Commons Sitting of 26 July 1985

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

Father of the House
Mr. Speaker: On this day 40 years ago, the Father of the House—the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan)—came here for the first time. I am sure that the whole House would wish to congratulate him and to wish him well in the years to come.
Hon. Members: Hear, hear.

Falklands War (Peace Proposals)
9.35 am
Mr. Nigel Spearing: On a point of order, Mr. Speaker. Yesterday, in business questions after I had left the Chamber, the right hon. Member for Cambridgeshire, South-East (Mr. Pym) raised a point of order, which is reported in column 1313 of the Official Report, relating in part to a question that I had asked the Prime Minister, in column 1303.
May I take the opportunity of tendering to the right hon. Gentleman my apologies for any embarrassment that my question may have caused him? I apologise also if he feels that paragraphs 5.14 to 5.27 of the minority report in my name are less complete and explicit than they could have been.
The evidence submitted by the Foreign Office, which is published on page 133 of that report, shows the great efforts that the right hon. Gentleman was making during that period. I was only too well aware of these, as I was present in the House at 11 am on Friday 7 May 1982 when he reported to the House on the results of those strenuous efforts in Washington and New York.

Electrical Substations
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wakeham]
9.36 am
Mr. Frank Haynes: Mr. Speaker has commented on what happened 40 years ago today. I am privileged to be a Member of the House with my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan). When he entered the House 40 years ago with the return of a Labour Government, there was massive work to be done. The troops came home and realised the mess that the nation was in. There were many problems to be sorted out.
My right hon. Friend is with us today. I pay tribute to the marvellous work that the Labour Government did during that difficult period. I do not doubt that my right hon. Friend will remember that day this morning. After checking wherever one can check these matters, I think that I am correct in saying that he is the only Prime Minister who has become Father of the House. He has been a true and faithful servant to all his constituents, the nation and the world.
Behind every great man there is usually a great woman. I refer to Audrey, my right hon. Friend's wife, who has done sterling work in the community. Without her, I do not think that my right hon. Friend could have achieved what he has.
I now sound a serious note. My constituency of Ashfield in Nottinghamshire contains a place called Selston. That is not a village or a town—it is something in between. Many people live in that fairly large area. On the evening of Saturday 13 July 1985, three youngsters—two 11-year-olds and a nine-year-old—climbed into an electrical substation on the housing estate. Apparently, youngsters do that fairly regularly. The children find cigarettes and matches and they go into the substation to pick off bits of the compound that is used for sealing the units. If the compound is running down the transformers, it means that there is a leakage of some sort, because the compound is on the inside and the units are sealed.
The units carry about 11,000 volts. I understand that for some years youngsters have put their hands into the transformers to get "tickled", as they call it. On 13 July, two 11-year-old boys went into the substation. One of them put his hand in and there was an explosion. That boy died the next day, suffering 85 per cent. burns over the whole of his body. The other boy, who went to the Nottingham city hospital burns unit, suffered 55 to 60 per cent. burns and died the following Wednesday in that unit. It was a terrible tragedy and I feel it my duty to bring it to the attention of the House.
There are, of course, regulations and there is an inspectorate. The authority is the East Midlands electricity board. I understand that the substations are examined fairly regularly, but when incidents of this sort happen it is obvious that something is gravely wrong.
There are 645 similar transformers in the county of Nottingham and nationwide there are over 11,000. Not long ago, Mr. Deputy Speaker, in your own county of Sussex, a lad was killed doing the same thing, and the electricity board at that time promised to take action so that it could not happen again. But nothing has been done, the regulations have not been tightened up, and there have been two fatalities in my constituency.

1417
It is disturbing to find that there is very easy access to many electrical substations. The electricity boards are making large profits and should be able to earmark funds for the purpose of safeguarding substations.
The wall around the substation where the tragedy occurred is 6ft high. There is no top on it. There are two doors at the front. The danger notice is on the front of the door. Around the outer perimeter of the 6ft wall is a small fence made with chicken wire. The youngsters were able to stand on the fence, climb over the wall and gain entry to the substation.
The Evening Post took photographs of one area in the city of Nottingham, Clifton, in which there are several substations. The photographs show clearly what is wrong with them. One of the substations is totally encased and there is no possible access to it unless the doors are open, but there is easy access to the others. As can be seen from the photographs, one is insecure—children can crawl under the fence. Another has a huge hole in the fence. In another there is graffiti on the substation walls, showing that someone has been in there.
The district manager of the East Midlands electricity board at Ilkeston, who is responsible for the area, says that the transformer and switchgear are contained in steel and are completely safe, but there is a pitch running down them, clearly showing that something is wrong. The board suggests that that is because people have tampered with the equipment. It is clear that the substations are not vandal-proof, and I should have thought that in 1985 it would be possible, with proper research, to make substations safe.
I understand that the district manager has also said that there are no laws with regard to fencing. Surely it is time that the Central Electricity Generating Board and the Department of Energy looked seriously at the situation.
I discussed the problem last night with my hon. Friends the Members for Jarrow (Mr. Dixon) and for Ogmore (Mr. Powell). They assure me that they have similar problems with substations in their constituencies. If the problem exists in places as far apart as Nottinghamshire in the Midlands, Jarrow in the north-east, and Ogmore in south Wales, the Department and the CEGB have a considerable task to put the matter right.
In rural areas the substations are not cordoned off. We know what kids will do; we have all been kids ourselves. They get up to all sorts of things, but when I was young tragedies of this sort did not happen. I met the parents of the boys and they were in a terrible state of grief. Last Sunday afternoon, on the estate where they live, the field was packed and the parents made it clear to me that they wished me to go down to the House of Commons and do something about the problem. They are asking for all substations to be made safe, no matter what the cost. We cannot put a price on life and we all know that the money is available to overcome the problem.
We also want to know what the powers that be will do about the problem. I hope that the Minister can give me, the House, parents on that estate and parents nationwide an assurance that they will do something with a view to overcoming tragedies such as the one that we had on 13 July in Selston, Nottinghamshire. We want something done so that such a tragedy never happens again.
I remember, as I am sure does my right hon. Friend the Member for Cardiff, South and Penarth, a chap during the
1418
second world war. His name was General MacArthur. He often issued orders. He said, " I want action on this day." That is what I and my constituents are looking for.
I found that the city of Nottingham spends £10,000 a month maintaining and repairing the substations. Multiplied by 12, that amounts to £120,000 a year. The city council says that it spends that money just to stand still and that no progress is made because no sooner has it done the repairs than the position is back to where it was. That is throwing money away.
The Government say that money should he spent wisely. I agree with that. I hope that I spend the money in my pocket wisely. We want the electricity authority and the Department of Energy to spend their money wisely.
Mr. Don Dixon: It is our money.
Mr. Haynes: I accept what my hon. Friend says. It is our money. It is the taxpayers' money, and it should be spent wisely in their interests. Something must be done about the problem. I hope that the Minister will satisfy me this morning that something will be done.
The authorities say that, because of vandalism, they are running to stand still. That is not good enough when so much public money is being spent. I agree that a fair amount of cash is needed, but the problem must be overcome. That is why I applied to Mr. Speaker for this debate. I hope that what I have said has been listened to. I hope that the nation notes the fact that the Department of Energy is full of money. It has all the North sea oil revenues and it receives a great deal of money from the electricity consumer. The Department of Energy and the CEGB have a responsibility. I hope that those departments will respond to this morning's serious appeal so that we never again have such a tragedy anywhere in the United Kingdom.
9.53 am
The Parliamentary Under-Secretary of State for Energy (Mr. Alaistair Goodlad): I associate myself with what has been said by Mr. Speaker and by the hon. Member for Ashfield (Mr. Haynes) about the Father of the House. I am delighted that our debate this morning should be attended by that great House of Commons man.
This debate is about a subject of great seriousness. I am grateful to the hon. Gentleman for having raised the matter. First, I must express my deepest sympathy with the parents and families of the victims of this tragic occurrence to which the hon. Gentleman referred.
On the early evening of Saturday 13 July two 11-year-old boys were in a substation at Selston. They were close to some of the equipment in that substation when there was an explosion which killed one boy outright and so severely injured the other that he died in hospital a few days later. The substation, which is in a housing estate, is what is known as a distribution substation where electricity at 11,000 volts is stepped down to low voltage for distribution to consumers. The main components were a transformer, a low voltage pillar and three interconnected 11,000 volts switches, and it was on the latter apparatus that the explosion occurred.
I shall answer as best I can what has been said by the hon. Gentleman, but I am sure that he will appreciate that investigations into the cause of the accident are continuing and that I should not wish to say anything that might be taken as being prejudicial to the coroner's inquest or to any other legal proceedings that might follow.

1419
As the hon. Member will be aware, a preliminary inquest on the matter of identification was held on Thursday 18 July. There will, of course, be a full inquest later and the date of that is a matter for the coroner. The safety regulations applicable to such electricity substations are laid down in the Electricity Supply Regulations 1937, made under the Electricity (Supply) Acts 1882 to 1936. Regulation 9(a) provides that, where energy at high voltage is transformed, converted, regulated or otherwise controlled in substations or switch stations, including outdoor substations, such outdoor substations and outdoor switch stations shall (unless the apparatus is completely enclosed in a metal casing connected with earth, the apparatus also being connected with the system by armoured electric lines) be efficiently protected by fencing not less than eight feet in height or other means so as to prevent access to the electric lines and apparatus therein by any unauthorised person.
The apparatus in the Selston substation was what is known as metal-clad—that is, all the live electrical parts are enclosed within substantial metal covers and insulated to a very high standard. Although there was therefore no statutory requirement for it, the Selston high voltage equipment was in fact enclosed within a substantial brick wall, 6 ft. high, which was fitted with substantial and padlocked wooden doors. The area containing the substation was itself bounded by a fence about 4 ft. high. also with padlocked gates. A notice was fitted on the substation main gates warning of danger and giving details of how the electricity board staff could be contacted. The substation appears to have met in all respects the statutory requirements.
It appears that the explosion occurred in that part of the apparatus forming a link between two of the three 11,000 volts switches. That part of the equipment took the form of a horizontal cylinder, made from a strong alloy forging, 4½ in. long and about 15 in. in diameter which was 3 ft. from the ground. That cylinder appears for some reason to have failed to such an extent that it had been leaking the bitumen compound which formed the insulating material within the cylinder. As the bitumen leaked from the cylinder linking the two switches, the insulation level fell until the short circuit which caused the explosion occurred. All the electrical protection equipment operated properly to switch off all supplies to the substation when the explosion occurred. Detailed examination and tests of this equipment which simulated the electrical events of the previous day were undertaken on the following day and showed that the equipment was in good order and operating correctly.
It seems clear that the bitumen compound had been leaking from the cylinder, during the day time when temperatures are higher, on the day previous to the accident. Some of the local children were getting compound on that day from both the ground and that part of the switchgear where the explosion occurred the following day. It appears that several boys with quite large pieces of compound were seen locally on the day following the explosion. It appears that the two children were playing with this leaking bitumen inside the substation when the explosion occurred.
The cause of the original failure of the cylinder is not yet known and it would be wrong for me to speculate at this stage. All the relevant parts of the equipment are being
1420
examined by a specialised engineering laboratory, independent of the East Midlands electricity board, which is attached to a local power station.
All such substations, as the hon. Gentleman said, are regularly inspected by the East Midlands electricity board on a six-monthly basis, but may be visited more often for other reasons. The routine inspections require the signing of a pro-forma detailing any faults found following an examination of the apparatus in the substation, on the basis of a printed check list.
Two employees of the board had in fact carried out such a routine inspection of the substation on 31 May 1985 and their signed report of that inspection revealed the only faults in the substation as being the absence of some small labels. It is inconceivable that those employees would have missed leaked compound and the check list for the switchgear concerned particularly mentions that leakage must be checked for. The floor under that part of the equipment where the explosion occurred is fully open to view.
An electricity board employee was on the scene within half an hour of the explosion and one of the senior engineering inspectors from my Department went to the site on Tuesday 16 July before any significant change was made in the state of the equipment. The board quickly set up its own panel of inquiry which met on Friday 19 July and has met again since. The chairman of the investigating panel is from the board's headquarters and is thus not directly associated with the area in which the accident occurred, and the panel includes an independent safety officer from the Electricity Council.
The switchgear in the Selston substation is from a very well-known manufacturer, was made and installed in 1965, and is very substantial. There has never been a similar occurrence with equipment of this manufacture.
Planning permission is not required for such small substations. They must, however, because they supply ordinary premises at low voltage, be within about 300 yd of the furthest consumer fed from them. There are about 160,000 of that type of substation in England, Wales and Scotland and in the last 10 years there have been no other fatalities. In common with all electricity boards, the East Midlands electricity board makes great efforts to ensure that the public, and children in particular, are aware of the hazards associated with electricity. The board circulates all schools in its area with offers of safety visits, video literature and so on, and these efforts are usually intensified in early summer before the school holidays begin.
The technical operations of the electricity supply industry in England and Wales are governed by the Electricity Supply Regulations 1937, and regulation 38 requires area electricity boards to notify the Department of Energy of all those accidents on its works or circuits which have caused or were likely to have caused injury. The same regulation is followed by one which empowers the Department to investigate any accident or type of accident it wishes to. The East Midlands electricity board has complied with its obligations in that respect.
My engineering inspectorate examine carefully all such notifications made to it and make such visits and investigations of individual accidents as is appropriate. Therefore, this particular accident will be examined in detail by the Department to see whether the regulations have been observed and to identify whether the accident

1421
discloses any shortcomings in the regulations or in their application. My inspectors will have the benefit of the report from the board's own panel of inquiry.
All the accident notifications to the Department are collated and analyses are made with the object of detecting any trends to enable preventive action to be taken. These analyses go back many years and, for a variety of reasons, the incidence of accidents, fatalities and injuries on the electricity boards' equipment is in gradual but significant decline, and has been so over many years. The most important of the figures that come out of these analyses are published in the Secretary of State's annual reports to Parliament. Accidents in substations to members of the general public, which have resulted in fatality have amounted to six in the past 10 years. All of these took place in substations where, unlike at Selston, the conductors are in the open air, and which are therefore, under the regulations, surrounded with fences not less than 8ft in height. Most of those fatalities occurred after forcible entry and usually in the course of vandalism or attempted theft of equipment. Until this very tragic accident, there had been no fatalities in substations utilising metal-clad switchgear during that period.
There are more than 419,000 substations of all descriptions in the country. The number of injuries to the general public averages 14 per year, and include some falls and other minor matters. In general, the public are not subject to major or continuing hazards as a result of the existence of these installations.
My Department keeps the regulations under constant review and is at present undertaking a major update of the 1937 regulations as a whole. These will be the subject of widespread public consultation before being laid before the House in due course. I believe that experience to date does not indicate any need for radical change to those parts of the regulations applying to substations containing metal-clad switchgear, which have an extremely good safety record. None the less, I can assure the hon. Gentleman that should the results of the investigation into this accident indicate that changes to the regulations are required——
Mr. Haynes: The Minister referred to the distance between the substations and neighbouring residential property. The Selston substation is almost on top of neighbouring property. It must be outside the regulations. Perhaps the substation was there first and the property built later. Nevertheless, it is almost on top of the property.
1422
I am listening carefully to the Minister's promise to examine the regulations closely to determine whether they need to be tightened. However, I am not quite happy with what he has said, although I appreciate that he has not finished yet. I make an application, here today, for a public inquiry into the incident. I did not want to make that point, but the Minister's remarks have drawn me to do so.
Mr. Goodlad: The hon. Gentleman's point about the location of the substation in relation to the houses will be taken into account in the investigation and the review.
By virtue of section 66 of the Electricity Act 1947, I have the power to cause an inquiry to be held in any case where I deem it advisable to do so, in connection with any matter arising under the electricity supply legislation. In the light of what the hon. Gentleman has said, of the inquiries being carried out by the board and by my engineering inspectorate, and of the verdict of the coroner's inquest, I shall consider whether a public inquiry would be desirable. I shall write to the hon. Gentleman in due course.
I thank the hon. Gentleman for raising the matter in the House today because it is right that this very tragic matter should be thoroughly examined to see what lessons—which might go towards preventing similar occurrences—might be learned——
Mr. Haynes: A number of points are being drawn out because of what the Minister is saying. Police often go into schools to educate children about crime. For example, they tell them never to accept things from or go away with strangers. Does the Department issue instructions to the Central Electricity Generating Board and its regions to go into schools to educate children about the dangers of the substations, and tell them that they must keep away from them? That point should be seriously considered, as it would help to overcome the problem. As I said earlier, children will be children, so we must educate them to stay clear of such places.
Mr. Goodlad: I am grateful to the hon. Gentleman. As I have said, electricity boards undertake a substantial programme of education in schools and provide demonstrations about electricity and its dangers. It is an enterprise in which everybody should join because there are clearly dangers in electricity. However, on the whole, I am confident that the regulations, which are subject to review, are adequate and that the practices are adequate as well.

Child Abuse
10.10 am
Mrs. Virginia Bottomley: I shall not have to start by facing the difficulties faced by Lord Shaftesbury in 1875 when he wrote to a friend who was profoundly concerned about the welfare of children and said:
"The evils you state are enormous and indisputable, but they are of so private, internal and domestic a character as to be beyond the reach of legislation and the subject would not, I think, be entertained in either house of Parliament."
I am pleased to have this opportunity to talk about child abuse. It has been estimated that more than one child dies every week at the hands of its parents or guardians, and that every year perhaps 50,000 others suffer lesser deaths—physical cruelty, mental torture, gross neglect, sexual abuse or severe emotional starvation within their families.
None of us can fail to experience a strong emotional reaction to the recent cases of child abuse and death which have been so widely reported. There have been errors of judgment and it is essential that lessons be learnt from those. Rather than simply adding to the sensationalistic and censorious responses to these recent appalling tragedies, for which simplistic solutions are too often proposed and social workers are more often than not used as whipping boys, I should like to try to redress the balance and see the problem of child abuse in a clearer context.
Sadly, there is certainly nothing new about child abuse and neglect. The use of pathological terms to describe its roots, causes and effects and the media's preoccupation with horrific cases should not obscure its long-standing nature or delude us into thinking that its incidence and characteristics are any different now from what has been described in literature over the years. Descriptions of barbarous treatment are widespread in literature and popular culture. There are frequent tales of infanticide, ritual sacrifice, mutilation, starvation, flogging and exploitation. It is only relatively recently that a child has been thought to have any right at all not to be abused or neglected.
I hope that this is not an area in which Members will advocate a return to Victorian values. In Victorian times children did not get a particularly good deal, as can be seen from graphic accounts in novels by Dickens and others. By 1822 there were laws for the protection of animals, but it was not until 1889 that, with the first children's charter, neglect and cruelty to children became illegal. The activity of baby farming where children faced a lingering death from starvation was notorious.
I should like to pay tribute to the work of the National Society for the Prevention of Cruelty to Children, founded in 1884. Like so many other organisations, it was founded by philanthropists responding to need as they saw it. In its 100 years over 9 million children have been helped. The society started with a policy of removing children from their homes and when necessary prosecuting their parents, but increasingly it tried to work with families in an attempt to keep children at home. At the turn of the century its enlightened founder, Benjamin Waugh, said:
"It is better to remove evil from the home than remove the child."
We still face precisely the same issue when dealing with child abuse.
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I hope
1424
my hon. Friend will allow me to associate myself with her remarks about the valuable work of the NSPCC. She has drawn attention to the work done by its field workers and also to the work that it does centrally and to its resources, such as the valuable Sainsbury library.
Mrs. Bottomley: I thank my hon. Friend for endorsing my remarks. The NSPCC has constantly moved ahead arid has pioneered work and performed the ideal role of a voluntary body of embarking on experimental and innovative work, maintaining statistics, expanding research and developing social work services. It also influences legislation and is increasingly involved in educational work.
The one job for which nobody has training is parenthood. Frequently in cases of child abuse we find poorly skilled parents with remarkably disadvantaged backgrounds who are quite unprepared for the demands and pressures that a child places upon them. Many hope that a child will be source of love for them, and are quite unprepared for long days and nights tending difficult children with demanding behaviour. When the strains and stresses on the rest of their life build up, too frequently it is the child who is the butt of their anger.
The majority of child abuse cases involve children under five, although there are increasing numbers of cases involving children over 10; about one child in four is over 10 at the time of the abuse. Apart from physical injury, they fall into categories of failure to thrive, sexual abuse, which is causing increasing concern, neglect, and emotional abuse. Fewer than half live with both their natural parents. The parents are more likely to be unemployed, and nearly two thirds are in receipt of supplementary benefit.
A significant number of the parents have criminal records, nearly half the men, and one in five of the women, according to recent NSPCC research, and a large number of the criminal records relate to violent offences. This raises the issue of the extent to which criminal records should be available to those responsible for child placement. There are many background stress factors on the families. They include marital discord in virtually half the cases, unemployment, and financial problems, but many parents also complain of difficulties with the children, saying that the child is behaving badly.
Significantly, many parents have an unrealistic expectation of how the child should behave, so that when it behaves badly the parent takes it as a personal rejection. Many complain of being socially isolated. Heavy drinking is a factor in about one in five cases, and another factor is a parent with a psychiatric history. Frequently, parents have had experience of being in care and, significantly, of being battered themselves.
It is helpful to build up background information, but it is naive to think that by building up such information one can predict precisely where incidents will occur, because they are profoundly multifaceted. We know of the disasters and the problems, and we know when a child loses its life. Serious injuries arid fatalities are in decline. Social workers and public authorities cannot advertise successes. The confidentiality of the parents and children involved mean that they are protected and, as a result, the public always receive a jaundiced picture.
Social workers are particularly vulnerable. Widespread variations in practice exist and one disaster inevitably results in social workers being pilloried. We had a recent

1425
example in the press of a lady with seven broken ribs being sent home from hospital, an injury which she sustained in a car accident. The lady later died, but this did not result in a letter from the DHSS advising doctors to X-ray motor accident victims. One can imagine the indignation of the medical profession if this one clear case of bad practice had been used as an example for guidelines.
Few people appreciate the complexity of the job that a social worker has to do. Such a worker has to make life and death decisions, he or she has to decide whether or not to place a child on the child abuse register, whether or not to seek a care or supervision order or whether to go for wardship. The social worker has to decide whether or not the child should be removed from its home and if it should be fostered or adopted, or whether rehabilitation should be attempted. All this uncertainty causes delays, stress on the parents and stress on the child. Indecision is often one of the worst eventualities for a child. But throughout this, social workers have to do all that they can to maintain the trust of the parents.
Too often, child care legislation results from some appalling incident. It is interesting that the Curtis report in the 1940s resulted from a case where a child was killed when in the care of foster parents. It resulted in the setting up of the children's departments. In 1973 Maria Colwell died at the age of seven, and the inquiry report into the circumstances of her care was published a year later. Currently there is the Jasmine Beckford case, when again a child was returned from foster parents to a home with a history of violence.
It would be unfortunate if such a case resulted in widespread over-reaction. Social workers are always having to act according to the whims of public pressure. In recent months we have had a great outcry in the media about social workers removing too many children from their families, suggesting that this is oppressive and a sign of the totalitarian state, and that it is not right for children to be brought away from their natural parents. The Family Rights Group has been particularly active in advocating this view.
It would be sad now if we had a widescale over-reaction, as many feel we did after Maria Colwell, where magistrates, social workers and others are so afraid of being pilloried in the press that they over-reacted. We could safely take hundreds and thousands of children into care to lead a rather sterilised life, doing the best that could be done. But it must be right to try as hard as possible to leave a child with the family, with the proviso that if rehabilitation does not work a brave and firm decision must be made because the child needs a secure and predictable future.
We have had other fashions and trends, some more sinister than others. In some of the more Left-wing areas we have recently faced an obsession with a kind of anti-racism where, in cases of black children especially, social workers were interrogated if they decided that they should be removed from their homes. This is profoundly unhelpful to all families and an insult to the overwhelming majority of caring families from ethnic minorities, suggesting that somehow they need a different standard of care. It is especially incensing when some of the more Left-wing despots try to interfere with professional social
1426
work practice in this way and are then often the first to point the finger at social workers and condemn them when cases go wrong.
The social worker has a duty to his local authority, and that points in two profoundly opposite ways. The Children and Young Persons Act 1969 requires that
"children shown to be at risk are protected."
The Child Care Act 1980 lays
"a duty on a local authority to work to prevent children having to go into care whenever possible."
Somehow, social workers have to find a way down the middle.
I welcome the recent consultative paper issued by the Parliamentary Under-Secretary on child abuse inquiries, trying to standardise the way in which inquiries are held. It is essential to hold such an inquiry speedily as soon as there has been an incident. The appalling cost of inquiries at present—up to £500,000 in one case—simply to have the local authority go through much of the same information that is gone through in the court case is unhelpful. We need a standardised way of learning from mistakes, adopting a similar approach to all inquiries so that comparisons can be made.
The British Association of Social Workers has been working for many months on policy papers for codes of practice in cases of child abuse, trying to look long term at the issues involved rather than simply responding to a crisis.
The emphasis laid by all is on the need for training. It was perhaps simplistic to think that a generic social worker could be produced after perhaps one year's training. Increasingly what is required is post-qualifying experience. The Seebohm idea of one front door so that families did not have to go to a variety of agencies is laudable, but to deal with the very difficult issues involved in child abuse must require post-qualifying training and experience.
In many ways, the probation service handles its training better. There is a major problem in that social workers do not receive mandatory awards. They go on their initial training as a result of secondment. It has been tentatively suggested that this makes it particularly difficult for colleges to fail CQSW students who are on secondment. This is an issue which I would like to see looked at further.
Above all, basic training must include a practical understanding and appreciation of child development. In most of the cases that have arisen the child has suffered considerable weight loss, which is one of the first signs of unhappiness and emotional distress. It is essential that some of this knowledge which health visitors have is understood more widely by social workers.
There is also the factor emphasised in the Maria Colwell report that the ability to communicate with children alone is essential. It is not possible to work only through the parents. Direct contact must be made with the child. Again I welcome the letter from the chief inspector of the Social Services Inspectorate to all authorities emphasising the need actually to see the child. I am constantly struck by the number of cases where a huge number of visits have been made but the child has not actually been seen. The child needs to be seen.
In my view, consideration should be given to adding a little more to the obligations of a family whose child is put on the child abuse register. That parent, for instance, might be entitled to a written statement in the way that in court an accused person who is refused bail is given a

1427
written statement of the reasons. Is it unreasonable for the parents whose child is placed on the child abuse register to have a written statement explaining their obligations and what is expected of them? Amongst the ideas that I suggest is, first, that for a child who is not attending a day nursery there should be regular medical inspections. Seeing a child unclothed at regular intervals is a vital ingredient. It is very hard for a social worker visiting a family to ask a child to remove its clothes. That needs to be done by a member of the medical profession.
There should also be an obligation on the parent to inform the local authority or the person responsible of any change in the location of the child. Frequently a disaster has been preceded by a change in the home circumstances —either the child has gone to live with someone else or there has been another significant change at home. Frequently it is a change which might not initially give rise to concern. For example, a father finding a job may to the uninitiated seem to be a good move, but it may mean that the mother is more isolated and more lonely, and the child is more at risk. It is vital for any change in circumstances to be investigated and considered.
Similarly, there is an impact on a family if there are changes in its support team. If a family aide leaves, or if a health visitor leaves, it is essential to recognise the significance and the impact that it may have on the child.
It is essential for management training to be introduced for the social work organisations. Social work departments are recent creations. There is no reason to despair—they have come a long way in a short time — but good management training is vital.
It is also important to have a qualified, experienced worker in each authority responsible for consulting on child abuse cases. The person who holds the child abuse register should not be an unqualified clerical assistant. It is essential to have someone who can give guidance and advice and weigh up information coming in to him.
I wish to spend a few moments discussing the input of the multi-disciplinary team. Children live in an environment in which their schools, their doctors, their health visitors, their local policemen — all sorts of people—have a part to play. A multi-disciplinary team is vital for dealing with cases of child abuse. However, it needs to be practical. It must know who is the chairman and what decisions have been reached. It cannot be just an exchange of hunch, intuition, feeling and suspicion. It must be a practical body which sets out clearly categorised points for action. Moreover, when the points for action have been established, there must be a specific recommendation about the action that needs to be taken if something goes wrong. It is easy enough to prescribe a recipe, but it is not so easy when one finds that the child is not there when one knocks at the door. To whom does one turn then? All of these eventualities need to be clarified.
The general practitioner has a particularly important role to play, but he does not always face up to this role. A recent research project on multi-disciplinary teams suggested that the general practitioner turns up only at 10 per cent. of the conferences to which he has been invited. The general practitioner's contribution is important. In the Maria Colwell case there was comment about the failure of the general practitioner to note the signs of child abuse. The Short report on children in care also referred to the vital role of the general practitioner and his reluctance sometimes to report suspected abuse by parents who are
1428
also his patients. A child has a right not to be abused. When he is making up his mind, that should be the overriding concern of the doctor. The child is his patient, too.
Teachers see a great deal of children when they are at school, but frequently they are remarkably unaware of the signs of child abuse. So the training of teachers is also important. A child who is reluctant to change for games may be hiding a bruise. Another sign may be that a child does not want to go home. That is particularly true of the child who wants to run away. It is essential that teachers should know what to do about such worrying signs. Health visitors, who have a practical knowledge of child development, also have a key role to play.
One member of the team who receives wide praise is the police officer. The police have become specialists and extremely sophisticated in dealing with cases of child abuse, particularly sexual abuse. They have the reputation for straightforward but sensitive communication with parents as well as for taking statements prior to any legal proceedings. They make a significant contribution to the. team.
Inevitably, tension can arise from the conflict between the need for confidentiality and the need to communicate about children at risk. Guidance on how to weigh up the conflicts between the different professional groups involved would be helpful.
Magistrates are as vulnerable as social workers to the pressures of public opinion and to the danger of making decisions which eventually result in disaster. I hope that this debate on child abuse will be used as an opportunity to discuss once again the future of our juvenile court arrangements: whether it makes sense to have adversarial conflict between the child and a local authority, in which parents have no official standing, or whether we should establish family courts and an inquisitorial system which would allow the court to become a seeker after the truth and to call expert witnesses, instead of being told that certain evidence is not admissible. Court delays can be particularly damaging to a child. A child of three months about whom a decision takes three or six months to be made spends two thirds of its life as the victim of indecision.
The public have a role to play. After a disaster has occurred we are too often told that somebody knew something, or thought something, or had heard something. The National Society for the Prevention of Cruelty to Children has played an excellent role in maintaining public confidence, but particularly at a time when families are geographically separated it is very important that good neighbours should be prepared to take action and to inform the relevant authorities of their concern.
I appreciate the steps which my hon. Friend the Parliamentary Under-Secretary of State for Health and Social Security is taking to review the procedures and to provide further guidelines in cases of child abuse. It is essential that public confidence should be maintained. For this reason I urge him to think again about the collection of national statistics. None of us can fail to have powerful professional, political and above all personal reactions when things go wrong. I urge him not only to consider the natural outrage that is felt when disasters occur and to make every effort to learn from the mistakes, but to reach his conclusions with a full appreciation of the complexity of the task with which professional social workers and

1429
others have been entrusted and with an awareness of the good practice and of the progress that is being made in many areas.
10.35 am
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): Before the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) leaves the Chamber, may I say how very pleased my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley) and I are that he has listened to our short debate. The Government join the Opposition in warmly congratulating the right hon. Gentleman upon his 40th anniversary as a Member of Parliament. We value having him as the Father of our House. We hope that he will long continue to play that role.
Today the right hon. Gentleman looks very much as he did in that splendid general election photograph of 1945, which is copied this morning in The Times. The importance of his election to his then Cardiff constituency and the importance of that watershed general election victory by the Labour party in 1945 passed me by entirely. I did not notice it. My only excuse is that I was then only eight days old. My mind was, alas, on other things. The House warmly congratulates the right hon. Gentleman on his anniversary.
Mr. James Callaghan: I am very grateful to the Parliamentary Under-Secretary of State. May I intervene to congratulate the hon. Member for Surrey, South-West (Mrs. Bottomley) on her very interesting and wide-ranging speech, to which I listened with great attention. In the past I had some small responsibility for these matters. The hon. Lady referred to the consequences of the Seebohm commission. We have been unable to reconcile the care of the child with the control of the child. When they are in two separate hands, it is bound to be a recipe for division. The care of the child and the control of the child should surely be in the same hands, or there should at least be the same over-arching responsibility for them.
The Children and Young Persons Act 1969 has not worked out as it should have done, because the children's department in the Home Office, which was able to reconcile those two responsibilities, has disappeared. I am not suggesting that there should be an overhaul of the administration, but I hope that the Parliamentary Under-Secretary of State will consider carefully the hon. Lady's point about the need for reconciliation of the tension between magistrates and social workers. That cannot be good for the future welfare of these children. I hope that he will forgive me for saying that. I fear that I shall have to leave the Chamber very soon, but I shall read his speech.
Mr. Patten: Characteristically, the right hon. Gentleman has pre-empted a large part of my speech. I shall turn from time to time during it to exactly those tensions. When the right hon. Gentleman has a chance to read my speech, he will see that his wise words are reflected in what I am about to say. I join him in paying tribute to my hon. Friend the Member for Surrey, South-West for the characteristically measured, balanced and articulate way in which she dealt with this most difficult problem. The House listens to her with respect because she
1430
has experience of these problems in both the social work and voluntary sectors. She is also a distinguished justice of the peace.
It is curious that my hon. Friend's Adjournment debate should be on the day after the trial of those involved in the tragic case of Tyra Henry. That case, and cases like it, cannot fail to stir the emotions of everyone who reads about them. I appreciate that, and I share the abhorrence which has been well reflected in what has been said about the cases that have occurred this year. However, those emotions must never be allowed to cloud the real problems that exist for social workers, the courts, doctors and others who have the difficult task of trying to balance the rights and welfare of the child with the need to return a child to his or her family, while ensuring that the protection of the child is paramount. The right hon. Member for Cardiff, South and Penarth mentioned those tensions.
Recent tragic cases have brought home to us all the sad extremes to which parents may go in abusing their children. But they are extremes, and there is a danger that they may give a false impression that all is failure. Such statistics as we have from the NSPCC and other bodies seem to demonstrate that, although child abuse cases must always be matters for considerable concern, there has been a welcome levelling-off, if not a slight decline, in the incidence of child abuse in recent years. My hon. Friend made an important point about whether our national statistics are adequate for our purposes. I wish to deal with that point in more detail than I can fit into the short time that remains, so I shall write to my hon. Friend and set out my views.
One problem is the under-reporting of child abuse, whether it be physical or mental. It is interesting that we have had many more reports of child sexual abuse during the past two or three years than we have ever had. Does that represent an increase in that disgusting practice, or does it represent an increase in the reporting of such cases because people are now prepared to talk about it? I believe that the latter is true, and that the incidence of reporting has been the most important trend in recent years.
The Under-Secretary of State for Employment (Mr. Peter Bottomley)indicated assent.
Mr. Patten: I am glad to see that my hon. Friend the Under-Secretary of State for Employment — the hon. Member for Eltham (Mr. Bottomley) — who has considerable experience in social work issues, agrees with that.
Professional staff in all disciplines and in all authorities who are in contact with children and families work extremely hard, with much unpublicised success, to help families who have problems. However, I should make it clear that a minority of social workers, social work managers and their political masters—the councillors in borough, district and county authorities— have rightly been criticised for their failings. But they are a tiny minority. The vast majority of social workers perform their difficult tasks extremely well. Most of us in the Chamber this morning would find it acutely difficult to perform those tasks.
Mrs. Virginia Bottomley: Does my hon. Friend agree that, sadly, some teachers, policemen, magistrates, health visitors and members of the public have not acted as responsibly as they might have done in some cases?
Mr. Patten: That has sometimes been the case, but I am sure that my hon. Friend will agree that only a small minority are involved. An unfortunate side effect of cases such as the ones about which we have read this year is that the entire profession gets a bad name for the failings of the few. That is not to say that the few should not be strongly criticised, or that the failure of management properly to direct social workers in their tasks should not be exposed. We should also expose the failings of a small minority of councillors, especially in one or two London boroughs, who have interfered dramatically with the professional judgments of social workers and made their jobs almost impossible.
These are not anecdotal remarks from a Conservative Minister. One need only read a report in last week's edition of the journal Community Care from social workers in the London borough of Lambeth, who resent the political interference that makes their jobs much more difficult. Councillors, having laid down policy guidelines, should not give in to the temptation of interfering with professional judgments. That is not their role.
All our efforts in the community stress that we must have an integrated approach to dealing with child abuse. A variety of forms of help can be made available to rehabilitate families. Authorities and voluntary organisations have developed a wide range of facilities, such as day and family centres, which provide much advice and help. In parallel to this activity, we must encourage the entire community to understand its role in helping families in trouble. That echoes a remark made by my hon. Friend the Member for Surrey, South-West. For example, there has been an encouraging growth in self-help groups in the community which offer assistance to families under stress — perhaps with telephone help lines. We should encourage the continuing growth of help in the community and care by the community for children at risk.
However, we must not be complacent. My hon. Friend referred, kindly, to some of the initiatives taken by my right hon. Friend the Secretary of State, my right hon. and learned Friend the Minister for Health and myself. We cannot stop there. We have a considerable task ahead of us in ensuring that tragic cases are avoided in the future. No one in the House would suggest that changes in the law, the guidance that we send out, the statements that I make from the Dispatch Box attempting to influence social workers, social work practice, social work management and those who direct social workers will stamp out the problem. We know that that will never happen, but we must redouble the efforts that we have made during the past few months to ensure that such cases become less likely.
Mr. Kevin Barron: Although I agree entirely that voluntary organisations and communities can help, we must ask how much a voluntary organisation can do in a case of child abuse before a professional judgment is needed. Neighbours looking after a family which they know is under stress may not always see the signs of abuse. Reliance on voluntary services must be limited because, in most cases, professional judgments are needed.
Recently, I heard about a Dr. Barnardo's pilot scheme for providing day fostering to parents under stress. The scheme looks after the child, and teaches the mother how to look after her children properly. Although it is a voluntary organisation, I believe that the professionals must judge how much that stress could be eased by
1432
removing the child from the home for a few hours a day. I am worried that if there is a reliance on voluntary organisations the necessary professional judgments will not be made.
Mr. Patten: I am grateful to the hon. Gentleman for intervening because he has raised some important points. I know of his interest in these matters. I agree that we must use voluntary organisations carefully. Professional judgments must not be suborned or second-guessed by voluntary organisations, individuals or politicians. However, professional social workers are employed by organisations such as Dr. Barnardo's and the NSPCC. We need partnership, and I believe that social work departments should take the lead in organising voluntary groups and bringing them together so that the problems to which the hon. Member for Rother Valley (Mr. Barron) referred can be resolved.
In the nine minutes that are left, I hope that I shall have time to pinpoint the six main points of our overall strategy. The first is that we must continue to learn lessons from serious cases that arise. Based on experience that we have gained from such investigations, on 4 July we issued a consultative paper which sets out to speed up the process of investigation. I am extremely pleased that my hon. Friend the Member for Surrey, South-West gave it such a warm welcome. We had close consultation with the social work profession, which also has warmly welcomed the paper.
I remember doing an interview on a BBC radio programme a couple of weeks ago, when I made that announcement. At the end of the interview the rather surprised announcer said that the BBC had telephoned the British Association of Social Workers, which said that it agreed with everything that I had said. I was delighted about that warm welcome. I am not criticising the BASW, but simply saying that it was a great disappointment to the BBC commentator.
Secondly, we must make sure that the law is working well. We responded quickly to the excellent report by the Select Committee on Social Services. Child care law is the essential legal foundation on which much of our work to provide help for abusing families is built. We intend, through our current review of child care law to produce a much clearer and much more consistent legal framework in which child care practitioners can operate. That is critical, because there is an enormous area of overlap between the work of my Department and that of the Lord Chancellor's Department. Over the past few months we have had a very helpful set of informal consultations with a wide range of groups of those involved about possible changes and potential benefits that may accrue from changes in child care laws.
There has been a suggestion that that is taking rather a long time. All that I would say to those who say that we are taking a long time is that it is an incredibly complicated area. We have a substantial number of consultation papers, which stand a foot or so high. It is a very complex law. Strong feelings and human emotions are closely involved. However, we shall issue a consultation paper in the autumn—by which I mean the autumn—so that those interested can look at our ideas for reform. Those ideas will of course be related to the general examination being conducted by my noble Friend the Lord Chancellor, Lord Hailsham, into the concept of family courts. That idea

1433
does not fall within the remit and responsibilities of my Department, but should such things come about in child care law that would be critically important.
Thirdly, we must make absolutely sure that our guidance is good. We must have a sound legal foundation on which we can continue to develop the procedural framework for dealing with child abuse. We are trying to develop the two things together. I am not waiting for the final reviews of the legal framework for child law before developing a better and tighter procedural framework for dealing with child abuse. The message from so many child abuse inquiries—alas, there have been many in the past — has pointed to the critical importance of good collaboration among authorities. My hon. Friend also referred to that matter.
Over the past 15 years successive Governments have issued a wide range of advice in that area, and we believe that the time is now appropriate for a much more comprehensive review of that material—to bring the whole lot up to date, to try to make it as sensible, but as direct, as possible, and to try to introduce advice for the first time ever about the extremely difficult and sensitive area of child sex abuse. I hope to be able to provide a collaborative framework within which professional and voluntary sector child care practice can develop. We are also looking at prevention and training, to which my hon. Friend referred. We hope to issue a further consultative paper by the end of the year.
If anyone is impatient with the idea of producing consultative papers, let me tell him that again it is a complicated area. We must consult the professions involved and carry them with us, because it is the social workers on the ground who have to do those exceptionally difficult tasks. However, I am determined that the guidance that will flow from the consultation by the end of the year will be definitive; of the sort that we have not seen before in social work practice.
Fourthly, we must monitor what the statutory social service departments actually do. It is sometimes forgotten by the general public and the media that local authorities run social work departments. They have the legal responsibility for looking after children in care. It is we who have to lay down the guidance, and the development of the professional skills of social workers is an essential part of our bid to improve services. As a contribution to that development, my right hon. Friend the Secretary of State set up on 1 April this year a Social Services Inspectorate. I welcome what my hon. Friend the Member for Surrey, South-West said about the work of the inspectorate so far. It was set up with the agreement of the statutory authorities. I welcome the tribute that she paid
1434
to the work already done by the chief inspector, Mr. Utting, who sent out a letter giving additional guidance on child abuse.
One of the first tasks that I have set the Social Services Inspectorate is to have a radical, rapid look at practice on the ground in connection with child abuse and report back as a matter of urgency so that we can build those conclusions into guidance which we shall introduce in order, we hope, to minimise the risk of tragic cases such as have been described today.
Fifthly, we are introducing regular structured reviews of the circumstances of children in care, trying to balance the needs of children's families and the worries and concerns of social work departments against the needs, interests and welfare of the children. In the light of the work that we are doing on child care law, we are looking again at the guidance that we are giving on that.
Finally, we hope to promote throughout the social work profession and the social work world, nationally and locally—it is at local level that so much is done—the idea that common sense is critical in what social workers do, and that in the continuing debate on whether one should be more or less cautious about a child's welfare, whether to return it to a family should there be any element of risk, in the last resort it must be the welfare and safety of the child that come first.
Recognising that the individual social worker has a difficult role, we believe that he or she must in the end follow the basic procedures laid down — the basic guidance that I gave in April this year. That is that if a child is at risk, and if a social worker has been told to visit and see that child, the social worker must do so. There is no excuse whatever for any social worker, whatever the difficulties he is working under, not to visit a child who is deemed to be at risk. Equally, there is absolutely no excuse for any social work managers not to have definitive instructions and structures within which social workers work. They should give guidance and make sure that it is carried through.
I think that social workers in some parts of the country would be greatly helped in carrying out their task if they were not interfered with by the politicians, who sometimes control and adversely affect what they do, as we have seen recently in Lambeth and one or two other London boroughs.
The Government are determined to introduce by Christmas a new set of guidelines for the entire social work profession that will be based on the six main points that I have mentioned. We hope that this will minimise further tragic cases of the sort that have so appalled the nation.
It being Eleven o'clock, MR. SPEAKER interrupted proceedings, pursuant to Standing Order No. 5 (Friday sittings).

Okehampton Bypass
The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I should like to make a statement about the bypass of Okehampton on the A30.
The House will know that earlier this year the Government's compulsory purchase orders for a route for the bypass to the south of the town were referred to a Joint Committee of both Houses of Parliament under the Statutory Orders (Special Procedure) Act 1945. That Committee, by a majority of four to two, recommended rejecting the orders, and proposed instead a route to the north of the town. This recommendation was contrary to that of the independent inspector, who held a 96-day public inquiry during which all the issues were exhaustively discussed. He endorsed the southern route which has been the route preferred by all successive Administrations since 1976. My right hon. Friend the Secretary of State for the Environment and I agreed with the inspector, that the balance of environmental and economic advantage lies in favour of the southern route, and we proceeded to make the orders.
One thing is clear—everyone is united about the need for a bypass, although I am fully aware of the strong and conflicting opinions which the route of the proposed bypass has aroused, both in Parliament and in the south-west of England. This issue must be resolved once and for all.
The Joint Committee believes that a route to the north could be constructed quickly. I must tell the House that it takes on average 13 years to plan and build a road.
Mr. Anthony Steen: Rubbish.
Mr. Ridley: With the best will in the world and no difficulties arising, I doubt whether we could complete a northern route in much under eight or nine years. It could be much more if there were difficulties, or if the inspector was again to recommend the southern route. For the people of Okehampton and the people of Devon and Cornwall the long delay and the uncertainty would be intolerable when the southern route could be completed in three years.
Parliamentary Select Committees make reports to Parliament, and it is for Parliament to accept or reject them. In this case a procedure for doing this is laid down in the Statutory Orders (Special Procedure) Act. It provides in section 6 for a confirming Bill to be brought in. Accordingly, the Government will introduce such a Bill, at the earliest opportunity, to confirm the southern route.
Mrs. Gwyneth Dunwoody: Is it not an outrage—[HON. MEMBERS: "No".]—that the Secretary of State should announce such an insensitive and arrogant decision'? How can he possibly pretend that he can justify the destruction of an area of supreme natural beauty——
Mr. David Harris: Rubbish.
Mrs. Dunwoody: —which is a national asset, on the basis of needing to push ahead with a bypass because it will take 13 years to find an alternative route?
If work were started immediately — the right hon. Gentleman knows very well that the southern route cannot be started immediately because a Bill will have to pass through the Houses of Parliament—it would still take until 1988 to finish the requisite road. Will the right hon.
1436
Gentleman admit that if the northern route were started as quickly it would take only two more years to complete a route which would do no damage and which would be environmentally acceptable?
As the northern route has already been surveyed, all the preparatory work has been done and the environmental groups concerned have said that they would be anxious to speed the agreement of the planning procedures for the northern route, how can the Minister justify ignoring all the evidence and the views of the Joint Committee? He is saying, in effect, that the interests of the nation as a whole are of no concern to him and that only financial matters concern him. He should resign and do something constructive to protect transport in Britain.
Mr. Ridley: The hon. Lady has some explaining to do. On 3 September 1976, the then Labour Government issued a press notice which read:
"The preferred route passes to the south of Okehampton."
If that was the view of her party then, she has to tell us why she has changed her mind. She will have an opportunity to do that when the confirming Bill comes forward. Secondly, my Department advises me that, if we were to go for a route to the north of the town, the inspector's report on the line order could be expected to be with the Department by 1939. The inspector's report on the compulsory purchases order might be with us by the end of 1991, assuming that there were no difficulties. It would then take three years to construct the road. The earliest completion date would be about 1994.
Mrs. Dunwoody: Absolute rubbish.
Mr. Ridley: If the inspector were to consider the route to the north at a public inquiry and report that the route should go to the south, as his predecessor did, it is highly likely that we should spend eight or nine years only to find ourselves in the same position without any route for Okehampton.
The hypocrisy of the Labour party sickens me. The bypass means jobs. There will not be jobs in Devon and Cornwall unless I get the bypass built. If the hon. Lady cares about the unemployed, she will be true to what she knows is the right decision.
Several Hon. Members rose——
Mr. Speaker: Order. I remind the House that this is a Back-Bench day. I ask hon. Members to put their questions briefly.
Mr. Peter Rost: Does my right hon. Friend accept that, if the Department of Transport had obeyed its own policy guidelines as laid out in paragraph 58 of the 1976 circular—
"no new route…should be constructed through a national park…unless",
in effect, there is no "reasonable alternative" — the bypass could have been built along the northern route long ago? Further, will he take aboard the fact that by so arrogantly overruling his own policies and reversing a decision that had been carefully considered by a Joint Committee he is creating a constitutional precedent that will undoubtedly arouse a great deal of criticism in this place, in another place and outside? Have we not had enough banana skins in recent months, and have not inspectors and Departments come to wrong decisions before?
Mr. Ridley: I understand that my hon. Friend took the opposite view to mine in the Joint Committee. I must complete his quotation from the national park circular. It continues:
"Application of the policy to some parks does, however, give rise to particularly difficult considerations because of their geographical location."
This is an example of just that. The Statutory Orders (Special Procedures) Act 1945 lays down the procedure for the report of a Joint Committee to be considered by Parliament. Therefore, it is not unconstitutional to follow the carefully laid down provisions in the Act. Furthermore, my hon. Friend may not be aware that, on 4 May 1949, the then Labour Government introduced a confirming Bill to alter the report of a Joint Committee on the Mid-Northamptonshire Water Board Order. There is nothing unique or unconstitutional about what the Government are doing.
Dr. David Owen: Is it not a fact that the national parks are vested in this House and it is for the House to decide whether to accept the Minister's judgment, which many of us believe to be wrongly based in terms of its historical perspective and in terms of the estimate which he has given to achieve the northern route? Exaggerating his claim will not help his case when it comes to the House. Will he confirm that no Whip will be placed on Conservative Members and that the issue will be judged on its merits? Will he confirm also that there will be no attempt to impose a governmental view on what should be an environmental choice for all right hon. and hon. Members?
Mr. Ridley: I confirm that it is for Parliament to take a decision upon reports prepared by the Committees of Parliament. This issue can be resolved only by Parliament. Committees do not make decisions; they make recommendations to Parliament which, in the end, has to decide one way or another. We are giving Parliament an opportunity to do that. As to what guidance is given to my right hon. and hon. Friends, that is a matter for my right hon. Friend the Patronage Secretary. I shall be interested to hear what guidance the right hon. Member for Plymouth, Devonport (Dr. Owen) gives to his hon. Friends.
Sir Peter Mills: As the hon. Member whose constituency is affected, I congratulate my right hon. Friend and the Cabinet on their decision. I am sure that he will know that the people of Okehampton and Cornwall are delighted as well. This is a courageous decision and the right one in the circumstances. I ask him to urge the Government forward, enabling the Bill to have a speedy passage through Parliament, so that the sufferings of the people of Okehampton and Cornwall will be ended finally. The Leader of the Opposition came to the west country recently and said that there would be hundreds of thousands of new jobs under a Labour Government. It is extraordinary that the very action that would help unemployment and the economic situation in the south-west is now being frustrated by the Opposition and the alliance.
Mr. Ridley: I am grateful to my hon. Friend and I am sure that he is right that we must consider the interests of his constituents and the people of Devon and Cornwall. It might interest the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) to know that, when her Government
1438
consulted the people of Okehampton and its surrounding area in 1976 in a comprehensive questionnaire to which 1,030 people filled in the answers, 55 per cent. expressed themselves unquestionably in favour of the southern route. The people concerned, whom my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) represents so ably, are clearly in favour of the Government's decision.
Dr. David Clark: Does the Minister appreciate that, while we recognise the importance of jobs and the need for a bypass at Okehampton, his statement will be seen as shameful? He has come to the House on the last day of this term to make it and, for the sake of two years, he is prepared to desecrate one of our national parks. This is final proof of the Government's complete disregard of things environmental.
Mr. Ridley: The hon. Gentleman must check. I was willing to make the statement yesterday, but it was agreed between the usual channels, including his own usual channels, that I should make the statement today instead. I was determined to make a statement to the House rather than answer a written question, and it is hard to be hauled over the coals when I have taken the trouble to come here when the House is sitting.
The hon. Gentleman is constructing an argument on a false premise. He said that adopting the northern route will take two years longer, and his case and that of the right hon. Member for Devonport rests on that proposition. However, that is not true. The northern route would take eight years at least, and perhaps still longer. I have no intention of short-circuiting the proper procedures for consulting and for public inquiries, and I am sure that he would not wish me to do so. Are the Opposition suggesting that we would cheat the people of Okehampton of the opportunity of consultation on a northern route? There is no northern route, and we should have to start from scratch. I advise the hon. Gentleman to get a better argument before he comes to discuss the merits of this when we debate the confirming Bill.
Mr. Jerry Wiggin: Does my right hon. Friend accept that the events in the Joint Committee, while within the letter of the original law, were not within the spirit of it, and that a small alteration to the proceedings of the House would stop a rehearing of a public inquiry, which is what took place on this occasion? I hope that my right hon. Friend will use whatever muscle he has to help that change take place.
Mr. Ridley: My hon. Friend is right. The orders were referred to the Joint Committee because it was proposed to take open space, not national parkland. The 1945 Act is relevant only where open space land is taken. It was held by my right hon. Friend the Secretary of State for the Environment that inadequate open space land could be offered in return for the land that was to be taken. The Joint Committee was asked to look not at national parks or the route of the bypass, but at the quality and quantity of the replacement land. Therefore, it greatly widened its remit —I am not criticising it—by going into the issue of where the bypass should be, as that had been determined by a public inquiry endorsed by my right hon. Friend and myself.
Mr. Simon Hughes: Given that the Secretary of State knows that there is general agreement that something must be decided soon

1439
for the people of Okehampton and Cornwall, will he nevertheless accept that people are opposed to his attitude because he knows that the Government will change the procedures for planning inquiries in major legislation to be introduced in the coming Session? He knows that he is creating a precedent of breaking into national parks, which many people regard as extremely distasteful.
Will the right hon. Gentleman answer the question put to him by my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen)? In the knowledge that this is not a party political issue, will he confirm that there will not be a party-political, determined, steam-rollered vote on a matter of vital importance for jobs and the environment? This is a matter not of Government policy but of local government policy, and hon. Members should be left to decide freely on it. The Government should not be dictating what some of their Members should do on a decision with which they fundamentally disagree.
Mr. Ridley: I quite see why the hon. Gentleman does not want to whip the hon. Member for Truro (Mr. Penhaligon)—he has apologised to me for not being here—who is keen that the road should be built. I repeat that questions on what is done by my right hon. Friend the Patronage Secretary are not for me to respond to.
I take the hon. Gentleman to task on his suggestion that there is something improper about the proceedings, which are strictly in accordance with the 1945 Act. The decision was referred to Parliament when it was decided to put the matter before the Joint Committee. The procedure is laid out in the Act and all the Government are doing is scrupulously following procedure. As the high court of Parliament has now made this decision, nobody can complain. The democratic nature of what I am suggesting is patently clear and obvious. The House can decide by vote and that is the right way to settle the matter.
Mr. Harris: Is my right hon. Friend aware that his decision will be received with massive relief in Cornwall, not least in my constituency, which is the most westerly and remote in the south-west peninsula, because poor communications are the biggest problem that Cornwall faces in trying to attract jobs? Should not the so-called environmentalists, and those who misguidedly support them in the House on this issue, stop and think what enormous damage they are doing not just to Okehampton, which again this weekend will suffer its usual horrendous traffic jams, but to the whole economy of Cornwall, to every industry, to farming, to fishing and, not least, to the tourist trade?
Mr. Ridley: I strongly agree with my hon. Friend that this is a matter of vital importance to the local people of Okehampton, Devon and Cornwall. For the House to ride roughshod over their economic interests is tempting our tolerance too far. I hope that hon. Members who are not certain about this matter will take the opportunity of the recess to go down to Okehampton and discuss it with the people living in the south-west. I am sure that my hon. Friend can arrange for them to meet the people who are vitally affected by these decisions.
If we are at all serious in our desire to find more employment in any part of the kingdom, we must not stand in the way of doing away with impediments to the growth of business and the improvement of the tourist trade. The general economic position of the south-west is grievously
1440
threatened by the absence of this road. If jobs mean anything, they have to be provided by uncorking this bottleneck.
Many people, including the inspector who held the public inquiry, believe that the southern route for the road would do less damage to the environment than a northern route would. It is not as if there is a solid opinion on the environmental aspect. There are two views on that, too. I am certain that the balance of advantage lies in the route that the Government propose, and I hope that hon. Members will take heed of what local people want.
Mr. Steen: I think that the House knows that I have a sneaking admiration for my right hon. Friend and for the way in which he has handled the bus and aviation Bills. However, does he realise that he is wasting time by pushing for a route through the national park because his officials have said that that route can be built by 1988 whereas the northern route cannot he built by 1990? Will my right hon. Friend check during the recess with officials who are against the northern route to see whether they are right in saying that that route will take eight or nine years longer? Officials have made that claim, but experts who have been involved on work on other motorways and dual carriageways have said that there would be only a two-year difference between the two routes.
Will my right hon. Friend also please realise that if the southern route were built through the national park, a bottleneck would occur at the other end of the dual carriageway because there is only a single carriageway from Okehampton to Launceston? All that we shall do is to move the bottleneck to the other side of Okehampton.
Does the Secretary of State realise the damage that he will do to the Conservative party by uniting the environmental and conservation lobbies throughout Britain who will be determined that the southern route should not proceed? Does he really want to drive a coach and horses through his own side?
Mr. Ridley: We hope to complete the Launceston part of the road in roughly the same time scale as the southern bypass could be completed. If we went for a northern route for the bypass, there would be a long period when the only bit that was not proper double-track bypass would be the centre of Okehampton where the present road goes. That would produce chaos in the town as well as for those who are trying to pass through to Devon and Cornwall.
I have checked endlessly with all concerned and the times that I gave for the completion of the line order and the CPOs by 1991 is the fastest that my officials think that it could possibly go if all goes well. I must take my hon. Friend through this likelihood. An inspector of great repute, having considered the matter at great length and heard all the evidence over 96 days, has come down in favour of the southern route for environmental as well as economic reasons. Therefore, if another equally impartial and wise inspector were to consider the evidence again at a public inquiry into a northern route, it seems prima facie likely that he would come to the same conclusion as the first inspector. If that happened, we should have gone through six years or so and still no decision would have been taken and no possibility of taking a decision would exist. The matter has been put to the high court of Parliament and must be resolved by Parliament.
Mr. Gerrard Neale (Cornwall, North): I thank and congratulate my right hon. Friend, whose decision will

1441
bring relief and reassurance to many local government organisations and other groups in the west country and particlarly in Cornwall. I have no doubt that in my constituency, as in other parts of the county, there will be horror among those who thought that they might support the alliance, and the prospective Liberal candidate for my constituency will be thunderstruck when he hears what the hon. Member for Southwark and Bermondsey (Mr. Hughes) and the right hon. Member for Plymouth, Devonport (Dr. Owen) have said.
Will my right hon. Friend confirm that the extension of the dual carriageway from Whiddon Down to Okehampton takes several miles out of the national park as well as putting some back in? Will he also confirm that, if he had not proposed to introduce the Bill and had tried to accelerate the procedures on a northern route, there would have been an outcry, because all the people to the north would expect all their rights to be honoured and to have full consultation and a public inquiry? The time scale that my right hon. Friend puts on a northern route is too short rather than too long.
Does my right hon. Friend agree that the RAC should be congratulated on sending a leaflet to all its members? I have an RAC leaflet sent to people planning to drive to Cornwall which says:
"Driving to Cornwall? The A30 bottleneck at Okehampton can mean long summer delays."
Cornwall cannot tolerate that continuing hassle and the continuing burden on its tourist and other industries. I congratulate my right hon. Friend.
Mr. Ridley: I am grateful to my hon. Friend. I look forward to hearing whether the hon. Member for Truro (Mr. Penhaligon) will be whipping the right hon. Member for Plymouth, Devonport (Dr. Owen)——
Mr. Simon Hughes: He will not.
Mr. Ridley: —or whether it will be the other way round. We are told that it is an alliance, so presumably it will behave as an alliance. It will be interesting to see which way it breaks.
As my hon. Friend the Member for Cornwall, North (Mr. Neale) rightly says, the hon. Member for Southwark and Bermondsey (Mr. Hughes) is trying to pontificate on what is in the interests of the people of Devon and Cornwall. It is worth finding out first what people think.
I agree with my hon. Friend that if we sought to accelarate the procedures in investigating a northern route we should attract the full ire of the environmental lobby and of the people who have interests on that route. That would be intolerable. Just because the environmental lobby has decided that it wants to sacrifice the nothern route, that does not mean that people who have interests on that route should not have their rights properly considered.
I have not seen the RAC leaflet that my hon. Friend mentioned, but I hope and pray that it will not be for too many more years that people have to queue for hours before proceeding to their holidays in Devon and Cornwall.

Johnson Matthey Bankers
Question again proposed, That this House do now adjourn.
Mr. Speaker: In view of the time taken by the statement on the Okehampton bypass, I suggest that the debate initiated by the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) should continue until noon and that the debate of the hon. Member for Bristol, North-West (Mr. Stern) should conclude at 12.30 pm.
11.27 am
Mr. Brian Sedgemore: Today is the last day of term for hon. Members and it ought to be the last day in public office of the governor of the Bank of England. His responsibility and culpability are awesome. He has presided over a fantasy so bizarre that it is believable only because it is true. He has supervised a bank that has financed fraud and provided money for the purposes of criminals.
It is no wonder that a number of peope to whom I have spoken in the City of London believe that the appropriate course for the governor of the Bank of England would be for him to tender his resignation. Certainly the sort of people whom I represent can only view with incredulity the behaviour in this dreadful affair of those who claim to be their betters.
My investigations have tended to show that Johnson Matthey lent money to people who were known to have been dishonest, or would have been shown to be dishonest if Johnson Matthey had carried out even the most elementary inquiries. It seems to me that all the members of the credit rating committee of Johnson Matthey Bankers are liable to be sued for breach of their fiduciary duty at common law, which duty is to act in the best interests of their company. I ask the governor of the Bank of England why the members of the credit rating committee have not been sued for a breach of their fiduciary duty and why they have not received writs of negligence.
When I said some days ago that Mr. Mahmoud Sipra, whose El Saeed empire was the basis of the collapse of JMB, had committed fraud and that JMB ought to have known about it and ought not the have lent his empire vast sums of money, Mr. Sipra appeared on BBC television and Channel 4 news and said that he was a man of great integrity. If Mr. Sipra believes that, he is living in a fantasy world of his own and his memory must be extraordinarily defective.
Only last year, on 9 October 1984, a judgment for fraud was given against him in the New York district court by Judge Kevin Duffy. I have a transcript of that judgment with me, so of course I can repeat it outside should the Whips ask me to do so. The judge said:
"The callous indifference to the law exhibited by Dr. Galin and Sipra from the inception of these actions in 1979 to the day of trial is only one example of their bad faith."
He also said:
"Dr. Galin used Rascator and Sipra used Intra-Span in order to further their fraudulent plan."
He began his summing-up by saying that "old-fashioned piracy" and "extraordinary greed" were at the heart of the case.
The governor of the Bank of England must explain to this House how a British bank supervised by the governor of the Bank of England could be lending money to a man who, throughout the period of the lending, was, according

1443
to the judiciary, acting with callous indifference to the law in relation to fraud. That question lies at the heart of the Johnson Matthey collapse.
When Mr. Ian Fraser, a director of Johnson Matthey, was put on warning about Sipra in 1982, he said that Mr. Sipra would perform — that the man known to his friends as the Cobra and to his enemies as the Devil would meet his contracts and repay his loans. How on earth could Mr. Fraser have said, and believed, that?
We know now, in relation to Mr. Sipra's empire, that since the collapse of Johnson Matthey these companies have been wound up or have had a receiver put in by the governor of the Bank of England: Nitemed, Monostick, Eurostem Maritime, Bulk Ferks, Trans-Gulf Lines, the Khyber Horce Company and Brooke Oil. They have all failed to perform, and Johnson Matthey must have known that they would fail to perform. Many millions of pounds have been lost to Johnson Matthey as a result. I could go on speaking about frauds by Mr. Sipra, but that might take us outside the subject.
What can one say about the behaviour of Mr. Ian Fraser, a director of Johnson Matthey? He, clearly, is in breach of his fiduciary duty at common law — I understand that he is a rich man—and should be sued for negligence because of that breach. But can we leave it there? We are talking about the loss of vast sums of money, and it seems that there are only three explanations for Mr. Fraser's behaviour. The first is that he might be a simpleton, the second is that he has turned a blind eye to fraud and the third is that he is a party to fraud. I believe that we can reject the first—that he is a simpleton—so that we are left with two alternatives. Either he has turned a blind eye to fraud or he is a party to fraud.
Mr. Fraser should be subjected to the most vigorous examination, and we may have to conduct a special investigation in this case and certain witnesses may have to be given immunity. My private inquiries into what is going on reveal that the fraud squad accepts that there was massive fraud and that the directors of Johnson Matthey were involved. However, there are enormous evidential problems and it is beginning to look as though no one will be brought to court because of those evidential problems.
The governor of the Bank of England may bear some responsibility for that—for giving these people nine months in which to lose documents, to sort out affairs with their accountants and get their alibis fixed up. It is an appalling state of affairs and the governor of the Bank of England is the man who primarily should answer for that.
I come to the case of a loan made to Ravensbury Investments to purchase Provincial Properties Wales, to enable that company to develop a piece of land in Barry and carry out a property development. Mr. Michael Hepker, who is the beneficial owner of Ravensbury Investments and Provincial Properties, has publicly said that I am being unfair to him, that he, too, is a man of great integrity and that he is a respectable business man.
What kind of respectable business man, when he is reported to the takeover panel and evidence is given against him to that panel—as it was on 12 July 1985— has friends who will telephone the person giving evidence and say that his legs will be blown off if he does not behave himself? What kind of respectable business man makes a fool of 12 police officers and sends them on a bogus raid to discover illegal firearms? That was last Friday.
What kind of respectable business man tries to ruin a man's life by reporting him to the licensing authorities
1444
when he has previously worked for Mr. Hepker? What kind of respectabley business man makes allegations of fraud and then has to withdraw them in writing to the police? What kind of respectable business man so frightens solicitors for the companies to which I referred that they must put the documents in a safe because, on Mr. Hepker's record, they fear that they will be raided?
It has been put to me that some attempts might be made to shut me up or encourage me not to talk in the House. People such as the Whips say, "Say it outside." The Islington police have been warned in relation to one of the men. Yesterday I took the trouble to warn Commander Hunter at the Hackney office about any possible consequences for my ex-wife, my son and myself.
Mr. Hepker's background, which Johnson Matthey apparently never investigated, is that he is a tax expert and drew up schemes originally on tax avoidance and then went massively into tax evasion. He set up a company called Marchmont Associates Ltd, which at one time shared offices with Rossminster, a company advised by the Chief Secretary to the Treasury. That company is massively involved in tax evasion—in shipping large sums of money out of the country to offshore islands— and the non-payment of tax. Marchmont Associates is also associated with a company called Supersaver.
Only yesterday, Mr. Hepker appeared in the Companies Court. This case will smash offshore lax evasion. Mr. Hepker's time is running out. Indeed. he is under investigation and there are several files inches thick in the possession of the special investigations branch of the Inland Revenue. The special investigator who is hunting him down is Mr. Bryn Jones, who works for the Treasury, so no doubt the Minister can confirm that those investigations are taking place.
Mr. Hepker goes to Johnson Matthey and says, "I want to borrow this money. Provincial Properties will cany out a property development in Barry." What he forgot to tell Johnson Matthey was that the Tesco property development fell through before he borrowed the money. In other words, he borrowed the money by fraudulent misrepresentation and committed an extraordinarily serious crime — in effect, the theft from Johnson Matthey of £1·5 million.
How can I prove that Mr. Hepker knew that the Tesco deal had fallen through? I can prove it because I have counsel's opinion — not counsel for Mr. Hepker's enemies, but counsel for Mr. Hepker. He had to admit to counsel that he knew that the deal had fallen through. Worse than that, he not only knew that it had fallen through, but he went to Johnson Matthey and said that the deal was still on. That was a major fraud.
Matters become even more extraordinary because, once Tesco had withdrawn from the deal, the price of the land plummeted. The price that it had been agreed should be paid for the land was ridiculous, but Mr. Hepker carried on with the deal and bought the land. Why? The only money that has been passed over in this case—£393,310 —was passed over on 8 July 1981. That was over the odds because another £110,000 should have been paid later. It was not.
That still leaves £1 million-plus, which was borrowed. hThat £1 million-plus has never been used for the benefit of Ravensbury Investments Ltd or of Provincial Properties Wales. It has been transferred through a series of companies for Mr. Hepker's personal use. That is a

1445
massive fraud. There are two frauds — a fraud on Johnson Matthey and a massive fraud on Ravensbury Investments.
How did Johnson Matthey behave? How did that British bank under the supervision of the governor of the Bank of England behave? It never discovered that the Tesco deal had fallen through. There is no Tesco store on the land in Barry. Johnson Matthey never checked, either then or in the years that followed, on the value of its security. It was told that the land was worth £1 million. When the bank was recently forced by the company to carry out a survey, it appeared that the land was worth £200,000. The bank never monitored the activities of Ravensbury Investments Ltd or of Provincial Properties Wales. Business men all over this country who have borrowed £50,000 from a bank, who have to fill in debenture forms every three months and whose companies are rigorously monitored will gawp at the fact that Johnson Matthey did no monitoring in relation to these loans.
The loan was made by way of overdraft and was on call. At no time in all those years did Johnson Matthey ask for the money back or ask for a repayment schedule. In other words, the bank handed out £1.5 million and then forgot about it. It did nothing. It provided no banking services whatsoever. This is a disgrace. It is not just negligence; it is very suspicious.
It is no wonder that the solicitors to these companies have been saying to Mr. Graham Mark and Mr. Robin Collier, "What does Mr. Hepker have over Johnson Matthey? Why do you not call in these loans?" When Johnson Matthey Bankers collapsed, the chief executive of Ravensbury Investments Ltd and the solicitors to that company wrote to Johnson Matthey saying, "Both these companies are insolvent. They have been insolvent for a long time, and there is no possibility of their ever making money. Why don't you get back your security?"
I have a file containing a bundle of the correspondence going backwards and forwards between the solicitors, the chief executive, Mr. Michael Hepker and Mr. McGregor from Johnson Matthey. Mr. Hepker has said, "Give me a fortnight and I shall stitch up a deal for you." Then he has said, "Give me another fortnight," and "Give me another fortnight." That is what I meant when I told the House that we were being taken for a ride.
At one stage, Mr. Hepker said that he would come up with another property deal. The only problem is that he would have to borrow some money to carry out that deal. What kind of negligent fantasy world is this? This point has been put to me by professional advisers to the company. In the first place, they thought, "Perhaps there are bigger and more serious cases than this £1·5 million loan from Johnson Matthey and that in the end these people at the Bank of England will deal responsibly with it." They have not dealt responsibly with it, because they have done two things. First, by not winding up the company, they have put the other creditors of the company in jeopardy. The other creditors who are owed £300,000 will never get a penny of the money that Mr. Hepker has taken. They have put them in jeopardy by not winding up the company. Secondly, there is roll-over interest on this loan and, in the end, that will increase the amount of money that the Bank of England has to write off. That money is being written off on our behalf. It is a loss not to the Bank of England but to the members of the public.
1446
I want to know how the governor of the Bank of England has justified the behaviour of his staff during the last few months.
It goes without saying that I have letters from the companies registration office showing that Mr. Hepker was in breach of section 1(7) of the Companies Act 1976 and sections 124 and 126 of the Companies Act 1948 over the production of documents. That is, however, a minor point.
What happened when the solicitors started to put pressure on Johnson Matthey to get Mr. Hepker to pay the money back? Mr. Hepker took out a curious option agreement and then tried to dismiss the solicitors and chief executive. In the middle of all that, he produced a document that showed a photostat copy of a Bank of England one pound note. I do not know what hon. Members know about criminal law, but it is illegal to photocopy Bank of England one pound notes and to produce bogus option agreements to silence solicitors. I gather that Mr. Hepker will come back to that aspect in time.
Where do we stand in relation to these matters? People have made large sums of money fraudulently and companies have gone bankrupt. There is Mr. Hepker and his company. Johnson Matthey was not performing any banking service. It was not carrying out its duty. There are also the directors of Johnson Matthey who were responsible for the preparation of the accounts. It is not the auditors but the directors who are responsible for the preparation of those accounts. The auditors merely say whether the accounts present a true and fair picture. Under section 393 of the Companies Act 1985 it is a criminal offence if a director
"knowingly or recklessly makes to a company's auditors a statement … which … is misleading, false or deceptive in a material particular."
Anyone who cares to study Johnson Matthey's accounts will know that, whether or not the directors knew that they were making misleading comments, they were certainly reckless, because there is barely a statement in those accounts that has not been made recklessly. Why has not criminal action been taken against those directors who were responsible for the preparation of the accounts?
It is up to the governor of the Bank of England to decide whether he has the integrity to resign. We need an independent wide-ranging inquiry into an extraordinary act that has led to the loss of £248 million and to the public having, in effect, to put up £100 million to bail out a bank. I have taken the House into a fantasy world. It has nothing to do with banking but is about fraud and greed. If we believe that the integrity of public and private life is important, we cannot just let this matter rest. We must ensure that it is investigated ruthlessly so that all the facts are known.
11.48 am
Mr. Dennis Skinner: I am pleased that my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) has extended some of the arguments that he put forward some days ago in a brief statement. It is important for us to make it absolutely clear that the British taxpayer is likely to foot the bill not only for all the money that has already been lost and put in by the Bank of England but for other bills. It now transpires, from some of the comments made by my hon. Friend, that the bills will get even larger. As I said some days ago, the

1447
chances are that, because of the dilatory fashion in which the Chancellor and the governor of the Bank of England have acted, many of those people to whom hon. Members and the newspapers have referred are likely to get off scot free, as has happened in many other City scandals of the past two decades.
Who will pay these additional bills? Will the Economic Secretary ask the parent company what happened? Will he say, "Why did you allow your errant youngster, Johnson Matthey Bankers, to run wild and deal with all these people? Why is it that you are not taking some responsibility for these massive losses to the taxpayer?"
What about the governor of the Bank of England? Should he not be personally responsible for some of the money that has been lost and the ensuing losses that are likely to occur? My guess is that we shall not be talking about £100 million from the taxpayer; the eventual sum may be double that.
My hon. Friend referred to Mr. Fraser. Should he not bear some responsibility, instead of lumping it all on the taxpayer? I thought that this Government believed in the policy, "You make a profit or you die." I thought that they believed in market forces and entrepreneurs. What was the purpose of all the argument about closing pits, steel works and the rest of the manufacturing base? Was it not all part of the policy, "If you can't make a profit, don't come to the Government for a subsidy. Don't expect us to bail you out. You make a profit or you die"?
There are now more than 3 million unemployed people on the scrap heap. They are witnesses to the Government's policy of making a profit or going under. Yet the crooks in the City can somehow or other launder their way from one fraud to the next, getting away with it, with tax avoidance schemes, and running to Johnson Matthey Bankers and saying, "Give us some more money—at the end of the day the taxpayer will bail us out".
Will Mr. Shamji—the friend of the Prime Minister—pay some of his money back? He should. He has companies up and down the land. I discovered another that he set up not long ago in Strood. Will the Economic Secretary to the Treasury make inquiries about that? If Mr. Shamji can find his way into an enterprise zone at Strood before it is announced in Parliament, somebody must have tipped him off. He already had a derelict factory there months before the area was declared an enterprise zone on 16 November 1982. Mr. Shamji's firm is Gomba UK, and he turned up at the factory in a Rolls-Royce one day early in 1982. Did he get the money from Johnson Matthey? Is that part of the £20 million that he owes? It has been a litany of scandal from one end of the story to the other.
The British people should demand that, instead of the taxpayer being called upon to foot the bill, it should be paid by the people to whom I have referred. The British taxpayer should not be expected to bail out the Chancellor of the Exchequer for all his legal expenses. They should be paid by him or some of the culprits who have been referred to this morning.
11.52 am
Dr. Oonagh McDonald: A large number of questions remain unanswered about Johnson Matthey Bankers and the Bank of England's supervision of that bank, and the subsequent problems.
I will take one example of the bank's main debtors— Mr. Abdul Shamji's Gomba group of companies. As the Financial Times reported last Saturday, several companies
1448
in the Gomba group face court actions over debt claims and Mr. Jim Sharp, the group's financial controller, is urgently seeking a refinancing package.
Since the master company in the United Kingdom was incorporated in May 1982, companies associated with Mr. Shamji have amassed large borrowings. Accounts up to 1982 of the companies in the group show borrowings of £32·5 million. There may have been other loans from JMB since then, but without up-to-date balance sheets it is impossible to know. Accounts have not been filed in Companies House since 1982. Mr. Shamji also has loans from the Credit and Commerce International Bank, Barclays and the Punjab Bank. His assets are said to be worth about £40 million.
One of the companies, Gomba Stonefield, based at Strood, Kent, in an enterprise zone, was bought from the receiver in 1981. It ran up net losses of £2·7 million in the three years 1982–84, according to Price Waterhouse's special audit. It owed £100,000 PAYE in June, but after a threat by the Inland Revenue to auction 32 containers arid their contents, the debt was paid. It is possible that other PAYE debts are outstanding, and also that Gomba did not pay national insurance contributions and PAYE contributions for employees, now redundant, of one of his Scottish companies. Its asset base is strong but earnings of many of the companies in the group are low, suggesting low returns on assets. That could mean that Mr. Shamji now has very real problems. He will need either a refinancing package or a major programme of disposal of assets.
JMB now has problems with Gomba. The Financial Times reported last Saturday, and The Observer on Sunday, that Gomba missed the first payment under the debt rescheduling agreement, and that this still has not been paid.
With regard to loans made to Gomba by JMB, Gomba's accounts filed at Companies House go up only to 1982. What information did JMB have about the accounts of Gomba companies when loans were made? What information was made available to them then?
Is the Bank of England satisfied with the security for the loans? Gomba engages in the not unusual practice of buying property, revaluing it upwards and then borrowing against the new value. Did JMB put its own valuation on Gomba's assets. Has the Bank of England carried out its own valuation since then?
Why should companies such as Gomba Stonefield that default on payments be allowed to continue in existence when so many other companies are forced by the bank into liquidation for similar faults?
Not only Gomba's loans may be doubtful. There is a vague reference in the Bank of England's report describing four anonymous doubtful loans totalling £119 million. There was also very little information about the remaining £129 million. That makes a total of £248 million in doubtful loans, some of them very large. What action is the Bank of England taking to recover those loans? Is £248 million still the correct figure? After all, that figure was given when the Bank of England said that there was no fraud involved. Then the Chancellor of the Exchequer last week announced a fraud investigation. What guarantee have we now that £248 million of doubtful loans is the correct figure, and that it will not continue to grow and grow with further recourse to the taxpayer?
I turn to the question of the Bank of England's supervision both then and now. Is it true that the Bank of

1449
England had, in effect, restricted its monitoring programme, before the collapse of JMB, to the clearing banks? Is it true that its supervision of the smaller banks was lax?
In the autumn we expect a White Paper proposing to give the Bank of England new powers, but it will take time for legislation to go through Parliament. May we be sure that the measures that the Government have taken so far —strengthening the banking supervision department at the Bank of England—are sufficient? Will the Minister give his assessment of those new procedures? May we be assured that there is no other JMB in the offing?
As the public have a right to know what happened with JMB, will the Minister arrange for the publication of the Price Waterhouse report? That report should, at the very least, be made available to a suitable committee, and the Minister should reconsider setting up a committee of inquiry under the 1921 Act. No doubt the Minister will recall that two days after the Prime Minister refused an inquiry in a letter to me dated 15 July the Chancellor of the Exchequer announced the fraud investigation. The Prime Minister said that she could see no purpose in such an inquiry, but on the very day that the letter was written the governor of the Bank of England said that fraud was suspected. We need a thoroughgoing inquiry. Will the Minister assure us that, once the police investigations are carried out, we shall have that proper full public inquiry?
11.59 am
The Economic Secretary to the Treasury (Mr. Ian Stewart): I have only a very short time in which to respond to the debate. I cannot, of course, comment on the affairs on individual customers of JMB or of any other bank. I am sure that the hon. Member for Hackney, South
1450
and Shoreditch (Mr. Sedgemore) knows that. Equally, I cannot comment on whether or not a particular person is being investigated by the Inland Revenue.
The hon. Member has produced a great deal of information about customers of JMB, much of it in the form of allegations. I should draw the attention of the House to the difference between information and allegation. If the hon. Gentleman has information that he believes to be relevant to the police inquiry, I hope and assume that he will pass it on, because it is important to follow up any available information.
My right hon. Friend's and the Treasury's response is the subject of the debate. My right hon. Friend has reported promptly and fully on matters that are his responsibility. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) welcomes the fact that he reported last week at the first opportunity.
The decision to mount the rescue operation was taken by the governor of the Bank of England on his own authority. He was acting correctly within his discretion and has since published an account of events leading up to the collapse and his reasons for undertaking the rescue. That is a reflection of the traditional relationship which exists between the governor and the Chancellor of the Exchequer. It is a point which some hon. Members appear to have found difficult to grasp.
I have no further time to respond to the points which have been made, but I repeat that there is a considerable difference between allegation and information and between information and evidence upon which fraud can be pursued.
I hope that, having taken the opportunity of this debate to put forward those matters, the hon. Gentleman will be equally diligent in ensuring that he and any other hon. Member who has information will provide it to the police so that the police inquiry, as the hon. Member for Thurrock (Dr. McDonald) asks, can be as effective as possible and can deal with all the relevant matters.

Package Holidays
12.1 pm
Mr. Michael Stern: To say that this summer the package holiday industry has been going through a bad time would be a major understatement. Having enjoyed for some years a slowly rising market, having built up its brochures each year in the expectation that that rising market will continue, and having encouraged the practice of last-minute bookings by offering substantial discounts, the tour operators were faced with not just an estimated 15 per cent. reduction in the expected market, but a substantial shift away from Spain as the preferred holiday destination. What has been regrettable about that pattern and what has occasioned me to raise the subject for debate is the fact that it is the customer who has suffered.
This season has highlighted three practices that exist within the tour operator section of the industry, all of which operate to the detriment of the holidaymaker. The first is the power of the tour operator to make material alterations to a holiday which has been booked and paid for, and to make those alterations up to the last moment before departure without infringing the regulatory code of the industry's governing body — the Association of British Travel Agents Limited. A holidaymaker may discover at the last minute that he or she is going to a different hotel, a different destination, a different resort or, in extreme cases, a different country. The only rights that the customer has are a woolly claim to compensation or the right to cancel the holiday and receive a refund, although with no holiday in prospect.
The second practice is known as consolidation. It enables tour operators to cancel flights, often with virtually no notice, to fill up other flights which have vacant seats. The holidaymaker is thus subjected to many extra hours of travelling and delay and a great deal of what can moderately be described as inconvenience at a time when the holidaymaker is paying for the reverse. Again, there is only a woolly right to compensation if the tour operator chooses to pay it, with the right to cancel and have no holiday.
The most pernicious practice occurs where a tour operator anxious to expand his share of the market puts out brochures containing flights and destinations which he must know he has no hope of fulfilling, thereby hooking the customer who can then be consolidated later onto another flight or another resort. That practice, which is known as ghosting, is known to be widespread and many people have suffered from it.
In all those cases, ABTA is powerless to prevent the abuses to which I have referred. Unless it rapidly sets its house in order, the industry will be defenceless against the major changes proposed in the EEC draft directive that we are discussing.
Since I first showed through the media my interest in this subject, I have had what can only be described as a fairly substantial postbag. To illustrate the need for rapid action, I should like to quote a few of the many cases that have been brought to my attention from all over the country.
Mr. Guthrie of Strathclyde booked a return flight from Malaga to Glasgow. He was informed at Malaga airport one hour before the flight was due to leave that it had been
1452
cancelled. He was left at the airport for 12 hours and the following morning was flown to Birmingham, which necessitated a further nine-hour journey to Glasgow.
Mrs. Purchase from Taunton booked last November to fly from Bristol to Austria on 2 June. She paid the final account on 3 April and was then informed that she would have to fly from Luton on 30 May to a different and less attractive destination.
Mr. Whiting of Leicester booked seven days in Corfu with Sunmed holidays and was told the Monday before departure that the resort had been changed. He was offered a substitute resort which was changed the following clay. He eventually ended up at inferior apartments which were already occupied.
Mr. Stevens of Wokingham booked to go to Minorca in January. He was forced by consolidation to cancel in April. He booked with Horizon and made the final payment in June. He was again forced to cancel because of consolidation and is now due to travel to Majorca with Thomson Holidays. He has his fingers crossed.
Finally, from my constituency, Mr. Penny and Miss Bartlett, who are getting married on 7 September, booked in March with Thomson Holidays to go to Benidorm from Gatwick during the early afternoon of Sunday 8 September. In June, they were offered a flight change to 7.30 am on the Sunday morning. That would have meant them leaving Bristol at 2 am on their wedding night. They were eventually offered an evening flight on the Sunday to Torremolinos from Bristol at 10.15 pm. for which it was suggested that they should be charged about £100 more.
In the light of those and many other incidents of which I have been informed, many of which were predictable and predicted at the beginning of this year, ABTA should surely by now have announced steps not just to prevent further such problems this summer, but to reorganise its members for the future, yet I understand from Mr. Kenneth Scott, the chief executive officer of Ilkeston Consumer Co-operative Society Limited, who has done considerable research into this problem, that while it is generally accepted that next winter's holiday market might increase by about 10 per cent., Thomson Ski has increased its advertised programme by 33 per cent. and Horizon by 20 per cent.
The problem is not peculiar to this country because, according to a survey by the EEC Commission, out of the 25 million holidaymakers in Europe this summer, approximately 6 million—24 per cent. —will face some disappointment.
If this summer's chaos had been wholly unexpected, and if the need to tighten the package holiday industry's rules to protect the consumer had been sprung on the industry at the last minute, ABTA's inaction in doing no more than enforce its existing code could have been understood. However, the appalling position of bookings for this summer was known in January and many companies faced with the eventual need to consolidate their flights did such consolidations in the early months of the year, and so enabled their customers to have adequate time to rearrange their holidays.
In addition, it was known towards the end of last year that the holiday places available and being offered by ABTA members for this summer exceeded the maximum possible market by anything between 25 and 33 per cent. The proposed EEC directive further to regulate the industry for the benefit of the holidaymaker has been

1453
around since at least January this year, but it has never once, to the best of my knowledge, been opened by ABTA for public discussion.
In those circumstances, it is not surprising that the EEC Commission has felt the need to step in and propose a draft directive to improve the regulations of an industry which has, by this summer's experience and this winter's prospective experience, showed itself at least insensitive to the desires of its customers.
The proposals in the draft directive are, in many respects, draconian. As a result, while my hon. Friend the Minister may feel, with considerable justification, that the directive as a whole is inappropriate, I hope that he will still look at some of the provisions contained in it with a view to encouraging the industry to adopt them on a voluntary basis.
For example, article 6(2)(m) of the draft directive calls for the automatic disclosure to the customer of the name and address of the local representative of the tour organiser. Such information would be, and would have been, very welcome to many holidaymakers. It is not a requirement of the present ABTA code.
Article 10(1)(c) provides that the holidaymaker is entitled to cancel and obtain a refund if the holiday is modified significantly—a provision that already exists under the ABTA code—but says that the definition of a significant modification is to be resolved by reference, in part, to the holidaymaker's view of what is significant. So the holidaymaker should have a say in whether or not he is entitled to be protected under the ABTA code—and on that the code is silent.
Article 10(4) provides that, on cancellation of a holiday, the holidaymaker should also be entitled to damages for the loss of his holiday, whereas under the present code he is entitled merely to a refund. Article 5 provides that a deposit on a package holiday should not be more than 10 per cent. of the whole price, again a matter on which the ABTA code is silent.
It cannot be said that there is no precedent in Europe for the package holiday industry to be subject to statutory regulation where all else fails. Draft legislation currently going through the Netherlands Parliament proposes entitlement to damages similar to that contained in the draft EEC directive—something that is already believed to exist in the United States. In addition, the draft Netherlands legislation suggests that all contracts between travel agents and tour operators should be open to public inspection in certain circumstances — a proposal that would flutter a few dovecotes in the travel industry. I understand that the Bill has reached the equivalent of Report stage in the Netherlands Parliament, and is therefore close to the statute book.
Apart from the proposals in the directive or in the proposed new Netherlands law, there are other ways in which the holidaymaker could receive greater protection. I cannot see any reason why, if a customer is obliged to pay the full price for a holiday eight weeks before departure, he should not then be guaranteed that he will get the holiday for which he is paying. Indeed, it would take a great deal of heat out of the issue if ABTA were to announce—and I invite it to do so—that no further consolidations would be put into effect by its members unless they are advertised to their customers within the next seven days.
1454
I appreciate that in that area ABTA has considerable difficulty in self-regulation because it is a body containing, almost in equal measure, two entirely different interests —the travel agents who genuinely want their customers protected and want to retain their customers' goodwill, and the tour operators who want to preserve the maximum freedom of action. Nevertheless, ABTA should be aware that, if it does not set its house in order, more stringent provisions of the sort that I have been discussing will become inevitable.
In view of the publicity that the media have rightly given to the issue already this summer, and in view of the size of my postbag, it is worth putting it on record that this summer many tour operators have adopted an entirely reasonable and responsible attitude to their customers. They have not stuffed their brochures with holidays that they could not possibly sell in sufficient quantities. They have taken adequate care and availed themselves of adequate local knowledge to prevent many overbookings at resorts. Where consolidations or material alterations in holidays have been necessary, they have given their customers ample time to reconsider.
The horrors that I have been describing, the horrors that we have heard of in the media, are not the fault of the whole of the industry, but unfortunately many companies within the industry have not taken the attitude that I have just described. I hope that my hon. Friend the Minister will impress upon the industry that it is the actions of the latter companies — some of which I have mentioned — that have created the need for EEC legislation to be considered, at least. Similar actions in the Netherlands have created a similar need there. Such actions will continue to feed the need unless the industry puts its house in order and thereby renders an EEC directive unnecessary.
12.15 pm
The Minister for Information Technology (Mr. Geoffrey Pattie): I thank my hon. Friend the Member for Bristol, North-West (Mr. Stern) for bringing the subject of consolidation to the attention of the House. I can well understand the disappointment experienced by travellers who find themselves consolidated at the very last minute. My hon. Friend cited some interesting and sad case histories from his postbag.
My hon. Friend's recommendations are good. I know that the travel industry will be grateful for his constructive approach in the debate, and especially for his remarks complimenting the vast proportion of operators on their responsible approach to the problem. However, if the practices that my hon. Friend described continue, the Government will find it difficult to resist any action proposed by the European Commission. I must point out that no proposals for a directive on package holidays have yet been made to the Council of Ministers by the Commission. However, I believe that the Commission does intend to make a proposal for a directive on package holidays later this year. Until the Government see this proposal, the House will understand that it is difficult for me and the Government to comment on it.
However, the Commission has held meetings of both national experts and the Consumer Consultative Committee to discuss possible draft articles, which might form a draft directive broadly aimed at harmonising that legislation within the Community which affords consumer protection to people taking package holidays. It is to these preliminary draft articles that my hon. Friend referred.

1455
Despite the fact that most member states in the Community do not see the need for such a draft directive, either from a consumer protection view point or as an instrument to stimulate tourism between member states, the Commission still intends, I believe, to submit a revised proposal to the Council of Ministers. Although we have not seen any revised proposal from the Commission, I understand that the current draft would have wide implications for United Kingdom law and practice on package holidays.
European Community legislation has all too frequently been thought by some to be the answer to consumer problems in many areas. I am not convinced that this is the case. The Government firmly believe that the interests of consumers, whether on a package holiday or not, are not served by increasingly rigid legislative controls on the providers of goods and services. Most problems, including any associated with package holidays, are better dealt with at a national level and often the answer lies not in legislation but in effective voluntary, self-regulatory action by the trade involved. Package holidays are a good example of where a voluntary code of practice can and should achieve a high level of consumer protection.
My hon. Friend was accurate, as he invariably is, in reminding the House of the potential conflicts of interest within ABTA. Nevertheless, the ABTA codes of practice, which were drawn up in consultation with the Office of Fair Trading, prescribe rules to be observed by its members, both tour operators and travel agents, in those areas such as descriptions of holidays, booking conditions, alterations, cancellations and price variations, to which my hon. Friend referred in particular. These codes are binding on all ABTA members, who may be fined or expelled for non-compliance. My hon. Friend will no doubt be aware that ABTA members account for the vast majority of package holidays from the United Kingdom.
Provision is also made in the codes of arbitration and conciliation procedures in the event of a dispute between a member and a customer. Although over 7 million package tours were taken last year, ABTA reported that, of the 9,683 complaints dealt with by its conciliation department, only 418 went as far as arbitration. This level of complaints is far lower than that found by the EC Commission in its survey. I might add that many member states disagreed with the findings of the EC survey. The Office of Fair Trading periodically monitors the codes and I understand that the office is currently in the process of doing this.
These codes, coupled with the protection afforded to package holidaymakers by bonding and insurance schemes, mean that the protection offered or available in the travel trade is greater than that in many other sectors.
Consolidations, the practice whereby tour operators, through lack of demand for a particular package tour, may have to transfer travellers to another flight, perhaps from a different airport, have, as my hon. Friend said, been the subject of considerable comment recently. My hon. Friend the Under-Secretary of State responsible for corporate and consumer affairs, when answering a question yesterday on this subject from the hon. Member for Normanton (Mr. O'Brien), explained that the Office of Fair Trading will include the question of the consolidations of holiday
1456
arrangements in its monitoring of all aspects of ABTA's code of practice. The office has expressed its concern to ABTA about the reported volume of consolidations this year and has asked the association to inform the office of what action it intends to take to deal with this problem. I am confident that we can look to ABTA to continue to enforce its members' adherence to their codes of practice. Already, I am aware that members of ABTA have been fined for breaches of the code.
Some people have argued for legislation to prohibit consolidation, but that is not the answer. The travel trade already has the means to regulate its own behaviour, so that the service it provides is acceptable to its customers. An overall ban on consolidation would no doubt lead to an unacceptable increase in the prices of package tours, so placing them beyond the reach of many people.
Apart from the ABTA codes of practice, the consumer also has the protection of the law. Although in the United Kingdom there are no laws which specifically and exclusively govern rights and duties between consumers and the providers of package holidays in particular, the basic legal position is primarily governed by the ordinary, general law of contract and, in some circumstances, by the law of tort. In both cases the law is based on common law and equitable principles developed over a long period by judicial decisions and modified from time to time by statutory provisions. In both cases, it is open to a parry who has suffered loss or damage through breach of contract or other act or omission to seek redress, usually in the form of financial compensation, in the civil courts, although some statutes impose criminal penalties on the wrongdoer.
One of the most important statutory provisions is the Supply of Goods and Services Act 1982. This Act, in England and Wales, specifies implied terms embodying the respective rights of providers of goods and services and consumers, extending many long-standing provisions relating to the sale of goods to the provision of services. Providers of services, who include tour operators and travel agents, have an obligation to do so with reasonable care and skill, within a reasonable time and for a reasonable charge. Redress for aggrieved consumers is by civil proceedings for damages.
Perhaps I may return to the draft European Commission proposals. When the Commission puts its final proposals for a directive on package holidays to the Council, the document will be available to all member states. When these proposals are received, the Government will of course provide a copy to the House together with an explanatory memorandum. My hon. Friend gave a detailed analysis of the various proposed clauses he has studied, centring in particular on entitlement to damages. It was helpful to hear his comments about the proposed Netherlands law.
The Government will also consult all other interested parties, including representatives of both holidaymakers and the travel trade, about the implications of the proposal. Meanwhile, both the Government and the Office of Fair Trading will continue to look to ABTA effectively to control any practices by its menbers which are detrimemtal to the holidaymaker.

Blackmill Hospital, Ogmore
12.28 pm
Mr. Ray Powell: I am grateful for the allocation of time during the last sitting before the summer recess to place on record the objections of my constituents in Ogmore and other people in the catchment areas of Aberavon, Bridgend, Pontypridd, and the Vale of Glamorgan, all of whom will be directly or indirectly affected by the proposed closure of Blackmill hospital in the Ogmore valley.
It is a pleasure to see you in the Chair, Mr. Deputy Speaker, for my speech. Blackmill hospital is on the side of the Ogmore valley near the small and delightful hamlet of Blackmill. It overlooks a beautiful area and a picturesque valley covered with trees at one end, and the area spreads out into well maintained sheep farms and grazing areas. The valley starts from Nantymoel and stretches through narrow terraced streets through Tynewydd and down to Blackmill. It is one of four similar valleys in my constituency. Access is mostly by secondary roads, which are convenient and of the sort that one would expect to find in the coalmining area of south Wales.
It is well known throughout the world that the Welsh people are friendly, hospitable and responsive and treat their visitors as members of the family, and their qualities of compassion and care are of a high degree. Against that background and description of the area, all those who will read the debate will realise why it is essential to make every effort to save Blackmill hospital for the service that it provides, for the people it serves and in recognition of the wonderful work and dedication of all the staff for the people they nurse.
Blackmill hospital is renowned throughout Mid-Glamorgan and the Principality of Wales and, I suspect, even further afield. Elderly people are nursed by relatives —sons, daughters, grandsons and granddaughters—and in some instances by neighbours. We all know what is entailed in the nursing of elderly people, and those who do it welcome the respite of a week or fortnight or even longer when their elderly charges are allowed to go to Blackmill hospital and the home nurse can have a holiday.
This social facility is essential. There is a real community need. There is an overwhelming demand and that becomes clear as one reads the statistics for Mid-Glamorgan about the increased number of elderly people. The problem is on the increase and, instead of reducing these facilities, we should be increasing them. We should be developing more Blackmill hospitals and not reducing this vital social facility.
I catalogue all the facts so that everyone, including the Minister, will realise the extent of the feeling and concern and the real rebellion among thousands of my constiuents over the decision to close this hospital. The way to describe this feeling is to compare it with the rebellion this week of 100 Tory Members against the Government's proposals to increase top salaries. We all know the extent of that rebellion, and I claim that my constituents are equally concerned about this hospital closure, if not more so.
Over the years the Minister and I have on many occasions expressed our opinions and debated general hospital services in Mid-Glamorgan. The Official Report could be referred to repeatedly from 1979 onwards. However, I feel that no mileage can be gained from that.
1458
I also have with me the draft consultative document on health services in Mid-Glamorgan published in March 1984. This strategic plan for 1984 to 1993, containing 137 pages, would be ideal ammunition for an all-night sitting of a Committee, but it would not be ideal for today's debate.
However, I must refer to the March 1984 document on the reorganisation of the health services in Ogwr. It was published as a draft consultative document, but, despite many meetings convened by the Ogwr community council all over the borough and the objections to closures from Mid-Glamorgan county, Ogwr borough, 23 community councils and a petition containing 9,937 signatures, the whole planned closure programme will be implemented if the Government are not prepared to relent on their decision to close Blackmill hospital. Surely the significance of this amount of protest will not go unrecognised by the Government.
No doubt the Minister will recall the Adjournment debate on the subject of Bridgend hospital on 22 March 1982—it is now called the Princess of Wales hospital. Hon. Members will find the report of that debate in Hansard of 22 March 1982, at columns 771–78. I ask the Minister to read his reply to that debate and his answer to an oral question on 27 June 1983 on phase 2 of the new hospital.
It is all to do with the closure of many hospitals in Ogwr borough—and the loss of beds, not the increase in accommodation—when waiting lists are getting longer and the elderly are living longer. If I had not secured this debate today I should have been attending a birthday celebration for Mr. Arthur Beaty, in Dwfrig ward at Maesgwyn hospital, Brynceithin, who is celebrating his 100th birthday today. I am sure that the House will want to record its birthday greetings to him. [HON. MEMBERS: "Hear, hear."]
Yesterday, I read through three full files of letters and reports dealing only with Blackmill hospital and the work of the hospital league of friends under the chairmanship and stewardship of Councillor Mrs. Muriel Williams, MBE, JP. I was overwhelmed by the public response to fund-raising efforts to provide for the hospital so many extra facilities and needs not usually available from any other source. I commend Mrs. Williams and her committee for all their untiring efforts. Only last week my wife opened the league's summer fete, which raised well over £500 in one afternoon and was supported by hundreds of the valley's residents.
To view objectively the proposals to close Blackmill hospital, one has to consider the historical background and the significance of the hospital to the community that it serves. The hospital was built in 1903 by the Ogmore and Garw council for the treatment and nursing of infectious diseases. Until 1948 it was used mainly for this purpose, treating outbreaks of infectious diseases such as measles, whooping cough, chicken pox, scarlet fever and many others. An improved programme of immunisation and vaccination, coupled with advanced medical treatment for prevention, resulted in a fall in bed occupancy at the hospital. To improve occupancy, a pre-convalescent ward was established.
I should like to place on record my appreciation of the work of the Ogwr community health council — Chris Johnston, the Secretary, Megan Butcher, last year's chairman, and Jack Thomas, the present chairman, —and the efficent and constructive way they organized

1459
public meetings and a petition which carried 10,000 signatures. I object to the contemptuous way in which they have been treated by the health service's planning officer, Mr. D. M. Chapple. They were not kept fully informed of Welsh Office decisions.
I should like to read a letter dealing with a series of Welsh Office decisions which was sent to Mr. Boulton, the general manager of the Mid-Glamorgan health authority. It said:
"In my letter of 7 May I informed you that the Secretary of State has approved the first part of your proposals for the reorganisation of health services in Ogwr. The purpose of this letter is to tell you that he also accepts as part of that reorganisation your proposal to close Blackmill Hospital.
The hospital is obviously held in affection by many people in the area and the Secretary of State fully appreciates the regard in which the hospital is held and understands the feelings of those people in the community who have expressed concern at its future. In particular he was impressed by the sincerity of the Friends of Blackmill Hospital who presented officials with a petition to keep the Hospital open.
He has concluded nevertheless that the reorganisation of health services which your Authority has proposed are in the best interests of all the people in Ogwr."
The penultimate paragraph is the most important:
"The Secretary of State has noted that the Health Authority would prefer not to dispose of the site immediately, in order to allow further exploration of the potential for its reuse in the local interest. The Secretary of State, having noted the strong local affection for Blackmill Hospital, is agreeable to a delay in disposal, but being conscious of the cost of maintaining the site in a reasonable condition after closure, encourages the Health Authority to have concluded its considerations by 1 November 1985."
Earlier today the Father of the House, my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan), was congratulated by my hon. Friend the Member for Ashfield (Mr. Haynes) on his 40 years' service to this House and to the nation. I urge hon. Members to read his article in today's edition of The Times and to reflect upon the achievements of the Labour Government of 1945. The Nye Bevans of this world, and others, fought long and hard to introduce the National Health Service. It is our duty and responsibility to protect this national asset and prevent the privatisation of medical care. Private medical care is escalating because American-based firms are falling over themselves to cash in on this gravy train.
Are the Government reducing the role of the National Health Service? Do they intend to provide only a substandard service for those who cannot find the cash to pay for private care? We will not tolerate this any further. We shall not allow these uncaring, unscrupulous monetarists to smash the National Health Service, as they have been trying to do since 1979. In June 1983 the Prime Minister said that the National Health Service was safe in her hands. Not only the Opposition but also, I believe, many Conservative Members doubt this.
I am sure that the Under-Secretary is not included in the real hard core of those whom I have just criticised. Therefore, I ask him to show a little compassion and to consider the proposal to salvage at least one hospital from the slaughter of the services that I have outlined by the area health authority. I ask him to consider the decision of the area health authority on 22 July 1985,
"that before taking steps to dispose of Blackmill Hospital and site they would look favourably at any constructive and feasible proposition to retain the hospital for the benefit of the community if such proposals were to be presented to them. The Secretary of State has allowed until November 1985 for such propositions to be presented to the Authority."
1460
May I suggest to the Minister two areas which might be suitable for the undertaking of a feasibility study for the future use of hospital facilities by a local charitable organisation, which would be much-needed community projects. First, one ward could be converted into a flexible day care centre for the elderly. The advantages of such a centre would be to allow greater use of the facility and allow patients to remain in care for longer periods. Secondly, it could use another ward to provide a short-stay holiday home unit for the elderly. If such a short-stay unit were provided, it would go a long way towards allowing relatives some respite for a week or two and would encourage them to accept their family responsibilities. If the proposals were accepted by the health authority and the social services department, referrals could be agreed and funded by the DHSS. I am sure that my proposals would mean that the costings of Blackmill hospital for the year ended 13 March 1984 could be substantially reduced.
Last, but not least, the child welfare clinic, the chiropody clinic and other community-based functions are sited at the hospital. They were sited at the hospital because alternative accommodation was not available in the area. Those functions could be retained at the hospital. This local charitable organisation would be able to make repairs and renovations of a high standard without the liability of unreasonable cost.
Finally, may I ask the Minister to give some help to the socially and industrially deprived area of Ogmore by at least allowing this community-based charitable organisation to continue the essential work of Blackmill hospital. If he will do that, I shall willingly and eagerly wish him a pleasant and restful summer recess.
12.41 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): I am happy to join the hon. Member for Ogmore (Mr. Powell) in sending good wishes to his constituent, Mr. Arthur Beaty, on his 100th birthday. I also congratulate the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) on his 40 years' service to the House.
The House will be aware that the procedures relating to a hospital closure provide ample opportunity for up-to-date consideration of the proposal for change and of any viable alternatives. They applied in the Blackmill case. I must dissent from the hon. Gentleman and assert that we have noted local feeling, but the weight of reasoned argument on service needs must also be weighed. In this case, the balance lies in favour of the authority's proposal.
Blackmill hospital is a unit of 30 beds. In recent years it has provided a pre-convalescent facility, generally for elderly people, some of whom move on to other accommodation. As the hon. Gentleman said, the buildings date from 1903 and occupy a site of about two acres. No beds are designated for consultant supervision. Patients are supervised by general practitioners. Additionally, the hospital is formally described as an isolation facility for infectious diseases.
The health authority wishes to close Blackmill hospital, which costs about £250,000 a year to run. It judges that this revenue could most usefully be transferred as a contribution to the running costs of a reorganised service for Ogwr district, which includes comprehensive care of the elderly. Provision for the elderly would then make appropriate use of the Bridgend general and Maesgwyn hospitals, which are both near the new Princess of Wales

1461
hospital, which is just being commissioned. Whatever the hon. Gentleman may say, the fact is that the reorganisation will provide more beds for the elderly than are presently available. Therefore, it is not true to say that we and the health authority are reducing the number of beds available for the elderly.
The health authority has been thinking about the future of Blackmill hospital for some time. Its first consultative document on the proposed reorganisation of hospital services in the Ogwr health district was issued in July 1979. It drew a significant response during public consultation and the authority duly decided to delay making any firm decisions until much nearer the opening of the new Princess of Wales district general hospital.
I am sure that that approach was right, because the new Princess of Wales hospital at Bridgend will form the focal point of very substantially improved health services for the people of Ogwr. When it opens in October of this year, the new hospital will provide the most modern forms of health treatment. In many respects it will be second to none in Wales. Indeed, extra funds made available by the Welsh Office to the Mid-Glamorgan health authority reflect our strong desire to secure such major improvements in health care
At one point, the Mid-Glamorgan health authority expressed concern that existing guidance on cost allowances for a hospital of the size of the Princess of Wales did not fully recognise the special needs of the district. There was some feeling that this guidance would not permit the introduction of the most recent technological advances. However, I am happy to say that we were able to provide the required funding to satisfy the overall requirements at the new hospital. More than £6 million has been provided for up-to-date equipment items, and an extra allocation of just under £4.8 million recurring revenue moneys has been added to the health authority's allocation especially for the new district general hospital.
All of this is additional to money for the capital development, costing in excess of £13 million, so our commitment to funding the health services in Ogwr should be crystal clear and unmistakeable. But I want to say something in a little more detail about the effect that this multi-million pound investment will have upon the actual health services provided to the people of Ogwr. It is this that has conditioned the authority's approach to the future of Blackmill hospital.
It is axiomatic that services for the elderly should be provided on the soundest possible basis. The development of services for the elderly is given priority attention by my Department. Among other things, health authorities are required to reinvest "good management" efficiency savings amounting to 0.5 per cent. of their revenue allocations for the priority groups of elderly, mentally handicapped and mentally ill people, who are among the most vulnerable in our society.
In this case, I believe that the reorganised health services proposed for Ogwr are likely to be of real benefit to elderly people in the community over and above the services available already. The needs of the elderly in hospital do not just demand concentrated medical and nursing care. There is also a requirement for a range of other specialised services. We look for significant improvement in this area, because, without it, and without the well-judged service intervention that they can provide,
1462
elderly people would otherwise be unable to retain their health, their independence and thus the society of their family and friends. These specialised facilities are precisely those that are available at a general hospital and are unlikely to be available elsewhere.
In saying that I certainly do not mean to disparage the work of the staff at Blackmill hospital. Their devotion to their patients is widely known locally and very well appreciated. However, there can be no doubt that the facilities being made available at Bridgend general hospital, Quarella road, as well as in the associated Maesgwyn hospital, are both superior in themselves and capable of meeting the total needs of the area in a way that Blackmill cannot.
That said, we have agreed with a suggestion from the Mid-Glamorgan health authority that any alternative proposal for the use of the resource represented by Blackmill should be given very careful consideration before any decision is taken on disposal of the hospital site. We fully recognise the great affection which the local community has for the hospital, and we are conscious of the excellent voluntary support that it has received. There is no intention to overlook the service that either has been or could be provided to the elderly at Blackmill. But it is up to the authority to see whether local initiative could support the development of a viable plan for some further future use. I am sure that it will be grateful to the hon. Gentleman for the ideas that he has presented this morning and that it will consider what he has had to say.
The closure of Blackmill will, of course, have consequences for the pattern of service provision generally within the area. For example, general practitioner services are themselves very significant in providing a primary health care service for the elderly. Here, it is the intention that general practitioner beds should be located near to the diagnostic and treatment facilities at Bridgend. This cannot but have a positive influence on the effectiveness of the GP services.
Again, the treatment of infectious diseases will also be subject to reorganisation. When the Blackmill hospital was originally built by the Ogmore and Garw council it was for the care of patients suffering with infectious diseases. Since then there has been a massive decline in the incidence and severity of these diseases to such an extent that a major isolation facility is no longer necessary. The new Princess of Wales hospital has itself been planned to enable the proper treatment of infectious diseases to be undertaken.
It may be said that, despite the care with which the Mid-Glamorgan health authority has planned and consulted, the new arrangements for the whole of Ogwr, which themselves imply the closure of Blackmill, should still not go ahead. It may be said that the 30 beds and Blackmill hospital should be retained. In that event, the further development at Bridgend general hospital about which I have spoken would have to be materially revised. Retention of Blackmill would mean that the resources expended on it would not be available for use elsewhere in Ogwr. This would affect the area plan, and some element of the intended provision for the elderly —planned to be in the region of 120 beds at Bridgend—would have to be omitted to balance the supply against likely demand. By retaining a relatively isolated GP unit, the planned capacity to provide comprehensive care for the

1463
elderly would be limited. Proposals for providing GP access to major diagnostic facilities and other specialist support at Bridgend general would be affected adversely.
It is difficult to see how any authority could justify having such beds in isolation from major support and acute specialties and outpatient services. Nor do I think that even the most ardent supporter of the notion of retaining Blackmill hospital would suggest that such a GP service at Blackmill should actually be replaced at Bridgend. Moreover, there are clear advantages of maintaining beds for the elderly in the most central and accessible location in relation to population. Bridgend general meets this requirement far more effectively than does Blackmill.
Again, so far as beds for the elderly in general are concerned, there must be doubt that Blackmill hospital could possibly hope to offer a service to elderly people of Ogwr superior to that proposed for the new Bridgend general and Maesgwyn hospital. The whole concept of the care envisaged for the elderly in Ogwr is to create a large number of beds in Bridgend with immediate access to major diagnostic and rehabilitative facilities. I make no apology in supporting Mid-Glamorgan health authority in working towards positive patterns of care for the elderly and for Ogwr as a whole. The most fruitful way ahead can only be charted by developing facilities around the Princess of Wales hospital.
I know that some of the few elderly people cared for at Blackmill hospital will initially be concerned at the thought of moving to an alternative location. It will of course be up to the health authority to ensure that this is managed with the care and sensitivity that we have come to expect from staff at Blackmill. Patients will fortunately not be asked to move great distances. Bridgend is only four and a half miles away and Maesgwyn hospital is only three miles away. At either place the distance from close relatives and friends will not differ substantially from that which exists now. They will be assured that all modern techniques available for their treatment and well-being would be close at hand.
All these developments in Ogwr take place against a resource background which Labour Members consistently refuse to recognise and occasionally misrepresent. As I have said many times in the House, and elsewhere, the Health Service in Wales has enjoyed a 16·3 per cent. increase in available growth resources between 1979–80 and 1985–86. This is after taking account of the effects of inflation, and 1983 public expenditure reductions. It is this very growth that has enabled authorities like Mid-Glamorgan to begin to address the problems of old and relatively expensive facilities, and to begin the business of moving to more modern and effective ones.
I do not say that these adjustments can be made easily. They demand great sensitivity, careful planning and considerable thought. There are hard choices to be made, but they cannot be avoided. On any objective standard the improvement in performance across the whole Health Service in Wales since 1979 is striking. Many more patient cases are being dealt with quickly and with a greater range of treatments than ever before, but it will not be possible for authorities like Mid-Glamorgan to continue to enhance their performance—to tackle the problems that confront the service — if scarce resources are used in running facilities that are relatively ineffective in cost and service terms. To cavil at this is simply to close one's eyes to the
1464
realities of Health Service planning and resource needs. We cannot take a relaxed view of any arrangement that uses resources ineffectively and thus diverts them from more and better patient care, particularly when modern, improved and accessible services are available
My right hon. Friend the Secretary of State and I very well recognise that the pressures on the funds that he has made available to the district health authorities are always strong. They are caused, for example, by new technologies and new methods of treatment as well as by pay increases. On this last point I will only say that these have been discussed at the recent round of annual reviews conducted by the executive committee of the health policy board within our Department.
There will be an opportunity for further discussion during the course of today when chairmen have one of their occasional meetings with the Secretary of Stale. Naturally, I cannot anticipate the course of this discussion, or indeed the Secretary of State's decisions as regards funding for 1986–87. What I will say is that we look to health authorities to continue to take effective measures to get the best value for money in the interests of patient care. I cannot imagine that anyone who works in the NHS would want to side-step that imperative. It is essential to the future of the service overall.
I do not in any way discount the financial and other problems of transition that Mid-Glamorgan faces. They confront all authorities to some degree. As things stand, Mid-Glamorgan has benefited from significant growth in its discretionary revenue resources in recent years. Moreover, additional cash loans of some £3 million in 1984–85 and £2·2 million in 1985–86 have been made to help the authority, which has also benefited from special central funding for particular service developments. We are also assisting a consultancy study designed to help the authority to manage the way ahead.
All of this is in support of the considerable efforts made by the authority over recent years to tackle the problems with which it is confronted. It is important to see the future of services for the elderly in Ogwr, and indeed the decision in respect of Blackmill hospital, in that context.
I do not believe that Mid-Glamorgan will be assisted in its effort—which will be to the long-term benefit of all those served by the authority—if every well-founded proposal for change is characterised as "cutting" health services, when in fact such changes represent further significant improvements in patient care. That can only reduce public confidence in the credibility of the service for both the present and the future—to the detriment of patients and the dedicated staff who work in the service.
I conclude by returning to the work of the staff at Blackmill hospital. I am sure that they will help in making the transitional period implicit in the transfer of services to a new location as smooth as possible. The staff's reputation for care gives me the strongest possible hope that the transition will be managed well.
I also acknowledge the work done by individual members of the local community and members of voluntary groups that have taken an interest in Blackmill over the years and the considerable support that they have given to the hospital. I hope that that goodwill will find its proper outlet in the facilities at Bridgend and elsewhere in Ogwr.

Southampton Economic Development Corporation
1 pm
Mr. Christopher Chope: I welcome the opportunity to draw the attention of my hon. Friend the Under-Secretary of State for the Environment to a sinister new development in local government—the abuse of companies limited by guarantee. The creation of such companies is often no more than a fraudulent sham and the use to which they can be put is grossly anti-democratic, an outrageous abuse of ratepayers' funds and a recipe for corruption on a massive scale. As not only ratepayers' but taxpayers' money is being siphoned into these companies, I hope that my hon. Friend the Under-Secretary shares my anxiety.
I shall illustrate the argument by referring to the recent establishment by Southampton city council of a company limited by guarantee, the Southampton Economic Development Corporation, which was incorporated on 20 March this year and has the widest possible terms in its memorandum of association. The report submitted to the city council said:
"A company which carries on an activity not permitted by its memorandum will be acting ultra vires and that activity will be void. It is therefore important that the memorandum must be drafted in the widest possible terms to enable a company to carry on any activity which it might wish to do in the future."
The objects of SEDCO enable it to do anything calculated to assist and promote the economic, scientific, technological and social development of Southampton; to carry on research; to stage conferences, exhibitions or plays and to provide leisure activities and amenities; to deal in property; to invest, borrow and deal with money and to take shares in other companies. The city secretary reported that that was not an exhaustive list of the company's powers and that there was also a blanket clause enabling the company to carry on any activity that is deemed to be incidental, necessary, expedient or conducive to its other specified powers.
Therefore, Southampton Economic Development Corporation has powers that are far wider and more extensive than those of the city council itself. However, unlike the city council, the economic development corporation is devoid of public accountability. Its members and directors are appointed by the city council, but need not be elected members of that council. Once appointed, they are accountable to the company and not to the public.
The public and press are denied access to agendas, supporting papers and minutes, thereby being denied all the public safeguards in the Local Government (Access to Information) Act 1985.
The company board meets in private and, most sinister of all, councillors who are not on the board are denied access to information. Board members may be paid fees and the board may be so constituted that minority parties on the city council are not represented on it.
Although directors are governed by company legislation and the company must keep accounts and make and file an annual return, the controls on members of the board are a far cry from open accountability to the electorate and the public. Yet the company is wholly dependent on public funds or the guarantee of such funds.
Within a few days of incorporation, Southampton Economic Development Corporation was given £450,000
1466
by the council. The payment was made under section 137 of the Local Government Act 1972, which enables local authorities to spend up to the product of a 2p rate.
The product of a 2p rate in Southampton is almost £700,000, but by the end of the last financial year only £250,000 had been spent. The remainder, instead of being returned to the ratepayers, was siphoned into the new company. All that the public know is that the money was invested on behalf of the company on 29 March, the day on which it was transferred. From now on, the ratepayers of Southampton have no control over the way in which that money is spent.
Not content with a mere £450,000, the directors of the company immediately started investigating ways in which millions of pounds could be produced for the company. The ingenious and sinister proposal that was considered was a back-to-back loan by which the company would borrow up to £3 million from a bank on the basis that the city council would deposit an equivalent sum with that bank. In that way, the council would not be deemed to be spending money, but would potentially be liable to use the money to meet the company's debts under the guarantee. Meanwhile, the company, meeting in secret, would be able to spend millions of pounds as it wanted.
The sham nature of that proposal is clear from a report to the directors that was given by Mr. Grey, who is not only a director of the company but the treasurer of the city council. The first sentence of his report reads:
"When considering the ways in which the City Council could provide funds for SEDCO, it was clearly important to bear in mind the limitations imposed by Statute and by Government regulations."
It may be apparent from that sentence that Mr. Grey was finding it difficult to separate his responsibilities as treasurer of the city council from the role which he was apparently playing at the time of making his report, that of a director of the corporation. Mr. Grey continued:
"If the revenue reserve for capital purposes of the Council continues to be the sole source of finance for this company, the present City Council policies, if maintained, would ensure that funds would be available for four to five years at the rate of £350,000 a year."
That was not enough, apparently, for the directors of the company. They wanted to consider alternative provision, and the city treasurer reported that he had conducted negotiations with two banks, Hambros and the Trustee Savings bank, and said that, in consideration of an investment by the council in the bank, the bank would make a loan to the Southampton Economic Development Corporation. He said in his report to the board of directors:
"An arrangement of this sort ensures that there is no direct link between the two transactions, the bank loan to SEDCO and the City Council's investment with the bank, both being in the normal course of business."
In my submission, that was nothing more than a sham, because it was clear that the bank would lend money to the corporation only if the city council agreed to deposit money with that bank, so giving a sort of back-to-back arrangement.
The report to the corporation went on to point out the costs of such loans. It said that the interest would be £130,000 a year for each £1 million borrowed. In other words, it would be up to £390,000. It went on:
"It is extremely unlikely that interest commitments will be met in the early years of operation, and the City Council will, therefore, need to act as a guarantor. In addition, provision will need to be made for repayment of the loan principal."
Mr. Grey said that the Hambros offer would cause little difficulty, because the loan would not fall due until the end

1467
of the seven-year loan period. That was, of course, a long way ahead for those currently running the council, although it would be a potential millstone around the necks of Southampton's ratepayers.
At the end of his quite long report, Mr. Grey told the directors:
"On balance, I would suggest that taking a loan at the present time is premature."
One of the directors on the board was a Conservative councillor, Mike Andrews, an accountant. He thought that what was being proposed was of dubious legality, and he expressed the intention to vote against the proposal at the board meeting. He said that he would point out to the bank which was thinking of entering into this back-to-back arrangement that it might be entering into a matter of doubtful legality.
Within 24 hours, the city council decided that Councillor Andrews should be dismissed from the board. A special agenda item referred to using the powers in the Local Government Act to deal with a matter of "extreme urgency". The mayor stated:
"It has been brought to my attention by the leader of the council"—
I do not know where that leaves the question of confidentiality, because it appears that the leader of the council, who is a member of SEDCO's board, is free to discuss matters that take place at board meetings with his Socialist colleagues outside, but can criticise someone who is not a member of the Socialist party if he acts similarly.
The mayor went on:
"Councillor Andrews who is a council appointed director of this corporation has indicated his intention to take action by writing to certain banking organisations on lines which could detrimentally affect the board's ability to satisfactorily progress negotiations. This action, if carried through, could be construed as directly incompatible with continued membership of the board of directors."
The mayor said that he thought that the matter should be dealt with without delay. As a result, the council on which the Socialists have a majority voted to dismiss Councillor Andrews from the board. That meant that one of the two Conservative councillors who had been elected to the board was dismissed.
The corporation is so rotten that it appears that anyone who wishes to scrutinise what happens is likely to lose his position on the board. It is possible that no minority party representative will be allowed to serve on the board unless he agrees to be a silent stooge and cipher for the Socialists. As with all authoritarian and undemocratic councils, the voice of a minority is left with the expensive option of litigation in which the opponents will be funded by the ratepayers and the public purse.
The officers of the council are involved as directors of SEDCO. They are being put into an invidious position. The city treasurer owes a fiduciary duty to the ratepayers in his own right and, as an employee of the local authority, he should give his working time and undivided allegiance to that authority. What is he to do when conflicts of interest and duty arise? How can he remain, and be seen to remain, impartial, objective, politically neutral and professionally independent? It seems that pressure was imposed to make him agree to enter into a £3 million loan, despite his reservations. It has been suggested that another council officer has been faced with pressure to doctor the minutes of the board meeting to avoid potential embarrassment to the leader of the Socialist city council.
1468
It seems that nothing can prevent the corporation from incurring liabilities of countless millions of pounds which ratepayers will have to meet in the future. Short of rate capping, there is no limited liability for ratepayers. They are rather like names at Lloyd's: they will have to pay up, if called upon to do so, in relation to bad decisions over which they have no control.
In the limited time available, I cannot go into the temptation of corruption to which directors of such companies limited by guarantee may be exposed. Money taken through the rates from commercial and residential ratepayers in Southampton can, through the device of this company, effectively be spent on anything that the company directors think fit. If, for example, the Widdicombe committee recommends a clampdown on local authority propaganda — I hope that it will — SEDCO will be able, under its memorandum, to spend ratepayers' money instead.
If a trade union or individual agrees to give a fixed sum of money to the Southampton Labour party, and is then to be rewarded with a soft grant or loan from the corporation, how will the press or public be able to learn about it? There is no way that the press or public would be able to learn about such matters. That is why I say that it is a recipe for corruption. I feel that all right-thinking people would regard putting local authority money and property beyond the direct control of the local. authority as dubious in the extreme, and depositing or charging public money as security for the debts or other obligations of the company as grossly immoral.
Unfortunately, there are now elements in local government that are not right-thinking and are prepared to bend whatever rules and conventions exist to further their own party political objectives. The members of the board of the company have no experience whatever in investing in businesses, which is apparently the purported purpose of setting up the developmemt corporation. It will take money from existing thriving businesses in Southampton and give it to dubious businesses that may well not survive and are likely to collapse, but only after a good deal of ratepayers' money has been poured into the board.
I hope that my hon. Friend will be able to give a message of hope to those who are desperately trying to resist these sinister developments in local government.
1.16 pm
The Parliamentary Under-Secretary of State for the Environment (Sir George Young): I am grateful to my hon. Friend the Member for Southampton, Itchen (Mr. Chope) for raising the question of the activities of the Southampton Economic Development Corporation. The specific case that he has raised in turn raises general issues of principle concerning the activities of local authorities. He touched on the potential conflict of interest facing local government officers who find themselves acting for the council but also for bodies that are at arm's length.
My hon. Friend raised a fundamental issue that we have asked the Widdicombe committee to look at: whether the premise on which Parliament gave local authorities very wide discretionary powers — in the belief that they would honour the convention to use them responsibly—is still valid at a time when, unfortunately, a growing number of local authority councillors exploit to the maximum the framework of the law to use ratepayers' funds for purposes that were never intended by Parliament:. One of the most valuable things that I can do is to refer

1469
my hon. Friend's speech to the Widdicombe inquiry, together with any supportive evidence that he has, particularly from the minutes of the board.
My hon. Friend likened the Southampton ratepayers, whom he represents so ably, to those who are named at Lloyd's, but if one is named at Lloyd's one has the option at the beginning of deciding whether to enter into that obligation. Short of moving out of Southampton—and denying themselves the benefit of my hon. Friend's representation in this House—those who live there do not have the option that members of Lloyd's have of deciding whether to take on a particular liability.
My hon. Friend raised several matters on which I am not able to comment in detail. I should like to reflect on them and seek further advice from my Department, but it might be helpful if I outlined to my hon. Friend and the House the Government's general philosophy about the relationship between local government and the funding of economic activity in a particular local authority area.
I think my hon. Friend will agree that responsible local authorities have a legitimate role to play in the economic development of their district. When my hon. Friend was leader of Wandsworth council, he worked closely with my Department to bring to fruition many worthwhile urban programme schemes directed at creating employment and improving Wandsworth as a place in which to invest. But Wandsworth council was answerable for its proportion of the programme, and there was the element of accountability, whereas in Southampton the link of accountability is somewhat weakened.
My Department's 1982 consultation paper, "Local authority assistance to industry and commerce", stated:
"Local authorities have a key contribution to make to the development of small firms—sand indeed to the encouragement of enterprise generally—through the proper exercise of their statutory powers, and especially in ensuring that enterprises are not unduly hampered by bureaucratic delays, over restrictive planning policies or unnecessarily heavy rate burdens".
In the past weeks two major Government reports have been published. The White Paper "Lifting the Burden" specifically drew attention to how local authorities can help local enterprise to flourish by minimising controls and bureaucracy and by adopting a positive approach through the planning system. Secondly, the publication "Pleasure, Leisure and Jobs" which my right hon. Friend the Secretary of State has sent to all local authorities outlines one important area of economic growth—tourism—and the important role that local government has to play in developing it.
I must qualify that support with a reservation which I am sure will meet with my hon. Friend's agreement: that local authorities must avoid conflict with central Government's priorities towards regional and inner city development and the control of public expenditure generally.
Local authorities are not capable of taking on and should not be expected to take on the whole burden of reviving the economy. They must work with the grain of national policies and not cut across them. Assisting industry locally should not be used as an excuse for experimenting with doctrinaire economic theories, imposing political conditions on employers, pursuing political propaganda campaigns or side-stepping expenditure controls.
1470
If ratepayers' funds were used through the board to fund party political campaigns, every right-minded person would see that as an abuse of those funds. In the end, a high-spending policy, brought about by a local authority, designed to revive the local economy, will inevitably be self-defeating because of the high rates burden which is added to the costs of local firms.
The Government have also made it clear that they are not opposed in principle to the setting up of enterprise boards. They are still a fairly new feature, and are one way in which local authorities can organise themselves to help industry. I can assure my hon. Friend that the Government will watch carefully how they develop — the crucial point that he made — and how the parent local authorities exercise control over their activities. My Department has already learned a great deal about the enterprise boards funded by the GLC and the metropolitan counties because we have power and control over their expenditure, which is exercised by my right hon. Friend the Secretary of State.
Some of those boards have adopted sensible, commercially minded approaches. I am sure that my hon. Friend does not object to that. I have to answer another debate later about the role of the Greater London Enterprise Board. Enterprise boards can offer potential advantages and, as my hon. Friend said, potential disadvantages. For example, an enterprise board, by concentrating local authority services in one body, separated from day-to-day political pressures, may be able to work more closely with the private sector, build up its own special expertise and identify gaps in local private sector provision whether in sites, services or capital. A body operating like that, using commercial criteria but with a regard to local employment needs, seems to me capable of fulfilling a useful role, not least in fostering the birth and growth of small firms in inner city areas.
There are obvious dangers, as my hon. Friend said, if the board diverts local government from what it can do to help in basic policy areas, in assembling land for example; or if it leads to additional bureaucracy with its own priorities, merely adding to industry's rate burden and imposing excessive conditions on the firms receiving aid. Problems would also arise if the scale and nature of the operations worked against national or inner-city priorities. Those dangers, while not inevitable, depend upon the guidelines that are set for the board by the elected members, how its performance is monitored and how it is made accountable.
As I said a moment ago, the Government have set up a committee of inquiry under the chairmanship of David Widdicombe to consider a number of aspects of local authority affairs, including the use of local authorities' discretionary spending power under section 137. As my hon. Friend made clear, it was the use of section 137 which enabled Southampton at the end of the year to use the margin available to it to fund the enterprise board. The Widdicombe inquiry will be looking at the clarification of the limits and the conditions governing the existing powers under section 137. There is a particular reference to bodies set up and largely funded by local authorities. Therefore, I expect the activities mentioned by my hon. Friend to figure quite prominently in the committee's deliberations.
My hon. Friend will understand that we want to have the benefit of the views of the inquiry, as an independent,

1471
impartial body, on the difficult issues that he mentioned before we can consider what policy changes are appropriate.
I come now to particular issues concerning the Southampton city council enterprise board, SEDCO. One of my hon. Friend's concerns is that it could be used to evade the normal Government controls on local authority expenditure. He described the transaction of the £3 million deposit with the £3 million advance.
It is certainly true that there are no constraints on the amount of money that an enterprise board may spend, other than those that apply to any commercial undertaking. Such expenditure is outside Government control on local authorities and could be brought within it only by primary legislation.
Grants to the enterprise board under section 137 would score against the authority's prescribed expenditure allocation. Likewise, revenue grants by Southampton to its board would count towards total expenditure for target purposes. My hon. Friend touched on the guarantees to the enterprise board and the potential long-term commitments that might be inherited by a city council of a different complexion.
As a matter of principle, I welcome private sector capital injections to a board as an indication that it is acting along sound commercial lines. The guarantee provided by the local authority does not score against expenditure until the guarantee is called. If it was called, a guarantee of a revenue nature would count towards total expenditure, but a guarantee of a capital nature would be prescribed expenditure only if the authority thereby came into beneficial occupation of a capital asset.
My Department is now reviewing the whole system of capital expenditure controls in consultation with the local authority associations, and the question of local authority controlled companies will be examined. It is a complex area and I listened with special interest to what my hon. Friend had to say about Councillor Michael Andrews, who was appointed to the board by the city council but subsequently dismissed in the circumstances outlined by my hon. Friend.
If Councillor Andrews was simply being censured for acting responsibly as a guardian of ratepayers, that is something that I would roundly condemn. I would want more details about the case before going further than that; however, there are grounds for anxiety. It raises the point of principle, on which I touched earlier, of the conflict of interest between accountability to the local authority and accountability to the enterprise board to which one is appointed as a director.
In the light of what my hon. Friend has said, we will continue to maintain a close watching brief on the operation of the boards, not least the one in Southampton. The points that my hon. Friend has raised are material to that monitoring exercise. When the recommendations of the Widdicombe inquiry are available, and when the exercise on capital expenditure controls is finalised we will be in a better position to decide whether any changes are required to the legal framework in which they operate.
In the meantime, I commend my hon. Friend for his diligence—which we have grown to expect from him—in bringing to public attention the potential abuse of the position in Southampton. My Department will keep a close watch on the position that he outlined.

Borders Region (Social Fund Assistance)
1.28 pm
Mr. Archy Kirkwood: I am grateful for the opportunity to raise the subject of the effect on the Borders region of the European Community's decision to withdraw priority status for social fund assistance.
I apologise to the Minister for having interposed myself between him and his holiday. However, I hope that he will agree that this is a subject worth considering because it has been causing some concern to my local authority. I hope that we shall have a useful half hour's debate.
New guidelines were issued by the European Community on 30 April this year on the management of the European social fund for the years 1986–88. These new guidelines exclude the Borders region from priority for most, though not all, forms of European social fund assistance. Before the change in the guidelines the Borders region was eligible for most types of European social fund assistance, because it came within the "priority" region which at that time encompassed the whole of Scotland.
The EC has now decided to change the geographical coverage of European fund assistance to cover smaller units based on local authority regions and counties which are undertaking industrial restructuring or have a particularly high unemployment rate or, alternatively, many long-term unemployed. Since the guidelines change, only two local authority regions in Scotland are without European social fund assistance priority—the Grampians and my own region of the Borders.
It has been made clear to the Government by me and by my right hon Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) as well as by people in the Borders region that employment by itself is not a good measure of economic well-being in a rural area such as the Borders, to the exclusion of everything else. The total number of unemployed in the Borders region in June 1985 was 3,460, giving an average rate of 9·1 per cent. I fully accept that in other parts of the country unemployment is much higher. Nevertheless, it is worth noting that there has been a slight but significant increase in the level of unemployment since June 1984, when it was 8·6 per cent. That is the direction in which the trend is going and it is causing concern in the Borders.
Within the regional average there are wide local variations in unemployment rates. For example, in the Berwickshire travel-to-work area within the Borders region the June 1985 unemployment rate was 13·3 per cent., which is only slightly lower than the current Scottish average and slightly above the current United Kingdom average. The situation in Berwickshire will deteriorate still further after the civil work stage at the nearby power station at Torness is completed. It seems unfair for the Borders, and Berwickshire in particular, to have European social fund priority withdrawn when other parts of Scotland with lower unemployment rates are being allowed to retain priority status.
The main thrust of the European social fund objective is to provide for the needs of two classes of people, those unemployed under the age of 25 and long-term unemployed. The April 1985 figures for the Borders show that one third of those out of work locally are under 25

1473
years of age. In addition, the number of local long-term unemployed has quadrupled since the late 1970s. In the Borders, 29 per cent. of the unemployed have been out of work for more than a year. In the bigger industrial areas, such as Hawick, 34 per cent. of those out of work have been unemployed for more than a year.
There are other factors that the Government should recognise when they take policy decisions, whether exclusively or in concert with the European Community, about the status afforded to different regions under any development or regional assistance scheme.
The continuous loss of population from areas such as the Borders is a problem. If those in the economically active age groups find difficulty in getting work, they move elsewhere. The Minister may take the view—and it is a view that others Ministers have taken—that there is nothing wrong with that. People may well get on their bikes, but one must consider the enormous problems created by imbalanced population distribution and the knock-on effects in other parts of the community when working age families start to leave the area in significant numbers. One very quickly realises the high price that has to be paid when active families quit the area.
The lack of employment opportunity is another factor which must be taken into account. The regional council in the Borders is doing its utmost to encourage and promote new, diversified industry to create new jobs from within the region and to encourage inward investment. I am pleased to say that it has been extremely successful, but changes, such as the new directive issued in April, mean that the council will be operating in future with one hand tied behind its back. I suggest to the Minister that the high incidence of low pay is another important factor in the Borders economy. Many families there need to have both parents working if they are to have a tolerable standard of living. The existence of two wage earners in a family in other parts of the country often signifies a desire to indulge in luxurious living, like the soft-living people who live in the south-east of England, but in such places as the Borders it is necessary to have both parents working to enable families to keep their heads above water.
There are also difficulties in getting guidance and advice to those out of work in a geographically disparate region such as the Borders. There is no access to commercial job agencies, as there often is in urban areas.
I have been pressing the Government, principally the Minister's colleagues in the Scottish Office, ever since I was elected to the House to recognise that areas such as the Borders have problems. They may not be the same problems as those in the more urban areas and they may be less easily quantified and recognised, but in their own way they are as real and as urgent. In my opinion, they are frequently ignored by Governments.
I strongly urge the Minister to hold urgent talks with his opposite numbers in the Scottish Office. I understand that it is not entirely within his responsibility, but I ask him to discuss these matters with his colleagues with a view to bringing forward early proposals to set up a rural development plan that could be used in conjunction with the Scottish Development Agency's powers and those available already to regional council planners to give a real boost and stimulus to appropriate types of commerce and industry in the landward areas of the United Kingdom.
1474
I accept that the grand, capital-intensive projects that have been considered in regional development schemes in the past may not be appropriate to smaller areas, but there is every opportunity to set up a sensitive and sensible amount of programming and planning within the remit of a rural development plan. It would not cost an enormous sum of money, but it would make a significant difference to the economic activity in such places as the Borders. In my view, no other single initiative could do more to generate real and beneficial economic activity in rural areas.
I remind the Minister, because he is responsible for the Department of Employment, that we in Scotland do not have the benefit of an organisation such as COSIRA, which has set up a rural development area south of the border in Northumberland. From north of the border we look across with envious eyes to what is happening there. Real and positive developments are taking place. The position is made worse from our point of view because Border Television straddles the border area. I get nightly reports on activities in north Northumberland, and my constituents telephone me asking why I am not getting this for them. It does nothing but engender and foster nationalism of the very worst sort, and the Government ignore that at their peril. The work that COSIRA has been doing is commendable. There is a great deal to be said for it, and it should be mirrored north of the border. If we had it, it would go a long way to mitigate the effect of the withdrawal of European social fund assistance.
The Borders lost its assisted area status in August 1982. It meant, among other things, that the Borders was no longer eligible for assistance from the European regional development fund. The loss of priority for European social fund assistance means that the region no longer has effective access to the most important forms of EEC funds available to local authorities. I am aware that restricted eligibility to European social fund assistance still obtains, but my local authority reports to me that it is difficult to use the categories that remain available because they are so very restricted.
I am also aware that to date no real use has been made of the European social fund's schemes. The Borders region has not been able to benefit from the funds but it had begun to mount a series of training initiatives for about 300 unemployed persons through the Borders college of further education. They would have been looking for financial assistance from the European social fund. It is a great tragedy that these efforts, which were well advanced, may be prejudiced if not entirely thwarted by the decision to withdraw priority status from the Borders region.
The Minister therefore owes us answers to a few salient questions. First, what influence, if any, do the Government have over the Commission in Brussels when it takes decisions of this kind? I am as ardent a European as the Parliamentary Under-Secretary of State, but nothing is more likely to sour pro-European feelings than decisions of this kind being visited upon us. I quote from The Scotsman of 12 June 1985 and pray in aid the Conservative Member of Parliament for the European seat of South of Scotland who said:
"According to the Commission's own table of areas with regional problems, the Borders come within the top one fifth, along with regions like Tayside, Central, Fife and Lothians. There must therefore be evidence for including the Borders on the list of regions qualifying for ESF's assistance."

1475
Since the regional authority, the local Members of Parliament and the European Member of Parliament agree that the fund needs to be retained, what influence, if any, do the Government have over the Commission?
Secondly, what representations were made by the Minister on this issue? I accept that negotiations with the authorities in Brussels do not revolve around the needs of Hawick and that policy decisions have to be taken on a much wider basis than that. However, the Government should have considered the implications for regions such as my own and for Grampian when the strategic decision was taken, which predated the April announcement, to withdraw priority status from these two regions.
Finally, will the Minister give an assurance that, if he cannot deliver a rural development plan and if he is unable to have discussions with his colleagues in the Scottish Office about a rural development set-up in Scotland, he will seek to have the Borders region reinstated as an area that qualifies for European social fund grants? Because of the problems faced by 300 youngsters who had expected to be provided with extra assistance for the employment projects of the Borders college of further education, can the Minister assure us that the Government will consider the problems caused by the withdrawal of European social fund assistance? Nevertheless, I hope that he will be able to say something positive about the establishment of a rural fund for the Borders area.
1.43 pm
The Parliamentary Under-Secretary of State for Employment (Mr. Peter Bottomley): The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) has not interrupted my holiday. It was not supposed to start until next week. In fact it is being interrupted by other matters. One of the encouraging aspects of being an Employment Minister is that not only is one able to listen and pay a great deal of attention to representations but one is also able to learn about success stories in the various regions of the United Kingdom. Too often we refer only to the failures. The hon. Gentleman has done well to point to many of the successes in his constituency and in the Borders region. I hope the message will go out that, even if he does not get what he is asking for from the European social fund, although Ministers may occasionally have to say no, we are just as keen as is he to ensure that the 300 young people to whom he referred are provided with the best possible opportunities. All those with the power to influence events —those on the regional council, Members of Parliament and those in statutory or voluntary organisations, or in commerce and the public sector— should try in every way to encourage people to do more for themselves and for others. The idea of such a self-improvement society unites most hon. Members. I am glad to see my hon. Friend the Member for Tayside, North (Mr. Walker) here. There is hardly a Scottish debate in the House without his presence, and often his interventions.
In simple terms, special schemes to meet needs are bound to create problems. Last night, I replied to a debate about the definition of a travel-to-work area. It was said that if a ward could be placed in a different travel-to-work area, extra help would be available. With any scheme people on one side of a boundary say, "We want to be on the other side because our problems are worse than others realise." In the Borders, incomes are lower than they are in some areas. The hon. Gentleman said that that should be taken into account when looking for priority areas under
1476
the European social fund. I would not claim to be an expert on whether it is taken sufficiently into account, but if it was given a higher weighting than the unemployment figures I could not guarantee that the Borders would come top of the list for receiving more favourable consideration.
The Government make representations to the European Commission, and we have views on some areas which we believe, rightly, should be included for priority treatment. The Borders is not at the top of that list. Other areas are in a much worse position than the Borders. I hope that the hon. Gentleman's constituents will realise that, however persuasively he has made their case, I must say bluntly that the Borders does not come top of the list of areas that should be given the highest priority. I hope that they will realise that we must work out our priorities and try to do something for the worst afflicted areas first. No doubt all of us would wish to treat the entire country in the same way, but if we did that we might lose assistance. We must exercise some common sense.
The hon. Gentleman asked about our influence with the Commission. I should tell him that the Commission has the legal right and, I expect, the duty under article 6 of the Council decision on the tasks of the social fund to set the priorities for assistance from the fund for each financial year by means of guidelines. The priority areas are part of those guidelines. Member states, including the United Kingdom, are consulted about the contents of the guidelines before publication, and although the Commission will listen to representations that we make, it is not legally bound to accept them. It is responsible for making the final decision. We put in strong representations on behalf of the areas that we believe should be included, and we must then wait to see what the Commission says. If it says something that we believe to be illogical or inconsistent, we can return to the Commission and say so.
It is worth remembering that the United Kingdom does relatively well from the social fund. That is because we deserve to do well. However, we also try to ensure that we take advantage of all the opportunities available to us. The guidelines are there for a purpose — to meet special needs—and if we can organise ourselves and put in the appropriate applications, we shall do well. Those who do not do what the social fund is designed to achieve will not do as well. Occasionally, we are unhappy with changes in allocations, but perhaps any comment about that should be left for another time.
I pay tribute to the officials in the Department of Employment who deal with social fund matters. They have a high reputation with Commission officials in Brussels for the quality of their work and for their knowledge of what we and the Commission are trying to do. They also have a good reputation among applicants from the United Kingdom for their helpfulness and knowledge. That is well reflected in the number of allocations made by the fund to the United Kingdom during the past few years. I should tell the hon. Gentleman that anyone who is thinking of developing a scheme should contact the European social fund section of the Department of Employment. Even without priority status, there are opportunities to help people to put in applications that meet some of the other guidelines.
It is worth saying — and not too loudly — that I suspect that the changes in the guidelines for the European social fund will make virtually no difference to the Borders region. In future, people may think that the schemes that they have worked out would have been accepted under the

1477
old arrangements, but that is looking some way forward. In another debate, which did not come off, another region would have been mentioned which thought that the changes were frightful. That case was not precisely the same, but even under the changes it got twice as much in the subsequent year as in the previous year. Therefore, the changes are not quite as bad as they appear.
I should like to answer some other questions that the hon. Gentleman asked towards the end of his speech. First, he asked what the Government were doing about the position of the Borders in the priority list. We have made it clear to the Commission that we disagree with some parts of the new priority list. We shall continue to make representations. Frankly, that does not mean that we believe that the Borders has been unfairly treated in its position on the priority list. It is worth noting the unemployment rates in some of the new priority areas—for example, 11·3 per cent. in Derbyshire, 12·4 per cent. in Lincolnshire, 10·7 per cent. in Nottingham and 14·6 per cent. in the Isle of Wight. Although I am not going into the details of the level of income and the difficulties of a relatively small population, well dispersed, I think that most people regard it as reasonably fair that there should be some order of priorities.
The reason for having priority regions is that the social fund supports employment and training schemes in the member states, and is invariably oversubscribed. Many of us would have views on the balance of spending in the European Community, but given the size of the social fund as it is now, there is a need for priorities. To ensure that the money available goes to the areas of greatest need, regions with the highest unemployment are given priority for funding. There is a more restricted range of employment and training schemes supported in non-priority regions, as the hon. Gentleman acknowledged.
How are priority regions determined? Before the fund review undertaken by the Council of Ministers in 1983, they were defined in the United Kingdom as standard regions with the highest unemployment. The term "standard region" could have been better phrased because the whole of Scotland was regarded as a single standard region and given priority status. Those standard regions were considered too large because, as the hon. Gentleman said, pockets within them that might be seen as having lower priority qualified and some areas where unemployment was high were not in standard regions. The new system allows fund aid to be more precisely targeted, although not as much as some people would like. A balance needed to be struck between targeting aid and the administrative nightmare of splitting the Community into thousands of small areas.
The Commission proposed that the new system should be based on a statistical mechanism. In the United Kingdom, at county or regional level, it would list areas on a hierarchical index with those with the highest unemployment and lowest income placed at the top and those with the lowest unemployment and the highest income at the bottom. Then it would be necessary to find the appropriate cut-off point to determine who had high priority status. That is self-evident.
There has been a delay in introducing the new system because of normal difficulties in working out the statistical mechanism. The Commission was not able to introduce the league table system until 1986, old priority regions
1478
having been retained on a transitional basis for 1984 and 1985. Although the final statistical mechanism has not yet been agreed by the Council of Ministers, the Commission considers the system equitable enough for introduction in the next round of applications and the Government agree in principle that a more rational means of determining regional priorities is necessary.
What is the effect of the change? It is pretty small from the United Kingdom's point of view. Some areas such as the Borders have lost priority and others have gained it, some of which I have mentioned. It is worth noting that the United Kingdom has gained relative to most other member states.
We should not regard the social fund as a great football match in which we try to grab the greatest share that we can. However, it is important to maximise the gain for the United Kingdom. At the same time, it is necessary to consider the underlying purpose of the fund and to ask ourselves whether our targeting is right and whether the existence of the fund encourages us to do things that we might not otherwise have undertaken, especially in the local authority and voluntary sectors.
The hon. Gentleman spoke of the unemployment rate in the Borders and the possible effect on the region of its removal from the priority list. It is worth noting that in 1985 there was just one application, which was successful. The application was submitted by a charitable organisation that is directed to the employment rehabilitation of the mentally handicapped. The project is likely to continue to be eligible for social fund assistance despite the change in status of the region. One cannot be absolutely certain but that is the presumption.
The removal of priority status does not exclude the Borders from access to social fund grants. There is scope for applications to be given priority under guidelines that are not subject to regional limitation. Vocational training schemes for new technology skills for those aged under 25 years is one of the target groups. We are as concerned as the hon. Gentleman to ensure that there is as much help for them as possible. We cannot claim that new technology skills are the answer for every young person, but it is important that as many as possible who can benefit from the schemes are able to do so.
The fund is still able to consider training where exceptional measures are being taken to assist industrial restructuring; training-linked jobs in small firms involving certain new technologies; schemes for women, migrant workers or the disabled and innovatory projects. The Department is keen to assist any organisation in the Borders or anywhere else that is contemplating applying to the social fund for assistance. Applications to the Department should be submitted by 31 August. This may mean that some people will not get the holidays that some hon. Members may be expecting.
I turn to the main area in which the hon. Gentlman can help positively, as he is doing, which is to consider whether more can be done perhaps to encourage the establishment of a system that is similar to COSIRA in Scotland. The hon. Gentleman talked about a regional development plan and the creation of appropriate schemes but I cannot provide the answer. In this instance the Department is not the expert and it is not in control. I shall ensure that the hon. Gentleman's comments are passed to my colleagues in the Scottish Office or even the Department of Trade and Industry. I am sure that he will persist in trying to ensure that with or without public

1479
funding there will be the same kind of encouragement, the accumulation of expertise and the finding of means to build and reinforce people's confidence and competence.
The hon. Gentleman spoke of the migration of active families and made some mention of dual income households. It is worth noting that I am one part of a dual income household. The hon. Gentleman made a polite remark about my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley), which she put in her local newspaper. Unfortunately, his name was misprinted—he was given a female christian name. One of the newspaper's readers wrote asking whether she did not know that the hon. Gentleman was a man. The newspaper printed the letter and it was a week later when it bothered to acknowledge that it was responsible for getting his name wrong.
Apart from examining schemes that have already been agreed, such as the social fund, and pressing for other schemes to be created that will assist in the development of industry and employment in rural areas, we must recognise what is happening outside the social fund, although these developments may be assisted by it. I hope the hon. Gentleman will encourage those who might be referred to as community signposts to learn about the details of the enterprise allowance scheme. It allows many of those who have been out of work for 13 weeks or more and who can produce £1,000 to set up in business while retaining basic benefit for a year. The scheme has been found to be a good way of getting people to fill gaps in the market and to bring together unused resources—often their skills and labour—to meet unmet needs.
It is worth giving encouragement to the youth training scheme. It is knocked sometimes, but it is recognised by those on it to be of great value. The same is true of developing the community programme.
There is a partnership of opportunity and responsibility. We in the Department are glad to play our part and I am pleased that the hon. Gentleman has given me the opportunity to explain that fact. I wish his constituents well in finding employment and creating a better future for themselves.

North-Western Regional Health Authority Plan
2 pm
Mr. Fred Silvester: I have been hoping for some time that my name would he drawn out of Mr. Speaker's hat so that we could debate this subject and I am pleased that it has happened at last, though I am sorry for my hon. Friend the Minister for Social Security who has drawn the short straw of replying to the penultimate debate before the recess.
I hope that, although my hon. Friend has a carefully prepared brief from his civil servants, he will throw away some parts of it. I hope that he will not start by telling me that the NHS in the north-west has done relatively well. I know that, and I spend a lot of time telling people that fact. The growth rate in the north-west is 23 per cent. in real terms and is above the national rate. Those who live in Preston, Salford, Wigan, Blackpool, Burnley, Blackburn, Leigh, Bury, Oldham or Tameside will find new hospitals to prove it.
I also do not need to be told that the resource allocation working party system is very good for the north compared with the south, that an extra £52 million has been devoted to the north-west since 1979 and that RAWP is a good system for diverting resources. I know that, too.
I also hope that not too much of my hon. Friend's speech will be devoted to the fact that south Manchester is relatively well off and has 11 per cent. more than the RAWP average for other places in the area. I know that it is the third best in the north-west after Rochdale and Trafford on a hospitalisation index. I mention those facts to get them out of the way. They are agreed and we do not need to debate them.
Let us turn our attention to the nitty-gritty. The regional health authority plan says that Manchester is too attractive. Therefore, it is planned to reduce the number of patient treatments by 9,000 or 10,000—from about 76,000 in 1984 to about 66,000 in 1993. It follows that, with the removal of patients, there will be a removal of beds and of the staff and resources that go with them. The 9,000 or 10,000 patients are to be treated elsewhere in the north-west and the money will go to those districts. We are talking about a localised problem, but one of some magnitude.
While the loss is taking place, south Manchester, like other districts, is witnessing a growth in patient care, reckoned to be 2 or 3 per cent. However, unlike other districts, we are not getting extra money. Indeed, we are losing money. We shall have to deal with additional local patients by squeezing the service provided to them or by sending even more patients elsewhere. That is the basis of the problem.
My right hon. Friend the Secretary of State for the Environment recognised in yesterday's statement on the rate support grant that some authorities have less fat to remove than others, because they are already more efficient. We should apply the same principle to the NHS. Compared with other health authorities, the south Manchester authority is efficient and the fat does not exist.
Over the three years up to 1985–86, south Manchester has increased patient treatments by 11·5 per cent. and increased bed throughput by 13 per cent., at a time when

1481
its revenue has fallen by £3 million. It is the only district in the north-west that has managed higher activity on a lower budget.
My hon. Friend the Under-Secretary of State for Health and Social Security claimed in his latest letter to me that south Manchester's efficiency was the result of a massive increase in Government investment. It is true that £5 million capital was spent in the district between 1982 and 1984. However, let us be clear what that means. About £1·25 million of that is going on the cardiac and renal services, which are regional specialties. About £2·8 million is going on the Duchess of York new pediatric unit.
That is being paid for out of the savings—which will accrue by changing from the old service to the new unit —of £600,000 a year. All that the district is obtaining, therefore, is the bridging facility while that money comes in. Meanwhile, to pay for the other on-going expenses at the district level, capital expenses — for example on maintenance—are being severely cut.
The improved cost per patient of the district is due not so much to Government investment, as the Under-Secretary claimed, as to good management and increased efficiency. I emphasise the point about efficiency because the district has the second lowest management costs of the region, at under 3 per cent.
The support costs at the Withington and Christie hospitals are low compared with similar establishments. The staffing at the nursing levels is traditionally lower in the district than in hospitals generally, and the cost per activity in the district is the lowest in the north-west. One might compare, for example, the Royal Marsden with the Christie, two cancer hospitals of international repute. The cost per patient at the Royal Marsden is twice that at the Christie.
To meet the targets and budgets set for the district, the people there have not been idle. We have already closed one geriatric ward, having been told that the region has facilities elsewhere. Let us hope it has. One children's ward is being compressed for a year until the new unit opens. We can live with that. Two chest medicine wards have been closed. Again, the region says that it has scope elsewhere, and we hope it has. The maternity arrangements have been completely reorganised to make savings. Other savings have been made and yet others are projected.
The first of our units has gone out to competitive tender, and that represents a continued search for slimness in an already fit athlete. Nobody denies that those efforts should continue, and they will, but what is currently proposed is, frankly, daft. The Under-Secretary had the cheek in his letter to me to say:
"We are not, in fact, asking South Manchester Health Authority to reduce its services. We are requiring it to live within its means."
He should not insult my intelligence or that of the people of south Manchester. The regional plan precisely and overtly requires south Manchester to reduce its services, and the budget allocated is based on that premise. Therefore, we can live within the means set by the region only by reducing services.
The district has struggled and has managed, on the whole, to maintain services to the patient. Despite much local propaganda, it is generally true that services to the
1482
patient have not been badly affected and are still very good. However, we are storing up severe long-term problems. Some of our facilities are now under great strain and matters such as maintenance will get progressively worse.
However, even what we have accomplished is not enough. The original deficit for the current year was £3 million. By the prodigious efforts that I have described, the authority got it down to £900,000. We now have the pay award which, on our calculations, will add £750,000, so that the deficit will rise to £1·5 million. To achieve that, we are having to look at a 4 per cent. across-the-board cut in services. That will affect the medical as well as the support staff and other facilities. To pretend that this is not a cut in south Manchester is to debase the Government's case. This cut is taking place in a region which is expanding and doing well, but it is certainly a cut and no semantics will overcome that fact.
Is this policy sensible? The Government are undoubtedly right in saying that people on the whole would rather be treated locally so that they no longer need to go into Manchester. However, this takes time. We are not responsible for GP referrals. We cannot be responsible for the speed or the absence of facilities in neighbouring districts. We cannot help it if, as is apparently the case, Christie hospital is bogged down with smear tests referred to it from Merseyside and all over the north-west. The hospital does not have the ability to cope. If these reductions occur, our ability to cope will be diminished. If there is to be a transfer to other parts of the north-west, there must be a link between the transfer and reduction of resources.
There is a grey area between those treatments that are purely local and can be treated in district hospitals elsewhere in the north-west and those that are recognised as regional specialties. The reputation of teaching hospitals, especially these hospitals, continues to act as an attraction. Why not? It is difficult to argue that there is any point in destroying excellence simply because it fits into an administrative pattern.
A new element has entered this confusion. We are told that the reduction in the number of patients in south Manchester will no longer be 9,000 by 1993 but will be only 1,200 because Trafford will no longer have its new general hospital. Instead of losing only 3,500 patients, Trafford will lose 9,000 and the additional patients will come across the border to the Wythenshawe hospital.
By 1993, the reduction in south Manchester will be less than originally imagined. Will there be more money? So far, there has been a resounding silence on that question. Will my hon. Friend the Minister guarantee that revised higher budgets for south Manchester will be rapidly produced between now and 1993 to take account of the fact that the case load will be different? We must have that information as soon as possible.
The facilities which are being closed to meet budgetary requirements will be needed if there are to be additional patients by 1993. Do we really envisage that we will remove facilities, with good teams and people working together, in order to have a downturn in the late 1980s, and that we shall try to reconstruct these facilities in the early 1990s? Does that make any sense? Will my hon. Friend urgently consider the programme with the region and the district between now and 1993 in order to avoid breaking up this year teams which will be needed later?

1483
My hon. Friend the Minister and I are good Tories. One of the aspects of being a good Tory is to be sensitive to the speed of change. They may not think that in the GLC, but it is generally true. No amount of accountants' rhetoric can change that. Even if the region is right —I have doubts about some of its policies—there is no way in which this change can take place at this speed. The change will be too quick and unmanageable.
The co-operation which was supposed to occur between the region and the district has not taken place. The regional chairman, Sir John Page, has clearly said that, if he had more money, he would not give it to the south Manchester district. There are 19 districts and, if 18 benefit and one loses, it is no good taking the matter to a vote. But the Minister has ultimate responsibility for it. which he cannot overcome.
I remind my hon. Friend that in 1983 the Government gave a special grant to Tadworth Court hospital over and above its regional allocation direct from the Department. It then gave £890,000 for each of three years. Far be it from me to suggest that that occurred because it was in the south of England and because there was intense media interest in the matter. I am sure that nothing of that kind occurred to influence the decision. But I will not even ask for the £1·5 million that we are short of; I will settle for the same as Tadworth Court. Will the Minister give us £890,000 or some other suitable sum which will help us through the transitional period?
I am very serious about these matters and I should be more than grateful if the Minister would put away his Civil Service brief and look at the problem seriously for himself, remembering my three questions. I am sure that he desires, as I do, not to tarnish a very good record in the National Health Service, and particularly in the north-west. But we cannot make that stick if we allow the region to inflict severe and unnecessary damage on one of the finest centres of medical skill. care and research in the country.
2.16 pm
The Minister for Social Security (Mr. Tony Newton): Despite the kind words of my hon. Friend the Member for Manchester, Withington (Mr. Silvester) at the outset about my having drawn the short straw in being here at this time, I am glad that he has had the opportunity, thanks to his luck in Mr. Speaker's draw—or whatever other mechanism is used for deciding when the debates take place—to bring this subject before the House this afternoon. It enables me to pay a well-deserved tribute to the assiduity with which my hon. Friend advances the cause of his constituents and brings the arguments before the House and before Ministers. It also gives me an opportunity to make some comment on the points that he raised.
My hon. Friend will realise that, in pre-empting some of the points that he expected me to make, I shall not be entirely diverted from some observations about what I take to be the record of the present Administration in providing resources for the Health Service in the north-west, but I shall also try to make some response to my hon. Friend's specific questions.
I do not need to tell my hon. Friend that resources in this area are undoubtedly not limitless, any more than are resources in any of the other fields with which Ministers are concerned in this or other Departments, but often the demands can he limitless. Clearly, there is a very large demand for health services, particularly when we take
1484
account of the increased number of things that can be done with modern techniques and modern knowledge. One of the main reasons for some of the pressures that we face is the very success of modern medicine, with the much wider range and scope of treatment that it can offer.
It is remarkable that south Manchester, like many other districts throughout the country, is treating many patients today who a few years ago would have had no hope whatever of being treated. That is part of the background to our debate. Even allowing for my hon. Friend's comments, that record has been assisted by a very considerable investment in the south Manchester district. Health Service resources will always—it is probably in the nature of things — be catching up with medical advance, but there has been a considerable investment and it has played a part in the achievements to which he referred and which I want to emphasise.
Equally, I accept that our job as Ministers in the DHSS is to look at all the demands, taking account of and making a judgment about priorities. We have to make as fair and just decisions as we can among the many competing claims. More specifically, we have the responsibility—I refer particularly to the Minister for Health and the Under-Secretary of State dealing with health matters — of dividing the money available to the Health Service between the 14 regional health authorities in England. My hon. Friend will understand how sorry my right hon. and learned Friend and my hon. Friend the Under-Secretary are that they were unable to be here this afternoon.
It is the job of the regional health authorities to divide their share among the district health authorities that manage local health services. That allocation of resources to districts must be taken at regional level because at that level are the people who have some genuine understanding of regional and local needs — the people close to the coal face, to use a fashionable metaphor. It is the job of districts to spend prudently the money that they are allocated, as a result of their judgment of what is needed, and not as a result of a decision imposed by Ministers from the centre.
Whatever adjustments one might make to the balance of that decision-making process, it is clear that it would be wrong and unacceptable for south Manchester, or anywhere else, if Ministers attempted to second-guess every decision made at regional or local level.
We are well aware that historically the north-western region has been a deprived area and needs our special attention. My hon. Friend fairly acknowledged that the Government have made great strides towards reducing the inequalities that have existed since the NHS began. Our plans are largely to complete a redistribution of health resources among the relatively well off and relatively poor areas within the next 10 years. The total additional revenue allocation for the north-west this year is £43 million—5·5 per cent above the 1984–85 level. As my hon. Friend is aware, the region is moving quickly towards its revenue target within that framework and will be only 1·8 per cent. below it this year. That should be compared with the fact that it was nearly 11 per cent. below its target in 1977–78 under the Labour Government.
I wish to emphasis the fact that the capital allocation in the north-west this year is the second highest in England. The north-western region receives about 11 per cent. of the national cake for new buildings. About £1 billion-worth of new hospital schemes are being planned, designed and built.

1485
I hope that it will be common ground between my hon. Friend and I that the north-western region is better off now than it was; it is being more fairly treated in relation to other health regions; it is treating more patients and, I understand, receiving fewer complaints about services than ever before.
I recognise that the implications of all that for south Manchester are of interest to my hon. Friend. The district development for teaching has continued rapidly. A number of facts, some of which my hon. Friend has mentioned, should be emphasised. There has been £5 million of capital spending within the district during the past two years. A new day unit for elderly, mentally infirm patients is in operation. My hon. Friend referred to the £1·25 million in revenue that has been spent on cardiac services and kidney dialysis. Those services are of great importance to many people. He also referred to the new paediatric unit at Withington hospital and an acute leukaemia treatment unit at Chistie hospital which are due to be started this year at a cost of £3·6 million.
The district is one of the best funded in the region, and it is the highest funded per head of the population of the north-western region's three teaching districts. In the light of what my hon. Friend said, I do not wish to place great emphasis on that, but in south Manchester it is easier to gain hospital treatment quickly than in many other districts in the north-west, such as Bolton and Blackpool.
Looked at from one point of view, the challenge facing the region—it has its difficulties— is to move other districts towards south Manchester's position. That is the task to which the region has been directing its attention in its new strategic plan. I am in difficulty this afternoon because that new plan was submitted to the Department only recently, and clearly neither officials nor Ministers have had the opportunity that they would wish to consider it.
I am inhibited from giving clear-cut answers to my hon. Friend. It is too early to give a considered reaction to a plan that has only just been received. Against the background of the regional priority, it is clear that south Manchester will continue to develop. This year alone, 50 more open-heart operations are planned at Wythenshawe hospital, making 900 in all, and 41 more renal dialysis treatments are planned at Withington, making 268 in all. That is the sort of development of which we can all be proud, especially those living in south Manchester.
To come closer to the heart of what my hon. Friend was saying, there is the problem that some of that progress could be endangered if the district continues to overspend its cash limits. I understand that £2·8 million is likely to be overspent this year. Unless that is checked, that is money pre-empted from the development in south Manchester and other districts. Under any Government, not just this Government, health authorities must live within their budgets. The regional health authority is therefore working with the district to find ways to reduce the accumulated overspend while continuing to provide the current excellent level of service. They are trying to bring spending under control in ways that go beyond the present arguments and genuinely wish to lay the
1486
foundations for future developments in south Manchester. It is important that that should be achieved because, unless it is, it could put in jeopardy the progress that has been made to make south Manchester the centre of life-saving surgery, which undoubtedly it is.
The district authority has set a budget for 1985–86 that can be contained within its cash limits by making better use of its facilities and cutting out waste. In all of that, the proposals are being carefully monitored by the region to minimise the impact on patient care. As far as possible, the region and district hope to reduce the deficit.
Some of the proposed changes may have an effect on the number of beds in certain specialties. For example, a reduction in the number of chest medicine beds might mean that chest medicine would have to be absorbed by neighbouring districts. But, as my hon. Friend acknowledged, if people can receive the care they need closer to their homes, that is an advantage rather than a disadvantage.
I want to pick up the specific questions raised by my hon. Friend. He referred first to guaranteeing revised higher budgets to take account of changes occurring in the plans in other parts of the north-west. He mentioned preserving teams for facilities that might be needed to meet the outcome of the first question. He raised a point about being sensitive to the speed of change. I thought that he was chancing his arm with his parallel with Tadworth, but I understand the spirit in which he put that forward.
I acknowledge my hon. Friend's questions and their importance. He will not expect me to respond specifically this afternoon against the background that the Government are considering the region's strategic plan that underlies his questions. However, I undertake to ensure that my right hon. and hon. Friends will carefully consider his questions; I will ensure that they are brought to their attention. I have no doubt that they will have those questions in mind when considering the region's plan, as they have a duty to do, and when reaching conclusions upon it.
I thank my hon. Friend for ensuring that these concerns are fully and properly brought to the attention of Ministers. I appreciate the spirit in which he has done that. In spite of the fact that there is a large task for us all in this matter, I see no reason to believe that south Manchester, together with the region—and I hope with the help of Ministers —will not succeed in dealing with the difficulties to which my hon. Friend adverted. There will be good cause for the local community and everyone concerned in the north-west, and south Manchester in particular, to be grateful to them for doing so and to my hon. Friend for his efforts to ensure that these considerations are properly taken into account.
It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

North-Western Regional Health Authority Plan

  WEIGHTS AND MEASURES BILL [LORDS]
  Ordered,
  That in respect of the Weights and Measures Bill [Lords], notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time. — [Mr. Peter Lloyd.]

Greater London Enterprise Board
Motion made, and Question proposed, That this House do now adjourn. —[Mr. Peter Lloyd.]
2.30 pm
Mr. Tony Banks: It seems most appropriate that the last debate before the House finishes for the summer recess should arise from the subject which has so dominated our proceedings in the current Session. I refer, of course, to the abolition of the Greater London council which concerns a piece of legislation more misconceived and despicable than any other to pass through Parliament in recent years. It also seems most appropriate that answering the debate will be the familiar ministerial figure of the political odd-job man from Marsham street. If work-rate alone is any guarantee of political success, the Parliamentary Under-Secretary is well on course to take over from the Secretary of State, now seemingly reconciled to his own abolition in the much-awaited Cabinet reshuffle.
The implications of the GLC abolition, despite what Conservative Members may wish to think, will keep coming back to the House right up to the next general election, because we in the Opposition will not allow Ministers to escape the consequences of their politically motivated butchery of a great council and the democratic rights of Londoners.
The Greater London Enterprise Board is an industrial development and job creation agency set up by the GLC. I should like to pay tribute to Michael Ward, the chairman of the GLC's industry and employment committee, who devised the structure, and to the chief executive and staff who run the board. There have been difficulties, and one understands that immediately, hut GLEB was succeeding in its efforts to bring the prospect of work to some of London's 500,000 unemployed, who are on the dole without any hope of a job because of the Government's economically illiterate policies and their wilful refusal to understand the appalling social consequences of such policies.
GLEB exemplifies in practice what an alternative economic strategy should look like, and it is perhaps because dogmatic Ministers cannot tolerate the notion that there are constructive and viable alternatives to hand for the British people that they have done just about everthing that they can to try to undermine the stability of GLEB's operations. It is bad enough that the Government should be denying Londoners the right to elect their own government for the capital city, without at the same time trying to destroy one of the most exciting and widely appreciated initiatives taken by local government in job creation and economic development policy.
I should like to spell out the immediate situation facing the GLC and the enterprise board as a result of the tactics adopted by the Secretary of State for the Environment and his Ministers. During the first two years of the enterprise board's existence the Greater London council provided a total annual budget of around £30 million, made up of some £20 million section 137 funds and £10 million section 3 mortgage loan facilities. The section 137 fund essentially provided the enterprise board with the investment capital that it needed to preserve jobs and help restructure industry in the interests of the community.
1488
During that period the enterprise board has invested in some 200 projects, including more than 100 enterprises, creating and preserving between 3,000 and 3,500 jobs.
A recent report by the independent accountants Thornton Baker has confirmed that GLEB has been preserving and creating jobs in London at an average cost of around £4,000 per job. That is significantly less than the amount it costs the nation to keep one male adult unemployed for a year, not to mention the fabulous cost of job creation in the Government's own enterprise zones. Quite apart from direct investment in enterprises, the Greater London Enterprise Board has also implemented a path-breaking strategy in harnessing new technology to the production of goods and services needed in the community to provide long-term viable jobs, and is also implementing enlightened social policies, including encouragement for industrial democracy and greater equal opportunities at work.
The establishment by GLEB of five technology networks, which can harness the creative ingenuity of London's academic sector for the creation of new products and services for industry, has received widespread national and international praise. About one third of all GLEB's investments are in new forms of social ownership, notably in worker co-operatives, whose commercial survival rate is significantly better than the average for new private business start-ups.
It is accepted that neither the Greater London council nor GLEB can solve London 's economic problems, since that will take the Socialist policies of the impending Labour Government. But GLEB offers one way that it might be achieved and, since imitation is the sincerest form of flattery, I am proud to say that regional and local authorities in West Germany, New Zealand and Australia are actively examining the establishment of GLEB-type bodies.
For the current year, the Greater London council made a commitment comparable to the two previous years in allocating GLEB a budget of just under £20 million. However, under the paving legislation in anticipation of the abolition of the GLC, the Department of the Environment was given powers to veto expenditure under section 137. From the very beginning of the current financial year the Government have consistently refused to release the full amount approved by the Greater London council for the enterprise board's budget. I remind the Minister that this is not Government money. It is not money put up by his Department. It is money made available by the Greater London council out of the rates raised in Greater London.
Ministers have put objections and obstacles in the way of the enterprise board throughout the whole of this sorry period. First, they said that they wanted to see a system of accountability instituted with the London boroughs. GLEB is quite prepared and ready to do this. Indeed, it is already doing it now in conjunction with the Greater London council.
So the Government adopted another tactic. They started to drip-feed GLEB by allowing the GLC to put a little of its own money into GLEB. But such an unhelpful policy inevitably will lead to a loss of confidence by financial and commercial institutions in the future of the enterprise board and its supported companies.
Matters became even more difficult when the Secretary of State made it clear that a condition for drip-feeding was that the board called a complete halt to any new investment

1489
work. As a result of that decision, some 20 major projects, involving a potential of about 1,000 jobs which could have provided some hope for London's unemployed have had to be abandoned by the enterprise board as a result entirely of the Government's malicious attitude and obstructive tactics towards the functioning of GLEB.
Still more serious were the indications of increasing nervousness by the banks which have been helping to finance these enterprises, as they perceive the refusal by the Government to release GLEB's entitled funding as a clear signal to withdraw their support from a number of GLEB companies. The Government are responsible for that, and the Minister should hang his head in shame. It has only been the dedication and expertise of the professional staff of the enterprise board which has prevented a series of GLEB companies from being destabilised this summer as a result of the Government's mixture of malevolence and ignorance in the way that they have handled GLEB affairs.
The Minister for Local Government has now told the GLC and the enterprise board that unless a scheme is put to him by the end of this month—Wednesday of next week — he will not even be willing to consider the release of the remaining £10 million of funds due to the enterprise board from the GLC. I underline yet again that this is not money coming from the Minister's parsimonious Department, starving local authorities of cash. It is money coming from the rates already raised and provided by the GLC.
It is well known that a large number of Labour and Tory boroughs want to continue to support GLEB. But the financial uncertainty surrounding the abolition of the GLC, together with rate capping and all the other penalties and controls which the Government now impose on local government, makes it difficult for the boroughs to commit themselves irrevocably. True to form, the Department of the Environment has said nothing about what Ministers consider to be an acceptable level of borough support. The boroughs are told to provide guarantees, but they are never told what guarantees would be acceptable to the Department. I hope that the Parliamentary Under-Secretary of State for the Environment will elaborate on this matter.
In "Streamlining the Cities" the Government said that they wanted to transfer responsibility for industry and employment from the Greater London council to the London boroughs. During the proceedings in Committee on the Local Government Bill we said that such a proposal was economic nonsense. We remain of that opinion. London desperately needs a regional strategic authority which is able to make plans for jobs and industry in the few difficult years that lie ahead for this Conservative Government. I do not wish to insult the London boroughs, but they do not have the resources and the expertise to deal with these matters.
At least in the early stages of the debate Ministers recognised that in order to take on the additional responsibilities for industry and employment which the Government are to push on to the boroughs they would need increased resources. We were told that the present section 137 2p rate might be doubled to a 4p rate for London as a whole. When the Greater London council is abolished, London will lose the product of a 2p rate. However, no sooner was the ink dry on the White Paper
1490
than the Government abandoned their promise to increase the resources made available to the boroughs for industry and employment purposes. They gave that promise in order to get out of a difficult corner, but they have reneged on their hint that they might provide additional resources.
The boroughs and the Greater London Enterprise Board are therefore in the position that even if the great majority of London boroughs agree to support GLEB they will be unable, with their present resources, to do so. They will be unable to raise the funding to the level that is necessary to maintain, even at an acceptable minimum standard, the board's investment programme. The Government should provide most of the resources for this programme.
I hope that the Under-Secretary of State will be able to tell us whether the Government intend to honour their promise to raise the section 137 limit. If the Government are not prepared to raise it, I hope that he will be able to identify other resources which the Government will make available to the boroughs. I hope that at least the Government will be able to pledge an amount that is equal to the amount raised by the boroughs. Without such a commitment there will be a serious question mark over GLEB's ability during the next few years to maintain its investment and its operations.
The Government do not directly criticise the Greater London Enterprise Board, but they carry out cynical and careful manoeuvres to ensure that they will not be held responsible for the financial strangulation of the future operations of the board. However, the Government will not be allowed to escape from their responsibilities. The Government must release the money that is owed to the board. That money has already been provided for it by the ratepayers of the Greater London council.
The Department of the Environment must also accept that it has a responsibility to help the boroughs to find the necessary resources, including those that are provided from the Government's coffers, so that adequate funding of the board can be ensured during the period after the abolition of the GLC and before the next general election. After the next general election the incoming Labour Government will translate the commitment of the Labour party to the board into a major priority in terms of its new economic reconstruction programme. They will pledge significant national resources for the investment and job creation activities of the board.
The jobs of many Londoners are being jeopardised by the irresponsible attitude of Ministers to the Greater London Enterprise Board. That attitude is inspired more by political malice and hatred of the GLC than by concern for the job prospects of Londoners.
2.44 pm
Mr. Frank Dobson: I join my hon. Friend the Member for Newham, North-West (Mr. Banks) in asking for some guarantees from the Government, even at this late stage, on the future of the Greater London Enterprise Board. My hon. Friend's case illustated the problem. The Government are not worried because the GLEB has been a failure; they are worried because it has been a success. Just as they hammered into the ground the GLC's fare's fair policy, which proved to be successful, popular, economical and sensible, so they are hammering into the ground the Greater London Enterprise Board because it has been extremely successful in creating jobs cheaply, in a way that puts to shame the

1491
enterprise zones which the Government have promoted and their lack of enterprise in creating jobs in any other area.
As my hon. Friend said, the Government's attitude to the Greater London Enterprise Board or to any success which conflicts with their irrational, Victorian and stupid economic policies is vindictive and malicious. That characterises the Government's attitude to the future of the board when the GLC is abolished.
2.45 pm
The Parliamentary Under-Secretary of State for the Environment (Sir George Young): As the hon. Member for Newham, North-West (Mr. Banks) said, it is appropriate that the last debate before the House rises should be on the subject that has dominated the business of both Houses this Session. Of course, it was inevitable that he and J would have to conduct that debate.
There was something symbolic about the hon. Gentleman's solitary stand on this matter today. Until recently he led armies of people round the streets of London, determined to defeat the Government. In Committee he had an army of speech writers, press people and aides at his right hand, and a huge budget available to publicise his case. But now he stands almost alone, apart from the cuddly figure of the hon. Member for Holborn and St. Pancras (Mr. Dobson). His armed forces have deserted the field. His commander-in-chief is negotiating surrender terms, and I suspect that he had to write the speech that he delivered. The hon. Gentleman resembles the Japanese soldier who emerged from a Pacific island not long ago convinced that the second world war was still in progress.
The hon. Gentleman made a series of remarkable claims about the achievements of the Greater London Enterprise Board. I think he said that it was widely appreciated. I have here a letter from the Consultative Group of Greater London Chambers of Commerce and Trade, which states:
"We are of the opinion that GLEB should be wound up, and that viable assets should be transferred to a new company with an effective management. As a first step we would like to see a completely independent valuation made of the assets of GLEB … we do not wish to see major amounts going from ratepayers to continue the expansion of GLEB or to keep in being enterprises that can only be sustained by continuous public funding."
The hon. Gentleman also said that the board was supported by the London boroughs. I have a letter from the clerk of the housing and works committee of the London Boroughs Association, which states:
"We are … highly critical of much of the work that has been undertaken by the GLC and some of the London boroughs in this area of economic development … In spite of the large budget GLEB have only created a relatively small number of predominantly short-term jobs, and have done nothing to encourage the removal of restrictive practices, overmanning, and the maintenance of artificially high wages. Unless there were significant change in the composition of the management of GLEB and its policies and activities. I do not see any possibility of our members wishing to be involved with it."
That hardly suggests a body that is widely appreciated.
May I deal with some of the figures mentioned by the hon. Gentleman. We could spend the rest of the day debating the cost of the jobs created by the board, but other councillors at County hall, who share the hon. Gentleman's concern about the economic problems of
1492
London, have calculated that the jobs created by the board cost, not the £4,000 that the hon. Gentleman mentioned, but between £17,000 and £22,000 each.
The hon. Gentleman's problem is that he is trying to say that the GLEB is a responsible body backing worthwhile commercial enterprises in a businesslike way, but he also says that unless the life support system of County hall is continued after 1 April next year the board will collapse. He must make up his mind. Is the board a viable commercial proposition, or not? If it is, there will be no problem, in his words, of convincing the London boroughs that it is worth pursuing. If, as I suspect, it is not a commercial organisation, but an organisation which has funded many projects which can survive only with continual injections of public money, the London boroughs will have understandable reservations about picking up the commitment which the GLC has undertaken.
The achievements of GLEB were compared by the hon. Gentleman with those of the London Docklands Development Corporation, the London Enterprise Agency and other bodies. However, he did not make those comparisons on a common basis. While GLEB's substantial costs to London ratepayers compare with some of those initiatives, its achievement in terms of creating secure, long-term jobs is relatively insignificant. Despite the strenuous efforts made by the council, the hon. Gentleman and GLEB itself, all that we have is a large amount of hot air, a range of political activities of very dubious benefit to Londoners and precious little in the way of a real contribution to the economic well-being of Londoners.
GLEB is almost friendless, in spite of the hon. Gentlemans' claims. The future of the board is quite properly in the hands of the London boroughs. They have told the GLC that they are unable to express support for the board, that they entertain doubts about the wisdom of its policies and investments, and that they may wish to call for a genuinely independent assessment of the board's activities. They will meet my right hon. Friend the Minister for Local Government on Monday to enlarge on those views. I am sure that he will want to pay close attention to what they have to say. Some London boroughs have gone quite a long way. They see no merit at all in the board, and no justification for expenditure of ratepayers' money on its activities.
Mr. Tony Banks: The Minister said that the boroughs had asked for an independent audit. If they get it, and if that audit says that GLEB is worth maintaining, will the Minister make extra resources available to the London boroughs so that they can maintain support for GLEB?
Sir George Young: I do not think that the hon. Gentleman has been listening to what I have said. I have made it clear that the decision rests not with the Government but with the London boroughs. It is they who have to decide whether they wish to continue to support GLEB. It is not a decision in which the Government have any specific role to play.
One of the most damning of the representations that we have received about GLEB is from a company that went to GLEB seeking help to expand its activities and create new jobs. Its approach failed, not, apparently, because it did not have a good case for support, but because the company's energies were exhausted by the excessively

1493
bureaucratic and detailed procedures of the board's staff. I am also tempted to speculate that the board's reaction was prompted, not out of concern for proper investment appraisal, but because the company did not match the board's irrelevant social and political requirements concerning trade union membership and the like——
Mr. Dobson: Will the hon. Gentleman give way?
Sir George Young: No, I must make progress.
One of the difficulties that faced that company was that at a crucial point in the negotiations the GLEB official concerned was in Tahiti for three weeks, and at another critical stage he disappeared to America for another three weeks.
Against the background of criticism from the boroughs, the chambers of commerce, the Confederation of British Industry and individual companies which have been in touch with GLEB, hon. Members may consider that the Government have been reasonable to the point of generosity in our response to the GLC's application for consent to its proposed funding of GLEB in the current financial year to the tune of £20 million, in addition to the £30 million to £40 million that had been provided in the previous two years. The locus of my right hon. Friend in relation to GLEB is narrow, and it is totally misleading of the hon. Gentleman to claim that the board's future is prejudiced simply because he has not without question given his approval to the expenditure concerned.
The problems that now face GLEB and the uncertainty about its future are not of the Government's creation. It is clear from what I have said that those difficulties arise out of the way in which the board has pursued its activities on both the political and investment fronts. Its declared aims include such matters as
"creating novel methods of social ownership and control"
and
"pursuing radical methods of worker involvement in production.".
The impression that one gets when one looks at GLEB is very much that the objective of investing in economic development is subordinated to such political aims to the extent that they are an impediment to what might be achieved. Even when the board's investment policy can be divorced from the overriding conditions about trade union membership and so on, it seems that both the property developments and the company investments have, in practice, been made in such a way that they will not be viable without repeated and substantial subsidies from ratepayers. As I have said, GLEB appears to want it both ways. It wants to be a successful commercial company, but it cannot survive without constant injections of public money.
Mr. Tony Banks: The Minister wants to kill it off.
Sir George Young: The Government are not against local authority involvement in economic development. We recognise that there is a role for local authorities to play, such as the provision of sites and the use of the Inner Urban Areas Act 1978. There is a legitimate role for local authorities to play in providing direct financial assistance to new and expanding companies. However, such activites must be based on a professional and realistic assessment of the market and of local needs. They must be undertaken in partnership with the private sector, which alone can
1494
identify the true requirements of industry and commerce and the particular areas where a public sector input can be be of assistance.
GLEB does not meet those tests, and I shall contrast the situation in London with that in the west midlands. It seems that the West Midlands Enterprise Board has concentrated on the job in hand and has attracted the full support of all the district councils in the area, which will take control of the board when the West Midlands county council is abolished. At a cost of £12·5 million to the county council and its ratepayers, the WMEB has created over 4,000 jobs. In these circumstances, I am pleased to announce that my right hon. Friend has today given his consent to a final contribution by the West Midlands county council of £3·5 million, which it seems will be sufficient to ensure the board's long-term future. Hereafter, it will continue with the help of the private sector and self-generating income. The WMEB has the green light, but for GLEB the light is still at orange. The WMEB has received all-party support, whereas GLEB has created difficulties for itself politically and with the investment fraternity. It is not an encouraging prospectus for the London boroughs, which might otherwise wish to fund GLEB.
The hon. Gentleman asked me about the 2p rate for spending under section 137 of the Local Government Act 1972. He knows that the GLC has to use section 137 in circumstances where the boroughs do not have to because the boroughs have social service powers which they can use without resorting to section 137. The GLC and the metropolitan counties are not in that position. My right hon. Friend has said that he was willing to consider representations on this front. However, we are not yet convinced that there will be a real problem in any particular area, especially when some of the authorities which complain the loudest are spending large amounts of section 137 money on political propaganda.
The Government believe that to be responsive to local needs and conditions in London and in the metropolitan counties it is right for the boroughs and districts to assume, if they so wish, responsibility for the economic development activities of the GLC and the metropolitan county councils. They have all the powers that they need to carry out such activities, and many of them already play an active role in this area. After abolition they will have the full rateable resources of their areas to devote to initiatives which their electorates consider to be necessary. Some of them may wish to join together in such initiatives, and they will be entirely free to do so.
The future of GLEB is therefore for the London boroughs to decide. The GLC reluctantly conceded as much only after my right hon. Friend said that he could not agree to the release of all the expenditure proposed by the council in the current year without satisfactory assurances as to GLEB's continuing accountability to London ratepayers for the large sums which it has received. As an independent company, the board is not affected by the abolition legislation. Only the rights of the GLC in relation to the board which remain in existence at 31 March 1986 will pass to successor authorities. We want to know what rights the GLC proposes to hand over to its successors.
In the meantime, we have gone out of our way to allow the board to continue in operation and to protect its previous company investments, however imprudent some of them might have been, while the GLC belatedly opened

1495
negotiations with the boroughs about the future. Consent has been given to the entire staffing costs of the board for the first half year and to certain repeat investments. Indeed, we have gone further than that and the board now has sufficient funds to discharge all its contractual liabilities throughout the year, and a separate consent has been promised to secure the future of the five technology networks until next July.
The fact that the board's horizons may have been foreshortened is due entirely to the GLC and the policies that it has adopted. It is for that reason that there is uncertainty about the board's future.
Mine is the last speech before the House rises for the summer recess, Mr. Deputy Speaker. You will shortly be putting the milk bottles out in Parliament square,
1496
cancelling the newspapers and locking the door. The occupants of the Chair and the staff of the House have had a difficult time during the summer Session and I am sure that their humour and patience have been tested to the full. I hope that I end on a note of unanimity by saying that the entire House wishes the occupants of the Chair and the staff a long and happy summer recess.
Mr. Deputy Speaker (Mr. Ernest Armstrong): I am grateful to the Minister. His good wishes are reciprocated, of course, especially to hard-working Ministers who re ply to so many Adjournment debates.
Question put and agreed to.
Adjourned accordingly at one minute to Three o'clock till Monday 21 October, pursuant to the resolution of the House of 24 July.