimately responsible for the register being properly drawn up, are you satisfied that it is up to date? Can I be satisfied that, on the sale of Cable and Wireless in the morning, those concerned with that matter in stockbroking do not include the Under-Secretary of State for Employment, the hon. Member for Rossendale and Darwen (Mr. Trippier), whose firm, remarkably, has been granted the opportunity to take part in that sale? That is a family firm and the hon. Gentleman was a partner until recently. His father is the consultant to Pilling Trippier and Co. and his sister is also a partner. That borders on corruption and should be examined.
    Mr. Speaker: Order. I was in the Chamber last night when the programme went out so I do not know what was
    762
    said on it, but I have heard about it this morning. The House knows that interests must be registered in the Register of Members' Interests.
    Mr. Winnick: Further to that point of order, Mr. Speaker.
    Mr. Speaker: Does it arise directly out of Question Time?
    Mr. Winnick: It does arise from Question Time, Mr. Speaker. It arises from a question asked by my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) and, with respect, it is not simply a matter of the Register of Members' Interests. There is a larger issue involved. Financial rewards are being paid to hon. Members by companies seeking a contract for the Channel tunnel. The television film last night revealed that there is the utmost pressure by companies and payments are being made to hon. Members. My hon. Friend the Member for Bolsover (Mr. Skinner) asked about the Register of Members' Interests. There is nothing in the register about rewards paid to hon. Members. I have raised that point previously. Is it in order, Mr. Speaker, for hon. Members to receive financial rewards in respect of contracts that are being bid for by companies? Does not that call into question whether there is an element of corruption? How can any hon. Member speak and vote when he is being financially rewarded by a company?
    Mr. Speaker: Will the hon. Gentleman come to the point?
    Mr. Winnick: I want you to rule, Mr. Speaker, on whether the practice that is now going on is acceptable, or whether, as my hon. Friend the Member for Bolsover has correctly said, it borders on corruption.
    Mr. Nellist: Further to that point of order, Mr. Speaker. When you consider the points put to you by my hon. Friends the Members for Walsall, North (Mr. Winnick) and for Bolsover (Mr. Skinner), could you also consider the references made at Question Time and Prime Minister's Question Time today to the increased privatisation of cleaning and other services in the Health Service, and Tory Members who are directors of or consultants to the companies that receive the contracts?
    Several Hon. Members rose—
    Mr. Speaker: Order. Points of order take time from our next debate, but I shall take them if they arise directly on this matter.
    Mr. Ashton: Further to that point of order, Mr. Speaker. On the programme last night certain definite allegations were made that the hon. Member for Bournemouth, East (Mr. Atkinson) had not registered his interests. After questioning by the programme, he altered the entry in the Register of Members' Interests, which is available to the House. Either the programme was guilty of contempt or breach of privilege, or the programme, which made serious allegations about the lobbying that is taking place, should be investigated.
    Mr. Maxwell-Hyslop: Further to that point of order, Mr. Speaker. It is surely notorious that, although a Select Committee made a recommendation which was accepted by the House, the House never enforced its rule against the hon. Member for South Down (Mr. Powell), who has refused to comply with the requirement to register interests

    763
    in the Register of Members' Interests. That is why the matter has fallen into disrepute and disuse. I notice that the hon. Member for Bolsover (Mr. Skinner), who complains of a failure of the Register of Members' Interests, has not complained to you that the most notorious case of this has endured for years—that of the right hon. Member for South Down. Because the House has, wrongly, never chosen to enforce its rule in his case, as he is articulate and television-worthy, it has become clear that the rule is not a rule at all. Either the register should be enforced, which is what I favour, or it should be done away with as spurious. It should not be left in its present condition, in which one of the most senior Privy Councillors defies it with impunity, and has done so for a decade.
    Several Hon. Members rose—
    Mr. Speaker: Order. I shall take one more point of order.
    Mr. Merlyn Rees: Further to that point of order, Mr. Speaker. Will you, on our behalf, look at the film and see whether it raises any matters of privilege? I saw the film last night in company, and after it people raised matters about the way in which hon. Members behaved, which needs investigation.
    Mr. Speaker: If the right hon. Member is alleging the involvement of privilege, he should raise it in the normal way. I take the point of the hon. Member for Tiverton (Mr. Maxwell-Hyslop). There is a Select Committee which deals with complaints about the registering and declaring of interests. The House lays down the rules governing declaration, and it is right that they should be followed.
    Mr. Campbell-Savours rose—
    Mr. Speaker: Order. Every right hon. and hon. Member knows that if he has an interest in an enterprise, it should be registered. That is a matter of honour.
    Mr. Campbell-Savours rose—
    Mr. Robert C. Brown rose
    Mr. Speaker: Order. I have nothing more to add.
    Mr. Campbell-Savours: Further to that—
    Mr. Speaker: Order. I have nothing more to add to what I have said.
    Mr. Campbell-Savours rose
    Mr. Speaker: Order. If it is a different point of order, I shall take it, but I will take nothing more on that subject.
    Mr. Campbell-Savours: On a point of order, Mr. Speaker. During the past four weeks at business questions on Thursday I have asked the Leader of the House whether a report of the Select Committee on Members' Interests, which was published last July, could be brought before the House for debate. As I understand it, that report may well be debated next week and, indeed, at the beginning of January. If any hon. Member wishes to make representations on the matter, he could do so during that debate. However, the point that is being raised is an extension of that. It is whether those who declare an interest should vote. That is an extension of the principle that we have not examined in the Select Committee.
    Mr. Speaker: The hon. Members makes a wise point. The House should debate the report.

    NEW MEMBER
    The following Member took and subscribed the oath: David Gordon Clelland Esq., for Tyne Bridge.

Tin Industry
3.42 pm
Mr. David Harris: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of giving consideration to a specific and important matter that should have urgent consideration, namely,
"the international tin crisis and the consequent redundancies in the Cornish tin industry."
I submit that the matter is specific in that it is nearly seven weeks since trading in tin was suspended on the London Metal Exchange, and the crisis has still not been resolved. It is certainly a matter of importance, given that the crises has many international repercussions, including many domestic ramifications. It has implications for the good name of the City of London and for trading arrangements, particularly if certain nations renege on their international commitments to support the International Tin Council.
The matter has extremely serious implications for the Cornish tin industry, and that is my prime interest in the subject. I have taken this step of asking for an emergency debate under Standing Order No. 10 because yesterday the Geevor tin mine in my constituency took the first step which could result—I hope that it will not—in 340 of its 375 work force being made redundant. Yesterday—I have the greatest sympathy for all concerned—the mine issued protective notices under the Employment Protection Act 1975. If the situation is not resolved within three months, it seems almost certain that those 340 people will lose their jobs.
The Geevor mine is in an extremely remote part of Cornwall, being five or six miles from Land's End. There is literally nothing else there, apart from tourism and
766
farming, to support that community. I am grateful for the fact that the Minister for Trade has taken an interest in the matter and I know that he is doing his utmost behind the scenes to try to resolve the situation, at least from the point of view of the International Tin Council.
I am also grateful to the right hon. Gentleman for seeing a couple of weeks ago a delegation formed of members of the industry, the county council, mining interests and others who came to plead their case and impress on him the dire crisis which that part of Cornwall will face if this and other mines close. My right hon. Friend gave a sympathetic reception to the delegation and I am sure that he will give equally sympathetic consideration to the points that were made. The issuing of redundancy notices yesterday underlines the seriousness and urgency of the situation. That is why I seek this emergency debate under Standing Order No. 10.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the international tin crisis and the consequent issuing of redundancy notices to miners in Cornwall."
I have listened with great care to what the hon. Gentleman has said and fully understand the point he makes on behalf of his constituents. However, I regret that I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10; therefore, I cannot submit his application to the House.

Ordered,
That the Crown Agents (Amendment) Bill be referred to a Second Reading Committee. —[Mr. Lennox-Boyd.]

Orders of the Day

  Gas Bill
  Order for Second Reading read.
  Mr. Speaker: Before I call the Secretary of State, I should tell the House that I have selected the amendment in the name of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel).
  3.46 pm
  The Secretary of State for Energy (Mr. Peter Walker): I beg to move, That the Bill be now read a Second time.
  The gas industry has had a very long connection with this House, and due to its nature it has always had a connection with Government. Indeed, a committee of 1847 was asked to look into the difficulties of a number of gas companies that were competing down the same streets, with the result that those streets were always in a state of disrepair, but in reality, no benefit was obtained in the longer term because of the manner in which a street was eventually served by a single supplier.
  As a result of that committee of inquiry in 1847, and because it was unlikely that there would be several suppliers for each street, subsequent Governments decided that there was a need for some form of price regulation upon the activities of the gas industry.
  There was a considerable expansion of the gas industry while it was in the private sector before it was nationalised in 1948. A colossal investment went into that industry, and a large section of the public was supplied by it, primarily under local or private enterprise control. Mr. Gaitskell, the then Minister of Fuel and Power, who moved the nationalisation Act in 1948, pointed out that Parliament's first approval of a gasometer was for the one in Great Peter street that supplied the gas lighting for Westminster bridge.
  During that period there is no doubt that the enterprise and initiative of the gas industry throughout the country brought considerable benefit. If one reads the 1948 measure, one will see that the reason for nationalisation was to comply with the mood of the then Labour Government, who thought it was sensible and right to bring all these things under public and national control as part of an overall programme of nationalising all our major energy industries.
  Looking back on the hopes and aspirations expressed, and the speeches made, in those nationalisation debates, it is sad to reflect that in practice the idealistic hopes of those who nationalised in the 1940s have not been achieved. In reality, we have not seen the ownership of industries by the people, the employees or the customers, but direct ownership primarily in the hands of the politician and the civil servant. For that reason, my view is that, rather than coming under the constant pressure of Whitehall and the current politician in charge, it is far better in the interests of the country to ensure that commercial managers have charge of those industries.
  The Department started to consider in July 1983 the feasibility and nature of the privatisation that should take place. In September 1983, I set up a section of the gas division in my Department to make a thorough examination of all the options and to consider the
  768
  advantages and disadvantages of a private sector gas industry as operated in other countries. That section examined the world gas industry for several months. It considered gas industries in the private sector or under municipal control and all the regulatory authorities, and reached conclusions on the advantages and disadvantages, the mistakes and success stories.
  We also considered how the gas industry is organised in Britain and the advantages and disadvantages of dividing it into regional companies, or into companies with different functions, or overall privatisation. The industry was examined thoroughly between September 1983 and April 1985, when I presented a major paper to my Cabinet colleagues giving the options and the arguments in favour of privatisation.
  The fundamental advantage offered by the Bill is that it will ensure that people employed in the industry, managers and customers will be able to participate directly in the industry's success. That is a much better system than the present one, which involves politicians and civil servants. The fact of a nationalisation, whether under Labour or Conservative Governments, is that there are three levels of management. There is the board, then there is the sponsoring Department, which crawls over most of what the board wants to do — whether it be pricing policies or investment programmes—and then there is the Treasury which crawls over what the Department has crawled over.
  I well remember when, in 1970, I first became a Minister responsible for a nationalised industry, I was asked to approve capital investment by British Rail in a new railway station, I had a 120-page report from my Department which criticised the BR proposal in some detail but which nevertheless concluded that, in view of the delays that had already taken place, the Secretary of State should approve the station. I asked whether anybody in my Department knew how to build a railway station. There was nobody with commercial experience of building such stations. If I had had such people in my Department, it would have been much better if they had been working for BR, building stations. Having completed my examination, however, I had to get Treasury approval for my consent. That example demonstrates the enormous interface between any nationalised industry and its sponsoring Department and between that Department and the Treasury, which serves only to interfere with the speed of decision taking.
  Mr. Tony Marlow: I am sure that all my right hon. and hon. Friends are convinced by the logic of my right hon. Friend's argument. When does he intend to bring forward a coal Bill to put the coal industry into commercial management? My right hon. Friend said that there were arguments about why the industry should be denationalised in one chunk rather than broken up into regional companies. Will he advance those arguments?
  Mr. Walker: Yes. I shall advance those arguments later. We are not discussing the future of the coal industry today. I have given my views and those of the Government from the Dispatch Box several times.
  Mr. Eric S. Heffer: Does the Secretary of State agree that the conversion to North sea gas, which took place under the gas corporation, was a thorough success? There is no great demand for

  769
  privatisation from customers because they are well satisfied with the service provided by the board. The gas industry is one of the great successes of nationalisation. Will the right hon. Gentleman admit that the reason for the Government's proposal is sheer dogma and nothing else?
  Mr. Walker: The conversion to North sea gas was a substantial success for the corporation and for the mass of private contractors who dealt with it throughout the country. To my knowledge, there was only one failure —when my own house was nearly blown up as a result of a mistake. [HoN. MEMBERS: "Who did it?") Alas, it was the gas corporation. I am not criticising the many successes of the industry. Like all major industries, private or public, it has had its successes and its failures. Free of interference from Conservative or Labour politicians, it will be in an even better position. I welcome the fact that a large number of the managers and employees and, if they wish, the customers will for the first time have the opportunity to participate directly.
  It has been argued—incredibly—that consumers will not have the protection that they have enjoyed under nationalistion. The record of the House of Commons shows that for the past 20 years, whenever the Conservatives have been in power, the Labour Opposition have strongly criticised the enormous increases in gas prices, and that, whenever Labour has been in power, the Conservatives have criticised the enormous increases in gas prices. The Alliance has been in the happy position of being able to condemn both Governments for constantly increasing gas prices. It is entirely untrue that nationalisation has protected consumers from major increases in gas prices.
  The 1976–77 annual report and accounts of British Gas states:
  "the Corporation increased gas prices under their published tariffs by an average of 12·3 per cent. on 1st October 1976. At that time it was intended that, subject to the Government's management of the economy, no further increase would take place for 12 months. However, on 15th December 1976 the Chancellor of the Exchequer announced in connection with negotiations for the IMF loan that the Government was asking British Gas to raise prices to increase the rate at which the corporation repaid capital to the National Loans Fund to the extent of £100 million".
  This resulted in a further 9·6 per cent. increase in gas prices. In other words, gas prices increased by 22 per cent. in six months. What protection was provided by nationalisation then? Throughout the present Parliament, the Opposition have criticised the way in which gas prices have been increased. Events under Governments of both parties show that nationalisation is not super for the consumer. Both parties have argued in opposition that nationalisation has been bad for the consumer.
  Mr. Tony Baldry: In the debate on the Loyal Address in 1946, Churchill described the Labour Government's proposal to nationalise the gas industry as a fraudulent deception on the housewife. Does my right hon. Friend agree that the whole history of nationalisation has proved that prognosis to be correct? The wonder is not that we are privatising the industry but that it has taken 39 years to get around to it.
  Mr. Walker: It is certainly difficult to argue that nationalisation has brought any great benefit to the consumers. Our legislation will provide a form of price control and protection for the consumer. British Gas will continue to be the main supplier of tariff customers
  770
  throughout the country. We have, therefore, built in powerful safeguards to protect consumers against abuse of that monopoly position. The legislation requires that there must be fair treatment between customers and rules out undue preference for or discrimination against individual customers or classes of customer.
  The overall level of price is subject to a maximum set by means of a pricing formula in the licence. Price control will operate by controlling changes in tariff gas prices and by reference to changes in the retail price index and gas costs. However, it will also build in, for the benefit of the consumer, a share in the benefit from the improved efficiency of British Gas. It will give clear protection, therefore, to consumers, as well as the benefit of improved efficiency, while retaining fairness for those who invest in the gas industry.
  Mr. Max Madden: Does the pricing formula to which the Secretary of State has referred cover all categories of customers? If it does not, what is his justification for excluding certain customers?
  Mr. Walker: I shall be dealing in a few moments with the one area that the formula does not cover.
  Mr. Robert Sheldon: When dealing with the price to the consumer and the advantages to shareholders, will the Secretary of State bear in mind the price at which it will be offered to the shareholders? We are dealing with public assets that are equivalent in a normal year to the sale of gilts. When the Government sell gilts they receive very fine prices indeed—to within one eighth of 1 per cent. However, when public assets are sold they can be sold for as cheap as half price. Will the Secretary of State regard the sale of public assets, whatever they are, as of importance to the taxpayer in order to make sure that taxpayers receive the full value that those assets represent?
  Mr. Walker: The right hon. Gentleman referred to the full value of the assets. However, he is aware that the full value of an asset cannot be specified without looking at what that asset yields, what it produces, what the future of that asset will be, what its replacement cost will be and a range of complicated factors. These factors will be carefully considered when a decision is taken about the nature and the price of the offer. Therefore the formula which we have provided to protect the tariff market, which affects all domestic users and a number of commercial and industrial users, will be subject to the price discipline which will be in the power of the regulator.
  In addition, we have provided in the legislation for both standing and connection charges. Standing charges are included in the overall price control formula. Standing charges are important for small consumers in particular, for whom we have introduced a further level of control. The licence will restrict the increase in standing charges to no more than the rate of inflation. The nondiscrimination provisions 'will also prevent the company from treating any consumer unfairly.
  Mr. Alan Williams: Will the Secretary of State bear in mind that the protection that he is offering to the consumer is an average increase in price? This is exactly what happened with British Telecom. There has been no protection for the domestic consumer, whose increases have been double or treble those imposed upon the business consumer. That applies also to the

  771
  standing charge. As the standing charge is a charge against capital that has already been invested, there is no justification whatsoever for allowing an increase that is equal to the rate of inflation.
  Mr. Walker: I am grateful to the right hon. Gentleman for making a comparison with British Telecom. Having studied the legislation relating to British Telecom and the licence, the right hon. Gentleman knows that it was made very clear that, because there was an imbalance in the charges to commercial and domestic consumers the formula to be applied in British Telecom's licence for the first period would endeavour to achieve a readjustment. That was made clear in the licence and it was discussed at great length in the heated debates upon that issue. I am delighted to be able to inform the right hon. Gentleman that with British Gas there is no imbalance between commercial and domestic consumers and that this formula will hold good for the domestic consumer.
  Mr. Williams: What will the extra safeguard be? There is the same average requirement. The licence will contain nothing that will force the gas company to conform to the advice that the Secretary of State is now giving. It could do whatever it felt was in its commercial interests.
  Mr. Walker: If the right hon. Gentleman examines the licence carefully, and the legislation, he will find that the regulator has the power to fix the maximum price. He will have available to him all the information that he needs to fix the maximum price. The fact that there is to be a maximum price and that there will not be an imbalance between commercial and domestic users will protect the position.
  It is argued that this is a great monopoly and that there will be no alternatives to it. However, one only has to look at television advertising to see that there is immense competition between gas, electricity, oil and coal in both the domestic and the industrial markets. If British Gas is to succeed, it will need to try not only to retain but to increase its share of the market. The idea that it will do so by increasing its prices is wrong, because it has no monopoly of energy supplied. It operates in an area of very fierce competition.
  Mr. Robin Maxwell-Hyslop: My right hon. Friend could help the House about one point. Competition in tinned tomatoes is a matter of buying one brand rather than another, but if one has a gas central heating system one cannot just switch to electricity; the capital cost is enormous. Therefore, to prohibit the cross-subsidisation of the domestic consumer compared with other classes of consumer is a very real problem. We have corresponded about this matter, and I am grateful to my right hon. Friend. However, I should like the House to know what protection is to be provided, because I am not sure myself, in what is not a competitive situation, like buying different products in a shop. Moreover, if there is no gas connection and the price of obtaining a connection is excessive, there will be no competition with electricity. These are the realities.
  Mr. Walker: In reality, if one looks at the commercial nature of British Gas, the electricity supply industry and the oil industry, one has to consider carefully, if one has only one form of heating, the factors involved in moving
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  to a different form of heating. However, each year there is a substantial market of people who are installing central heating for the first time. There is also an expanding market of people who are replacing their existing systems. May I also point out, in Energy Efficiency Year, that if any domestic heating system is more than 10 years old if can almost certainly, due to the newest technology, be replaced by a new one, which will be more than self-financing.
  If one is running British Gas, one is desperate to obtain an increasing share of the new market that comes on stream every year. Failure to do so results in damage to the business. All the competitors are desperate to obtain new business and to keep their share of the market. If the price of gas were increased for all those who already have it, the new gas company could not discriminate under the legislation in favour of new customers. We shall prevent discrimination of that nature. In addition, the regulator will have the power to investigate the gas supply accounts —they will have to be kept separately—and decide whether there has been any form of cross-subsidisation. My hon. Friend will therefore find that substantial protection has been provided.
  Mr. Maxwell-Hyslop: The regulator will have the power to investigate, but can he stop cross-subsidisation?
  Mr. Walker: If my hon. Friend examines clause 9, he will see that considerable power will be given to the regulator to stop it.
  Mr. Tony Benn: The Secretary of State knows that it is much more complicated than that. For example, the Central Electricity Generating Board would have liked over a long period to convert to gas-fired power stations. They would have been much cheaper than other options. That was prevented, because no Government wanted gas to be used in that way, or gas stocks to be depleted at a rate which is controlled by the Secretary of State. If we are talking about a free market, does it mean that the CEGB will be able to close down its existing power stations and open gas-fired power stations without restraint and that the rate at which our limited gas resources can be depleted will be lifted, which will mean that the new gas company can deplete gas resources at any rate that it chooses?
  Mr. Walker: I am delighted to say that, because of the mass of improvements in the cost effectiveness of coal, there would be a competitive position there. No one will rejoice more than the right hon. Gentleman about the improvements in the coal industry.
  Connection charges are important. It has been suggested that the imposition of a connection charge could prevent someone from obtaining his rights. We have come up with a formula that will provide protection for customers. The corporation will have to set out the principles that it will apply to those charges.
  There will be a substantial improvement in pricing compared with what happened under nationalisation. We have decided to set up a new consumer body. We have carefully examined the operations of former consumer bodies and obtained their advice, knowledge and information. We have spoken in great depth to consumer organisations and, obviously, to British Gas. British Gas is anxious to retain contact with the consumer, because it believes that a good consumer relationship greatly benefits the industry.

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  The new consumer body will have regional offices and staff to deal with complaints. In cases in which the Director General of Gas Supply has responsibility, the staff will report to him and to the Secretary of State. In other cases, they can, if they wish, report to the Office of Fair Trading. The regional offices will be able to take up all the complaints of gas consumers, including, if they wish, those about appliances and all the activities of British Gas. The corporation wants that to happen and very much values the professionalism of the service that it has maintained. In combination, this provides a basic system for the consumer which is much stronger than anything since nationalisation.
  All the present obligations to supply gas, which have existed for a long time, will be carried over to the new company. The legislation provides for other suppliers to be authorised by the Secretary of State to bring gas to areas that have not previously enjoyed those supplies. Those gas suppliers will have the same obligations and be brought under the same regulations as British Gas.
  Dr. Michael Clark: Why will the Director General of Gas Supply not be the final arbiter in a dispute concerning industrial gas users? Why will the matter have to go to the Director General of Fair Trading?
  Mr. Walker: I shall deal with that point when I come to the industrial market.
  All the safety provisions applying to British Gas will be transferred to the new company. For some time, the Health and Safety Commission has been responsible for enforcing safety factors in relation to British Gas. We have reviewed the statutory obligations of the gas industry and have decided to tighten up a number of important areas. The period of 24 hours within which British Gas has to deal with an escape has been reduced to 12 hours. Until now, the statutory requirements have been imposed on the British Gas side of the meter. They will now be extended to the customers' side of the meter.
  In discussing the improvements in safety provisions that will occur following this legislation, we have had the full co-operation of British Gas. It has been exceedingly anxious, because there is no other way in which it can succeed as a business, to retain a reputation for high safety standards.
  I turn now to the subject of the industrial market which was raised by my hon. Friend the Member for Rochford (Dr. Clark). In supplying the gas industry, British Gas is in a highly competitive market, competing with fuel oil, gas oil, electricity and coal. Gas accounts for only 35 per cent. of the industrial energy market—65 per cent. is in the hands of direct competitors. Apart from one year when a prices and incomes policy was imposed, the Government have never interfered with the contract pricing arrangements of British Gas. The corporation has been left to compete in that market. It would be an absurdity to say, "Now that you are to be privatised, we no longer want you to have the freedom to compete with other energy suppliers. We want to put you under a rigid system in which someone else fixes your prices." In concluding that that would be absurd, we took account of the views of the main industrial users. We met the CBI's energy committee and had detailed discussions with the leading and smaller users of gas in the CBI. We discussed the desirability of keeping the contract market unregulated. Those users concluded that it was in the interests of greater competition
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  and of industry for the market not to be regulated. We met the biggest users of gas—in the chemical industry —which came strongly to the same conclusion and gave us the same advice.
  There could be an outside fear that, for some reason, British Gas will decide suddenly to increase its prices, which would swiftly result in it losing its share of the market to the other main competitors. I do not believe that that question will ever arise; but, if it does, we provide in the legislation that it will be as free as it is now arid as free as its main competitors. This involves studying not just gas in isolation, which is the task of the Director General of Gas Supply, but the whole nature of competition in the contract market between gas, electricity, oil and coal, all of which are fiercely competing at present. The Director General of Fair Trading has the ability, knowledge and freedom to note all those fears, not just one. We therefore provide in the legislation that, if the Director General of Fair Trading looks into a complaint and finds that it is justified, he can, among other things, suggest that the whole matter will then be brought into regulation by the Director General of Gas Supply. Obviously, if he did that, the market would be totally regulated.
  I can only say to those of my hon. Friends who rightly argue for the advantages of the benefits of competition that, in the view of the CBI, industry or commerce, it was not justifiable to regulate something that had never been regulated during the whole period of nationalisation. The new company, in setting out its policies as required by the licence, will be including two clear assurances for industry. First, for the three years after privatisation, it intends holding contract prices to certainly not above and probably below the inflation rate, subject to there being no substantial and unforeseen changes in the exchange rate which would savagely affect its position. Secondly, the new company will not set prices in such a way as to restrict, distort or prevent competition. That assurance will be pronounced and presented publicly by British Gas. It will give the Office of Fair Trading a further weapon should the office decide that it needs to examine prices.
  Mr. Kenneth Carlisle: My right hon. Friend said that it would be made certain that price increases for industry would not be greater than the rate of inflation. What would happen if, for example, the price of oil on the world market decreased so that energy prices were reduced? Heavy users of gas would prefer lower rather than higher prices.
  Mr. Walker: That is why, under nationalisation, British Gas has competed successfully in the market. That is why the CBI and the chemical industry have asked the Government to ensure that regulation is not imposed upon them. I think that one will find that British Gas, would be delighted, in the fierce competition in which it is involved, to take advantage of any downward movement in price and to obtain a better share of the market. The only people who made strong representations to me that this sphere should be regulated are those currently in competition in it.
  Mr. Malcolm Bruce: In the light of what the right hon. Gentleman has said, and of the intervention made by the right hon. Member for Swansea, West (Mr. Williams) about British Telecom, will the Secretary of State explain whether what he is saying about the regulation of industrial prices means that the domestic

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  prices will have to rise by more than the RPI formula? He is admitting that there is a differential, similar to that in British Telecom.
  Mr. Walker: I cannot acknowledge that. I am saying that, in this sector of contract pricing, British Gas has done well and is doing well and there is not an imbalance of return as there was in the commercial sector of British Telecom. It has a commodity that competes well—it controls 35 per cent. of the market. Its major competitors are the oil companies, the electricity boards and the coal industry. I am glad to say that the latter is becoming an important competitor as a result of the benefit that the Government have given it through the coal conversion scheme, and some of the major users have recently transferred rom other energy to coal. This is a fiercely competitive market place, and it would be absurd to say that in privatisation, our desire is to move the gas corporation from its competitive position, which is helpful to industry and commerce, to a regulated position.
  Mr. Madden: The Secretary of State has said that the Office of Fair Trading would, under the powers that he proposes, be able to investigate any complaint from an industrial customer if he felt that his company was being badly treated. As bulk supply contracts have hitherto been commercially confidential, will the Office of Fair Trading have the powers to require from the new, privately owned gas corporation information about the privately negotiated contracts?
  Mr. Walker: The Office of Fair Trading has that power in connection with any investigation of any company. Another provision is written into the legislation, which is that for the first time, the Office of Fair Trading can demand that British Gas publishes its maximum prices for contracts. Therefore, one will be able to see to a greater extent than before the method and basis on which the company is doing the pricing.
  The Office of Fair Trading will be able to take action through the Monopolies and Mergers Commission under existing trading and fair competition law. Close regulation of the kind proposed for tariff customers would therefore be extended to contract gas sales if necessary, and intermediate stages, falling short of regulation, could be proposed by the MMC. The Office of Fair Trading, rather than of gas, is the right body because it has a wider remit and sees what is happening among the competitors in this important market.
  Therefore, in the industrial sphere we can claim that the Bill's provisions, which meet the views on regulations that bodies such as the CBI have given to the Select Committee, comply with what is required, and will assist. There are other ways in which this legislation improves the position of the competition, particularly with regard to competition in common carriage. My predecessor introduced legislation that, for the first time, gave to other gas suppliers the opportunity to use BGC's network. I recognise the importance of giving greater opportunities for competition within gas supply to reinforce the competitive pressures that are already felt from other fuel suppliers.
  Therefore, the Bill pushes forward considerably the position under the Oil and Gas Enterprise Act 1982, which first opened up the possibility of private sector supplies to
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  individual consumers. The Bill will carry forward and reinforce these provisions and in addition will complete the process started by my predecessor by removing the unique status of British Gas as the only authorised gas utility. There are no unnecessary obstacles in the way of other companies that wish to become utilities in areas not already served by the British Gas Corporation.
  It has been argued that splitting the corporation into area boards serving different parts of the country would achieve greater competition. I carefully examined this possibility, and looked into the advantages and disadvantages that it would bring. Under such an arrangement, each consumer would, as is now the case with electricity, face a single supplier in their area. Breaking up the corporation would also put at risk economies of scale through the integrated transmission and distribution system that has been developed and the advantages of central co-ordination, which allow best practices to be spread rapidly through all parts of the country.
  The major structural change would, as in the past, mean far greater regional diversities in prices and would have inevitable disadvantages in disruption to consumers and industry. At the end of the day, the idea is that a therm of gas could be obtained at such and such a price in the north-west as opposed to London or the south-east. In reality, as our examination of the American system showed clearly, there is no effective competition as a result of comparisons with gas prices in one region as opposed to another. In fact, there are always considerable differences in the cost of distribution and other factors that give a reason for variation.
  Mr. Gordon Wilson: Is the right hon. Gentleman aware that electricity in Scotland comes under the control of the Secretary of State for Scotland and that two electricity boards provide electricity for Scotland at a cheaper rate than that provided by the CEGB? In those circumstances, why does he not consider the prospect of reinstating the old Scottish gas board, which was an autonomous organisation with headquarters in Scotland? That would give rise to much-needed employment, and also, because it has access to its own autonomous indigenous gas supplies, it would be able to compete with the BGC elsewhere.
  Mr. Walker: I am sure that the hon. Gentleman will recognise the reason for the advantage in Scottish electricity prices, which is that those boards have gone nuclear to a far greater extent than has anybody else. I am sure that he will support that trend in other parts of the industry. As to gas, significant regional variations would not be to the advantage of either industry or the country, and would not add to the competitive position.
  The most significant opportunities for competition in gas are provided by the freedom given by the Oil and Gas Enterprise Act. Under that, sales of gas to individual customers are permitted, and it provides, for the use by third parties of the British Gas Corporation supply system for the delivery of gas to such customers. We are strengthening these proposals. The Bill continues the right, created by the Act, for third parties to use the BGC system and for the price to be set by an independent arbitrator. Unlike a report that appeared in a newspaper today, consistent with our decision on the enforcement of the regulatory system generally, this task will be for the new Director General of Gas Supply.

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  A new element in the Bill is the possibility of licence conditions concerning the use of the system by others. As was made clear when I published the licence, my intention was to reinforce the present system in two important parts by means of licence conditions. First, it is important that the British Gas Corporation should make clear to all concerned the likely terms on which it would be prepared to enter any such deal. Therefore, I propose to require it to publish such information, including its suggestions of the typical prices that BGC would propose, consistent with the principles set out in the Bill for the determination of charges by Ofgas. We have put a statutory provision into the Bill as to the manner in which the appropriate cost will be considered so that the Director General of Gas Supply has a statutory duty to ensure that the decisions that he takes are based on a realistic assessment of the cost.
  Mr. Peter Hardy: Despite all these complicated rules, it seems that the right hon. Gentleman expects more gas to be consumed, whether by the British Gas Corporation, the successor companies or rival carriers. Given that probable increase in demand, is it proposed to maintain the same limitation on sourcing of that gas on the new privatised company, perhaps by relaxation of his rule on Sleipner, or by what other means will the new company, with the advice of his Department, guarantee that there will be supplies of gas in the latter part of this century?
  Mr. Walker: Imports and exports are most complicated in both directions. There is a complication in terms of the potential power of exporters and of importers. The subject is involved in large long-term contracts. Before any flotation takes place, during the passage of the Bill, we shall announce in detail the Government's views and policy on the future of imports and exports. That announcement will not be part of the Bill — it has nothing to do with the legislation. However, we have to make clear our policy, and we shall do so at a later stage.
  As was made clear when I published the licence, it is my intention to reinforce the present system in two important areas through licensing conditions. First the BGC must make clear to all concerned the likely terms of any deals. Secondly, a real restraint on supplies by independent companies is their inability to guarantee a continuous supply, whereas the BGC can do that because it has a wide variety of suppliers from different fields. One way of overcoming that problem is for BGC to provide a back-up supply of gas to cover any interruption of supplies from a third party, either planned or in an emergency.
  In our discussions with the oil companies, it was shown that one of the weaknesses of the previous legislation was that it did not provide for a back-up supply. Therefore, I propose to require the BGC to state the conditions under which it would be prepared to make available such a backup supply, including the method by which it would calculate charges. The publication of that would enable firms to make decisions about their total supply to a would-be customer, which would substantially improve the position.
  A further obstacle to common carriage deals has been the difficulty of matching the output of individual fields with customers' demands, especially the disposal of residual production over and above that which can be taken by a purchaser. I have asked the BGC to make it clear in a public statement that it will not discriminate
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  against offers of residual gas but will consider them in exactly the same context as the other companies' requirements being considered at that time.
  The proposals in the Bill—including the statement on principles for setting charges for the director general and the power for him to adjourn cases so that normal negotiations can continue—represent a real advance on the regime introduced in the 1982 Act. They will give new impetus to companies to conclude such deals, and hence reinforce internally the already strong competitive forces that are emerging from other fuels.
  One restraint that will be removed from the BGC is its inability—due to pressure from Whitehall under both Labour and Conservative Governments — to take full advantage of its research programmes and the international opportunities that have been presented to it. There is no doubt that had the BGC operated with the same freedom as British Petrolem during the past 10 or 15 years, its contribution to the British economy, both nationally and internationally, would have been very much greater.
  Mr. Dick Douglas: Under the previous legislation, the Secretary of State took the power to remove from BGC something that it could do—and as BP does—its right to drill for oil. Now the right hon. Gentleman is reinstating that facility to suit his views of Tory doctrinaire policy.
  Mr. Walker: The hon. Gentleman makes a perfectly reasonable criticism. He is correct to say that the Conservative Government have interfered with the management of the BGC. Can he explain why, during the last five years of the Labour Government, the capital investment programme of BGC was substantially reduced? Was that the result of any Government interference? Was it the result of the Treasury leaning on BGC?
  The hon. Gentleman quoted an example of my Government interfering with the BGC. I have quoted examples of the Labour Government similarly interfering with the BGC. It is a perfect illustration of how the commercial ability and talents of the BGC have been frustrated by nationalisation.
  Mr. Peter Viggers: My right hon. Friend is aware of my interest in this matter. He is also aware of the apprehension felt by the smaller oil companies, many of which have contributed greatly to the North sea. They are concerned that they will be subject to predatory attacks by BGC once it is independent and capable of bidding for them. Can my right hon. Friend give any assurance to those oil companies that they will be protected against such attacks?
  Mr. Walker: The powers of non-discrimination against suppliers will be clearly stated because they are important. My hon. Friend says that the oil companies are concerned about take-over bids. He is aware that such attacks could currently be made by BP, Shell or any other major company operating around the world. I do not believe that the creation of another independent major company will make the threat of attack even greater.
  Mr. Ted Rowlands: Answer the question.
  Mr. Walker: I am answering the question. My hon. Friend the Member for Gosport (Mr. Viggers) knows enough about the oil industry to appreciate that the

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  possibility of a large company taking over a smaller company already exists. Many large companies operate in the North sea with such rights and powers. My hon. Friend is also familiar with the terms of the licensing arrangements that will continue to operate. Whoever may be Secretary of State, he has the power to ensure that the medium and small-sized companies obtain a share of those rights. My hon. Friend knows that that policy has been pursued by successive Governments and will continue to be so. I do not believe that any new fear arises out of this legislation. It will be no different to the current position of major companies operating within certain freedoms.
  Part I of the Bill deals with the arrangements for the control of gas supply and the system of licensing. It sets up an effective regulatory body for the whole of domestic and industrial tariff gas. It has an appropriate safeguard for the contract market, but allows industry to benefit from the considerable competition in that market.
  Part II provides for the arrangements to transfer BGC to a private company and for the sale of its shares. I hope that the sale will take place soon after Parliament has approved the legislation, and in a way that allows the managers, employees and customers of BGC, as well as other people, to have real participation, for the first time, in that important company.
  Part III deals with some of the miscellaneous matters, including protection of commercial information. My hon. Friend the Member for Gosport knows that the protection of information by oil companies—small, medium and large—is an important factor. After careful consultation, we have included provision to deal with the anxiety expressed and the points raised.
  This is a carefully considered and well-thought-out piece of legislation. I believe that it will be to the benefit of gas consumers, employees and managers. It will also be of very great benefit to the whole country.
  4.36 pm
  Mr. Stanley Orme: Most hon. Members, and people throughout the country, are aware of the reason why the Government have introduced the Bill. It has nothing to do with productivity, efficiency, or competition. It is solely designed to raise revenue so that the Government can implement the only major policy that remains to them—to reduce taxation in an endeavour to buy votes at the next general election.
  The Bill will result in the selling off, at cut price, of a major public corporation which has shown superb public enterprise and which is one of the great success stories of the past 20 years.
  Twenty years ago, the gas industry was a sad and declining energy supplier, losing its market share and calling out for investment. Today, it is modern, efficient, profitable and responsive. It is one of the 10 largest businesses in the United Kingdom, employing 93,000 people and serving 16 million households and 35 million people.
  The BGC's ability to make profits in recent years has never been in doubt. Indeed, the Secretary of State referred to that. Its profit in 1984–85 was £803 million, and more than £504 million was paid to the Government through the gas levy. Its success in productivity is also undeniable. A four-year financial target was set from 1983–84 for an average annual return of 4 per cent. on
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  average net assets. That represents a 12 per cent. reduction in unit net trading costs measured per therm of gas. Not many industries, whether public or private, could match that.
  During the past 20 years the industry has been rebuilt to create a national gas transmission system to supply gas safely and securely to 60 million households. It is a technical, commercial and financial success story, which has been achieved by public enterprise and a nationalised industry.
  To achieve that success, the Governments of both parties vested in that corporation an enormous set of powers—of first purchase of gas, of sole supply, and of exclusive access to the North sea. By any standards, that is enormous monopoly power. That power was justified for the tasks and objectives that were set, but surely they are not transferable to any private body. Such powers could be justified only if they were made accountable to the Government of the day and to Parliament.
  The Secretary of State has described accountability as interference, but it is nothing of the sort. He has exercised his justifiable right in broader national and energy interests to prevent the Sleipner deal, for example. We may quarrel with his decisions, but we do not deny his responsibility to make the corporation, which has enormous power and influence over key national and energy matters, accountable and answerable.
  The right hon. Gentleman has told us that the difficult and delicate issue of imports and exports of gas is one which the Government will have to examine further. That is not mentioned in the Bill, nor is it referred to in the licence. The right hon. Gentleman said that he would spell out the issue in Committee and in the Bill's subsequent stages in its passage through Parliament. Why is it not in the Bill now? Why must we rely on a statement by the right hon. Gentleman? It should be recognised that we are talking about a method of interference by the Secretary of State and the Government.
  There are other issues that are outside the Bill that we shall have to examine in great detail in Committee and as the Bill passes through the House. Enormous powers are to be transferred from a public monopoly to a private monopoly, and there will be no real public accountability. There is no evidence that the Bill will improve efficiency, provide a better service, produce cheaper gas or, least of all, create competition. I say to Conservative Members, and especially to the hon. Member for Aldridge-Brownhills (Mr. Shepherd), who, like me, was a member of the Committee which considered the British Telecom Bill, as it then was, that the Bill offers no return to the market place or market forces.
  The Government's privatisation programme has had a series of curious and contradictory objectives, stretching from Amersham International to British Telecom. The Government's high priest of privatisation, the Financial Secretary to the Treasury, had some interesting comments to make about privatisation in November 1983. He said:
  "The primary objective of the Government's privatisation programme is to reduce the powers of the monopolist and to encourage competition. As the programme moves into the heartlands of the public sector, maximising competition will become of dominant importance."
  There is nothing in the Bill that meets the remarks of the Financial Secretary to the Treasury. Despite the

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  mutterings of the Secretary of State, that cannot be gainsaid. The right hon. Gentleman was then, as now, a member of the Government.
  The Government will have established a private monopoly that will operate in the fuel market both as a buyer and as a seller. It will not be accountable to Parliament, but it will be able to make decisions that could render nonsense the energy and fuel depletion policies that have been determined by the Government. The Secretary of State has recently issued a draft licence to give privatised gas a 25-year monopoly. That can be terminated only if 10 years' notice is given. We note the rather pathetic attempt by the Secretary of State, in the Bill and in the licence to breathe some life into the dead provisions of the Oil and Gas (Enterprise) Act 1982. It is a fact that the Bill will provide no competition, despite what the right hon. Gentleman said.
  Mr. John Maples: The right hon. Gentleman is making much of competition. He has told us on previous occasions that a Labour Government would renationalise the gas industry. Will he tell us how much competition there would be with a renationalised gas industry?
  Mr. Orme: At a later stage, I shall come to what a Labour Government would do, when I shall answer the hon. Gentleman's question. If there is no competition, there must be public accountability. That is the argument that the Opposition have always advanced when faced with measures to privatise nationalised industries —[Interruption.] The Secretary of State continues to mutter. It would be interesting to hear what he has to say about the gas levy. We are told about the powers of the new Gas Users Council. We believe that it will be able to investigate only those complaints that arise from tariff gas supplies. It will not be able to deal with contract customers' complaints, nor with complaints about installing, contracting, sales and repairs of appliances. It will have no statutory rights to investigate such complaints, yet the corporation controls more than 80 per cent. of appliance sales.
  Mr. Peter Walker: There is no specific provision in the Bill of the sort that the right hon. Gentleman appears to want, because the Bill provides gas tariff powers. I can assure the right hon. Gentleman that the new council will have powers to enable it to examine complaints of the sort to which he referred. If a specific reference is required in the licence, that can easily be met. British Gas and the Government have said publicly that they will consider and examine all these matters.
  Mr. Orme: The Secretary of State has not answered my question. Clause 32(2)(b) states:
  "any matter (not being an enforcement matter or a matter relating to tariff customers) which relates to the supply of gas through pipes and in respect of which any functions of the Director General of Fair Trading under the Fair Trading Act 1973 or the Competition Act 1980".
  That provision is directed to supplies. Where is the comparable provision for appliances?
  Mr. Peter Walker: I can assure the right hon. Gentleman that all the activities of British Gas will be able to be investigated by the council, including those which relate to appliances. There is no need to set out in the Bill that which the right hon. Gentleman requires. British Gas, the Government and the current chairman of the National
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  Gas Consumers Council have all stated publicly that all these issues will be considered. I am sure the right hon. Gentleman is relieved to know that that consideration will be open to the new council.
  Mr. Orme: There is nothing of that sort in the Bill. I hope that the Minister of State will be more explicit when he replies to the debate. I can give the Secretary of State a firm assurance that we shall table amendments in Committee to take up the matter.
  My right hon. and hon. Friends supported the powers that were vested in the public corporation, but we believe that they should not be transferred to a privatised company. The powers should not be unaccountable. A privatised BGC will not have fewer powers, and it will not be accountable to the Government or to Parliament. We are being offered the creation of another quango—Ofgas —that will be a pale imitation of Oftel. We are all aware that telephone subscribers are unprotected by Oftel. The recent increases in consumer charges by British Telecom have been met by a wave of protests from consumers, and even some members of Oftel have said that changes should be made in their powers and responsibilities. I wonder whether the Secretary of State and Conservative Members heard the director of Oftel on the radio this morning. He was being interviewed during the "Today" programme on Radio 4. If that is the watchdog that we have in Oftel, I urge the right hon. Gentleman to ensure that a better person is appointed to be in charge of gas. In part I we are being offered cut-price consumer protection. The provisions of the draft licence are no reassurance.
  I shall now deal with the rather complicated price formula. We have had only a short time to look at the licence, because we have had it for only a few hours. However, as I see it, the licence contains a complicated price formula with two elements — X and Y. What figure will X be established at? That covers only half the costs. We then have Y, the allowable costs, the North sea costs that can be transferred to the consumer. It is a free-for-all on an increasing proportion of the price of gas. There is not much protection there. Therefore, we are entitled to know what X and Y represent.
  Another issue that is unclear is whether the licence allows for differential pricing. Are we to see the introduction of higher regional gas prices? The Secretary of State referred to his opposition to regionalising the gas industry—breaking it up—because of the difficulty as it is a monopoly supplier for consumers. Is there anything in the Bill that prevents the regionalisation of prices? That is an important matter.
  Mr. Wilson: Will the right hon. Gentleman support the formation of a Scottish gas company if the Bill goes through, rather than allowing Scotland to be buried in the middle of the British Gas company that may be established?
  Mr. Orme: No, because I think that Scotland is well served by the British Gas Corporation at the moment, and there is no need for such a change.
  There was speculation that a formula in the licence would ensure that standing charges would rise faster than the rate of inflation. That is not in the licence. Instead, we have the weasel words "best endeavours". What does that mean? What protection is there for the hard-pressed consumer? Why is there not a simple formula of, say, RPI

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  minus Z? I am sure that the House would support such a formula, but there is no statutory provision within the Bill or in the licence; only the words "best endeavours". That does not seem to meet the point in any shape or form.
  We understood that codes of practice were to be included in the licence. They are not. There is just an obligation for them to be published three months after the licence is granted. Are there any changes to existing codes of practice? If so, the House should have the opportunity to look at them first.
  I remind the House of those who will not be protected by the Bill. The Secretary of State spent some time dealing with industrial consumers. In fact, 38 per cent. of gas consumption is not covered by the Bill. These are the industrial and commercial consumers, many of them small businesses, who buy their gas under contract, amounting to about 6·8 billion therms per year. They will not be protected. In that regard, the Secretary of State's press release is totally misleading. He said:
  "The new system of regulation to be applied to the whole of the domestic market and the industrial tariff market will mean that the price of gas will be regulated in such a way that the consumer will obtain a real and direct benefit from improved efficiency by British Gas".
  The right hon. Gentleman said that while conveniently forgetting to tell the press and the public that the industrial tariff consumer represents only 5 per cent. of the industrial market. The remaining 95 per cent. will not be protected by regulations, licence, Ofgas, the Director General of Gas Supply or the Gas Users Council. Over 1·25 million customers who buy appliances from the BGC are not covered by the Bill and are not within the remit of the Gas Users Council. We shall await further information on that from the Secretary of State. All those who need to have their appliances repaired and serviced are not covered by the Bill, and I have already quoted clause 32.
  That is linked to the question of gas showrooms. Their future is in jeopardy, and we heard no word from the Secretary of State about that. The Government previously found out, to their astonishment, the rapid reaction of the consumers when they tried to strip and sell off gas showrooms. There are over 800 gas showrooms, which are the local contact point for the consumer for payments, queries, servicing and complaints. They are the point of contact for the consumer to report emergencies.
  Any closure must represent a loss, not only in jobs, but in a decline in service. Any reduction in the number of gas fitters employed as a result of closure must mean a less satisfactory emergency service. No statutory provision can make up for the loss of means to provide a proper and safe service. If any showrooms are closed, the customers will suffer and the consumers will be the victims. They will not be the only victims. We have heard nothing about this from the Secretary of State.
  In 1984, British Gas invested in British goods to the extent of over £1 billion, giving support to 250,000 British jobs. If privatised gas follows the British Telecom model, we shall see major orders placed overseas, the loss of British jobs and more damage done to the already declining manufacturing industry within the United Kingdom. Those are crucial points.
  We noticed recently that the Secretary of State had a difference of opinion with his noble Friend Lord Stockton about the selling of the silver. In fact, I agreed with the Secretary of State when he said that the Government were
  784
  not selling the silver. It is not the silver that is being sold, but the table, the chairs, and the house itself. That is once and for all. Once that money has been used, it cannot be replaced. A future Government will have to replace it.
  Twenty per cent. of the shares of British Telecom were sold overseas on the first day, making a killing of £180 million. That is the size of the problem. We are dealing with a major British industry that is worth about £16 billion, and it is likely to be sold for anything between £6 billion and £8 billion. It is an absolute disgrace that that should be taking place at a time of high unemployment and industrial decline in the United Kingdom.
  We have heard a little about greater share ownership from the Secretary of State. Again, I look at the British Telecom figures. The maximum stake of any employee is one millionth of 1 per cent. of the total shareholding. Perhaps the most humiliating aspect is that employees' shares do not entitle them to attend the annual meeting. That is absolutely ridiculous. The vast majority of the 16 million gas consumers in Britain are finding it hard enough to pay their bills. Not many of them will be beneficiaries from such a development.
  Labour believes that the British Gas Corporation belongs to the nation. Under Labour, it will be in the public sector. We shall ensure that the new public utility meets the needs of the economy, the consumers and the workers in the industry. That will be achieved in a way that is consistent with our other economic aims and priorities. The industry will be publicly owned and publicly accountable. That is our policy, and it is the policy that we shall implement.
  Mr. Bruce: I take it that that is an unequivocal declaration that the Labour Government, if there ever were one, which is unlikely, will take the British gas industry back into public ownership, regardless of the cost. Where will the right hon. Gentleman get the money to do so?
  Mr. Orme: I have clearly stated Labour's policy. I give the hon. Gentleman this assurance. He will have a little more time to study our proposals than we have had to study the licence.
  Mr. Heifer: My right hon. Friend has made an absolutely first-class speech. Can he take it slightly further and say that we shall consider taking the industry back into public ownership without paying huge sums of compensation because, in the past, it has been the people's money and the people's assets that the Government have got rid of? It is right that the Labour party should take back the people's assets.
  Mr. Orme: We shall re-acquire the assets, based on the policy of the Labour party conference and that of the national executive of which my hon. Friend is a member. That policy has been clearly laid down.
  Many of the key issues are outside the terms of the Bill and the licence. As well as service, showrooms and the manufacture of gas appliances, there is no mention of research and development, trade union rights or the valuation and sale of the BGC.
  I should like to refer to the gas levy. Paragraph 2 of schedule 6 states:
  "No order shall be made under section 2(3) of that Act specifying for the year 1991–92 or an earlier year a rate of levy higher than the rate of the preceding year."
  Are we to understand from that that the gas levy will be maintained, and will continue until 1992? Will the

  785
  Government still impose a levy on a privatised gas industry? We were entitled to be told the answer today, but we were not.
  The debate should be taking place with the full facts presented to us. The Secretary of State has not answered many points, certainly those that I have raised. For instance, what percentage of shares will be sold overseas? How will the golden share be operated to protect British interests? Will there be any restrictions on the number of shares bought by oil companies, for example? The haste with which the Government have introduced the measure has left many questions unanswered. Those matters are vital to the future of gas, and we are entitled to the answers.
  The Secretary of State said that while the industry was fairly successful it could be improved under privatisation. I refer him to the Deloitte, Haskins and Sells report. They are the management consultants whom the Department appointed to look into the BGC. The report states:
  "British Gas management and employees can look back at many excellent achievements, the principal being the conversion from town to natural gas and the substantially increased share of the energy market. These have been combined with a good safety record, a significant improvement in customer service and good industrial relations. Finally, BGC has generated sufficient profit and cash flow to meet financial targets and to self-finance its investment programmes.
  We consider that the management and employees of any commercial organisation could be proud of such a record, and also that it reflects well on the sponsoring Department of Energy."
  What better evidence is there than an independent assessment of the British Gas Corporation?
  There is only one reason why the Government are proceeding with the Bill. I have mentioned it before. It is to finance tax cuts, while maintaining high unemployment. The Bill is irrelevant to the economic and industrial problems facing Britain. We shall oppose it, and we shall reverse it.
  5.6 pm
  Mr. John Hannam: I declare my full support for the main principle behind the Bill: privatisation and the transference of the ownership of British Gas to the real public —the employees, the consumers and the investors. I was sorry to hear the right hon. Member for Salford, East (Mr. Orme) clearly state that when— if ever—Labour had the opportunity to renationalise the industry, it would deprive the employees, consumers and investors of any increase that they may have achieved in the value of their shareholdings. That should be well and truly taken on board by those people.
  I congratulate my right hon. Friend the Secretary of State on the way in which he has presented the measure and on the methods that he has used to ensure the success of the forthcoming flotation.
  Ever since the prospect of privatising the British Gas Corporation began to appear before us, my main concern has been that it would prove impossible to formulate a method that would safeguard the interests of all the various parties concerned —new shareholders, gas consumers and gas producers. Ideally, from my point of view, I should have liked to see a breaking down of the monopoly/ monopsony structure so that effective competition could be introduced at all levels of the industry. But as I looked more deeply at the nature of the industry and the worldwide situation, taking into account the finite nature of the basic resource, the single supplier distribution
  786
  requirements and the vital safety aspects, it became obvious that splitting the British Gas Corporation into several regional or other sorts of gas companies would leave us not only with monopolies in the regions but with the certainty of loss-making areas, such as my own in the south-west, with large populations spread over wide areas. Therefore, with regret I had to accept, looking across Britain as a whole, that it would be extremely difficult to set up a regional structure of a privatised gas company or companies with equal access to gas supplies at a fair price.
  Therefore, reluctantly I accept the continuation of the whole corporation as a single entity and with that the need for a system of regulatory control to protect all consumers and producers —all those who need protection from what will be a powerful private sector monopoly. Incidentally, it will be led by potentially the toughest capitalist monopolist of them all—Sir Denis Rooke. I have the highest regard for his knowledge of the gas industry and his ability to manage it to the best advantage of its employees, but, without any yardstick to judge the gas industry's comparative efficiency over the years, I do not know—and I challenge anyone else to know—how to measure successfully its cost effectiveness. That will be just as difficult under the new regime.
  Competition in gas, as my right hon. Friend said, will have to be achieved by other means—by comparisons with other fuels and close examination of costs. Here regional accounting might help, although I appreciate that the gas industry is different from the electricity industry where that is more feasible.
  The use of the Oil and Gas (Enterprise) Act by new suppliers could afford an opportunity for some comparisons of efficiency. Although I welcome the improvement for access for industrial suppliers, there probably will not be any great immediate surge of competitive markets here given the power of BGC to resist any such competition in the domestic and industrial markets.
  That leaves me still worried about the monopsony situation of the BGC as a buyer and seller of North sea gas. I am convinced that the slow development of gas resources in the United Kingdom sector in the 1970s is directly related to that factor. The low prices offered to gas producers affected the market and it was only when shortages became imminent, especially to the industries sector in the late 1970s, that prospects of higher price imports helped raise the gas offer price to new producers.
  That directly resulted in a sharp increase in gas exploration and the subsequent realisation that there was plenty of gas around and that we did not need to buy high cost Norwegian Sleipner gas. Norwegian, Russian and Dutch gas is becoming available throughout Europe, making Europe extremely well provided for Britain should not be completely isolated from the European scene. I strongly urge my right hon. Friend to give full consideration to a freer export and import market in gas.
  There are grave fears in the industry that the absence of such competition from the European market will allow the BGC to squeeze United Kingdom gas producers unfairly both on prices for gas and through its own activities as a private sector producer of oil and gas.
  So long as we have had a sensible Government policy framework in recent years, the oil companies have generally accepted that the BGC has acted reasonably within that framework, but with privatisation they are increasingly concerned that a new conflict of interest now

  787
  arises. Here we have a company under obligation to maximise its profit-making potential, but at the same time continuing to have effective control over the development of all United Kingdom gas resources.
  Therefore, we should obviously try to ensure that the BGC operates in a way that allows for the most efficient development of United Kingdom natural gas and does not hinder the activity necessary to maintain a stable long-term gas supply from our North sea sector.
  As has already been mentioned, one problem area is the discriminatory purchase practices which exist. In all sorts of different ways the BGC could favour those companies with which it is involved in, for example, joint ventures or the disposal of associated gas. We must ensure that there are safeguards against such prejudicial treatment and that competition between producer companies is on an equal footing for gas sales.
  Another area of worry is that relating to access to information and all kinds of geological data which are provided by gas producers in the course of contract negotiations. That is always a ticklish area when dealing with the oil industry. Trying to get producers to unite to present a case at any time has always been difficult because of the confidentiality of geological information.
  It is easy to see that such information could give British Gas a substantial advantage in applying for future exploration licences and also in the acquisition of other oil and gas interests which are certain to take place. Firm legal safeguards are needed to prevent any flow of such valuable information from the purchasing arm of British Gas to its exploration arm. My right hon. Friend referred to the protection in clause 9, and perhaps the Minister of State will elaborate further on that when he replies. I hope that he will accept the difference between the purchasing and exploration sides of British Gas. They must be kept separate.
  The new BGC will be in a unique position for a private company in the oil and gas industry. It will have a captive market in buying and selling and a major say in how, when and where gas and even oilfields are developed.
  In addition, BGC will be able to carry on business as an oil and gas exploration and production company in direct competition with others in the industry. That may add up to an attractive proposition for investors, but it also poses obvious dangers to what has been an incredibly successful free enterprise North sea oil industry.
  Therefore, it is essential that we establish a clear statutory definition of what BGC can or cannot do. Otherwise, the BGC's obligation to serve its shareholders by the use of every commercial advantage at its disposal could be at the possible expense of effective development of United Kingdom gas reserves. A free export-import gas market would be one way of ensuring a more competitive environment and would guarantee the full development of United Kingdom gas resources, and, incidentally, create a large number of new jobs. In the absence of such a market in gas, other safeguards should be included if we are to secure the best gas developments for Britain.
  Nearer to home, I have one or two queries on the regulatory system and on consumer protection. First, there is the problem of small businesses using more than 25,000 therms. What recourse will they have for complaints on unfair pricing? The Gas Users Council does not seem to have been given responsibility for such small and medium
  788
  sized businesses, so it would be useful to know exactly what avenue of representation is open to them. That applies particularly in my region of the south-west where we have a large geographical spread and a large number of that size of gas consumer.
  In the south-west region we have seen the devolving of consumer organisations to about 12 management districts. Will the new consumer users' council structure have the flexibility to deal with the needs of rather diverse regions in Britain?
  I have always been particularly worried about the safety of our gas supply system. I welcome the introduction of the stricter safety regime through the Health and Safety Commission. However, as we move into Energy Efficiency Year, I hope that some positive steps will be announced by the commission towards energy-saving audits, equipment standards and general safety matters.
  When does the commission expect to announce the action that it proposes to take on some of those fronts, particularly on the safety of imported gas appliances? For years our manufacturers have warned us of the unsafe features of cheap imported gas appliances which do not have to conform, as ours do, to British safety standards. Recent tests have confirmed what we have always been told —that cheaper, often quite attractive, appliances represent real safety threats. Something will have to be done if we are not to see standards drop as our own manufacturers lower their construction standards in order to retain their competitiveness.
  The safety of gas supplies, installations and equipment is obviously a vital factor in the public perception of this privatisation measure. I hope that the Health and Safety Commission will soon be able to make some positive pronouncements on those matters. I am pleased that my right hon. Friend has placed such importance upon the safety regime and the role of the Health and Safety Commission.
  I welcome the Bill and the transfer of ownership of the gas industry to the real public—the consumer, employee and investor. I welcome the consumer protection structure and ask that it be as flexible as possible to cater for the regional disparities in Britain. Finally, I welcome the release of this great industry from the constraints of Whitehall interference, something which my right hon. Friend stressed. I am sure that the confidence that he is placing in the management and work force of BGC will be well rewarded in future.
  5.18pm
  Mr. Malcolm Bruce: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House declines to give a Second Reading to a Bill which fails to introduce competition into the operations of British Gas; maintains the British Gas Corporation's monopoly market power without establishing effective regulatory machinery; provides inadequate protection for consumers from unfair pricing; and continues the Government's reckless and irresponsible policy of disposal of national assets to finance current consumption."
  The Bill is rather phenomenal—first, because of the scale of the flotation for which it provides and, secondly, because of the implications of this privatisation measure for the British Gas Corporation's consumers and competitors, and for the effect that it will have on Government revenue.

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  The Bill is interesting because, as far as I can see, it fails to meet any of the known philosophical or ideological justifications that the Government have advanced for any previous privatisation measure.
  The BGC is a huge centralised monopoly now. When the Bill is passed it will still be a huge centralised monopoly. Given its size and market power, it is difficult to see how the BGC can be subjected to significant competition other than on the margins. The Bill contains some rather fanciful provisions in respect of "any licensed gas company". We all realise that in practice we are still talking about British Gas plc as the supplier.
  It is the difficulty of weakening British Gas's monopoly that makes us critical of the measure. I recommend that hon. Members should read our reasoned amendment, because it spells out in detail why the Bill is wrong on the Government's criteria. Our reasoned amendment takes the Government to task because they have not attempted to introduce competition or to tackle the monopoly.
  We do not believe that the Government's proposals provide anything like adequate protection for the consumer. We object to the sale because it is irresponsible and because it has serious long-term implications. It is being introduced, as we are all aware, as a short-term expedient to finance pre-election tax cuts.
  The Government are not allowing a free market in North sea gas. The Secretary of State said that he might tell us something about it during the Bill's passage. That was a further sign of how hurried and ill thought out the measure is.
  The Government are not taking powers to prevent the BGC from using its monopoly in the way that the hon. Member for Exeter (Mr. Hannam) was worried about—to see off competitors by cross-subsidising or by using predatory defensive pricing to keep people out of the market.
  The BGC will be free to move back into the oil business. It could do that merely by gobbling up the independent smaller oil companies which are currently operating at the mercy of the market. They should be protected from being swallowed by a predatory BGC. Why should not Government make the exploration, development and production of the BGC a separate company?
  Mr. Michael Portillo: For a Liberal, the hon. Gentleman is coming close to enunciating a policy. Is it his policy that the free import and export of gas should be allowed? Will he confirm that?
  Mr. Bruce: I was trying to elucidate the Secretary of State's policy. He could not tell us. He said that he might be able to tell us in a few months' time. If the Government are trying to privatise BGC to promote competition, we would expect to see measures to extend competition before we are asked to vote on the Bill. I have made it clear that we do not believe that the Government have justified what they are proposing to do, because they have failed to tell us what they are doing.
  The loss of growing, small oil companies would be bad news for my area and for Britain. We welcome the fact that those oil companies are diverse in type and offer more contract opportunities and jobs. From the Department of Energy's point of view, the small independent companies have a creative approach to exploration and development and they will maximise our resources and development opportunities.
  790
  We know that the BGC wants to get back into oil. It is no wonder that those independents are worried. Why is nothing being done to break up the BGC into its constituent parts? The point has already been made that the Government could have chosen this opportunity to reestablish regional companies. The hon. Member for Dundee, East (Mr. Wilson) has already referred to the possibility of a Scottish gas company. There seems to be no reason why that could not be done and why such companies could not compete in exploration and distribution.
  The Government said nothing about retail operations. Having tried to privatise them separately two or three years ago, it is rather surprising that the Government have not referred to them now that they have brought the whole corporation to market.
  The Government claim that the sale of the BGC will mean wider share ownership. We welcome wider share ownership. A flotation of this size must secure wider share ownership to raise the money that the Government need. Those shares will have to be offered at a discount, for two reasons. The first is the size of the flotation. The second is the need to ensure that first-time shareholders receive a reasonable bonus and are not put off the whole idea of share-owning from the start. We know from experience that a year or two after privatisation most of those shareholders will have sold the shares to the City institutions and that the real widening of share ownership will not be as great as the Government hope.
  We are worried that the BGC will use its size and the power that it has in the market to the detriment of existing or potential competitors. We are even more worried by the Bill's implications for the corporation's 16 million consumers. That represents a great many households as well as an important number of corporations and companies.
  It seems that the pricing formula is to be based on the retail price index minus X plus Y, where Y is the allowance for the cost of acquiring new supplies. Hon. Members should strongly question that pricing policy, because there are serious implications behind the licence that the Government will issue.
  The licence means, first, that the Government's abuse of the BGC monopoly, when they forced up prices by the RPI plus 10 per cent. for three consecutive years, will he frozen as the base from which all future price increases are calculated. That is an unacceptable starting point. Secondly, the increased cost of new supplies gives BGC an open-ended opportunity to increase prices. The Secretary of State said that measures will be taken to restrict increases for industrial users. That means that the burden will fall more heavily on the 15·5 million domestic consumers. Pensioners and other low income groups will be dismayed by the fact that the Bill permits the continuation of standing charges. Many of them are campaigning to have those charges abolished. We only have the rather lame exhortation, which the right hon. Member for Salford, East (Mr. Orme) mentioned, about BGC using its "best endeavours" to keep standing charges under control.
  Those pressures will not make the BGC improve its efficiency or cut costs in such a captive market. The market cannot do that for the reasons that I and other hon. Members have given. The regulatory authority cannot do it because the Government have not given it the power or the authority to do so.

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  On the Government's instigation, the BGC has squeezed consumers to the point of yielding £2,068·2 million in gas levy since the Government introduced it in 1980, and a further £1,217·1 million in tax to the Treasury during the Government's term of office. That is a total of £3·25 billion to the Treasury.
  When I suggested to the Minister of State during last energy Question Time that the Government should introduce a utilities commission modelled on some of the American examples, all the Minister could say was that he noted my liking for bureaucracy. The Secretary of State is offering us the worst of all possible worlds. He is offering us a regulatory body and a director general with powers and functions that spread over 47 of the Bill's 66 clauses but does not give that body the authority or funding to ensure the proper protection of consumers.
  Substantial theoretical power is given to the director, the Gas Users Council and the Secretary of State, but with, according to the Bill, a budget of under £2 million and a staff of under 100, it is doubtful whether the director general's sphere of operations will be all that wide. He is also constrained by being one director general rather than a commission. He is appointed by the Secretary of State. He is subject to pressure from and is accountable to the Secretary of State.
  For a Right-wing Secretary of State, that may of course be designed to allow the BGC to maximise its profit and ensure that the Government's friends in the City are satisfied. It also allows a Left-wing Secretary of State, such as the right hon. Member for Chesterfield (Mr. Benn), who has no doubt read the Bill carefully, to approach the matter in the opposite way and undermine the BGC's viability to keep down prices. That power is contained in the Bill.
  In reality, the director general does not have the power and resources that he needs, either to investigate the pricing policy of the British Gas Corporation and its costing, or to prevent cross-subsidy or the abuse of monopoly power. A much more powerful commission is required. It should be established at arm's length from the Secretary of State, and should have five or seven commissioners with wide-ranging experience, because only then can we be sure that it will operate independently. Obviously, the commission should have regional offices, as the Secretary of State envisages his directorate will have and adequate resources levied on the British Gas Corporation, which is the normal practice in these circumstances.
  It should be recognised that a licence to operate a huge monopoly such as the BGC is a privilege, and that that is the basis for issuing the licence. It can and must be used to provide a reasonable return to the operators, but not to maximise profit. The monopoly should not be allowed to pursue unfair pricing, which is being favoured by the Government in their interference with the British Gas Corporation. The commission should have the resources to be able to state exactly how the costs are arrived at, to investigate the abuse of monopoly and cross-subsidy, and to direct the BGC to reduce its prices, if abuse is occurring. That is the strength of authority that we seek, but it is not what we have been offered. The commission should also be allowed to take account of the need to promote conservation before it sanctions further investment and price rises.
  792
  Whatever Labour spokesmen may say, it is unrealistic to assume that, once privatised, the BGC could be renationalised. First, the Labour party cannot win the general election outright—there is no chance of that. Therefore, it would not be able to introduce the appropriate measure. Given that it will not have a majority, there is no chance of the House sanctioning nationalisation. Secondly—the Labour party would do well to think about this—a new Government, pledged, as we would be, to deal with appalling unemployment, environmental decay and the need to re-establish a diversified manufacturing base, would have far higher priorities for the billions that it would cost to renationalise the BGC than to waste them on transferring ownership back from one sector of the British economy to another. We would use the money to create new wealth, investment and jobs.
  The Government are wrong to believe that the highest price for the flotation—that is presumably what they seek, given that we know why they are introducing the Bill —will be secured by offering minimal regulation. The size of the flotation and the need to attract new shareholders with the prospect of a bonus will do most to depress the share price. The Government's friends in the City would be well advised to note that, if the regulatory powers contained in the Bill prove to be as weak as we believe them to be, and as ineffective as they will be, and if BGC is allowed to make massive windfall profits, a future Government that could include a future Conservative Government if, heaven preserve us, there is one after the general election—may have to introduce tighter regulatory measures. In government, the alliance would not hesitate to introduce a powerful regulatory gas commission, if we felt that the public interest required it. That is the right way to ensure that the BGC is properly brought to account and disciplined in a realistic world.
  Mr. Kenneth Hind: Does the hon. Gentleman agree that, if the BGC is free and allowed to make profits, it could do the one thing which at present it cannot do —that is, become another effective multinational company, which will develop at home and overseas, and export the profits back to the British nation for its benefit? Surely we are freeing the corporation from the straitjacket of being involved purely and simply in British business.
  Mr. Bruce: The hon. Gentleman has greater enthusiasm for developing more multinational companies than I or other hon. Members have. The BGC is profitable at present in Britain on behalf of the nation. I have already said that there is scope for international operations, but that does not mean that it should not be regulated, nor that it should necessarily be privatised.
  The size of the flotation, and its effect on the City and on competition for funds worries me. The City is somewhat bedazzled and starry-eyed at the blue chip monopoly that the Government are offering it. The City would be wise not to think that it is being offered a licence to print money. The billions of pounds that will be raised must come from somewhere. If the private sector invests in the acquisition of shares and the City funds that, it cannot fund other projects. It would be better if the City put more money into creating new wealth, rather than move bits of paper about so that 10 per centers can make a fortune, with no new assets, jobs and installations being

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  created. The Government must recognise that the competition for funds is likely to damage other sectors of our economy. They have failed to recognise that in bringing more and more of our national assets to the market.
  The surplus from the BGC is substantial. The Government will use the money from its flotation to finance tax cuts. How will those tax cuts be paid the year after the Government have sold the BGC, and how will the Government continue to fund tax reductions? How will the tax cuts be used? If the money is used to reduce the standard rate of income tax to 25p in the pound, where will the tax cuts go? They will be used by the better-off members of our community to buy imported goods, which will aggravate our underlying economic problems. That will not help our basic problems.
  The most depressing aspect of the Bill is that it is being introduced by the so-called Department of Energy. The Government have never had an energy policy, other than not to have one. That has been the stated proud policy of the Government, and is the reason why the Department of Energy has been regarded, presumably by the rest of the of the Cabinet and the Prime Minister, as a suitable repository for dissident wets, which is what the Department of Energy has become.
  Mr. Geoffrey Lofthouse: Will the hon. Gentleman give way?
  Mr. Bruce: I am sorry, but I shall not give way. I should like to finish my remarks.
  The Secretary of State has led his team of wets, presumably to save his skin in Cabinet, given that he was mooted to be for the chop, to offer the BGC up as their sacrificial lamb to redeem the Tories' pledges of pre-election tax cuts. That is the essence of what is being offered. It has nothing to do with sensible planning or use of our energy resources. Indeed, the Government are putting all their eggs in the energy basket. They live off oil revenues, and will live off the sale of the BGC.
  If the energy market goes wrong, as today's newspapers suggest, the country will be in a mess because the Government will have failed to pursue an energy policy or to diversify and broaden our manufacturing base. The Government's action amounts to the rape of our energy industry, and is a party political game. There is no ideological justification for it. The Government, including their friends on the Right, know that this is not about competition, markets or efficiency, but about obtaining money to pay for tax cuts.
  There will be less, not more, competition as a result of the measure, and the 16 million British gas consumers can expect only one result—to pay increased gas prices, higher than the rate of inflation, for years to come. They can see no alternative when the Bill is passed. Therefore, I urge the House to take account of our reasoned amendment, which demonstrates clearly and categorically that there is no justification for the measure as proposed by the Government and that we should reject it.
  5.38 pm
  Dr. Michael Clark: I welcome the Bill, unlike the Opposition, who wholeheartedly but honestly reject it, and unlike the hon. Member for Gordon (Mr. Bruce), who spoke on behalf of the Liberal party and referred to his reasoned amendment, which consists of all
  794
  of five and a half lines. It states that the Liberals would like to privatise the British Gas Corporation, but because there are one or two difficulties involved they do not recommend that it should be done. It is another case of the Liberals saying, "I would if I could, but I can't."
  I welcome the Bill because too much of British industry has been in public hands for too long. When the Conservatives came to power in 1979, 40 per cent. of the capital of British industry was in public hands. We have already brought a large amount of that back into private hands, and by 1988, 20 per cent. of that 40 per cent. will have been taken out of the private sector and placed back into private hands. What is happening now, therefore, is just another part of the Government's policy of extending the capital-owning democracy which began so ably with the sale of council houses.
  Privatisation also gives us the opportunity to increase the number of people in Britain who own shares. It has already doubled the number who owned shares in 1979, and the privatisation of British Gas is one more move in that direction, and it is to be applauded. When British Telecom went private, a substantial number of its employees bought shares, and 90 per cent. of those who bought have retained them. I am confident that the same will happen with the privatisation of British Gas.
  While I congratulate my right hon. Friend on getting the Bill to its present stage so quickly, I must remind him that some of us have had difficulty in digesting all the terms of the licence and the regulatory conditions. Hon. Members who served on the Select Committee have not been helped, because of the speed of the Bill's progress, to get through all the evidence that we wanted to examine before this stage of the Bill.
  Gas is a major part, a £7 billion sector, of British industry. It supplies 60 per cent. of the domestic energy market, 40 per cent. of all heat, 36 per cent. of the energy used in the industrial sector and 30 per cent. of that used in the commercial sector. Though it is extremely large in energy terms, the fact that most of those figures are below 50 per cent. —averaging perhaps 40 per cent. —shows that gas has competition. Without competition, the figures would not be so modest. Thus, there is competition in energy, even if there is not competition in gas supply, and that will continue when British Gas is privatised.
  Since 1962 the rise in gas prices has been less than half the rise in oil, solid fuel and electricity prices, so that although British Gas has had a monopoly for 20 years or more, it has adopted a responsible attitude towards prices. While in recent years it has been buying from the North sea gas which has been extracted at a reasonable price, British gas has not abused that position; prices to the customer have been kept low and, as I say, it has adopted a responsible attitude towards prices.
  Mr. Wilson: Whereas the corporation may not have been raking off huge profits from its customers, the Government gave in to the temptation to do that when they did not exercise the same self-restraint in terms of the gas levy.
  Dr. Clark: The gas levy was a responsible act by the Government to ensure that this premium fuel was not depleted too quickly, so ensuring that we would have gas in future for chemical feedstocks, plastics, fertilisers and aviation. It has been necessary to conserve hydrocarbons, and that was the purpose of the gas levy.

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  Three aspects of competition are disturbing, and we must keep an eye on them. First, let us consider the domestic consumer. It is clear from the terms of the licence published yesterday —naturally, we have had only a limited time to examine it —that there will not be a requirement to disclose the monopoly profits made from selling gas to the domestic consumer.
  The argument is that regulation will be by price rather than by profit. If we are to have regulation by price, we must remember that price determines the amount of the commodity that is sold, whereas profit determines competition. If profits are high and generous, others will want to come in and share in them, and hence competition will be generated. That is why I question the wisdom of regulating by price rather than by profit.
  I could accept the decision to regulate by price rather than by profit if the profits made from selling monopoly gas to the domestic consumer were revealed for all—hon. Members and the public at large—to scrutinise. But, we are told, the plans are that we shall not see the details of profits made from selling gas to the domestic sector.
  The public at large will see in due course the profits made overall by privatised British Gas. They will also see the dividends paid to British Gas shareholders, many of whom will be employees of the company. They will wonder what proportion of that profit came from them, buying gas from a monopoly supplier, and they will not know the answer. I hope that when he replies to the debate, my right hon. Friend will address that point and will reconsider the clause in the licence which says that profits made from supplying the domestic sector will not be revealed. The only way to be sure that the price charged to the domestic customer is fair and reasonable is for us to see the details of the profits made from that business.
  Secondly, a clause in the licence refers to domestic prices being set by the complex formula to which the right hon. Member for Salford, East (Mr. Orme) referred. I agree that X and Y appear in the formula, but after studying it for some time, one can see how the figures and control details are derived.
  There is a factor in the formula by which, in exchange for making profits from the sale of gas under the monopoly powers that privatised British Gas will have, there is a requirement progressively to reduce non-gas costs. That is fair enough, but the Y factor then allows for all increases in North sea gas supply costs to be passed straight to the customer.
  That will weaken the resolve of British Gas to negotiate prices firmly with its suppliers and will weaken its intention to be as efficient as possible in all stages of its business, from supplier to delivery. Perhaps my right hon. Friend will comment on that feature when he replies to the debate. To pass costs straight on without any dilution or modification is a temptation that many companies would not be able to resist.
  Thirdly, my right hon. Friend spoke about breaking up British Gas into regions. He said that there was no need to do that because economies of scale would be gained from having one large organisation rather than having competing organisations in the various regions.
  If there were regional areas within British Gas—with different supply problems and differing purchasing prices —costs to the consumer would vary in each region. The
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  public would then be able to identify those regions which were operating efficiently. Even allowing for the different circumstances of trading, the public would be able to see which areas were not performing properly and needed to improve. It is a shame that British Gas is not broken down into various regional areas or areas of trade and business, so that there is more competition.
  The second aspect of competition is the common carrier —the use of the gas network by those other than British Gas. We on the Select Committee have interviewed a number of oil companies, which say that it is unlikely that they will seek to use the common carrier. As a result, it is likely that British Gas will be the only user of its pipes and network of gas supply.
  Why have the oil companies said that they are unlikely to use the common carrier? We all know that the price of gas at its ultimate destination is the purchase price plus the cost of distribution. Oil companies, large and small, can determine through their efficiency and luck of their finds the price of gas taken from the ground or the sea, but the distribution costs will be entirely in the hands of British Gas.
  What will British Gas charge anyone else who breaks into the common carrier? If it charged less than it charged itself, that would not be fair on those who purchase straight from British Gas, who would be subsidising those who purchase gas from an oil company. If the oil company was charged exactly the same as British Gas charged itself, there would be no incentive for British Gas to go to all the trouble of allowing the common carrier to be used. The incentive arises only if British Gas charges more for the use of its distribution network than it would obtain by using that network itself. If it charged more, an independent oil company would consider using the common carrier only if its prices at source were considerably lower than British Gas prices at source. Therefore, with a low source price and a high distribution cost, there would still be a benefit to the consumer.
  However, if independent oil companies have to get their source price down so low before they can use the common carrier, and if British Gas tempted them with a small margin over and above the price at which the oil companies intended to sell, the gas would simply go back into the British Gas system. One wonders what will happen with the common carrier, and one fears that it will not be used by anyone other than British Gas.
  The third area of competition is exploration by the privatised British Gas company. There is no reason why a privatised British Gas should not go back into exploration. Indeed, we have been given reason to think that it will do so—and it might explore for oil, too. The funds for this expensive exploration can come from cross subsidisation, whereby British Gas can charge high prices to the domestic consumer and put the profits to good use by exploring for new gas fields, but what is to stop British Gas favouring the purchase of gas from its own fields rather than buying gas at a low price from independent oil companies? If it does so, there will be no control on price, and price competition will be weakened. That will be a major worry for the independent oil companies, which will be unable to sell gas to the privatised British Gas company unless, perhaps, they are prepared to give up acreage to British Gas in exchange for supplying it with the gas that they have already found. That is another area about which we have reason for concern, and I hope that my right hon. Friend will give an answer when he replies.

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  The Office of Gas Supply and the Director General of Gas Supply are very unlike the organisation that was set up to control privatised British Telecom. It appears that the director general will not have a specific duty to promote competition. That is sad and surprising, because it should be one of his prime requirements. He will not be the final judge on any industrial complaints, which will go to the Office of Fair Trading. However, my right hon. Friend said that if those complaints were frequent, the regulations could be changed.
  The director general can also require British Gas to publish typical prices for conveying gas down the common carrier, and determine a general policy on the use of the common network system by a third party. That does not go far enough. These are statements of policy, not regulations. He cannot require British Gas to accept a third party on the common carrier, but can only require it to make a statement about the terms and conditions under which a third party would be accepted. There should be precise regulations and controls on when, why and under what conditions a third party can use the common carrier.
  By the very nature of the gas industry, privatisation, however welcome, will have some imperfections. Despite that, I welcome the Bill because I believe that privatisation of this large industry will be beneficial to customers, to employees of the organisation and to the economy. Strenuous efforts have gone into preparing the regulations and the licence. I hope that my right hon. Friend will keep a careful eye on how the regulations are used and how the licence is applied. If in the future there is need to tighten them up, I hope that he will bring them back to the House so that they can be considered again.
  5.57 pm
  Mr. Tony Benn: One could not have a clearer description of the difference of opinion that divides the two sides of the House. Like a vulture, the Conservative party is already beginning to hover around the British Gas Corporation to see what rich pickings it can make for its own people.
  So far there has been no mention of the fact that many people look to gas for security of supply, high levels of maintenance and repair and high levels of safety at a price that they can afford. During this winter, as with every other, many people will be wondering whether they will be able to pay their gas bill when it arrives later in the year. As is well known, people die every winter from hypothermia simply because they cannot afford to pay the price of fuel. Therefore, to look to this industry as a way of making more profit, rather then of meeting a need, shows the real motivation behind the introduction of the Bill.
  The Secretary of State was totally unconvincing. His arguments for privatisation were not valid, and he never mentioned the real reason for this measure. In 1969–70 and from 1975 to 1979, I was the sponsoring Minister for the British Gas Corporation. Since the public ownership of gas there has been major investment, higher safety standards and a very good repair and maintenance record. The industry has bought British equipment, which has maintained employment, and there has been a sense of service. Successive Governments have taxed the industry, but one can also tax an industry in private ownership. For example, we tax petrol. Anyone who thinks that once gas is in private ownership it will be free from a predatory Chancellor does not understand how this works. For
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  various reasons, any Chancellor will from time to time look at ways of raising revenue, and private gas could be taxed as easily as public gas. The only difference is that gas is now being taxed for a different reason—to make it more profitable to sell it off.
  I happened to be Secretary of State when North sea gas was brought ashore. Because British Gas was a monopoly buyer, it was able to get a good price from the oil companies because the oil companies could not play one customer off against the other. British Gas was able to say, "If you want to sell gas in Britain, you must sell it at the price that we offer." One reason why gas prices have been so low—in some ways too low, to make it easy for electricity and coal—is that British Gas was able to force oil companies to sell gas at a low price.
  Massive investment in a new distribution net work was set up and a programme to convert appliances was successfully established. The case for the common ownership of gas is unanswerable. It was not always and only in private ownership before nationalisation. Hon. Members might remember the phrase, "gas and water Socialism." There was a proud municipal record of running town gas before nationalisation.
  Gas is a vital national asset. Energy policy under any Government is bound to take account of depletion policy. It would have been possible for British Gas, if it had so chosen and if the Government had allowed it, to deplete at a massive rate and bring the gas ashore so that people converted to gas when it was cheap, only to be caught with equipment that they could not afford to use when more expensive gas came in because ours was starting to run out. Energy pricing as between gas, electricity and coal is a central part of national policy.
  I should like to mention one consideration that has not come out so far, unless the Secretary of State dropped a hint. Once gas is taken out of public ownership, British Gas will be under the complete control of the Common Market Commission. I have warned the House about this before, and am speaking from knowledge. When I was Secretary of State, it tried to argue in Brussels that the continental shelf was under the treaty of Rome. We said that it was not and were able to enforce our will because we owned the gas fields there. The Commission wanted the pipelines to take the gas straight to Europe rather than come through our system to the continent. We were able to say, "No, we do not accept that the continental shelf comes under the treaty of Rome." Privatisation will enable the Commission to enforce its will under the competition articles of the treaty. Moreover, the record of buying British equipment will dissolve because the EEC requirement to put orders out to tender will be enforceable with a private gas corporation, whereas it was not when it was public, when we were able to have regard to the long-term security of supply of equipment.
  The Bill hands over North sea gas to Common Market control by the act of privatisation. It will lead to higher prices, greater fuel poverty, lower safety, a weakening of regulation, poorer maintenance, loss of control to the EEC and reduced demand for British equipment.
  The real motivation for the Bill should be spelt out with absolute clarity, as the Secretary of State did not touch on it. It is to sell assets, which the Government do not own, to their business friends, who will buy the assets at knockdown prices. It is to pay City institutions enormous fees to sell the assets and to use the proceeds for a once-and-for-all tax cut to buy support at the next general election. It

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  is important that, in addition to these technical discussions and dreams about the draft of the Queen's Speech when there is a Liberal Government —my gosh, that was interesting—we make it clear that business firms put up money to pay for Saatchi and Saatchi advertising to get a Tory Cabinet elected, knowing that a Tory Cabinet will put on the market, below their real price, assets the value of which comes from the labour of those who work in the industry concerned and public investment. They will buy them, make a large killing and support the Tory party again. It is corruption. There is no question about it.
  I have been here for 35 years and I have never seen a measure which so reeks of corruption as this one. We should consider the figures. British Gas is valued at £16 billion. The Government have already sold £4·7 billion of public assets and lost £1·4 billion by under-pricing. That is statistically established. British Telecom shares, for example, rose 93 per cent. in value before night fell and the Government lost £1·3 billion in a single day —money that would have solved the problem of inner cities, made the Archbishop of Canterbury happy and ended the tragedy in the Broadwater Farm estate or in Brixton or in Liverpool or in Sheffield.
  That money could have been used to meet needs, but it was used to pay an electoral debt incurred by the Government, who gained support from business companies. If the House doubts that assertion, the figures are public. The City institutions received £253 million—
  Mr. Lofthouse: I thought that it was £300 million.
  Mr. Benn: Well, the figures vary. They received getting on for £300 million in fees for selling assets. That is four or five times as much as Band Aid and Live Aid raised in one year of concerts for the starving of Ethiopia. The City of London was rewarded with six times as much as the generosity of the public could provide for the starving of Ethiopia. But here is the rub. Of the City underwriters, 33 of the 55 who got the business contributed to Tory party funds. I have some figures to prove it. Baring Brothers gave £25,000 to the Tory party in 1983 and shared in fees of £5 million to sell off Cable and Wireless. Kleinwort, Benson paid £30,000 to the Tory party and shared in more than £5·5 million for selling British Aerospace, £190 million for selling British Telecom, more than £5 million for selling Cable and Wireless and £9 million for selling Enterprise Oil. That investment of £30,000 in Tory party funds was pretty good. Hill Samuel paid £28,000 to the Tory party and shared in £5·5 million of fees for the sale of Jaguar. Lazards put in £20,000 and shared in £1·75 million for the sale of Wytch Farm. Morgan Grenfell put in £30,000 and got a share of £3 million for the sale of Amersham International and Sealink.
  When I think of the district auditor chasing councillors in Lambeth on the ground that they were a bit late fixing a rate and compare that with the massive sums of money given, in effect, in return for political support to City institutions that have contributed nothing to raise the quality of service of British Gas or to provide safety for those who use it, I can only call it corruption. The public should know how it all works.
  I am glad that my right hon. Friend the Member for Salford, East (Mr. Orme) said that an incoming Labour
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  Government would deal with this matter. The precedents for legislation set by the Tory party are many. I have gone through the legislation of the 1970–74 Tory Government who took powers under the Counter-Inflation (Temporary Provisions) Act 1972 to control prices, to demand information, to amend statutes, to control profits, to vet investment and to control multinationals. They introduced the Insurance Companies (Amendment) Act 1973 which gave powers to veto directors, to inspect books, to issue directives and to define unfair practices. The fair trading legislation gave powers which included entry and seizure. The classic case was the one-clause Rolls-Royce (Purchase) Act 1971. Through one clause, they brought Rolls-Royce into public ownership. My right hon. Friend need have no fear that he will not be sustained by Tory precedents when dealing with this abuse of public trust, which is a denial of the fiduciary responsibility to taxpayers and the public of whom the judges are so ready to speak when they criticise Labour councillors.
  There will need to be changes in the nature of public ownership. Over the years, for my sins, as Postmaster General and as an Energy Minister I have been responsible for many public corporations. There must be real accountability to Parliament. I have never believed it right for the Secretary of State of the day—I had many years experience of this—to have no explicit authority over a chairman such as Sir Denis Rooke, but always to have to twist the chairman's arm and then not be accountable to Parliament. There should be explicit powers of direction, subject to parliamentary approval.
  Secondly, we should get away from the crude patronage of appointments of board chairmen. In the United States, an ambassador cannot be appointed without the approval of the Senate in committee. Parliament should have to approve the chairpersons appointed to our public corporations so that people can give evidence about them before they are confirmed.
  The third point bears a little on the question of regional boards. I was doubtful about centralisation, but it was thought necessary because of North sea oil. Local authorities should have power over local managers of nationalised industries and be able to seek their removal if they are not sensitive to local needs.
  A final precedent from the Tory party is the Trade Union Act 1984. Many Ministers have talked about the need to restore the power of union members over the unions. A minor amendment to the Government's own Act would allow workers in industry to choose by ballot the boards of directors of the companies for which they work. The alteration of one word —from "union" to "company"—would secure a measure of power for those who have invested their lives in the gas industry comparable with the power now supposedly enjoyed by those who have invested their money in it.
  The party of which I am honoured to be a member, which still lives under the shadow of and perhaps affection for the Herbert Morrison legislation after the war, must look again at these matters. There must be accountability to Parliament. There has never been proper accountability. Parliament must be able to vet the chairmen of these great corporations. There must be accountability to elected local authorities to see that the big bosses in the public sector do not ride roughshod over local needs. Those who work in the industry must have powers over their own industrial

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  management —based, perhaps, on the legislation introduced by the Conservatives to deal with trade union democracy.
  I have long urged those changes. When the history of all this comes to be written, for this privatisation will not last long, it may be that by breaking the Morrison mould the Government will be remembered for having paved the way to a form of common ownership which entrenches service to the public and not the pursuit of profit which is the Government's sole interest in introducing this measure.
  Several Hon. Members rose—
  Mr. Speaker: Order. Fifteen hon. Members are seeking to catch my eye. Some of the speeches have been rather long. The right hon. Member for Chesterfield (Mr. Benn) has set an admirable example, but I ask hon. Members once again to be relatively brief.
  6.12 pm
  Mr. John Maples: The right hon. Member for Chesterfield (Mr. Benn) manages to construct an incredible conspiracy around almost anything of which he does not approve. He should reflect on the fact that the vast majority of shares in denationalised public corporations will end up in the ownership of pension and life assurance funds, and that profits from them will inure to the benefit of the 11 million occupational pensioners in this country.
  I wish to deal briefly with two aspects of the Bill—the principle of denationalisation and the need for competition. Although they are interlinked, I do not believe that they are mutually dependent. There is a respectable and persuasive case for denationalising public corporations regardless of the consequences for competition, although competition is clearly important.
  Denationalisation results in genuine public ownership, rather than ownership by the Government of the day. It enables management to manage the business free from political interference. Investment programmes are not constrained by the annual imperatives of the public sector borrowing requirement target. The record of denationalised industry is most encouraging. Profits have almost always increased substantially, which results in a substantial increase in corporation tax, which inures to the benefit of us all.
  It is time that we nailed the lie that the sale of public corporations is intended to finance tax cuts, because it is not. The purpose is to reduce gilt sales and to help fund the Government's capital investment programme. It is not like selling the silver to pay the butcher—an analogy commonly used by the Labour Front Bench—but more like selling an old picture that has been sitting in the attic for a long time, so as to avoid increasing one's overdraft.
  Much of the criticism of the Bill in the financial press relates to competition, but the arguments are not so strong as they at first appear. The Labour party has no standing in the argument, as it wishes to renationalise the gas industry and to reinstate a state monopoly without any competition at all. The alliance seems to want to have things both ways. The hon. Member for Gordon (Mr. Bruce) put his name to the amendment criticising the Bill for not promoting enough competition, but said in his own speech and in a Liberal party press release that it was
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  virtually impossible to have competition in the gas industry. Similar statements have been made by members of the SDP.
  Consideration of three areas of the corporation's business shows that the arguments about competition are not so persuasive. The Government are being urged to allow the free export of gas. Presumably this must also mean freedom for British Gas to import it. The people asking for that are the oil companies, and it would almost certainly result in an increase in price. In this area, there is a great national interest at stake —the rate of depletion of North sea gas and oil reserves—and it is reasonable for any Government to have some influence on that. I do not believe that it would be right to free the market internationally for North sea gas, but there is a serious danger of the British Gas Corporation exercising its monopsony purchasing power to the detriment of producers. I am sure that the Government will keep a careful eye on that. If there is any evidence of such behaviour, the Government will be able to hold over the corporation the threat of allowing producers to export, so as to ensure that the British Gas Corporation does not exercise its monopoly against the public interest.
  Secondly, there is not a legally constructed monopoly in the Bill in relation to industrial and commercial supplies. Anyone will be able to supply industrial and large commercial customers and will have the right to use the corporation's pipes. The normal legal and free market rules will thus apply, and if the corporation abuses its effective monopoly by trying to charge unrealistic prices it will almost certainly find that it has competition. Moreover, the Director General of Fair Trading, backed by the Monopolies and Mergers Commission, will have considerable power to intervene in any abuse of the corporation's considerable commercial powers.
  It is also worth remembering that gas is not the only fuel available. People can use oil, coal or electricity. It may not be easy for industry to switch from one fuel to another overnight, but in general it is easy to make such a switch in the medium term because there are always industries coming on stream, introducing new plant or renewing old plant and thus able to make the choice. It is also open to the North sea gas producers to become suppliers to industry. There is thus no need to worry about the Bill not promoting greater competition in supply to industrial and commercial users.
  In the domestic market, the criticism seems a little more valid, but one must ask whether there could possibly be competition in the supply of gas to domestic users. If there were two gas mains running down the street, some hon. Members would no doubt say that the two of them would conspire to raise prices, so more than two would be necessary. How many gas mains are there to be on each street? It is clear that we cannot have competing suppliers for domestic customers. We must bite the bullet and accept that. As my right hon. Friend the Secretary of State said, however, there will be competition from oil, coal and electricity. That competition is real and genuine. If the British Gas Corporation abuses its monopoly, the use of other forms of energy will increase substantially and its own share of the market will be greatly eroded. It seems to me, on reflection, that a privately regulated monopoly, with the kind of price formula that the Bill envisages, gives consumers a far better deal than a public, politically controlled monopoly.

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  If one reflects upon the Bill, one is driven to the inescapable conclusion that, in general, denationalisation is good for efficiency —management, shareholders, employees, consumers and the taxpayer. The Bill, which denationalises the gas industry, allows and promotes competition, where it is practicable, and protects consumers where competition is not practicable. I am sure that it will prove a success, and I hope that it will soon be followed by the denationalisation of the electricity industry.
  6.20 pm
  Mr. Robert C. Brown: Alongside my name in the Register of Members' Interests are the words
  "Sponsored by the General, Municipal, Boilermakers and Allied Trades Union."
  That union organises most of the workers in the gas industry, and I declare that interest. But in today's Second Reading debate I am speaking on behalf of the 72,000 electors at the poll in my constituency—or the vast majority of them, because very few of my constituents support this retrograde measure.
  The Government intend to privatise the British Gas Corporation. With their gross majority they will hardly need to play the loyalty card to get Conservative Members, who ought to know better, to go into the Lobby and support this measure which—make no mistake about it —will rob the British people. The gas industry belongs, in the truest sense, to the British people. The investment in the gas industry was derived from the taxpayer and the raw material—gas—belongs to the British nation, not to any section of it. Governments, acting through the British Gas Corporation, hold it in trust. That trust is to be betrayed tonight by the Conservative majority in this House.
  The Conservative Government and party say that they believe in the sanctity of property, but time after time they have trampled upon property rights, even if those rights were held collectively rather than individually. Something does not cease to be owned simply because not a single name is attached to it. The Government have fought this out the hard way—through the courts after the Trustee Savings Bank flotation. However, because the nation did not believe that it could be so blatantly robbed of assets such as gas, it did not think to bolt down those assets. Unfortunately, the option to bolt down the assets is no longer available to the British people.
  If we consider the effects of privatising the British Gas Corporation, the first issue in people's minds must be gas safety. I worked for 30 years in the private gas industry. Then I worked in the publicly owned gas industry. Therefore, I am well aware of how important gas safety is to the industry's employees. A privatised British Gas Corporation will eventually be less safe than it is now. No amount of flummery will disprove that fact. The Secretary of State for Energy airily dismisses our worries about gas safety by suggesting that it would be commercial suicide for a private gas company to neglect gas safety. I agree entirely, but he has not taken on board the implications of his measure for gas safety right across the board. I want to deal with them.
  The British Gas Corporation plc, or whatever it will call itself in future, will be forced into devising a tariff formula
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  which, broadly, is about a reduction in non-gas costs. They include pipeline maintenance. Although the British Gas Corporation has been quite successful in reducing its non-gas costs, there comes a point when they cannot be further reduced without endangering the services that are provided.
  In real terms, during the last 10 years the BGC has reduced its non-gas costs by more than 20 per cent. Pressure to reduce them further, to fit an artificial formula, could lead to the kind of risk assessment that defers a mains renewal until another financial year, or for two financial years. No fig leaf of commercial concern could hide the risk that that course of action would entail. We have seen such commercial concern lead to aircraft disasters. I do not believe that any hon. Member would be bold enough to say that there is not serious concern, to put it at its mildest, about some of the air disasters that have occurred both in this country and elsewhere, involving both the British Aircraft Corporation and foreign corporations.
  Mr. Maples: Does the hon. Gentleman think that in that respect there is a difference in the safety record between airlines which are owned by their Governments and airlines which are privately owned? I suggest there is not.
  Mr. Brown: I am prepared to accept that point, but at least the customer can choose his method of travel: whether by train, road, ship or air. The average domestic gas consumer has no choice.
  A further element in non-gas costs are wages and salaries. As a percentage of all non-gas costs, they have fallen from 27 pr cent. to just under 19 per cent. When the pressure to reduce non-gas costs is applied, what better way is there to save money than to economise on staff costs? That point will not escape any corporation. Just by moving to a contractor-based industry, thereby getting rid of the obligation to provide pensions for its employees, the British Gas Corporation would save 17 per cent. of its costs. Although contractors will try to operate safely, their record in the domestic installation market is worse than that of the BGC's directly employed work force.
  No one should kid himself that the Consortium of Registered Gas Installers was a cure-all for the cowboys in the industry. It was not. However, when a cowboy bodges a job, the skilled work force of the BGC can be called on at present to put things right for the customer. We cannot rely on the Government's bland assumption that privatisation will make no difference to safety. Of course it will. I am not suggesting that the difference will be immediately apparent and that the day after the Act is on the statute book everything will fall apart, but in the medium and in the longer term there will be vast differences in safety standards.
  It is also the height of insult, as the BGC is now constituted, for the Secretary of State to trumpet that a new statutory requirement will be imposed upon the BGC to answer calls about gas escapes within 12 hours instead of within 24 hours. It is insulting to make out that there will be new protection. Does the right hon. Gentleman not know that British Gas already has an internal code that its work men get to a gas escape within two hours? The board for which I worked before I became a Member could proudly say that it attended a reported escape within minutes rather than hours. There will be no extra safety,

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  and it is hypocrisy to suggest otherwise. Costs and circumstances could lead the privatised company to take advantage of the 12-hour limit in a way that the public company would never dream of taking advantage of the present 24-hour limit.
  Gas is an inherently unsafe substance but, thanks to the corporation's care, dedication and investment, the industry has the best safety record in the world. However, after privatisation, we shall have only the protection of commercial suicide rather than the ethic of public service. I know which I prefer. I know which one the public needs and deserves.
  The Bill provides for the establishment of a Gas Users Council which will be able to maintain prices and make representations to Ofgas. Its powers will be more limited than present powers because they will be restricted solely to the price of gas. In effect, important chunks of the corporation's service will be excluded for ever —notably, appliance retailing and the code of practice on disconnection.
  The staff of the gas consumers councils are all to be made redundant. A letter from the consumer affairs branch of the Department of Trade and Industry, Millbank tower, confirms that, stating:
  "This means that existing contracts of employment will come to an end when the new provisions come into force and all staff can therefore expect to receive redundancy notices in due course."
  Those agencies have existed to protect the consumer. This overkill will result in a lack of continuity of expertise and knowledge. Behind all this is the Government's view that regulation and consumer protection will depress share prices. Regulation may affect share prices, but I submit that the City would not consider consumer protection important compared with direct regulation. Consumer protection will not affect share prices.
  It is scandalous that, in those areas where the Government have the least political support — the regions with the highest unemployment levels, especially the northern region—the gas consumers councils have consistently handled twice the national average number of complaints per thousand customers, not counting inquiries, requests for guidance and advice. In the past two years in the northern region the gas consumers council retrieved £55,000 for consumers on disputed gas and service bills.
  There can be no doubt that the ability of the Gas Users Council to maintain the operation of a rather complicated price formula—for both beachhead and non-beachhead costs—will be limited. That means that the price of the raw material will not be subject to any constraint, save the ability to pay. We can see the deals that will come forward. With gas costs being 46 per cent. of all costs, the scope for moving from average pricing to long-run marginal pricing is great. It has been calculated that gas prices in the medium to long term could cost a family of four an extra £1 a week. That sum is large enough to do away with the great bonanza of the tax handouts that the sell-off is intended to create.
  Another matter of concern, which is probably of no interest to the Government, is jobs. I have already touched on the pressures to make greater use of contractors and to close showrooms. Up to half of the corporation's work force could face the sack. Although the new go-getting
  806
  company may expand its business, it is unlikely that those jobs will ever be replaced. We are likely to see a takeover market boom rather than an expansion of the gas market.
  We have had no assurance about the future, as my right hon. Friend the Member for Salford, East (Mr. Orme) said, of the "Buy British" policy with British Gas. If this legislation is anything like the British Telecom legislation, there will be a sad future for many British jobs. If the denationalised body buys extensively overseas, it will put at risk up to 250,000 manufacturing jobs. What an achievement! It is in line with the Conservative party's achievement during its six years in office of massively increasing unemployment.
  Privatisation is morally wrong. In this case, it is also logically wrong. The gas industry works well. We should keep it public.
  6.36 pm
  Mr. Michael Portillo: I listened with great interest to the hon. Member for Newcastle upon Tyne, North (Mr. Brown). I would not for a moment doubt his sincerity, but a number of his points were extraordinary. I do not believe that any of his points—that British Gas will lose half its employees, that 250,000 jobs in the gas industry are at stake or that safety will be called into question — are credible or will carry any credibility outside the House. If that is the basis of the Labour party's attack on the Bill, I warn the party that it will not carry that attack far. It bordered on the insulting for an hon. Member who spoke proudly of representing the workers to imply that, just because industry moved from the public to the private sector, the same people in control would completely disregard the safety of the public. That was an extraordinary claim and did no credit to those workers.
  Mr. Robert C. Brown: I was not suggesting that for one moment. The hon. Gentleman is grossly misrepresenting me. I said that if the industry were fully privatised and we did not have in gas distribution the number of employees that we have today, there would be a great danger of safety being disregarded.
  Mr. Portillo: Whether or not I grossly misrepresented the hon. Gentleman, he will understand that I did not intend to do so. The Official Report will show whether I made a fair assessment of what he said.
  I am a strong supporter of privatisation. It has provided a considerable stimulus to companies that have moved from the public to the private sector. On the whole, those companies have become more responsive to their customers, more efficient and more profitable. The fact that they are more efficient and more profitable means that they perform better in the economy. It adds to the economy's performance and is likely to be productive, not destructive, of jobs. Competition is generally improved, which means a better choice and better service for the customer.
  Another aspect of privatisation is the creation of millions of new shareholders—people who have never invested before. I think here of the right hon. Member for Chesterfield (Mr. Benn), who spoke about common ownership. The people have no sensation of owning in common the British Gas Corporation, the NCB or any of the other nationalised industries. The first occasion on which these people felt that they might own some of these

  807
  great British industrial giants was when the Government gave them a chance to buy shares, and in the case of British Telecom, 2 million people bought shares.
  Mr. Lofthouse: What evidence has the hon. Gentleman of inefficiency, which has been referred to by him and other Tory Members, in the gas industry when that industry is compared to those in the private sector?
  Mr. Portillo: I prefer to deal with the historical example and let the hon. Gentleman know what he knows perfectly well already, that in the case of British Telecom customers are extremely satisfied because they are getting a better service. If the hon. Gentleman is telling me that he has never had a letter from one of his constituents complaining about the gas industry, and if he is saying that there is no room for improvement, I should have to doubt that. I see every reason to believe that with the BGC, as there has been with British Telecom, there will be an improvement in the service to the customer after privatisation.
  Privatising a monopoly presents difficulties for a Government. It is not as easy as privatising a company with direct competition in its product. Whatever one does when one privatises a monopoly, some natural monopoly sectors will remain, and the problem is how one deals with this problem, addresses it and improves the situation. However, the fact that a natural monopoly will remain is not a good reason for leaving this in the hands of the Government. I see no reason to believe that Ministers and civil servants are any good at running companies, and here I agree strongly with my right hon. Friend the Secretary of State. There is no evidence that Government control has been good for customers, and it is demonstrable that Government control has been bad for the running of business and therefore for the whole economy.
  With both British Telecom and the British gas industry, I should have preferred the new arrangement to be one of divided companies. That would allow for greater competition, transparency and comparison between one part of the industry and another. I am perhaps an idealist, but I know that I share those views with a number of my hon. Friends.
  If I am asked whether I should like to see a company privatised, even without the opportunity of its being regionalised in the first place, the answer would be yes. The great change in employee attitudes, the freedom that management gains when freed from Government control over its investment policy, and the pressure that is established on management both from bankers and shareholders, all combine to make it a better company in all respects, including its services to its customers.
  None the less, it is important that the Government leave the door ajar for the entry of new competition. They must be prepared to defend competitors from the anticompetitive practices of the monopolies, and they must press the monopolies to pass on to the customer any gains in efficiency in the form of lower prices.
  The Government did quite a good job on all of those matters in the privatisation of BT. The Director General of Oftel was specifically charged with promoting effective competition within the industry. The fact that he has taken that duty seriously has recently been proved by his decision on inter-connection. This is important, because, however good one makes regulations in industry, the true
  808
  friend of the customer is competition. Several important groups have agreed on that point when being interviewed by the Select Committee—the National Gas Consumers Council and National Consumer Council both agreed that that is so.
  If anything, the British gas industry should face tighter regulation than does British Telecom. The BGC faces competition from other fuels, such as electricity, gasoil, and so on, but much of that competition is weak. On the other hand, with the privatisation of BT, we were dealing with a rapidly developing market where technological developments were coming along fast and establishing new markets in which the monopolies had no long-established monopoly. That is not the case with the British gas industry. The gas market will not change in its ways and a monopoly will continue to hold its monopoly. For that reason, the regulatory regime should be tighter in this case than in the case of British Telecom.
  One thing missing from the Bill is the duty, present in the British Telecom Act, on the director general to promote effective competition. I was surprised by that. There used to be a cartoon character who stuck his head over a brick wall and said, "Wot, no Watneys?" When I stuck my nose into the Bill I said, "Wot, no duties to promote effective competition in the industry?"
  I am also concerned about how the industrial customer, who gets no protection, will fare under the Bill. The reason advanced for that being the appropriate mechanism is that the British gas industry faces tough competition in the industrial market. That was not the case in all industrial markets. For example, in some markets gas competes with gas oil, which is about 50 per cent. more expensive than gas.
  I have heard it said that the CBI has made no objection to the fact that there will be no reserve powers for the regulator. I venture to suggest that the CBI does not speak for all British industry. I am not the secretary of the CBI's fan club. I wonder whether all British industry has understood that there is no reserve power in the Bill for the regulator. It may be fair to argue that British Gas should be able to price up to what the market can take. But from the political point of view, some customers will have a problem if gas price rises to what the market can take, and their squeals could be rather loud.
  I am concerned about two other points about pricing. The first is the obligation on the new British Gas company to "use its best endeavours" to keep down standing charges which is rather a weak phrase. The other provision is that it should publish the principles that underly the connection charges. As far as I can understand, there is no control over connection charges. That is important. The BGC has an obligation to supply customers with up to 25,000 therms if they live within 25 yards of a gas main, but if there is no control over what the new company can charge for connection, there will be a way round the statutory obligation, and some safeguard would be appropriate.
  I should like to see further improvements in the competition for the supply of gas. The Oil and Gas (Enterprise) Act 1982 opened the way for private suppliers to supply gas direct to customers, and the Government have rightly recognised in the Bill that one of the important failings of the previous legislation was that there was no provision for back-up supplies. I am pleased that the Government have suggested something in the Bill, but the important point is the price at which back-up supplies will be provided. Again, as far as I can tell, the Bill and the

  809
  draft licence leave the decision on what is a reasonable price in back-up supplies entirely to the new gas company, and that is not desirable.
  I am aware that the new British Gas company will be able by predatory pricing policies, if it should choose to operate them, to pick on any competitors that may appear one by one. It can offer a good deal to industrial customers based on the fact that it has much cheap gas coming to it from old contracts. It can make an average price with which it can easily undercut any new product on the market, as the price of that must be based on up-to-date costs of new supplies from the North sea. Again, I should have thought that a specific prohibition on predatory pricing would be appropriate.
  I am a little surprised that the Bill does not seem to extend to the sale of appliances. In some of the appliance markets, up to 80 per cent. of the market is controlled by the British Gas Corporation, and that is important. This contrasts with the British Telecommunications Act, because in that measure there is a provision that it shall be the duty of the director general to
  "enable producers of telecommunications equipment to compete effectively."
  An equivalent clause in this Bill would be appropriate.
  I am also concerned that in the offshore sector the BGC should not be allowed to use its special position in an anti-competitive way. These days we talk much about Chinese walls, and one needs something like a Chinese wall between the two positions of the British Gas Corporation —as the most important, virtually monopoly buyer of gas from the North sea, and as an important producer. If it is both of those things, it can find itself competing for new licences with other oil companies and also being the only possible buyer of gas from those oil companies. It could put pressure on its competitors to discourage them from competing for licences. It is possible that such a practice might already be illegal under the Competition Act 1980. Perhaps my right hon. Friend can confirm that.
  My hon. Friends have raised another important point —the desirability of a distinct prohibition of preference being shown towards one supplier. The most obvious example would be the BGC showing preference to itself as a supplier, but there could be other examples. That brings us to the complicated question of what is the correct regime for imports and exports. In the past, the BGC has shown a preference for foreign supplies. This is not simply an academic point, because in the 1970s the BGC contracted for Frigg supplies, the result of which was a tremendous slump in exploration and development on the United Kingdom continental shelf. This was serious both for our balance of payments and for employment, which is why we take such a serious view of the matter.
  My right hon. Friend said that he intended to make a statement on imports and exports, and I look forward to that. I remind him of the conclusions of the Select Committee report on gas depletion—that imports of gas were likely to be necessary at some future time, perhaps in the 1990s, so it was desirable to move towards a regime in which both imports and exports would be allowed.
  Privatisation of a monopoly has three important benefits —commercial freedom for the company, regulation to protect the customer, and competition. I believe the greatest benefit to be competition. I am not sure whether the Bill recognises competition as the most important aspect. I hope that the Government will
  810
  carefully consider whether the balance is right, or whether there should be certain additions to the Bill to bring competition to the fore.
  6.52 pm
  Mr. Peter Hardy: I hope that the hon. Member for Enfield, Southgate (Mr. Portillo) will serve on the Standing Committee. However, he has outlined differences between his views and those of the Government that may lead to the Government not to look kindly upon any application from him.
  Some of us have sympathy with a little of what the hon. Gentleman said—although only a little. His attachment to competition is genuine and sincere. I hope that he understands that some of us represent constituencies where the Government's lust to achieve competition has resulted in 200 or 300 people chasing one job. That has not generated any great achievement.
  My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Brown) asked what we should call the new organisation. Perhaps it should be called, "Privatised Integrated Gas plc" —"PIG" for short. That is not an inappropriate title given the direction in which so many Conservative snouts have been pointing during the debate. However, at least we know where we stand with the majority of Conservative Members.
  The alliance amendment would give us the worst of all worlds. At least the Secretary of State has managed to resist pressures to disintegrate the industry, to split it into many pieces. If the amendment was accepted, that would happen. We should be grateful that we have been spared that.
  The Secretary of State's speech was condescending, especially when he implied that the BGC had not been successful. Had it performed as badly as the private sector companies that have given money to the Conservative party during the past five years, there might be a case for the Bill. Had it been only half as successful as it has been, however, that surely should have protected it from the Government's clutches. The BGC has out-performed every company that supports the Conservative party.
  Our country is too short of success and achievement for the sort of success achieved by the BGC to be put at risk. For it to be put at risk for corrupt motives is deplorable, and for that corruption to be disguised is equally deplorable. The Bill is about raising money, but the Secretary of State did not once offer even the slightest glimpse of the Government's estimate of what they expect to gain. The Government are to spend £30 million promoting the sale of BGC. We know that the City of London will receive at least £300 million for arranging that sale—yet we do not know how much the Government hope to gain. We must be given that information. If we are not, the Committee stage may not proceed as quickly as the Government might wish.
  We are concerned about priorities within the Department's expenditure. As I said, the Government will spend £30 million promoting the sale of the BGC. However, recently the Secretary of State and his colleagues expressed a burning commitment to the cause of energy conservation—indeed, 1986 is to be Energy Efficiency Year. When the Minister replies, will he confirm that the Government intend to spend £30 million promoting the sale of BGC, but only £5 million to £6 million supporting the promotion of Energy Efficiency

  811
  Year? It appears that the interests of the Conservative party have been valued at five times higher than the interests of the nation.
  The Secretary of State should have referred in more detail, and with a little less condescension, to the achievements of the BGC. In the foreword to the BGC accounts, Sir Denis Rooke painted an entirely different picture to the one painted by the Secretary of State. He referred to the BGC doing well to achieve a record level of gas sales, to the steady customer growth and to continuing healthy profits.
  The BGC's profits during the lifetime of this Administration and that of the previous Administration elected in 1979 have provided receipts to the Treasury that will probably exceed the amount that will be obtained from its sale. The BGC has been forced to make those payments, but it will contribute no longer when it has been sold, and then the taxpayer will bear an even heavier burden.
  One point that appears to have escaped Conservative Members is Sir Denis Rooke's reference to the willingness of all employees, at all levels, to adapt to change and to co-operate. The BGC's achievement has been that operating costs, in real terms, fell by 19 per cent. in five years. Few private companies have reached that level of efficiency —reached with the full co-operation of its employees.
  The hon. Member for Southgate said how great it was for workers to have shares in their companies, because it would help them to identify with their enterprise. The hon. Gentleman would have to go far and wide before he could find any significant enterprise in which the employees identified with the success of that company in the way that employees of the BGC, at all levels, identify with their company's success. Is the hon. Gentleman saying that their efforts, their co-operation and their significant achievements will not be set at naught by the greedy snouts of those who form the current Administration?
  Mr. Portillo: Is the hon. Gentleman seriously doubting that National Freight Corporation Limited has moved from loss to profit and success because many of those who are employed by it have had their attitudes affected by their ownership of shares in the company?
  Mr. Hardy: It was about four or five years ago that I took part in a debate on the sale to the public of Amersham International. Conservative Member after Conservative Member said that the only real resources of Amersham International lay in the hands and brains of those who worked for the organisation. They went on to ask why ownership should continue to rest with the state. I suggested that the Government and Conservative Members should allow Amersham International to be owned by a co-operative. There were ribald remarks as Conservative Members sniffed the profits that they were going to make. That disposed of that argument.
  If the hon. Member for Southgate tables an amendment in Committee that is designed to make British Gas a cooperative owned by the employees at all levels, from Sir Denis Rooke down to the apprentice gas fitters, I might vote for it. I do not think that such an amendment would be supported by his right hon. and hon. Friends. That is not what they are about. They realise how badly they have
  812
  served Britain and how badly they have performed generally. They realise that the only way in which they can win power at the next election is by bribing the electorate.
  I do not regard the Conservatives' bribery as an inevitably successful venture. The common sense of the British people has caused them to recognise that the country cannot afford the sort of Government that we have had here over the past five or six years. The Government's bribery will be a vain effort and the course on which the Secretary of State and his right hon. and hon. Friends are embarked will cause them to be regarded with greater distaste by the electorate than would otherwise be so.
  That distaste will be emphasised and intensified by the complacent condescension of the Secretary of State, who disregarded the efforts made by those employed in the gas industry. He chose to minimise the achievements that they have secured. He forgot about the enormous income which the Government have derived from British Gas and which they plan to enjoy on privatisation. That is scarcely a responsible approach—it is certainly not a generous one —on the part of the Secretary of State. At the very least he could have paid proper tribute to those who work in the gas industry instead of insinuating failure throughout his speech—although British Gas may be rather relieved that there is to be an integrated organisation rather than the dismembered one which some Conservative Members have advocated.
  Lastly, I shall refer to part of the document which was laid before the House last night. I trust that the Minister will be able to explain it fully, either this evening or in Committee. We have heard a great deal of jargon and gobbledegook in the House. It can be found in almost every published utterance. It is often ornate and sometimes it is a confusing and irritating use of language.
  It seems that we have moved now to a form of numerate language which is completely bewildering. I do not regard myself as an idiot, but I find it extremely difficult to understand the formula which has been presented to the House. The Minister assured us that there would be clear price protection, but I wonder how many gas consumers in my constituency, the Minister's constituency or the constituency of anyone else here can be reassured by the formula of price protection:

  Mt=(1?X/100)Pt-1Kt

  That is followed by some further embellishments that do not contribute to clarity.
  I know that the Conservative party has frequently fought elections with the claim that the people are entitled to know. Surely they are entitled to know, even if they do not have a first-class honours degree in mathematics or statistical science. If the Minister thinks that the formula to which I have referred is a satisfactory piece of clarification, that will neither give reassurance to the 35 million who depend upon gas, nor make the 93,000 employees of British Gas confident of the sanity of those who have made the decision to put their jobs under threat. He is sadly mistaken. We are entitled to a better explanation than that.
  The Secretary of State told us that the officials of the Department of the Environment had crawled all over British Gas and other energy industries. I do not know whether that is a fair description. If the result of that crawling is to inflict numeracy upon Britain of the sort that

  813
  is exemplified by the formula to which I have referred, perhaps the Department of Energy and its Ministers should be privatised and not the successful BGC.
  7.6 pm
  Mr. Peter Rost: It was predictable that the Opposition would spend their time today in another sterile argument about the marvels of nationalisation. It is regrettable but rather comforting that they have reaffirmed their commitment to grab back the millions of shares that will be taken by small savers, and especially workers in British Gas, following the enactment of the Bill. They have told us that they will do so if they get the chance to implement that policy. I have no doubt that one half of the Labour Opposition—again, this is comforting to know —intend to grab back the shares without paying compensation, while the other half will do so while paying some sort of compensation. We should welcome their decisive declaration to the voters for it means that the Labour party is even less likely than before to have the opportunity to form a Government and to carry out its policy.
  I welcome the Bill. I want to see the spur of greater efficiency and the profit motive spread throughout British industry. I do not see why employees in British Gas should be denied the advantages and privileges that are already on offer and have proved to be beneficial to the employees of British Aerospace, Jaguar, National Freight Corporation Ltd, British Telecom and all the other industries and organisations that have been privatised. I wish to see the extension of privatisation.
  However good a performance British Gas has put up —I am not one of its critics—I am modest enough to accept that under privatisation it might do even better. It might serve the economy better as well as the consumer. That in itself is a justifiable objective.
  Mr. Kevin Barron: The hon. Gentleman has referred to the employees of British Aerospace and their shares. Does he realise that only 3·6 per cent. of British Aerospace's employees now own shares in the company?
  Mr. Rost: That is 3·6 per cent. more than before. I have no doubt that many of those—[Interruption.] The hon. Gentleman may have the opportunity to make his own contribution if he will allow me to continue. I have no doubt that those who no longer own shares in British Aerospace will regret having disposed of them when they reflect on the performance of the company as a result of the motivation that has been provided by privatisation. I am sure that that applies to all the truck drivers who took their trade union leaders' advice and failed to take shares when the National Freight Corporation was privatised. I have no doubt that they are regretting that decision.
  I welcome the Bill, but I, too, have doubts. I feel that some of the provisions can be improved. I support the arguments that have been advanced by my hon. Friends the Members for Enfield, Southgate (Mr. Portillo), for Rochford (Dr. Clark), for Exeter (Mr. Hannam) and for Lewisham, West (Mr. Maples). We must be careful not to fall into the trap of privatising a monopoly without creating the opportunity for genuine open competition of providing a system of firm regulation. Naturally, most of us would prefer to adopt the first option. If a major industry is privatised, we should try to provide within the
  814
  transfer the opportunity for real competition. If that is not possible—I think that most of us understand that it is not practical—we must take the second best. It is a poor, but important, second best. Whether we like it or not, we must provide a sensible system of regulation. I am not entirely persuaded that we have followed either of those courses effectively enough to protect consumers and the national interest.
  My colleagues on the Select Committee on Energy's inquiry into the regulatory process have made points that I can only confirm. Those points have come out during the inquiry in evidence from oil companies, the BGC and consumer organisations, and much of it has already been published. A pattern is emerging. We appear to be in danger of privatising a monopoly without providing a competitive framework or an adequate framework of protection through regulation.
  I shall give an example of one area that has not been mentioned so far—consumer representation. I am not certain whether the loss of the regional structure of the National Gas Consumers Council will weaken consumer representation. I should like a firm assurance. I am not certain whether the Gas Users Council should have the right to take up consumer issues directly with the company instead of indirectly through the regulatory agency.
  In view of the details that the Government have given on the licence and the legislation, I wonder whether we have done enough to protect ourselves against the risks. I do not want to accuse the company, because I am sure that it will act responsibly when it becomes a member of the great club of free enterprises. Nevertheless, I wonder whether we should have provided stronger safeguards against the cross-subsidisation that might prevent genuine competition in the tariff structure that we are entitled to expect. Perhaps the Director General of Gas Supply should have been given an overriding duty to encourage competition as a general guideline. My hon. Friends have already made that point. I want to know how the director general will ensure that costs are properly allocated and charges fairly based on those costs.
  I want the further assurance that the director general will have those powers and that the company will have an obligation for its accountancy procedures to be more clearly laid out and defined than at present. They must be transparent, as they are in other areas of the private sector, for shareholders and the market. If the accounts are to be separated into only two categories—one covering gas supply and the other covering all the rest of the operations of the company—I can see the possibility of obscuring cross-subsidisation. That might work against whatever competition could be available and against the consumer.
  I believe that in the licence there should be an obligation to safeguard the consumer and the national interest. I am not sure whether that is in the licence. For example, standing charges are of great concern to smaller consumers. It seems to show sloppy drafting of the legislation —I put it no stronger than that —that the successor company will have no obligation to keep standing charge increases below the rate of inflation, but will be obliged to use its "best endeavours". I am sure that the Minister of State is listening, and I hope that he will interpret that as sloppy drafting rather than a deliberate plan. There should be an obligation on the company to publish not just the maximum but the minimum prices. That is tremendously important, so that the smaller industrial consumers can see whether they are being asked

  815
  to pay a higher price than the large industrial consumers. Therefore, we want to see not just the maximum prices of industrial tariffs —that is already provided —but the minimum ones, too.
  It is assumed that commercial and industrial customers can protect themselves against the privatised BGC. I hope so. It is right that the regulatory powers should be primarily concerned with the domestic consumer, but I believe that the larger industrial and commercial consumers can protect themselves only if there is genuine competition or if, for example, the common carrier provisions can be operated fairly. As my hon. Friends have said, there are serious doubts about the common carrier provisions. We know that they have not worked so far, because the BGC has not encouraged or wanted them. There is no evidence that it will encourage them in future. After all, the new company will have tremendous power in the market place. If anybody wants to transport gas direct from the North sea to industrial customers, it will have the power to offer the customer the average price, whereas the competitor, wanting to use the common carrier facilities, will have to offer the customer the marginal price.
  We are still not clear whether the method for calculating the tariff for the use of the common carrier will be fairly judged. There must be genuine monitoring, even if there is good will from British Gas, and we hope that there will be. The Secretary of State has a responsibility to look again at that subject, to see whether the common carrier provision is a genuine attempt to provide some competition or just a bit of window dressing, which I am sure it is not.
  Many points have been covered and I do not wish to hold up the House unduly. I shall summarise by suggesting that if we want to privatise British Gas, we should do so. However, it is a monopoly and we must provide particular safeguards—even more so than with British Telecom. I am not sure whether we have provided those safeguards, particularly upstream on production and competition. British Gas will now be encouraged and will want to go back into the exploration and production of gas. We must consider what effect that may have on the market place. I am not sure that we have provided competition where it could be provided, nor am I entirely satisfied that the regulator will have enough teeth.
  We seem to be resting our case on the Monopolies and Mergers Commission. The commission and the Director of Fair Trading already exist and have a statutory duty. But is it satisfactory that we should leave the regulatory body relatively weak and then expect the Monopolies and Mergers Commission to crawl all over the new company on a monitoring basis? The director general should be given a little more power to prevent the commission being asked to come in the whole time.
  The same applies to the Secretary of State. It seems that he is reserving his powers. He has ultimate power, through Parliament. We have ultimate power to renationalise, if necessary, and to change all the rules. If a great deal of the regulation and the assurance of competition and fair play is left to some extent to the discretion of the Secretary of State, using his reserve powers, particularly in upstream areas, one wonders whether that will be an undesirable
  816
  form of political intervention, rather than getting away from that, which is the purpose of privatisation in the first place.
  We want to make sure that we shall not continue, in a privatised form, the cosy relationship that appears to have been built up between a major oil sector and the larger companies in that sector, and the BGC. We also want to make sure that the prospectus looks attractive, so that the Revenue can get its money. We may be failing to accept that a tough form of regulation will not necessarily put investors off, nor will it mean getting a lower price for the shares. That is a misguided point of view. Investors might be more encouraged if there were a tougher regime and fairer regulation of the monopoly, in interests of the consumer and the nation. I think that investors would prefer that, and it would look better in the prospectus. It would be better than the continuing fear that the rules might have to be changed and the uncertainty that investors would have as to whether there would be a continuing public and political argument on whether we had done enough to regulate the monopoly. Such fear and uncertainty would be damaging to investors' confidence, and would affect the prospects of the prospectus more than if we built in from the beginning a slightly tougher regime.
  I hope that the doubts that I have expressed have not given the impression that I am in any way unhappy about the Bill. On the contrary. Many of them may be too pessimistic points of view. I have great confidence in the management of BGC, which should have been privatised long ago. It would have shown some of the private sector Confederation of British Industry members a thing or two if the managers had been allowed to get going before. I believe that privatisation will be in the long-term national interest, and the short-term benefits to the Treasury are only secondary to that.
  However, we must not forget that the credibility of the Government's privatisation programme is now on the line. It could be at risk if we do not get it right. Therefore, it is important that we scrutinise the legislation closely. I hope that my right hon. Friend the Secretary of State will examine the Select Committee's report when we have considered what we shall say ourselves, and that, if necessary, we shall still be flexible enough to make adjustments to make sure that we get it right.
  7.33 pm
  Mr. Kevin Barron: I think that all hon. Members will accept that the strength or weakness of any monopoly, certainly in the gas industry, lies in its exemption from the price discipline. Once the state disposes of its ownership of the British Gas Corporation, inevitably there will be a conflict between the owners, suppliers and customers unless suppliers and customers have a practicable and reasonable option. There is no option for the suppliers. The Secretary of State tried to say that there was, but he was not convincing. I do not think that he himself was convinced that there was an option. At the same time, there is an option for customers, but it costs a lot of money. The option is to install an oil-fired oil burner or a coal-fired coal burner in place of a gas one, in a domestic central heating system. In most households that option is not practicable, as it could cost anything up to £1,000.
  We should consider the reaction of our constituents to privatisation, and the questions that they will ask. We shall be able to answer the questions that they are likely to ask

  817
  only when we have had a chance to study the draft licence, which was published only 25 hours ago. It was not fair to publish the draft licence less than 25 hours before the beginning of the debate. The National Gas Consumers Council and consumer councils in the regions have been the eyes and ears on many occasions of right hon. and hon. Members on both sides of the House, because they can scrutinise proposals in detail and on occasion they write to us to say exactly how they feel we should treat legislation. They have not had the opportunity to do so through the trick of printing the draft licence less than 25 hours before the debate. That is a great pity. There is representation for consumers in the Bill. I am sure that everyone involved with the present consumer councils will not like the idea of their being missed out because the draft licence was published such a short time ago.
  This morning I received a letter from the North Eastern Gas consumers council about regional representation if the Bill is passed. It believes that there should be not just regional offices but people in the offices who know about the needs of the regions and can represent people there. I hope that the Minister and members of the Standing Committee will take that into account.
  Prices are a major matter on people's minds. The formula that my hon. Friend the Member for Wentworth (Mr. Hardy) read out was a bit confusing, to say the least. I understand that the draft licence says that the percentage of increase will be below the rate of inflation. However, there is also a percentage for the rising cost of materials. It is vague on exactly how the new licensing authority, or regulatory body, will control prices. I should like the Minister to explain in more detail than in the draft licence what we can expect. Is it true that the price rises will be below the rate of inflation, or will they be above the rate of inflation, for other reasons?
  Standing charges are another matter on people's minds. The words "best endeavours" are used in condition 4 of the draft licence. It would be difficult to make a valid judgment on the level of standing charges in the next 12 months or the next three or four years.
  The Bill talks about different suppliers. Condition 11(3)
  in the draft licence says:
  "Where an escape of gas reported to the Supplier relates to gas supplied by any other gas supplier authorised under the Act, the Supplier shall take all reasonable steps to notify that other gas supplier of the escape as soon as practicable after the escape is reported to the Supplier."
  If a supplier is told of a gas leak, is it the case that that might not be acted upon straight away? If so, more clarification on the emergency services is needed than appears in condition 11(3).
  I was fortunate enough to see a new service centre that opened in Rotherham during the summer recess. That centre can respond quickly to telephone calls from anybody who suspects that there is a gas leak on domestic premises or anywhere else. Will that no longer be the case? If so, that is a backward step for the community.
  Condition 12(1)(b) of the draft licence talks about
  "a Code of Practice concerning the payment of gas bills including guidance to domestic consumers if they have difficulty in paying".
  I am sure that hon. Members will have had dealings with the BGC when people on low incomes or state benefits have been unable to pay their gas bills. However, they have been able to continue to use gas to keep warm and so on while overcoming the problems of immediate payments. How will that situation differ now? I am sure
  818
  that the Minister will recognise that, because of Government in action, fuel poverty in Britain will not go away. It is a real problem, despite our great energy supplies.
  Why are we discussing the privatisation of the BGC now? Nothing in the Bill will give much protection to consumers in my constituency. Little protection is being given to people who work in the industry. Indeed, if past privatisation programmes are anything to go by, the improved efficiency that some Conservative Members have talked about will be followed by massive redundancies. It falls on the Exchequer to pay for that in unemployment benefits and so on. The Government are taking this step for reasons which do not necessarily benefit the people who work within the British gas industry or use British gas.
  This summer, British Telecom announced annual profits of £945 million after tax —the first profits since privatisation. Because of the sell-off of British Telecom, the British people lost half of that—£472 million. The same has happened in other sell-offs under the Government. British Aerospace shares were sold for 150p in 1981. Two weeks ago those shares fetched 481p, an increase of 331p a share.
  Mr. Rost: Does the hon. Gentleman accept that a large proportion of the rise in value of British Aerospace shares since 1981 could be due to the success of privatisation?
  Mr. Barron: I doubt that that could be substantiated when one considers other privatisations where the price of shares have sometimes doubled, or increased even more, within weeks of privatisation. It is more likely that the City is making a big killing than that the public interest is being looked after. British Aerospace shares have shown an increase of 331p, or £95 million.
  Cable and Wireless shares were sold for 168p in 1981. Two weeks ago they fetched 635p a share, a gain of 467p or £534 million. The shares of Amersham International increased within a few weeks of being sold. In 1982 they were 142p and now they fetch 290p or £67 million. The same applies to Associated British Ports and Jaguar.
  British Telecom shares were sold for 130p. Two weeks ago they were fetching 206p a share, a gain of 76p or £2,289 million. Those are the gains that are being made in this casino of privatisation deals that the Government have been putting through.
  There is not necessarily any more real investment or jobs in those industries. In many cases, the opposite is true. Privatisation does not necessarily mean a greater or better use of new technology or lower prices. It does not mean that more people are making more things. It just means that a few people are making money.
  The Government say that the sell-off has nothing to do with the base and tawdry business of helping the rich to get richer. When the subject rears its head in the Chamber we are told that their policy is all about creating truly public enterprise and a wider share ownership whereby workers have a stake in the companies in which they work. That is a con trick. The facts and figures of privatisation measures since the Government have been in power show that.
  For example, when British Aerospace was privatised in 1981, there were 158,000 shareholders, 125,000 of whom had holdings of less than 500 shares. Last year that figure had dropped to 43,000 shareholders, with 35,200 of them

  819
  holding fewer than 500 shares. I can tell the hon. Member for Erewash (Mr. Rost) that the employees' shareholding in British Aerospace is 3·6 per cent. —hardly the great stake in the employees' industry that was spoken about before privatisation. One half of 1 per cent. of shareholders—just 500 people or institutions—own 76 per cent. of the British Aerospace shares that have been sold off. That is a higher concentration of ownership than in Marks and Spencer or the Midland bank.
  The number of shareholders in Cable and Wireless dropped from 151,000 to 50,000. Those with over 1 million shares rose from four to 54. Employees' holdings in Cable and Wireless are now 1·4 per cent. Where is the wider share-owning democracy that we have heard about so often from the Conservative Benches? Where do we find the people in the workplace getting the benefits of their labour, other than as salaries or wages?
  In British Telecom, 500,000 shareholders with 400 shares or less sold their shares within six months of privatisation. At present less than 2 per cent. of employees hold shares in the company. Again I ask, where is the wider share-owning democracy that is talked about and the golden light that is held up to show the way forward for the British economy? Over 65 per cent. of the shares of privatised companies are owned by the top 0·5 per cent. of shareholders. So much for people's capitalism and for the spreading of share ownership.
  The Government are now about to privatise the BGC. They say that they will raise over £5 billion. For what —to raise tax thresholds and cut income tax rates? Privatisation will do nothing for the 7 million people in this country who are living on state benefits. The Government hope that it will help them keep power in the House of Commons in 1987 or 1988. People should not ask me for an opinion; they should go to the City. They will be told that the BGC is now and will in years to come be worth more than £5 billion.
  The measures contained in the Bill are not for the small investor; they are for the big money. The Bill is not for the 16 million gas consumers. It would be nice if we had had the opportunity to debate in greater detail whether there will be higher standing charges and how prices will be regulated. The Bill does not provide for competition in supply. If it did, it would keep down share prices. I am sure that those people who are sitting around like vultures waiting to buy into the BGC do not want that to happen. The Bill does not safeguard the consumer. Safeguards for the consumer would make the BGC less profitable for those waiting to buy.
  The industry was nationalised in 1949. It had been a private shambles. There was under-investment, primitive technology and danger, as in the coal industry which was nationalised a few years earlier. The industry was rescued by public ownership and was made fit for modern needs by economic planning.
  The BGC is now a high-employment, high-investment, high-technology and high-efficiency industry. It is responsive to national and industrial needs. It is sensitive to consumer and community interests. It is a public service in every sense. It is a profit-making public service. It provides income of £1 billion a year for the taxpayer. Will the Minister tell us how taxpayers will obtain the income that will disappear with the privatisation of the BGC? Will
  820
  it be brought in through a further gas levy? Will the income go to those people who are sitting on the fence waiting to buy into the industry?
  The gas industry that the Tories want to sell is a national asset. They will turn a public monopoly that has public duties and is publicly accountable into a private monopoly —a machine for making big money for big money. There will be no price or service advantage for the people.
  The most ironic factor in this privatisation measure is the Morecambe bay project. It was rejected by private enterprise which did not feel that it was necessary. Private enterprise did not believe it necessary to develop or produce gas in Morecambe bay. The BGC decided to go into Morecambe bay. It ensured that in January this year Morecambe bay came on to cope with the winter gas demands. The Government will be asked over and over again why they are handing the BGC back to people whom gas consumers would regard as irresponsible.
  7.44 pm
  Mr. Richard Shepherd: A case for the privatisation of public holdings can be made much more easily than we sometimes think. As we are all aware, difficulties arise when we talk about public monopolies. In this case, the public monopoly is also a utility. Market theory argues that there need be no regulation if there is a competitive environment. However, where there is no competitive environment, but there is regulation, it is often difficult to determine the nature of the regulatory authority. Like a moving target, our appreciation of what we are looking at changes from time to time.
  We saw that with British Telecom. The reservations that we had about Oftel when we discussed British Telecom's licence are now being expressed by the Director General of Oftel. We are sometimes slow to take on board where the force of an argument lies.
  I find that there is something distinctly disappointing and worrying about the Bill. The arguments that we adduce for privatisation revolve, essentially, round efficiency. We say that greater efficiency accrues to the industry and to the national interest from competition. In this instance there is an absence of competition, whichever way one considers the Bill.
  We are considering the structure of the industry. If we privatise the BCG in its present form and move it out of the public into the private sector, we beg the question why that, of itself, is beneficial. One argues and accepts the argument that it is beneficial to withdraw the industry from the claw of public sector interference, Treasury views and strictures, and the Department second guessing the professionals within. That is the one argument that I can appreciate and wholeheartedly support. What inducements have we tried to construct in the Bill that will enable us to be assured that the industry will seek out efficiency and manage its affairs efficiently in the public interest?
  I found it disappointing to hear my right hon. Friend the Secretary of State say that he had considered the various forms in which the BCG could be privatised and had rejected the regional operating company argument. I considered that proposal carefully because it has some of the features—not all of them, by any means—which at least help one to assess whether an industry is more likely to work to the consumer's general benefit. That is my primary interest in the privatisation process.
  With a regional operating company, we have the first thing that we are looking for—a benchmark by which to

  821
  judge whether one area is operating reasonably as against another. There is another benefit. We reduce the possibility of monopolistic tendencies through cross-subsidisation. My right hon. Friend said that one lost the economies of scale with the regional operating company. I am surprised at that observation. I have not seen enough of his background papers or work to give me sufficient confidence to accept his point. The argument in favour of breaking up the BGC's present structure into regional operating companies is that they would be handling the same distribution pattern as at present. There is no difference in scale. We are talking about 12 companies where there is one at present, all operating within the area of their natural monopoly. Where is the loss of economy of scale?
  We shall probably have price differentials. I am not sure that the Bill, or the regulatory machinery that it envisages, will eliminate subsequent changes in pricing policy. We have national unitary pricing. I believe that that is counter-productive and against the national interests. It does not mean pricing at marginal costs. A social judgment is being taken that prices should be the same in one area as they are in another. That is a fair point to make, but it is not in the interests of efficiency or the good running of companies.
  There is a benefit in terms of regional pride. I have seen a tremendous managerial drift to the centre over the years. I was born in Aberdeen, and I am sympathetic to the Scottish point of view. In the west midlands, I have again seen this drain towards the centre. To have 12 large regional operating companies with their headquarters in regional towns dealing direct with their local market and employees would give a flavour of entrepreneurial drive to these regions. There is merit in considering that. The national transmission system would be a 13th element, separate from them. There is no reason why it should not be a separate company, together with the 12 regional operating companies. I am looking for a benchmark and a test of efficiency. In that way we could ask why it is that region A manages its affairs more tightly than region B. Our interest in that would reflect the customers' interest. We do not want customers to be ill served.
  In talking about the present corporation we are talking about a massive company. It is difficult to have windows into its activities without a regulatory regime that is pervasive and demanding in information. I know that that is not the British way. In the past I have watched our response to regulatory authorities. We are light regulators. Indeed, we have difficulty in regulating the City. In this vast business we are dealing with technologies, details of men management, and a huge tranche of information, and it is difficult to identify practices with which we may be unfamiliar.
  I fear monopolies because of the rationale behind them and the incentive to maximise profits, not necessarily with the exertion of effort, but with the acceptance of the monopolicy position in the market. That is why I am sorry that my right hon. Friend the Secretary of State did not say more about the reasons which made him discount introducing a different structure for the privatisation of the BGC.
  Mr. Rowlands: I have been following the hon. Gentleman's argument closely. At present, there is regional identification. Certainly Wales Gas has a certain pride. It would be wholly unfair to compare one region
  822
  with another. The Welsh economy will determine the success or failure of the sale of gas in Wales. It would be wholly unfair to compare a Welsh regional gas corporation with one in the south-east. During the past five years, in particular, Welsh gas would have come out badly because of the collapse of the industrial market. The hon. Gentleman's argument for regional comparisons would lead to unfairness.
  Mr. Shepherd: I understand the hon. Gentleman's point. He may be over-anxious about the ability of people to judge efficiency in areas between one set of circumstances and another. Obviously every circumstance is not identical, but in that way we could see the management of a national scarce resource on a comparative basis. The hon. Gentleman has put forward an argument to show why for a period, Wales may not seem to have performed as efficiently for example as Midland gas or South-East gas. Nevertheless, through comparison one gets closer to identification, and so to adding an incentive to efficiency, which I should like. Obviously, we differ on this.
  My right hon. Friend the Minister will probably have read the report on fiscal studies by Hammond, Helm and Thompsons, and I certainly commend it to the House. The report concludes:
  "We find it difficult to see any significant benefits from the Government's proposals to privatise BGC in its present structure. The consequences may even be adverse. And privatisation on this basis is likely to make the task of introducing competitive incentives in the future more, rather than less, difficult to put into practice."
  I am inclined to agree with that. I am disturbed by the closure of options by this form of privatisation.
  I urge upon my right hon. and hon. Friends the need to reconsider their route to privatising BGC, with all its implications of a massive significant market force. There will be no market discipline. Such a huge combine will mean that stockbrokers and the finance industry will not be able to exercise the detailed determination of its arrangements, which should provide one of the benefits of privatisation. That would work much better with smaller regional companies. If there is an opportunity to do so, I should be grateful if the Government would reconsider that point.
  7.54 pm
  Mr. Gordon Wilson: It is a happy coincidence that I follow the hon. Member for Aldridge-Brownhills (Mr. Shepherd) after his thoughtful remarks. He put trenchant criticisms of the Bill to the Government, and I should like to follow his example, but perhaps less delicately.
  The Gas Bill is completely misguided. It is both daft and dangerous. It is daft because it is not necessary to privatise the gas industry in the first place, and dangerous because it creates a large powerful private monopoly. We must consider one matter which did not necessarily follow previous privatisation legislation —the British Gas Corporation is a monster company, and straddles a huge market. If all monopolies are insensitive to public needs, and if it is difficult enough to control our public monopolies, as the Government have found in times past in dealing with Sir Denis Rooke as chairman of the BGC, what will happen when the BGC becomes a private monopoly and Sir Denis is freed from the fetters of having to pay some attention to the Government's views?

  823
  The BGC has a total monopoly of gas collection, distribution and sales. It is a monopoly buyer of methane, has a monopoly of trunk pipelines, and a monopoly of sales to domestic, industrial and commercial suppliers. In practical terms, even if it were possible for other companies to catch up, it would take decades for any company to match the BGC in the open market. It would be virtually impossible for the Shells and Essos of this world to shoulder the BGC from its customer base. There is nothing in the license arrangements announced by the Government precipitately before the debate which allows for adequate competition, and care of consumers.
  One can consider the legislation in a broader light. At present we are in the middle of a merger mania where large companies either come together voluntarily or are forced into shotgun marriages. The Government are introducing legislation to spread the powers and functions of building societies, yet the building societies, huge as they are, continue to merge. We see more and more financial power coming into the hands of fewer people.
  Yesterday we debated the Channel tunnel. Again, with a Government directive, without adequate consultation, a huge investment could be made without considering the impact which it might have in other areas. The Government seem to be following a dictatorial path. During the past year I have detected a whiff of the corporate state coming from the Government. One of the problems of the development of mega-corporations in the financial and industrial world is that eventually they may be able to challenge the Government, and dare the Government to do things which the Government could have resisted if the corporations had been more and smaller.
  Privatisation of the BGC does not make sense. The BGC is over the golden years. The hon. Member for Rother Valley (Mr. Barron) dished out great dollops of praise to the BGC, but he neglected to mention that latterly the BGC came into a huge windfall through the discovery of natural gas in the North sea.
  On that basis, it has managed to expand what was previously a declining market and to build up its organisation. Speaking as a consumer, at various stages in its development I have considered it to be one of the most inefficient of the public corporations because it never seemed to get its workmen out to put right some of the equipment that it had sold to suppliers such as myself. That is why I do not entirely accept the view that everything British Gas has done over the years is perfect.
  The Government should read into the whole question of the supply of gas a considerable warning, as should future investors in the company. The gas supply forecasts covering the period 1985 to the year 2000, issued by British Gas in November 1984, stated:
  "The amount of gas produced from fields now under contract will fall steeply in the late 1980s and early 1990s.…But United Kingdom supplies will not be enough. This leaves a gap between the supplies from the UK fields which British Gas can rely on for the 1990s and the demand it predicts from its customers. This gap will have to be filled by imports continuing at about their present levels."
  British Gas intended that it should be able to fill that supply and demand situation by entering into an arrangement with the Norwegians for the development of the Sleipner field, but the Government turned that down and at present everything depends on which sector
  824
  forecasts one believes. Either way, by the mid-1990s we could be running out of gas. It is certain that, should we move into such a restricted supply situation, the price of gas would climb steeply for the consumer, yet there would still be a profit element levied for British Gas plc.
  I see the future market as being sticky. Any investor who takes shares in British Gas based on the company's previous success should be wary. In that connection, the Government should explain what will be the position of the gas levy. So far, British Gas has increased its prices in response to demand by central Government and the surplus has been whisked off by the gas levy.
  If the price of gas begins to rise and the increase must be borne by the consumer, will the Government surrender part of the gas levy so that the price rise will be braked? It is clear from the criticisms of the licence that insufficient information will be provided about the profit levels of the new public limited company. Despite that, we still have a public tax—the gas levy—involved in the matter. The Government should come clean on that.
  I have argued so far that the privatisation we are considering is bad in United Kingdom terms. I am even more worried about the position in Scotland, which has not done all that well out of the gas industry. By a circumstance of history, gas was first discovered in the southern basin of the North sea and it was six or seven years before the gas pipelines began marching northwards. In the meantime, much of Scottish industry was deprived of supplies of gas at a time when the price of gas was extremely cheap. Indeed, to this day Scottish industry consumes a smaller proportion of gas than elsewhere in the United Kingdom.
  It is interesting to record that, as soon as gas was discovered in Scottish waters, in the early 1970s, the then Conservative Government intervened and abolished the then autonomous Scottish gas board. That cannot be regarded as entirely coincidental, in the same way as, all of a sudden, in 1975–76, the then Labour Government decided that mineral resources which had previously been attached to the Scottish region should come under a different regime. They transferred all the offshore oil resources from the Scottish account into a new offshore account. Government financial trickery of that kind is prevalent.
  When I asked the Secretary of State whether he thought that a new Scottish company should be set up, I got an unconvincing reply. We cannot assume, either, that the existing company in Scotland—I will call it the regional company —Scottish Gas, will remain even with the autonomy that it now has.
  Mr. D. E. Thomas: Is the hon. Gentleman aware that it was recently made clear that under the Bill the boundaries of Wales Gas —presumably the same applies to the company in Scotland —were not protected? Does he agree that it is time the Minister came clean on that issue?
  Mr. Wilson: That is true, and I am grateful to the hon. Gentleman for raising it. Information leaked from Scottish Gas suggests that the British Gas Corporation, in preparation for its changing role, intends to change the identity of Scottish Gas. Quietly, without a fanfare of trumpets, the term "Scottish Gas" is likely to be dropped and "British Gas (Scotland)" put in its place. Scottish Gas will decrease in importance in the new structure. It would

  825
  not surprise me if, once British Gas got going, the Scottish area management—the same may be true of Wales and of local managements in other parts of Britain —disappeared. In other words, there is a danger of further centralisation.
  I read in the Petroleum Economist for November that the Bow Group, with the members of which I am not always in agreement, had made clear its preferred solution, which was that British Gas should be split up like the Bell Telephone Company in the United States and sold off separately.
  Although I am completely against the privatisation of British Gas, I believe that if it came to the bit, it would be more effective in United Kingdom and Scottish terms for there to be an independent Scottish company. Let us remember that such an organisation would not be small. At present, Scottish Gas has 6,700 employees and 1 million customers. It has sales of £403 million a year and it is one of the top 10 Scottish companies, judged on sales. Last year, Scottish Gas invested £20 million and paid £57 million in wages.
  It is also more than self-sufficient in supplies of gas, because, although Scotland consumes 6·2 per cent. of British Gas Corporation sales, 20 per cent. of the gas produced comes from gas fields off the Scottish coast, excluding Norwegian gas from the Frigg and Statfjord fields.
  I call on the Government to review their policy in that respect. According to leading articles that I have read, the investment market in Scotland would be interested in having the opportunity to invest in a company of that sort, so that we could keep the management and policy firmly in my country.
  I was flabbergasted to hear that Labour party policy was completely against any regional control of Scottish Gas, yet it is supposed to be the party of devolution, the party that claims it wants a Scottish assembly, that believes that industrial development should go to a Scottish assembly and that such a policy should be binding even on north of England Labour Members —or so I am informed by Scottish Labour Members. Being a naive soul, I am willing sometimes to believe that.
  When I heard, however, that the right hon. Member for Salford East (Mr. Orme) had firmly committed the Labour party against any form of Scottish involvement, and when he said that the official Opposition were in favour of this big private monopoly operating from a London base, I felt that the Labour party's devolution policy did not amount to much. I shall make some effort to let people in Scotland know that the Labour party is still the party of centralisation and believes in London control.
  The Government should beware of making some of the same mistakes that they made in relation to the Trustee Savings bank, when they assumed that they could float off a company with assets that did not even belong to the state. Apart from the legal action, the House of Lords excluded Scotland from that Bill. One can never tell what the House of Lords will do, but we know what the House of Commons will do because of the Government's huge majority. In this case, I would like to encourage their Lordships to dismember this Bill and to ensure that if it goes through, adequate care is taken to retain as much financial and managerial power as possible within the areas in which British Gas operates.
  Even with their present free market philosophy, I cannot understand why the Government should go out of
  826
  their way to create such a huge private monopoly which, given what has happened with British Telecom, will undoubtedly lead to massive increases in gas prices for the consumer. If they do privatise this company, I serve notice that any Scottish Government will have to take steps to return this important industry to Scotland.
  8.11 pm
  Mr. Tom Sackville: I welcome the Bill because there is every reason for returning the gas industry to private ownership. The conditions that existed in 1948, which first led to nationalisation, no longer apply. Then there was a general recognition that a major reorganisation was needed. The industry had grown up piecemeal over 100 years and was extremely diverse and unco-ordinated. Thanks to the differing qualities and specifications of its products, as well as the varying efficiency and stability of producer companies, there was considerable doubt whether consumers or industry were being served as well as they could be.
  It was not clear that the necessary reorganisation could even be achieved under private ownership. There was also a reforming Socialist Government for whom it was an article of faith that production could be better harnessed under state ownership for the greater benefit of consumer and employee alike.
  Given the lack of any real example up to then of a major nationalised manufacturing concern by which the likely success of failure of the new enterprise could be judged, it was relatively easy to sell the idea of nationalisation to people of all political persuasions. But the conditions are now very different. Nationalisation has not brought the great economic and social benefits assumed by Socialists of the day. Indeed, it is alarming how little their successors on the Opposition Benches have learnt from the intervening years. They still have a touching faith in the principle of state ownership that is not given substance by industrial experience either here or anywhere else. That faith is not shared by many people outside the immediate world of politics, and I suspect that it is not shared by even a majority of those who normally vote Labour at the polls —or used to.
  The situation today is also quite different from 1948 in that the co-ordination and modernisation of the industry is now complete. The task for which the Government were brought in has now been fulfilled.
  Many long-term benefits will stem from this Bill. One of the most significant is the opportunity it gives to encourage enterprising private sector management into a large and vital British commercial concern. That is in no way a criticism of the present management of British Gas, and I pay tribute to the entire work force of North-West Gas, 500 of whom work in my constituency in Bolton.
  It would be profoundly unhealthy to perpetuate the current situtation in British industry of two distinct sectors —the private and the nationalised. In practice, the result is that nearly all the go, go modern image concerts are in the private sector, whereas large and important corporations, such as British Gas, do not have complete access to all the managerial talent that is at present available. That is particularly true at senior management level, because many of the most able and creative managers in British industry are simply not prepared to put up with the arbitrary interference of politicians in investment, pricing and other routine management decisions.

  827
  The effect of this failure to maximise managerial efficiency in the gas industry is potentially very serious. It threatens the interests of employment in the industry through lack of competitiveness with other sources of energy, with a consequent fall in market share. It also threatens consumers, and, thanks to the role of gas as one of the major elements in industry's source of energy, it threatens to raise costs. We are all aware that for years large sections of British industry have suffered as a result of high energy costs compared with overseas competition. That fact has undoubtedly contributed to the decline of many sectors of our industry. The Bill will ensure that those dangers are minimised.
  The Opposition have given no good reasons for keeping British Gas in state ownership. They have said nothing to dissuade me from the ideal that if politicians were any good at running major energy or other commercial concerns, they would have gone into industry. The running of British Gas is to be returned to those best qualified to do the job. For that and many other reasons, I unreservedly welcome the Bill.
  8.17 pm
  Mr. Geoffrey Lofthouse: A few moments ago I glanced at the Bill and noticed that it was entitled "Gas Bill". It should have really been called the Representation of the People (Purchase of Seats) Bill, because that is what it is.
  In my view, the Bill and the licence have been brought to the House with indecent haste. There has been no real chance to digest the contents of the licence, and only this morning that problem was encountered by the Select Committee. Although the hon. Member for Erewash (Mr. Rost) tried to show some enthusiasm for the Bill, he found it exceedingly difficult.
  The management and employees of British Gas will be surprised to learn how inefficient Conservative Members feel the British Gas Corporation has been over the past 20 years. My right hon. Friend the Member for Salford, East (Mr. Orme) said that it had been 20 years of success, and I support that view.
  Why do the Government want to privatise BGC without any evidence of inefficiency and with no evidence at all of non-profit making sectors within the corporation? Many Labour Members and, I guess, many Conservative Members and people in the country know why the Government are pushing the Bill forward with indecent haste. It will provide them with income for tax cuts for their friends. That is no secret. The whole country is aware of it. They are selling the family silver, as has been said often since a speech in another place, and they are selling the bricks and mortar, as my right hon. Friend the Member for Salford, East said today.
  I understand that British Gas is valued at anything from £6 billion to £10 billion. If it is worth £8 billion, it represents a 7p cut in income tax, but that same £8 billion could keep another 100,000 people on the dole and still provide tax cuts. The Bill represents the biggest present to the Government's friends and relations in the City of London. The British gas industry is to be handed to them on a gilded plate. It is a good deal for City financiers who will be on a nice little earner with commission for handling the sale. Moreover, the City will be able to buy the industry at half price and pocket the profits which
  828
  currently pay for community services. The Bill represents profit for the people who can afford to buy and for the Government's friends, but it is rotten for consumers. As has been said time and again today, there will be no competition. There will be a private monopoly keen to push up its prices to increase profits still further.
  The right of British Gas to force entry into a consumer's home is also to be transferred. That is deeply worrying. I appreciate that that right must be retained for safety reasons, but it is dangerous to give that right to a private company that is not answerable to Parliament. It endangers civil liberties.
  What arrangements will be made for pensioners and others with little money? Private companies exist to make money. I do not believe that any hon. Member disagrees with that. I do not believe that a private company will concern itself with keeping the old, the disabled and the low-paid warm. The area that I represent is now feeling the full force of the Government's policies through the Department of Energy. They have created mass unemployment and poverty in the coal industry. My constituents will have great difficulty in meeting their gas bills, and they do not expect the new company to be as sympathetic towards them as British Gas.
  Who will be the regulator? The Secretary of State, a politician, a politician's hack? Will the regulator be independent and part of the Office of Fair Trading? Listening to the Secretary of State, I got the impression that he wants to conceal the Bill's purpose, because he gave little information about what it will do. For example, will the regulator act as an arbitrator on price fixing? Will he fix prices? Can there be a fully competitive market with the regulator fixing prices? Such questions must be answered.
  I do not know whether the Secretary of State and his Department have considered such matters in their indecent haste to produce the Bill. How much political interference will there be from Government? Will it be the same as with British Gas? Will the regulator have control? Nobody knows. I suggest that the Secretary of State does not know. I hope that the Minister will give the matter some thought before giving an answer later.
  Will the privatised gas company be free to import, or will it be controlled by the Government? What will happen to the gas levy? Will the Government continue to control price increases, which has enabled them to put money into the Treasury's coffers? What will happen when the Government receive the first flood of money after the sale of British Gas, which they will need to fulfil their electoral commitment to cut taxes? What will they use after that money is gone? What will they use to replace the income from the profits of British Gas? Such questions need to be answered. We believe that we know the answers.
  If the Government were to be re-elected, they would have to increase taxes to fill the revenue vacuum. What information is to be available to the regulator? Will he get the same information as that to which the public are entitled, or will he get more? Could British Gas run its accounts together? Could there be cross-subsidy? Could domestic and industrial tariffs be joined? Nobody will know where the profits and losses come from.
  I understand that the Bill lays down no obligation to keep increases in standing charges down to the rate of inflation. this business of "best endeavour" has been put into the Bill. Somebody has thought it up. It has not been put there because it looks nice. Why has it been included

  829
  if the Government genuinely intend that standing charges shall not increase above the rate of inflation? I suggest that it is a get-out, so that, if "best endeavours" prove not to be good enough, it can be argued that standing charges must increase above the rate of inflation.
  The Secretary of State referred to other nationalised industries. As he mentioned them, we are entitled to more information. He said that the Government would consider all nationalised industries with a view to privatisation. Was he referring to the coal mining industry? Did he have an eye to the future, when massive sums of taxpayers' money have been used to buy men's jobs through redundancy payments? When all that money has been used, will the Government hive off the profitable parts of the mining industry to their friends? Is that what he meant when he said that other industries will be considered?
  This is a continuation of the Government's policy of denationalising and selling off to their friends anything and everything that is profitable. No case whatever has been made for hiving off British Gas to the private sector. There is no evidence that British Gas has been inefficient. The Bill arises purely out of Government dogma. I hope that Conservative Members, who know in their hearts that the Bill cannot be good for the nation, will join us in opposing it today and in Committee.
  8.30 pm
  Mr. Peter Bruinvels: I am sorry that the hon. Member for Pontefract and Castleford (Mr. Lofthouse) is so worried about the Bill, because employees in the industry support it. Like many other people throughout the country, they look forward to legislation which will not merely privatise a major industry but will allow all those prepared to come forward the opportunity to share in a highly successful industry. What is wrong with reducing state influence and introducing free private enterprise?
  I welcome the Bill and I pay tribute to the people in the gas industry, especially in East Midlands Gas —the board, the engineers, the technicians, the salesmen and women, accountants, clerks, telephonists and all the other people who have made the industry in Leicestershire and throughout the country the great success that it has become.
  In 1984–85 the industry's turnover was £6,913 million, and it is to be congratulated on the way in which it conducts its business, its undoubted professionalism and its good service. If the time has come for it to go into the private sector, what is wrong with that? Its success is not a vindication of the principle of state ownership. It is due to the high standards of technical expertise, good management and perceptive planning. I suggest to the hon. Member for Pontefract and Castleford that we should wait and see—I hope that I shall be proved right and that he will be proved wrong.
  In 1950, after the first year of state ownership, 213·5 million therms of gas were distributed in the east midlands region. Last year, the figure was 1,746 million therms —an increase of more than 800 per cent. and evidence that the customer is getting what he wants and needs. In 1950, the region had 1,055,000 customers. It now has 1,700,000. That represents a vote of confidence by the people of the east midlands in the industry and in the service that it provides so efficiently and well. In the same period, the output of therms per employee has increased tenfold —a measure of productivity of which any
  830
  industry could be proud. East Midlands gas is run like a small public company in which customers and consumers are treated like shareholders, favourably and with care.
  I am pleased to welcome the assurances given by my right hon. Friend the Secretary of State that he intends to encourage all employees to take up shares in the industry, as I know that my constituents who work in the industry are keen to take up that important concession. Since its inception in the early 1820s, the gas industry has been a family industry, with intense loyalty not just to the company but to the consumers on whom the industry has always depended, and the Conservative party has never forgotten the consumer. I am sure that that loyalty will be confirmed by the willingness of employees to take up a stake in their industry, as I pointed out to my right hon. Friend the Secretary of State following his statement earlier this year.
  I want an end to high costs and prices once and for all, I want a reliable and universal service no matter where one lives, and I want a much better return on capital. I believe that that will be the result of the Bill.
  Mr. Hardy: The hon. Gentleman has paid a well-deserved tribute to the staff of East Midlands gas, which serves my constituency. I confirm his assessment, but does he accept that that splendid record has been achieved by people who believe that they are providing a service and who are sustained in their efforts by consultative committees, the members of which ensure that that high standard is met and recognise the contribution of the workers? If the hon. Gentleman is on the Standing Committee, will he vote with us to ensure that the qualities that have made that success possible are maintained?
  Mr. Bruinvels: The hon. Gentleman makes an important point. The employees of East Midlands Gas are a credit to their industry. Indeed, I believe that we are better served than are many other parts of the country, but I do not believe that there is any need to revert to the old system of area and regional councils, because I do not believe that it is principally they who have made East Midlands Gas so successful, although they have certainly contributed to it. In any case, those people are keen for the Bill to go forward.
  Mr. Hardy: No, they are not.
  Mr. Bruinvels: For a long time I was national accounts manager for an excellent energy cost analysis company specialising in tariff analysis. We worked out the best possible deals for gas consumers throughout the country. I agree with my hon. Friend the hon. Member for Erewash (Mr. Rost) that maximum tariffs and costs for particular firms must be published under clause 36, but 1 want the minimum tariffs available to be published as well. In fact, I want far more information to be given. I hope that, in replying to the debate my right hon. Friend the Minister will refer to the tariff structure. There is no reason for tariffs to be kept as private property by any gas board so that companies such as the one to which I have referred require enormous amounts of money to be put up to achieve savings. All companies are keen to make savings on heat and energy. This country is now a cost and energy efficiency organisation, and the whole tariff structure needs to be re-examined.
  I believe entirely in fair competition, and I believe that the effects will be good. I do not share the Opposition's

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  view about a monoploy, and so on, because it is not a closed market. There will still be electricity, and oil will be available on the open market. I want at least and at last an efficient service at a price to suit the customer. The customer must come first. Local negotiations with local companies should continue, but agreements reached in one part of the country should be published for the benefit of others elsewhere. In other words, the tariff structure must be published. Controversially, I have never accepted the need for standing charges. I believe that the charge should be included in the price per therm supplied to each customer.
  Everyone is concerned about allegations that safety will suffer because so many people will be involved in putting in new equipment, but I do not accept that claim. I believe that even greater efficiency will make for even greater safety. Clearly public confidence must be retained at all times, and it is important that a free emergency service will be available at all times, but we must also demand standard equipment and standard repairs throughout the entire network and watch that aspect carefully. There is no justification for spreading fears, because safety will be better. The Health and Safety Commission will be observing developments, there will be close liaison with local engineers and any sub-contracted work will have to be approved.
  I realise that this is a sad day for the Labour party, which has long been committed to further nationalisation and has already pledged its commitment to the renationalisation of this great industry. I am sorry that the Opposition wish to take away power from the people, to disregard their views and to bring back more state control and the resultant faceless bureaucrat. I think that the people of this country want local people to look after local industry. Do the Opposition not realise that people want a stake in their future? They do not want to be denied that stake. Hundreds of thousands of people wanted a stake in British Telecom. They got it, and they have done very well out of it. The Opposition should not be worried about this measure. It will give more say to the people of this country. Democracy will be seen to work in this industry.
  It has been alleged that the employees are worried about their future. The gas industry's employees have nothing to fear. They have the expertise and a role to perform. They will be called upon regularly to perform that role. The industry will always, of course, look after its consumers, but it needs the confidence of its employees. It will get that confidence.
  Finally, I pay tribute to the safety standards of the industry in the east midlands. I deprecate the suggestion by trade union spokesmen that when the Bill becomes law the industry's employees are likely to compromise the safety standards. I know that this is untrue. As usual, the trade union representatives are wrong.
  The proposed sale of the British Gas Corporation will result in many benefits. Privatisation will work slowly, but it will work. It will make the industry much more accountable to the consumer and to the shareholder. Many thousands of people will have a real voice and a real stake in the gas industry. They will have a say in how it is to be run successfully. This is a partnership agreement from which both consumer and employee alike will benefit, and I have no hesitation in supporting the Bill.
  8.41 pm
  Mr. Peter Pike: When the hon. Member for Leicester, East (Mr. Bruinvels) began, it sounded as though he was making a case for the industry remaining in the public sector. He referred to the industry's glowing record. However, he then said that he would loyally troop through the Government Lobby tonight and vote for the privatisation of the industry. His reasons for voting for the Bill, however, were weak. They did not take the matter any further than the Secretary of State for Energy's statement this afternoon.
  The hon. Member for Bolton, West (Mr. Sackville) referred to the conditions in 1948 when the industry was taken into public ownership. He said that they were very different from the conditions that appertain now. He used the phrase, "there will be a return to private ownership", but forgot to mention that large sectors of the gas industry were already in the public sector before it was nationalised in 1949. They had been developed by the foresight of local government over a long period, so it is not just a question of the industry being returned to the private sector; it did not belong completely to the private sector in the first place.
  When the Bill was debated in Parliament in 1948, in preparation for nationalisation in 1949, many people said that the industry was not worth nationalising because it was dead and finished, and that the demand for gas would fall. During the war, very little money had been spent upon the industry. It was in an appalling state. The Labour Government of that time did the right thing. Ever since then, the gas industry has repaid the confidence that was placed in it by the growth that was so well illustrated by the hon. Member for Leicester, East and by its development since it was taken into public ownership.
  The Secretary of State made no case for taking this industry out of the public sector and putting it into the private sector. One has to assume that there are three reasons why the Government are privatising the industry. The first is political dogma; anything that is successful and is under public control must be returned to the private sector, whether by means of privatisation Bills or by means of the creeping privatisation of local government. I refer to hospitals, the Health Service and similar services. The Government are so opposed to anything being under public control that if it is successful they must take it away and put it into the hands of private owners.
  Secondly, the Government are adamant that, if money is to be made out of any industry, it should go into the pockets of their allies and wealthy supporters. Conservative Members have said on several occasions this afternoon that the Gas Bill will widen share ownership, but this is nonsense and a fallacy. The percentage of shares that will be offered to the public will be very small. My hon. Friend the Member for Rother Valley (Mr. Barron) illustrated just how rapidly the widespread shareholding in British Aerospace and in other industries has diminished.
  The third reason for the Government's pursuit of privatisation is their need for cash—to pay for tax cuts, whether by reducing the rates of tax or by a change in the tax threshold, and to meet the cost of public expenditure. However, the Government have failed to say what they will do when they have no more assets to sell. Once they have sold all the country's assets, they cannot be sold again.

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  The profits of nationalised industries are very important to the economy. I refer to a gas industry profit of well over £1 billion. That excludes the £500 million special gas levy. British Telecom made a similar profit of well over £1 billion. As soon as that money is in the hands of the private sector, the Government will have to raise it from other sources if they wish to maintain their programme. They ought to tell the people of this country where that money will come from and what they will do when there are no more industries to sell off.
  This is a very important debate. My hon. Friend the Member for Wentworth (Mr. Hardy) referred to the British Gas Corporation's annual report. Any company would be proud to produce a report of that kind. It shows an increase in markets, profits and productivity. The industry has a turnover of £6·913 billion. It has over 93,000 employees and over 16·5 million customers. It has a tremendous record, of which the industry can rightly be proud. Last year its profit was £1·6485 billion. That included the £504 million gas levy. The industry's report makes a good case for this industry not being put into the hands of the private sector.
  Is there any good reason why a successful industry that is in public ownership should not be used to support an industry that can be run only as a service and that will never make a profit? There is no good reason why that should not be so. If the gas industry can make a profit which enables the Government to meet the costs of other necessary services that cannot be run at a profit, it is right and justifiable for the money to be used for that purpose. If one looks at the gas industry's improvement in productivity and takes as its base year 1978–79 with a factor of 100, the productivity of the gas industry has improved to 112, that of the electricity supply industry has improved to 111·5 and that of all other United Kingdom industries has improved to 108·7. This shows that the gas industry's record is very good.
  During the last 15 years a tremendous amount of work has been undertaken towards integrating the previous 12 area boards and developing the national grid. This has resulted in scale economies, national research and development programmes, centrally controlled product management, integrated purchasing and the planning of supplies. By achieving these objectives efficiently and effectively, the British Gas Corporation has become an even more highly effective national energy supplier. This progress and success will he better maintained under public control rather than under private enterprise. Gas is such a major source of national energy that it is vital, in the interests of the nation, for it to remain under public control.
  Major decisions are needed in the near future in the electricity and gas industries to ensure that our energy supplies are adequately safeguarded. Although there are various forecasts on the reserves of natural gas in the North sea and Morecambe bay gas fields, the one certain fact is that they are both finite. At the same time, gas demand continues to grow. In the national energy interest, decisions must be taken speedily to develop a means of producing substitute natural gas from coal. Even if the need for this coincides with the most optimistic forecasts of natural gas reserves and the ability to meet demand from existing sources, I am firmly convinced that it would be in Britain's best interests to embark upon such a programme of substitution. Natural gas on a phased basis should be introduced sooner rather than later.
  834
  Page 15 of the BGC's annual report refers to the developments that the BGC has made and the £21 million it has spent in the past year on research and development of substitute natural gas. British Gas can be proud of this programme in which it leads the world. If the Government and a publicly owned industry were to go full ahead with that programme, we could seize the export market and fulfil our tremendous potential. If the BGC is put into the private sector, one must accept that issues such as supplies from the Norwegian Sleipner field are of such strategic and national importance that they should be determined by the Government and not a publicly owned industry.
  I am extremely worried about the possible closure of gas showrooms. There are two showrooms in my constituency—in Padiham and in Burnley. The one at Padiham is open part time, and I am sure that, once the BGC is privatised, it will not be considered economically viable. It is a matter of not only sales but the point of contact for customers. If that showroom closes, many customers will face difficulties in going to the main centre in Burnley, especially when the bus services end because of the transport legislation —the Transport Act that the Government have forced through.
  The Bill poses a threat not only to people in the industry but to the 250,000 people employed by British suppliers who supply the goods that British Gas needs. This is a vital matter. The Royal ordnance factory legislation was debated two years ago, but staff issues have still not been resolved. There are still disputes about pensions for the employees. As I said repeatedly in Committee and in the House, if the Transport Bill was passed, employees' conditions would deteriorate. We are already seeing signs of that, with bus operators withdrawing from the National Joint Omnibus Council. In rural areas London Transport is asking drivers to take a massive wage cut. That is a sign of the times which is likely to be seen again from that the the Transport Act has been passed.
  The National Gas Consumers Council is extremely worried about some aspects of the Bill. Because one of my colleagues wishes to speak, I shall refer only to the TUC submission to the Select Committee on Energy entitled, "The real cost of privatisation." The two small squares at the bottom of the front page state, "Public, it's yours" and "Private, it's theirs". This summarises the effect of the legislation. It is vital that the Bill should be defeated.
  Advertising for British Telecom shares stated, "Buy a share in British Telecom". Millions of pounds were spent on trying to convince people to do so, but the people already owned British Telecom.
  The TUC's submission states:
  "The TUC can see no evidence that privatisation as such will make British Gas more efficient, more competitive, or more publicly accountable; nor that its service to customers or its support for UK manufacturers will improve. The TUC does not believe that its sale will benefit the British Exchequer in the long run and it fears a marked worsening of employees' job prospects and terms and conditions. Perhaps most important of all, the TUC judges that the sale will seriously weaken national energy policy at a time when most countries recognise its importance to future economic recovery."
  Those are good reasons to reject the Bill, which is not in the nation's interest.
  8.55 pm
  Mr. Dick Douglas: have a confession to make —none of my constituents own Canalettos, to the best of my knowledge, but they have a

  835
  distinct interest in the public sector, especially energy. I know that the Minister of State is conscious of public interference in the energy sector. He presides over the Offshore Supplies Office which proudly tells us the percentage that British contractors receive from our offshore activities. That is public interference. It is not allowing the market to hold sway.
  Why do the Government dislike the British Gas Corporation? Is it because it has been technologically inefficient? This nation took an industry that was technologically backward —in terms of converting gas from coal and antiquated appliances —and brought it into the last decades of the 20th century. The BGC pioneered the shipment of natural gas for Britain and the world. Ships were converted. The British Princess and British Pioneer were pioneers in the importation and exportation of natural gas. In converting the whole nation to the use of natural gas, a public corporation has been and continues to be a technological innovator.
  The BGC went into partnership with international oil companies to develop North sea oil. Some are well known to the Minister of State. Is there any evidence that the BGC was backward in terms of technological development in the North sea and elsewhere? In the so-called Oil and Gas (Enterprise) Act 1982 —what a misnomer —the Government took away the possibility of continuing to drill for oil in the North sea. They imperilled the innovator centres for geology and drilling that the BGC had set up.
  Now, we see a conversion. What is bad for a public corporation when it is used for development is good in a private sector company when the doctrinaire Tories so determine. There is nothing to show any backwardness in the BGC. Is it the Government's view that the BGC has failed to make profits and serve the nation? My hon. Friend the Member for Burnley (Mr. Pike) showed how profitable the BGC is, and this fact should go echoing from the Chamber. The profits that accrue to the nation will not be lost for one year. They are lost from 1986 for as long as Tory Government remain in power.
  The Government are not selling Canalettos. It is a falsehood to say that the industry will be transferred to the people. Few people in High Valleyfield, Dunfermline, Kincardine and Oakley in my constituency will have shares in the new company, but they know that this industry has served them well. The Government are using a doctrinaire approach that shows their profligacy. The Minister knows that we are producing 2·7 million barrels of oil a day from the North sea. I warned time and again that the retaliation of the OPEC countries would come, and so it has, because the Government have used the nation's assets to furnish bribery.
  If there is any indictment of corruption, it should be levelled at the Government, not for selling Canalettos but for misusing the vital assets that the nation has built up under Governments of both parties. In the past we had the middle way, but now we see profligacy and a wasting of the nation's assets. The foolish virgins did not put oil in their lamps. This Government are so foolish that they are wasting the oil and gas assets of the nation. When the next election comes, I am sure that they will get their comeuppance.
  9.1 pm
  Mr. Ted Rowlands: My right hon. Friend the Member for Salford, East (Mr. Orme) reminded the House of the remarkable achievements of the BGC in the past 20 years. First, there was the technical achievement of laying and developing a national gas transmission system that has turned out to be not only one of the safest but one of the most extensive, in terms of size of country and population, in the western world. It has turned a sad, downtrodden and declining industry into one of the great success stories of the past 20 years. This success story and these achievements were carried out by a public enterprise, by people with a sense of service rather than of profit, who believed in the industry and invested their lives and skills in it. In return, the industry invested in Britain. As many of my hon. and right hon. Friends have said many times, the BGC has invested in British manufacturing, and has contributed to the creation of up to 250,000 jobs as a result of its "Buy British" policy.
  The Labour party sees no need to have to justify the continuation of the BGC as it stands. We are committed supporters of the concept of public enterprise, of which we see the BGC as an excellent illustration. When the Government, who wanted to find things desperately wrong with the corporation, sent in their people to check the corporation, there was a problem. Deloitte Haskins and Sells went into the BGC, went through it and came up with this conclusion:
  "We consider that the management and employees of any commercial organisation could be proud of such a record, and also that it reflects well on the sponsoring Department of Energy".
  The Secretary of State should take note of that second point. The company endorsed our belief not only in the success of public enterprise but in the relationships between the Department, Ministers and civil servants and that between the Government and the corporation. We do not have to justify the continuation of the BGC, because of what it has achieved and could still achieve for our national energy requirement.
  My right hon. Friend the Member for Salford, East also reminded us of another important point. Those achievements have been obtained by bestowing on that corporation massive powers, and with it huge resources. No one could deny that they are extraordinary powers. Successive Governments have given the BGC, and then endorsed such a policy, the power of first purchase of all gas, of sole supplier of gas, and exclusive access to the North sea gas. Thereby, as my right hon. Friend the Member for Chesterfield (Mr. Benn) reminded us, they enabled the BGC to drive a good bargain on behalf of consumers with the multinational oil companies developing gas in the North sea.
  Those powers were, and are, justified to achieve national energy objectives and to provide consumers with safe supplies of gas at a reasonable price. We are unashamed supporters of public enterprise, and especially the success of the BGC. When Governments gave the BGC such powers, they rightly believed that the corporation would be directly accountable to the Secretary of State. Therefore, I cannot understand the right hon. Gentleman's argument in that respect. The 1972 Act endorsed and supported the role and the relationship between the Secretary of State and the BGC. The right

  837
  hon. Gentleman was certainly part and parcel of the Department and the industry when that Act passed through Parliament.
  We must be squeamish and conscientious when handing over such powers to a corporation. Therefore, in the past we have imposed upon the corporation a degree of parliamentary, public and governmental accountability. Such control is well justified. Without it, Parliament should not bestow such powers on a public enterprise.
  In selling the assets of the BGC, we shall also be transferring its powers to the new independent company. We must discover the Secretary of State's policy on that. Enormous powers now reside in a public enterprise and will be transferred to a private sector gas monopoly. Wherever one stands on privatisation, whatever the ideological, philosophical or economic divide, the concept that we should invest in a private company the powers that we invested in a public enterprise, without any safeguards, is a major concern that should divide not only the two main parties in the House, but Conservative Members in their attitude to the Government's proposals.
  The Secretary of State's defence of the Bill is that it will remove ministerial and Whitehall interference in the BGC. In their place, he wants competition and regulation. We must ask whether there will be that competition and whether the regulations will be adequate. It is interesting to note that coded messages —some rather less coded than others —have been sent from Conservative Members to the Secretary of State during the debate. For example, the hon. Members for Erewash (Mr. Rost) for Enfield, Southgate (Mr. Portillo) and for Aldridge-Brownhills (Mr. Shepherd), after a few comments in support of the Government, quite rightly then turned on the Government and said, "We do not believe that there will be competition or that there will be proper and effective regulation."
  If those Conservative Members do not believe that, and we certainly do not believe that, it is obvious that those two alternatives to proper public accountability will fall. Unless the Government can prove that there will be competition and effective regulation, their case cannot be accepted, because it is too weak. There is no justification for the sale of the BGC's assets or the transfer of its powers to the private sector.
  The Secretary of State's case is that there will he more competition and effective regulation. We cannot know whether there will be more competition, because the right hon. Gentleman has not told us about the vital decisions that must be made.
  The right hon. Gentleman came to the Dispatch Box to justify the Bill and the Government's policy, and it was astonishing that he made no statement on whether he would allow exports of gas. Indeed, he said nothing about gas imports. I understand the battles that he might be fighting on that score, but if he is not so engaged, we hope that the Minister of State will announce that the Government will not allow gas exports and that they will retain power to deal with Sleipner-type cases. If the Secretary of State decides to allow gas exports —many Conservative Back Benchers want that to happen, as do many outside, who are demanding that that should happen on behalf of the private sector —he will make nonsense of the case that he and his Department have advanced on the Sleipner contract.
  The case that was put before the Select Committee on Energy, and before the House generally, on the Sleipner
  838
  contract was that there would be a sufficient amount of gas from the United Kingdom's part of the North sea. It was said that that could be guaranteed because we could control North sea resources. It was explained that the resources would be brought to our shores to provide gas for British consumers, be they industrial, commercial or domestic. It was said that we did not need a Sleipner import contract because we had sufficient gas in the North sea, that we had control of it and that it would he brought home to British consumers.
  The issue was fundamental to our depletion policy and the provision of gas in the 1990s. Against that background, we ask the Minister of State to tell us where the Government stand on exports of gas. If it is an area in which there will be competition, we must be told of the consequences. It is an area of competition of which we still have no understanding or appreciation.
  The Secretary of State says, "There will be competition. I shall breathe some new life into the powers and effects of the Oil and Gas (Enterprise) Act 1982. I have done it in the Bill and in the licence." Let us remind ourselves of the common carrier provisions in the 1982 Act. There are two or three Members in the Chamber, apart from myself, who are veterans of that measure, in that we considered it with our colleagues in Committee. We remember the arguments. We remember the then Secretary of State for Energy, the present Chancellor of the Exchequer, claiming that the gasless folk of Blaby would be supplied with gas by means of private contracts and private common carrier provisions. He told us that British Gas had never reached his constituency and that a private supply would reach out to consumers who had been thwarted and disappointed by public enterprise.
  What has been the result of the 1982 Act? Its previsions allow applications for and approval of common carrier provisions, but there has not been one approval, nor has there been an application since 1982. That has been the result of one of the famous privatisation Acts. That is the consequence of the Chancellor of the Exchequer's policy when he was Secretary of State for Energy. The pipe dreams of alternative supplies are not being converted into reality.
  The Secretary of State's response to that charge turns on the provisions in clause 19. I have read the clause, and I ask the Minister of State to tell us where we can find any meaningful or significant improvement in the so-called common carrier provisions. The bulk of clause 19 has been taken from section 17 of the 1982 Act. There are a couple of different subsections, and they appear to be modest concessions that reflect what British Gas wanted us to do in 1982. There is not much in the clause that brings anything new to the common carrier provisions currently on the statute book.
  We were told by the Secretary of State this afternoon that there are new common carrier provisions in the licence. He explained that these are to be found in the 10th condition, which deals with the supply of back-up gas. It appears that the BGC will provide some general information on policy and that it will have to stand ready to supply back-up gas. At best, that can be described as a marginal improvement on the common carrier provisions. We were expecting a further condition in the licence which—
  Mr. Robert C. Brown: On a point of order, Mr. Speaker. I am trying hard to follow the arguments of my

  839
  hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) but it is difficult to do so while two Scottish sub-committee meetings are taking place simultaneously behind me as well as a Chesterfield and Merseyside committee meeting.
  Mr. Rowlands: We Welsh have survived the Scots for long enough.
  Where is the condition in the licence that British Gas will have to buy the residual gas from privately contracted oilfields? Where in the licence is the solemn and binding declaration of intent by British Gas? It is not in the conditions of the licence where we would expect to see it. Where is the famous new leap forward in the private common carriership of gas? The truth is that there will be no competition. The very day on which the Secretary of State talks about that he produces a draft licence for a 25-year public gas monopoly.
  The extra conditions will not create a common carrier provision. Anyone who has been sitting at the back of the room during the Select Committee on Energy's considerations will have heard oil company after oil company, having been presented with the propositions, saying that they will not make any difference at all and that it is scarcely worth the bother. That has been the sum total of the advice given to the Select Committee by the oil companies, and hon. Members on the Committee know that to be true.
  As there is no proper accountability or control over a monopoly of that sort with such enormous powers, the question of competition falls. There may not be much competition. There has not been any so far, and there is little likelihood of it.
  The Secretary of State also referred to regulation. How effective will the regulation be in protecting the industrial and commercial consumer, with a privatised monopoly power of the type that will be created under the Bill? There is a great deal of scepticism about that argument. Many hon. Members —the Secretary of State did not listen to many of them —such as the hon. Members for Erewash, for Enfield, Southgate and for Rochford (Dr. Clark), have said that the regulatory powers and the provisions in the draft licence are scarcely effective in defending or providing sufficient safeguards to industrial, commercial and domestic consumers.
  When one starts to look at the regulations, it is little wonder that there is scepticism and disbelief at the effectiveness of the regulatory system that is being introduced. We were told of the great advance in controlling prices. There will be control over one part of the gas cost, the non-gas cost—the RPI minus X. We do not know what X will be, and we ask the Minister to tell us what the Government's thinking is in that respect.
  There will be another wide ingredient in the gas cost, called "allowable cost". That is the cost of gas from the North sea. The Secretary of State did not tell the House or remind everybody that that portion of the total price is a growing proportion. The non-gas cost used to be a larger proportion, but it is now a little over 50 per cent. By the time the new company gets going, the major portion of any price of gas could be totally allowable and uncontrolled by any formula.
  Mr. Rost: Does the hon. Gentleman agree that if British Gas is allowed automatically to pass on all the extra
  840
  costs of higher prices from the North sea, there will not be an adequate incentive for it to shop around for the most economic gas price? Should not the shareholder, rather than the consumer, carry the can for any mistakes?
  Mr. Rowlands: The hon. Gentleman should put that point to the Minister of State, because it is reasonable. I am saying that the Secretary of State promised some sort of price formula that would control the price of gas for the domestic consumer. Up to half, if not more, of that gas price will be wide, which is just allowable gas costs. Therefore, it is not an adequate protection.
  That is not the only area where the consumer is not protected under the arrangement. We have all the weasel words about standing charges. Why is it just "best endeavours"? Why is it not RPI minus Z? Why should there be a case for just making the best endeavours to hold standing charges at about the rate of inflation?
  The Secretary of State derided the role that the House plays in influencing, controlling, supervising and making British Gas accountable. It is as a result of pressure from both sides of the House that we have a rebate system on standing charges. It was not volunteered by the gas industry, but extracted from it as a result of that pressure. Now we shall have the regulatory power, under which the new company will have to do nothing more than use its best endeavours to hold down the standing charges.
  There is a list of other conditions in the licence about publishing tariffs, and publishing maximum prices. The hon. Member for Erewash said that there was not much point in that. How does publishing maximum prices protect the consumer? It is not a form of consumer protection. The Director General of Gas Supply will not be able to control the tariffs. British Gas will just publish its maximum prices, which is not consumer protection. As my hon. Friend the Member for Salford, East said, it is cut-price consumer protection.
  Mr. Peter Walker: What control has there been over contract gas during nationalisation?
  Mr. Rowlands: I listened with interest to the right hon. Gentleman when he was talking about that in his speech. He was not Secretary of State when, for the best part of 12 months, there was a growing and justifiable chorus in the House against the imposition of unnecessary price increases for industrial and commercial consumers.
  Mr. Peter Walker: Who did it?
  Mr. Rowlands: The right hon. Gentleman did it. There was a change as a result of pressure from both sides of the House.
  Ninety five per cent. of industrial consumers will be excluded from the regulations. Only 5 per cent. buy gas on a tariff basis, so the rest will have to take their chances. We were told that ICI and the chemical companies had gone to the Secretary of State and said that they did not want any regulation. We understand that ICI can take care of itself. The big boys in the chemical industry can take care of themselves. A large number of industrial consumers who will need protection will want to be covered by the regulations. They will have no protection, as they are denied that right under the Bill and the licence.
  Mr. Peter Walker: Why does the hon. Gentleman think that the main competitors of British Gas want regulation?
  Mr. Rowlands: They feel that British Gas will use its monopolistic power in the private sector to scoop up additional markets. What will the Secretary of State say to them about that? The licence and the Bill will not do anything effective on behalf of the consumer, whether industrial, commercial or domestic.
  Genuine questions have been raised by supporters of public enterprise and people outside, who have said that, as a result of the weak and loose form of regulation, there will be no effective regulation of what will be a large privatised monopoly. A Conservative Member asked what control there would be over the right of British Gas to go out and acquire significant oil companies. Unless some tax dividend is taken out of the corporation we shall be left with a minimum of £3 billion to acquire an oil company or two. Sir Denis Rooke, the chairman of the British Gas Corporation, has never concealed his intention in that regard. Therefore, understandably, there are worries and complaints that there will be the break-up of some independent British oil operations.
  We do not believe that there is any effective consumer protection. We do not believe that there will be an effective form of regulation or competition. Yet the Bill will transfer these enormous powers to a private monopoly. Why will there not be any effective form of regulation? It is because the City and those who advise on the sale of the shares say that an effective and tough form of regulation will depress the price of the shares and make it more difficult for people to take them up. It will not help the so-called sale of the century.
  We know who will be the beneficiaries of the sale. First, it will be those who advise the Government —the bankers, the stockbrokers, the consultants. Who is the chief adviser on the sale? It is none other than Rothschilds. This will be its second privatisation exercise. Hon. Members will remember the first one —Amersham International. It managed to get it wrong by only a third on that occasion. It managed to sell a marvellous company at a knockdown price. That was the first major scandal to be created by the sale of assets at discount or knock-down prices. The very organisation that was in charge of the sale of Amersham International —one of the great disgraces —will now be in charge of a larger sale of public assets.
  If the Bill and the draft licence are anything to go by, consumers will not be protected. The Bill has nothing to do with a better service, a cheaper form of gas for consumers or the rights of industrial or commercial consumers. It has everything to do with the financial greed of the Government and the way in which they are trying to plan a victory at the next election. They are using public assets, nationally developed, to pay for tax cuts. That is what is behind the proposals. That is why we shall oppose the Bill and why a future Labour Government will restore not only the assets but the powers to the nation, where they belong.
  9.27 pm
  The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): As long as the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) was dealing with the Bill, he had difficulty in making his case. That changed only when he came to the end of his speech and endeavoured to raise his pure political prejudices in describing what the Labour party would do if Britain were ever unlucky enough to see that party re-elected to power.
  842
  It was interesting that in those closing moments the hon. Gentleman did not say on what terms a Labour Government would renationalise if that eventually ever arose. The right hon. Member for Salford, East (Mr. Orme) says that I should wait and see. An interesting altercation took place on the Opposition Benches earlier when it was suggested that perhaps re-nationalisation should take place without compensation—
  Mr. Heffer: I hope that the right hon. Gentleman will read what I said. I did not say "without compensation". I said that I trusted that we would renationalise without massive compensation. I have checked my speech. The point is that these are the assets of the nation, paid for by the ordinary people through their taxes, and those assets are being handed over to rich people to make rich pickings.
  Mr. Buchanan-Smith: I am grateful to the hon. Gentleman for giving us the view of one member of the Labour party. I recall that the phrase used earlier was "at the price that had been paid for it".
  Mr. Hannam: That is right.
  Mr. Buchanan-Smith: I noticed that the Front Bench was careful not to follow up that point, and not to say what it would do. I agreed with the hon. Member for Gordon (Mr. Bruce) only when he said that that eventuality would not arise. Even if it did, it would be interesting to see what view a Labour Government took of an industry whose ownership was spread widely not just among its employees but through the rest of the economy.
  The Government's privatisation proposals have given people throughout the country a greater opportunity to share in British industry. The Labour party is completely wrong and out of touch when it wants to deny people the opportunity to share the assets of British industry and to have a direct stake in the country's future prosperity.
  Mr. Ron Leighton: The Government are taking away something that belongs to all the people to pay for tax cuts for a few of the people.
  Mr. Buchanan-Smith: I should be interested to know what the hon. Gentleman feels he owns in the BGC at the moment. As my right hon. Friend the Secretary of State explained, ownership of the BGC is vested in the Government. The corporation is administered by Ministers and civil servants. The British people do not own it.
  Mr. Douglas: The other day, there was an article in The Times by the Attorney-General. He said clearly that the National Health Service belonged to the nation and that he was proud of it. There is a valid analogy with the BGC. People are proud of the public sector, and the Tories cannot stomach that pride.
  Mr. Buchanan-Smith: One is interested in one's health in relation to the National Health Service. One's interest in this proposal is in the benefits that it can bring and the opportunity it gives to share in a prosperous, expanding and healthy gas industry. It will bring back benefits to the country and to those individuals who will have a stake in the industry after the Bill's passage. I am delighted that the Government are giving that opportunity to the public.
  We heard some prejudices at the end of the debate. There were one or two interesting interventions. One of the most interesting came from the right hon. Member for Chesterfield (Mr. Benn). He said that he had been a

  843
  Member of the House for 35 years. When I listened to him, I began to wonder what he had learnt during those 35 years, not in the sense of experience, because I know that he has a great deal of experience of these matters, but about the real world of energy and the gas industry, and what the position was when he was responsible for those matters.
  The right hon. Gentleman made the extraordinary statement that if we were to privatise the BGC it would, in some strange way, give the European Community control over the resources of the United Kingdom continental shelf. Does he not realise that the vast majority of those resources belong to the nation? They are national resources which the Government are committed to ensuring are shared more widely throughout the nation. Does the right hon. Gentleman not realise that the exploration and production of those resources is already almost entirely in the hands of companies that are not in the public sector? If one removes one company —that is a small part —in the gas sector, or even if one removes a small proportion of reserves which are not at present being exploited, it will make absolutely no difference in terms of the European Community. The right hon. Gentleman is talking nonsense.
  Secondly, the right hon. Gentleman said that in some strange way by privatising BGC we would reduce the demand for British equipment. I would be the first to pay tribute, as one who has responsibilities for the policies of procurement, to the good record of British Gas in using British contractors and suppliers —the hon. Member for Newcastle upon Tyne, North (Mr. Brown) made that point —but so do other companies. All companies are treated equally, whether they are British, American, French or Italian. They are all treated the same. There is no difference regarding procurement. I have little doubt that the management of BGC will continue the same policies in compliance with the Government's requirements and buy British where it is the right and proper thing to do.
  Mr. Benn rose—
  Mr. Buchanan-Smith: I shall give way in a moment. The way in which the right hon. Members for Salford, East and for Chesterfield say that the commercial policies followed by BGC will change as a result of privatisation shows an extraordinary lack of confidence in its present management. We are privatising British Gas with the same management in control, and I have little doubt that the same sensible policies will continue in support of British industry.
  Mr. Benn: Could I advise the Minister to look at the records of his Department, because he will find two things? First, the Commissioner for competition made representations when the Labour party was in government that it was contrary to the Treaty of Rome to insist that the gas be landed in Britain. Secondly, when we continued a scheme introduced by the Conservative Government to encourage the purchase of British equipment by American companies, we were taken to the European Court, and the present Government abandoned the matter in the summer of 1979 because the court case was launched on polling day 1979. If the right hon. Gentleman looks at the records, he will find that he is wholly misleading the House by implying that there is no connection between this matter and Common Market controls.
  Mr. Buchanan-Smith: I am delighted that I gave way to the right hon. Gentleman, who demonstrates everything that I have said about his being completely out of touch. I ask him to look at the most recent publication of the Department, the Brown Book, which shows that more than 70 per cent. of the procurement regarding the United Kingdom continental shelf is from British companies. I also invite him to look at the 1985 Brown Book. He will undoubtedly not look forward to its publication. Although there are still two weeks before the end of this year, I happily predict that we shall see an even better record on British procurement. It will certainly be better than when the right hon. Gentleman was in charge.
  The right hon. Gentleman's fantasies reached their peak when he asked for more accountability to Parliament, and spoke of the lack of control of Ministers under current legislation over nationalised industries. Is he not aware that under the nationalised industries legislation the Secretary of State in the responsible Department has the power to give directions to that industry?
  Mr. Benn: They are general.
  Mr. Buchanan-Smith: They are not so general. I know that the right hon. Gentleman did not like it, when the Government gave directions to BGC, for example, regarding Wytch Farm. That could scarcely be more specific. Yet again, the right hon. Gentleman is simply talking through his hat. It is not a good account of his stewardship if it is only now, many years later, that he tries to regret not using powers which were available for him to use, if only he had chosen to do so.
  Mr. Robert C. Brown: We were discussing procurement. Is the Minister aware that if the denationalised British Gas adopts the same attitude as British Telecom since its denationalization, countless thousands of jobs of British workers will be put at risk?
  Mr. Buchanan-Smith: No, their jobs will not be put at risk, because British Gas will be subject after privatisation, as it has been all along, to the same policies as is every oil and gas company. It must agree to the memorandum of understanding when applying for licences and to the full and fair opportunity concept.
  I assure the hon. Gentleman that a privatised British Gas will be treated in exactly the same way by my offshore supplies office after privatisation as it is treated now. I have confidence in the management of British Gas and I have confidence —unlike Opposition Members; it is clear from the points that they have made that they do not have the same confidence —in the way British Gas will act, and I am sure that it will continue its record.
  After the hon. Member for Gordon moved the alliance amendment, I was left, as were many hon. Members —that was clear from the comments that were made subsequently —confused about what he and his hon. friends wanted. He spoke in general terms about competition, said that the Government were being irresponsible and at one point urged the break-up of British Gas into separate parts, saying that he would separate the production from the other functions of the company.
  What does the hon. Gentleman think all that would do for the morale and strength of British Gas as a British company, remembering that the corporation —throughout the period of nationalisation and not just since the development of our offshore gas resources —has had

  845
  a stake in the manufacture of the product which it supplies and sells? The hon. Gentleman seeks to turn back British Gas not just to pre-North sea oil days but to the time of pre-nationalisation.
  The hon. Gentleman was most confused when he dealt with the kind of regulator he wanted. I am delighted that more hon. Members are now in their places because they will be interested to learn that the alliance parties recommend not one regulator but six or seven regulators.
  At Question Time recently the hon. Member for Gordon chipped me by saying that all I wanted was extra bureaucracy. From his own mouth tonight he told us that he was seeking precisely that. It is clear that that is what the alliance wishes to achieve. As I say, one is left confused.
  The hon. Gentleman was against privatisation as we are proposing it, and when answering an intervention from the right hon. Member for Salford, East, he said that he was against renationalisation. One was left wondering where he was. My hon. Friend the Member for Rochford (Dr. Clark) summed it up by saying that the hon. Member for Gordon was really saying, "I would if I could but I can't because I don't know what I want to do." On that basis, I ask the House to reject the alliance amendment, especially as, if by chance it were agreed to, we should have no idea of the direction in which we were going.
  The hon. Member for Dundee, East (Mr. Wilson) and several hon. Members mentioned the possibility of breaking up British Gas into regions. That would not make sense. Nor would it make sense for Scottish consumers. After all, consumers would still be facing a single monopoly supplier. We should simply be putting at risk the economies of scale from which Scottish consumers, like all consumers, will benefit as the result of having a highly integrated industry with an integrated transmission and distribution system and all the advantages that coordination allows countrywide.
  The hon. Member for Dundee, East must remember that gas has been built up as an integrated industry, particularly since nationalisation in 1948. He may argue the case from the point of view of narrow nationalism, but I am interested in looking after the Scottish consumers to ensure that they get the best deal, pay the cheapest price for gas, and enjoy the benefits of efficiency. I assure the hon. Gentleman that if we followed his course and that of his party, the Scottish consumers would suffer. I certainly cannot recommend that.
  Mr. Wilson: I am grateful to the Minister, although not for that exposition, with which I totally disagree. If he wishes to help the consumer, he should perhaps leave the privatisation scheme alone in its entirety. He is arguing that on the benefits of scale it is far better to have one United Kingdom company rather than a company in Scotland. Would not Scotland's economic health be improved if we had as many autonomous companies as possible operating in our country, because every time power is taken away, Scotland loses out. Scottish Gas now intends to change its name to British Gas (Scotland), and that shows just how the Scottish element will diminish once we have a United Kingdom private company.
  Mr. Buchanan-Smith: I am not aware of any such intention. Secondly, on no occasion have I, on behalf of a constituent, had to go beyond the Scottish area manager of Scottish Gas in order to get matters resolved. The way
  846
  in which Scottish Gas and British Gas have devolved their administration means that the Scottish consumer is getting the benefits of scale as well as a recognition of a well-devolved administration from British Gas. I hope that they will continue to enjoy those benefits.
  My hon. Friends the Members for Erewash (Mr. Rost), for Enfield, Southgate (Mr. Portillo) and for Rochford spoke of competition and the powers of the regulator. I agree that there is a balance, and that where there is a risk of monopoly power we want the regulator to be strong. But equally, where there is scope for competition it would be foolish and wrong to extend the power of the regulator into those areas where adequate competition already exists. That certainly applies to the contract market.
  As my right hon. Friend said earlier, gas has only a 35 per cent. share of that market and there is already considerable competition from other fields. That market is unregulated at present, and to regulate it now would turn the clock back instead of forward. That is something which a Conservative party and Government should not do.
  The regulator has real powers under the Bill. A number of points were raised about the area within which the regulator would be working, and concern was expressed about discrimination between consumers —particularly the small industrial consumer —in the tariff market or discrimination between the industrial market, the contract market which is not regulated, and the domestic market.
  Under clause 9, suppliers will continue to be obliged not to discriminate in supply to tariff customers, and tariffs must be framed to avoid such discrimination. That is enshrined in the legislation. Equally, under condition 2 of the licence, there must be separate accounting. That will make clear the profits in the gas supply and will pre vent hidden subsidy of other activities such as the appliance retailing and exploration sectors.
  We must remember that the regulator has considerable power. In the event of a supplier not complying with the conditions of the licence, he can make a direction to the supplier and, if the supplier does not comply with that, the Bill empowers him to obtain damages and the rest. If there is abuse in the industrial contract market, which is under the control of the Office of Fair Trading and the Monopolies and Mergers Commission, there is always a possibility of the regulator's powers being extended if that is recommended to the Secretary of State.
  The Bill helps to improve safety. I pay tribute to the role that the hon. Member for Newcastle upon Tyne, North (Mr. Brown) has played in the gas industry. I understand that he was an apprentice in the Newcastle gas company some years ago. The Bill provides the independent oversight of the Health and Safety Commission. I agree that the industry handles substances that can be dangerous in certain circumstances, but it is in the industry's interests to ensure that safety is a top priority. It has done that for many years. Its record of safety is second to none in the world. It will remain in its interests, if it is to be commercially successful, to ensure that that safety record continues.
  There is to be a reduction in the response time when an emergency arises and an extension of emergency provision to the consumer side of the gas meter. That is another advantage for the consumer. We also have new arrangements which my hon. Friend the Under-Secretary of State for Employment is working out with the Confederation for the Registration of Gas Installers to

  847
  promote better self-regulation and safety. A new code of practice is being drawn up and I believe that standards will rise.
  The right hon. Member for Salford, East mentioned the safety of appliances. Those standards are the responsibility of the British Standards Institution, but most important is the supervision of the Department of Trade and Industry, which is considering a Bill to cover the safety of goods —especially imported goods —about which I get the most complaints. There will be better safety as a result of the Bill and it is scaremongering to suggest that privatisation will lower safety standards. Safety is the prime responsibility of the nationalised industry and it will remain the prime responsibility of the new private industry. In several respects, safety matters are being tightened up.
  Concern has properly been expressed in relation to the Gas Users Council. The right hon. Member for Salford, East and other Opposition Members assume that its power will extend only to the regulated area —that is, the tariff market area —but clause 32(2) gives much broader powers, allowing it to cover any area covered by the Office of Fair Trading, including industrial contracts as well as appliances. At present, the National Gas Consumers Council can take up consumer problems with suppliers such as Comet. The Gas Users Council will have the same ability.
  I am anxious that there should be no doubt about the powers and I shall be happy to return to the subject in Committee if the Opposition wish. The Government intend the Gas Users Council to operate widely in the best interests of all consumers. Here again, however, the powers will be greater. At present, the National Gas Consumers Council can make reports. The Gas Users Council will be able to do the same. The Gas Users Council will be able to go to the new privatised company just as the National Gas Consumers Council can now go to the corporation, but the Bill gives extra power especially in the area of the tariff market, allowing the Gas Users Council to go directly to the regulator —the director general of Ofgas —and ask for action to be taken. The powers will thus be greater and more specific than at present.
  I hope that my hon. Friend the Member for Erewash was not trying to mislead the House—I may have got it wrong —when he expressed concern about the structure of consumer councils. It is perfectly possible for the new Gas Users Council to set up a regional structure to deal with consumer questions in all parts of the country. It will be able to set up whatever structure is appropriate in the regions and in Scotland. It will also be able to set up an advice structure in any area in relation to the various industrial and consumer interests or to ensure that widely scattered consumers are properly represented.
  We have had a good and useful debate, but I have been surprised at the lack of enthusiasm from the Opposition. When the measure was announced in May they said that they would fight it the whole way. Yet when the right hon. Member for Salford, East was speaking, I counted only 15 Members on the Labour Back Benches. If that is the strength of their defence against privatisation, any other nationalised industry had better look to the Conservative party for support in ensuring an exciting commercial future.
  848
  The Bill gives a privatised British gas industry the opportunity to be more efficient and to act commercially. That opportunity will benefit consumers, as they will realise, through better service, better prices and better safety. There is also the important opportunity —at which the real opposition from the Labour party is directed —for wider share ownership and a greater opportunity for the people of Britain to own a stake in one of our greatest industries. The Government are prepared to give the people of Britain that stake. The Labour party wishes to deny it to them.
  Question put, That the amendment be made: —
  The House divided: Ayes 23, Noes 302.

  Division No. 20]

  [10 pm

  AYES

  Alton, David

  Owen, Rt Hon Dr David

  Beith, A. J.

  Penhaligon, David

  Bruce, Malcolm

  Ross, Stephen (Isle of Wight)

  Carlile, Alexander (Montg'y)

  Steel, Rt Hon David

  Freud, Clement

  Stewart, Rt Hon D. (W Isles)

  Hancock, Mr. Michael

  Thomas, Dafydd (Merioneth)

  Howells, Geraint

  Wainwright, R.

  Hughes, Simon (Southwark)

  Wilson, Gordon

  Jenkins, Rt Hon Roy (Hillh'd)

  Wrigglesworth, Ian

  Kennedy, Charles

  Kirkwood, Archy

  Tellers for the Ayes:

  Livsey, Richard

  Mr. John Cartwright and

  Maclennan, Robert

  Mr. James Wallace.

  Meadowcroft, Michael

  NOES

  Adley, Robert

  Cash, William

  Aitken, Jonathan

  Chalker, Mrs Lynda

  Alexander, Richard

  Chapman, Sydney

  Alison, Rt Hon Michael

  Chope, Christopher

  Amery, Rt Hon Julian

  Churchill, W. S.

  Amess, David

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

  Ancram, Michael

  Clark, Dr Michael (Rochford)

  Arnold, Tom

  Clark, Sir W. (Croydon S)

  Atkins, Rt Hon Sir H.

  Clarke, Rt Hon K. (Rushcliffe)

  Atkins, Robert (South Ribble)

  Clegg, Sir Walter

  Atkinson, David (B'm'th E)

  Colvin, Michael

  Baker, Nicholas (Dorset N)

  Conway, Derek

  Baldry, Tony

  Coombs, Simon

  Beaumont-Dark, Anthony

  Cope, John

  Bellingham, Henry

  Cormack, Patrick

  Benyon, William

  Corrie, John

  Best, Keith

  Cranborne, Viscount

  Bevan, David Gilroy

  Critchley, Julian

  Biffen, Rt Hon John

  Crouch, David

  Biggs-Davison, Sir John

  Currie, Mrs Edwina

  Blackburn, John

  Dickens, Geoffrey

  Blaker, Rt Hon Sir Peter

  Dicks, Terry

  Body, Richard

  Dorrell, Stephen

  Bonsor, Sir Nicholas

  Douglas-Hamilton, Lord J.

  Boscawen, Hon Robert

  Dover, Den

  Bottomley, Peter

  du Cann, Rt Hon Sir Edward

  Bottomley, Mrs Virginia

  Dunn, Robert

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

  Durant, Tony

  Bowden, Gerald (Dulwich)

  Dykes, Hugh

  Braine, Rt Hon Sir Bernard

  Edwards, Rt Hon N. (P'broke)

  Brandon-Bravo, Martin

  Emery, Sir Peter

  Bright, Graham

  Evennett, David

  Brinton, Tim

  Eyre, Sir Reginald

  Brooke, Hon Peter

  Fallon, Michael

  Brown, M. (Brigg & Cl'thpes)

  Farr, Sir John

  Bruinvels, Peter

  Favell, Anthony

  Bryan, Sir Paul

  Fenner, Mrs Peggy

  Buchanan-Smith, Rt Hon A.

  Fletcher, Alexander

  Budgen, Nick

  Fookes, Miss Janet

  Bulmer, Esmond

  Forman, Nigel

  Butler, Rt Hon Adam

  Forsyth, Michael (Stirling)

  Butterfill, John

  Forth, Eric

  Carlisle, Kenneth (Lincoln)

  Fowler, Rt Hon Norman

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

  Fox, Marcus

  Carttiss, Michael

  Franks, Cecil

  849

  Fraser, Peter (Angus East)

  Lilley, Peter

  Fry, Peter

  Lloyd, Ian (Havant)

  Gardner, Sir Edward (Fylde)

  Lord, Michael

  Garel-Jones, Tristan

  Luce, Richard

  Gilmour, Rt Hon Sir Ian

  McCrindle, Robert

  Glyn, Dr Alan

  McCurley, Mrs Anna

  Goodhart, Sir Philip

  MacGregor, Rt Hon John

  Goodlad, Alastair

  MacKay, Andrew (Berkshire)

  Gow, Ian

  MacKay, John (Argyll & Bute)

  Gower, Sir Raymond

  Maclean, David John

  Grant, Sir Anthony

  McNair-Wilson, M. (N'bury)

  Greenway, Harry

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

  Gregory, Conal

  McQuarrie, Albert

  Griffiths, Sir Eldon

  Madel, David

  Griffiths, Peter (Portsm'th N)

  Major, John

  Grist, Ian

  Malins, Humfrey

  Ground, Patrick

  Malone, Gerald

  Grylls, Michael

  Maples, John

  Gummer, Rt Hon John S

  Marland, Paul

  Hamilton, Hon A. (Epsom)

  Marlow, Antony

  Hamilton, Neil (Tatton)

  Marshall, Michael (Arundel)

  Hampson, Dr Keith

  Mather, Carol

  Hanley, Jeremy

  Maude, Hon Francis

  Hannam, John

  Mawhinney, Dr Brian

  Harris, David

  Maxwell-Hyslop, Robin

  Harvey, Robert

  Mellor, David

  Haselhurst, Alan

  Merchant, Piers

  Hawkins, C. (High Peak)

  Meyer, Sir Anthony

  Hawkins, Sir Paul (N'folk SW)

  Miller, Hal (B'grove)

  Hawksley, Warren

  Mills, lain (Meriden)

  Hayes, J.

  Miscampbell, Norman

  Hayhoe, Rt Hon Barney

  Mitchell, David (Hants NW)

  Hayward, Robert

  Moate, Roger

  Heath, Rt Hon Edward

  Monro, Sir Hector

  Heathcoat-Amory, David

  Montgomery, Sir Fergus

  Heddle, John

  Moore, John

  Henderson, Barry

  Morris, M. (N'hampton, S)

  Heseltine, Rt Hon Michael

  Morrison, Hon C. (Devizes)

  Hickmet, Richard

  Morrison, Hon P. (Chester)

  Hicks, Robert

  Moynihan, Hon C.

  Higgins, Rt Hon Terence L.

  Mudd, David

  Hind, Kenneth

  Murphy, Christopher

  Hirst, Michael

  Neale, Gerrard

  Hogg, Hon Douglas (Gr'th'm)

  Newton, Tony

  Holland, Sir Philip (Gedling)

  Nicholls, Patrick

  Holt, Richard

  Norris, Steven

  Hordern, Sir Peter

  Onslow, Cranley

  Howard, Michael

  Oppenheim, Phillip

  Howarth, Gerald (Cannock)

  Oppenheim, Rt Hon Mrs S.

  Howell, Rt Hon D. (G'ldford)

  Osborn, Sir John

  Howell, Ralph (Norfolk, N)

  Ottaway, Richard

  Hubbard-Miles, Peter

  Page, Sir John (Harrow W)

  Hunt, David (Wirral)

  Page, Richard (Herts SW)

  Hunt, John (Ravensbourne)

  Parkinson, Rt Hon Cecil

  Hunter, Andrew

  Parris, Matthew

  Irving, Charles

  Patten, Christopher (Bath)

  Jackson, Robert

  Patten, J. (Oxf W & Abdgn)

  Jessel, Toby

  Pawsey, James

  Johnson Smith, Sir Geoffrey

  Percival, Rt Hon Sir Ian

  Jones, Gwilym (Cardiff N)

  Pollock, Alexander

  Jones, Robert (Herts W)

  Portillo, Michael

  Joseph, Rt Hon Sir Keith

  Powell, William (Corby)

  Kellett-Bowman, Mrs Elaine

  Powley, John

  Kershaw, Sir Anthony

  Prentice, Rt Hon Reg

  King, Roger (B'ham N'field)

  Price, Sir David

  Knight, Greg (Derby N)

  Proctor, K. Harvey

  Knight, Dame Jill (Edgbaston)

  Pym, Rt Hon Francis

  Knowles, Michael

  Raffan, Keith

  Knox, David

  Raison, Rt Hon Timothy

  Lamont, Norman

  Rathbone, Tim

  Lang, Ian

  Rees, Rt Hon Peter (Dover)

  Latham, Michael

  Rhodes James, Robert

  Lawler, Geoffrey

  Rhys Williams, Sir Brandon

  Lawrence, Ivan

  Ridley, Rt Hon Nicholas

  Lee, John (Pendle)

  Ridsdale, Sir Julian

  Leigh, Edward (Gainsbor'gh)

  Rifkind, Malcolm

  Lennox-Boyd, Hon Mark

  Roe, Mrs Marion

  Lester, Jim

  Rossi, Sir Hugh

  Lewis, Sir Kenneth (Stamf'd)

  Rost, Peter

  Lightbown, David

  Rumbold, Mrs Angela

  850

  Ryder, Richard

  Tracey, Richard

  Sackville, Hon Thomas

  Trippier, David

  Sainsbury, Hon Timothy

  Twinn, Dr Ian

  Shaw, Giles (Pudsey)

  Viggers, Peter

  Shepherd, Colin (Hereford)

  Wakeham, Rt Hon John

  Shersby, Michael

  Waldegrave, Hon William

  Silvester, Fred

  Walker, Bill (T'side N)

  Skeet, T. H. H.

  Walker, Rt Hon P. (W'cester)

  Smith, Tim (Beaconsfield)

  Wall, Sir Patrick

  Speed, Keith

  Waller, Gary

  Spence, John

  Wardle, C. (Bexhill)

  Spencer, Derek

  Warren, Kenneth

  Spicer, Michael (S Worcs)

  Watson, John

  Stern, Michael

  Watts, John

  Stevens, Lewis (Nuneaton)

  Wells, Bowen (Hertford)

  Stevens, Martin (Fulham)

  Wells, Sir John (Maidstone)

  Stewart, Andrew (Sherwood)

  Whitfield, John

  Stradling Thomas, Sir John

  Wiggin, Jerry

  Sumberg, David

  Wilkinson, John

  Taylor, John (Solihull)

  Winterton, Mrs Ann

  Thatcher, Rt Hon Mrs M.

  Wood, Timothy

  Thomas, Rt Hon Peter

  Woodcock, Michael

  Thompson, Donald (Calder V)

  Yeo, Tim

  Thompson, Patrick (N'ich N)

  Younger, Rt Hon George

  Thorne, Neil (llford S)

  Thornton, Malcolm

  Tellers for the Noes:

  Thurnham, Peter

  Mr. Michael Neubert and

  Townsend, Cyril D. (B'heath)

  Mr. Peter Lloyd.

  Question accordingly negatived.
  Main Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 300, Noes 213.

  Divison No. 21]

  [10.15 pm

  AYES

  Adley, Robert

  Carttiss, Michael

  Aitken, Jonathan

  Cash, William

  Alexander, Richard

  Channon, Rt Hon Paul

  Alison, Rt Hon Michael

  Chapman, Sydney

  Amery, Rt Hon Julian

  Churchill, W. S.

  Amess, David

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

  Ancram, Michael

  Clark, Dr Michael (Rochford)

  Arnold, Tom

  Clark, Sir W. (Croydon S)

  Atkins, Rt Hon Sir H.

  Clarke, Rt Hon K. (Rushcliffe)

  Atkins, Robert (South Ribble)

  Clegg, Sir Walter

  Atkinson, David (B'm'th E)

  Colvin, Michael

  Baker, Nicholas (Dorset N)

  Conway, Derek

  Baldry, Tony

  Coombs, Simon

  Beaumont-Dark, Anthony

  Cope, John

  Bellingham, Henry

  Cormack, Patrick

  Benyon, William

  Corrie, John

  Best, Keith

  Cranborne, Viscount

  Bevan, David Gilroy

  Critchley, Julian

  Biffen, Rt Hon John

  Crouch, David

  Biggs-Davison, Sir John

  Currie, Mrs Edwina

  Blackburn, John

  Dickens, Geoffrey

  Blaker, Rt Hon Sir Peter

  Dicks, Terry

  Body, Richard

  Dorrell, Stephen

  Boscawen, Hon Robert

  Douglas-Hamilton, Lord J.

  Bottomley, Peter

  "Dover, Den

  Bottomley, Mrs Virginia

  du Cann, Rt Hon Sir Edward

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

  Dunn, Robert

  Bowden, Gerald (Dulwich)

  Durant, Tony

  Braine, Rt Hon Sir Bernard

  Dykes, Hugh

  Brandon-Bravo, Martin

  Edwards, Rt Hon N. (P'broke)

  Bright, Graham

  Emery, Sir Peter

  Brinton, Tim

  Evennett, David

  Brooke, Hon Peter

  Eyre, Sir Reginald

  Brown, M. (Brigg & Cl'thpes)

  Fallon, Michael

  Bruinvels, Peter

  Farr, Sir John

  Bryan, Sir Paul

  Favell, Anthony

  Buchanan-Smith, Rt Hon A.

  Fenner, Mrs Peggy

  Budgen, Nick

  Fletcher, Alexander

  Bulmer, Esmond

  Fookes, Miss Janet

  Butler, Rt Hon Adam

  Forman, Nigel

  Butterfill, John

  Forsyth, Michael (Stirling)

  Carlisle, Kenneth (Lincoln)

  Forth, Eric

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

  Fowler, Rt Hon Norman

  851

  Fox, Marcus

  Lewis, Sir Kenneth (Stamf'd)

  Franks, Cecil

  Lightbown, David

  Fraser, Peter (Angus East)

  Lilley, Peter

  Fry, Peter

  Lloyd, Ian (Havant)

  Gardner, Sir Edward (Fylde)

  Lloyd, Peter, (Fareham)

  Garel-Jones, Tristan

  Lord, Michael

  Gilmour, Rt Hon Sir Ian

  Luce, Richard

  Glyn, Dr Alan

  McCrindle, Robert

  Goodhart, Sir Philip

  McCurley, Mrs Anna

  Goodlad, Alastair

  MacGregor, Rt Hon John

  Gow, Ian

  MacKay, Andrew (Berkshire)

  Gower, Sir Raymond

  MacKay, John (Argyll & Bute)

  Grant, Sir Anthony

  Maclean, David John

  Greenway, Harry

  McNair-Wilson, M. (N'bury)

  Gregory, Conal

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

  Griffiths, Sir Eldon

  McQuarrie, Albert

  Griffiths, Peter (Portsm'th N)

  Madel, David

  Grist, Ian

  Major, John

  Ground, Patrick

  Malins, Humfrey

  Grylls, Michael

  Malone, Gerald

  Gummer, Rt Hon John S

  Maples, John

  Hamilton, Hon A. (Epsom)

  Marland, Paul

  Hamilton, Neil (Tatton)

  Marlow, Antony

  Hampson, Dr Keith

  Marshall, Michael (Arundel)

  Hanley, Jeremy

  Mather, Carol

  Hannam, John

  Mawhinney, Dr Brian

  Harris, David

  Maxwell-Hyslop, Robin

  Harvey, Robert

  Mellor, David

  Haselhurst, Alan

  Merchant, Piers

  Hawkins, C. (High Peak)

  Meyer, Sir Anthony

  Hawkins, Sir Paul (N'folk SW)

  Miller, Hal (B'grove)

  Hawksley, Warren

  Mills, lain (Meriden)

  Hayes, J.

  Miscampbell, Norman

  Hayhoe, Rt Hon Barney

  Mitchell, David (Hants NW)

  Hayward, Robert

  Moate, Roger

  Heath, Rt Hon Edward

  Monro, Sir Hector

  Heathcoat-Amory, David

  Montgomery, Sir Fergus

  Heddle, John

  Moore, John

  Henderson, Barry

  Morris, M. (N'hampton, S)

  Heseltine, Rt Hon Michael

  Morrison, Hon C. (Devizes)

  Hickmet, Richard

  Morrison, Hon P. (Chester)

  Hicks, Robert

  Moynihan, Hon C.

  Higgins, Rt Hon Terence L.

  Mudd, David

  Hind, Kenneth

  Murphy, Christopher

  Hirst, Michael

  Neale, Gerrard

  Hogg, Hon Douglas (Gr'th'm)

  Neubert, Michael

  Holland, Sir Philip (Gedling)

  Newton, Tony

  Holt, Richard

  Nicholls, Patrick

  Hordern, Sir Peter

  Norris, Steven

  Howard, Michael

  Onslow, Cranley

  Howarth, Gerald (Cannock)

  Oppenheim, Phillip

  Howell, Rt Hon D. (G'ldford)

  Oppenheim, Rt Hon Mrs S.

  Howell, Ralph (Norfolk, N)

  Osborn, Sir John

  Hubbard-Miles, Peter

  Ottaway, Richard

  Hunt, David (Wirral)

  Page, Sir John (Harrow W)

  Hunt, John (Ravensbourne)

  Page, Richard (Herts SW)

  Hunter, Andrew

  Parkinson, Rt Hon Cecil

  Irving, Charles

  Parris, Matthew

  Jackson, Robert

  Patten, Christopher (Bath)

  Jessel, Toby

  Patten, J. (Oxf W & Abdgn)

  Johnson Smith, Sir Geoffrey

  Pawsey, James

  Jones, Gwilym (Cardiff N)

  Percival, Rt Hon Sir Ian

  Jones, Robert (Herts W)

  Pollock, Alexander

  Joseph, Rt Hon Sir Keith

  Portillo, Michael

  Kellett-Bowman, Mrs Elaine

  Powell, William (Corby)

  Kershaw, Sir Anthony

  Powley, John

  King, Roger (B'ham N'field)

  Prentice, Rt Hon Reg

  Knight, Greg (Derby N)

  Price, Sir David

  Knight, Dame Jill (Edgbaston)

  Proctor, K. Harvey

  Knowles, Michael

  Pym, Rt Hon Francis

  Knox, David

  Raffan, Keith

  Lamont, Norman

  Raison, Rt Hon Timothy

  Lang, Ian

  Rathbone, Tim

  Latham, Michael

  Rees, Rt Hon Peter (Dover)

  Lawler, Geoffrey

  Rhys Williams, Sir Brandon

  Lawrence, Ivan

  Ridley, Rt Hon Nicholas

  Lee, John (Pendle)

  Ridsdale, Sir Julian

  Leigh, Edward (Gainsbor'gh)

  Rifkind, Malcolm

  Lennox-Boyd, Hon Mark

  Roe, Mrs Marion

  Lester, Jim

  Rossi, Sir Hugh

  852

  Rost, Peter

  Tracey, Richard

  Rumbold, Mrs Angela

  Trippier, David

  Ryder, Richard

  Twinn, Dr Ian

  Sackville, Hon Thomas

  Viggers, Peter

  Shaw, Giles (Pudsey)

  Wakeham, Rt Hon John

  Shepherd, Colin (Hereford)

  Waldegrave, Hon William

  Shersby, Michael

  Walker, Bill (T'side N)

  Silvester, Fred

  Walker, Rt Hon P. (W'cester)

  Skeet, T. H. H.

  Wall, Sir Patrick

  Smith, Tim (Beaconsfield)

  Waller, Gary

  Speed, Keith

  Wardle, C. (Bexhill)

  Spence, John

  Warren, Kenneth

  Spencer, Derek

  Watson, John

  Spicer, Michael (S Worcs)

  Watts, John

  Stern, Michael

  Wells, Bowen (Hertford)

  Stevens, Lewis (Nuneaton)

  Wells, Sir John (Maidstone)

  Stevens, Martin (Fulham)

  Whitfield, John

  Stewart, Andrew (Sherwood)

  Wiggin, Jerry

  Stradling Thomas, Sir John

  Wilkinson, John

  Sumberg, David

  Winterton, Mrs Ann

  Taylor, John (Solihull)

  Wood, Timothy

  Thatcher, Rt Hon Mrs M.

  Woodcock, Michael

  Thomas, Rt Hon Peter

  Yeo, Tim

  Thompson, Donald (Calder V)

  Younger, Rt Hon George

  Thompson, Patrick (N'ich N)

  Thorne, Neil (llford S)

  Tellers for the Ayes:

  Thornton, Malcolm

  Mr. Tim Sainsbury and

  Thurnham, Peter

  Mr. Francis Maude

  Townsend, Cyril D. (B'heath)

  NOES

  Adams, Allen (Paisley N)

  Cunningham, Dr John

  Alton, David

  Dalyell, Tarn

  Anderson, Donald

  Davies, Rt Hon Denzil (L'lli)

  Archer, Rt Hon Peter

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

  Ashley, Rt Hon Jack

  Deakins, Eric

  Ashton, Joe

  Dewar, Donald

  Atkinson, N. (Tottenham)

  Dixon, Donald

  Banks, Tony (Newham NW)

  Dobson, Frank

  Barnett, Guy

  Dormand, Jack

  Barron, Kevin

  Douglas, Dick

  Beckett, Mrs Margaret

  Dubs, Alfred

  Beith, A. J.

  Duffy, A. E. P.

  Bell, Stuart

  Dunwoody, Hon Mrs G.

  Benn, Rt Hon Tony

  Eadie, Alex

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

  Eastham, Ken

  Bermingham, Gerald

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

  Bidwell, Sydney

  Evans, John (St. Helens N)

  Blair, Anthony

  Ewing, Harry

  Boothroyd, Miss Betty

  Fatchett, Derek

  Boyes, Roland

  Field, Frank (Birkenhead)

  Bray, Dr Jeremy

  Fields, T. (L'pool Broad Gn)

  Brown, Gordon (D'f'mline E)

  Fisher, Mark

  Brown, Hugh D. (Provan)

  Flannery, Martin

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

  Foot, Rt Hon Michael

  Brown, Ron (E'burgh, Leith)

  Forrester, John

  Bruce, Malcolm

  Foster, Derek

  Caborn, Richard

  Foulkes, George

  Callaghan, Jim (Heyw'd & M)

  Fraser, J. (Norwood)

  Campbell, Ian

  Freeson, Rt Hon Reginald

  Campbell-Savours, Dale

  Freud, Clement

  Canavan, Dennis

  Garrett, W. E.

  Carlile, Alexander (Montg'y)

  George, Bruce

  Carter-Jones, Lewis

  Gilbert, Rt Hon Dr John

  Cartwright, John

  Godman, Dr Norman

  Clark, Dr David (S Shields)

  Golding, John

  Clarke, Thomas

  Gould, Bryan

  Clay, Robert

  Gourlay, Harry

  Clelland, David

  Hamilton, James (M'well N)

  Clwyd, Mrs Ann

  Hancock, Mr. Michael

  Cocks, Rt Hon M. (Bristol S.)

  Hardy, Peter

  Cohen, Harry

  Harman, Ms Harriet

  Coleman, Donald

  Harrison, Rt Hon Walter

  Conlan, Bernard

  Hart, Rt Hon Dame Judith

  Cook, Robin F. (Livingston)

  Hattersley, Rt Hon Roy

  Corbett, Robin

  Healey, Rt Hon Denis

  Corbyn, Jeremy

  Heffer, Eric S.

  Cox, Thomas (Tooting)

  Hogg, N. (C'nauld & Kilsyth)

  Crowther, Stan

  Holland, Stuart (Vauxhall)

  Cunliffe, Lawrence

  Home Robertson, John

  853

  Howell, Rt Hon D. (S'heath)

  Penhaligon, David

  Howells, Geraint

  Pike, Peter

  Hoyle, Douglas

  Powell, Raymond (Ogmore)

  Hughes, Robert (Aberdeen N)

  Prescott, John

  Hughes, Sean (Knowsley S)

  Radice, Giles

  Hughes, Simon (Southwark)

  Randall, Stuart

  Janner, Hon Greville

  Redmond, M.

  Jenkins, Rt Hon Roy (Hillh'd)

  Rees, Rt Hon M. (Leeds S)

  John, Brynmor

  Richardson, Ms Jo

  Jones, Barry (Alyn & Deeside)

  Roberts, Ernest (Hackney N)

  Kaufman, Rt Hon Gerald

  Robertson, George

  Kennedy, Charles

  Robinson, G. (Coventry NW)

  Kilroy-Silk, Robert

  Rogers, Allan

  Kinnock, Rt Hon Neil

  Rooker, J. W.

  Kirkwood, Archy

  Ross, Ernest (Dundee W)

  Lambie, David

  Ross, Stephen (Isle of Wight)

  Lamond, James

  Rowlands, Ted

  Leighton, Ronald

  Ryman, John

  Lewis, Ron (Carlisle)

  Sedgemore, Brian

  Lewis, Terence (Worsley)

  Sheerman, Barry

  Litherland, Robert

  Sheldon, Rt Hon R.

  Livsey, Richard

  Shore, Rt Hon Peter

  Lloyd, Tony (Stretford)

  Short, Ms Clare (Ladywood)

  Lofthouse, Geoffrey

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

  McCartney, Hugh

  Silkin, Rt Hon J.

  McDonald, Dr Oonagh

  Skinner, Dennis

  McGuire, Michael

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

  McKay, Allen (Penistone)

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

  McKelvey, William

  Snape, Peter

  MacKenzie, Rt Hon Gregor

  Soley, Clive

  Maclennan, Robert

  Spearing, Nigel

  McNamara, Kevin

  Steel, Rt Hon David

  McTaggart, Robert

  Stewart, Rt Hon D. (W Isles)

  McWilliam, John

  Stott, Roger

  Madden, Max

  Strang, Gavin

  Marek, Dr John

  Straw, Jack

  Marshall, David (Shettleston)

  Thomas, Dafydd (Merioneth)

  Martin, Michael

  Thomas, Dr R. (Carmarthen)

  Mason, Rt Hon Roy

  Thompson, J. (Wansbeck)

  Maxton, John

  Thorne, Stan (Preston)

  Maynard, Miss Joan

  Tinn, James

  Meacher, Michael

  Torney, Tom

  Meadowcroft, Michael

  Wainwright, R.

  Michie, William

  Wallace, James

  Mikardo, Ian

  Wardell, Gareth (Gower)

  Millan, Rt Hon Bruce

  Wareing, Robert

  Miller, Dr M S. (E Kilbride)

  Weetch, Ken

  Mitchell, Austin (G't Grimsby)

  Welsh, Michael

  Morris, Rt Hon A. (W'shawe)

  White, James

  Morris, Rt Hon J. (Aberavon)

  Williams, Rt Hon A.

  Nellist, David

  Wilson, Gordon

  Oakes, Rt Hon Gordon

  Winnick, David

  O'Brien, William

  Woodall, Alec

  O'Neill, Martin

  Wrigglesworth, Ian

  Orme, Rt Hon Stanley

  Young, David (Bolton SE)

  Owen, Rt Hon Dr David

  Park, George

  Tellers for the Noes:

  Patchett, Terry

  Mr. Frank Haynes and

  Pavitt, Laurie

  Mr. Ron Davies.

  Question accordingly agreed to.
  Bill read a Second time and committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day' sitting, the Ways and Means Motion and the European Communities (Spanish and Portuguese Accession) Bill [Lords] may be proceeded with, though opposed, until any hour. —[Mr. Boscawen.]

  GAS BILL [MONEY]
  Queen's recommendation having been signified—Motion made, and Question proposed
  That, for the purposes of any Act resulting from the Gas Bill ("the Act"), it is expedient to authorize—
  (1) the payment out of money provided by Parliament of the following, namely—

  (a) the remuneration of, and any travelling or other allowances payable under the Act to, the Director General of Gas Supply and any staff of the Director, any sums payable under the Act to or in respect of the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of the Act;

  (b)any sums required by the Secretary of State for defraying or contributing towards the expenses of the Gas Users' Council established under the Act;

  (c) the remuneration of, and any allowances or pensions payable under the Act to or in respect of, persons appointed—

  (i) to carry out tests of apparatus and equipment provided and maintained by persons supplying gas through pipes;

  (ii)to carry out tests of gas supplied through pipes; or

  (iii) to examine and stamp, or authorise the stamping of, meters used for ascertaining the quantity of gas so supplied;

  (d) any sums payable by the Secretary of State to the chairman and officers of the National Gas Consurners' Council and the chairmen and officers of the Regional Gas Consumers' Councils by way of compensation for loss of office or employment or loss or diminution of remuneration or pension rights;

  (e) any expenses incurred by the Treasury or the Secretary of State in acquiring securities of the successor company (within the meaning of the Act) or rights to subscribe for any such securities;

  (f) any administrative expenses incurred by the Secretary of State in consequence of the provisions of the Act;

  (g) any increase attributable to the Act in the sums payable out of money so provided under any other Act;

  (2) the charging on and payment out of the National Loans fund of any sums which, by virtue of the Act—

  (a) payable under section 12 of the National Loans Act 1968 in respect of interest or redemption money on British Gas Stock; or

  (b) are payable under section 5 of the Miscellaneous Financial Provisions Act 1955 in respect of unclaimed interest or redemption money on such Stock;

  (3) the payment out of the Consolidated Fund of any increase attributable to the Act in the sums payable out of that Fund under any other Act. —[Mr. Boscawen.]
  Question put: —
  The House divided: Ayes 282, Noes 202.

  Division No. 22]

  [10.30 pm

  AYES

  Alexander, Richard

  Braine, Rt Hon Sir Bernard

  Alison, Rt Hon Michael

  Brandon-Bravo, Martin

  Amery, Rt Hon Julian

  Bright, Graham

  Amess, David

  Brinton, Tim

  Ancram, Michael

  Brooke, Hon Peter

  Arnold, Tom

  Brown, M. (Brigg & Cl'thpes)

  Atkins, Rt Hon Sir H.

  Bruinvels, Peter

  Atkins, Robert (South Ribble)

  Bryan, Sir Paul

  Atkinson, David (B'm'th E)

  Buchanan-Smith, Rt Hon A.

  Baker, Nicholas (Dorset N)

  Budgen, Nick

  Baldry, Tony

  Bulmer, Esmond

  Beaumont-Dark, Anthony

  Butler, Rt Hon Adam

  Bellingham, Henry

  Butterfill, John

  Benyon, William

  Carlisle, Kenneth (Lincoln)

  Best, Keith

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

  Bevan, David Gilroy

  Carttiss, Michael

  Biffen, Rt Hon John

  Cash, William

  Biggs-Davison, Sir John

  Chalker, Mrs Lynda

  Blackburn, John

  Chapman, Sydney

  Blaker, Rt Hon Sir Peter

  Chope, Christopher

  Body, Richard

  Churchill, W. S.

  Boscawen, Hon Robert

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

  Bottomley, Peter

  Clark, Dr Michael (Rochford)

  Bottomley, Mrs Virginia

  Clark, Sir W. (Croydon S)

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

  Clarke, Rt Hon K. (Rushcliffe)

  Bowden, Gerald (Dulwich)

  Clegg, Sir Walter

  855

  Colvin, Michael

  Hunter, Andrew

  Conway, Derek

  Irving, Charles

  Coombs, Simon

  Jackson, Robert

  Cope, John

  Jessel, Toby

  Corrie, John

  Johnson Smith, Sir Geoffrey

  Crouch, David

  Jones, Gwilym (Cardiff N)

  Currie, Mrs Edwina

  Jones, Robert (Herts W)

  Dickens, Geoffrey

  Joseph, Rt Hon Sir Keith

  Dicks, Terry

  Kellett-Bowman, Mrs Elaine

  Dorrell, Stephen

  Kershaw, Sir Anthony

  Douglas-Hamilton, Lord J.

  King, Roger (B'ham N'field)

  Dover, Den

  Knight, Greg (Derby N)

  du Cann, Rt Hon Sir Edward

  Knight, Dame Jill (Edgbaston)

  Dunn, Robert

  Knowles, Michael

  Durant, Tony

  Knox, David

  Dykes, Hugh

  Lamont, Norman

  Edwards, Rt Hon N. (P'broke)

  Lang, Ian

  Emery, Sir Peter

  Latham, Michael

  Evennett, David

  Lawrence, Ivan

  Eyre, Sir Reginald

  Leigh, Edward (Gainsbor'gh)

  Fallon, Michael

  Lester, Jim

  Farr, Sir John

  Lewis, Sir Kenneth (Stamf'd)

  Favell, Anthony

  Lightbown, David

  Fenner, Mrs Peggy

  Lilley, Peter

  Fletcher, Alexander

  Lloyd, Ian (Havant)

  Fookes, Miss Janet

  Lloyd, Peter, (Fareham)

  Forman, Nigel

  Lord, Michael

  Forsyth, Michael (Stirling)

  Luce, Richard

  Forth, Eric

  McCrindle, Robert

  Fowler, Rt Hon Norman

  McCurley, Mrs Anna

  Fox, Marcus

  MacGregor, Rt Hon John

  Franks, Cecil

  MacKay, Andrew (Berkshire)

  Fraser, Peter (Angus East)

  MacKay, John (Argyll & Bute)

  Fry, Peter

  Maclean, David John

  Garel-Jones, Tristan

  McNair-Wilson, M. (N'bury)

  Glyn, Dr Alan

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

  Goodhart, Sir Philip

  McQuarrie, Albert

  Goodlad, Alastair

  Madel, David

  Gow, Ian

  Major, John

  Gower, Sir Raymond

  Malins, Humfrey

  Grant, Sir Anthony

  Malone, Gerald

  Greenway, Harry

  Maples, John

  Gregory, Conal

  Marland, Paul

  Griffiths, Peter (Portsm'th N)

  Marlow, Antony

  Grist, Ian

  Marshall, Michael (Arundel)

  Ground, Patrick

  Mather, Carol

  Grylls, Michael

  Mawhinney, Dr Brian

  Hamilton, Hon A. (Epsom)

  Maxwell-Hyslop, Robin

  Hamilton, Neil (Tatton)

  Mellor, David

  Hampson, Dr Keith

  Merchant, Piers

  Hanley, Jeremy

  Miller, Hal (B'grove)

  Hannam, John

  Mills, lain (Meriden)

  Harris, David

  Miscampbell, Norman

  Harvey, Robert

  Mitchell, David (Hants NW)

  Haselhurst, Alan

  Moate, Roger

  Hawkins, C. (High Peak)

  Monro, Sir Hector

  Hawkins, Sir Paul (N'folk SW)

  Montgomery, Sir Fergus

  Hawksley, Warren

  Moore, John

  Hayes, J.

  Morris, M. (N'hampton, S)

  Hayhoe, Rt Hon Barney

  Morrison, Hon C. (Devizes)

  Hayward, Robert

  Morrison, Hon P. (Chester)

  Heath, Rt Hon Edward

  Moynihan, Hon C.

  Henderson, Barry

  Mudd, David

  Heseltine, Rt Hon Michael

  Murphy, Christopher

  Hickmet, Richard

  Neale, Gerrard

  Hicks, Robert

  Neubert, Michael

  Higgins, Rt Hon Terence L.

  Newton, Tony

  Hind, Kenneth

  Nicholls, Patrick

  Hirst, Michael

  Norris, Steven

  Hogg, Hon Douglas (Gr'th'm)

  Oppenheim, Phillip

  Holland, Sir Philip (Gedling)

  Oppenheim, Rt Hon Mrs S.

  Holt, Richard

  Osborn, Sir John

  Hordern, Sir Peter

  Ottaway, Richard

  Howard, Michael

  Page, Sir John (Harrow W)

  Howarth, Gerald (Cannock)

  Page, Richard (Herts SW)

  Howell, Rt Hon D. (G'ldford)

  Parkinson, Rt Hon Cecil

  Howell, Ralph (Norfolk, N)

  Parris, Matthew

  Hubbard-Miles, Peter

  Patten, Christopher (Bath)

  Hunt, David (Wirral)

  Patten, J. (Oxf W & Abdgn)

  Hunt, John (Ravensbourne)

  Pawsey, James

  856

  Percival, Rt Hon Sir Ian

  Stradling Thomas, Sir John

  Pollock, Alexander

  Sumberg, David

  Portillo, Michael

  Taylor, John (Solihull)

  Powell, William (Corby)

  Thatcher, Rt Hon Mrs M.

  Powley, John

  Thomas, Rt Hon Peter

  Prentice, Rt Hon Reg

  Thompson, Donald (Calder V)

  Price, Sir David

  Thompson, Patrick (N'ich N)

  Proctor, K. Harvey

  Thorne, Neil (llford S)

  Pym, Rt Hon Francis

  Thurnham, Peter

  Raffan, Keith

  Townsend, Cyril D. (B'heath)

  Raison, Rt Hon Timothy

  Tracey, Richard

  Rathbone, Tim

  Trippier, David

  Rhys Williams, Sir Brandon

  Twinn, Dr Ian

  Ridley, Rt Hon Nicholas

  Viggers, Peter

  Ridsdale, Sir Julian

  Wakeham, Rt Hon John

  Rifkind, Malcolm

  Waldegrave, Hon William

  Roe, Mrs Marion

  Walker, Bill (T'side N)

  Rossi, Sir Hugh

  Walker, Rt Hon P. (W'cester)

  Rost, Peter

  Wall, Sir Patrick

  Rumbold, Mrs Angela

  Waller, Gary

  Ryder, Richard

  Wardle, C. (Bexhill)

  Sackville, Hon Thomas

  Warren, Kenneth

  Sainsbury, Hon Timothy

  Watson, John

  Shaw, Giles (Pudsey)

  Watts, John

  Shepherd, Colin (Hereford)

  Wells, Bowen (Hertford)

  Shersby, Michael

  Wells, Sir John (Maidstone)

  Silvester, Fred

  Whitfield, John

  Skeet, T. H. H.

  Wiggin, Jerry

  Smith, Tim (Beaconsfield)

  Wilkinson, John

  Speed, Keith

  Winterton, Mrs Ann

  Spence, John

  Wood, Timothy

  Spencer, Derek

  Woodcock, Michael

  Spicer, Michael (S Worcs)

  Yeo, Tim

  Stern, Michael

  Stevens, Lewis (Nuneaton)

  Tellers for the Ayes:

  Stevens, Martin (Fulham)

  Mr. Mark Lennox-Boyd and

  Stewart, Andrew (Sherwood)

  Mr. Francis Maude.

  NOES

  Adams, Allen (Paisley N)

  Conlan, Bernard

  Alton, David

  Cook, Robin F. (Livingston)

  Anderson, Donald

  Corbett, Robin

  Archer, Rt Hon Peter

  Corbyn, Jeremy

  Ashley, Rt Hon Jack

  Cox, Thomas (Tooting)

  Ashton, Joe

  Crowther, Stan

  Atkinson, N. (Tottenham)

  Cunliffe, Lawrence

  Banks, Tony (Newham NW)

  Cunningham, Dr John

  Barnett, Guy

  Dalyell, Tam

  Barron, Kevin

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

  Beckett, Mrs Margaret

  Deakins, Eric

  Beith, A. J.

  Dewar, Donald

  Bell, Stuart

  Dixon, Donald

  Benn, Rt Hon Tony

  Dobson, Frank

  Bennett, A. (Denfn & Red'sh)

  Dormand, Jack

  Bermingham, Gerald

  Douglas, Dick

  Bidwell, Sydney

  Dubs, Alfred

  Blair, Anthony

  Duffy, A. E. P.

  Boothroyd, Miss Betty

  Dunwoody, Hon Mrs G.

  Boyes, Roland

  Eadie, Alex

  Bray, Dr Jeremy

  Eastham, Ken

  Brown, Gordon (D'f'mline E)

  Evans, John (St. Helens N)

  Brown, Hugh D. (Provan)

  Ewing, Harry

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

  Fatchett, Derek

  Brown, Ron (E'burgh, Leith)

  Field, Frank (Birkenhead)

  Bruce, Malcolm

  Fields, T. (L'pool Broad Gn)

  Caborn, Richard

  Fisher, Mark

  Callaghan, Jim (Heyw'd & M)

  Flannery, Martin

  Campbell, Ian

  Foot, Rt Hon Michael

  Campbell-Savours, Dale

  Forrester, John

  Canavan, Dennis

  Foster, Derek

  Carlile, Alexander (Montg'y)

  Foulkes, George

  Carter-Jones, Lewis

  Fraser, J. (Norwood)

  Clark, Dr David (S Shields)

  Freeson, Rt Hon Reginald

  Clarke, Thomas

  Freud, Clement

  Clay, Robert

  Garrett, W. E.

  Clelland, David Gordon

  George, Bruce

  Clwyd, Mrs Ann

  Gilbert, Rt Hon Dr John

  Cocks, Rt Hon M. (Bristol S.)

  Godman, Dr Norman

  Cohen, Harry

  Golding, John

  Coleman, Donald

  Gould, Bryan

  857

  Hamilton, James (M'well N)

  MacKenzie, Rt Hon Gregor

  Hancock, Mr. Michael

  McNamara, Kevin

  Hardy, Peter

  McTaggart, Robert

  Harman, Ms Harriet

  McWilliam, John

  Harrison, Rt Hon Walter

  Madden, Max

  Hart, Rt Hon Dame Judith

  Marek, Dr John

  Hattersley, Rt Hon Roy

  Marshall, David (Shettleston)

  Healey, Rt Hon Denis

  Martin, Michael

  Heffer, Eric S.

  Maxton, John

  Hogg, N. (C'nauld & Kilsyth)

  Maynard, Miss Joan

  Holland, Stuart (Vauxhall)

  Meacher, Michael

  Home Robertson, John

  Meadowcroft, Michael

  Howell, Rt Hon D. (S'heath)

  Michie, William

  Howells, Geraint

  Mikardo, Ian

  Hoyle, Douglas

  Millan, Rt Hon Bruce

  Hughes, Dr. Mark (Durham)

  Miller, DrM. S. (E Kilbride)

  Hughes, Robert (Aberdeen N)

  Mitchell, Austin (G't Grimsby)

  Hughes, Sean (Knowsley S)

  Morris, Rt Hon A. (W'shawe)

  Hughes, Simon (Southwark)

  Morris, Rt Hon J. (Aberavon)

  Janner, Hon Greville

  Nellist, David

  John, Brynmor

  Oakes, Rt Hon Gordon

  Jones, Barry (Alyn & Deeside)

  O'Brien, William

  Kaufman, Rt Hon Gerald

  O'Neill, Martin

  Kilroy-Silk, Robert

  Orme, Rt Hon Stanley

  Kinnock, Rt Hon Neil

  Owen, Rt Hon Dr David

  Kirkwood, Archy

  Park, George

  Lambie, David

  Parry, Robert

  Lamond, James

  Patchett, Terry

  Leighton, Ronald

  Pavitt, Laurie

  Lewis, Ron (Carlisle)

  Penhaligon, David

  Lewis, Terence (Worsley)

  Pike, Peter

  Litherland, Robert

  Powell, Raymond (Ogmore)

  Livsey, Richard

  Prescott, John

  Lloyd, Tony (Stretford)

  Radice, Giles

  Lofthouse, Geoffrey

  Randall, Stuart

  McCartney, Hugh

  Redmond, M.

  McDonald, Dr Oonagh

  Rees, Rt Hon M. (Leeds S)

  McGuire, Michael

  Richardson, Ms Jo

  McKay, Allen (Penistone)

  Roberts, Ernest (Hackney N)

  McKelvey, William

  Robertson, George

  858

  Robinson, G. (Coventry NW)

  Straw, Jack

  Rogers, Allan

  Thomas, Dafydd (Merioneth)

  Rooker, J. W.

  Thomas, Dr R. (Carmarthen)

  Ross, Ernest (Dundee W)

  Thompson, J. (Wansbeck)

  Ross, Stephen (Isle of Wight)

  Thome, Stan (Preston)

  Rowlands, Ted

  Tinn, James

  Ryman, John

  Torney, Tom

  Sheerman, Barry

  Wallace, James

  Sheldon, Rt Hon R.

  Wardell, Gareth (Gower)

  Shore, Rt Hon Peter

  Wareing, Robert

  Short, Ms Clare (Ladywood)

  Weetch, Ken

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

  Welsh, Michael

  Silkin, Rt Hon J.

  White, James

  Skinner, Dennis

  Williams, Rt Hon A.

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

  Wilson, Gordon

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

  Winnick, David

  Snape, Peter

  Woodall, Alec

  Soley, Clive

  Young, David (Bolton SE)

  Spearing, Nigel

  Steel, Rt Hon David

  Tellers for the Noes:

  Stott, Roger

  Mr. Frank Haynes and

  Strang, Gavin

  Mr. Ron Davies.

  Question accordingly agreed to.

WAYS AND MEANS

  GAS BILL
  Resolved,
  That, for the purposes of any Act resulting from the Gas bill, it is expedient to authorize—

  (1)the inclusion in authorisation granted under that Act of conditions requiring the rendering of payments to the Secretary of State or the Director General of Gas Supply;

  (2) the making of new provision with respect to the incidence of gas levey;

  (3)the payment of sums into the Consolidated Fund or the National Loans Fund.—[Mr. Moore.]

European Communities (Spanish and Portuguese Accession) Bill [Lords]
Considered in Committee.
[MR. ERNEST ARMSTRONG in the Chair]

Clause 1

  EXTENDED MEANING OF THE TREATIES" AND THE COMMUNITY TREATIES"
  Question proposed, That the clause stand part of the Bill.
  10.40 pm
  Mr. Eric Forth: We took the opportunity on Second Reading of this important measure to examine properly, as we should, the principles of the accession of Spain and Portugal to the Community. I believe that this is now our opportunity to examine with my hon. and learned Friend the Minister of State the detailed implications of Spain and Portugal joining the Community, if we approve the Bill in all its stages.
  I should like to draw an analogy, in the most European of senses, with something called the environmental impact assessment, with which I am sure Members on both sides of the House who take an interest in European affairs will be familiar. I should like to ask for an EIA of a different kind —an enlargement impact assessment.
  On Second Reading, we were concerned with principles and not details. I hope that tonight we shall receive from the Government and my hon. and learned Friend a detailed examination of the impact on the United Kingdom and the Community and some facts and figures about what is proposed by the Government.
  To help the Committee, I should like to suggest to my hon. and learned Friend some headings under which he might give us details. I can see that he is already warming to this theme in anticipation of giving the Committee the details so that we can mull them over before deciding whether to approve clause 1.
  Mr. Michael Fallon: Would it not have been fairer to ask the Community to make some environmental impact assessment of our entry and that of the Irish and the Danes? Will my hon. Friend speculate as to the assessment that the Community made in 1973 of the impact of our arrival, and whether it was right?
  Mr. Forth: My hon. Friend makes an interesting and valid point. During my modest contribution on Second Reading, I tried to point that out in the context of Greek entry into the Community, which I think is a more recent and, in a sense, a more valid example. During the arguments about Greek entry into the Community we were told many matters of principle, but we were short on detail. In the four years since Greek entry, it has emerged that that has been an unmitigated disaster not just for the Greeks but for the EEC.
  Mrs. Elaine Kellett-Bowman: Certainly not for the Greeks.
  Mr. Forth: It has been for the Greeks. If my hon. Friend wishes to argue that point I shall be delighted to go into detail on it.
  Let us not be diverted from our main purpose, which is to consider in detail the impact of the proposed entry to the Community of Spain and Portugal under a number of important heads. The first must be agriculture. We must be told what is Her Majesty's Government's estimate of the effect Spanish and Portuguese entry into the Community will have on the common agricultural policy. That can be considered under a number of different heads. There are the estimated costs in terms of wine, olive oil and tomato production. They should be fairly predictable and I hope that we shall have some figures from my hon. and learned Friend.
  It is more difficult to estimate —I hope that the Government will make an attempt —the draining away of resources from the traditional northern type of products —dairy produce, cereals, beef and lamb —which must inevitably take place when the voting power of the new southern states gets itself together and starts to deny resources to the farmers of the northern states.
  Mr. Eric Deakins: With respect, I think that the hon. Gentleman's argument is a little misleading. It is not a case of draining resources away from temperate zone products to Mediterranean products but rather of continuing with the present vast level of resources devoted to temperate zone products and increasing the amount going to Mediterranean products. There will be an increase in the total size of the CAP not just a change in the distribution of resources within it.
  Mr. Forth: I am grateful to the hon. Gentleman, because I am sure that that is as likely a possibility within the context of the CAP. I am sure that my hon. and learned Friend will want to help the Committee and will give us his view of which of those alternatives he thinks will be the more likely. Either way, we must be allowed to make the assessment. It is vital to us as a country with consumers and agricultural producers to know which way matters will go.
  Mr. Fallon: Is it my hon. Friend's view that those resources should remain to be squandered on over-production of the various temperate products that he mentioned without being reformed, or should they be diversified in equal misallocation among the new applicant states?
  Mr. Forth: My hon. Friend is tempting me greatly, but I shall resist the temptation. In agreeing with him, I must say that we must be told whether the Government believe that the accession of two new members to the Community is likely to cause a realistic reform of the CAP or whether it will simply make the CAP problems worse? I have long been in favour of radical reform of the CAP, and reform must be on the basis of an assessment of the needs of the people of the Community year by year, and a preparedness to fund production to that level, but not beyond. That is a relatively simple and effective way of beginning to control agricultural expenditure. I expect that my hon. and learned Friend the Minister will tell us how far he believes that that will take place in the context of the enlargement of the Community.
  10.45 pm
  My second question concerns our horticultural sector. We shall be told that there is a built-in protection for

  861
  horticulturists for a period of years. I am much more interested in hearing the Government's view on what will happen to our horticulturists after the transition period has ended. One thing is sure—we cannot wish away the inherent climatic advantage of Spain and Portugal over our horticulturists. It is less than honest—
  Mr. George Foulkes: What about a common sunshine policy?
  Mr. Forth: Indeed. It is less than honest for anyone to pretend that the effects on horticulture in the long-term can be less than disastrous. I hope that we shall hear the Government's view of what will happen after the transition period.
  The third heading that I would suggest for the detail is the impact on our claims on the regional and social funds when two less well-off countries become claimants on them, if they may join the Community after 1 January 1986. Again, either the funds will be enlarged so that we may retain the same absolute claim on them or, if they remain at roughly the same level, our claim on them must be less. Logic and, indeed, political fairness would say that. We have yet to hear from my hon. and learned Friend what the impact on the United Kingdom would be of a lessening of our claims on the social and regional funds. Many Opposition Members will be interested in that as they come from areas which for a long time have benefited from both funds.
  Fourthly, at present Spanish industry achieves productivity of about 60 per cent. of that of the Community as a whole. Presumably, it is hoped that both Spanish agriculture and industry will be enormously improved in their effectiveness and productivity. Can we have some estimate of the impact of Spanish industry, improved perhaps with technology from the existing member states, financial aid and in many other ways, on our industrial sector? Those of us who represent west midlands' constituencies are extremely interested in the effect on the automobile sector, drop forgings and many other areas in which the Spaniards have shown great potential. Why should we assume that we shall benefit from an ability to export to Spain in competition with other member states, but somehow be immune to the increasing productivity, efficiency and effectiveness of Spanish industry with its advantages of lower unit costs and so on?
  Mr. Fallon: I am listening with great interest to my hon. Friend's argument. Why should we be immune?
  Mr. Forth: I am not suggesting that we should be immune. I am asking the Government to give some assessment of the impact of the entry of Spain and Portugal to the Community on our country, industry and consumers. If we are to make a balanced judgment of the claimed benefits of the entry of Spain and Portugal to the Community —benefits which I would dispute —we must be given much more detail of the likely cost to us in terms of the budget, agriculture and so on.
  What assessment has been made of the cost of the measure in terms of the bureaucratic elements of the Community? Two more languages will be added, and we know the enormous costs of language interpretation and translation within the Community's institutions. The European Parliament's membership will be increased and much extra travel will be involved by members of the Commission, Council and Parliament to Madrid and
  862
  Lisbon. In many respects I envy those who will be involved in that, but I hope that we shall be told the likely cost in institutional terms and the burden on the Community.
  I hope that the Committee will be given all the details necessary to enable hon. Members to make a balanced judgment of the costs and benefits of clause 1 to the people of the United Kingdom.
  Mr. Nigel Spearing: I shall bring to the attention of the Committee some aspects of the Bill that were not adequately dealt with on Second Reading; the hon. Member for Mid-Worcestershire (Mr. Forth) referred to some of them. I shall refer to three areas —the nature of the clause, the terms of accession and the implications for the democracies of Portugal and Spain of becoming members of the Community.
  First, the nature of the clause. Clause 1 is the effective provision of the measure because, by two paragraphs, it adds two treaties to the European Communities Act 1972. They attach the whole of the accession treaty in each case to the terms of that basic Act.
  This mechanism means, in effect, that we are attaching a train to the engine of the 1972 Act. In other words, this measure couples the whole train to that locomotive. But it is outwith the choice of the House that we add the whole train. Everything in the accession treaties is added to the legislation by virtue of the Bill.
  That might not be of note but for the fact that the House has not had much, if any, participation in the terms of those accession treaties. We are being asked to endorse all or nothing; there has been no deliberation by the House, other than by way of written questions and answers —I am not sure that there have been any of those —about the nature of the treaties.
  I recall an incident, Mr. Armstrong, when one of your predecessors in the Chair, Mr. Grant-Ferris, heard points of order from 4 o'clock one afternoon to 7 o'clock the following morning, when we were in Committee on what was then the European Communities Bill. The points of order that were then raised arose because the Chair ruled out all amendments to the treaty on the grounds that they were contrary to the treaty of accession to which that measure gave effect.
  The similar situation that arises tonight with this Bill may not be of great consequence, although, as the hon. Member for Mid-Worcestershire reminded the Committee, it remains to be seen what the consequences are.
  Mr. Deakins: Will my hon. Friend agree that by clause 1 we are not being asked to approve the treaty of accession either with Portugal or Spain? If we were, they would be listed separately, and the Chair has ruled out any amendments that would separate the two. We are not being asked to approve either treaty or both treaties. We are merely being asked to agree to those two treaties being added to the list of treaties in the European Communities Act 1972. We are not even being given an opportunity to discuss the content of those treaties. On Second Reading and Third Reading we can vote only on the general principle of the admission of Spain and Portugal. We cannot vote on the details of the arrangements by which they are admitted to membership of the EEC.
  Mr. Spearing: I am grateful to my hon. Friend for putting into better words what I was trying to explain. He was referring to
  "the treaty relating to the accession of the Kingdom of Spain and the Portuguese Republic",
  yet there is no reference at all to the name of the treaty which does not even have a capital letter. My hon. Friend is quite right, and is adding to the point that I have already made. Time will tell whether or not it would have been advisable for the House to be more aware of the negotiations that led to the creation of this treaty.
  It is possible that future treaties will come before us in the same way, with wagons and carriages whose contents we do not know. They may not be concerned with any future accession, but no doubt any future treaty could well relate to the internal constitutional nature of the Community itself.
  When those treaties arrive —there is talk about them —we will probably be confronted with a similar one-clause Bill containing additional subsections and a description of the treaty. A Bill in that form is now almost inevitable because it flows from the nature of the European Communities Act. On this occasion I shall not venture into the advantages and disadvantages of this procedure, because I would be ruled out of order, but I am drawing attention to the nature of the coupling, to the fact that it is all or nothing, and to the fact that up to now the House has been unable to enter into negotiations on the nature of the carriages or wagons, still less what they carry as cargo. We would therefore be wise to keep an eye on those who will be deciding those matters.
  Mr. Tony Baldry: It seems that the hon. Gentleman is making some points of principle. If so, will he explain why he and others did not seek to divide the House on Second Reading? From now on, will it always be the Conservative side of the House that will have to carry the internationalist banner into Europe and beyond?
  Mr. Spearing: The reasons why there was no Division were made very clear by those who spoke on Second Reading, and it is all in Hansard. As to the banner of international feeling, I am not sure whether the hon. Gentleman is a full student of international constitutions, but if he looks at the European Communities Act 1972, he might come to a different conclusion, if only because the word "federalism"—which is often used inaccurately —is better termed "unitarism". If he looks at the 1972 Act, on which this Bill is based, I think that he will come to the same conclusion.
  The terms of accession have been highlighted by the hon. Member for Mid-Worcestershire. Industrial tariffs will be dismantled at a substantial speed —certainly at a much greater rate than the agricultural changes that will come.
  The hon. Gentleman is right in saying that there is a great concentration of Spanish industry, particularly around the Barcelona area, and we do not know whether there will be investment from various parts of the Community into that area or whether the reverse will happen and the rapid reduction in tariff barriers will mean that that area becomes less active industrially. I do not know whether it is possible to predict which way it will go or whether there will be a mixture of trades and skills, but any such change will have an impact in Spain and some areas outside it.
  864
  11 pm
  I, and I believe other hon. Members, have learnt that the Spaniards are expecting to be net recipients as a result of joining the EEC. That was part of the bargain from their point of view. They may not expect to be net recipients to a great extent in the first year because of the period over which accession takes place, but they will expect to receive more and more. If that does not happen, or if resources are not available or if their calculations of net receipts are disappointed, I suspect that our colleagues —I want to be very international in this respect —in Spain might not think so much of the EEC as they do at present. I understand that there were no abstentions in the Cortes and that every member voted in favour of accession. Perhaps they will not take that view if Spain is not a net recipient as is expected.
  Mention has been made of Mediterranean products and the fact that there will now be a much greater emphasis on the Mediterranean. I believe that not all the Mediterranean countries need to vote to produce a blocking minority when the qualified majority rule applies.
  I should like to concentrate on the impact of accession on Spain and Portugal's newly fledged and welcome democratic procedures. The matter has been mentioned often and it has been assumed, certainly in Spain, that joining the EEC will assist those welcome institutions. We must be careful about that. There is a difference of opinion in this House about the impact on our democratic institutions of accession to the treaty. Some hon. Members feel strongly that there has been an impact. If there has been an impact in the United Kingdom, can there not also be an impact on Spain and Portugal? The answer must be yes. The impact could be strengthening, but it could be weakening. We all know that Spain's stability depends on a delicate balance of central and peripheral forces in the nation and in each political grouping.
  I must be careful, but I have been told on good authority that local taxes, which are a great feature of Spanish local democracy, will be changed by accession to the EEC because VAT will mean that Madrid, by virtue of being the central recipient of the tax to hand over the 10 or 11 per cent. to the EEC, will have a much stronger financial position. That might be confirmed or denied, but if it is true I do not need to emphasise how much a change in the powers of collecting money from the highly patriotic regions to the centre might have on internal Spanish politics. That is not necessarily to the benefit of the growth and strengthening of Spanish democracy.
  Portugal, unlike Spain, entered the Community without unanimity. There was already internal dissent, as there was here when this country joined. Portugal is a much poorer country. It will be the least prosperous member in terms of GNP per head — about 25 per cent. of the average in the Community of 12, the figure being about 100 per cent. for the United Kingdom and 130 per cent. for some of the smaller countries. If that is so, there will be enormous implications not just for the EEC but for Portugal.
  A very high proportion of the Portuguese population is engaged in agriculture and a significant proportion in semi-subsistence agriculture. For many years the Portuguese Government have seen to it that they look after the interests of people on the land, especially in the northern part of the country.
  Mr. Baldry: Surely the purpose of the European Community is, among other things, for the British Labour party and the Portuguese Socialist party to join together to raise that country's GNP and to ensure a better standard of living for everyone in Portugal as much as for everyone in this country.
  Mr. Spearing: I do not think that the hon. Gentleman fully understands these matters. As we are in Committee, I will explain the fallacy in his assumption. Socialists in this House are very international. One cannot be a Socialist for one's own country alone. One must have a world view.
  Mr. Fallon: Will the hon. Gentleman give way?
  Mr. Spearing: No, I am replying to the hon. Gentleman's hon. Friend.
  The hon. Member for Banbury (Mr. Baldry) is quite right. I wish to see a strong Socialist party and a strong Socialist Government in Madrid and in Lisbon doing for their populations the things that the Government of the United Kingdom ought to be but are not doing. I am not convinced, however, that accession to the EEC will assist or enable a Socialist Government in either of those countries to achieve that aim. I shall not go into the matter any further, as it would not be appropriate in this debate to go into why we and some Conservative Members take that view.
  Portuguese agriculture is in almost every respect dissimilar to the type of agriculture practised and encouraged by the common agricultural policy around the coast of northern France and the wide open fields of East Anglia and I do not believe that the CAP will necessarily be suitable to keep people of Portugal on the land. I understand that one of the policies of my Socialist colleagues in Portugal is to ensure that unemployment is limited, that people are secure in their holdings, that they have reasonable markets for their products and that they can live a reasonably balanced life in reasonably balanced communities. I believe that those are the aspirations of Portugal, but I am not convinced that it will be possible to do all those things under the Procrustean imposition of a common agricultural policy decided in Brussels and not in Lisbon.
  Mr. Fallon: I am trying to follow the hon. Gentleman's argument, but I am still very puzzled why he thinks from Newham that Socialists in Spain will be disadvantaged by entry to the Community when every Socialist in the Spanish Parliament believes otherwise.
  Mr. Spearing: The hon. Gentleman cannot have listened very carefully, or perhaps I did not speak at sufficient length. When I gave the central taxation example and referred to the ability of any Government in Madrid to determine their own policy, I said that it was subject to confirmation. I received that information on good authority. That is the answer to the question of the hon. Member for Darlington (Mr. Fallon).
  If the extent to which a regional Government can raise their own revenues and determine their own priorities is weakened it will reduce in strength the kind of democracy that we hope will develop in Spain. If the hon. Member for Darlington does not understand this, he should have a word with his hon. Friends the Members for Southend, East (Mr. Taylor) and for Wolverhampton, South-West (Mr. Budgen), who I am quite sure will tell him what it is all about.
  Mr. Hugh Dykes: One of the interesting features of the speeches of the hon. Member for Newham, South (Mr. Spearing) is that he always adopts the most gloomy line on the relationship between this country and the existing members or new members of the European Community. Conservative Members extend a very warm welcome to Spam and Portugal. I wish to make just a few remarks about Spain, partly because the Select Committee, of which the hon. Member for Newham, South is its distinguished Chairman, recently visited that country.
  Why do Opposition Members not express their misgivings honestly and straightforwardly? We know that Members of the Labour party believe that foreigners cannot work these things out in the way that the British can; that they do not have the rounded constitutional experience and the centuries of distinguished history that enable this country to reach wise and statesmanlike judgments. They are foreigners. If the people in Transport House know this, why does the hon. Member for Newham, South not say so, rather than wrapping it all up in Spanish anxieties about the effect of membership on its agriculture and industry?
  One of my colleagues —I shall not say who it was because it would be embarrassing if I mentioned his name —was guilty of the same mistake. That is partly the cause of the relative decline of Britain, and that is why I want this country to be an enthusiastic and fullhearted member of the European Community.
  A few months ago at a private meeting —I shall deliberately not reveal the name —one of my colleagues said something similar: that we in the United Kingdom are very practical, rational and sensible, whereas all the member states of the European Community indulge in theories, political and philosophical fantasies and ideological nostrums. I intervened and said, "Do you mean like the Germans, who, philosophically and impractically, are producing 3·8 million motor cars a year, albeit during a recession, while the British, practically and rationally, are producing 1 million motor cars a year?" He said, "That has nothing to do with it. We won the war."
  I hope that those who are particularly interested in Portugal will forgive me if I do not say anything about that country, partly for reasons of time. It will be an economic challenge to this fascinating and interesting new member of the European Community, Spain, to see what happens. Nobody can quantify that and provide a sensible assessment. By definition the future cannot be ascertained. —[Interruption]. That is bound to be so. Before entry, Britain had only a rough idea that it would make a Significant net contribution. The original estimates were not exceeded. Far from it. The outturn understated by a very significant margin the figures in the original pre-entry White Paper on the cost of British entry.
  We can never be sure about these aspects. It is atmosphere, philosophy and attitude that are important in developing the Community. Our first modest step was taken in the Luxembourg agreement and at the intergovernmental conference. At long last, there is a tiny role at the margin for the European Parliament. How daring. How rash and reckless. But at least it is a first small step in the right direction.
  Along comes an interesting new member, Spain. That country produces 1·4 million cars. The Spanish "Carmada" is about to begin. Spanish cars are starting to arrive in Britain. Admittedly Spain has a protected market,

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  but we shall soon see the effects as that protection is removed. What will be the opportunities and advantages for us?
  11.15 pm
  Why can we not approach this matter enthusiastically, and not just see it as a challenge? It is a chance to develop the Community for the good of this country. I want that above all else. Our exports to the Community have increased from 45 per cent. to 60 per cent. Opportunities have already been created, but our economy is still too weak in many significant manufacturing sectors, partly because of the recession and monetarist policy. I am not an enthusiastic exponent of aspects of the monetarist policy.
  The enlargement of the Community is a opportunity for us as well as a danger for the new member states. They are behind in some economic terms, and they know it. However, they do not show the pessimism and dread that characterise the British Labour party in our relationship with the EEC.
  The Chairman of the European Legislation Committee the hon. Member for Newham, South, will know about our discussions with our Spanish counterparts in the Cortes Generales. Of course that is not a real Parliament like the House of Commons. It is just a pretend Parliament. It does not have that democratic feel that we have. We should pay tribute to the remarkable achievement in Spain in recent years. We should remember the difficulties caused for democracy in the days of the Franco regime and the chaos that was predicted in British and other newspapers after Franco went. Of course, that did not take place, and the Spanish have impressed everyone by the way in which they have handled matters through their constitutional mechanisms and the Cortes Generales.
  Mr. Forth: With high unemployment.
  Mr. Dykes: They have contended impressively with those problems. Spain is welcome in the Community for that reason as well.
  During the discussions in the Spanish Parliament, one of my colleagues —again I shall not name the hon. Member, but it is a different one this time —said that the mechanism for scrutiny had been established in Britain to keep the Community at bay and to ensure that it did not have too great an effect on the British body politic. He said that because the Labour party had had an especially hostile attitude, we had had to establish that machinery in the House of Commons. It was a political device as well as a controlling mechanism.
  The Spaniards seemed rather bemused by my colleague's comments. They said, "That is interesting. We shall not comment on that, because it is a matter for you. We are still considering whether to have an elaborate scrutiny system. It may not be necessary. We are happy to have the creation of this additional political layer —the Community layer — of endeavour and decision making over and above the national layer." The Minister of State for EEC Affairs said, "The scrutiny system will be designed to ensure that Spanish laws, rules and regulations will be harmonised as quickly as possible in line with Community laws, rules and regulations."
  Mr. Forth rose
  Mr. Dykes: I shall resist the strong temptation to give way. My hon. Friend made an interesting speech in introducing his non-amendment. If he will forgive me I shall not give way, because I wish to conclude soon.
  Spain is not yet in the Community. There is a danger that the Spanish will be disillusioned later after their experiences on the economic rather than the political front. However, I doubt that they will be, because I think that their attitude will be similar to that of the Italians. Incidentally, according to the latest statistics, Italy's GDP has overtaken that of the United Kingdom. The Opposition will say, "We cannot believe these statistics. They must be made up, or they must be inflated." These warning signs for the United Kingdom cannot be ignored by those of us who wish to engineer —in the legitimate sense of that verb —the recrudescence of the original enthusiasm for our membership of the community.
  The Italian attitudes to the EEC are so different from that. I know that hon. Members will say that they get away with certain things, but we also get away with certain things. The budget rebate system is a spectacular sign of how the British succeed in getting away with something, and we should express gratitude to our Community colleagues for that system, which is almost unique, and in its size has a unique effect.
  I think that the Spanish attitude will be similar to that of Italy. France is a halfway house, and Germany is a traditional enthusiast for the Community, partly because of its esoteric and bitter historical experiences. We need such enthusiasm, because all the time we are losing. Inevitably, I have made a speech rather like a Second Reading speech, and I hope, Mr. Armstrong, that you will forgive me for saying that. This is an opportunity once again to welcome Spain to the Community, as I think most hon. Members do, even Labour Members, who did not divide against the Bill on Second Reading. This enlargement will increase majority voting, which is the only way to keep the Community going forward. Britain will benefit far more from the incidence and usage of majority voting than from the exercise of the unanimous voting system or, in the reverse arrangement, the Luxembourg arrangement on national vetoes.
  These factors should be seen in perspective. If we ever succeed in making the Labour party truly internationalist again, the Conservative party will be content.
  Mr. Tam Dalyell: I simply want to ask about tomatoes. The Minister knows well, as he represents parts of the lowland, that there is the problem of the glasshouse owners. I have rather more owners in my constituency than he does, and my hon. Friend the Member for Clydesdale and Milngavie (Mr. McCartney) has even more. The Minister will be familiar with the problem of the Dutch tomatoes. Given the entry of Portugal, what advice would he give to those of our constituents who want to continue investments in glasshouses, given the costs of electricity and oil, and the likelihood of the influx of even cheaper Portugese tomatoes? This is a Committee point, but it matters to quite a number of the people whom the Minister and I represent.
  Mr. Tony Marlow: I had said earlier, Mr. Armstrong, that I would like to catch your eye on Third Reading, but, as my hon. Friend the Member for

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  Mid-Worcestershire (Mr. Forth) has already posed some questions to my hon. and learned Friend the Minister, it might be useful if I put my points to him now.
  I do not apologise for detaining the Committee at this late hour. This is important business, and it is not my decision that it is being held now, but that of the Whips. Any hon. Members who do not wish to be detained by me should be aware that there is very little doubt that the Government will get their business through.
  Debates such as these sort out the men from the boys —the statesmen, like my hon. Friend the Member for Harrow, East (Mr. Dykes), and I suspect my hon. Friend the Member for Banbury (Mr. Baldry), who have advanced knowledge of where the currents of world history are about to flow, and those such as myself, the non-statesmen whose knowledge of history lies only in the past. I am afraid that my views are those of a humble Back Bencher, concerned not with the momentous inevitability of future European history but merely, and I suppose that the statesmen around would say pettily, with the interests of my country and the concern for the well-being of my constituents. An example of the narrowness of my vision is that I am not really concerned as to what entry into the European Community will do to the durability of the democracy in Spain and Portugal. I do not know what will happen, but I do know that the entry of Greece has not made its democracy any more advanced than it was before.
  Perhaps we should ask why Spain and Portugal are seeking to join the community. As the saying goes, one wonders. Surely they must have heard of the madness of the common agricultural policy, of which the central flaw is that he who spends is not he who pays, a policy of profligacy rewarded. We have been told that this problem has been gripped, but I dare say that the Spanish and the Portuguese can see through the issue as well as we can, and know that the financial mechanism about which we have heard so much will not effectively apply and will dissolve in a shower of rain.
  Could it be that those countries are, instead, seeking to join the EEC because they see a massive opportunity for their irrigated and sunblessed acres to be urged into unrestricted expansion, financed by unstaunchable largesse from the remainder of the Community? One wonders why they seek membership and why they wish to subject their industries to the rigours of European competition. Do they not believe what we have said in this House a thousand times? Are they not terrified at the prospect of their home markets being laid bare by the thrusting, rampant reborn British manufacturing industry?
  Mr. Fallon: No.
  Mr. Marlow: Quite. Could it just be that those countries believe that their supply of cheap, skilled labour will be a magnet for capital from inside Spain, inside the Community and outside the Community, and that that investment, together with their existing favourable tariff barriers and the artful exploitation of non-tariff barriers —which is always allowed within the Community to those who are perceived to be the underdogs —will enable their industries to wipe the floor with our industries?
  Like other hon. Members, I have been asked questions about the entry of Spain and Portugal to the Community —questions that should be answered. If that entry takes place, how will it affect the United Kingdom, both
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  bilaterally and through the EEC itself? How will it affect the CAP —that bloated, financially incontinent, substantially unreformed CAP? Spain, alone, will add 30 per cent. to the acreage of the Community, and all those acres will have a massive potential for irrigation and improvement and hence a massive potential for increased production.
  How will the CAP be affected by the fact that Spain alone will add 25 per cent. to the agricultural work force, balanced by a mere 14 per cent. increase in the consumers of the Community? The surpluses will not simply increase, they will accelerate. There will be a vociferous, dubloon-demanding lobby, a massive reinforcement for the most powerful vested interest in western Europe, to plunder the European coffers. As European budget succeeds European budget, the cost of agricultural support will explode. Financial mechanism or no financial mechanism, it will be impossible to resist. Some people do not seem to worry about that —it will not be for the temperate products; it will not be for the north European products; it will be for the Mediterranean products, as Spain, Italy, Portugal, France and Greece gain the balance of power in the European Councils.
  I am glad that I have no farmers in my constituency. I feel sorry for my colleagues who, if this measure is passed, will soon feel the cold chill of their farmers' wrath breathing down their necks — [Interruption.] What is wrong —it is quite poetic.
  What will be the effect on our industries? When we joined the EEC, we were told that the mass markets of Continental Europe would be lying there, waiting to be taken by the virile and dominant British manufacturing industry. The reality is that from a position of balance we now have a massive deficit in manufacture with the European Community —£7 billion, £8 billion, £9 billion, it has all gone wrong.
  Why should this new accession be any different? Many colleagues feel that it will increase jobs, but how can we be confident that, this time, our jobs will increase? How can we be confident that, this, time, we are not kidding our constituents and ourselves as we did 15 years ago? Northampton is renowned for the footwear that it manufactures. Probably many hon. Members wear footwear that was made in Northampton. We import from Italy twice as much footwear as we export to the entire world. In part, that is because of the quality of Italian footwear, but in part it is because of the structure of business. Some Italian businesses pay no taxes and are not subject to the overheads that are borne by British firms. We import a quarter of the amount of footwear from Spain than we import from Italy, and that importation has doubled between 1982 and 1984. What impact will Spanish footwear have on the footwear industry in the United Kingdom?
  11.30 pm
  Britain is the major recipient of regional fund moneys. Will the regional fund increase? Will our share of its moneys increase, or will the sustained and uncontrollable pressure of agriculture support reduce it? Will the pleas of poverty from Iberia reduce our share of the fund's moneys?
  Mr. George Robertson: I hope that I intervene in a natural break in the hon. Gentleman's script. I ask him to take on board the fact that one of the reasons why Britain will lose out on moneys from the regional

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  development fund is the redrawn regional boundaries, which stemmed from a decision of the Government whom the hon. Gentleman supports. Did he vote against the proposals to redraw the boundaries, which in one stroke reduced the amount of aid from the regional development fund that Britain received?
  Mr. Marlow: The hon. Gentleman is making a point which is contentious, which is not agreed and which is wrong. What will the cost of the accession of Spain and Portugal to the United Kingdom? There are many who think that it is undignified to talk about money in these circumstances when we are discussing such a great statesmanlike issue. There is the view that we should not concern ourselves with the cost. As my hon. and learned Friend the Minister of State, Foreign and Commonwealth Office has said on previous occasions, when Spain finally comes into the Community it is estimated that there will be a 0·1 per cent. in the VAT take, which will cost the United Kingdom about £75 million a year. I doubt whether that is an overestimate. We shall lose money that is paid out from the regional fund. There will be additional complexities with the CAP that will cost us money. There will be additional policies.
  We have been told on many occasions that, whatever happens in Europe, the cost to Britain will not be more than 7 per cent. That means that if there are new policies, additional policies or additional expenditure in Europe, which take effect in countries entirely outside the United Kingdom, we shall have to pay only 7 per cent. of the bill. If the cost of the existing policies are spread equally throughout the Community, we shall be liable to pay our full share, which is 21 per cent.
  If we pass the Bill, we shall trigger the 1·4 per cent. VAT ceiling. That will be a signal of our preparedness to meet other cost increases later. There will be an increase in the cost of funding Europe of 25 per cent. for no additional European policies and no additional European responsibilities. There will be nothing extra. At a stroke, there will be inflation of one quarter for the same product, and an opportunity for radical reform will be discarded.
  I have a vision of Europe and the European Community which, I dare say, is shared by a number of my hon. Friends. I have a vision of a Europe that is united and free, a Europe with different cultures and different traditions combining increasingly on defence and foreign policy where we have common interests. I see an area of free trade without frontiers and an area which has a common agricultural policy where the interests of consumers are more highly thought of than at present. I do not believe in a unified Europe that is bullied into petty harmonisation by the centralising bureaucrats of Brussels with their powers of policy initiation. We can and should expand Europe at some time, but how can we expand it before we have reformed it? If hon. Members want to destroy the Community, they should vote for the Bill. The costs, the complexities of agricultural policy, and the predominance of Socialist centralising bureaucratic policies will increase if Socialist Spain and Portugal, with their previous history of centralised Government, join the Community. The sensible management of European policies and the method of decision making will deteriorate as responsibilities are illogically redivided to satisfy the needs of an expanded
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  Community. As my hon. Friend the Member for Mid-Worcestershire says, two more languages will be added to the cacophonous babble that already exists.
  If the Bill succeeds, Europe will drown in a rising tide of its own problems. Perhaps the cynics are right when they say that the difference between a statesman and a politician is that statesmen make big mistakes. If as a politician, I make a small one as I vote against the Bill, it is nothing compared with the potentially monumental error that the statesman will make if he supports it.
  Mr. A. J. Beith: The hon. Member for Northampton, North (Mr. Marlow) has missed his calling. He should write a melodrama that could perhaps be put on widely around the Community. Indeed, he delivered a wonderful melodrama of a Community run by foreigners, even more foreign than the French, German and Italians who he thinks are running it now, from countries that are even more alien. If the foreigners get control, they will pursue their own interests. That is something that the British people would never contemplate within the Community. If that happened the Community would be brought into total chaos, so I am surprised that the hon. Gentleman is not supporting the proposal with enthusiasm. If his amazing picture were to be realised, such disaster would overtake the Community that the very thing that he wishes —that the Community would fall apart and Britain would no longer be a member of it —would come about more quickly.
  As the hon. Member for Mid-Worcestershire (Mr. Forth) said, all those foreigners insist on speaking their own languages instead of English. Of course, if we spoke to them loudly enough they would be able to understand.
  Mr. Marlow rose
  Mr. Beith: Please allow me to develop my argument a little further.
  The hon. Member for Mid-Worcestershire assumes that, because people choose to speak their own languages, that is a further reason why we should not associate with them or make any provision to translate the various languages of the Community. That displays an extraordinary flight from the internationalism in various parts of the House.
  Mr. Forth: I am sure that the hon. Gentleman is not seeking deliberately to mislead the Committee. Perhaps he can help me if my hon. and learned Friend the Minister cannot. Has the Liberal party made an estimate of the cost of the necessary translation and interpretation that will be caused by the two additional languages? I did not say at any stage that it was undesirable for two new countries to join. I did say that I should like to hear an estimate of the cost so that we can make an assessment of it.
  Mr. Beith: I am happy to let the Minister give an estimate of the cost. If every one of the questions asked by the hon. Member for Mid-Worcestershire was answered to his satisfaction, he would still not be in favour of the entry of Spain and Portugal to the Community. If every question was answered to his dissatisfaction he would also oppose their entry. His view would not be changed one iota by the answer to the questions. I do not challenge his right to raise them. It is perfectly reasonable.
  That applies with even greater force to the hon. Member for Northampton, North, whose views will not be changed by anything that the Minister will say tonight

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  because, for some reason, which seems to be slightly illogical in view of the picture that he paints of the consequences of Spain and Portugal's entry, he does not want the extension of the Community. That places him, as so often before, in the company of the hon. Member for Newham, South (Mr. Spearing) and other hon. Members on the Labour Benches who lecture the Socialists of Europe on how damaging it will be to their countries and their principles if they allow themselves to be drawn into the Community.
  Mr. Marlow: Of course, it is unreasonable and unfair to expect the hon, Gentleman to listen to me or any other hon. Member. However, as he is listening to me now, I shall make my point again. I am against the Bill because I believe that it will be damaging to the Community.
  Mr. Beith: The hon. Gentleman must pull the other one. I listened with much enjoyment to his remarks. Nothing in them at any stage convinced me for a moment that he wanted to further the interests of the European Community. He has distinguished himself by his opposition to the European Community —its existence, its activities and everything about it. He must not pretend otherwise. He would do a disservice to his reputation for pugnacious awkwardness if he did so.
  The hon. Member for Newham, South lectures the Socialists of Europe on the great damage that they are doing to their principles and countries. The trouble is that he is getting more and more lonely. He is feeling increasingly that there is nobody left in Europe to oppose the existence or extension of the European Community. If all the Socialists in other countries are misled into supporting it, he will find himself absolutely on his own. It is even becoming a lonely cause in the Labour party, not because of a change of principle, but because of general departures since the general election from the Labour party's traditional hostility to British membership of the Community. A whiff of old battles drifts over the debate from time to time.
  Those of us who believe that the Community is a great and immensely valuable institution and who wish to maintain and continue it welcome the accession of Spain and Portugal to it from both the Community's and their own point of view. It is striking how strong the support for membership of the Community has been in those countries, particularly by statesmen —I will not have the term thrown into disrepute by the hon. Member for Northampton, North —whose claim to that title is distinguished by the fact that they have advocated democracy in adverse circumstances.
  In Spain, great predictions were made that chaos would result at the end of the Franco regime. Many of those who now so strongly advocate Spain's membership suffered under that regime, and have struggled to establish democracy in Spain in its aftermath. Several of them had a spectacle that none of us had to face, of the guns pointing at them in the legislature of their country. Anyone who saw the television pictures or talked to any of the people involved will realise what a dramatic demonstration it was of the initial dangers to democracy in Spain, as well as of the resilience that it showed, when that extremely unpleasant episode passed quickly into Spanish history.
  Portugal has been through great trials and difficulties with the arrival of democracy. The Portuguese Government have not consistently advanced the interests
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  of their own agriculture. Some of the early agricultural measures of Portuguese Governments were disastrous. Portuguese agriculture is struggling to recover from the ludicrous neo-Marxist policies that were attempted in the early stages of the Portuguese revolution. Many of those who are now earnestly advocating Portuguese membership of the Community fought to maintain democracy and pluralism at times when there seemed to be a real threat to those concepts from some of those who initially came to power in the aftermath of the Portuguese revolution.
  It is not for us to dismiss the value of democracy in Spain and Portugal when those who are most concerned with the establishment of democracy, and most seeking to enhance it from within those countries, attach such great importance to it. If they believe that the economic interests of their countries will be advanced by accession, who are we to criticise them for taking that view? Who are we to challenge them for making that a political priority?
  Hon. Members who have been so critical of the clause and the Bill in general have neglected the opportunities in those two countries, poorer as they are than the European average —particularly Portugal —for future expanding trade with this country. There is potentially a much larger market if wage levels in Spain, and particularly Portugal, increase, and the spending power of the people in those countries increases. I wish to see that, and I hope that it will lead to a great deal more trade in the Community, much of it to the benefit of Britain.
  Essentially the clause and the Bill are about a political question —the future of the Community and the future of democracy in Spain and Portugal. I believe that the vast majority of hon. Members believe that the passing of the Bill will greatly enhance those things.
  Mr. Fallon: When listening to debates on the Community, it has always struck me how dated is the approach of the House to the Community. Hon. Members seem to continue a debate from the early 1970s, arid to start at a point far before that, when the House was the centre of the world or the Community. That simply is not so.
  11.45 pm
  I have great respect for my hon. Friend the Member for Mid-Worcestershire (Mr. Forth), who has drawn attention on numerous occasions in idle House and, I understand, in the European Parliament, to the various issues involved in the accession of Spain and Portugal to the EC, and he is right to do so. However, I also believe that he is fundamentally mistaken in his analysis of that impact. First, he suggests that the impact on the Community will be damaging. The hon. Member for Berwick-upon-Tweed (Mr. Beith) has effectively demolished that argument, because those who oppose the accession have no real interest in the future survival, expansion or enlargement of the Community.
  Secondly, my hon. Friend suggests that accession will have an adverse impact on Britain. I simply cannot understand that argument. It amazes me that there are such enclaves of Spanish and Portuguese interests in Northampton, Newham or Worcestershire who are better judges of Iberia's imports and exports than are those countries themselves.
  Mr. Marlow: What are the magnificent benefits that our constituents and Britain will get from the accession of

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  Spain and Portugal to the Community? Perhaps my hon. Friend could quantify them for us. We have been waiting for such a quantification for a long time.
  Mr. Fallon: My hon. Friend has already drawn attention to the considerable benefits to the shoe industry in his constituency from the increased competition from Iberia and from the force of comparative advantage that should be improving his shoe industry and the prospects of those of his constituents who happen to work in that industry.
  There is a wholly beneficial impact on Britain. There are enormous opportunities for the west and south-west of Britain in increased links and trade with the Iberian peninsula. There are enormous other opportunities for our industries generally in exploring such an increased market.
  Thirdly, there is the impact on Spain and Portugal. That is why I am all the more puzzled why the hon. Member for Newham, South (Mr. Spearing) should seek to speak for the Spanish or Portuguese Socialist parties in opposing this accession.
  Mr. Spearing: I am grateful to the hon. Gentleman for giving way. I had hoped that I would not need to intervene in his speech. May I assure him that I was wishing to do no such thing? I was commenting only on the possible impact of the EC's policies and institutions on those countries. That is rather different.
  Mr. Fallon: It is not all that different from the assessment of the Spanish and Portuguese Parliaments, and of the Spanish and Portuguese Socialist parties, of the impact of accession on their countries, which they completely support and which they regard as likely to be beneficial. I still do not understand why the hon. Gentleman happens to have a much better understanding of that impact on Spanish industry and agriculture than do the Socialists in those countries. He might like to brood on that and return to the point.
  Mr. Forth: I should like to try to help my hon. Friend. I invite him to consider the example of Greece, which was enthusiastic to enter the Community, but which some four year on has found itself obliged to introduce import and currency controls and to defer yet again the introduction of VAT, which had been agreed as part of entering the Community. If my hon. Friend accepts Greece as a reasonable precedent to observe as a relatively poor and undeveloped country joining the Community, the example is not encouraging. It is on the basis of such an example that those of us who make a pessimistic analysis rest our case. I would be interested in his observations on that.
  Mr. Fallon: My observation is simply that my hon. Friend is making my point and not his, because the impact on Greece has been substantial in the form of special funds and emergency aid. When he says on behalf of the Spanish community of Worcestershire that the impact on Spain and Portugal will not be as the Spanish Government and Portuguese Government believe that it will, I am dubious.
  Let us take the three areas that my hon. Friends think will be so harmful to Spain and Portugal. First, let us consider agriculture. It has been argued tonight that the extension of the agricultural policy to Spain and Portugal will merely divert resources from the enormous subsidy of northern states' surpluses of temperate products. Anything
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  that diverts resources away from constant oversubsidy of products in surplus in northern countries and increases the need to reform and adjust that policy is to be welcomed and not criticised.
  It was further suggested that the Community, as it is, should insulate itself from further market forces or resist the force of comparative advantage from Spanish and Portguese industries. My hon. Friend the Member for Northampton, North (Mr. Marlow) implied that his domestic shoe industry should be completely protected from any qualitative and quantitative advantages that the Spanish and Portuguese shoe industries happen to obtain.
  Mr. Marlow: The point that I was making —I am sorry if I was labouring it when I was making it —is that there are benefits to be found in Italian footwear. It has style and people like to buy it. The Italians have unfair trading advantages which they should not have if the Community is working properly. I am concerned that the Spaniards will have the same unfair trading advantages. We are all in favour of fair and free trade, but we do not want unfair competition.
  Mr. Fallon: I am afraid that my hon. Friend disappoints me again. Of course those unfair trading practices exist in Spain and Portugal, but if Spain and Portugal are not admitted into the Community they will continue. There will be no mechanism for tackling them. My hon. Friend will have to go to GATT and the OECD and beg in vain for those practices to be tackled. Only by having those two countries in the Community, those two Ministers around the table at the Council of Ministers, those two commissioners in the Commission, and representatives of those two countries in the European Parliament, will my hon. Friend be able to prosecute that unfair trading. He will never be able to extend the various policies of DG4 and the supervision and the policing of the competition policy to Spain and Portugal unless he has those countries inside the Community.
  My hon. Friend for Mid-Worcestershire said that if we admit Spain and Portugal there will be added linguistic disadvantages. Two more languages will need to be added to the Community's official languages. It is to some extent a reflection on my hon. Friend and his former colleagues in the European Parliament that they have not resolved that problem. If the addition of two languages to the existing seven makes the Community's linguistic costs intolerable, I welcome it. We shall then proceed to a more rational community, such as the United Nations, where only two languages are translated.
  To oppose the accession of Portugal and Spain to the Community merely on the ground that it adds two more languages when our accession and that of Ireland and Denmark added a linguistic burden is a thin argument.
  We did not invite Spain and Portugal to join the Community. They applied to join it. I regard that as a compliment to the Community, and I regard the accession as a strengthening of the Community and as a step towards a wider and freer European market.
  Mr. Deakins: This is the Committee stage and we are discussing clause 1. I have three questions to put to the Minister about costs. They were not dealt with by his right hon. and learned Friend the Foreign Secretary on Second Reading. In his speech, only two paragraphs of a fairly long speech were devoted to costs. We have already heard what the figures are. Will the Minister confirm that the net

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  figure of £75 million, given by the Foreign Secretary as our additional net contribution at the end of the transition period, takes account of any possible change in our receipts from the regional and social funds? I am not sure that I understand the new financial mechanism that was agreed in the past year, but I assume that if there is any variation in our receipts from those funds, they are taken into account in the financial calculations. Therefore, the £75 million should be a true figure, even if, for example, our receipts were halved as a result of the admission of Spain and Portugal.
  Secondly, will the Minister confirm that the Commission's estimate of 0·1 per cent. of the Community VAT base as being its best estimate of the total cost of the entry of Spain and Portugal at the end of the transition period takes account of all the other additional costs, such as that of translation? I assume that the Commission's estimate makes provision for those additional costs. If not, it would be helpful to know what other costs there might be in addition to the 0·1 per cent.
  Finally, would it not be helpful in future if the House of Commons —even if the Community is not bothered about this —were given an economic assessment of the entry of new members, and not merely a financial assessment? Obviously, that cannot be done now because the Bill will presumably get its Third Reading tonight, but, if this occurs again, I hope that when Ministers negotiate these matters in Brussels or elsewhere, they will ask whether the Commission can prepare an economic assessment on the impact of new members for the benefit of existing member states.
  Mr. Christopher Murphy: Before the House sanctions clause 1, it should reconsider the relationship of Gibraltar with both the United Kingdom and Spain because on 1 January all three will be partners in the same enterprise, albeit with the dependent territory having to take the junior desk. Therefore, it is surely essential that Gibraltar's particular circumstances should be recognised and safeguarded.
  Gibraltar, having suffered the trials and tribulations, through no fault of its own, of a closed border with Spain, is hoping now to return to some semblance of normality. However, it would certainly be wrong to assume that an open border will solve all problems. Some will remain and, indeed, more may be created now that the siege economy must change. Many questions need to be asked about Gibraltar in the light of Spain's accession to the European Community. They relate to the pension rights of former Spanish workers and the necessary funding, the potential use of the airport facilities by Spanish aircraft, the impact of Spanish tourists on the resources available, the planned development of the ship repair yard and Spanish competition. Other matters which also pose questions, such as the continuation of NATO's use of the rock and the determination of Britain to protect its sovereignty, may be outside the scope of the clause. Nevertheless, all the topics are vital to Gibraltarians who will stand fast in their loyalty to the Crown and who look to Parliament for support on occasions such as this.
  Membership of the European Community can be seen in many lights, as this debate has illustrated. But Gibraltar's status of being effectively both in and out is somewhat double edged. The advantages of not having to
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  conform on taxation such as VAT are clear, but the disadvantages of the application of company and financial directives are equally obvious.
  A gold key has long been symbolic of Gibraltar, hanging, as it does, from the gateway to its castle on the armorial bearings. With such a key, a great future for this small but vibrant dependent territory can be unlocked, but only so long as we remain, in its interests, as firm as the rock of Gibraltar itself.
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  Mr. Roger King: I give a lukewarm welcome to the accession of Spain to the European Community, partly because when people want to join a club I suggest that they abide by the existing rules of the club. When another country seeks to join the Community, all too often the existing members bend over backwards to accommodate the new member.
  I have no doubt that in the long-term Spain and Portugal will bring much benefit to the Community, and I hold dear the concept of a Europe that is united on trade. But we who come from the centre of the country, from the west midlands —still the workshop of the nation —tend to look at the bottom line of any arrangements such as those we are considering tonight to see what is in it for us, arid I make no apology for saying that I cannot see much in it in the short term.
  I refer of course to the car industry, and I shall delay the Committee briefly to have a whinge about what is happening to that industry. I have had a regular whinge about it since coming to this place, though not much has happened as a result. Even at this late hour another whinge may move the Government a few degrees further along the road that the motor industry would like to travel.
  We have heard how Spain's industry has developed and continues to develop. However, it has the advantage of sheltering behind artificial tariffs. They were put up not necessarily by Spain but by the Community, which agreed a special arrangement with Spain in 1970.
  Mr. Fallon: Is my hon. Friend aware that that agreement was specifically negotiated because it was then thought by the Community that Spain would quickly be entering? The fact that the Community has taken so long to agree to Spanish accession has accentuated the unfairness to which my hon. Friend refers. The sooner we get Spain into the Community the sooner we can deal with the unfair comparative advantage of which he speaks.
  Mr. King: That may have been the case and the Community's idea may have been that eventually Spain would come in. On the other hand, in 1970 Spain was vastly different. It was a peasant economy and I suggest that the EEC looked benevolently on that country with a view to improving its people's living standards, and applied concessionary tariff rates.
  In the interim, the Spanish car industry has developed substantially, until it is now bigger than ours, and those in the motor industry and in many of Britain's industrial areas find it hard to accept the present position. About 100,000 Spanish-derived cars come into this country at a low, 4 per cent., import tariff. About 3,500 cars go in the opposite direction. That 100,000 total is expanding dramatically, and some are forecasting a figure in the next year or so of well over 120,000, if not 130,000 cars a year.
  Only one British company exports to the Iberian peninsula —Austin Rover —because Ford imports cars

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  from its plant in Spain, as does General Motors. I accept that we shall never get parity of trade in the car industry. We are not likely to send 100,000 of our cars over there and to import 100,000 Spanish-derived cars. But I do not accept that when we negotiate for a country to come into the Community, we should give it concessionary terms that allows it seven years to reduce its tariff barrier for our products so that it is not until the early 1990s that we start trading fairly in this one commodity.
  That is grossly unfair to the British car worker, who in my constituency has indulged in the luxury of two weeks of lay-offs at a time when the Spanish factories are busy churning out ever greater quantities of cars for sale in this country. That was recently reinforced with the addition of Seat cars, which forecasts 20,000 sales in Britain within the next two years.
  When we negotiated the arrangements with Spain we should have stood up for the right of the British car industry to have a larger quota into the Spanish market. Currently, that quota is about 3,800 cars a year, yet we could sell between 8,000 and 10,000 cars if we were given the opportunity. Next year's quota is now being arranged, and there is some some hope that it will go up to 7,000 or 8,000 units. Austin Rover certainly hopes so. But the Spanish Government have given indications that it may be only 5,000.
  If we want Britain's wholehearted support for Spain's accession to the Community, we should not have to wait seven years before gaining parity with her. Our industry cannot afford to wait that long while we are bamboozled by an ever-rising torrent of Spanish cars into this country. There must be a fair and equitable status with that country, and, if we cannot have the equivalent in tariff rates, let our Government seek to endorse the British car industry's determination to up its quota into the Spanish market by much more than the Spanish Government will seemingly allow.
  When we get parity to trade and fair and suitable treatment for our own industry, we shall get the wholehearted support of the Community generally for Spain to come into the EEC.
  Mr. Baldry: I entirely endorse the remarks of my hon. Friend the Member for Darlington (Mr. Fallon). What shall we tell our children and the children of Spain and Portugal —[Horn. MEMBERS: "Don't talk to strangers."] We shall tell them that the overwhelming majority of the British Conservative party wanted to write history whereas the overwhelming majority of the British Labour party was content only to read history. We shall tell them that we on the Conservative Benches saw democracy emerging in Spain and Portugal and gripped it and hugged it, while the Labour party, like a load of old housewives, balanced the price of one pound of tomatoes as against another.
  The Conservative party in this decade, as in the last, has been the truly internationalist party in this House, whereas the Labour party has constantly carped at the small print, while pretending that it was in favour of greater internationalism and of showing solidarity with Socialists in Spain and Portugal.
  I hope that tonight we will give a resounding endorsement to the Bill and its clauses. We should show that the Conservative and Liberal parties are determined to build a stronger and more democratic Europe, and that
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  at no stage will we be distracted by the small print carping of the petty bourgeois Poujadists who seek continually to look back when we in this country, more than anyone else, should look forward.
  Mr. George Robertson: This has been a fascinating debate. It has confounded all the pessimists —and the Whips —with its length and breadth. Several fascinating speeches have been made, including a remarkable one prepared by who knows who for the hon. Member for Northampton, North (Mr. Marlow) —a farmer who has that same ritualistic and obsessive interest in the common agricultural policy and, no doubt, its benefits as many others on the continent.
  The hon. Gentleman's speech was reminiscent of some crackling Pathé newsreel. It was a political version of Gilbert and Sullivan which kept us better amused than most of his previous speeches, although it did not take us much further than most of them. Some of the arguments advanced on both sides of this great Conservative argument are interesting. I am sure that, as the groans that must have greeted each new name on the annunciator went up from the deep leather armchairs of the Library, they thought how elevated the debate must be.
  The elegant and lonely speech of the hon. Member for Harrow, East (Mr. Dykes) and the speeches laden with irony will look remarkable in the cold print of Hansard tomorrow morning. The hon. Member for Harrow, East directed his remarks, as he must, against those behind him where he finds most of his opposition. He said that Italy's gross national product has only recently overtaken that of Great Britain. Italy is led by a Socialist Prime Minister and, for the past six years, a Conservative Government have presided over the decline of the British economy, ensuring that our GNP would fall behind that of Italy. Pretty soon we shall be behind everyone else as well.
  Mr. Marlow: I am grateful to the hon. Gentleman for giving way. He is putting forward the same misinformation as the Social Democratic party —[Horn. MEMBERS: "Where are they?"] —whoever they may be. He is saying that the Italian GNP is greater than that of the United Kingdom. Why do the Italians then pay only two thirds as much VAT as us?
  Mr. Robertson: Perhaps there are even more accountants in the Italian Parliament than here. I was simply reflecting on the encyclopaedic statistical knowledge of the hon. Member for Harrow, East and giving the most reasonable and obvious explanation of the phenomenon that he described.
  The hon. Member for Darlington (Mr. Fallon) now finds that his main vocation is speaking on behalf of the Spanish and Portuguese Socialist parties —remarkable for the hon. Gentleman, bearing in mind his background. I assure him that if they could choose any hon. Member to speak for them in the House, he, with his peculiar views on economic policy, would not be their chosen champion.
  The Labour party has never disguised the fact that we support and welcome Spain and Portugal's accession. That view was made crystal clear on Second Reading and again tonight.
  Great progress has been made in Spain and Portugal. In a few years they have come from the depths of dictatorship into the mainstream of Europe. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) has said, great courage and resource have been shown by those who

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  have led those countries through that difficult period. All were motivated by the wish to join the main stream of Europe. The fulfilment of part of that vision comes with accession to the European Community on 1 January.
  12.15 am
  Those long and difficult negotiations were accomplished under the supervision in Spain of Socialist Prime Minister Felipe Gonzalez and in Portugal mainly by Socialist Prime Minister Mario Suarez. Those two statesmen took Spain and Portugal from dictatorship to accession to the European Community and they should be congratulated on that achievement. I am glad that Conservative Members recognise that.
  Mr. Fallon: The hon. Gentleman welcomes the struggle of those two countries to join the Community during the period since 1975 and 1979 but at exactly the same time the Labour party in Britain was trying to leave the Community. How does the hon. Gentleman explain that?
  Mr. Robertson: The policy of the Labour party has been quite clear. The Conservative party allies itself with some pretty peculiar people on the continent and especially in the European Parliament, so why should Conservative Members imagine that there must be a monolithic view among the Socialist and social democratic parties in the European Community? The fact is that we are in the Community, we remain in the Community for the present moment and we welcome Spain and Portugal to it.
  Mr. Dykes: Will the hon. Gentleman give way?
  Mr. Robertson: No, I should like to make some progress.
  We believe that those long and difficult negotiations will strengthen democracy and its institutions in both Spain and Portugal and make the European Community more complete. That achievement lies principally at the door of the two individuals who led the Socialist parties in those two countries.
  There is, however, no contradiction in Labour Members pointing out the problems and challenges that will come with the accession of Spain and Portugal when the Community faces major struggles to overcome the financing problems that it already has. Hon. Members on both sides have asked awkward questions about the present financial crisis and the greater crisis that is likely to befall the Community. The erudite Minister who is to answer the debate always speaks without notes and will doubtless provide the information and detail to be expected from that practice, so we shall be no wiser at the end of a speech of characteristic elegance than we were at the beginning of the debate, however long the debate may continue.
  The European Community faces problems that will not go away and some of them will be exacerbated by the accession of two new nations, because the characteristics of those nations' economies and especially their agriculture will in many ways make the Community's financial crisis worse. As my hon. Friends the Members for Walthamstow (Mr. Deakins) and for Newham, South (Mr. Spearing) have pointed out so admirably, the financial crisis with which we live will not be easily resolved.
  It could be resolved in two ways. First, it could be resolved by increasing European Community funds. That would be the simple solution for a number of right hon.
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  and hon. Members and for a number of people in European Community countries. An increase in the value added tax level from 1·4 per cent. to 1·6 per cent. would result immediately in a tranche of money that might solve the problem. However, that solution would be unacceptable to this Parliament and to nearly every other Parliament in the European Community. We remember the difficulty that the Minister of State, the hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind), experienced in pushing through, against vigorous opposition from his own supporters, the increase in the VAT contribution.
  Mr. Dykes: On a point of order, Mr. Armstrong. I apologise for interrupting the hon. Member for Hamilton (Mr. Robertson), but is it in order for the hon. Member for Linlithgow (Mr. Dalyell) to be reading a newspaper.
  The First Deputy Chairman: No, not if it is a newspaper. I think that the hon. Member for Linlithgow realises that it is not in order.
  Mr. Robertson: The fact is that the European Community's immediate financial crisis could be resolved by an increase in the funds, but that option is not available either to the European Community or to the British Government.
  Secondly, the crisis could be resolved through the reform, reorganisation and revamping of the European Community's existing expenditure. All hon. Members know that reform of the Community's financial institutions is essential if the crisis is not entirely to threaten the basis of the European Community. The European Parliament is considering this week the European Community's budget and it has substantial views about it, only some of which are connected with the outcome of the Luxembourg summit.
  The statement of fact that is contained in the explanatory memorandum—
  "that Spain's contribution to, and receipts from the European Communities Budget should roughly balance and that Portugal should be a modest net beneficiary"—
  is threatened by the fact that the Community's draft budget makes inadequate provision for discharging the promise that was made to Spain and Portugal during the negotiations. That is the tip of the very large iceberg of financial irresponsibility that faces the European Community this year. I do not undermine the general belief that Community membership should expand from 10 to 12 if I point out the contradictions in the way in which the European Community finances itself.
  At the bottom of the crisis lies the common agricultural policy. It takes up between 70 and 74 per cent. of the European Community's budget and threatens to devour even more of it in future years. The crisis will inevitably be made worse by the accession of Spain and Portugal, on account of the agricultural surpluses.
  The European Community is under threat. If the budget does not balance, Ministers will be forced to adopt short-term expedients. In the long term this country's status as a net beneficiary of the regional and social fund will be threatened by the accession of Spain and Portugal, which will have a share of the existing cake. The shift in the European Community's balance from the industrial to the agricultural countries —that is, from the north to the south of Europe —will ultimately threaten the coherence and credibility of European Community policies.
  Mr. Marlow: This is a simple question. The hon. Gentleman has referred to the problem, but what are the

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  benefits to the United Kingdom, which he represents, from the accession of Spain and Portugal to the Common Market?
  Mr. Robertson: I represent a section of the Parliament in the same way as the hon. Gentleman does. He is in a beleaguered, although vocal, minority in his party. I have already identified the benefits to the United Kingdom of an enlarged European Community. It makes Europe a more complete entity. It gives us opportunities, but it also challenges, and that fact must be taken on board. The majority of hon. Members believe that a wider Community is in the interests of all members of the European Community, but that does not make us shy away from the challenges, problems and crises that face the Community.
  We welcome the accession of Spain and Portugal. It is the right move for the Community and for Spain and Portugal. We welcome it because we recognise the merits of those two new democracies joining the rest of Europe and facing Europe's problems with us. The Opposition do not welcome accession blindly, ignorantly or oblivious of the difficulties and anxieties. It is up to all 12 member states to ensure that the heady historic atmosphere of Spanish and Portuguese accession is accompanied by cold brutal action to make it all worth while.
  The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): Like the hon. Member for Hamilton (Mr. Robertson) and most of my colleagues, I welcome the accession of Spain and Portugal to the Community. The hon. Member for Hamilton reminded the Committee that the Labour party has supported the membership of Spain and Portugal during the long seven years of negotiations, but he did not respond to the fair point put by my hon. Friend the Member for Darlington (Mr. Fallon) that it is curious that, for the first five of those seven years, the Labour party was calling for the United Kingdom to leave the same Community that it wanted Spain and Portugal to join. At the very least, the Spanish and Portuguese Socialists found it difficult to understand why the Labour party felt that their membership of the Community was desirable but Britain's membership was not. Perhaps the hon. Member for Hamilton will enlighten hon. Members and his fraternal comrades in Spain and Portugal as to what their proper interests might dictate if, having joined the Community, some future Labour Government decided to take us out again.
  These are not purely theoretical problems. The hon. Member for Hamilton will be aware that the Spanish and Portuguese Socialist parties listen carefully to what the British Labour party says. There seems to be an enormous identity of interest in these matters. Clearly, any views that the hon. Gentleman and his colleagues wish to put forward would be helpful.
  Mr. Foulkes: What about tomatoes?
  Mr. Rifkind: I can understand the hon. Gentleman being more interested in the debate turning to the subject of tomatoes rather than Labour party's policy, and I would happily turn to that matter.
  My hon. Friends the Members for Banbury (Mr. Baldry), for Darlington and for Harrow, East (Mr. Dykes) enthusiastically welcomed Spanish and Portuguese accession. The hon. Member for Berwick-upon-Tweed
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  (Mr. Beith) correctly emphasised the political importance of Spanish and Portuguese membership. I do not believe that it is necessary for anyone to give a particular reason why Spain and Portugal should join the Community. There are a multitude of reasons, but they boil down to a simple proposition —Spain and Portugal are now democratic societies; they are European countries; they wish to join the Community; and under the terms of the Treaty of Rome, they are entitled to make such an application. As long as the terms of that application are properly negotiated with the existing member states, it would be unthinkable for such an application to be refused.
  The fact that the negotiations have taken seven years shows that there was on both sides a realisation, as the hon. Member for Hamilton said, that difficulties would accrue, not just to existing members of the community, but to Spain and Portugal. Those two countries perceive that, as countries that are not nearly as industrialised as most of western Europe, their competitiveness can by no means be properly assumed. Existing member states will have substantial opportunities to increase industrial exports.
  Mr. Forth: My hon. and learned Friend says that it would be unthinkable for an application to be refused. Is he suggesting that there are no grounds whatsoever on which existing member states could decide that the joining of a new member was damaging to the interests either of that new member, of the Community as a whole, or of a particular country? Many people who have followed this case all the way through think that if there is a proven disadvantage to the United Kingdom or to the Community as a whole, it would be legitimate to say, "We are not yet convinced that it would be a benefit for you to join."
  12.30 am
  Mr. Rifkind: If a democratic European country applies to join, it must in principle be given an opportunity for the negotiations to succeed. There must be a desire on both sides to see that accession negotiations reach a successful conclusion, but at the end of the day there is no guarantee either on the part of the Community or on the part of the applicant state. For example, when the terms of the proposed accession of Norway were put to the Norwegian people through a referendum, they declined to accept them. Equally, the Community must have such a right, if the negotiations do not prove successful. However, when a democratic European country applies, there is a desire to give a favourable response if at all possible and realistic.
  My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) referred to the implications for the common agricultural policy and asked for a whole series of statistics to show the precise figures of the costs that would be involved in the accession of Spain and Portugal. My hon. Friend knows that it is simply not possible to respond with such details. He may be expressing surprise, but I do not think that his shock is likely to alarm the House. One must be conscious of the fact that Spanish and Portuguese membership, particularly with regard to Mediterranean products, will increase the availability of these products in the Community. It has implications not only for the existing members of the Community, but for Mediterranean countries, and that is why negotiations are going on with these countries as to how the access of their products to the Community can be safeguarded once Spanish and Portuguese membership takes place.
  My hon. Friend will also be aware that one of the reasons why the negotiations took so long was that strict

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  terms were put to the Spanish and Portuguese, and one of the sectors about which the Community was most concerned was the cost implications. For example, olive oil is likely to be in substantial surplus in years to come, and the Spanish have had to accept the fact that their entitlement to full intervention prices will not be available even after they have joined the Community. Only when a system of guaranteed thresholds has been introduced, and the Community is in surplus, or likely to be in surplus, will Spain be able to participate in that crucial sector.
  This also applies to wine, where again there is a likelihood of Spanish produce adding to existing surpluses. Severe constrictions on Spain have had to be accepted, including compulsory distillation of a substantial proportion of its produce. These matters have been taken into account. They do not give an assurance that there will be no problems, and my hon. Friend was right to say that the accent within the Community will increasingly change from the years when the Community first came into operation.
  A significant number of Mediterranean countries, with a common interest in that area's agricultural produce, will be in the Community at the same time as Germany and the United Kingdom are joined by France as a significant net contributor to the costs of the Community. These countries, as well as other northern countries, will have a significant interest in ensuring that the mistakes that were made at first, —which are still being experienced with regard to northern agriculture, through the operation of some aspects of the CAP —will not be repeated with equally extravagant consequences in the southern states. That is why the negotiations on fruit and vegetables, olive oil and wine were some of the most difficult and complicated and on which it took years to reach an acceptable conclusion.
  Mr. Marlow: My hon. and learned Friend said that the accession of Spain and Portugal to the Community would allow extra new markets to our exporters.
  When we joined the Community we were told that Europe was there waiting for our exports. It did not happen that way, but the other way round. The European exports came here. What makes my hon. and learned Friend so confident that the accession will be of benefit to Britain rather than the other way round and the Iberians will have our market?
  Mr. Rifkind: I shall answer that point in a moment, because I want to deal with the industrial side, which is extremely relevant to my hon. Friend's point. If he would allow me to reach it in my own time, I should be grateful.
  My hon. Friend the Member for Mid-Worcestershire and the hon. Member for Linlithgow (Mr. Dalyell) raised the subject of horticulture and the problems of tomatoes, on which the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has expressed an interest. Here, too, there was a realisation that it was a sensitive area, which is why an exceptionally long transitional period of 10 years has been provided. That is a significantly longer transition period than that provided for other areas in the treaty.
  However, there will be problems after that period. Special rates of assistance under capital grant schemes will be available to growers in the United Kingdom wanting to change to more efficient forms of glasshouse that will make them more competitive in the longer term. The
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  Canary Islands will be entitled to export some of its tomato produce to the United Kingdom when Spain joins the Community, but under protocol 2 of the treaty that will remain subject to the reference price system, even after the end of the transitional period. That will protect the interests of United Kingdom tomato growers. That part of the protocol was negotiated at the instigation of the United Kingdom because of the realisation that there was a legitimate United Kingdom interest.
  The hon. Member for Hamilton referred to the regional and social fund. Over the past few years the United Kingdom has been a net beneficiary of the regional fund. There is no question but that we will continue to receive major payments. The hon. Gentleman was wrong to imply that our entitlement to funds is affected by the designation of which areas of the United Kingdom come under regional funds status. He entirely misunderstands the way in which the system operates. Each country in the Community has a quota range that determines its entitlement, and it is for the country concerned to determine which parts of its national territory will benefit. Whether it is 10 per cent. or 90 per cent. of the United Kingdom does not affect that. The hon. Gentleman clearly does not understand that point, although he should, given his interest in these matters.
  Mr. George Robertson: We must clarify this point. It may not affect the totality of the resources that can be received by this country, but it deliberately excludes a large number of areas from obtaining assistance under the fund. Significant areas were cut off from such assistance as a direct consequence of the changes in boundaries.
  Mr. Rifkind: The hon. Gentleman knows, first, that that has nothing to do with the Community; secondly, that it has nothing to do with the enlargement negotiations; and, thirdly, that it was not the point that he made earlier in the debate. That is sufficient comment on that matter.
  Spain and Portugal, whose gross domestic produce per capita is lower than the Community average, will be significant beneficiaries of the regional fund. Because they are likely to have generous quota arrangements; by definition that means that the entitlement of other member states must be reduced. That is unavoidable.
  The European Council stated that the regional fund should grow in real terms. While it is not possible to calculate the implications for the United Kingdom, the ultimate effect will depend on whether the increase will be lesser or greater than the reduced quotas which the United Kingdom and other member states will have in the fund.
  There are no quotas for the social fund. The enlargement will not affect the designation of priority areas within the United Kingdom. However, it is not possible to predict with any certainty what the effect will be.
  Mr. Forth: My hon. and learned Friend will recall that some time ago the Government placed great stress on the effectiveness of the budgetary discipline introduced after Fontainebleau. He now says, with some pride, that he expects the regional fund to grow in real terms. He conceded that the accession of Spain and Portugal would add to the agricultural commitments, although he said that there would be an element of restraint on olive oil. How does he square those apparently contradictory elements where individual parts of the budget will grow with the fact that the budget itself will be discipline contrained?
  Mr. Rifkind: My hon. Friend will be the first to accept that if Spain and Portugal join the Community, it is not unreasonable that the total expenditure of the Community should increase without that having any implications for whether budgetary discipline is working or is not. A Community of 12 can properly contemplate higher spending than one of 10.
  My hon. Friend must appreciate also that Spain and Portugal will be contributing to the Community as well as receiving from it. A substantial proportion of any additional gross expenditure by the Community will be covered by Spanish and Portuguese contributions. It is proposed that during the transitional period Spain should be in the position of broad financial neutrality. In other words, its contributions to the Community should not be less than the benefits that it receives from it. It is proposed that Portugal should be a modest net beneficiary. My hon. Friend should accept that any increase in the total spending of the Community will be covered properly and to a substantial extent by the contributions through the VAT system and customs and levies by Spain and Portugal over the years to come.
  Mr. Fallon: Does my hon. and learned Friend agree that there is something rather curious about Socialists on the Opposition Benches opposing increased spending on disadvantaged areas in Portugal and Spain, while supporting Community expenditure on about 30 per cent. of the United Kingdom, to which the regional fund currently applies?
  Mr. Rifkind: It has always been a phenomenon of the Socialist world that Socialists are so in love with the concept of internationalism that they have no time left for any individual international Socialists. That is a phenomenon which we have observed in the House and elsewhere.
  My hon. Friends the Members for Mid-Worcestershire and for Northampton, North (Mr. Marlow) spoke about industrial matters. My latter hon. Friend asked what the prospects were for the United Kingdom, given the disappointments that have been experienced over previous years. As my hon. Friend the Member for Darlington rightly said, there is no guarantee that the United Kingdom will use the opportunity that enlargement will present.
  One of the problems over the past 10 years is that the tariffs that British exporters have had to face in selling their goods in Spain have been far higher than those that Spanish exporters have had to face in Britain and elsewhere in the Community. Where tariffs are to be removed completely, there will be far more potential problems for Spain than for the United Kingdom. Spanish exports which come to Britain attract relatively modest tariffs, while British exports to Spain face high ones. If British industry cannot take advantage of the improved market, it will have only itself to blame. I cannot guarantee that it will be able to take advantage of the opportunity, but I hope that it will. The artificial barrier that has inhibited British trade in Spain will be removed in the way that I have described.
  In the course of the negotiations we have achieved substantial and quick reductions in the tariffs that are applied by Spain. It is proposed that in the first three years some of the high tariffs will be reduced by no less than 52·5 per cent., and removed completely a few years
  888
  thereafter. That will provide attractive opportunities for British exports as well as those from elsewhere in the Community.
  My hon. Friend the Member for Northampton, North asked about the footwear industry, and I understand his concern for it. Her Majesty's Government are concerned about the recently introduced restrictions on British footwear exports to Spain. We have already made representations to the Spanish Government and the Commission. It is our view that after accession these restrictions will constitute quantitative restrictions on trade and will be in clear breach of the Treaty of Rome. The Commission has undertaken to examine the matter. It is a legal matter that will be pursued, for the reasons to which my hon. Friend properly drew attention.
  The hon. Member for Walthamstow (Mr. Deakins) asked whether the £75 million that has been estimated as being the ultimate British net contribution will take into account the effect on the regional and social fund. The figures are based on Commission estimates. The Commission has not explained in detail the basis on which it reached the figures, but we understand that it takes into account what are believed to be the likely implications for the regional and social fund, but does not take into account any administrative costs for the Community as a whole. That was the second question asked by the hon. Gentleman. He suggested that in future there might be an economic assessment for new members. I think he will appreciate that such an assessment, although it might be of some academic interest, would be unlikely to be more than speculative.
  12.45 am
  My hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) referred to Gibraltar. I appreciate his concern. We are currently engaged in discussions with the Government of Gibraltar about pensions. However, Spanish entitlements to pensions from the Government of Gibraltar will arise only where Spanish workers have made contributions to the social fund of the Gibraltarian Government. Where they have made such contributions, their entitlement will be the same as that of Gibraltarians who have made identical contributions to that fund.
  Finally, my hon. Friend the Member for Birmingham, Northfield (Mr. King) was concerned because he believed that if people want to join a club they should adhere to its rules, irrespective of the implications for them. I am hesitant about agreeing with him on that. He will appreciate that the United Kingdom spent the first part of its membership of the European Community with the task and objective of seeking to change some of the original criteria where we believed that they were basically unsound and unfair. I believe that it was to the satisfaction of the United Kingdom and in the interests of the Community as a whole that the matter was properly resolved. It is always difficult to join any organisation where the rules were formed at a time when one was not a member. I recall that during the accession negotiations the remarks of King Alfonso of Castille in the middle ages were quoted. He apparently said that if he had been present at the creation he would have had some useful hints for the better ordering of the universe. Many of the 20th century advocates of the Community could also have identified with that view.
  I believe that the debate has been valuable in dealing with some of the detailed points in which my hon. Friends

  889
  and other hon. Members are interested. It is clear that there is wide and enthusiastic support for Spanish and Portuguese membership of the Community, on both sides of the House. I believe that that represents the whole spectrum of political thought in the House, and shows the good will of the people of the United Kingdom towards Spain and Portugal. Their membership is a prospect that we can all endorse with enthusiasm and pleasure.
  Question put, That the clause stand part of the Bill: —
  The Committee divided: Ayes 60, Noes Nil.

  Division No. 23]

  [12.50 am

  AYES

  Amess, David

  Lennox-Boyd, Hon Mark

  Baldry, Tony

  Lester, Jim

  Beith, A. J.

  Lilley, Peter

  Benyon, William

  Maclean, David John

  Best, Keith

  Mather, Carol

  Boscawen, Hon Robert

  Maude, Hon Francis

  Brooke. Hon Peter

  Merchant, Piers

  Cash, William

  Meyer, Sir Anthony

  Chope, Christopher

  Miller, Hal (B'grove)

  Coombs, Simon

  Moynihan, Hon C.

  Cope, John

  Murphy, Christopher

  Currie, Mrs Edwina

  Neubert, Michael

  Dorrell, Stephen

  Nicholls, Patrick

  Douglas-Hamilton, Lord J.

  Norris, Steven

  Dover, Den

  Osborn, Sir John

  Durant, Tony

  Powley, John

  Dykes, Hugh

  Raffan, Keith

  Fallon, Michael

  Rifkind, Malcolm

  Fenner, Mrs Peggy

  Sainsbury, Hon Timothy

  Forsyth, Michael (Stirling)

  Stevens, Martin (Fulham)

  Fox, Marcus

  Sumberg, David

  Garel-Jones, Tristan

  Thompson, Donald (Calder V)

  Gregory, Conal

  Thompson, Patrick (N'ich N)

  Ground, Patrick

  Thurnham, Peter

  Hamilton, Hon A. (Epsom)

  Wallace, James

  Harris, David

  Wardle, C. (Bexhill)

  Hirst, Michael

  Watson, John

  Hughes, Simon (Southwark)

  Wilkinson, John

  Hunt, David (Wirral)

  King, Roger (B'ham N'field)

  Tellers for the Ayes:

  Knight, Greg (Derby N)

  Mr. Ian Lang and

  Leigh, Edward (Gainsbor'gh)

  Mr. Peter Lloyd.

  NOES

  Nil

  Tellers for the Noes:

  Mr. Tony Marlow and

  Mr. Eric Forth

  Question accordingly agreed to.
  Clause 1 ordered to stand part of the Bill.

Clause 2

  SHORT TITLE
  Question proposed, That the clause stand part of the Bill.
  Mr. Beith: I am beginning to think that the Bill should not be cited as the European Communities (Spanish and Portuguese Accession) Act but the European Communities (Spanish and Portuguese Accession) Act that the Labour party did not vote for. Cited any other way it gives the misleading impression that the Labour party, having spoken so enthusiastically in favour of clause 1, were in favour of the Bill when, so far as I can establish, not one Labour Member brought himself to vote in favour of the key clause ensuring that Spain and Portugal can accede to
  890
  membership of the Community. That being the case, the Socialists of Spain and Portugal should be made aware of that extraordinary thing.
  Therefore, although it may be late to put forward a manuscript amendment, we cannot let clause 2 pass without saying that in the citation of the Bill in the clause we are ignoring the extraordinary retreat of the Labour party. Faced with having to say that it wants somebody else to be a member of the Community that it does not want to be a member of itself, it fled in disarray.
  1 am
  Mr. Foulkes: The hon. Member for Berwick-upon-Tweed (Mr. Beith) seems rather perturbed for some reaaon. He seems to have joined the ranting tendency in the House of which, from time to time, I have been accused of being a member. The vote was not notable for the non-participation of the Labour party because the responsibility for getting legislation through the House does not rest with the Opposition; it rests with the Government. When we voted on clause one stand part, we were not voting on the principle of the Bill. The House was unanimous about the principle contained in the Bill. What was notable was that the Government, who have the responsibility to get the Bill through the House, were only able, with the help of the alliance, to muster 60 votes.
  The Second Deputy Chairman of Ways and Means (Sir Paul Dean): Order. I know that the hon. Member was provoked, but I am finding it a little difficult to relate his comments to this short clause which deals with the short title. I assume that the hon. Member has now made his point.
  Mr. Foulkes: Yes, Sir Paul.
  Mr. Marlow: The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) said that as the vote was merely on clause stand part there was no necessity for the Labour party to vote. How will it react to a vote on Third Reading?
  The Second Deputy Chairman: We cannot anticipate subsequent stages.
  Question put and agreed to.
  Clause 2 ordered to stand part of the Bill.
  Bill reported, without amendment.
  Motion made, and Question proposed, That the Bill be now read the Third Time.
  1·2 am
  Mr. Fallon: I am sure that the House would not wish the Bill to be read the Third time without giving the Opposition the chance to reply to the question asked by my hon. Friend the Minister of State (Mr. Rifkind) which is relevant not just to the Third Reading but to clause 2. Why have they encouraged the Socialist parties of Spain and Portugal for five long years to apply for membership of the Community while at the same time they were seeking to withdraw from it?
  Mr. Marlow: The Bill despite, or even perhaps because of, the vote on clause 1 stand part is contentious. It has disadvantages not just for the United Kingdom but for the European Community.
  Mr. Baldry: When did my hon. Friend think about that?
  Mr. Marlow: My hon. Friend was not listening to my speech earlier. I do not blame him for that. It is his

  891
  privilege. That there is not wholehearted support for the Bill in this country has been signified by the fact that fewer than 10 per cent. of the Members of the House voted for it. Not only that, but the Opposition sat on their hands and abstained when they were given the opportunity to support the Bill.
  Question put and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

STATUTORY INSTRUMENTS, &c.

  LANDLORD AND TENANT
  Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committee on Statutory Instruments, &c.).
  That the Agricultural Holdings Act 1948 (Variation of Fourth Schedule) Order 1985, dated 28th October 1985, a copy of which was laid before this House on 19th November, be approved.—[Mr. Sainsbury.]
  Question agreed to.

PETITIONS

  British Rail Engineering Limited (Springburn)
  1.5 am
  Mr. Michael J. Martin: I have a petition to present compiled by the people of Scotland which contains 54,000 signatures and which the Serjeant at Arms has been good enough to keep safely for me.
  The history of the petition is that recently British Rail Engineering Limited, Springburn has proposed to run down the only railway workshop left in Scotland. There used to be four such workshops in my constituency, and at one time it was the railway engineering centre of the world. Now the work force is reduced to 1,500 workers, and if BREL gets its way, it will run down the work force to 400. In some parts of my constituency unemployment is running at about 40 per cent., and it is high among young people under the age of 21. Therefore, the Scottish people feel that something should be done to persuade British Rail, which is the core owner of BREL, to reverse the decision.
  I abhor the attitude of Mr. Robert Reid, chairman of British Rail, who wrote to me saying that he is not prepared to meet me and my colleagues to discuss redundancies but only to discuss new ways to attract industries into Springburn after the redundancies take place. It is ridiculous that the chairman of a nationalised industry should deny an hon. Member the right to represent his constituents. It is traditional for people to turn to a Member for Parliament when redundancies are announced. Every facility is provided by Ministers; and, indeed, the Prime Minister is on record as saying that she is willing to meet hon. Members regarding closures and that she has put her Ministers at their disposal. It is scandalous that a servant of the nation should rebuff a Member of Parliament in this way. I hope that the Secretary of State for Transport reads my words in Hansard and takes action to help me do what I am entitled to do —to represent my community.
  The petition reads
  To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
  The Humble Petition of the People of Scotland showeth
  That the present run down of British Rail Engineering Ltd., Glasgow Works in the constituency of Glasgow Springburn would lead to the closure of the only main workshop in Scotland.
  Wherefore your Petitioners pray that your honourable House do all in its power to urge the management of British Rail to retain this very valuable asset in Scotland.
  And your Petitioners as in duty bound, will ever pray, &c.
  To lie upon the Table.

  Basildon Hospital
  1.10 am
  Mr. David Amess: I beg to ask leave to present part of a petition which has been signed by thousands of my constituents, the sentiments of which I fully support. The prayer of the petition is as follows:
  To the honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled. The humble petition of residents of Basildon showeth that the proposals of the Basildon and Thurrock District Health Authority to remove from Basildon Hospital its maternity, gynaecological, paediatric and special baby care services and centralise at Orsett

  893
  would be in the very worst possible interests of the people of Basildon. Wherefore your petitioners pray that your honourable House will take all such measures as lie within your power to persuade the Basildon and Thurrock District Health Authority to abandon these proposals for reorganisation, and your petitioners, as in duty bound, will ever pray.
  To lie upon the Table

Garw Colliery
1.12 am
Motion made, and Question proposed, That this House do now adjourn. —[Mr. Sainsbury.]
Mr. Ray Powell: With the proceedings of the House having continued until a late hour, and petitions then having been presented, I wondered whether we would ever reach this point. I should have liked to raise this Adjournment a week ago, because in the intervening time certain developments have occurred in the Garw valley and at the Garw colliery, where the men, by a majority decision, have agreed to the colliery closing without going through the new review procedure.
The last debate of this type that I conducted with the Minister was about the St. John's colliery in Maesteg in my constituency. That was on 23 April last, when the Minister pointed out that he had been born in Wales, in Glyn Ceiriog near Llangollen in north Wales. North Wales is not all that different from south Wales, with the exception of the accent. The Minister will appreciate that it is still necessary for me to put on record, on behalf of the community of the Garw valley and the constituents of Ogmore, the main objections to the conditions that applied to the St. John's lodge members regarding the restriction on the retention of the colliery.
The Minister will recall that when I was fighting for the St. John's colliery, which had a work force of 840, he promised to ensure that the matter went to the new review procedure. I am pleased to say that eventually he carried out that promise, and I thank him for that. Nevertheless, the colliery closed, and it may interest the Minister to know that the director of the coal board in south Wales sent me a letter the day after the miners in Maesteg had taken their decision to permit the colliery to close without going through the new review procedure.
A number of collieries have closed in my constituency, but never before have I received a letter so quickly from the director as I did on this occasion. It was more instant than instant coffee. The closure was agreed by the men at 4 o'clock in the afternoon, and the director was able to get a communication to me by the following day.
In Ogmore there have been a number of closures since 1979, including the Caerau, Coegnant and St. John's colliery in the Llynfir valley, the Wyndham Western colliery in the Ogmore valley and the Ffaldau colliery in the Garw valley. Now, the very last colliery left in the Ogwr borough area, the Garw colliery, is to go. These closures have caused the loss of 2,900 jobs in the mining industry in my constituency since 1979. Indeed, the Garw valley —the No. 4 area of the south Wales coalfield —once supported 12 productive pits.
I compliment the lodge committee and the work force, who were given a raw deal by the NCB. They were asked to prepare a plan to break even, which had to be operative by March 1986. They were told that from the one coal face in operation they had to produce 7,500 tonnes a week rather than the existing 4,350 tonnes. They prepared a plan last week, and I have with me maps, drawings, estimates and figures that were presented to the NCB in Cardiff, with the backing of the south Wales NUM officials. Mr. Cliff Davies refused to accept that plan, rejected it totally and said that it did not comply with the NCB's criteria. Why was that criterion used for pits in Wales when it was not used in other NCB areas?

895
When the NCB announced its new Strategy for Coal, which wiped out the Plan for Coal, the key factor was production at a price that the market would bear. The NCB says that this means producing at a cost of less than £42 per tonne. Of the 156 pits, approximately 110 cannot meet that criterion, but more significant is the picture in the areas where the NCB is helping the breakaway union to reduce NUM influence.
Equally significant is the fact that the officials of the breakaway union have not commented on the NCB strategy of drawing a line at £42 per tonne production cost —a policy that will be devastating for NUM members in Nottingham, south Derbyshire, Leicestershire and the midlands.
I have with me a list of collieries showing production costs per tonne for the last six months under the NCB's criteria, and this is relevant to the collieries that have closed in the Ogmore constituency in the last 12 months.
The production cost per tonne at Mansfield was £65·10; at Rufford, £58·02; at Silverhill, £55·29; at Pye Hill, £57·92; at Babbington, £57·01; at Hucknall, £56·32; at Newstead, £53·42; at Cadley Hill, £87·55; at Donisthorpe/ Measham, £70·87; at Wolstanton, £66·73 and at Holditch, £58·68. Yet the Garw colliery was producing coal at £53·65 a tonne and the south Wales NCB decided that the collier had to close.
Are the collieries that I have mentioned, which are producing coal at high cost, protected against that criterion because they are encouraging the UDM in those areas? It is important for miners in south Wales to know that. I have not gone into detail about collieries that produce coal at much more than £42 per tonne —I was using them only as a comparison with the Garw colliery.
I should like to pay tribute to the Garw lodge officials —Mr. John Jones, the chairman, Mr. Berwen Howells, the secretary and Eirfyl Jones, the vice-chairman —for the way in which they have conducted the negotiations, and on their loyalty to the work force. They have consulted the work force in these negotiations, as they did during the 12-month miners' strike. I would like to pay tribute also to the community of the Garw valley, which gives unstintingly to the miners and assisted them in all possible ways during their fight to retain their collieries.
In a previous debate on the St. John's colliery, I told the Minister that most miners in my constituency were not Scargill supporters, but that they were on strike because they believed that it was the only way in which to fight the battle to retain their collieries, their jobs and their families', friends'and communities future. The predictions made by the NUM in the 12-month strike are coming true in Wales, especially in my constituency.
The work force of 600 in the Garw valley has been transferred from the pits that have closed in the past six or seven years. Some 400 mining gipsies will again be without work when the colliery closes. They will look for other pits but, in the south Wales coalfield, they are being closed, slowly but surely. There are very few jobs for young people. The youngest person at the Garw colliery is 23, and no young person has been employed in the pit in the No. 4 area for the past six years.
The plan that I mentioned earlier would have been able to develop massive reserves which the NCB agrees exist in the Rhondda Fach and Rhondda Fawr seams. The plans were based on the cheapest possible means of developing
896
those seams. It would have taken two years to get to the main seams and cost £7 million, but the plans were rejected utterly, with little thought for miners in the Garw valley.
As it is the last in the area, would it be possible to mothball the colliery? It could be used as a tourist attraction as the Garw, Ogmore and Llynfir valleys lend themselves to the tourist industry. It could also be used some time in the future as access to an abundance of coal in seams that are acknowledged by the NCB and others to be readily available. What would it cost to maintain a colliery such as Garw so that it might be used in future? I appreciate that there might be problems with gases from other collieries, but could the Minister consider it? If he cannot give me an answer tonight, perhaps he will reply later. I would like to be able to say that we will give something to people at Garw. The work force and the community have suffered as a result of 100 years of despoliation by owners and the NCB. I ask the Minister to consider the feasibility of preservation and not to seal off those vast reserves of coal, which are a national asset.
Having referred to the pressure on the work force of Garw colliery and the reason why they accepted the decision, I shall quote just two paragraphs from a memorandum written by area director Cliff Davies to the manager of the St. John's colliery on 11 November. He said:
"I am becoming increasingly concerned that men who wish to take voluntary redundancy at St. John's Colliery will be caught by the DHSS and RMPS rules and will suffer severe financial penalties. As you are aware, unless the men are off our books by 2nd January, 1986, the penalties will be triggered. The time available to us to process such redundancies is fast running out.
The same concern applies to men who are awaiting redundancy at collieries to which St. John's men will transfer. If we delay much longer, these men too will be caught by the DHSS and RMPS rules."
That meant that if the miners were not prepared to accept redundancy by 2 January 1986 —and the same criterion applies to miners at the Garw colliery —they would lose substantial sums of money and face 12 months loss of unemployment benefit. As they had already lost 12 months work without any pay at all, that would not have been a matter of great concern to them if there were any future for the colliery or the miners working there, but they have been browbeaten by all and sundry and especially by the Government and MacGregor and their understudies in the industry. That is why the miners took a majority decision to agree to closure.
That valley, in which 8,000 people reside, is full of trees and spoilt only by the NCB tips. The only employment in the area is with Offrex Rexel, which has a predominantly female work force of 500 at Llangeinor, Sweetex which employs 40 women part time and Flextank, which has a mainly male labour force of 200.
My constituents therefore ask or special consideration and the restoration of special development status to the area. The NCB should reinstate the area to its past beauty, make it safe, ensure that subsidence problems are resolved and prepare sites for factory development. The Government should give special consideration to the loss of £250,000 in rates to the local authority as a result of just two pit closures.
The loss of jobs is of even greater significance in an area of such high unemployment. In the Maesteg area, male unemployment was 24 per cent. before the St. John's colliery closure. It has now escalated to nearly 40 per

897
cent., with further increases due to washery closures. The same will apply to the Garw colliery and the Ogmore valley.
My last point is equally important. What I said in the debate on 23 April about the effects on the community needs to be repeated today. The Minister replied:
"The hon. Gentleman has mentioned the Margam project several times in the House and blamed the Government for not bringing it forward fast enough. The board has now received planning permission from West Glamorgan county council to build a colliery at Margam, which would employ about 650 people. However, the board has yet to make a final decision on whether to proceed with the project. If it decides to proceed, the next step will be to refer it to the Secretary of State." —[Official Report, 23 April 1985; Vol. 77, c. 853.]
In an article published in the Western Mail on 24 April 1985, the reporter, David Lewis, said that Mr. Philip Weekes, who was then the South Wales NCB area director, had announced that the NCB was to develop the Margam mine. I should like to know why this project that was promised by Mr. Weekes is not yet in being. I hope that the Under-Secretary of State for Energy will press the NCB to develop this mine. I understand that it contains the best coking coal in the world and that acid rain is less likely to be a potential hazard.
Finally, I attended yesterday in the House a coalfield communities campaign reception. The campaign is supported by 69 of the 100 local authorities in coalfield areas, including my authority, the Ogwr borough council. I hope that the Under-Secretary of State will look at the document that was presented yesterday by the coalfield communities campaign to a number of hon. Members and consider its arguments about the decline in communities as a result of colliery closures.
1.31 am
The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): First, I must begin by commending the diligence and concern of the hon. Member for Ogmore (Mr. Powell) for his constituency and his skill in securing, albeit at this late hour, a further Adjournment debate on a pit closure in his area. He knows that, whenever a possible pit closure is announced, it must be of serious concern to everybody who cares about the coal industry's future, but in particular to the local community. If that community is in an area of high unemployment, as is the case with Garw colliery, I recognise that there are special problems. The Government and the National Coal Board recognise the nature of those problems and have gone to enormous lengths to ease any difficulties with which the men or the community may find themselves faced when a pit closes.
The hon. Gentleman faced me across the floor of the Chamber on a similar occasion on 23 April. The issue that he raised then was St. John's colliery. Much of what I said on that occasion holds true now, and I make no apoligies to the hon. Gentleman for repeating myself.
Perhaps the House will consider for a moment the general question of pit closures. I have pointed out to the House many times that the closure of individual pits is a matter for the NCB, in consultation with the mining unions. Opposition Members repeatedly and incorrectly allege that the Government are shutting pits in their constituencies. The Government employ no mining engineers and no coal specialists who can take a view on the prospects for a particular pit. That is the role of the NCB, and in the hon. Gentleman's area it is the role of the director and staff of the south Wales area of the NCB.
898
Pits have always closed —330 under Labour Governments in recent years —and in all cases it has been the result of consultation within the industry, not with Government. I admit that, when a pit has been the main employer in a community, as Garw has been for over 100 years, it makes no difference to the people who live there what the complexion is of the Government in power. They are concerned for their future, and rightly so. The Government, too, are concerned for their future, but, more than that, we are concerned for the future of the whole coal industry and for the health of the nation's economy.
Opposition Members continue to suggest that keeping open uneconomic pits is an answer to unemployment, but it is not. Today's uneconomic pit is often the exhausted pit of two or three years' from now, and by keeping open grossly uneconomic capacity the industry harms itself and drains the nation's resources. What the Government want to see is a healthy coal industry. I remind the hon. Gentleman of the commitment that we have shown to achieving that objective —the massive and record support that we have given the industry in the past six years.
Despite the longest and most damaging industrial dispute that this country has seen, that support has enabled miners to remain at the top of the industrial pay league. It has ensured that, during a massive and long overdue restructuring, there have been no compulsory redundancies. No man has been forced to leave the industry and those who have chosen to leave have done so on extraordinarily generous terms. That support has led to the creation of National Coal Board (Enterprise) Ltd, which is not only bringing new industries into mining areas but giving men who have worked in the coal industry the chance to make a fresh start, often using their redundancy money in creative and imaginative ways.
I am glad that the hon. Member for Ogmore referred to the modifications to the colliery review procedure which have been introduced. I am aware that, in the case of Garw, the men have voted to agree to the closure of the pit and to transfer to other pits or accept voluntary redundancy. Nevertheless, had they chosen to oppose the board's proposals, there is now available a review procedure which, by the inclusion of an independent review body, allows for a completely impartial recommendation to be made on the future of any pit referred to it. Hon. Members will have read in the past few days of the case of Darfield main colliery, itself the subject of an Adjournment debate a few weeks ago. Following a national appeal meeting, a rescue plan put forward by the British Association of Colliery Management was accepted by the board and the pit is to remain open. That stresses and underlines the value of the procedure.
The hon. Member for Ogmore has asked me to look at the feasibility of preserving Garw colliery and the cost of mothballing. That must be, and is, a matter for the area director and his staff. I do not know whether the hon. Member has raised this matter with the area director but, if he has not, he should do so at the earliest opportunity, because it is for the area director to decide. The hon. Gentleman mentioned that a survival plan was put forward at Garw by the NUM but that the investment envisaged by the plan was said by the area director not to have provided a sufficient return. The NCB has announced investment plans for the south Wales coalfield which show the extent of its commitment to the area. Betws, Abercynon, Penallta, Abernant, Taff Merthyr, Merthyr Vale and

899
Oakdale will benefit this year from investment in high technology. They are pits with extensive reserves, sound geology and good prospects. No doubt men who have voted to accept closure at St. John's and Garw will transfer to those pits and will have a long career ahead of them producing coal. The area director has confirmed to me today that the men at St. John's and Garw have been offered any pit of their choice on the south Wales coalfield. Whatever their decision, I wish them well.
The hon. Member for Ogmore suggested that the area director and the NCB have been devious in the way in which they approached this closure, because they pointed out to the work force that, as a result of paying insufficient national insurance contributions during the strike, some men would not qualify for unemployment benefit if they chose to take redundancy during the next benefit year. That is an incredible accusation, because surely it is the duty of an employer to point out to his employees any factor that might affect their well-being. No pressure has been put on miners to take redundancy, because they can equally choose to transfer to another pit.
I wish that the hon. Gentleman would put the other side of what is happening in the Welsh coalfield. There has been more investment in this financial year in south Wales
900
than in any previous year, and there is still more investment in the pipeline. There is now record productivity. In the first three months of this year, production losses were £15 a tonne, but now the area director is talking of the coalfield moving to a break-even position in the first quarter of next year. Last week, the highest ever productivity of 2·1 tonnes per man shift was achieved. In addition, in this financial year, averages should be higher than in either of the two years before the strike. This is a marvellous success story for south Wales, and if the trend should continue, therein lies the greatest hope for the future.
The hon. Gentleman is right to stress the vital role that will be played by the National Coal Board (Enterprise) Ltd. in his area, and the many other areas that are faced with the serious problems caused by pit closures. He will appreciate that many of the issues that he has raised are matters for my right hon. Friend the Secretary of State for Wales, but I shall ensure that the points that he has raised with me —both those that are my responsibility those that are the responsibility and of my right hon. Friend —are dealt with, and he shall receive replies on the points to which I have not had time to reply tonight.
Question put and agreed to.
Adjourned accordingly at twenty minutes to Two o' clock.