Commons Sitting of 19 June 1985

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

  BERKSHIRE BILL [LORDS]
  Order for Second Reading read.
  To be read a Second time tomorrow.

Oral Answers to Questions
  SCOTLAND

    Paediatric Beds
    Mr. Robin Cookasked the Secretary of State for Scotland what is the number of paediatric beds per thousand of client population which his Department uses as a yardstick in determining the adequacy of health provision.
    The Parliamentary Under-Secretary of State for Scotland (Mr. John MacKay): There is no officially accepted target level of provision of designated paediatric beds, but I am satisfied that there is adequate provision of paediatric beds in Scotland as a whole. It is primarily for health boards to determine the pattern of provision in their own areas.
    Mr. Cook: Is the Minister aware that, due to pressure on its forward budget, Lothian health board has now dropped the provision for a paediatric ward in the new hospital being built at Livingston? Is he further aware that one fifth of the population of Livingston are under the age of 10? Whatever the general standards employed, does the hon. Gentleman, as Minister responsible for the Health Service in Scotland, regard it as satisfactory to provide a new hospital which will not cater for such a large chunk of the local population? If not, will he give my constitutents an assurance that the new hospital will cater for their children?
    Mr. MacKay: Phase 1 of the West Lothian district general hospital will provide about 400 beds, including a paediatric department of 26 beds. That project is now under construction and, as I understand it, there is no intention of altering the plans for phase 1.
    Mr. Malone: I accept that this is a health board responsibility, but is my hon. Friend aware that in Aberdeen there is a surplus of paediatric beds but a need for neonatal care? Does he agree that it would he possible to reallocate resources in such a way as to meet that need?
    Mr. MacKay: My hon. Friend is quite right. Health boards have to ensure that the facilities provided accord with current population and demand. The decrease in the
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    child population means that there is undoubtedly an oversupply of paediatric beds in Scotland as a whole, but more beds are needed in certain sections.
    Mr. Dalyell: Are the running costs available for the paediatric unit under construction in Livingston?
    Mr. MacKay: The problem with the running costs—
    Mr. Dalyell: Answer the question.
    Mr. MacKay: I am about to do so. The problem of the running costs of the West Lothian district general hospital is more attendant on phase 2. As I have explained, phase 1 contains the paediatric unit and I understand that the running costs are available.
    Mr. Bill Walker: Does my hon. Friend agree that the provisions made in Tayside, and particularly in Blairgowrie, where the cottage hospital has now become a community hospital, have achieved a sufficiency of paediatric beds and an increase in the number of geriatric beds?
    Mr. MacKay: My hon. Friend is quite right. In relation to all kinds of hospitals, health boards must consider the total needs of patients in the area. One of the principal needs to which I draw the attention of health boards is the need to provide more geriatric beds.
    Mr. Ewing: How can the Minister claim that there is an oversupply of beds in hospitals in Scotland when waiting lists and waiting time for admission are beginning to increase again? With regard to the paediatric department of the West Lothian district general hospital, if my hon. Friend the Member for Livingston (Mr. Cook) is correct, as I suspect he is, and the project has been dropped, although the Minister seems to think that it is going ahead, will the Minister instruct the health board to ensure that the paediatric unit is included?
    Mr. MacKay: I have explained that phase 1 is already under construction and a paediatric unit of 26 beds is included in it. I also explained to the hon. Member for Livingston (Mr. Cook) that phase 1 can be run without phase 2 being on stream.

    Housing Benefit
    Mr. Millanasked the Secretary of State for Scotland what steps he is taking to give local authorities increased powers to deal with abuses of the housing benefit system.
    The Secretary of State for Scotland (Mr. George Younger): The Government accept the housing benefit review team's recommendation that powers to prevent abuse of the housing benefit scheme should be strengthened. Our Green Paper proposes in particular that my right hon. Friend the Secretary of State for Social Services should have a reserve power to limit the level of rent eligible for housing benefit.
    Mr. Millan: Is the Secretary of State aware that there are slum landlords in Glasgow and elsewhere who are letting out appalling properties at scandalously high rents to those on supplementary benefit? These rents are paid by district councils as agents for the Department of Health and Social Security. As the Government have abandoned their proposals to abolish the Rents Acts — their

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    abolition would make the abuses even greater—what justification can there be for denying Scottish local authorities a power which is available to English local authorities to initiate the fair rent procedure? The implementation of that procedure in Scotland would allow authorities to get at bad landlords and would save money for the public purse. Why cannot that action be taken?
    Mr. Younger: I appreciate the problem that the right hon. Gentleman has raised. He will know that local authorities are already empowered under the housing benefit regulations to reduce benefits where they judge accommodation to be unnecessarily large or the rent to be unreasonably high when compared with other accommodation that is available in the area. I am advised that the powers that are available to English local authorities are comparatively rarely used. We are keeping the matter under close review and if it is necessary to take action we shall have to consult COSLA before embarking on the introduction of legislation.
    Mr. Craigen: I find the Secretary of State's reply entirely unsatisfactory. When the Government are planning to cut housing benefit for the needy, how can the right hon. Gentleman permit the greedy to be able to abuse the present housing benefit system? The Opposition would assist in the passage of minor amending legislation to ensure that tenants are protected and that landlords are not allowed to abuse the system. Surely the right hon. Gentleman agrees that it is essential for local authorities in Scotland to have the right which English local authorities already have to apply for the rent officer to register a rent.
    Mr. Younger: I can only assume that the hon. Gentleman did not hear my reply to the right hon. Member for Glasgow, Govan (Mr. Millan). There are two ways in which this wrong can be put right. First, a local authority can use its existing powers, as I have described, to limit the amount of benefit that is given where it considers that that is necessary. Secondly, tenants and their advisers have plenty of powers to demand the registration of a rent. They can demand the presence of the rent officer at any time that they wish to do so. They should be encouraged to use that right whenever they wish.

    Rural Aid Fund
    Dame Judith Hartasked the Secretary of State for Scotland what consideration he is giving to the proposal submitted to him for a rural aid fund.
    Mr. Younger: My hon. Friend the Minister with responsibilities for industry and education is to meet the Convention of Scottish Local Authorities to discuss a proposal submitted by Strathclyde regional council for the creation of a rural aid fund for Scotland.
    Dame Judith Hart: May one hope that if such a meeting takes place the prospects are somewhat hopeful? Is the Secretary of State fully aware—I know that the district council within his constituency is one of the authorities which have supported the proposal—of the importance of such a fund, given that so many rural areas have suffered considerable deprivations over the past 10 or 20 years and will suffer further deprivation under the Transport Bill when it is enacted? Does the right hon.
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    Gentleman appreciate how valuable even a modest rural aid fund would be to restore and maintain many rural communities?
    Mr. Younger: I appreciate the right hon. Lady's views on this issue. I can assure her that the consultation that we shall be having with Strathclyde regional council will be genuine. I look forward to hearing from my hon. Friend the details of the ideas put forward by the council. I appreciate that there is much concern about how we can help rural areas,. There is a vast array of powers available for helping rural areas, and large sums are directed specially to rural areas in many different ways. We must consider whether a rural aid fund would add significantly to the present powers. If so, would it be worth while to introduce such a fund?
    Mr. Henderson: Is my right hon. Friend aware that the greatest need in a rural area is good transportation? In that context, the assistance that is to be made available as a result of the Transport Bill to encourage new developments in rural areas is much to be welcomed. Does my right hon. Friend agree that it would be helpful also to arrange for some focus on the passing of knowledge between those who carry out experiments in rural areas about new forms of transport which it may be possible to introduce following the Bill's enactment?
    Mr. Younger: Yes. I agree entirely with my hon. Friend that the special arrangements that are being written into the provisions for transport in rural areas reflect clearly the high priority that the Government give to ensuring that rural areas are properly looked after. There has been a vast increase in the subsidies to the Highlands and Islands ferry service. That is only one example of many of the special aids that are given to rural areas.
    Mr. Donald Stewart: Will the right hon. Gentleman accept that one of the most damaging actions to rural areas is the slashing of agricultural advisory services by 41 per cent.? If the English Minister of Agriculture, Fisheries and Food does that, does the Secretary of State for Scotland have to pursue the same line like a puppy dog?
    Mr. Younger: We are still consulting all interests concerned as to how best to change those services. However, I never expected the right hon. Gentleman to complain. The integrated development programme, which is more than half funded by the Government, is pouring vast sums into his area in every way. I should have thought that the right hon. Gentleman would express some thanks for that.
    Mr. Forth: Is my right hon. Friend not concerned that, following demands for urban and rural aid, the next demand will be for suburban aid? Is he not worried that, although many people now demand aid, the money has long since run out and we shall not be able to find any more resources with which to meet their demands?
    Mr. Younger: My hon. Friend is perfectly correct, in that as long as funds are limited we must ensure that they are targeted towards the most important areas. This Government have added to the aid for urban areas, and that aid is used extensively. We have new schemes for the rural areas, including the programme for regional industrial development and the development of rural area workshops scheme, both of which have recently been introduced to give extra help to rural areas.
    Mr. McKelvey: Does the Secretary of State realise that the people of Scotland would broadly welcome his launching the rural aid fund by handing back the £15 million that he has just taken out of the Estimates to cover the rise in rates relief, from 3p to 8p, which he engineered in order to call off the hounds who were chasing him?
    Mr. Younger: I am not sure how the hon. Gentleman would like the money to be spent other than on helping the ratepayers. I should have thought that he would be pleased if the money helped ratepayers in Kilmarnock and Loudoun, as well as everywhere else.
    Mr. Home Robertson: As many successful rural schools are under threat because of the Government's education cuts, will the Secretary of State make a statement on the future of funding for rural, community-based primary schools?
    Mr. Younger: Alas, the first part of the hon. Gentleman's question shows that he is, as usual, completely ill-informed. The amount of money allowed for education in Scotland is at its highest level per head ever. Indeed, the Government have raised it. As the hon. Gentleman knows, the closure of schools is a matter for the regional council in the light of its priorities. The hon. Gentleman asked indirectly about assistance for rural areas, but his area gets as much help as any.

    Rates
    Lord James Douglas-Hamiltonasked the Secretary of State for Scotland what is his most up-to-date assessment of the numbers of (a) domestic and (b) commercial ratepayers in Scotland who will benefit from the terms of the Rating (Revaluation Rebates) (Scotland) Bill; and what is his latest estimate of the total cost, taking reductions on appeal into account.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): The Convention of Scottish Local Authorities has now obtained returns from all the Scottish rating authorities which show that some 133,000 domestic and 62,000 non-domestic, including commercial, ratepayers will qualify for revaluation rate rebates at a total cost in 1985 of around £30 million. These figures are a reasonable measure of the likely demand for rebate.
    Lord James Douglas-Hamilton: Will not the final figure be known only when all the appeals have been resolved? Is it not true that all those most substantially affected, whose rateable value has risen more than three times, will be assisted by the Bill, and that the commitment is open-ended?
    Mr. Ancram: My hon. Friend is quite correct. The final figure will not be known until the last eligible ratepayer has been paid. [Interruption.] I agree that the scheme is most generous. I am surprised that Opposition Members should laugh at the provision of £30 million when many of them were asking for much less only four weeks ago. I find it hard to understand why they do not appreciate the scheme as much as Scottish ratepayers do.
    Mr. Bruce: The hon. Gentleman has just revealed what he was unable to reveal two weeks ago. Should he not now recognise that the cut-off point has been set too high and that many small businesses which still face extinction should have the benefit of a greater reduction
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    than he has allowed for? Does the hon. Gentleman not realise that there is still very considerable discontent among small businesses in Scotland? If he thinks that the rates issue is dead in Scotland, he should bear in mind that it is not as dead as his party will be at the next election.
    Mr. Ancram: I am glad that the hon. Gentleman has been converted from the view—expressed only eight weeks ago in the House—that this is a warped priority, but I fear that, like all converts, his zeal has taken him further than his common sense might do. If he studies the scheme, he will discover that we set the level of a three times multiplier because we appreciated that we could not undo revaluation altogether and, as the hon. Member for Glasgow, Garscadden (Mr. Dewar) said, we had to set it at a level that would help those who were hardest hit. That is what has been achieved by the scheme, and it is much appreciated in Scotland.
    Mr. Douglas: The Bill is still going through Parliament and is now before the House of Lords. As about £20 million might be available for distribution, will the Minister consider amending the legislation so that all the funds that the Secretary of State has won from the Treasury can be used?
    Mr. Ancram: I do not know whether the hon. Gentleman was here when we debated the issue the other night, but I made it clear that the scheme was demand-led. I explained that the three times multiplier gave adequate protection without undoing the revaluation. We are distorting revaluation, but we are not claiming that those who have gained should give anything back. According to the latest figures available, that demand-led scheme will cost about £30 million.
    Mr. Bill Walker: Does my hon. Friend agree that even after the three times multiplier has been used there will be an increase of over 50 per cent. in the cash to be paid for rates in the Angus district, and only a little less in Perth and Kinross? Does my hon. Friend agree also that we must apply pressure to get rid of this iniquitous system, which has produced such a massive increase in rates in that part of the country?
    Mr. Ancram: I appreciate that under this scheme, even with the help provided by domestic relief, some ratepayers in Scotland are faced with high rate increases. The Government are studying the whole system of local government finance. We hope to be able to make proposals towards the turn of the year.
    Mr. Dewar: I welcome the Under-Secretary's admission that he knew, but would not admit in Committee, that there would be a substantial shortfall—probably of about £20 million — on the £50 million package about which the Secretary of State boasted at Perth. Can the hon. Gentleman confirm press reports that of the sum that would be available for the small business man and other non-domestic ratepayers, about £3 million is likely to go to the owners of poster sites in Scotland and not to small businesses?
    Does the Minister accept that an element of flexibility must be built into the legislation and that if that £20 million is not paid out as advertised it will be seen by many who face rate increases of 50 or 60 per cent., with not a penny of aid, as the political equivalent of a serious breach of the Trade Descriptions Act?
    Mr. Ancram: I do not like to accuse the hon. Gentleman of deliberate political cynicism, but as £30 million has been made available by the Government to help those who are hardest hit—the phrase that he used in the House when he said that he would co-operate with the legislation—I find the last part of his question hard to understand.
    The figures have become increasingly robust as the analysis of the revaluation has continued. The figures that I have given today were made available by COSLA on 12 June and were confirmed to an extent by the Minister of State in the debate in the House of Lords on Monday.
    We have no central information about the poster sites. I understand that in the one area that has been considered in respect of poster and advertising sites they represent a small proportion in terms of numbers, qualifiers and cost.
    Mr. Wilson: Did the Secretary of State not claim that he had negotiated with the Treasury an extra £50 million to spend on domestic and non-domestic ratepayers? Does the Minister agree that if he does not change the multiplier he will gratuitously hand back to the Treasury £20 million which otherwise would be available to those badly affected by rate changes in Scotland? Does he agree that to fail to claim the money for Scotland would be iniquitous?
    Mr. Ancram: The hon. Gentleman is on record as saying that revaluation is good and I am sure that he will not withdraw that opinion. The agreement with the Treasury was that it would provide new money to underwrite the scheme, which is demand-led. At the time that the announcement was made in May, the best estimate of the cost of the scheme was £50 million.

    Sporting Events (Safety)
    Mr. Canavanasked the Secretary of State for Scotland whether he is satisfied with standards of safety and crowd control at Scottish sporting events; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): No one can ever be wholly satisfied about matters of safety and crowd control, and I have therefore arranged that the inquiry under Mr. Justice Popplewell should include Scottish sports grounds. My officials have asked Scottish fire brigades to visit sports grounds in their areas to advise managements on any necessary safety measures. With the co-operation of the police, a programme of such inspections is currently being undertaken. The governing bodies of sport have been asked to make constituent clubs aware of the free advice available, as the clubs have a responsibility to ensure the safety of the public.
    Mr. Canavan: Instead of imposing crippling rate burdens on Scottish football clubs in comparison with English football clubs, will the hon. Gentleman consider introducing a system of financial assistance for ground improvements? Will he support the representations that I have made to the Belgian Government to follow the example of FIFA and UEFA and draw a distinction between Scottish and English football, rather than impose a ban on Scottish as well as English football clubs? In effect, this ban is punishing Scottish clubs and their supporters for the gross and deplorable behaviour of some English fans during the Brussels tragedy a few weeks ago.
    Mr. Stewart: One of the results of the revaluation is that the rating burden on many Scottish football grounds has declined. I have every sympathy with the hon. Gentleman's point about European matches. I think the House will agree, however, that the Belgian Government's announcement in those tragic circumstances was understandable. We have passed on to the Foreign Office the representations that we have received.
    In recent years, Scottish football club supporters have had an excellent record in away matches. I am sure the House agrees that, in the present circumstances, it was sensible for the five clubs involved in European competition to announce that they would do everything possible to dissuade their supporters from travelling to away matches next season, except in the case of cup finals on neutral ground.
    Mrs. McCurley: Does my hon. Friend agree that, although the Government have had a significant influence by the banning of alcohol at football matches, ultimately every sporting club must bear a greater responsibility for the safety and care of those attending sporting events at their premises?
    Mr. Stewart: I entirely agree with my hon. Friend. She is absolutely right to point to the responsibility of clubs. There is no room for complacency about the control of hooliganism in Scotland. That is why I have arranged to meet the Scottish Football Association, the Scottish Football League, the chief constables and the British Transport Police on 1 July to review existing arrangements and to consider whether, in the interest of the huge majority of fans, further action should be taken to improve behaviour at football matches next season.
    Mr. O'Neill: Does the hon. Gentleman agree that it is not enough simply to suggest that free advice will be available? If safety at football grounds in Scotland is to be improved, money must be forthcoming. The parlous state of the finances of most of the small Scottish clubs makes it difficult for them to find the necessary funding on their own. The Government must give greater support to help small clubs to make their grounds safe.
    Mr. Stewart: Substantial sums of money go into football, including £7 million a year to the Football Trust. Last year, the Football Grounds Improvement Trust distributed £3·3 million retrospectively. I am a member of the working group on financing improvements at football grounds, which is under the chairmanship of my hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane). The FGIT surveyors' report will include surveys of all non-designated grounds in the Scottish first and second divisions.
    Mr. Malone: Does my hon. Friend agree that one of the most important contributions to crowd control is an all-seated stadium? Does he agree that Aberdeen has been able to show an example of crowd control not only in Aberdeen but when Aberdeen clubs have travelled abroad? Aberdeen's supporters are ambassadors for the game, rather than the reverse.
    Mr. Stewart: Yes, Sir. I had the pleasure of attending Pittodrie at the beginning of the season to present the championship flag to Aberdeen. There is no doubt that it has an excellent stadium. The McElhone report emphasised the importance of seating.
    Mr. Ewing: When the Minister refers to £7 million going to the Football Grounds Improvement Trust, does he appreciate that that money comes from the pools companies for the use of the fixtures list? In terms of their take from betting, the Government take far more from football pools than the football clubs have returned to them for ground improvements. Does the hon. Gentleman appreciate that a ground at which we have trouble—not in terms of controlling crowds, but in relation to crowds entering and leaving—is Hampden Park, because the design of the reconstructed stadium had to be changed as a result of the Government cancelling the £5 million grant that was to have been made available? Will the Minister, as a contribution to solving the problem in Scotland, restore that grant and give the money to the Scottish Football Association at Queen's Park so that the reconstruction of Hampden Park can be completed?
    Mr. Stewart: The reconstruction of Hampden is going ahead, and I visit Hampden regularly. There are sources of Government assistance which are potentially available, for example, the leg-up and the urban programmes. The hon. Gentleman should accept that the tax on betting to which he refers is a tax on gambling, not a tax on football, and that is an important distinction.

    Peripheral Housing Estates
    Mr. Hugh Brownasked the Secretary of State for Scotland what proposals he is considering in response to the report on peripheral housing estates by CES Ltd., "Framework for Action," a copy of which is being sent to him; and if he will make a statement.
    Mr. Ancram: The study was commissioned by four local authorities, including Glasgow district council, and it is for them to consider in the first instance how best to respond. I shall, nevertheless, study with interest the proposals of relevance for central Government. I welcome in particular the emphasis in the report on the need and scope for joint ventures between the public and private sectors to tackle the problems of peripheral estates.
    Mr. Brown: In the light of that reply, will the Minister indicate, even informally, to Glasgow and Strathclyde that he would be willing to meet them to discuss in what way a new structure might be evolved — be it a town development or urban development corporation—to fit the needs of Easterhouse?
    Mr. Ancram: The hon. Gentleman will accept that I must, first, look at this quite complex document and evaluate it, and obviously I cannot make a commitment as to timing. I believe that the emphasis must be on co-ordinated action, which recognises the priority needs of Easterhouse within existing programmed expenditure. As he will be aware, the SDA is already involved in the new greater Easterhouse partnership and the new joint initiative for Easterhouse. The agency will, within the terms of its remit, continue to respond positively to the problems of such areas.
    Mr. Henderson: Does my hon. Friend agree that the hon. Member for Glasgow, Provan (Mr. Brown) has drawn attention to a constructive proposal for dealing with one of the many problems that arise from past mistakes by local authorities, often egged on by Governments of the day, in housing policy? While recognising that much has to be done to rectify these errors, does my hon. Friend
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    accept that that should not be done at the expense of the housing needs of those local authorities which have pursued wiser policies?
    Mr. Ancram: I am grateful to my hon. Friend for making that point, and I am sure he realises that it is the Government's concern to promote and encourage private sector involvement in public sector estates, both to diversify tenure and to enhance the amenity. I hope that authorities will not stand in the way of these types of development for political ideological reasons.

    Iron and Steel Industry
    Mr. Tom Clarkeasked the Secretary of State for Scotland when he next plans to meet the Scottish representatives of the Iron and Steel Trades Confederation to discuss the current state of the iron and steel industry in Scotland and the economic implications thereof for Scotland.
    Mr. Younger: A member of the Iron and Steel Trades Council was one of the STUC representatives whom I met on 7 June. Also, the ISTC was represented on the works committee at Ravenscraig, which my hon. Friend the Minister with responsibility for industry and education in Scotland met when he visited the works on 3 June.
    Mr. Clarke: What is the Secretary of State's response to this morning's press speculation, and reported remarks of Sir Robert Haslam, on the future of Ravenscraig? Does the right hon. Gentleman accept that the closure of Ravenscraig and, consequently, Gartcosh, would be a devastating blow to the Scottish economy? Is he prepared to give a lead to the Scottish ministerial team by saying that he is prepared to resign on this issue because he is not prepared to see Scotland becoming an industrial desert?
    Mr. Younger: I appreciate the concern that the hon. Gentleman has mentioned. I, too, have seen the speculation in newspapers this morning. It is just that: it is speculation. The remarks made yesterday before the Select Committee were in that vein as well. The position, as I confirm again, is that there is no sign yet of the corporate plan being presented to the Government. When it is presented to the Government it will have to be carefully considered by Ministers before any decisions can be agreed to or otherwise. That is the position and, as I think the chairman confirmed in his evidence yesterday, that is likely to remain the position for some considerable time yet.
    Mr. Hirst: May I reassure my right hon. Friend that he will have the undivided support of Conservatives in any efforts that he makes to persuade the British Steel Corporation and his ministerial colleagues that Ravenscraig should not only continue but should enjoy new investment in coke ovens? May I further urge, if the newspaper reports are correct, that he and his ministerial colleagues plan and mount the type of skilful and successful campaign that they mounted in 1982, to ensure that Scotland retains its steel-making capacity?
    Mr. Younger: I am grateful to my hon. Friend for the first part of his remarks. As to the second part, all of us have to wait to see what is in the corporate plan, and then we will have to formulate our responses very quickly.
    Mr. James Hamilton: The Secretary of State is very conscious of the fact that I am one of the hon. Members

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    in whose constituencies Ravenscraig lies. As the right hon. Gentleman is aware, there is a conference at the civic centre in Motherwell on Friday at which there will be representations from the STUC, all the councils, all the Churches, the ISTC and all the other trades unions. Depending upon the decision, which I am sure will be a unanimous one to fight for Ravenscraig, will the right hon. Gentleman give us a categorical assurance that at Cabinet level he will lead the fight for the retention of Ravenscraig?
    Mr. Younger: I well appreciate the importance of the meeting, and I am glad that the hon. Gentleman will be present. I am anxiously awaiting news of what will be in the corporate plan when it comes. I can give the assurance that, when it does, I shall be heavily involved in dealing with responses to it.
    Mr. Teddy Taylor: As the current uncertainty seems to stem largely from the advice of the European Commission that Britain should further reduce its steel-making capacity, can my right hon. Friend give us a clear assurance that the Government will not contemplate further reductions until the other member states of the Common Market have carried out their agreed obligations to reduce steel-making capacity? Is he aware that Members of Parliament who represent English constituencies are fully conscious of the superb battle that he has put up so far for Scotland's steel industry?
    Mr. Younger: With regard to the European scene, as my hon. Friend knows, my right hon. Friend the Secretary of State for Trade and Industry and his colleague have, on a number of occasions in Brussels, forcefully made the very points that my hon. Friend has just made. That is a matter on which the Government have taken a very strong stand.
    Mr. Buchan: Many hon. Members are concerned about the adjective "anxious" which the Secretary of State used to describe his views on the forthcoming plan. Only one question remains: will he put the future of Ravenscraig before his own job?
    Mr. Younger: I think that my views on this subject have been widely known for long enough. I have given the assurance—and nobody with any sense could expect me to go further at this time—that I am waiting to see what the corporate plan says. Thereafter we shall all have to work out our responses to it.
    Mr. Bruce: Will the Secretary of State acknowledge that the future of Ravenscraig is crucial to the future of Scottish industry, that the suggestion that it should be closed is something that should be considered as totally unacceptable within Scotland and that he should say so unequivocally? It is not just a matter of Ravenscraig and the jobs there, but of all the jobs dependent on it in British Rail, in the support industries and so forth. Will he acknowledge that without the steelworks Scotland cannot have a credible industrial base, and that he should say so and fight every inch of the way to ensure that the steelworks remains?
    Mr. Younger: I appreciate the hon. Gentleman's continuing concern about the matter, but I suggest to him and to others that they should be careful not to close Ravenscraig before anyone has even proposed it.
    Mr. Lambie: When will the Government make the announcement about the new investment at Hunterston?
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    Will it be made tomorrow before the meeting on Friday referred to by my hon. Friend the Member for Motherwell, North (Mr. Hamilton)?
    Mr. Younger: I do not expect any such announcement to be made tomorrow.
    Mr. Bill Walker: Does my right hon. Friend agree that the Government have been saying to the workers and management in all industries that we have to increase productivity if we are to maintain our markets? Is it not true that, by that standard alone, Ravenscraig has excelled and we should not let anyone outside Scotland be misled by the fact that the European Community has certain levels of production which it says must be maintained throughout Europe? Is my right hon. Friend aware that we in Scotland and Britain have made our contributions, and that Ravenscraig has shown that it is the plant of tomorrow and not of yesterday?
    Mr. Younger: I agree with my hon. Friend. My right hon. Friends and I have made it clear on numerous occasions that we consider that when capacity in Europe is being discussed it must be clearly understood that it is not expected that this country should do all the reducing of capacity, but that there should be an agreed system between the European countries.
    Mr. Milian: In view of the recent damaging reports, and of early reports emanating from the BSC, why can we not have from the Secretary of State a straightforward and unequivocal commitment that Ravenscraig will not be closed?
    Mr. Younger: The right hon. Gentleman has been in the higher reaches of Government and he will know that in nationalised industries the principle that is rightly followed is that the industry runs its own concerns and refers to the Government for the major decisions. It would be wrong, in whichever direction the proposal goes, to preempt the decision on any part of the plan before one sees the plan as a whole. Everybody concerned must wait for BSC to produce its corporate plan, and I assure the right hon. Gentleman that there will then be a clear reaction.
    Mr. Wilson: As it is no secret that BSC is deeply hostile to keeping Ravenscraig open, will the Secretary of State not delay too much his attack on this matter, because if he holds back decisions could be taken on the corporate plan by other Ministers? It is urgently necessary that he puts his full weight behind Ravenscraig, and I assure him that he will have every support from my party on this matter.
    Mr. Younger: I am grateful for that support from the hon. Gentleman. The views of all of us in Scotland on this matter are well known, but it is prudent to wait to see a target before one starts firing at it.
    Mr. Dewar: Is the Secretary of State not being a little disingenuous in suggesting that this is all speculation? It is known that options were presented to the Government in the middle of last year, and that those options included the closure of a major steel plant. Is it not a fact that Sir Robert Haslam said to the Select Committee yesterday that discussions were under way on those options? In those circumstances, if the right hon. Gentleman has not seen those options, it must be because the Secretary of State for Trade and Industry has not shown them to him. Is it not essential that the Secretary of State for Scotland gets his

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    oar in now and makes it clear that the future of Ravenscraig is non-negotiable and that it must continue to play a central role in the Scottish economy? Does the Secretary of State recall that the Minister of State, Department of Trade and Industry, said on 3 June after visiting Ravenscraig that he did not think there was any uncertainty about the future of the plant? Is not the only way that the Secretary of State can end the uncertainty started by yesterday's events is to make it clear that there will not be a closure of one of BSC's three major strip mills under this or any other Government?
    Mr. Younger: I appreciate the hon. Gentleman's first point, but he must appreciate that what was said yesterday, which was not surprising, was that there were a number of different options, which were all being considered. That is as it should be. The hon. Gentleman will also know, as was made clear yesterday, that discussions are always going on between the sponsoring Department and the nationalised industry. Preparations for a corporate plan form part of a process that does not stop. However, it is essential that the industry should first make its proposals about what it thinks is the best plan for the industry's future. It is then for the Government to consider whether they are prepared to approve or reject the proposals. That is the Government's role.

    British Leyland (Bathgate)
    Mr. Dalyellasked the Secretary of State for Scotland if will make a statement on his most recent discussions with British Leyland about the future of the Bathgate commercial vehicles plant.
    Mr. Allan Stewart: British Leyland tells me that discussions are continuing to try to find a purchaser for the engine plant, although some earlier interest has receded. I understand that approaches have been made to British Leyland about developing the site for alternative use. The company has made it clear that if there is a purchaser for the engine plant, any alternative use for the site must ensure the continuation of the engine manufacturing facility.
    Mr. Dalyell: May I ask the Minister a question, of which notice has been given to his office for a considered reply? Will the Scottish Office help West Lothian district council, Lothian regional council and Bathgate area support enterprises to obtain co-operation from Leyland for the conversion of the Bathgate premises to accommodate incoming manufacturing industry?
    Mr. Stewart: I am grateful to the hon. Gentleman for giving me notice of the question. First, I emphasise that Locate in Scotland has carried out the most comprehensive promotion ever undertaken for a single site, in addition to the Government's general role in improving the climate for industry in the area following the working party's report. The initiative for specific uses of the premises must lie with those who have proposals to put to Leyland. However, I assure the hon. Gentleman that my office stands ready to be involved in any discussions on such specific proposals.
    Mr. Robert Atkins: Does my hon. Friend agree that the new range of commercial vehicles made by Leyland Vehicles has been amazingly successful, and that that is evidence of the great changes in productivity and
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    efficiency of management and, above all, in the work force, and of the Government's commitment to British Leyland in the interests of the British public as a whole?
    Mr. Stewart: I entirely agree with my hon. Friend. There is no doubt that British Leyland has made substantial strides. The problem regarding Bathgate is that British Leyland has more than enough capacity at its Leyland plant to accommodate even a substantially increased demand for trucks.

    Improvement Grants
    Mr. Maxtonasked the Secretary of State for Scotland when he intends to make a statement on improvement grants for private housing in Scotland.
    Mr. Ancram: A comprehensive review of private sector house improvement policy in Scotland is virtually complete, and I hope to publish proposals for consultation fairly soon.
    Mr. Maxton: Is the Minister aware that there are 1,000 closes, that is 6,000 to 8,000 houses in Glasgow, which are subject to a section 24 order, which require immediate and urgent repairs to be carried out? Is he further aware that Glasgow district council will require £25 million extra on its budget to ensure that those improvements are carried out? Despite the fact that he is carrying out a review, will he ensure that Glasgow district council is given the money to provide more jobs in the building industry and to give people a decent home to live in?
    Mr. Ancram: I have heard what the hon. Gentleman has to say, and I have heard those facts quoted before. I do not believe that that should have been the case, and I shall explain why. The capital allocation on the private sector non-HRA last year in Glasgow was £86·6 million, which was 50 per cent. of the Scottish total, or 11 per cent. of the Scottish total of private housing. Of those resources, £2 million was unspent, and the council chose to transfer that to its HRA block allocation rather than to augment this year's non-HRA allocation. This year the council has had about £8·5 million more than its forward commitment Indeed, the amount that has been made available to it is considerably more than its own estimate of expenditure on grants related to section 24 repairs and notices.
    Mr. Steel: How does the Scottish Office justify a lower rate of housing improvement grant in Scotland than in England and Wales when more houses require improvement in Scotland and when we have a higher rate of unemployment among construction workers?
    Mr. Ancram: I am surprised at the right hon. Gentleman's question. The eligible houses in Scotland are on a much broader base than those in England. In England the eligible date is pre-1919, whereas in Scotland it is pre-1964. Obviously, considerably more houses are involved in Scotland. To suggest, as I infer from the right hon. Gentleman's question, that the Government's record on private housing is not good, is to fly in the face of the facts. During the past five years we have had 171,000 grant applications approved, compared with 41,500 approved in the previous five years under the Labour Government.
    Mr. Henderson: Can my hon. Friend give some indication of the scale of housing improvement grant support that the Government have provided in money terms during the past five years, and how that compares

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    with the previous five years? Does he agree that at this stage we should be getting a better consensus between the Government and local authorities about the criteria that should be applied to improvement grant applications?
    Mr. Ancram: My hon. Friend asks for the figure for the past five years compared with earlier years. In cash terms, during the five years of the Labour Government £51 million was spent in this area, compared with £311 million under this Government. In real terms the Labour Government effectively spent £123 million compared with £329 million spent by this Government. Perhaps more indicative than that, is the fact that in each of the last two years this Government spent more in real terms than the Labour Government spent during their whole term of office.
    Mr. Kennedy: On the subject of improvement grants to the private sector, will the Minister reconsider his policy for those who have had the cavity wall foam insulation process carried out in timber-framed houses, in that he will not at present allow them specific grants for it to be removed unless that process is part of a general improvement and repair process that qualifies for grant? Many of the houses in the Highlands where such work has been carried out are comparatively new, and therefore do not require other improvements. Will the Minister put pressure on the building societies, in the light of the Building Research Establishment report, not to take such a severe line on mortgages on the subsequent resale of property as a result of the process? Will the Minister reconsider his policy?
    Mr. Ancram: I shall obviously take account of what the hon. Gentleman said in the second part of his question. He and I have corresponded on the first part, and I have made clear to him the criteria for grants. When we publish our consultation paper, I think he will find that we are looking at the whole area of improvement grants on a much broader basis.

  SOLICITOR-GENERAL FOR SCOTLAND

    Travelling People (Crown Office Attitude)
    Mr. Hendersonasked the Solicitor-General for Scotland if he will undertake a review of the Crown Office attitude to complaints against travelling people, and invite representations from local authorities, the police and public
    The Solicitor-General for Scotland (Mr. Peter Fraser): The policy in relation to complaints of unlawful encampment is reviewed from time to time and has recently been revised to link toleration to achievement by local authorities at district level of the provision of pitch targets. As I informed my hon. Friend on 31 October 1984, complaints against travelling people of other breaches of the law are normally dealt with by the police and procurators fiscal in the normal way.
    Mr. Henderson: Accepting that the Scottish Office as well as the Law Officers have an important responsibility in this matter, does my hon. and learned Friend agree that if all travelling people were well behaved and good neighbours there would be very little problem in their finding sites? Does he further agree that during the past year or so there have been examples of incidents and behaviour which entitle us to consider bringing to an end
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    the quite extraordinary privileges which travelling people have in being able to settle anywhere in encampments regardless of planning considerations, environmental health and property ownership, and free of rent and rates?
    The Solicitor-General for Scotland: As I have said before, and wish to emphasise again, the toleration policy extends only to unlawful encampment and does not in any way extend to other breaches of the law. The travelling people, as much as anyone else, are under the ordinary obligation to ensure that they observe the law of Scotland. My hon. Friend will also be aware that where there are large, random groups moving around the country in a nontraditional pattern the toleration policy observed in the past does not apply.
    Mr. Ron Brown: In this year of youth, is it not quite disgraceful that many youngsters are forced to be regarded as travelling people simply because they are looking for jobs? Is not the DHSS being encouraged to lean on them and to make it intolerable for them to exist as human beings? Is it not true that these youngsters—the new travelling people — deserve to be protected? They deserve basic rights, just like anyone else — just like tinkers, and I do not knock tinkers by any means. If this Government lead in anything, will they come forward—dare I ask?—with a youth charter to support and protect those youngsters who form a lost generation in Scotland today?
    The Solicitor-General for Scotland: If the hon. Gentleman has a point, it is certainly nothing to do with the problem that we have in Scotland of trying to accommodate traditional travelling people, who have encampments in various areas. I would have thought that those of us who are aware of the problem would want to ensure that the provision of sites throughout Scotland for travelling people were established. What the hon. Gentleman raises has nothing to do with that very real difficulty.

    Housing Benefit
    Mr. Millanasked the Solicitor-General for Scotland how many prosecutions there have been in Scotland in the last year for fraud in relation to the housing benefit system.
    The Solicitor-General for Scotland: Precise figures are not available, but inquiries with procurators fiscal indicate that there have been approximately 15 such cases.
    Mr. Millan: I am interested to hear that reply. Is the Solicitor-General aware of the abuse of the housing benefit system by slum landlords in Glasgow? We understand that in some cases the abuse goes over the borderline into deliberate fraud. I do not expect the hon. and learned Gentleman to comment on individual cases, but will he give me an assurance that where evidence of fraud is obtained the full rigour of the law will be applied and the landlords concerned prosecuted?
    The Solicitor-General for Scotland: I am aware both of the matters that the right hon. Gentleman has raised and of what was in the Glasgow Evening Times. He will appreciate that although the matter is not sub judice it would be inappropriate for me at this stage to comment specifically on the allegations that have been made. I

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    confirm to him that although I am not in a position to make any comment immediately, he may take it that the matter is being carefully investigated.
    Mr. Martin: Does the Solicitor-General know that since my days as a councillor in Glasgow there have been complaints about the company mentioned in the Glasgow Evening Times? The complaints are still continuing in my constituency. I have heard tales of people's belongings being thrown out on to tenement landings and of the locks being changed on the doors. Surely as a Minister of the Crown the Solicitor-General should investigate these matters. He should ensure that tenants are properly protected and that we do not go back to the Rachman landlord system.
    The Solicitor-General for Scotland: Again, I have to say that it would not be appropriate to make comments on the particular company, nor do I know how long that company has been in existence. I emphasise that the reserve I place on my remarks is not idle. I am aware that serious allegations have been made, including those that involve harassment of tenants, which would be illegal under the Rent Acts.

    Defence Policy
    Mr. Canavanasked the Solicitor-General for Scotland whether he will publish in the Official Report the full text of complaints lodged with procurators fiscal alleging the illegality of Her Majesty's Government's defence policy and the reason why no action was taken.
    The Solicitor-General for Scotland: No, Sir.
    Mr. Canavan: In view of the complaints lodged with the procurator fiscal at Stirling by students at Stirling university to the effect that, under the terms of the Geneva convention, it is a crime in international law to target the civilian population, and in view of the fact that the Government's nuclear arms policy presents a threat to the civilian population as well as to military personnel, is there not at least prima facie evidence for bringing a prosecution against the Prime Minister and her Government for conducting a defence policy that is criminal?
    The Solicitor-General for Scotland: There is no general multilateral convention outlawing nuclear weapons, nor under international law is the use or possession of nuclear weapons prohibited. Indeed, the existence of such treaties as the one on non-proliferation would seem to indicate implicit acceptance of the legality of possession of nuclear weapons by some nuclear states. In any event, I would scarcely have thought that Stirling sheriff court was the appropriate forum to arraign before it every Prime Minister and Secretary of State for Defence since this country acquired a nuclear capability.
    Mr. Forth: Does my hon. and learned Friend not regret these misplaced and misguided attempts to bring into the judicial sphere that which correctly belongs to the political sphere? Does he agree that the electorate of the United Kingdom wholeheartedly endorse the Government's defence policy?
    The Solicitor-General for Scotland: My hon. Friend is right. What is being sought by the question and by the approach that was made to the procurator fiscal is the introduction of a political element into legal proceedings.
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    In any event, as I have sought to emphasise, it is the view of the Government that the possession of nuclear weapons is not a breach of international law.

    Procurator Fiscal (Staff Vacancies)
    Mr. McKelveyasked the Solicitor-General for Scotland if he will list the vacancies in the Procurator Fiscal's Department.
    The Solicitor-General for Scotland: As at 31 May 1985 there were vacancies for five legal assistants, one executive officer and nine typing posts.
    Mr. McKelvey: Because of the worsening working conditions of the service of the Procurator Fiscal in Scotland, has the Solicitor-General had any indication from the staff that they intend to take some form of industrial action, which may culminate in strike action, to pursue their claims? If they put pickets on a Crown Office building, which police force will monitor their activities?
    The Solicitor-General for Scotland: Unfortunately for the hon. Gentleman, he got the wrong answer. He was anticipating that the number of vacancies would be increasing rather than decreasing. In any event, such is my respect for the procurator fiscal service as a whole that I have no doubt that industrial action of the sort that he suggests would be considered wholly inappropriate.

    Crime Statistics (Strathclyde Region)
    Mr. Hirstasked the Solicitor-General for Scotland how many prosecutions there were for crimes and offences in Strathclyde region in 1984; and how this compares with 1983.
    The Solicitor-General for Scotland: Provisional figures for 1984 indicate that 103,150 persons were proceeded against in Strathclyde region for crimes and offences. This compares with a figure of 114,336 for 1983.
    Mr. Hirst: Does my right hon. and learned Friend agree that, if Strathclyde regional council brought the Strathclyde police force up to established strength, more police on the beat would do a great deal to detect crime and so increase the number of prosecutions? Does he further agree that Strathclyde regional council's refusal to increase the number of police is profoundly damaging and wholly unjustified?
    The Solicitor-General for Scotland: Yes. Although I have said that there is a decline in the number of people proceeded against, I should have thought that there was nothing in that figure to justify the action being taken to withhold from the chief constable the funding that he needs to bring his force up to full strength. I understand that there is a shortfall of about 200 police officers and 704 civilian support staff in Strathclyde region.
    Dr. Godman: Would not the statistics concerning those proceeded against in Strathclyde courts for drunkenness and related offences be improved considerably by the establishment of designated places?
    The Solicitor-General for Scotland: The action that has been taken in Aberdeen has shown that the problem can be dealt with much more satisfactorily in that way. If the hon. Gentleman examines the figures that I have given,

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    I believe he will appreciate that what my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) said was valid.
    Mr. Nicholas Baker: On a point of order, Mr. Speaker. My point of order concerns Question 15, which I had hoped to have the opportunity to ask, and a significant mistype. The mistyped word is "liability". I had no intention of asking about the liability of the Scottish salmon fishing industry, but wanted to raise the issue of its viability. You will be aware, Mr. Speaker, that good beats of Scottish salmon rivers have never seen fewer salmon—
    Mr. Speaker: Order. I am not aware of that and I am sorry that we did not reach the hon. Gentleman's question. We did not make very good progress today. However, I have done my best to call those hon. Members who tabled questions lower on the Order Paper. I shall ensure that the correction is made.
    Mr. Foulkes: On a point of order, Mr. Speaker. It has not escaped your notice that, in spite of your excellent efforts, we managed to get only as far as Question 9 today. So that we might proceed more quickly and ask more questions of Scottish Ministers, who represent the equivalent of seven United Kingdom Departments and a wide range of issues—we did not reach some important questions today, such as that on the salmon industry and one on Pratt and Whitney, in which I was especially interested—would you consider refraining from calling some Conservative Members again and again when there
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    are only a handful of them and when some of them have not tabled questions at all? Would you also consider making representations through the usual channels to the effect that Scottish Question Time should take place more frequently than every four weeks? The Welsh are able to question their Secretary of State every three weeks and I think that we should be doing it at least every fortnight.
    Mr. Speaker: If the hon. Gentleman looks at the Order Paper, he will see that I gave preference, as is my practice, to those hon. Members with questions on the Order Paper. [Interruption.] Order. If the hon. Gentleman is referring to hon. Members from English constituencies, may I say that they have as much right to take part in Scottish Question Time as Scottish Members have to take part in English Question Time. I called some of them today, though I think not as frequently as I called Scottish Opposition Members. If the hon. Gentleman consults the Order Paper, he will see that I made a judgment on important issues in Scotland and that hon. Members with questions further down the Order Paper were called.
    Mr. Bill Walker: Further to the point of order, Mr. Speaker. I understand that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has just drawn attention to the fact that, unusually, I do not have a question on the Order Paper today. The reason is quite simple—
    Mr. Speaker: Order. I cannot think that that is a matter for me. I hope that the hon. Gentleman is not dissatisfied with being called three—or was it four, times?

Questions to Ministers
Mr. Dennis Skinner: On a point of order, Mr. Speaker. Yesterday at Question Time, during the course of the questions and answers on the National Health Service, I raised the issue of a young girl in my constituency, Sara Kelly, aged 22 years of age, who had died, with reference to the fact that she had needed an nebuliser under the NHS scheme. I was told by the Minister—indeed, the House was told by the Minister—in answer to my question:
"The hon. Member"—
he was referring to me—
"therefore immediately turns to another story, that of a girl in Pinxton. That is why the hon. Member asked his question, because he has not put it to me before … We can sort out the problems if the hon. Member will put the cases to us in a proper way and not seek to exploit them for his own purpose."—[Official Report, 18 June 1985; Vol. 81, c. 163.]
The clear implication of that was that I had never raised the case of Sara Kelly with the Ministry. The fact is, of course, that on 1 May, before Sara Kelly died, I wrote to the Department of Health and Social Security and asked for an investigation into the case of the nebuliser. I was calling upon the Minister to provide a nebuliser for Sara Kelly at that time. Some days later I received a telephone call from Sara's parents telling me that she had got a nebuliser, but unfortunately had passed away. I got a reply from the DHSS on 7 June—
Mr. Speaker: Order. Could the hon. Gentleman make his point of order to me, because it seems to me that this point of order is rather more for the Department than it is for me?
Mr. Skinner: The point I am making, Mr. Speaker — and I am absolutely certain that my hon. Friends understand it—is that the Minister misled the House. He was saying to the House yesterday that I had never raised the question of Sara Kelly in the proper fashion, and I have a copy of the reply of the Parliamentary Under-Secretary of State for Health and Social Security, the hon. Member
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for Oxford, West and Abingdon (Mr. Patten) of 7 June. I rang up the DHSS yesterday and asked whether they knew that their Minister had misled the House. He has a duty to come to the House and rectify the matter, but he has not got the guts to come.
Mr. Speaker: Order. These are not points of order for me. The Minister who was answering at the Dispatch Box yesterday is here and I am sure that, if the hon. Member will give him an opportunity he will wish to say something.
The Minister for Health (Mr. Kenneth Clarke): Further to that point of order, Mr. Speaker. I accept that yesterday I unintentionally made an unfair comment about the hon. Member's constituency case. I came to the House armed with the particulars of two cases with which he had been dealing and one on which I had been corresponding with him. I thought that I had complete knowledge of the cases that he had raised. I therefore, I am afraid, misunderstood what he said and thought that he was raising a new case about which I had not heard before. He quite correctly says that he had written to the Department on 1 May and received a reply from my hon. Friend the Parliamentary Under-Secretary. I afterwards discovered that the hon. Member was not, as I had believed, raising a totally new case.
I have written the hon. Member a letter apologising for that and saying that it is an open letter. I am sure that he can reassure his constituents that he had raised the case in the proper way. I also repeat my undertaking to him yesterday to try to sort out the remaining cases that he has, and I believe that if he continues to pursue his constituency cases we shall be able to sort out the problems in Derbyshire.

SCOTTISH ESTIMATES
Ordered,
That the Estimate Class XVIII Vote 5, Rate Support Grants to local revenues, Scotland, be referred to the Scottish Grand Committee.—[Mr. Archie Hamilton.]

Consumer Guarantee Protection
3.34 pm
Mr. Michael Hirst: I beg to move,
That leave be given to bring in a Bill to oblige traders offering long-term guarantees when providing goods or services to make suitable arrangements to ensure that such guarantees remain effective in the event of the trader ceasing to trade.
Adam Stewart is a retired constituent of mine and he and his wife like nothing more than to sit in their home and admire their garden. Some months ago they succumbed to the blandishments of a salesman from Coldshield Double Glazing and spent a lot of their life savings installing double glazing in their home, largely relying upon an assurance they were given by the salesman of a five-year guarantee for the work.
After installation of the windows, problems emerged and Mr. Stewart spent several frustrating months trying to have the work put right. Alas, in the meantime Coldshield went into receivership and Mr. Stewart discovered to his alarm and anger that his guarantee was worthless. By the time he contacted me, nothing could be done to help him.
Many hon. Members will be uncomfortably aware of similar cases and will know of the heartache, worry and financial loss experienced by people who discover that they hold worthless guarantees. Hon. Members will have experienced the frustration of writing impassioned letters to the Director General of Fair Trading, to the Minister with responsibility for consumer affairs and to the receivers or liquidators of companies, only to receive sympathy but no recourse for our hapless constituents.
The spate of insolvencies in recent years has left millions of people unprotected against defective goods or workmanship in relation to double glazing, dry rot and dampness eradication, loft conversion, servicing of domestic appliances, rustproofing, and so on. The extent of the problem is confirmed by a Which? report stating that, of 850 wood preservation firms surveyed, 600 had ceased trading two years later.
A company does not have to go into insolvency for the consumer to discover that his guarantee is ineffective. The small print often excludes apparently reasonable grounds for a claim.
These are not isolated occurrences. According to the receiver to whom I wrote on behalf of aggrieved constituents, the recent collapse of Coldshield has left tens of thousands of people with worthless guarantees. Wallguard was advertising 30-year guarantees for its damp treatment the week that it went into receivership. Servis washing machines, Multi Guarantee, Mulberry home extensions and countless other failures tell a tale of misery for people who paid good money in the hope and expectation that the work done was properly guaranteed.
The impressive growth of home ownership in recent years has been comfortably outstripped by the growth in home improvements, and many people have spent a great deal of money improving their homes—an objective that we all regard as thoroughly desirable. The private sector home improvement market is estimated to be worth about £6 billion per year. Inevitably, however, the cowboys have come in looking for the potentially rich pickings. Due to their ability to undercut reputable traders by accepting cash payment, the cowboys are believed to command about 40
300
per cent. of this lucrative market, with disastrous results for penny-wise, pound-foolish, home improvers who give their business to cowboys.
The guarantee is used as a hard marketing tool in advertising literature and in the sales pitch of high pressure salesmen. Purchasers believe, usually reasonably, that they are buying peace of mind and that the guarantee that comes with the goods or services gives them the right to have defective work put right during the guarantee period. Few customers are aware of the terms of the guarantee. Often they do not see the terms before they are committed to buy or the work is executed. Frequently, the guarantee turns out to be heavily qualified, excluding consequential loss, often non-transferable in the event of sale and containing other unnecessarily restrictive conditions.
A parliamentary answer last November to my hon. Friend the Member for Congleton (Mrs. Winterton) revealed a sharp increase in the number of complaints referred to the Office of Fair Trading in relation to construction, double glazing and home insulation. With complaints running at almost 50,000 per annum, the Office of Fair Trading is understandably worried about the problem and its discussion paper confirms its concern about the imperfections of guarantees and the position of holders of worthless guarantees.
In fairness, I should point out that a number of trade federations have made efforts to ensure better standards of workmanship and better guarantee cover, but despite the many worthwhile initiatives traders can still offer guarantees which mean virtually nothing in practice.
The purpose of the Bill is to simplify and strengthen the meaning of the term "guarantee" and to oblige traders who offer guarantees in excess of one year to make suitable arrangements to ensure that those guarantees remain effective throughout the entire period in the event of a firm ceasing to trade. Such a guarantee would be effected either by direct insurance between the consumer and an authorised insurer or by an approved trade association scheme or indemnity scheme which, one hopes, would have an independently insured backstop. The use of the word "guarantee" would be outlawed in all other circumstances. I must stress, however, that nothing in the Bill in any way affects the existing statutory rights of consumers under the Sale of Goods Act or the Supply of Goods and Services Act.
Most importantly, my proposals do not depend upon statutory regulation or the licensing of individual firms, nor are they designed to protect people from their own wilful stupidity. People will still be free to deal with the firm of their choice, whether it is a cowboy firm or a reputable company. Firms unable to offer a guarantee would confer on consumers no guaranteed rights and they would trade with them at their own risk. With proper publicity and the education of consumers in the risks of trading with a non-guarantee company, it is to be hoped that there would be a significant reduction in complaints of the sort which have been aired in Esther Rantzen's programmes or which have appeared on the consumers' problem pages in the tabloid newspapers.
An indirect benefit of the Bill would be encouragement for trade federations, membership of which would presumably enable a trader to obtain more competitive terms for guarantee provision. Building societies and banks also have a part to play, as much home improvement work, which is the source of so many complaints about worthless guarantees, is financed by them. They should,

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if only to protect their underlying guarantee for the loan, require the borrower to use a trader offering a proper guarantee.
It is not my intention that those guarantee requirements should inhibit the small trader or the new entrant to the industry. These people would still have every opportunity to develop their businesses. I am sure that many of them grow from small beginnings by operating locally and enjoying personal word-of-mouth recommendations.
I accept that there would be an extra burden in arranging guarantee insurance, but that would be a small price to pay for the extra business which would be forthcoming from those seeking the security of a guarantee.
People may well ask whether the result of the Bill would be yet another step along the road to the nanny state. I remind the House that deposit taking, credit sales and hire purchase, and the operation of banking and insurance, are already subjected to stringent statutory control. The clients of lawyers, accountants and stockbrokers have the security of an indemnity fund. Holidaymakers are protected by a Government-funded scheme. I am looking not for Government funding but for a legislative framework to ensure that a guarantee is in reality what it purports to be.
Question put and agreed to.
Bill ordered to be brought in by Mr. Michael Hirst, Mr. Spencer Batiste, Mrs. Virginia Bottomley, Mr. Hugh Brown, Lord James Douglas-Hamilton, Miss Janet Fookes, Mr. Charles Kennedy, Mr. Austin Mitchell, Sir Hector Monro, Mr. Stuart Randall, Mr. James Wallace and Mr. Gordon Wilson.

Consumer Guarantee Protection
  CONSUMER GUARANTEE PROTECTION
  Mr. Michael Hirstaccordingly presented a Bill to oblige traders offering long-term guarantees when providing goods or services to make suitable arrangements to ensure that such guarantees remain effective in the event of the trader ceasing to trade; And the same was read the First time; and ordered to be read a Second time upon Friday 5 July and to be printed. [Bill 164.]
Opposition Day
[15TH ALLOTTED DAY]
Opposition Day

  Prices
  Mr. Speaker: We now come to the important debate on Government-imposed price increases. I have selected the amendment in the name of the Prime Minister.
  3.49 pm
  Mr. Roy Hattersley: I beg to move,
  That this House condemns the Government's policy of intentionally increasing public sector prices through rising tariffs for gas and electricity, increased rents, rates, water charges and bus fares, higher charges for school meals, meals on wheels, home helps and prescriptions, which will result in disadvantage for all but the richest sections of society; deplores the increases in private sector prices resulting from the Government's extension and imposition of higher levels of value added tax; and strongly disapproves of the Government's mismanagement of the economy which has produced record interest rates and a consequent level of mortgage repayments which for most families greatly exceeds any gains from changes in income tax.
  Inflation is the area of the economy in which the Government most often proclaim victory, but an examination of the facts shows that boast to be largely bogus. For five years, the Prime Minister has claimed credit for a falling inflation rate, and has rejected all blame for increases in unemployment. In both cases, the truth is almost the exact opposite of what she asserts. That is a demonstrable fact, and it was so even before the increase in the retail price index over the past five months.
  I simply draw the attention of the House to the statistics. During the past six years the British inflation rate has fluctuated between 9 per cent. above the OECD average—that was in the year in which the Government increased VAT from 8 to 15 per cent., and pushed up the RPI by four points at a stroke—and 1·8 per cent. below it. The latter figure came about immediately before the last general election.
  But over the period as a whole, the average rate of inflation in the OECD has fallen from 9 to 5 per cent., whilst in the United Kingdom it has fallen from 10·1 to 7 per cent. That is a comparison of our inflation record with that of our competitors and partners in the developed world. We have certainly done no better—and, indeed, have probably done worse — than the average in the other OECD countries.
  There can be no dispute about unemployment. It is a question not of perhaps having done worse but of certainly having done worse, continually having done worse and remorselessly having done worse. In 1969, United Kingdom unemployment stood at 0·5 per cent. above the OECD average. In 1980 it was 1·1 per cent. above; in 1981, 3·9 per cent. above; in 1982, 4·1 per cent. above; and in 1983, 4·4 per cent. above; and in 1984 it was 5 per cent. above the OECD average.
  In the five years for which there are statistics and in the five years of this Conservative Government, our unemployment rate has continually and remorselessly increased as compared with unemployment in the OECD countries of our partners and competitors.
  Mr. Patrick Nicholls rose—
  Mr. Hattersley: I shall give way to the hon. Gentleman in a moment. So far I have given only the official statistics, but perhaps he wishes to argue with them.
  Mr. Nicholls: Was there one single month under the last Labour Government when the rate of inflation was lower than it is now?
  Mr. Hattersley: As I develop my case, the hon. Gentleman will discover that the problem that he has to face—[HON. MEMBERS: "Answer the question."]—is whether the present rate of inflation is the lowest that the Government could achieve, or whether, through their wilful policy and despite the advantages that they have enjoyed, they have behaved in such a way as to produce a rate of inflation that is worse than that in the countries of our competitors and collaborators in the OECD. The answer to that question is a categorical yes, and I am glad that the hon. Gentleman is wisely not prepared to argue with that contention.
  The contention is that, as compared with other developed countries, our rate of inflation has continually and inexorably deteriorated. That has happened at a time when commodity prices have remained relatively stable and when almost all the external factors—I draw the hon. Gentleman's attention to oil prices — have encouraged an improving inflation rate. The things that have pushed up inflation in this country during the past five months are domestic factors, just as they were in 1979 and 1981. The causes of inflation are VAT, rents, gas, electricity and, overwhelmingly, mortgages. Things that are the direct result of Government policy have escalated the inflation rate to the 7 per cent. figure at which it now stands. All the increases that I have listed have come about either directly as a result of Government edict or indirectly as a result of Government incompetence.
  It is now accepted that the most immediate cause of the increase in the retail price index is the increase in mortgage rates. About that I want to ask the Chief Secretary an immediate question. If he cannot answer it now, I warn him that we expect the Secretary of State for the Environment to answer when he winds up in five hours' time.
  When official statistics prove the inadequacy of Government policy, it is the Government's practice not to change the policy but to change the statistics. That happened when the retail price index was replaced by the tax and price index; that happened when the method of calculating the unemployment total was altered to give a better figure; that happened when the method of estimating the number of people in work was altered to improve the total.
  Is the same about to happen with the retail price index? I understand that the retail prices index advisory committee has been asked by the Government to consider the removal of mortgage rates from the inflation calculations. That is a simple matter to which the Chief Secretary can answer yes or no. If he cannot, the Secretary of State for the Environment can answer later. Perhaps the answer is known already. I shall be pleased to give way to hear the answer to the question. Have the Government, or have they not, invited the retail prices index advisory committee to consider the removal of mortgage rates from the RPI? We look forward to the Chief Secretary enlightening us as the afternoon progresses.
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  Whether or not the Chief Secretary admits that what I say is true, the increase in mortgage rates played a major part in the April and May inflation increases. The May increase was described by the Secretary of State for Employment as a "blip" in a downward curve. When he made his usual statement on the unemployment figures, the Secretary of State did not say that there had been a blip in April, a blip in March, a blip in February, a blip in January — that is five blips in a row. Many commentators believe that if blips are the euphemism for upward movements, there will be another blip next month.
  Five blips in a row — possibly six — requires a collective noun. The word of course is "trend". The trend has been upwards since Christmas. The trend has been established not by external factors, because commodity prices are relatively stable and the pound has not significantly deteriorated since January. The cause is domestic Government policy and the principal cause is the increase in the mortgage rates, for which the Government are wholly and directly responsible.
  The story of the mortgage rates increase is well known, but it bears repetition. For 18 months, the Chancellor of the Exchequer insisted that the pound must float free and find its natural value in world markets. While he was insisting upon that throughout 1984, commentators were saying that, since oil is priced in dollars, depreciation would increase oil revenues, the oil revenue increases would extend the fiscal adjustment, the extended fiscal adjustment would increase the Chancellor's scope for tax cuts, and therefore the Chancellor was in positive favour of depreciation. Not once did the Chancellor do anything to contradict that view.
  The Chancellor of the Exchequer (Mr. Nigel Lawson): Rubbish.
  Mr. Hattersley: Will the Chancellor say when he contradicted the view that he welcomed depreciation? Will he give an example now? The Chancellor did nothing to contradict that judgment. As a result, on 10 January the pound seemed likely to depreciate to the value of a single dollar. As a result of that, the Chancellor stepped in on 11 January and manoeuvred an interest rates increase, which did not work.
  The following day, not only the Chancellor, but all in Downing street, took a hand. At No. 10, The Observer newspaper was told that intervention to support the pound was imminent, while next door, at No. 11, The Sunday Times was being assured that intervention was out of the question. The result was chaos in the market and panic in the Government. On Monday 14 January, the Chancellor reintroduced minimum lending rates and began the process that ended with base rates at 14 per cent. and the highest real interest rates that this country has endured for 50 years.
  The cause of those interest rates rising to that level was not the old theory of crowding out or the new excuse of international rates. It certainly was nothing to do with the money supply, even though the Government were not meeting their money supply targets. Interest rates in Britain are now 6 per cent. above those in Germany, America and Japan, for reasons that are special to the United Kingdom. Those reasons are and remain the incompetent management of sterling by the Chancellor and the panic that affected the Government thereafter. As a result of that unique increase in interest rates, mortgage

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  rates rose to 13·75 per cent. and 14 per cent.—4 per cent. higher than at the time of the last election and 2 per cent. above the level that the Government inherited in 1979. In fact, those mortgage interest rates have been surpassed only once in our history, and that was under the Tory Government in 1981.
  On 1 April, mortgage interest rates rose by a full 1 per cent. That added £9·60 a month to the repayments on a £20,000 mortgage, which is the average new mortgage taken out. That increase in repayments on the average new mortgage more than swallowed the £7·50 tax relief provided in this year's budget for a married couple. Thanks to the Government, during the past five years, that family with a £20,000 mortgage has faced a 4 per cent. increase in its mortgage repayments and an actual increase of £40 a month. The Conservative party, which claims to be the party of home ownership, has made home ownership more expensive than ever before.
  For some families, especially young couples, the Government have made the price of home ownership prohibitive. Yet, if those same young couples want or have to live in rented accommodation, especially municipal rented accommodation, the cost has increased just as much. Thanks to the Government's decision virtually to abolish housing subsidies, increases in rents have escalated at a speed that no hon. Member, whatever his persuasion, would have regarded as tolerable five or 10 years ago. In 1978–79 — the last year of the Labour Government — the average council rent was £5·90 a week; last year, it was £14·77. The estimate for 1985–86 is £15·50 a week—an increase over seven years of 163 per cent. gross and 41 per cent. in real terms. These are massive increases which ordinary families find it almost impossible to face and bear.
  The increases in mortgage repayments and in rates are borne by home owners and house renters who are desperately affected by another item of policy for which the Government are generally and directly responsible—the continuing increase in rates. I know that it is the practice of the Government's propaganda machine to blame the rates increases on individual councils. It may well be the whole absurd paraphernalia of rate capping and all that goes with it was not so much a device for holding rates down as a device for finding scapegoats on whom to blame the increasing rates.
  Whatever the purpose of all these schemes introduced by the Chancellor and his many predecessors who escaped before he arrived, none has worked. Between 1974–75 and 1978–79—that is the period of the Labour Government, for hon. Members who enjoy making such comparisons—rates rose by 73 per cent. In fact, the real cost fell by 5 per cent. Between 1978–79 and 1984–85 the rates rose by 146 per cent.—the real cost rose by 46 per cent. Between the first year that this Government were in office and the estimate for next year, the rates increase will be 169 per cent.—a real increase of 44 per cent. That is 44 per cent., to which an additional escalating payment must be made for water rates, which continue to grow at a speed that is inexplicable to most people who have examined the industry.
  The Government blame all this—a 44 per cent. real increase in rates plus the increase in water charges—on spendthrift councils. They justify their blame and substantiate their accusations by giving examples of items
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  of spending which I freely admit are sometimes absurd, but which are almost always trivial in terms of a borough's total rates bill.
  If councils are to blame for escalating rates, then Conservative councils are at least as guilty as Labour in local administration. I ask the Chief Secretary to consider the average domestic rates precept this year in the shire counties, where the Conservative party believes itself to hold sway and in some areas exercises undisputed power. In the 10 shire counties where Labour sets the rates, the figure is £4·83; in the 19 shire counties where the Conservatives set the rates, the figure is £5·31; and in the 10 counties where there is no overall control the figure is £5·34. By dividing the shire counties into three groups—Labour, Conservative and others—one can see that, according to the Government's criteria, the Labour party has a better record of thrift than the other parties.
  I am not blaming the independents, the Social Democrats or the Liberals, who have increased the precept the most. I am not blaming the Tory councils which have increased the precept more than Labour councils. To blame them for the increase in rates would be as absurd as to blame all the other groups which have had the unpleasant task of imposing and passing on the price increases required by the Government. Those councils have increased their rates for two reasons — first, because the Government have increased councils' costs by imposing extra duties on them, such as the administration of housing benefit, and, secondly, because the Government have neglected services, such as local transport, which councils rightly thought it their duty to rescue.
  At the same time as this Government have increased councils' costs, they have remorselessly and ruthlessly cut the rate support grant, which is central Government's contribution to local authority spending. In 1978–79 which was the last year of the Labour Government-this is another comparison which will be noted by assiduous hon. Members who like to make these comparisons — the RSG was £12·226 billion; this year it has sunk in real terms to £8·489 billion. If this Government had kept RSG at the level they inherited, local authorities would have received a sum so much greater than the sum they now receive that none of the increases about which there have been so many complaints would have been necessary or imposed.
  In such circumstances, it is dishonest and absurd to blame the rates rises on local councils. It is as dishonest and absurd as it would be to blame the chemists for the increases in prescription charges from 20p to £2, to blame the dentists for the increased patient costs which come from open-ended charges, or to blame the opticians for the increased prices which result from the abandonment of NHS glasses and lenses. The Government are responsible for all those items, just as they are responsible for the rates increases.
  Mr. Tim Eggar rose—
  Mr. Hattersley: I am always happy to give way to the hon. Gentleman.
  Mr. Eggar: Before the right hon. Gentleman leaves the question of rates, may I ask him to recollect that the Government imposed a limit on the GLC? Does he remember that the GLC then voted voluntarily to go below that limit and announced that it was able to do that without

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  any reduction in the standard of services being offered to the people of London? Did the right hon. Gentleman welcome the move by the Government which forced the GLC to reduce the rate, or did he believe that his friends at county hall should have been allowed to raise the rates as high as they wished?
  Mr. Hattersley: I will now demonstrate why I said that I am always happy to give way to the hon. Gentleman. Perhaps he will recall what happened when the GLC reduced the rate below the figure that the Government anticipated. That required the Government to give more money to county hall, and because that had to be done, they had to take money away from Lancashire and every one of the shire counties.
  Mr. Eggar: No.
  Mr. Hattersley: It is no good the hon. Gentleman saying, "No", because that is exactly what happened. It is what I told the Prime Minister would happen and it is what the Prime Minister justified having happened. Because the GLC remained within the law, the shire counties, many of them Conservative-controlled, were penalised. If the hon. Member for Enfield, North (Mr. Eggar) regards that as a sensible way of distributing the rate fund, I shall give way to him frequently in the future.
  Mr. Nicholas Soames: Get on with it.
  Mr. Hattersley: I long for the hon. Member for Crawley (Mr. Soames) to intervene.
  Mr. Soames: Just wait.
  Mr. Hattersley: The people whom I have described — those who are paying higher mortgage rates and higher rents, both of whom are paying additional rates bills—are also the people who are now faced with massive increases in the cost of gas and electricity.
  I have no doubt that, when the Chief Secretary makes his valedictory speech, he will say that gas and electricity prices rose between 1974 and 1979. I congratulate him on his perception in discovering that. During the lifetime of the Labour Government, gas prices, although they increased by 73 per cent. in nominal terms, fell by 39 per cent. in real terms. Between May 1979 and August 1985, gas prices rose by 128 per cent. in nominal terms and 56 per cent. in real terms.
  Electricity prices rose much more quickly under Labour than they have under the Conservatives. However, I hope that, as the Chief Secretary entertains us with a detailed recital of the figures that I have offered him, he will also give the history of those price increases.
  The Labour Government of 1974 inherited from their predecessor annual losses on gas of £41 million and on electricity of £176 million. I know that it is not fashionable for the present Government to defend their lineal predecessor, and the Chief Secretary may say that many of the problems that the Labour Government faced with gas and electricity prices were the direct result of the Heath Administration. He must make his own judgment on whether he wants to offer that condemnation.
  The facts are beyond dispute—a £41 million deficit on gas and a £176 million deficit on electricity—and the Labour Government moved slowly towards a break-even point. As one of the Ministers who was responsible for this area of policy, I vividly recall that the criticism of the
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  Labour Government was not that we were putting gas and electricity prices up too quickly but that we were increasing them too slowly—that we were subsidising the gas and electricity consumer.
  Mr. Eggar rose—
  Mr. Hattersley: No, I must get on.
  Mr. Robert Atkins: The right hon. Gentleman said that he always gave way to my hon. Friend the Member for Enfield, North (Mr. Eggar).
  Mr. Hattersley: While I could not lose by giving way, I am motivated solely by compassion. Therefore, I will not give way again to the hon. Gentleman.
  The Government's attitude towards the gas and electricity industries has been diametrically different from that of a Government who struggled—not completely successfully — to make the industry break even. The Conservatives have used gas and electricity to raise revenue and collect taxes, and I will quote two authorities for saying that.
  I remind the Chief Secretary of what the National Gas Consumer Council said about the gas tariff:
  "We strongly opposed and fought vigorously against the suggestion that the tariff should rise higher than the commercial needs of the industry in order to provide a convenient source of revenue to the Treasury."
  It went on to say that its opposition to the gas industry being used
  "to provide a convenient source of revenue to the Treasury"
  failed and that the fight to stop the gas tax was lost. It added that the
  "three-year Government imposed programme of rapid gas price rises was…a programme that more than doubled the price of gas."
  The same rule applies to electricity. I have quoted the report of the Select Committee on Energy in the House before. When I last raised it in debate, the Chief Secretary did not comment on the issue. I invite him to comment on it today. That Select Committee said:
  "the proposed electricity price increase…is not justified on the grounds either of the Financial Target or the Government's economic pricing policy. The only possible reason for it is the Government's desire to raise additional revenue."
  Mr. Andrew MacKay rose—
  Mr. Hattersley: I had better not give way to the hon. Gentleman, or his hon. Friend the Member for Enfield, North will feel cheated
  The Select Committee added:
  "the industry has been required by the Government…to make payments to the Treasury in 1984–85 of some £360 million over and above the figure of £380 million which would be consistent with Financial Targets."
  The Government now impose a purchase tax on gas and electricity. It is a surreptitious tax, but it is a tax nevertheless on electricity and gas.
  Mr. Andrew MacKay: The right hon. Gentleman is rightly concerned about price rises. I am sure that he is keen to enlighten the House and the country on his party's policy. Do he and his party believe in a statutory prices and incomes policy, or would he have some sort of fudge or compact with the trade unions?
  Mr. Hattersley: My answer to the alternatives that the hon. Gentleman offers me is that I do not believe in a statutory incomes policy. I do, however, believe, as I have always believed, that an agreement must be forged between unions and Government — [Interruption.] I

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  know how concerned the Government are by the increase in wages reported today. I hope that they will understand, if they are concerned about wage increases, that they should not be surprised by today's news. If the Prime Minister preaches the doctrine of every man and woman for himself and herself, she must expect the trade unions to do exactly the same. As Mr. Sid Weighell once said:
  "If we live in a pigsty economy, everybody will try to get their snouts in the trough.
  As the Conservatives have encouraged the belief that every man and woman should fight for himself and herself and damn the consequences, they should not be surprised if trade unionists take them at their word.
  Several Hon. Members rose—
  Mr. Speaker: Order. I do not think that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) is giving way. There will be ample time for other hon. Members to contribute to the debate.
  Mr. Hattersley: I return to the subject on which—[HON. MEMBERS: "Keep to the point."] I have not left the point. If Conservative Members will concentrate, when I say that I am returning to the point, it means that I have not left it. I am on exactly the same point.
  The surpluses in the gas and electricity industries which the Government have arranged and have imposed—they would be called profits in private industry, and I suppose that they will be called profits if those industries are privatised — are used to reduce the public sector borrowing requirement. They are taxes, and they are intended to assist in the achievement of the massive tax cuts which the Chancellor pursues so frenziedly but never actually achieves.
  I suspect that this frenzy will increase as the election approaches — not surprisingly from a party which promised to cut taxes but has in fact increased the annual tax bill by £29 billion. That means, I suspect and fear, that there will be additional assaults on public services such as the assault mounted by the Secretary of State for Transport in his direction to the London Regional Transport Board to reduce its level of revenue support. The assault resulted in fares being increased on average by 9 per cent., short journey fares being increased by 25 per cent. and children's bus fares being increased by 50 per cent. Those are the sort of prices that real families pay for the Chancellor's frenzied and vain pursuit of a surplus big enough to provide the tax cuts which he once promised and has failed to provide.
  There will be the pathetic pretence that the problems of the economy, while all this is going on, can be solved by the belief and the pursuit of the superstitions which have so failed the economy for the last six years. I have absolutely no doubt that when the Chief Secretary speaks we will hear a repetition of all the old shibboleths that we have heard from him week in, week out, since he first became a member of the Government. He will announce that the policy which has visibly failed is really an invisible success and he will urge us to be patient, telling us that in the end the policy which has so damaged the economy will save the economy. To most people the absurdity of that blind faith is now obvious.
  We were once told that, if the Government held down inflation, every other aspect of the economy would improve. What they have done is to attempt to hold down inflation by damaging every other aspect of the economy.
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  The 2 million extra unemployed, the record level of company liquidations, the deficit on manufacturing trade, the net decline in investment and the negative net investment in manufacturing, construction and transport, are all the prices that we pay for the Government's belief that, if they hold down inflation, everything will come right. Not even in that particular have the Government succeeded. Not even in that promise have the Government managed to do what they asserted would be done.
  The most recent of these promises was made by the Prime Minister somewhere in south-east Asia. I cannot recall the exact country—that does not matter; the right hon. Lady cannot either — but I do remember the promise. The promise was a 3 per cent. inflation rate by polling day. Therefore, I ask the Chief Secretary whether the Government are still committed to that figure or are now edging away from the Prime Minister's indiscretion. If the Government still believe that 3 per cent. is possible by polling day, let me remind them what they have to do. They have to cut inflation by 4 per cent. in the next two years. What the Government have achieved in six years is a reduction of 3·1 per cent. What they have achieved since the last election is an increase of 3·3 per cent.
  Notwithstanding that, I make my position clear about what I fear most—that the Prime Minister will cynically attempt to keep her promise by further collapsing the economy, by adding to record unemployment, by adding to the number of company liquidations, by increasing the deficit on manufacturing trade and by worsening the position in transport, manufacturing and construction, where net investment is already negative. My fear is that the Prime Minister will cynically deepen the damage in the vain hope of having a least one semi-plausible claim to make about her economic record. I do not think that it will do her reputation very much good. The country no longer believes her economic prescription—how could it when so many promises have been broken and when so many forecasts have proved risibly wrong?
  I conclude with one recent example. On 21 March the Chancellor spoke to the House about inflation which he said
  "will stay low and will get lower."
  Since then, the retail prices index has risen twice. What is more, even when the Chancellor gave his assurance on 21 March, he must have known that it was going to rise in April, but what he said to the House was that inflation
  "will stay low and will get lower."—[Official Report, 21 March 1985; Vol. 75, c. 973.]
  It is conduct such as that and words such as those—
  Mr. Lawson: That is not what I said in the Budget speech.
  Mr. Hattersley: The Chancellor is assuring the House that he said something different in the Budget speech. It is a sort of defence to say that one said one thing on one day and another on another day, but I do not think that it is a defence that will take him very far. I believe that it is defences like that and statements of the sort that I have just described which make the comment that the Chancellor offered the House on 21 March wholly apposite—apposite not to the inflation rate, but to the Government's reputation—that it will stay low and will get lower.
  4.26 pm
  The Chief Secretary to the Treasury (Mr. Peter Rees): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  'supports the Government's sound financial policies to reduce and contain inflation, to provide the basis for a fifth successive year of economic growth and to secure a sustained rise in living standards.'.
  The motion standing in the name of the official Opposition covers an enormously wide area, in the hope, presumably, that it may hit a few targets—
  Mr.Jack Straw: The right hon. and learned Gentleman is a sitting duck for a start.
  Mr. Rees: Just give me a chance to see whether I can fly. The hon. Gentleman is usually more generous than that.
  In the hope that echoes of the debate may reverberate in the valley of Brecon and Radnor, the amendment attempts to give a little more coherence to the debate. The difficulty is that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) makes most of his interesting speeches outside the House. Taking my cue, however, from his most recent interview with The Guardian, and his recent Crosland lecture at Oxford, I shall direct my remarks today to the broad priorities of the Government's economic policies and the question of nationalised industry prices.
  The Government's economic policies have been clearly stated and consistently followed since the day on which they assumed office in 1979. I think that our record stands close comparison with that of other countries of the OECD and so far out-tops the record of the last Labour Government that I am rather surprised the right hon. Member for Sparkbrook should even have tabled the motion.
  We inherited a situation where inflation, starting from a figure of around 17 per cent. in the autumn of 1974, which the right hon. Member for Leeds, East (Mr. Healey) represented as 8·4 per cent., had accelerated to 26·9 per cent. in 1974, before falling temporarily as a result of the short-term expediency of incomes policy. By May 1979, inflation was 10·3 per cent. and on a sharply rising trend.
  Those rates of inflation were bidding fair to destroy our economic base and social cohesion. The right hon. Member for Sparkbrook will well recall those days, as he was Secretary of State for Prices and Consumer Protection from 1976 to 1979, so some of his observations had an added piquancy. He will recall the policies with which his Government tried, without success, to contain the situation. He will also recall his clear statement of priorities in February 1978, when he said:
  "in terms of promoting employment opportunities throughout the country as a whole, nothing is more important than containing inflation."—[Official Report, 7 February 1978; Vol. 943, c. 1271.]
  I applaud that clear statement of principle. Would that the Labour Government had applied it. I ask the right hon. Gentleman whether this is one of the old shibboleths to which he referred, one to which he has returned, or one which he has never left.
  Does that quotation still represent one of the priorities of Labour party policy? The right hon. Gentleman did not touch with sufficient clarity, either in his Crosland lecture or in the interview in The Guardian, on his priorities and how he hoped to achieve them. Let me chart the Government's record on inflation.
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  In May 1979 inflation was 10·3 per cent. and rising, as the previous Administration's attempts to impose bureaucratic short-term solutions were collapsing. If ever there was a pigsty economy, it was in those dark winter months of 1978–79, when the noses of certain sectors of the trade union movement were in the trough and the right hon. Gentleman and his friends did nothing to remove them.
  In 1980 the Government set out in place of the previous bureaucratic short-term solutions a medium-term financial strategy to promote honest finance and sound money and a sustained fall in inflation. We have stuck to our strategy, and it has been successful. Inflation has been steadily squeezed from the system.
  Mr. John Maxton: What about interest rates?
  Mr. Rees: The hon. Gentleman must learn to control himself. We are no longer in Committee Room 10.
  Under the previous Administration inflation averaged 15·5 per cent. Under this Administration it has averaged 9·7 per cent. Since June 1983 inflation has averaged 6·2 per cent. Inflation is under control in a way that it has not been since the late 1960s.
  The right hon. Member for Sparkbrook made much play of the upturn in the RPI figures this spring and summer. In May the RPI showed an annual increase of 7 per cent., compared to 6·9 per cent. the previous month and 5 per cent. earlier in the year. Of course these figures are unwelcome, but Opposition Members should not pretend that they come as a great surprise or signal the failure of our policies.
  My right hon. Friend the Chancellor of the Exchequer made it clear in his Budget speech that he expected inflation to edge up in the middle of this year. This increase in the RPI is due largely to temporary factors and, as the right hon. Member for Sparkbrook is right to point out, mortgage interest plays a great part. The rise in inflation followed a certain upset in the exchange markets at the beginning of the year — a clear sign of the problems that would assail any Government not committed to the firm financial and fiscal policies that we are implementing.
  The right hon. Member for Sparkbrook made some points about the activities of the retail prices index advisory committee. He will know, having occupied the position that he did, that this is an independent advisory committee, with representatives of the TUC, the CBI and the Government, and is to report towards the end of 1985. The Government have asked it to look at a range of factors, but if the right hon. Gentleman is suggesting that it is likely to be prejudiced in favour of the Government, he is being grossly discourteous to the independent members who form it.
  Mr. Hattersley: No matter what I am suggesting about the advisory committee, I am asking about the Government. Have the Government asked the committee to look at the inclusion of mortgage rates?
  Mr. Rees: We have asked it to look at a range of factors, including in particular the contribution made by housing.
  Dr. John Cunningham: That means yes. Where are the figures?
  Mr. Rees: If the hon. Member for Copeland (Dr. Cunningham) is suggesting that the independent advisory committee is likely to put its name to a figure, he should reflect a little more.
  Dr. Cunningham: It is a fraud.
  Mr. Rees: No, it is not a Government fiddle. Let me remind the hon. Gentleman, who has perhaps not considered his question as closely as has the right hon. Member for Sparkbrook, not having held the same range of posts in the last Administration, that most other countries do not include mortgage costs in their RPI.
  Mr. Hattersley: Answer the point.
  Mr. Rees: I have given a clear and explicit answer, and these matters are for the decision and recommendation of the independent advisory committee. The right hon. Gentleman should contain himself. Does he wish to assert that the committee is not advisory and not independent? I have given a clear explicit answer to his question. If he is not satisfied with it, he should have formulated his question in a different way. He clearly has not thought through the charge which he is rather apt to throw around the Chamber.
  Let me point out that every monthly statement of the RN under the last Labour Government was higher than the 7 per cent. figure recorded a fortnight ago. The right hon. Gentleman went grudgingly a little way to conceding that, but he did not deal satisfactorily with that rather striking comparison.
  Sir John Page: Will my right hon. and learned Friend say that again, because I should like to memorise it?
  Mr. Rees: My hon. Friend is right. It is a simple proposition that should remain in the memories of every hon. Member, and, I hope, the electors. Every monthly statement of the retail prices index under the last Labour Government was higher than the 7 per cent. figure recorded a fortnight ago. That is the most telling and succinct epitaph on the counter-inflationary policies of the last Labour Government.
  The figure of 7 per cent. still concerns us, but it also emphasises how right we have been to make the containment of inflation our first priority, to rest upon the shibboleth which the right hon. Member for Sparkbrook enunciated so admirably and clearly in February 1978.
  In his Budget speech my right hon. Friend the Chancellor made it clear that we expect inflation to turn round again by the end of the year, falling to around 5 per cent., and further in 1986. We still do, and we can say this with confidence because we are sticking to our financial strategy, which we set out in 1980. Monetary conditions are sufficiently restrictive to squeeze inflation from the system. Our fiscal policy has public borrowing on a sensible track. The PSBR was equivalent to 5·4 per cent. of GDP in 1978–79. In the last financial year, despite the coal strike, it was about 3 per cent., the lowest figure since the early 1970s. For this year we are looking for a further reduction to £7·1 billion, or 2 per cent. of GDP, to underpin our strategy for lower inflation.
  Of all the subjects on which the right hon. Member for Sparkbrook has touched in his speeches outside the Chamber, this is one to which he has never given a clear and succinct answer. I address this question specifically to him, as I have on previous occasions. What proportion of
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  GDP to go on the PSBR does he regard as acceptable in the present circumstances? I shall willingly give way if he wishes to answer.
  Mr. Hattersley: That is a ludicrous question.
  Mr. Rees: The right hon. Gentleman is shifting uneasily in his seat. The question is ludicrous for him because he cannot answer it. He has not worked out the position on that. He has not really worked through the Labour party's counter-inflationary policies.
  If ours is called a dogmatic and monetarist approach, I shall plead guilty. I shall be in the good company of most of the Finance Ministers of the developed world. These are the very policies which were so strikingly endorsed at the last OECD ministerial meeting in Paris. In the words of the Bonn economic summit communiqué:
  "In order to sustain non-inflationary growth and higher employment, we have agreed that … we will follow prudent, and where necessary strengthen monetary and budgetary policies with a view to stable prices, lower interest rates and more productive investment."
  Does the right hon. Gentleman dissent from that and from the views of his presumed friend the President of France?
  If the debate is to be more than a mere exercise in rhetoric by Opposition Members, it is right to consider what alternative policies they advocate. The right hon. Gentleman has told us, or The Guardian readers, that within days of a Labour Government taking office, whenever that may be, he will produce a medium-term economic strategy.
  Mr. Maxton: In October 1987.
  Mr. Rees: I am glad that the hon. Gentleman knows with such precision the day and outcome of the general election.
  It is interesting to note that the right hon. Gentleman describes his policy as a medium-term economic strategy, not a medium-term financial strategy. I have got the point that the right hon. Gentleman, in his expansive way, is taking a broad view of the problem. Therefore, he should give us his broad views of the problems, instead of confining himself to one or two rather trumpery pieces of rhetoric. I hope that he will tell us what he would propose. As the hon. Member for Glasgow, Cathcart (Mr. Maxton) has told the House exactly when the general election will be, and what its outcome will be, the right hon. Gentleman will have devoted considerable thought to these matters and will no doubt produce his plan only a few days after the general election.
  The right hon. Gentleman has not mentioned that plan in this debate. Nor was there a serious mention of the level of the borrowing requirement in his speech. This afternoon he resisted my blandishments again and described my question as ludicrous. Is it not a question which he would address in his medium-term economic strategy? The right hon. Gentleman did not mention the money supply. I pay tribute to him for the fact that in his interview with the Tribune on 10 May 1985 he said of the money supply:
  "We shall regard it as a tool for managing the economy in the way that we want."
  Perhaps he is to a tiny degree a monetarist. I welcome him to the club.
  The right hon. Gentleman promises us a new form of non-enforceable social contract on pay with the trade union movement. I hope that that theme will be developed during the debate, because it will be particularly interesting to hear the views of the Liberal and Social

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  Democratic parties. They not only believe in a social contract, but believe that it should be statutory, enforceable and extended to prices.
  Mr. Richard Wainwright: Will the right hon. and learned Gentleman tell the House where he picked up the words "social contract" in either the Liberal or Social Democratic party manifestos?
  Mr. Rees: I apologise deeply to the hon. Gentleman if he does not fancy the words "social contract". I thought that after the years when he and his hon. Friends underpinned the Labour Government, the words "social contract" had passed into Liberal and SDP currency. Perhaps the hon. Gentleman can catch your eye, Mr. Deputy Speaker, and explore such interesting semantic questions.
  Even over a period of years the country will recall the failure of those policies. For a party which has put down this motion to take as the centre plank of its policies an incomes policy, enforceable or unenforceable—either of which in the long term is unenforceable in practice—reveals a remarkable failure of memory or an obstinate incapacity to learn. We can only murmur in the words of Dr. Johnson:
  "The triumph of hope over experience".
  The right hon. Gentleman has been more expansive on prices. In his Tribune interview of 10 May he said:
  "I favour the reconstruction of price controls … but not blanket price controls … the sort of selective price controls that were beginning to evolve which prevented unreasonable price increases"—
  not observable to the rest of the country—
  " — increases that were the product of a company's monopolistic power in the economy and which prevented exploitation—I want to see again … Some sort of control on prices ought to be one of the sanctions we used to influence industrial behaviour.
  The hon. Gentleman might have enlightened us on whether he believes in some sort of statutory control or arbitrary powers such as he was prone to use in 1978, or whether he merely advocates an increased and strengthened Monopolies and Mergers Commission. It appears that, while the right hon. Gentleman has forgotten the lessons which his Government learned painfully at our expense during the intervention in our affairs of the International Monetary Fund, he remembers the one aspect of policy which failed so signally in whatever form it was introduced.
  I shall now deal with the more startling charges in the Opposition's motion—nationalised industry prices. To have a sensible debate on this issue it is important to establish, or re-establish, to return to, or not to leave, the facts, because they have been stated on many occasions from these Benches. The right hon. Gentleman gave the House some of the facts, but in a highly partisan and selective form.
  Domestic electricity prices increased between 1974 and 1979 under the Labour Administration by 170 per cent., while between 1979 and February 1985 they increased by 84 per cent. The right hon. Gentleman is right to draw our attention to the fact that the rate of inflation was more acute in the period in which he presided as the protector of consumers than it has been under our Government at any time.
  Industrial electricity prices increased between 1974 and 1979 by 133 per cent., compared with 65 per cent.
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  between 1979 and 1985. Indeed, domestic electricity prices were frozen for two years to April 1984, and electricity price increases are expected to be at or below the rate of inflation during the next two years. In short, under the Labour Administration electricity prices increased by 2 per cent. every six weeks, whereas under the present Government they have increased by 2 per cent. during the past two years. I hope that my hon. Friend the Member for Harrow, West (Sir J. Page) will also record that particularly important point.[Interruption.] My hon. Friend can read Hansard, but hon. Gentlemen may be more disadvantaged.
  Between 1974 and 1979, industrial gas prices rose by 288 per cent. If the competitiveness of British industry was a concern of the right hon. Gentleman, that is an extraordinary figure. Between 1979 and 1985, the increase was only 94 per cent.
  Between 1974 and 1979, domestic gas prices increased by 73 per cent. Because gas remained substantially under priced in economic terms, which created severe distortions in the market, gas prices had to be increased in real terms during the following three years. Once that step had been taken, gas prices rose no faster than inflation. Domestic gas prices did not increase during the 15 months to January 1984, and Sir Denis Rooke told the Select Committee on Energy on 20 November 1984 that he expected to be able to hold gas prices to roughly the rate of inflation for the next three or four years because of efficiency savings.
  Mr. Hattersley: I am trying to follow the logic of the Chief Secretary's argument. Does he believe that the Labour Government were wrong to increase those prices and, therefore, approach break-even? Would he have preferred us not to do that and to leave a bigger deficit for him to deal with when he came to office?
  Mr. Rees: I am coming to the principle. I am sure that the right hon. Gentleman, who is well known for his courtesy in debates, will allow me to develop my speech. There is an important principle to be debated here. I hope that we will be able to establish a little common ground between the two sides of the House on the principle by which nationalised industry prices should be regulated. The right hon. Gentleman is right to say that we should focus on the general principle, and I shall derive much support from the White Paper which the Labour Government produced in 1978.
  Mr. Tam Dalyell rose—
  Mr. Rees: If the hon. Gentleman will allow me, I shall develop my speech. I am sure that he wants to make a relevant intervention, but I hope that he will have an opportunity to catch your eye, Mr. Deputy Speaker.
  Under the Labour Administration, domestic water charges increased by 86 per cent., while between 1979 and February 1985 they increased by 83 per cent. Opposition Members will no doubt object to the fact that water charges are to be increased by about 11·5 per cent. this year, but they may have overlooked the fact that under the Labour Government the water authorities' investment declined by a third in real terms, while between 1979 and 1983 investment increased by a sixth in real terms.
  In 1984–85 capital expenditure was about £750 million, and it will increase by almost £200 million by 1987–88. The right hon. Gentleman was anxious about the levels of investment. I remind him that during the last financial year

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  there were record levels of investment across the country totalling about £55 billion, and that is likely to be matched this year. I have drawn his attention to the figures for the water industry. That is why we have planned for higher water charges. Following a summer of drought last year, I hope that the country will see the good sense of that. It is pointless advocating increased investment in infrastructure if measures to pay for it are not supported.
  I come now to the point raised so perceptively by the hon. Member for Copeland—to reflect on the principles which should underlie the pricing of nationalised industries. I assume that both the last Labour Government and this Government accept that the prices that industries charge should cover their marginal costs of supply, including a satisfactory return on the capital they employ. In case Opposition Members have forgotten, the energy policy Green Paper presented to Parliament by the right hon. Member for Chesterfield (Mr. Benn) in February 1978—I am sorry that he is not here to contribute to the debate—said:
  "Energy prices should give both consumers and producers reasonably accurate signals about the costs of energy supply".
  Those are impeccable economic sentiments.
  "Underpricing encourages consumers to waste gas resources … prices should therefore at least cover the cost at which supplies can be provided on a continuing basis, while yielding an adequate return to investment."
  I really wonder what we are debating.
  If Opposition Members ask what is a reasonable return on investment, I can only refer them to the nationalised industry White Paper of March 1978, which indicated that the required rate of return on investment should, in normal circumstances, be 5 per cent. in real terms.
  I have to admit that the required rate of return on capital for the gas industry, under its targets, is about 4 per cent., for the electricity industry about 3 per cent., and for the water industry under 2 per cent. That leads me to cite the well-worn words of Clive of India:
  "I am astounded at my own moderation."
  Mr. Dalyell: If I were to send the Treasury the evidence that West Lothian district council gave yesterday, figures and all, on the loss of income tax and many other related benefits in relation to the Polkemmet closure—which is the subject of a major public inquiry about the pit that was flooded—would I be assured of a full answer once the Treasury had the figures?
  Mr. Rees: I should not like to commit myself until I have seen the hon. Gentleman's letter, as it may not be entirely a matter for my Department. I understand what the hon. Gentleman is saying about tax loss. I hope he recognises that whenever he and I have corresponded I have endeavoured to answer his questions very fully. I shall look at his letter, and if parts of it are matters for my right hon. and hon. Friends, I hope that he will forgive me if I pass it on to them.
  Mr. Nicholas Budgen: Will my right hon. and learned Friend inform the House whether the figures for the rate of return on capital are on a current or a historic cost basis?
  Mr. Rees: On a current-cost basis.
  Mr. David Maclean: We have been talking about revenue loss. There is one other statistic which I should like my right hon. and learned Friend to give me, which I could memorise and pass on
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  to my constituents. How much has been lost to the country and to the energy industries as a result of the strike last year, led by Arthur Scargill and aided and abetted by Opposition Members?
  Mr. Rees: My right hon. Friend the Chancellor of the Exchequer in his Budget, gave the best figure that we were able to provide for last year. It is a little too early to say exactly what the consequential costs will be for this year. If my hon. Friend tables a question later in the year, I hope to be able to oblige him. The figure will certainly be in hundreds of millions, not tens of millions.
  Mr. Robert C. Brown: The debate is clearly about prices, costs and comparisons between this Government and the previous Labour Government. The one cost to which the Chief Secretary has not referred——and he should have done—is the human misery inflicted by the Government's policies. Will he make a comparison between the unemployment rate during the last 15 months of the Labour Government—when it was falling steadily—and the figure after six years of this Conservative Government, when 2 million more people are unemployed? If, as the Prime has suggested, getting inflation down to 3 per cent. will cost another 1 million jobs, will the Chief Secretary support that? Is that the price that we will have to pay?
  Mr. Rees: I hope that I can deal with that intervention as courteously as I know how. If the hon. Gentleman will cast his mind back—although I do not know whether he was in the Chamber—he will recall that his right hon. Friend the Member for Sparkbrook said that the first priority for employment was the containment of inflation. That is my answer to the hon. Gentleman.
  Even a most cursory examination of the facts must show that this is a most ill-conceived Opposition motion. The Government's record in reducing and containing inflation since 1979 is vastly superior to that of the previous Labour Government. Despite the last few months' figures, there is little reason to doubt that the RPI will be back on a declining path before long.
  Our methods are plain and proven. We have a consistent strategy, which we have sustained for the past five years, and which we will sustain through the next five years. In 1980 we set out a medium-term financial strategy to promote honest finance and sound money. We have stuck to it and concentrated on what Governments can realistically influence. We have secured monetary conditions which are sufficiently restrictive to squeeze inflation out of the system. We have buttressed those with a fiscal policy which has put public borrowing on a sensible downward path.
  Nor is there any conflict between reducing inflation and creating more jobs. The one is dependent upon the other, as the right hon. Member for Sparkbrook recognised in February 1978 and, perhaps more authoritatively, as the Bonn summit recognised in its communiqué. We reject, as the country has rejected on various occasions, the distortion, the inefficiency, the bureaucratic complexity of price controls, wage controls and dividend controls.
  The Labour party — whether inside or outside the Chamber — has offered us nothing but a torrent of synthetic indignation and a tepid rehash of the policies of yesteryear.
  The alliance, perhaps recalling the Lib-Lab pact of the 1970s out of which it was conceived, has offered us a

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  statutory prices and incomes policy—so much for its moderation, detachment and imagination. Our policies have been proved and they have yielded results. They provide a framework of success and stability for the years to come.
  I invite my right hon. and hon. Friends to reject with contempt the Opposition motion and to support the Government amendment.
  4.58 pm
  Mr. Richard Wainwright: Alliance Members welcome the opportunity provided today by the Labour segment of the Opposition to debate one of the most important indicators of Government economic policy—an indicator at the sharp end where things matter to people, not one of those intermediate targets discussed in terms of witchcraft and voodoo that have fatally beset Treasury Ministers during this and the previous Tory Administration.
  It will be of interest throughout the country that at last the House of Commons is debating prices rather than monetary aggregates. The people of mid-Wales will listen to the debate on prices with rather more satisfaction than hitherto when they have had to listen to stories about M3 —which, when that proved to be a useless indicator of money, was changed to MO, which has now proved to be even more useless. We await the next fantastic indicator of monetary aggregates that the Government may dream up.
  It is also a good time for the debate because, as everybody knows, the Government's medium-term financial strategy lies in ruins. The Financial Times this morning pronounced a stately funeral oration on the Chancellor's policies. The question of the hour, which I suppose will not be answered in today's debate, is how the Prime Minister can find someone reckless enough to come in to sweep aside the witchcraft and try to get the show on the road in reasonable economic terms. She has little time left before the run-up to the general election in which wholly to recast her financial and economic policies.
  Some of the worst manifestations of state-imposed prices flow from the appalling mismanagement of interest rates during the regime of the present Chancellor. This country has the highest nominal interest rates of any major European country, or of Japan or the United States, except for Italy. Not only mortgage interest but interest paid by new and struggling business men has become crippling and has led to a record rate of bankruptcies and liquidations.
  The Government orate about competition, but they are destroying real competition in many spheres of business. It is not the cash-rich monster companies or the companies that donate so generously to what they consider to be a Conservative party suffering from the record high real interest rates, but the very engines of competition, the small new businesses, the up and coming businesses, whose directors do not sit in lordly state but take their coats off, and, if they have to have a board meeting, have it in the gents because they are really running the business and making it go. Now many of them are going to the wall, not because of their own failings but because of the extortionate demands of the banking system.
  Mr. John Maples: I am sure that we would all like to see lower interest rates not just for
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  small businesses but for everyone. Having castigated the Government, does the hon. Gentleman agree that the two major influences on interest rates — oil prices and interest rates in the United States — are outside the control of the Government?
  Mr. Wainwright: It is late in the day for the hon. Gentleman to echo the parrot cry of Treasury Ministers, who know better but have nothing else to say, that it is all the fault of United States interest rates. The hon. Gentleman must understand that prime rates today in the United States—thank goodness—are only 9·5 per cent. As everyone knows to his cost, prime commercial rates in this country are over 13·5 per cent. To blame the United States is not only years out of date but wholly fallacious.
  The interest rate factor has a major effect in producing crippling price levels. Another obsession of the Government that is largely responsible is the Prime Minister's obsessive fear and hatred of any alternative centre of power. It is rumoured that she is even jealous of power at the highest level in the constitution, but that is not germane to this debate.
  Wherever alternative sources of power exist, the Prime Minister is determined to root them out; hence the lunatic obsession with abolishing the metropolitan counties and the GLC. In many cases, it is local administration, local budgeting and local financial control that ensure a reasonably low level of keen pricing. The centralisation that is the driving motive of the Government, not just on Whitehall but on 10 Downing street, is pushing up the prices of a whole range of public utilities.
  Mr. Francis Maude: How can the hon. Gentleman square his concern with localising decision-making with his concern to introduce a statutory price control system?
  Mr. Wainwright: On another occasion I should be delighted to lecture the hon. Gentleman on the fact that alliance incomes policy is decentralised to the greatest possible extent and would consist of local and regional tribunals which would make their own decisions in an arbitration fashion. If the hon. Gentleman is trying to tax us with a centralised incomes policy, he should look back to the Government of his right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).
  The cutting out of the transport support grant and the crippling of the passenger transport executives in all the metropolitan areas are having a disastrous effect on the successful policy of lower bus fares to encourage more passenger use.
  Mr. Maxton: Particularly by Labour-controlled authorities.
  Mr. Wainwright: By many authorities, some of them supported by Liberals.
  One of the most significant giveaways in the social security Green Paper, which has just been debated by the House, is the crazy suggestion that free school meals should be abolished, and that instead the proposed family credit system should include sufficient cash to cover school meals for children of poor families. What an absurd centralisation of a service that is dealt with economically on a local basis. Anyone who reads the Daily Telegraph weekly bulletin of food costs will have noted the wide variations between different parts of the country. The provision of a uniform cash allowance, which would

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  inevitably have to cover the higher range of food costs, instead of allowing local education authorities to carry on their duty of providing free school meals economically, would add considerably to that branch of education costs.
  The Government are even jealous of the water authorities, which were the creation of a previous Conservative Administration. The Prime Minister is not content with being able to control the nominations to those authorities and the appointment of their chairmen. She is not satisfied with enabling them to fix prices secretly, without the press being allowed to attend the meeting; she wants to interfere with the price mechanism that they adopt.
  No doubt all hon. Members have taken note of the shrewd observations of the chairman of Thames water authority as to how the Government frustrated his authority's intention to make only a modest price increase. The Government insisted on a negative external financing limit which forced Thames water authority to put up its prices by about twice the rate of inflation. Interference with local decision-making is a major contributor to the scandal of unnecessary price rises in these important parts of the economy.
  There is an even greater evil. Many of us used to think that the ultimate in selfish cruelty was the forced feeding of Strasbourg geese to provide pate de foie gras in fashionable restaurants. The fattening of public utilities to enable the Government to sell them off to people who have wealth to spare for such investments is an even greater cruelty inflicted on poor families and on people on moderate wage levels who have to pay the higher prices so that the Government may make dramatic sales of the public utilities to their friends and to the better off.
  I do not believe that even the Prime Minister's Fleet street knights will be able to disguise this scandal for much longer. The electorate will cotton on to it or smell it out soon. It is a shoddy device aimed — I think unsuccessfully — at enabling the Government to make spectacular cuts in income tax on the eve of the election.
  I remind the House what the Treasury and Civil Service Select Committee had to say about this sort of dodge in its third report earlier this year:
  "We are also concerned at the Government's insistence on using nationalised industries' finances to offset public expenditure … it seems likely that the nationalised industries will resort to using their monopolistic power to raise prices."
  That is exactly what has happened. It is happening throughout the whole range of nationalised and public utility prices which are mentioned in the motion. The Confederation of British Industry has observed with acerbity on the penalties which large industrial users of energy have to pay as compared with their competitors.
  There is another aspect of state-administered prices which must be mentioned, because it is important for our younger generation and it is not mentioned in the motion. My right hon. and hon. Friends regard the recent increases in dental charges as a savage blow to good health and sensible preventive medicine. Since the present Prime Minister came to power, dental charges have increased from £7 to £17 for a treatment, plus an open-ended 40 per cent., which could make treatment cost as much as £110. That is an absurd way to encourage heathy practices among younger people.
  We need a proper mechanism for controlling and monitoring the pricing policies of nationalised industries and all other nationwide public utilities. The alliance,
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  given the opportunity, would ensure that all nationalised industry and public utility prices of nationwide application would be subject to specific and affirmative detailed approval in the House and to continuous monitoring thereafter.
  Mr. Maxton: I am a little surprised at what the hon. Member is saying about a national price for electricity and gas. Surely he is aware that although, in Scotland, especially in the west of Scotland, electricity and gas prices are marginally lower than in other parts of the United Kingdom, the total amount spent in a year on energy by people in that area is 20 per cent. higher than in the south of England. Surely that difference ought to be taken into account.
  Mr. Wainwright: Yes, indeed, and the matter should be debated in the House. Nothing that I have said, as the hon. Gentleman will find when he reads Hansard tomorrow, suggests there should be a uniform price throughout the country. The pricing policies of these industries should be debated fully and not on some obscure order late at night. They should be subject to major and proper debate.
  I must protest at the shoddy procedure into which the House has slipped recently — debating the public expenditure White Paper on a take note motion. At the end of such a debate, the Government—the Secretary of State for the Environment is the worst offender—take the House's decision as meaning approval of everything in the public expenditure White Paper. That is contrary to the facts, because the House merely takes note of the White Paper. It is also contrary to reason, because a vast area of public expenditure, including estimated local government expenditure, cannot possibly be settled in one or two days of debate. The proper procedure is to disentangle those various items into their separate components and to debate and vote on them on a substantive motion.
  We shall not get out of this dreadful plight until the management of the economy is put on a realistic basis and the Government's targets are employment, prices and the exchange rate. Until there is a greater disposition to encourage locally administered pricing and local control of services, we shall not get the best bargain or the best value for money for taxpayers and ratepayers. Because the Government have signally failed on this count, Liberal Members will join the Labour segment of the Opposition in the Division Lobby tonight.
  5.15 pm
  Mr. Martin Brandon-Bravo: The circumstances of this debate are extraordinary The public would be forgiven if they were not aware that this afternoon's debate has been called by the Opposition because they feel there is an important subject to debate. But what do we see? One duty shadow Minister on the Front Bench, I believe two Opposition Whips and someone who sits there more in hope than in anger. Such is the seriousness with which the Opposition treat this debate.
  Mr. Austin Mitchell: Only because the hon. Gentleman is here.
  Mr. Brandon-Bravo: With respect to the intervention from the television personality—
  Mr. Maxton: Do not praise him.
  Mr. Brandon-Bravo: I would not praise him—no, Sir.
  Not surprisingly, I oppose the motion and support the amendment. It is also not surprising that the Opposition have the nerve to table a motion in these terms. I well understand that oft-used phrase, "It is politics, lad." The Opposition must think that we are a nation of fools if they expect us to believe that, with Labour in government—Heaven forbid — public sector prices would remain steady and all would be well with the long-term health of the nation.
  I recall a certain right hon. Opposition Member saying after the last general election that the Labour party had promised to spend 17 billion without any thought for how such enormous expenditure could be funded. He then implied that the electorate were not fools and rejected Labour's manifesto. We are two years on and the Labour party is at it again, in the vain hope that just enough people will fall for such irresponsible and undeliverable nonsense.
  During the past two years, no matter what subject is being debated, the Labour party has announced that, if it were in government, it would spend X amount more. If we sat down with pen and paper and added up all these X amounts we would probably exceed the 17 billion that the right hon. Gentleman to whom I referred said was bogus in the first place. The Government have been involved in the rise in gas, electricity and water charges and, if we are honest, why should they not? They are national resources and their use and management are the long-term, if not day-to-day, concern of the Government of the day. The absence of any cost balance between the competing types of fuel under the last Labour Government left commercial and domestic consumers in an unreal and unstable position.
  The House will recall that, under Labour, the cost of gas to domestic users was reduced in real terms but that commercial users faced massive increases. My right hon. and learned Friend the Chief Secretary to the Treasury mentioned those increases. I suppose that it can be said, without fear of contradiction, that there were short-term votes to be had but long-term damage to industry—but then, the Labour party rarely concerns itself with the long term. The problems of industry, if the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) is to be believed, began only in 1979.
  My own company relied heavily on the constant supply of steam for its manufacturing process. We had a dual-fired boiler—we could switch instantly from gas to oil—originally to cover us against strike action. We would have had a triple choice if it had been technically possible or available. That was around 1972. The point I am making is that we were lucky, we had and made a choice while there was time. Many commercial users did not and they were stuck with an expensive fuel source, either because at that time gas simply was not available or the demand to be converted to gas was refused. Then, in a couple of years, as the House knows, the Labour Government increased gas charges for industry in real terms by, I believe, 112 per cent.
  I said that we were lucky. Indeed we were. We had a commercial advantage in those years over other users. But I am not sure that it was fair or just, and certainly it was not in the national interest. Energy prices are the concern of what ever party is in government and so long as the guidance is objective and rational I see no criticism of that involvement.
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  I pay water rates, like everybody else, and I do not like it any more than they do. I find it extraordinary, however, that demands for greater investment in our water supply and sewage and for environmental provision are wholly at variance with the implications by Her Majesty's Opposition that the cash for those provisions should not be generated from within the water industry. The money has to come from somewhere. That is not to say that I like the present method of assessment of water rates — I most certainly do not — but the principle that the industry should generate its own resources is not, in my view, unreasonable.
  I take it that the reference to rents is directed to the public sector of council properties; again I say, why not? We have seen much hand-wringing on this subject. It will be recalled that the hon. Member for Bootle (Mr. Roberts) said that when he was chairman of his local authority's housing department rents remained static. He forgot to consider that there was perhaps a link between his policy of static rents and the deplorable state that he admitted his housing stock got into. Clearly, the lack of a sensible renting policy led directly to a decline in the quality of the housing stock in the hon. Gentleman's constituency.
  I believe that it is sound common sense in both the long and the short term to have a rent policy that provides the necessary income to ensure that housing stock is kept up to scratch and provides the necessary surplus to ensure security and make proper environmental provisions on all estates and in all flats and tower blocks. Whatever party is in government then has the duty to ensure that those who cannot meet those reasonable rents get the necessary financial help. Static rents and declining standards of provision help no one — certainly not those in need. Furthermore, an aggressive right to buy policy produces much revenue for a local authority with which to improve the position of those who, for whatever reason, wish or have to stay in rented accommodation.
  The hon. Member for Copeland (Dr. Cunningham), the hopeful shadow Minister, laughs.
  Dr. Cunningham: I thank the hon. Gentleman for giving way. The reason I was smiling was that he was suggesting that capital receipts from the sale of council houses were available to local authorities at their discretion. He clearly does not understand the policies of the Government he is supporting, because he must surely know—he ought to know—that capital receipts are more heavily controlled and restricted by this Government than ever before and that councils cannot spend their own money in the way they want.
  Mr. Brandon-Bravo: Perhaps, if the hon. Gentleman had been listening instead of dreaming of greater things, he would recall—he can check Hansard tomorrow—that I said quite clearly "produces much revenue for local authorities". If he will stop grinning for just two seconds, I should like to point out to him that the revenue gain from the right to buy policy in my local authority was greater than the subsidy lost as a result of Government policy. This has nothing whatever to do with capital receipts. Perhaps if the hon. Gentleman studied his subject a little more instead of trotting out the usual knee-jerk reaction to capital spending, he might be able to contribute a little more accurately.
  I emphasise that, in our local authority, the profit—not capital receipts—that flowed from the right to buy more than made up for any loss of subsidy.

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  I am puzzled by the criticism of bus fares, because I believe that the Opposition are on very shaky ground here. Certainly, from my own experience, this Government have not forced local authorities to put up bus fares.
  Mr. Maxton: Where do you live?
  Mr. Brandon-Bravo: I live in Nottingham, a most beautiful city, in the centre of this fair land.
  Most sensible local authorities have raised bus fares in line with real costs, inflation and the need for sensible provision for capital replacement. I see nothing wrong in that policy and therefore certainly cannot see how any criticism of the Government can be made. But some authorities—the hon. Member for Leeds, Central (Mr. Fatchett), who sits in hope and anger, will probably say, "Hear, hear," to this—have simply said, "Where are their votes? Let us dump the rising cost of provision on to the rates. Let commerce and industry pick up the bill; they do not have a say in local affairs." That, sadly, has been the practice in the republic of Sheffield and in other areas like it.
  I come to yet another item on this agenda. I, too, have a mortgage and I, too, do not like the higher charges. Buying one's own home is the best investment of one's life and, if it is a strain to begin with, at least it is a declining cost in real terms on an increasing asset. If recent statistics are anything to go by, my advice to council tenants is to make a start now. The current situation, because of high interest rates is holding house prices static. We should make no mistake, however—interest rates will come down and house prices will then rise. So I say again to council tenants that they should make a start now because, whoever is in control of their local authority in future years, one thing is absolutely certain—rents will rise substantially over the lifetime of their mortgage and those who are paying rent will at the end have nothing to show for it.
  Mr. Maxton: Does the hon. Gentleman give the same advice to the 13 per cent. of the council house tenants in my constituency who are unemployed, with only unemployment benefit or supplementary benefit? Does he say to them that they should start to consider purchasing their houses?
  Mr. Brandon-Bravo: I should like to be able to say yes to the hon. Gentleman. However, I do not believe that there is any logic or sense in saying that if everybody cannot have something, nobody should have it. I hope sincerely for a rapid decline in the percentage, of unemployment in the hon. Gentleman's constituency and I hope that in due time his constituents will be able to buy their own homes. I also hope that the present system, with the Government helping even the unemployed to buy their own homes by means of assistance on mortgage interest, will be supported. I hope that the hon. Gentleman will agree that that is a right and proper provision.
  On this matter of mortgages and mortgage interest rates, I do not think that we should forget the reality that, while higher mortgage charges are short-term pain for some of us who pay them, they often represent for others—frequently old-age pensioners with just a little bit put by — a little bit of much-needed extra income. That other side of the mortgage equation is often forgotten. I am not sure what the figures are, but I believe that about five or six times as many people have a little money in building societies as are currently borrowing from those societies.
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  Most important of all, if all these matters were held down by simple Government intervention and funded, as indeed they would have to be, by higher direct or indirect taxation, we would find that we had embarked on yet another horrendous upward twist to unemployment—and that national tragedy is monstrous enough already. We may have a long haul, but I believe that over the past few years the policies that a Labour Government would have imposed would have been ruinous. Our sound money policies are the best long-term future for this country and for all concerned.
  5.31 pm
  Mr. Derek Fatchett: It is always fascinating to engage in a debate when what one intends to say has been trailed with so much interest by the previous speaker. Before replying to some of the points made by the hon. Member for Nottingham, South (Mr. Brandon-Bravo), I wish to refer to the speech of the hon. Member for Colne Valley (Mr. Wainwright). I was disappointed to hear the announcement of a split in the alliance that was so evident at the end of the hon. Gentleman's speech. He said that the Liberals would be supporting the Opposition tonight, but he could not speak for the Social Democratic segment of the alliance. I am not surprised that he cannot speak for the Social Democrats. It is a difficult task, given that the nature of that organisation is such that only one person speaks for it. It is sad that there should be such a sharp division in the alliance, particularly at a time when, to some extent, it may be trying to paper over the cracks.
  The hon. Member for Colne Valley has sung the praises of cheap public transport. That delighted me, because I am a great believer in the political process of conversion and persuasion. It is a pity that the hon. Gentleman is no longer present. If he were, he would recall that, when the Labour party was elected to office in west Yorkshire in 1981, very much on the basis of a public transport policy, it had to seek a supplementary rate to implement that policy, and it may come as no surprise to learn that it ran into certain opposition from Liberal councillors. The memory of the hon. Member for Colne Valley may be somewhat clouded on this issue, or perhaps it is useful to talk about a Liberal commitment to cheap transport while forgetting its record in other respects.
  Mr. Maxton: It could be that the argument advanced by the hon. Member for Colne Valley (Mr. Wainwright) for decentralisation and regional and local decision taking extends to Liberal policy matters as well.
  Mr. Fatchett: That is a valid point. Many of us read the Liberal newsletters with interest, which reveal differences up and down the country, and, indeed, from ward to ward. However, I shall not be tempted into going down that path as it takes us away from the major issues in the debate.
  The hon. Member for Nottingham, South made several points that to some extent I dispute. On capital receipts and the right to buy, it was peculiar that he did not bring himself up to date with the current regulations. That point was made by my hon. Friend the Member for Copeland (Dr. Cunningham).
  Earlier this afternoon, I went with a delegation of tenants from Leeds to see the Minister for Housing and Construction. He asked, "How much money will Leeds

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  raise this year in terms of capital receipts?" He was told that it would be in the region of £5 million, but that only £1 million could be spent. Given the keen interest of the hon. Member for Nottingham, South in the sale of assets, I should have thought that he would be keen to ensure that local authorities should be able to spend much more than 20 per cent. of the sum raised in that way.
  Mr. Brandon-Bravo: The hon. Gentleman appears to be even less informed than his hon. Friend the Member for Copeland (Dr. Cunningham). I was not talking about capital receipts. When a council house is sold and a local authority acts as the estate agent and building society, that authority makes a profit on the interest, just as a building society does. I assure the hon. Gentleman that in Nottingham that profit, which has nothing to do with capital receipts, is about £7 million—well in excess of the loss of Government grant.
  Mr. Fatchett: Many studies of Nottingham would challenge those figures and suggest substantial revenue losses there. I was referring to the capital implications arising from the sale of houses in terms of capital receipts.
  The hon. Gentleman also talked about bus fares and said that Labour authorities had held down for cheap, short-term political gain. That is strange. If it was for cheap, short-term political gain, why did the Government run away fom this year's metropolitan county council elections in areas which operate cheap transport policies? If his argument was so correct, would it not have been appropriate for the Conservative party to hold those elections and to put that view to the electorate in order to gain support? I am convinced that there would have been an endorsement of the cheap fares policy among many county councils, but the Government removed the right to vote from 13 million people.
  Subsidised public transport may well be of great help to industry. Indeed, there is evidence to suggest that such policies are popular not only with the electorate but with commercial interests in city centres. In areas that have pursued such policies, there has been very little opposition from commercial interests. Therefore, it may be worthwhile for the hon. Gentleman to pursue those matters further.
  The Chief Secretary regularly spoke of sound finance, to which he seemed to attribute a sacrosanct definition. That may well be the subject of much argument, but I make the assumption that there is a sacrosanct definition that allows us to understand exactly what sound finance means. To make that concept a reality in terms of managing the economy, one must turn sound finance into pounds and pence in relation to the PSBR, targets for monetary growth and various other measurements of monetary aggregates.
  I indict the Government not for getting caught up in damaging dogma, but for the fact that, even in terms of their own dogma, they have been regressive and redistributive, and have pushed the burden of their policies on to the weakest members of our community. If a figure for the PSBR is needed and it is decided that it should be sacrosanct and cannot be altered, one can arrive at it by various means. In other words, the objective can be set, but the means can vary.
  The Government cause the public anxiety because their methods push the burdens in one direction. We have
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  discussed rents, mortgage costs, water rates and the cost of fuel. Those burdens have increased as a result of Government policies. The Government have no need to go in that direction, even on the basis of their own targets, but the means chosen are redistributive. It is a simple test to consider those burdens alongside the cuts in taxation for the rich in our society. The burden has been taken off the rich and has increased on those least able to carry it. That is my indictment and the country's indictment of the Government.
  Mr. Nicholls: It appears that the hon. Gentleman is honest enough to admit that taxes will have to increase if a Labour Government come to office. In fairness to the hon. Gentleman, he is prepared to consider a problem which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) avoided. The hon. Gentleman has implied an increase in the PSBR. Will he tell us by how much the next Labour Government—if there ever is one—would increase the PSBR?
  Mr. Fatchett: I get somewhat disappointed with the hon. Gentleman. He rises regularly with enthusiastic questions, but one feels that he wastes most of his energy getting up and it is not reproduced intellectually. If the hon. Member had been listening, he would have realised that I was arguing within the limitations of the sacrosanct dogma of the Government. Many other arguments could be made, and I am sure some of my hon. Friends will make them.
  According to the Government, rates have become a major domestic burden. The Government tell us that the rate burden is so great that they will do something about it. The Prime Minister has rates at the top of her agenda, although I suspect that football hooliganism and violence have now taken over. The Government have not yet produced any legislation on rates. The abolition of rates was at the top of the agenda in 1974, 1979 and 1983, and I suspect that it will be in 1987. Rates have become an acute embarrassment to the Government as a direct result of their policies.
  The projection by the Chartered Institute of Public Finance and Accountancy for 1985–86 is that local government expenditure will increase by 2·9 per cent. That is considerably less than the rate of inflation. However, the average domestic rate bill is estimated to increase this year by 9 per cent. We have an increase in spending of 2·9 per cent. but an increase in the cost to the domestic ratepayer of 9 per cent., which is above the current rate of inflation. As the Under-Secretary seems to acknowledge, the individual ratepayer is paying more but getting less value in services. Those who have served in local government will recognise that that means pressure from ratepayers and tenants for better services, yet the squeeze continues and the bills and rents go up. The Government have forced a reduction in services, but at the same time they have forced the average domestic ratepayer to pay more. That has come about because, given the sacrosanct nature of the Government's targets, they have cut central Government support to local government, thus forcing up rates and reducing services. The Government are thrashing around trying to find an alternative to rates, but they are creating problems in the current rating system.
  The Government could get rid of many of their problems with the rating system if they would give back the money that they have taken from local government, but

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  they are not prepared to do that. They have reduced the level of rate support grant funded from 62 per cent. under the Labour Government to about 46 per cent. now. That vacuum, created by the Government, is pushing up rates and increasing the burden on individual ratepayers. The Government must explain to the country why they have adopted a policy of rate increases above the rate of inflation.
  Mr. Brandon-Bravo: No one disputes that rate support grant has diminished, but I hope that the hon. Gentleman will be honest enough to admit that the process began under the Labour Government. More specifically, will he confirm that, despite a reduction of rate support grant in percentage terms, his city and mine, like others with special needs, have had additional specific grants and are thus no worse off and that the combination of rate support grant and additional specific grant means that many programme authorities are better off than before? Does he admit that that is true?
  Mr. Fatchett: I think that that is very far from the truth. The equation certainly does not work in that way in Leeds. Like so many other cities, we have lost money as a result of the Government's cuts in rate support grant.
  I make the challenge once again. Why have the Government followed a deliberate policy of pushing up rates? If rates are a regressive tax, why are the Government increasing them? The Government's pricing policy is redistributive from the poor to the rich. The Government have not yet answered that indictment, but sooner or later they will have to do so. Moreover, I suspect that if the hon. Member for Nottingham, South goes to the Minister on this, he will get a correction rather than confirmation of his claim.
  I repeat, if the Government are so concerned about local government finance and the rating system, why will they not give local authorities a chance and give back the money that they have taken from them?
  Government policy on public sector housing costs and rents is equally absurd and redistributive from poor to rich. At 1983–84 price levels, public housing subsidies in England and Wales amounted to £1,852 million in 1979–80, but only £391 million in 1983–84. In other words, the Government have taken £1,500 million out of public housing subsidy. In so doing, they have pushed up council house rents, again placing the burden on those least able to afford it.
  Mr. Austin Mitchell: I warn my hon. Friend to be prepared for more Conservative interventions of the asinine character that we have seen so far. One wonders where they come from and whether it is the role of civil servants to brief Tory Back Benchers on their inaccuracies.
  Mr. Fatchett: I am grateful to my hon. Friend for his concern about my future safety.
  Mr. Maxton: On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) has raised an important constitutional issue and I ask you, Mr. Deputy Speaker, to resolve it. It is my understanding that every Back Bencher in this place enjoys equality. That applies whether the individual sits on the Government Benches or on the Opposition Benches. If a Minister is prepared to assure me that I can approach those who sit in the civil servants' Box to consult them on
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  figures, I shall be prepared to accept that the action of the hon. Member for Nottingham, South (Mr. Brandon-Bravo) was legitimate. If I am told by you, Mr. Deputy Speaker, that it would be out of order for me to talk to those who occupy the civil servants' Box, an important issue will have been raised.
  Mr. Deputy Speaker (Mr. Harold Walker): I cannot see any Boxes. If an hon. Member goes behind my Chair, he is outside the House. If an hon. Member does so, who he talks to and what he does have nothing to do with me.
  Mr. Brandon-Bravo: Further to that point of order, Mr. Deputy Speaker. I can assure you, Mr. Deputy Speaker, that I had a conversation with those in the civil servants' Box and that no questions were asked.
  Mr. Michael Forsyth: On a point of order, Mr. Deputy Speaker. Is it in order for Labour Members to introduce filibustering tactics to spin out the debate when one of their colleagues is addressing the House?
  Mr. Deputy Speaker: The hon. Gentleman's point of order is bordering on the bogus. He is committing the sin of which he is complaining.
  Mr. Fatchett: In a sense, Mr. Deputy Speaker, I am grateful for your ruling. I accord with it, of course. You cannot see what happens behind your Chair, but if anything happens behind it that educates Conservative Members, that activity has a value. That is the point that I was about to make to my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
  Before I was interrupted by the points of order, I was saying that cuts in housing subsidies and rents have increased and that the consequent burden has been placed on those least able to carry it. The total spent on public housing has declined by about 28 per cent. since the Government took office. That is a sign of the low priority that the Government accord to public sector housing.
  The cuts and the administrative chaos that has been created by the Government should be a cause of concern for Conservative Members. The social security reviews tell us that there has been a sharp increase in the money spent on housing benefit. The forerunner to the housing benefit scheme was the rent and rate rebate scheme, the cost of which was £1,380 million in 1979–80. By 1983–84 the expenditure on housing benefit was £3,790 million. The latest estimate of expenditure on housing benefit for 1984–85 is £4,160 million. The benefit will be taken up by about 7 million households. That means that basically one in three households would be claiming housing benefit. By taking money away from public sector housing in terms of rate subsidy, the Government will cause many more people to claim housing benefit.
  The Government are saying that they cannot afford to continue the housing benefit scheme and that they will have to make cuts in it. The direct result will be more and more people finding themselves with housing costs that are difficult to meet and with burdens that are difficult or impossible to carry. Again, that will be the direct result of Government policy.
  There have been increases in rents in the public sector and local government finance has been cut. There have been savage increases in water rates. When the Chief Secretary to the Treasury said that the rate of return of the water authorities was under 2 per cent. and that the target set in the White Paper of 5 per cent. was not being met,

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  I was fearful that that was the prelude to an announcement of even further increases in water rates in subsequent years. Water rates are yet another example of the burden that is being carried by those least able to bear it.
  The effect of the Government's economic policy can be described only as socially divisive. It has deliberately increased unemployment, and unemployment has been used as a tool of economic management. The Government's economic policy has pushed up prices in a way that again can only be described as socially divisive. At the same time, the Government have given priority in their taxation policy to benefiting the rich and the very rich. A Government who behave in that way stand indicted before the public. The Government's priorities are wrong and need to be reversed. The reality is that they can be reversed only when the Government are kicked out of office and we have a Labour Government who are committed to social justice and economic efficiency.
  5.55 pm
  Mr. John Maples: It is interesting that, in a debate on prices called by the Opposition, the only Labour Back Bencher to participate in the debate so far, the hon. Member for Leeds, Central (Mr. Fatchett), should make an interesting speech about local authorities and housing finance.
  Mr. Maxton: Read the Order Paper.
  Mr. Maples: The hon. Gentleman is interjecting from a sedentary position, as he does frequently in Committee. Essentially, the hon. Member for Leeds, East made a speech about local government and housing finance.
  Mr. Maxton: Will the hon. Gentleman give way?
  Mr. Maples: I have only just begun my speech. I am sure that the hon. Member for Glasgow, Cathcart (Mr. Maxton) will be able to catch your eye, Mr. Deputy Speaker, if he wishes later to contribute to the debate.
  Perhaps the hon. Member for Leeds, Central was as surprised as my right hon. and hon. Friends and I were when the Opposition chose inflation and prices as a subject for debate. For Conservative Members, it is rather like being asked to debate crime with the inhabitants of Wormwood Scrubs. The Opposition have chosen an astounding subject for debate.
  Mr. Fatchett: It might be useful to remind the hon. Gentleman of the motion that appears on the Order Paper in the name of my right hon. Friend the Leader of the Opposition. The motion refers to the Government
  "intentionally increasing public sector prices".
  It refers to a range of items, including rents, rates and water charges. Those items are central to the motion. It is a sign of the priorities of Conservative Members when they take the view that water charges, rents and rates are not important to the British people.
  Mr. Maples: I was not trespassing on your authority, Mr. Deputy Speaker, in suggesting that the hon. Gentleman was outside the terms of the motion. However, it is interesting that, in a debate that is generally about prices—certainly one would gain that impression from those who have spoken from the Front Benches—an Opposition Back Bencher should address himself to the narrow topic of local authority finance, interesting and relevant though that is.
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  As my right hon. and learned Friend the Chief Secretary to the Treasury observed, although the increase in the RPI tipped 7 per cent. this week — the Opposition were fortunate that that should happen shortly before the motion came before the House—that percentage is lower than the increase for every month of the period that the previous Labour Government were in office.
  My right hon. and learned Friend could well have responded to the debate by putting that fact on a continuous tape and playing it for 20 minutes. It is all that needs to be said in answer to the assertion that a Labour Government would do better in controlling inflation. It is perhaps for that reason that there are so few Labour Members in the Chamber. Perhaps I should be more charitable and assume that they are filling the Labour benches at Ascot. On reflection, if that were so, the hon. Member for Great Grimsby would be there.
  Under the previous Labour Government, the retail price index increased by over 100 per cent. and the average increase was 15 per cent. a year. Over the past five years of this Government, it has increased by 50 per cent. If one takes account of the fluctuations that have been caused by changes in the mortgage interest rate, the increase has been about 5 per cent. for over three years. Our inheritance from the previous Labour Government was an increase in the RPI of very nearly 20 per cent.
  Mr. Austin Mitchell: That was not an inheritance. The Conservative Government increased the RPI when they took office in 1979.
  Mr. Maples: When the Conservative Government took over from the previous Labour Government, inflation was rising. After the Conservative Government had been in office for four months, inflation was 17·5 per cent. Almost anyone who studies these matters will agree that that was the result of the policies of the Labour Government. The Government have been successful in bringing inflation down to 5 per cent. and in keeping it pretty steady at that level. That is a considerable and creditable achievement by the Government. It is difficult for Conservative members to take criticism on that front from those who succeeded in doubling prices over a period of five years. It is particularly galling to take it from the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who was Secretary of State for Prices and Consumer Protection for much of that period.
  We should not forget that a partner in that duet of Secretaries of State during those five years was the present president, I believe, of the SDP. In October 1974, she told us that inflation was running at, I think, 8·4 per cent., only for us to find out about six months later that it was running at more than 20 per cent. The only thing that temporarily reduced inflation under the Labour Government was the intervention of the IMF. By the time the Labour Government left office, inflation was once again rising and a considerable number of blank cheques were left for their successors to pick up. To put the right hon. Member for Sparkbrook back in charge of prices and inflation in order for him to have a second go would be a bit like the Irishman who lost £100 on the cup final; £50 on the match and £50 on the action replay.
  The Opposition make a great deal of nationalised industry prices, so it is worth looking at our respective records in two or three cases. Nationalised industry prices are important to the consumer, and are a substantial

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  element of industrial costs. The motion criticises us for increases in the electricity tariff. In the past three years, electricity prices have risen by an average of 2 per cent. a year, but they rose by the now well-known figure of 2 per cent. every six weeks under the last Labour Government.
  Under this Government, there has been a fall of 8 per cent. in real terms over the past three years. The one utility where the Opposition can claim to have reduced prices, or at least not to have increased them by much, is gas, and more specifically, domestic gas prices. However, the Labour Government deliberately suppressed domestic gas prices and increased industrial gas prices. Indeed, they increased industrial gas prices by more than 100 per cent. in real terms during that period. That was a very shortsighted and self-defeating policy.
  The policy led, by 1979, to selling gas to domestic consumers at a loss, which cannot make any sense. It was also nonsense for the importance of such elements as efficiency and resource allocation in industrial costs, the creation of employment and the holding down of prices in the industrial sector. There is fairly good authority for that in the Labour Government's Green Paper on energy policy, which was published when the then Secretary of State for Energy was the present right hon. Member for Chesterfield (Mr. Benn). That Green Paper said:
  "Energy prices should give both customers and producers reasonably accurate signals about the cost of energy supply. Under-pricing encourages consumers to waste scarce resources and may discourage additional supplies."
  None of us could claim to be able to put it any better than that.
  The Conservative party was left to correct that situation when it came into office, and it has done so. But it is worth reflecting on what happened to some other nationalised industry prices between 1974 and 1979. The cost of telephone calls rose by 200 per cent., of rail fares by 153 per cent., of domestic coal by 150 per cent. and of the post by 133 per cent. Given the Labour party's record, we do not need any lectures or instructions on nationalised industry prices.
  Despite our differences in approach to other matters, all hon. Members would like to see inflation fall still further. No doubt there are almost as many opinions as there are economists, but we could probably all agree on a shortlist of inflationary causes. I believe that they fall into two groups: those that affect the demand side, and those that affect the cost side. On the demand side, I would put money, the creation of credit and to some extent wages. On the cost side, I would say that wages are perhaps the biggest factor, although commodity prices and interest rates are also involved.
  On the demand side, the expansion of the money supply and the rate at which consumer credit is created are obviously enormous factors. There are a variety of causes for them, such as the level of the public sector borrowing requirement, the level of interest rates, the rate at which bank lending is expanding, loan demands, credit terms and so on. We have a certain amount of control over some of those factors. For example, we have some control over the level of the PSBR. We also have some qualitative controls that we can exercise over consumer lending.
  In addition, taxation policies can have some effect. Unfortunately the hon. Member for Colne Valley (Mr. Wainwright) is not in the Chamber at present, but he took issue with me over what was the main factor in the level
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  of interest rates. I believe that, although we have some control and influence over domestic interest rates through domestic economic policies, it would be a terrible mistake to assume that we could buck the trend of worldwide and American interest rates, particularly when there is some doubt about oil prices and their importance for the strength of the pound and our balance of payments. Unfortunately, such things are outside our control.
  A variety of market forces, both national and international, are at work. If the money supply is squeezed too hard, the velocity of its circulation simply increases to compensate for that. Thus, although there are some elements of control which we are using, there are also some factors over which we do not have any control. In addition, we have very limited control over other factors.
  On the cost side, many commodity prices are also largely outside our control, except to the extent that the exchange rate influences their performance as input prices to British industry. We have considerable influence over the prices of commodities produced in Britain and particularly over the prices of nationalised industry products such as energy. In such cases, one person's price is another person's cost, and it is vital to try to keep nationalised industry prices as low as possible and to try to keep rises reasonable, so that they do not become an exorbitant cost to the industries or their customers. This Government have made considerable progress in improving the efficiency of nationalised industries in an effort to keep down industrial costs.
  The reduction in corporation tax, which represents a substantial cost to companies, businesses and producers, and the reduction in national insurance contributions for employers are very positive steps towards controlling price rises. However, I should like us to go a little further with employer's national insurance contribution. Wherever the Government have a direct influence over industrial costs, they would do well to exercise it as much as possible in a downward direction. That would also have a beneficial effect on employment, and there may be more that we can do there.
  The difficult question is that of wages. Unit labour costs are a vital ingredient in our international competitiveness. High wages are fine if they are earned in increased productivity. If they are earned from profits, that is fine. However, if they are paid in a way that results in price increases, they must inevitably end up being inflationary. Under the last Labour Government wages rose by 140 per cent. During the same period, we saw output fall by 4 per cent. That must be a recipe for inflation.
  We must see a general moderation in wage and salary rises in the private sector, because the interrelation of unit costs and international competitiveness is vital. One of the big factors, particularly under the Labour Government, was the enormous upward pressure on wages that was generated by the trade unions. Unfortunately, we now see the Labour party in opposition supporting almost every wage demand that comes along, regardless of its merits, or of its consequences for inflation or the competitiveness of the industry involved. Labour Members know from their experience in government that they cannot go on doing that. That is what eventually landed them in a lot of trouble. Moderation is a vital factor in controlling inflation.
  The control of pay in the public sector involves some other considerable, but different, difficulties. It will be difficult to continue to maintain a level of general wage

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  increases in the public sector that is considerably below that in the private sector. It was reasonable to expect to do it for a certain period, as there are other compensating advantages in the public sector, but we cannot go on for ever. We must look at ways of trying to find a more flexible framework for discussing, and deciding on public sector pay increases.
  Mr. Gerald Bermingham: Perhaps the hon. Gentleman can explain why, for example, in the recent Army pay settlement, those holding the most senior ranks seemed to obtain a much higher percentage than those who hold the most junior ranks. Indeed, it would seem from recent industrial settlements that those who are chairmen and managing directors of very large public companies obtain much higher percentage pay increases than those who produce the goods on the shop floor. Does the hon. Gentleman not agree that there seems to be an inequality in our society these days, in that, the higher up someone gets, the more likely he is to receive an enhanced rate of pay? Those at the bottom of the pile seem to get very little.
  Mr. Maples: I do not know about that, but it is a perhaps unfortunate fact that senior executives among the top three or four executives in major international companies work in an international market. If we do not pay the salaries which they can earn abroad, they are likely to move abroad. That has already happened. The salaries paid here are nothing like as high as in the United States. I agree that that creates an extraordinary discrepancy, but few people can command such large salaries.
  The cost to a large company of paying its chairman £100,000 is minuscule compared with the cost of giving all its employees a 10 per cent. pay rise. Raising unit labour costs has an impact on the international competitiveness of a company. The argument by the hon. Member for St. Helens, South (Mr. Bermingham) is valid, but he is really talking about a public relations exercise which does not have enormous economic consequences.
  If artificial efforts are made to hold down the salaries of top executives, many of them will move to the United States where they will be paid considerably more.
  It would be interesting, in the context of both private and public sector pay, to know exactly how the Labour party proposes to deal with the problem. I understood that the hon. Member for Copeland (Dr. Cunningham) was to reply on behalf of the Opposition, but perhaps the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who is present now, can tell us. We know that the Labour party favours an incomes policy because the right hon. Member for Sparkbrook has mentioned it on several occasions and that usually causes him trouble in some parts of the Labour party. He says that he does not favour a coercive incomes policy but he has said:
  "We ought to become the party of an incomes policy, but I do not want a statutory incomes policy and I do not want a coercive incomes policy."
  Exactly what kind of incomes policy does he want?
  The nub of the debate should be to ask which party has the best chance of bringing inflation down. The Conservative Government have succeeded in bringing it down from nearly 20 per cent. to 5 per cent. Which party
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  has the best chance of bringing inflation down from 5 per cent. to zero? It is obvious that that is more difficult than bringing it down to 5 per cent.
  Is the best prospect to be found in the continuation of the present Government's policies? The answer must be yes. With the promotion of efficiency in the public and private sectors, a sound public sector financial policy with the public sector borrowing requirement and public spending under control, with a reasonable control over the money supply and bank lending, and with moderate wage demands, we have a reasonable prospect of reducing inflation to well below 5 per cent.
  What is likely under a Labour Government? Their record is not good. Public spending would rise enormously, and probably go out of control if history is anything to go by, with serious consequences for the PSBR and the money supply. There would be further nationalisation and the active promotion of inefficiency in the nationalised industries. That is what happened under the last Labour Government and history has a horrible way of repeating itself. Loose money would be in pursuit of low interest rates. Taxes would be high and in the early years of a Labour Government substantial wage increases would be granted. All that would be incredibly bad for prices and inflation.
  The evidence is there. The Labour Government's record is very bad and ours is very good. [Laughter.] Opposition Members laugh because no arguments are left at their disposal. Our record is good. We have succeeded in bringing down inflation to 5 per cent.
  To think that a future Labour Government would be good for prices requires one to ignore all the evidence. The Opposition cannot sell that argument to the House. They have not succeeded in selling it to the electorate and while they have no policy on wages other than to dance to the tune of their puppetmasters, they are unlikely to do so.
  With inflation, as with other aspects of economic policy, the proof of the pudding is in the eating. I am afraid that the right hon. Member for Sparkbrook tastes no better now than he did when he was Secretary of State.
  6.15 pm
  Mr. John Cartwright: I welcome the opportunity to take part in the debate, because it allows us to talk about the problems experienced by ordinary people in our constituencies. Few of my constituents lie awake at night worrying about the PSBR, GDP, the medium-term economic strategy or monetary aggregates. They and many people throughout the country are most worried about how to balance the family budget each week. That task has been made more difficult by Government policies on many of the issues to which the motion refers.
  I shall pick just three of the issues from the broad and attractive menu set out in the motion. First, I shall deal with Health Service charges. Everyone who is realistic about the Health Service accepts that some charges are a regrettable necessity, but the scale and frequency of the increases made by this Government impose a considerable burden on many ordinary people.
  The increase in charges introduced on 1 April this year was the seventh since 1979. The prescription charge stood at just 20p in 1979, and now it is £2. That is a tenfold increase in six years, which inevitably causes ordinary people problems.
  Mr. Nicholls: Is not the hon. Member for Woolwich (Mr. Cartwright) forgetting that the biggest percentage

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  increase in prescription charges was in 1968, when the leader of his party was a Labour Minister? He did not feel the need to resign. Will the hon. Gentleman put the issue in context by reminding the House that prescription charges were introduced by Hugh Gaitskell, a Labour Minister?
  Mr. Cartwright: I have said that any realist accepts the need for charges. The Labour Government cancelled charges in 1964 and promptly reintroduced them in 1967. That is what I mean by being realistic. The hon. Member for Teignbridge (Mr. Nicholls) is a fair man, so I am sure he will accept that massive, rapid and frequent increases in charges cause problems.
  Perhaps the Government believe that because of exemptions in the Health Service charging system there is no serious impact on patients. That is not the view of the experts. The British Medical Association, hardly a revolutionary body, says that it regards the charges as
  "a further erosion of the National Health Service and a further restriction of the service."
  The BMA says that it is concerned that some people who should go and see their doctor might well be deterred because of the scale of Health Service charges.
  A similar comment was made by the British Dental Association, which said that the charges might persuade people to have their teeth extracted and not conserved because extraction is cheaper than filling. It added that the charges
  "set dental health back a generation."
  The experts think that high charges have an impact on those who have to find the money.
  Perhaps the most interesting comment was in the Daily Telegraph of 13 March, which said:
  "Conservative Governments have seemed equally unsure whether they related prescription charges to the cost of living, the cost of drugs or the rate of inflation."
  The Daily Telegraph decided:
  "There is nothing scientific or principled about it."
  That interesting judgment underlines the point that I am making about the impact on ordinary people.
  Hon. Members have referred to charges for essential public services such as gas, water and electricity. Those of us who live in the Thames water authority area would agree that the TWA has not been a much-admired institution among consumers. However, the campaign which the authority and its chairman put up against the Government earlier this year with respect to water charges won it a great many friends among ordinary consumers.
  The original Thames water authority board was reduced substantially in October 1983 and was replaced by a new board of 15 people appointed by the Government. One of the new board's objectives was to run
  "the authority as a major well-run business."
  To execute that objective the board produced a plan for the current financial year involving a reduction in borrowing of £18 million and capital investment of £121 million to make improvements in the system. Most importantly, it involved increases to the consumers of only 3 per cent. I believe that most consumers would have regarded that as a good piece of business and one that carried out the duties which the Government gave to the authority.
  The Government had a different view. They demanded that the authority should make higher profits and larger debt repayments and, as a result, that the increase to the consumer should be 10 per cent. rather than the 3 per cent. proposed by the authority. The TWA predicts that, if the
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  Government's longer-term plans come to fruition, the Treasury will be able to cream off £270 million from Thames consumers in 1985 prices. The authority says:
  "Not surprisingly the Board of Thames argues that this includes a tax on water."
  There has been a similar approach with respect to gas. The gas levy, which is a separate charge in addition to the taxation that is paid by the gas industry, produced more than £521 million in 1983–84. In the two years 1982–83 and 1983–84 the gas levy produced almost £1 billion for the Treasury. The public expenditure White Paper suggest that in the three years to 1987–88 British Gas is expected
  "to remain self-financing after paying over £2,900 million in gas levy and taxation".
  There are 16 million gas consumers, and the levy costs about 3p per therm on the overall charge of 40p per therm.
  A similar situation is developing in the electricity industry. The London electricity board has told me that its prices are about 5 per cent. higher than they need to he to fulfil its statutory obligation to break even. Because of the Government's policies, London electricity consumers are paying about £3 more every quarter than they need pay.
  Conservative Members have argued that these price increases are less than the increases under the Labour Government. They totally miss the point. Clearly, consumers do not like paying high prices, but I think that they are prepared to accept them if they know that they are forced on the utilities concerned because of external pressures. I think that consumers resent the idea that they are paying more than they need pay simply to provide a back-door source of funds for the Treasury. Managers of the industries concerned resent that as much as, if not more than, the customers.
  The idea of using essential public services, such as gas, water and electricity, as a means of collecting a hidden tax is extremely unfair, because that taxation falls much more harshly on the less well-off. The results of that pricing policy can be seen in many cases — for example, heating. Many of us who represent inner city constituencies know only too well that many people can no longer afford an adequate level of heating in their homes. Many of the problems of condensation and dampness in local authority blocks of flats stem from the fact that people can afford to heat only one room and cannot afford to heat, say, the bedroom. No doubt the advice given by local authorities to those of my constituents who talk about the problems of condensation is sensible, but it is hardly practical. They are told to switch on the heating and open the windows. One might as well tell people to burn pound notes, because that is not practical advice. Imposing higher prices than are necessary so that the industries can be used as milch cows for the Treasury results in much hardship for ordinary people.
  I agree with those Opposition Members who have argued that the major cause of the growth in the rates bills during the lifetime of this Government has been the Government's policy of reducing the proportion of local authority expenditure that is met by central Government from 61 per cent. in 1979 to less than 49 per cent. during this financial year. I believe that this approach will continue and that a great many problems will be faced by a number of ratepayers because of some of the proposals in the Green Paper "Reform of Social Security". The

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  impact of rents and rates on the most needy households was understood by the independent review team, which said:
  "100 per cent. help with housing costs for those on the lowest income is the only fair way of meeting their needs within the present vagaries of the housing market."
  The Government accepted that point when it came to rents but they certainly did not do so with respect to rates. The Green Paper states:
  "The Government's view is that, while domestic rates continue to be a significant element of local authority spending, every household should be required to make some contribution towards them."
  The Green Paper suggests that every supplementary benefit claimant should meet about 20 per cent. of his rates bills. We have been given no sign that that additional burden on supplementary benefit claimants will be compensated by an equivalent increase in their income support scales. Even if that were done, the compensating help would be given only on a rough averaging basis. It would certainly leave many supplementary benefit recipients with higher than average rates and paying out more in rates than they receive in supplementary benefit. That must mean that they will face the risk of debts and hardship.
  Hon. Members on both sides of the House have frequently commented on the fact that the burden of rates falls most harshly on single pensioner households. We all have examples in our constituencies of single pensioners—often widows—living in a home on their own and paying exactly the same rates as the better-off family next door which has more than one breadwinner. That unfairness will become harsher if the Government persist in extending it to those pensioners who now receive 100 per cent. rate rebates. We are talking about substantial numbers of pensioners. The Association of Metropolitan Authorities estimates that in London and the metropolitan areas alone 1 million pensioners in households qualify for 100 per cent. rate rebates.
  The policy of imposing part of the rates burden on supplementary benefit recipients also has implications for families in which the parents are in low-paid jobs or are unemployed. There is a large number of such people. In inner London, one child in four comes from a family that is dependent upon supplementary benefit. In other metropolitan areas, such as Manchester and Liverpool, the figure is as high as three children in every 10.
  The Government argue that there is a case for placing this element of responsibility for rates on individual consumers, irrespective of their income, in order to increase the accountability of local government. The independent review team rejected that argument, saying:
  "there is little evidence to suggest that low-income households have any real control over their housing costs."
  Many hon. Members know from practical experience that few tenants distinguish between the rates element in what they pay in rent and all other charges that go to make up the total. The Government's approach will mean more hardship if people must meet that rate element irrespective of their income.
  Another aspect of the Green Paper will involve additional hardship. This is the proposal to combine the rent and rate assessment for housing benefit in one taper. This is bound to hit owner-occupiers particularly hard when they have only their rates bills to pay. Their benefit
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  will be withdrawn at a much steeper rate than has been the case in the past. This will be a problem for about 1·5 million owner-occupiers, most of them pensioners. They are the sort of thrifty people who have provided for themselves throughout their working lives. They will now find themselves hit hard by the new approach of the Government.
  The London Housing Aid Centre's analysis suggests that the rate rebate proposals alone will mean cuts in benefit for perhaps 5 million recipients. Worse still, many people will totally lose their housing benefit. The review team suggested that there would be a 15 per cent. cut in the housing benefit caseload. That implies 1 million people being taken totally out of the housing benefit system. Other estimates have suggested that as many as 1·8 million claimants will lose housing benefit altogether.
  That is an insensitive approach to the problem and it demonstrates again the Conservatives' lack of concern to share burdens in a reasonable way, as we have seen in many of their policies in the last six years. For that reason, all alliance Members will unite in voting for the Labour motion and against the Government on this issue.
  6.32 pm
  Sir John Page: I have always been a believer in thought transference. It was therefore particularly pleasing when the Chief Secretary returned to the Chamber, having received through the means of extra-sensory perception the news that I was about to speak.
  I congratulate my right hon. and learned Friend on his excellent tour de force, putting succinctly all the facts of real life, includig the way in which people suffered under previous Labour rule — something that often gets forgotten. At my request my right hon. and learned Friend repeated one of his bon mots, and tomorrow I shall tear from Hansard the pages on which appear his speech and keep them, if not next to my heart, in my notebook, because they will provide useful ammunition.
  Having given my right hon. and learned Friend that bouquet, he will be less attracted to me when I tell him that I am supposed to be leaving right now, accompanied by my hon. and recently knighted Friend the Member for Bury St. Edmunds (Sir E. Griffiths), to address several hundred people in my constituency. I hope that hon. Members will forgive me if I am not able to stay for long after my remarks, particularly as I shall ask a question and not be here to receive the answer.
  We have learnt something this evening of the Liberal party's policy on prices and incomes, and we have had a glimpse from Labour Members of their party's attitude towards a prices and incomes policy, although they gave us only a view through a chink in the door.
  My question to my right hon. and learned Friend is connected with charges by the nationalised industries. Can he explain why, when the Post Office controlled the telephones and wished to spend, say, £500 million on new capital investment, it might have been difficult for permission to be given for that money to be spent? Indeed, the Post Office might have been told to defer that investment. However, if British Telecom wants to invest, say, £500 million on identical equipment, there is nothing to stop it from doing that. Indeed, it is all virtue. I have always been mystified, as a small business man, by the way in which the Government do not seem to separate capital and revenue expenditure. I had hoped that a change in that attitude would occur.

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  I should at this stage declare an interest, being a director of a water company. I make that declaration because I wish to discuss water charges and possible reorganisation of the industry. I have always taken the view that the water industry and other nationalised industries should, from revenue, save and make a greater contribution towards the capital investments that they wish to make.
  Government policy, recently announced, calling for the upping of the return on such investment is right, although the ground may not have been sufficiently prepared before the ideas involved in that policy were made known. I have not thought it right that with substantial, or even moderate, new capital investment, water authorities should be expected to borrow the money. That has been the tradition over the years. I speak on this issue for myself and not as a spokesman for the water companies or water authorities. Might not the simplest way of dealing with the issue be to introduce into the water authorities—not in one go, and not wholesale privatisation—arrangements to put them in a similar position to statutory companies, which the water companies now are? That would have a major advantage. They would, within the statutory limitations, be able to invest in the water industry and borrow money on the open market. By that means, they would not cause worry in respect of increasing the public sector borrowing requirement.
  Mr. Maxton: Will the hon. Gentleman give the House an assurance that he would not wish to see his proposal extended to Scotland, where we do not have water authorities? The water authority is the local regional council, elected by the people, and by that means the water is under the democratic control of the local authority.
  Sir John Page: I am grateful to the hon. Gentleman for that intervention. Having taken part in the Committee proceedings on the Water (Fluoridation) Bill, I now know more about the water industry in Scotland. My comments refer to the non-Scottish water companies, although if immense success resulted from a limited amount of private enterprise being injected into the water authorities, that might influence the people of Scotland to demand similar privileges and advantages for themselves.
  I make that suggestion as a contribution to the debate because I believe that a degree of private enterprise in the water industry would be of great advantage. However, in view of the monopolistic position in the supply of water, the same competitive edge does not exist to enable a new type of water authority or company, reorganised, to be competitive in its prices and services to the people.
  I congratulate my right hon. and learned Friend again and hope that the realities of modern life, about which the Government have been very successful in educating people, will continue to be reinforced and that further progress will be made in facing real problems in a real way.
  6.40 pm
  Mr. Austin Mitchell: I will not pursue what the hon. Member for Harrow, West (Sir J. Page) said, because I was hoping to give a few encouraging words to the Conservative wets whom I hoped would be speaking in order to put more pressure in their pipes and more holes in their spray. The wetness of the hon. Member for Harrow, West was professional only, so I will not follow up that argument. The Conservative
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  Members who have spoken have been the dries, dredged in by the Whips and provided with Central Office briefing sheets on the rate of inflation from 1974 to 1979 as compared with the rate of inflation since then.
  Mr. Maude: Will the hon. Gentleman inform the House how many hon. Members on the Labour Benches are not either Front Bench spokesmen or Whips?
  Mr. Mitchell: I am not, and I think that there are two of us.
  I welcome the motion because it does the important job of getting away from the world of abstractions, jargon and alphabet-soup letters with which we deal in this place—the PSBR, the M3, the MO, the PSL, all those bogeymen created by the City to frighten Governments and make them panic-stricken about abstractions — to the preoccupations of real people and what affects ordinary lives. That is the pressure of Government—enforced cost increases in the basic services provided by Government or local authorities—in other words, the kind of things that matter in Grimsby rather than those that matter in the City of London.
  On those basic matters, the Government's record in using prices particularly the prices of fuel, as a form of taxation, pressing heavier prices on ordinary people, as distinct from the tax burden on their friends which they have been so concerned to lighten in their six years in power, has been one of increasing misery, demonstrable in every item listed in the motion. The prescription charge increased massively after their Government denied in their 1979 manifesto that they would carry them through.
  They promptly increased the prescription charge, and it has increased again well ahead of the cost of inflation. This has placed a particular burden on those people at the margin who do not qualify for free prescriptions and who find them an oppressive burden. Rates are up 169 per cent. from 1978–79 to 1985–86, and 82 per cent. in real terms. This is a wholly unacceptable rate of increase. Nationalised industries' charges, in particular the basic fuel charges for gas and electricity, have gone up faster than the cost of living, because they have been used as a form of taxation. The test is whether they have gone up faster than the cost of living. On that test, the Government have been using them in that fashion. Council house rents, transport costs and water charges have increased substantially and are about to go up again, thanks to the change in policy.
  Hanging over it all are increased interest rates, and particularly mortgage rates, which are up 4 per cent. since the election. On an average mortgage of £20,000, £40 per month extra is paid by householders, not to the Government but to the financial community—the banks, the building societies and the interests of finance—because of the Government's curious illogical position that, to defeat inflation, prices and interest rates must go up.
  Those interest rates have become a cross on which not only British industry but British householders and the British population, including anyone buying anything on higher purchase, are being crucified. That applies particularly this year. That is a tax on every man, woman and child in the country for no purpose, strangling the economy and the household budget. All those increases are regressive tax increases. They are more painful to those who have less and who are therefore hit harder. They

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  are easily carried by the better-off sections of the community that the Government represent, but they hit severely the people that Labour Members represent, the middleman and the ordinary person.
  It is particularly insulting that the Government should be carrying through this shift in purchasing power and imposing such burdens on people, because they have given away in tax concessions, especially over capital taxation, to the better off section of society about £3,000 million every year, while imposing increased charges through this machinery on those least able to bear them. All this hurts the quality of life of the mass of people, making life meaner, harder, shabbier and more of a struggle. This is doubly sordid compared with the give-aways to one section of society, that small wealthy class which essentially the Tory party represents and which has benefited so lavishly from what the Government have done.
  One critique of the Government's performance, and perhaps a superficial one, is that all this is a confidence trick. In other words, the Government set out to cut taxes and, finding that they could not do it in the easy, glib way that they said they would, they decided to do it by optical illusion, by shifting burdens, by shifting deck chairs around on the Titanic, by increasing the charges of nationalised industries, by increasing indirect taxes and by putting up taxation. However, it would be superficial to make an attack on those grounds.
  At this stage, the increases in costs and interest rates represent something more significant. The Government have not achieved the real cut in taxes that they said they would achieve, and they have not effected a cut in interest rates. The Government said that their obsession with cutting public spending and increasing the charges of nationalised industries to hold down the public sector borrowing requirement was dedicated to bringing down interest rates. Real interest rates currently are, I think, the highest since the war. They are certainly at record levels and much higher than the interest rates of our major industrial competitors. Thus, the Government have not achieved the objective of their policy.
  These increased costs and interest rates are a symptom of the total failure of the economic policies on which the Government were elected—a failure which, to be fair, the Opposition pointed out from the start. We said that the policies would never work, but perhaps the country has to experience the pain and agony before the lesson comes home. Perhaps we have to have this tragic experience, in which, because of the failure of the Government's policies, what are now blithely called blips are becoming a way of life. There is a blip in the figures every month. The Minister assures us that it is abnormal and that things will soon be back on course, but the trend in inflation, interest rates and unemployment is ever upward despite the hope that these are just blips.
  The light at the end of the tunnel that Ministers have been glimpsing now for four years, as is rapidly becoming clear, is the light of an approaching train. There is no light at the end of the tunnel in which the awaited downturns in these atrocious figures become consistent upturns. The Government clearly have been and are pursuing a mirage which they will never grasp and which will never materialise. This failure will result in the end of the Government. They may have two or three years in which
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  to hang on to power but, because their policies have failed, there must be three years of a downhill run in which there is now no possibility of turning round. The only way to get out of the trap and the mess is to change the policies, but the Government have made a virtue of never changing and not turning round. The only way out is to turn round, and if they will not turn round, it will be a downhill run for them and the country.
  There is now no possibility of pulling rabbits out of a hat. Tragically, nobody can take the Prime Minister—who has imposed these policies on the country and her Cabinet—by the elbow and say, "Enough is enough, we have to change and turn round, as Mr. Macmillan did in 1962, if the Government are to be saved." A change is unlikely to save them, but even if it could, it is impossible because of the domination of this overwomanned Government by the prejudice of the Prime Minister.
  There is no way out for the Government, although it is clear that all the holes into which they are stumbling—the holes of poll taxes rather than rates, of SERPS and of the abolition of the metropolitan counties — have all been dug by one person in the Government. They can get out of them by the elimination of that one person, but there is nobody man enough to move in that direction, so I shall not pursue the argument. That is the reality of the trap in which the Government are stuck.
  The strategies on which the Government came in—monetarism and incentive — have failed. They could never work, because the Government were essentially imposing not a considered, worked-out philosophy that had a prospect of changing the country's fortunes, but a morality. Under the guise of that philosophy, the Government were imposing a morality, a discipline, a tightening and toughening of the restraints. They were proposing a massive deflation through the over-valued pound.
  The Government talked about sound money. It is appropriate that the Prime Minister should talk about sound money because she has more of it than most people, so its soundness is more important to her than to other sections of the community. What they were talking about was an over-valued sterling that strangled British industry, reduced our share of world trade and financed a flood of imports to destroy jobs.
  As soon as a Government become obsessed not with the real economy — jobs, growth, manufacturing, exports, expansion and survival in a competitive world — but with the abstractions of the PSBR, M3 or whatever it has changed to lately—I gather that it is MO and that the Government are controlling MO because it represents only banknotes and banknotes are being taken out of circulation or are falling to pieces, so MO has come down, which is the Government's one success in their money supply policy—and manage the economy so as to control those abstractions, they inflict ruin and damage on the real economy, jobs and unemployment. That is what they have done with the massive deflation and high interest rates to achieve those targets. That is the opposite of what was necessary, and that is what has produced these increased charges.
  The only way to cut the burden of taxation, to ease the burden of welfare and to allow the economy to carry the burden of public spending is to expand the economy—making it grow, getting more jobs, and making our industry more competitive and able to survive in the world. That is the real economy of jobs and exporting.

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  By growing, I do not mean the faltering growth of the past couple of years, which is really a bounce back from the extent of the deflation inflicted on the economy in 1980–81, or being dragged along as we have been in the wake of the American recovery. I mean a recovery stimulated and primed in this country. The Government have done the opposite, and all else follows from that.
  It is true that, when the Chancellor took over after the last general election, he saw a way out. That was to pretend that the pound was not important and he had no exchange rate target, and then to let the pound go down — in other words, to walk backwards towards growth while pretending to do something else. He did that behind the Prime Minister's back—he had to do so, because she is obsessed with the exchange rate against the dollar and wants it to be the same when she goes out as it was when she came in, although it will not happen.
  At the same time, the Chancellor was running an accommodating money supply by subterfuge — by gobbling up commercial bills and by overfunding so as to keep down M3. He was doing both those things until January this year, when the market sussed him out. It realised what he was doing and the consequences of it in their financial terms. At that point, the Prime Minister intervened. She could not face parity with the dollar. She intervened, interest rates were jacked up massively and the pound subsequently went up.
  The increase in the value of the pound has tightened the noose around the neck of the British economy once again. The noose, which was easing, has been tied on increasingly hard. The increased value of the pound will not only make life more difficult for us in the American market, where we are still quite competitive, but will make it excruciatingly, agonisingly more difficult for us in the European market, which the Government say is so important to us. In January, the pound was still over-valued in real terms against the deutschmark. Compared to the last quarter of 1976, it was over-valued by about 40 per cent. The fact that it has appreciated against the deutschmark, the yen, the franc and the lira since then will make it far more difficult for us to survive in a market in which we were already running a horrendous deficit in manufactured trade.
  The Government are trapped because they cannot make the economy more competitive unless they get the pound down, but they cannot get the pound down, against the European currencies in particular, because they fear that that will increase the rate of inflation, which is already rising, and because the Prime Minister is obsessed with exchange rates. At the same time, they must get the economy more competitive because our unit labour costs are rising more rapidly than those of any of our competitors.
  Effectively the Government are trapped, and with them the British economy. With that trap, the brave experiment ends. It means the end of the line for the experiment. It means a long dying whimper at the whim of the bankers for the Government and the country. Everything else that we are debating today follows from the trap in which they are now. It follows that nationalised industry charges must be increased, as they have been, and the increases will go on because the Government need to raise more taxation. They will not do that, because they are obsessed with tax cuts, so they will increase charges. It follows that the flogging off of nationalised assets that belong to all of us will have to go on at the kind of ludicrous prices with the
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  ludicrous commissions that the Government have been giving away over the past few years, simply so that the Government can survive financially. That is not prudence, wisdom or competitiveness. There is no change if one flogs a public monopoly off to make it a private monopoly. There has been no increase in competition.
  The cuts in welfare implicit in the Green Paper published two weeks ago will be massive, because the Government are trying to finance an increasing burden of expenditure to cope with increasing unemployment on a shrinking productive base, and that cannot be done. Unless we expand the production base, we cannot finance the increasing burden of unemployment. One could solve two problems by expanding the base and bringing down unemployment, but the Government will not do that because they are trapped.
  The cuts that must still come this year will have to be heavy. Despite the Chancellor's apparent finality, the Government are now embarked on a programme of cuts that will cause agony for Tory Back Benchers and for the country. Believe it or not, the right hon. and learned Member for Dover (Mr. Rees) will be disposed of because he is too kind-hearted and nice to carry through the necessary cuts. The Whitelaw star chamber will have to be beefed up and given more muscle. It will have a jamboree.
  Mr. Maxton: I go along most of the way with my hon. Friend, but I just cannot believe what he has said about the Chief Secretary to the Treasury.
  Mr. Mitchell: No more will we hear those merry quips and japes in the Finance Bill Committee, no longer will we hear the friendly kindly remark from the sober-minded right hon. and learned Member for Dover because he is too kind to carry through the excruciating cuts that are now necessary.
  I think Woodrow Wilson said that the essence of conservatism was to say nothing and to ask one's grandfather. The essence of the Government's policy is to say nothing, do nothing and axe one's grandmother. That is the scale of the cuts. The Government have been pursuing these policies for six years. It is all very well for Conservative Members to ask what the Labour party would do, and to go on about the horrendous inflation of 1974, but these policies have been applied for six years. When shall we see the rewards? When will we see what the Government said the policies would produce? When will we see the lower interest rates to which all the cuts in the PSBR have been dedicated? When will we see the lower unemployment, which was implicit in the promises made in 1979? When will we see inflation vanishing, in the way in which the Chancellor had been describing? If inflation were completely eliminated, what would bring growth? Growth does not merely spring like a phoenix from ashes. Inflation does not abate automatically; the abatement must be generated, pumps must be primed, and money must be spent. There is nothing in a zero inflation figure which will bring growth.
  When will we see a lower inflation figure, and the revival of our economy and manufacturing industry? When will our share of world trade increase, and replace the long whimpering decrease which has occurred every year since the Government came to office? A share already too low has been whittled away by the destructive policies of the Government. We shall not see those aims, becasue

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  the reverse is happening. Inflation is increasing, interest rates are at record levels, unemployment continues to rise and manufacturing continues to suffer. What can stop that? What can the policies deliver?
  In economics, virtue, discipline and morality are not rewarded. It is not merely a question of chanting slogans about sound money and doing nothing, but of investing, encouraging, stimulating, spending and competing for expansion and growth, yet the Government are not doing that. They are only inflicting pain and discipline on us. Economics is not for a Sunday school. We live in a hard cold world, and the Government have harmed the real economy of the country.
  It is no use talking about small businesses replacing the massive job losses in big business, unless the Government provide the climate and framework for expansion, the stimuli, and low interest rates for small businesses to flourish. The Government's policies can never work. They could not have worked, and we warned the Government of that from the start. These policies have been a long tragedy for the country.
  The Government came to office desperate for power, and the Prime Minister was blinkered by her prejudices. The essence of the Government's strategy in 1979 was: "If only people would be more like the Prime Minister, all would be well." The Government were so blinkered that they did not see that they were defending, in terms of incentives, PSBR cuts, and lower inflation, policies which directly favoured the Prime Minister and her friends, and which placed the sacrifices, inevitable in the depression that the policies generated, on the section of society least able to bear it—the poor, the old, and the ordinary. They are all suffering under the charges which we are lamenting today. They have the rough end of the stick and must pay the increased bus fares, rents and gas, electricity, rates and prescription charges. Life for those people has become more of a struggle, meaner, shabbier and more bitter. That is the Government's final crime against our people.
  The essence of the Government's achievement has been to make our country shabbier and meaner, and to set us on a course different from that of the rest of the world—from the wealthy European Community countries, expanding America, and growing Japan. Ours is a unique case of self-inflicted agony and decline, with the sacrifices of that decline placed on those that cannot bear them. The sacrifices are carried by the poor, those who carry the burden of interest rates and the mass of the people. That is what the Government have achieved in their six years.
  Now we are witnessing one of those rare and massive changes in the mood of the country which occur in British politics when our people begin to realise what the Government's prejudices, follies, simple ignorance and sheer wrong-headedness are doing to our economy. The tide is turning, as it did between 1961 and 1964. Although the Government have two years, that change in mood makes them irrelevant, out of date and out of court. Those who bear the sacrifices, who see that society has not improved as they wish, and that the Thatcher follies have failed, will throw out the Government in two or three years' time. The Government will probably stay on until the bitter end, and the end will be bitter. That mood is building up and is irresistible.
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  Disraeli attacked Gladstone's Government as a range of exhausted volcanoes, but the present Government were never big enough, nor had enough fire in their bellies to be volcanoes. We are seeing a row of squeezed pimples and boils on the body politic of the Government Front Bench, whose evil pus has been squeezed by what they have done to our society. That is what the Government are. That is their level, and size. The British people realise what has been done and how horrendous the Government's mistake has been. There is no chance now that the Government will change, but the people will take their revenge because they have been betrayed and because the sacrifices made necessary by that betrayal have been placed on their backs.
  7.7 pm
  Mr. Francis Maude: I am a comparatively new Member, having been here for just over two years. I had a slight advantage in knowing a little about the House before I came. I had always thought that a good day was an Opposition Supply day because that was when the Opposition carefully selected their subject and the Government had their back to the wall and were indicted. I thought that today of all days would be such a day because the Opposition, in their wisdom, had chosen to debate prices and to take on the Government on the Government's ground. I expected to hear high drama today.
  I came into the Chamber at about 3.30 and heard the speech of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). I am a stranger to the usual channels that operate in the House, and I do not know, nor wish to know, anything about the way in which the Opposition choose their subject. It seemed that the speaker had been chosen, rather than the topic. The Leader of the Opposition had his day yesterday, and presumably today it was to be the Deputy Leader. I suppose that he was thought to know something about prices as he had been responsible for them for three years, and I thought that I might have a chance to inform myself and to end up knowing a little more about prices. I came and listened, but I am none the wiser.
  Today we have had not high drama, but a remarkably serene debate, until the hon. Member for Great Grimsby (Mr. Mitchell) rose to his feet. We then heard a great deal of hot air. However, I suppose that when talking about energy prices hot air is appropriate.
  Mr. Norman Hogg: The hon. Gentleman has spent the opening minutes of his speech lecturing us on how this is not turning out to be a great day. He could do us a favour and make a great speech and make our day.
  Mr. Maude: I am grateful to the hon. Gentleman for his encouragement. I shall do my humble best.
  I had hoped that there would be a lifting of the veil by the Opposition. They have spent a great deal of time telling us that they will form the next Government. I thought that we were heading towards the time when we might be told a little more about what they are proposing. Are they a party of price controls? Do they favour a statutory price control policy? As part of that, do they favour a statutory wages policy? These are matters on which the right hon. Member for Sparkbrook has been delphic, to put it kindly. He did not lift the veil.

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  The motion mainly concerns price increases imposed by nationalised industries. That is something into which politicians have delved far too often. Governments inevitably have to delve into that matter, and I suppose that where Governments delve, Parliaments must follow. It is a difficult subject. Let no one pretend that any Government of any party have ever found it easy.
  We maintain the fiction that there is an arm's-length relationship between the Government and nationalised industries, that the Government set the targets and that the nationalised industries simply continue to operate in a commercial way to meet the targets and to render to the consumer the services which they are statutorily bound to render. But how are the Government to determine, in so far as they have the power, the pricing policies of nationalised industries? I understand that there has been a certain amount of consensus on that point. My right hon. and learned Friend the Chief Secretary quoted at some length from the energy policy Green Paper produced by the right hon. Member for Chesterfield (Mr. Benn) in 1978, which said:
  "It should be the aim of nationalised industries to secure something in the region of a 5 per cent. return on capital."
  That 5 per cent. is calculated on the same basis as that on which the Government operate today — a current-cost basis. Not many nationalised industries manage that. I understand that the Government operate the same broad principle, that they set their targets in terms of a return on capital. It does not matter what the percentage is, it is the broad principle of setting a target for a term.
  Nationalised industries are not, and never can be, subject to ordinary commercial pressures, especially when they operate, as most of them do, as monopolies. I do not know whether 5 per cent., or 1·5 per cent. for the water authorities, or 2·75 per cent. for electricity, or 4 per cent. for gas, are the right returns, because I am a politician, not a business man. If I had wanted to meddle with the running of a nationalised industry, I would have gone into that business rather than into politics. That is one of the ghastly problems with the whole range of nationalised industries. We take them into the public sector and they end up being meddled with by politicians.
  Mr. Kevin Barron: Will the hon. Gentleman comment on the Government's gas levy, which is being forced on the British Gas Corporation? Last year the Government raised the sum, directly from consumers of gas, of £522 million. That is a direct energy cost put on by politicians. How does that policy align itself with the hon. Gentleman's remarks?
  Mr. Maude: The hon. Gentleman's point supports my case. When an industry is taken into the public sector it is subject to Government control, and politicians will meddle. Nationalised industries are a tempting source for politicians to meddle with. They are a little bag of goodies, and who can blame politicians if they dip their hands into it? I want politicians to get out of business and industry and leave them to operate in the private sector where they belong.
  Mr. Robert B. Jones: Will my hon. Friend reflect on the fact that there is not necessarily an equation between setting a target for a contribution to the Exchequer from an industry and the price level imposed by that industry? For example, the British Gas Corporation reached an agreement with its unions in 1973
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  that it would phase out the use of private sector contractors for the laying of small-scale pipelines, irrespective of whether that was efficient. That is still happening. There is no great drive for efficiency in the BGC along the lines that would keep down prices while making a contribution to the Exchequer.
  Mr. Maude: My hon. Friend makes a valid point. When a utility or an industry remains in the public sector, it is not subject to proper competitive pressures. Even within a natural monopoly there are many ways to introduce competition. The first step towards that must be to remove the utilities from the public sector and return them to the private sector where they belong.
  I have one point of agreement with the hon. Member for Great Grimsby, who I know is a compassionate and even fanatical follower of competition. He said that if we transferred a monopoly into the private sector we would often not be better off. I think that we would be a little better off, but not as better off as we could be. I am concerned about the Government's intention to transfer British Gas en bloc to the private sector. I would rather it was broken up so that some limited competition could be introduced into the system.
  If we start—as I hope we will before too long—to talk about selling the water authorities to the private sector, I hope that we can obtain a competitive framework. One possibility would be to lease the capital utilities to someone prepared to bid for them, someone prepared to contract to operate the industry in an area for, say, five years at a given charge to the customer. The customer would know where he was and the operator would be subject to competitive pressure, because he would know that in five years other people would bid against him. That is one way to obtain a proper competitive pressure in the system in order to protect the rights of the consumer.
  Mr. Robert B. Jones: Is my hon. Friend aware that that is precisely what happens in France, where nearly half the water supply is provided by private contractors operating the plants on behalf of local authorities of all political persuasions, including Communist?
  Mr. Maude: Once again I am grateful for my hon. Friend's deep and wide knowledge of this subject. It is an eminently practical solution to a problem which needs addressing in the near future.
  I want to discuss the way in which electricity prices have operated. There is always a temptation for politicians to meddle with the pricing processes of nationalised industries. That has not always been beneficent, but almost always the opposite. Mention has been made of the way in which the last Government manipulated gas prices, perhaps to try to buy support by artificially holding down the price of gas to the domestic consumer and artificially increasing it to the industrial consumer. There was the inevitable consequence of the loss of jobs in those industries affected by artificially high energy costs.
  The Opposition were unwise enough to include electricity prices in their indictment of the Government. I make no apology for reiteraing a point that has been made. It is a commonplace, but that does not stop its being true. Under the last Labour Government electricity prices rose by 2 per cent. every six weeks. Under this Government they have risen by 2 per cent. over the last three years. That is a good record for the Government.

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  There is one way in which electricity prices could be reduced. Of the fuel used to generate electricity, 75 per cent. comes from the National Coal Board.
  Mr. Barron: It is 80 per cent.
  Mr. Maude: The hon. Gentleman says that it is 80 per cent. I bow to his superior knowledge. As a proportion I expect it to diminish slightly, although the CEGB will continue to buy the same bulk volume from the National Coal Board. The CEGB could buy that coal more cheaply elsewhere. There is nothing magic about British coal that makes it perfectly suited to generating electricity in Britain. Much of the coal used by the CEGB could be bought more cheaply elsewhere. It is not even as though the NCB is making a profit by selling the coal at a high price. Electricity prices could be reduced if there were a reduction in the price of coal.
  I represent a coal mining constituency and 4,000 coal miners. I also represent some 50,000 consumers of electricity. There is a strong connection between the two. It is often the same people in the Opposition who in one breath complain about high electricity charges and the damage that they are doing—in high-flown phrases the hon. Member for Great Grimsby referred to the Conservative party putting the boot in on pensioners and those least able to pay — yet in other circumstances complain about pit closures and moving from high-cost pits in the coal industry to low-cost capacity. They should be able to see that the two are directly related. It is only by getting out of the old high-cost coal mines and into low-cost mines that we can begin to get the cost of coal down, and hence reduce the cost of electricity.
  The motion that we are debating in this serene fashion covers a wide range. I have touched on only one or two aspects. When the Opposition have a chance for calm reflection, I think that they will come to the conclusion that they have chosen badly today. They have tried to take on the Government on the Government's favourite ground. A cursory examination will show that when the Labour party was in government it had a bad record on prices. The record of this Government is not perfect; no one can pretend that. Inflation at 7 per cent. is far too high, but it is worth repeating that it is a lot lower than the figure for the lowest month under the last Labour Government. This may be the last debate on this subject in Opposition time. It would serve the Opposition well to call it a day on this one.
  7.24 pm
  Mr. Kevin Barron: I am tempted to ask the hon. Member for Warwickshire, North (Mr. Maude), as I am also a relatively new Member, about a colliery in his constituency. At the time when he and I dealt in Committee with the Coal Industry Act 1983, that colliery, according to the report of the Monopolies and Mergers Commission, was making a loss. Has the hon. Gentleman checked whether it is now making a profit?
  Mr. Maude: The two large capacity coal mines in my constituency are making good profits. Two are making small losses. Everyone in the coal industry in Warwickshire knows that in not many years' time the two loss-making collieries will close. There is no secret about that. In one pit village there have been rumours for 60
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  years that the pit would close the following year. It probably will close within the next few years. There is nothing dreadful about that. The people there do not regard it as the end of the world.
  Mr. Barron: I am glad that the hon. Gentleman has said that. I should be pleased to have his support for keeping uneconomic collieries open because of the consequences to the communities and the need for employment opportunities in that area.
  What the hon. Gentleman said does not ring true if we consider the rising cost of energy. About 80 per cent. of electricity generation is done by coal bought in this country. Yet in 1983–84 the CEGB still made a profit of £623 million. In those circumstances, it should remain a public corporation. It should keep in balance and not be a burden on the public sector, but that does not mean that it should make profits of £623 million.
  In the same year the British Gas Corporation made a profit of £668 million. Most of that profit comes directly from consumers, although the British Gas Corporation can make some revenue by providing services in the private sector. Last year there was a gas levy of £522 million.
  The profits of the energy undertakings must be set against the 92,000 cut-offs of electricity in domestic households that took place from December 1983 to December 1984. In over 4 per cent. of those cases the householders were pensioners. We are talking about 4,000 pensioners' homes which may have the energy supply cut off because the householders cannot afford to pay the bills.
  In many cases the standing charges are a burden. It is an absolute scandal that both the gas and electricity undertakings can make such huge profits while making high standing charges. Until five years ago many householders did not have to live on state benefits and were not classified as being on the poverty line. One of the major growth areas in the last five years has been the number of households that have to rely on state benefits.
  The Labour party has been saying consistently that when the energy undertakings are making such high profits, standing charges are too high. Pensioners and people on low incomes should not be under threat. I am sure that at some time every hon. Member has been approached by someone who was under threat of having the gas or electricity supply to his house disconnected. I have many times, and I have not been a Member of Parliament long. Only this week I tried to help a constituent, who is now unemployed and was about to have his supply disconnected. The Government must stop interfering by forcing levies on consumers. They should recognise that they are merely creating more upset in homes that can do without the pressures of present energy charges.
  Mr. Maude: Bearing in mind his objection to their profits, where does the hon. Gentleman suggest that new investment in the gas and electricity industries should come from?
  Mr. Barron: I am talking about profits over and above what is being invested. I could go on at length about the British Gas Corporation, but I shall save it until about November when we shall debate the matter in great detail. We should consider how the British Gas Corporation has been attacked in the past five years and has been stopped by the Government from going into areas where it could have earned more revenue to invest.

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  Rising energy costs have been made worse by many of the Government's actions, not least the 1984 Budget which put VAT on building alterations and central heating equipment. That was disgraceful. There have been indirect increases in the prices of petroleum products. In May 1979, 44·8 per cent., or 39·9p, of the price of a gallon of petrol was tax. In January this year, 54·3 per cent., 102·6p, of the price of a gallon of petrol was tax. That was an increase of more than 9 per cent. The price of derv affects public transport and the moving of food, and hence food prices. The tax on a gallon of derv has increased 3 per cent. since 1979. That is another example of the Government increasing prices when they should have been lowered.
  Worse, there have been increased charges in the National Health Service. Prescription charges £2 as from 1 April. On 25 April 1979, the Prime Minister said that the Government had no intention of increasing prescription charges. They have increased by about 1,000 per cent. since she said that. It is easy to say that 75 per cent. of prescriptions are exempt from charges, but many people have difficulty getting exemption certificates. I recently came across a person who is £1·21 short of getting exemption. He was told that if he collected the five prescriptions that he gets each month in one week, there would be no problem and he could claim the money back. He has had those prescriptions for years, but getting £10 together in one week is extremely difficult for somebody who has lived on state benefit since coming out of the armed forces.
  Dental charges also increased earlier this year, and they particularly affect people on low incomes. The matter did not get much debate in the House, although it deserved more than the increase in prescription charges because 90 per cent. of people who need treatment after a free inspection pay the full basic amount, which has increased to £17. The costs of crowns, inlays and bridges—an expanding area of dental treatments — have also increased between 6 and 10 per cent. That is substantially higher than the rate of inflation, although inflation is now higher than when the increase was announced.
  Since 1979, there has been a massive increase in council house rents. Nobody can deny that the increase was started by the Secretary of State for the Environment. Whitehall has directly forced rents up. I never thought that I would experience that.
  The hon. Member for Warwickshire, North mentioned water rates. About five months ago, I received a memo from the Yorkshire water authority complaining about its being forced to increase water rates by 12 per cent. per annum for three years. That instruction came direct from Whitehall. People find it difficult to get rebates of water rates. It is disgraceful that Ministers should force up water rates when people are getting nothing like the same increase in income or state benefits.
  A worse example of shoving public sector prices up is the Government's ideological attack on local government and the rate support grant. They have forced local authorities to decide, for example, whether home help provision should remain, whether elderly people who live on their own must be left completely alone or whether home helps will have to charge. Local education authorities have been forced to increase the price of school meals or to do away with them altogether.
  My local authority, the Rotherham metropolitan borough council, has lost more than £24,000 in the last
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  five years through the attack on the rate support grant. That money has had to be found by ratepayers and by cutting back services and losing some council jobs. It does not help to see local authorities having to put up prices and make charges for services such as meals on wheels, which, by good housekeeping, they were formerly able to provide to people in need.
  In 1979 the Government laid great stress on the right of people in this country to be home-owners and the right of council house tenants to buy their own homes. I notice that they have not done so much shouting about private tenants having the right to buy their homes as well. However, they shouted again in 1983 about how they felt that the people of great Britain had the right to own their own homes.
  Mr. Maxton: My hon. Friend will remember that not only are they not shouting about private tenants having the right to buy — which, if they were true to their principles, they would give them—but, because of cuts in improvement grants, they have actually been forcing people out of private ownership and private rented tenancies into the public sector and therefore putting a greater burden on public sector housing.
  Mr. Barron: That is quite true.
  I want to recall what has happened since the 1983 election and the increase in the mortgage interest rate. The mortgage interest rate in this country at the present time is 6 per cent. higher than in the countries that we normally term our main competitors, such as America and West Germany. The Government, who claim to be the friends of people who want to own their own homes, have failed miserably to keep down interest rates and to protect the interests of the many people whom they encouraged to take on mortgages.
  An average mortgage of £20,000 means a payment for every 1 per cent. increase in the mortgage interest rare of an extra £10 a month. So a person with an average mortgage since the last general election, when I came into the House, is paying an extra £40 a month.
  That will go on record as one of the major ways in which the Government failed to honour their commitments as far as home ownership is concerned. I have not checked the figures recently, but I have done so over the past two years, and they reveal that the number of people who are having to surrender their mortgages and lose the houses that at one time were sold by public bodies, such as the National Coal Board or local authorities, is constantly growing.
  If the Government fail to take action to stop the rapid rise in mortgage interest rates, they will get everything that they deserve at the next general election, because people who voted for them and their ideological slogans about home ownership will find that they have been led up the garden path and put into the hands of the moneylenders—the friends of Conservative Members.
  7.43 pm
  Mr. Patrick Nicholls: If the debate has not shed very much light on the subject, we have at least learned one thing—that it is going to be the Labour party's policy when they fight the next election to choose those areas in which it has been most signally unsuccessful and then have the nerve to attack the Government for the successes that have achieved in those fields. We can

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  sympathise with the Labour party in this, because if they had to debate a motion like this tonight on their own successes in office they would never get the thing off the ground.
  The hon. Member for Rother Valley (Mr. Barron), in a spirited speech, went through a number of points, trying to suggest that it was the Labour party which had something to offer the electorate. To hear a member of the Labour party proclaiming himself the champion of the home owner and those who are struggling to pay their mortgages is quite incredible. One only has to think of the proposals made recently by the hon. Member for Oldham, West (Mr. Meacher), which were going to take away income tax relief for those who have mortgages—although when the implications of that were realised by his colleagues, they quickly shut him up. But that showed as nothing else could what the real attitude of the Labour party is to income tax relief for house owners. We saw an element of it also in 1983, when one of the last acts of the Labour Opposition before the last election was to ensure that the Government's Budget proposals for increasing the amount of income tax relief for those with mortgages were blocked.
  The hon. Gentleman talked about council houses and tried to suggest that there was something dishonourable, or not very praiseworthy, in the Conservative party's attitude to them. It must be borne in mind, however, that our legislation which enabled council tenants to buy their own homes has led to a massive increase in house ownership. I refer the hon. Member to a document which is still an excellent read—and indeed an excellent buy at 60p—entitled "The New Hope for Britain", to see what threats the Labour party had in store for those who purchased their council houses. If the hon. Gentleman wants to remind himself about that he need only look at page 23, the last paragraph in the left-hand column.
  Mr. Barron: The hon. Member has not said that householders were a lot better off under the last Labour Government than they are now. I understand from the press that my hon. Friend the Member for Oldham, West (Mr. Meacher) was talking about mortgage tax relief for people on salaries of £20,000 a year-plus. If that is true—I do not know if it is—would that not be correcting the massive imbalance in personal taxation since 1979, when this Government have been giving massive tax cuts to people with salaries of £20,000 a year-plus?
  Mr. Nicholls: If the hon. Gentleman wants to know what his hon. Friend had in mind, he had better ask him. It was clear to anyone who read his proposals that they represented a threat to the principle that a person is entitled to income tax relief if he is purchasing his own home.
  The hon. Member for Rother Valley chided the Government and cited the American experience. I wonder if he would want this Government to approach unemployment in the way in which it is approached in America — where, after six months, the rate of unemployment benefit, or the American equivalent, is reduced to such a level that if a person does not then take the work offered, he suffers real hardship, in a way that would not be countenanced in this country. That is one part of the American experience, but it is typical of the hon. Gentleman to choose one aspect of the American experience and ignore the things that go with it. If the hon.
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  Gentleman were standing up in the United States Congress tonight he would find his political views so far to the left of what he would be hearing there that he would not get a very good reception.
  The hon. Gentleman picked up the question of prescription charges. It really is remarkable to hear the Labour party now talking about the evils of prescription charges. They were first introduced—as I am sure the hon. Gentleman knows — by Hugh Gaitskell. The biggest increase ever was in 1969 under a Labour Government. The hon. Gentleman tried to brush aside the fact that 75 per cent. of the prescriptions are filled free. All those members of society that we would all agree should not have to pay prescription charges are exempted. From what the hon. Gentleman has said, one would expect him to approve of the way prescription charges are now applied, because those who cannot afford it do not pay them and those who can afford it do. We see that approach everywhere we look—both in the motion and in what has been said in the debate.
  The Labour party now claims to be the champion of the old-age pensioner, but it has forgotten that it was the party which was so stuck for cash that it had to abolish the Christmas bonus. It has forgotten that it was the party which changed from the historic method of assessing pensions to the forecasting method. That was not designed to help the pensioner, because in due course Mrs. Barbara Castle pointed out in her memoirs that it was done purely and simply to save money. In fact, she described it as "dishonourable".
  The last Labour Government introduced legislation to link the rise in old-age pensions to earnings rather than prices, but in three years out of five they had to get out of that legislation. When a former Labour Secretary of State for Social Services was chided for not taking the earnings link into account, he said, "Oh no. We had to take it into account, but there was no obligation on us to get it right." Wherever one looks, it is clear that it is in precisely those areas where the Labour party's record is worst that it has sought to attack us.
  At times it is extremely difficult to work out precisely what the Labour party is saying about prices in the public services. Is it saying that those prices should never go up? If one is seeking inspiration, or even some light relief, one can turn to the Labour party's manifesto at the last election, which said that, were it elected, it would freeze all council house rents for a year. Why a year? Why not nine months or 15 months? What would have happened in the meanwhile to the expenses that would have been borne by the taxpayer? What about the increased costs for repairs, maintenance and servicing of the debt? Where is the logic in saying, "We will freeze rents for a year."? What does that tell us about a sensible and responsible attitude to maintaining costs in public industry?
  Mr. Peter Pike: Does not the hon. Gentleman realise that we said that we would freeze rents for a year to give us sufficient time to work out the future of housing finance policy? Had we been elected, we could not have sorted that out in a matter of weeks. It would have taken a year. That was a sensible and fair proposal.
  Mr. Nicholls: I am prepared to accept that the hon. Gentleman thinks that that was the position, but the more accurate version of events was that that would be a good vote winner among the people to whom Labour was

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  supposed to appeal. The singling out of that one tiny point in overall housing policy and the offering of such an obvious and manifest bribe cannot bear any other interpretation.
  The only way in which to assess rising prices is to look at the rate of inflation. This debate has revolved around one central point that I put to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), which he did not address. Whatever one says about the current temporary increase in the rate of inflation, the fact remains that under the last Labour Government there was no month in which the rate of inflation was as low. We believe that it has now peaked, but given that that has been achieved without dividend, price or wage controls, one begins to have a framework in which one can assess what the Labour party has on offer and what we have on offer.
  The depressing thing is that there is nothing new in what the Labour party has said. Even worse, there is not the slightest sign that it has learned anything from its own history. That point has already been made several times and it will have to be made again, because the Labour party still does not realise it.
  We are being criticised for a rise in electricity prices of about 6 per cent. over three years, which contrasts with a rise under Labour of about 2 per cent. every six weeks. The Labour party may say, "Look what we achieved on gas prices." During the period of the last Labour Government there was a price reduction of about 19 per cent. for domestic gas users, but there was an increase of about 112 per cent. for commercial gas users. It ought to be self-evident that in the end one does not do the domestic consumer any good by selling him gas at a loss and by penalising industry which will inevitably pass that price increase back to the consumer.
  Even if one does not accept that argument, but believes in penalising the business user while letting the domestic user off lightly, it is clear that at the time the Labour party did not believe in it. Its Green Paper on energy policy, published when the right hon. Member for Chesterfield (Mr. Benn) was Secretary of State, clearly stated:
  "policies will be working under a severe handicap if price signals are not pointing in the same direction."
  Whatever one thinks of the principal argument, what can one say of a Labour party that adopted a policy in which it did not believe?
  To hear the Labour party talk about price rises in the nationalised industries, one would think that while it was in office such prices did not go up aggressively. But they did—telephone calls by 200 per cent., electricity prices by 163 per cent., rail fares by 153 per cent., domestic coal by 149 per cent., finished steel by 136 per cent., second-class postage by 133 per cent. and gas by 69 per cent. That is the reality of what the Labour party achieved when in office.
  Having listened to the entire speech of the right hon. Member for Sparkbrook, one still does not know what the Labour party now has on offer. One can gain an indication from the last Labour party manifesto, and when pressed in an intervention, the right hon. Gentleman to some extent gave the game away. Labour's manifesto — the longest suicide note in history—stated:
  "Give powers to a new Price Commission to investigate companies, monitor price increases and order price freezes and reductions … Take full account of these measures in the national economic assessment, to be agreed each year with the trade unions."
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  The national economic assessment is presumably the unworthy successor to the social contract, which was neither sociable nor contractual. It is also the worthy successor to the concordat, and it is not surprising that the Labour party has not referred to that. The dictionary definition of concordat is a composition made by a bankrupt with his creditors. That just about says everything there is to say about the way in which the last Labour Government conducted their arrangements.
  That is the profoundly depressing thing about the Labour party. To be fair to the alliance, it is at least prepared to admit the errors of its ways, although it is not prepared to do anything about them. The hon. Member for Woolwich (Mr. Cartwright) said that in an imperfect world prescription charges would have to be levied, yet he criticised our prescription charges even though they are lower than those which were levied when many of his hon. Friends held office in the last Labour Government. In a remote way there may be some hope for the alliance, but there is no hope at all for the Labour party, which has clearly shown that it is incapable of learning anything at all from its history.
  All it has offered are the same policies and remedies that have failed in the past, and there is not the slightest reason to think that they will ever succeed in the future. Labour Members need not take my word for that, because I am mindful of a good speech made at a party conference some years ago, when it was said:
  "We used to think that you could just spend your way out of recession and increase employment by cutting taxes and boosting government borrowing. I tell you in all candour that that option no longer exists; and that in so far as it ever did exist; it worked by injecting inflation into the economy. And each time that has happened, the average level of unemployment has risen. Higher inflation followed by higher unemployment. That is the history of the last 20 years."
  That speech was made by the last Labour Prime Minister, the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan).
  Mr. Barron: If the hon. Gentleman has only scorn to pour on the Labour manifesto and the Labour party conference, why has he spent the past 15 minutes using them to avoid having to defend the massive increases in public sector pricing since the Tory Government came to power?
  Mr. Nicholls: I have referred to the Labour manifesto because, since then, Labour Members with memories long enough to remember when Labour was in office and who still crave office have done their best to ensure that the public forget what was in their manifesto. In those circumstances, it is legitimate and honest to point out that, in so far as it has been possible to prise out of Labour Front Bench spokesmen what a future Labour Government would have in store, it is clear that they have learnt nothing whatever in the meantime. I make no apologies for quoting the words of the last Labour Prime Minister, because the sad fact is that the Labour party has moved on from the days when its senior statesmen recognised common sense when they saw it. The right hon. Member for Cardiff, South and Penarth was an example of that, but he is not here today.
  Because the Labour party has nothing new to offer, a Labour Government would mean more of the same. Not only the rich but the middle classes in the broadest sense of the term would be squeezed, as they always have been. The same old policies would mean the same old inflation

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  and the disabled, the poor, the sick and others on fixed incomes would suffer most as a result. The right hon. Member for Sparkbrook talks about squeezing the rich. That is all very well for him, for Labour party grandees and minor light essayists who are earning so much that they can afford to be squeezed and make a virtue of it and still have enough left over. The pity is that if we ignore people in that position and consider those in the real world, there is every reason to believe — and no reason to believe otherwise — that if a Labour Government come to power at the next election they will simply do what they have always done, and that is far too high a price to pay.
  8.2 pm
  Mr. John Maxton: I pay tribute to the Labour Government for many of the policies that they carried out, although I do not deny that I went on marches against public expenditure cuts when Labour was in power. Even if we had the same old policies, my constituents would offer up a great prayer of thanks that at least we had a Government who cared, with much lower unemployment rates and a far higher standard of public services than we have now. But we shall not have the same old policies. We shall have new policies.
  The hon. Member for Teignbridge (Mr. Nicholls) said that one of his interests or recreations is historical research.
  Mr. Barron: Hysterical?
  Mr. Maxton: No, historical. If the hon. Gentleman was a genuine student of history, he would know that the term "concordat" had a much wider meaning than that which he tried to give it. For instance, the use of the word in the history of the Roman Catholic Church is quite different from that suggested by the hon. Gentleman. I shall not, however, go any further down that historical road.
  It is true that many people do not pay the current exorbitant prescription charges, but the existence of these charges merely adds to the poverty trap. A man who gets a 10p pay rise may suddenly find that he has to pay the £2 charge for prescriptions for himself, his wife and his teenage children, so his 10p pay increase may cost him a great deal of money.
  Mr. Nicholls: Does that mean that the hon. Gentleman will support the social security Green Paper, which proposes that benefits should be based on net income rather than on gross income so that the poverty trap which the hon. Gentleman rightly describes will disappear?
  Mr. Maxton: On prescription charges, my answer is to get rid of them altogether and go back to a Health Service that is free at the point of use to all within it. That is the best way to organise the Health Service.
  The hon. Member for Teignbridge berated the Labour party for defending the old-age pensioners. If the Government had not excluded the earnings-related element from the pension increase calculations, pensioners would have £4 per week more than they now have. That action was taken by the Conservatives, not by the Labour Government.
  Mr. Nicholls: The Labour Government did not pay it.
  Mr. Barron: My hon. Friend should not take the hon. Member for Teignbridge (Mr. Nicholls) too seriously. The
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  hon. Gentleman suggested in his small contribution to the debate that 20p per prescription before the 1979 election was somehow a greater charge than £2 per item in 1985.
  Mr. Maxton: That is why I suggested that the hon. Gentleman's interest was in history rather than in mathematics.
  Talking of inflation, one or two things should be made clear. In this context, insufficient attention has been paid to unemployment. Conservative Members may ask what that has to do with inflation. The percentage rate is not the only measure of inflation. Inflation is about what people can buy with the money that they receive each week and whether they will be able to buy as much next week and in subsequent weeks. For the individual, the largest inflationary factor may be unemployment. If a person earns £190 per week, which I understand is the average household income, and pays £10 per week for electric light and heat, his electricity bill represents about 6 per cent. of his income. If he suddenly finds himself on £45 unemployment benefit or supplementary level he will still have to pay the electricity bill, but it will represent about 25 per cent. of his income. Indeed, the electricity bill is likely to be bigger because an unemployed person spends a great deal more time at home than a person who goes out to work. Unemployment thus creates inflation for the individual, and even Conservative Members cannot deny that the creation of unemployment has been part of the Government's economic policy.
  I am sorry that my hon. Friend the Member for Great Grimsby (Mr. Mitchell) is no longer present, as I have to disagree slightly with some of his comments. He referred to the failure of the Government's economic policy, and I think that he was probably right, but there are times when I am not so sure. The economy is not an end, but a means by which to obtain social and political ends. I am not convinced that the Government are not achieving their social and political aims, which are twofold.
  First, they want to create an ever better and more secure standard of living for the small wealthy class that gives them so much support. The Government have been extremely loyal to their most loyal supporters and have given them more or less what they want. They have given them higher incomes. I gather that the Government will be embarrassed when they release the details of the salaries of those in the upper echelons of the nationalised industries. It is probable that the report will reveal salary increases that are way above the general rate of the increase in earnings and the rate of inflation. I gather that the Government are delaying the publication of the report. It will be rather interesting to see what happens when it is published. However, the Government have satisfied the needs of their most loyal supporters. Secondly, the Government want employers to play their part in establishing a low-pay economy for the rest of the people. They want trade unions to be suppressed. They think that unemployment is a tool by which they can put down the unions.
  I am not convinced by the argument that we must be wary in thinking that the Government have failed to achieve their economic and political objectives, but there is something in it. I am not sure whether the Government will achieve exactly what they set out to do. Of course, in a democracy the people will get rid of them at the next general election.

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  The hon. Member for Teignbridge suggested that our consideration of inflation should be confined to the rate at which it is running. That is inaccurate. Our consideration of inflation should be much more sophisticated. First, the poorer someone is, the harder he will be hit by inflation. The prevailing rate of inflation will, in effect, be higher for those who are poor than for those who are rich. One of the anomalies of our society is that the poorer someone is the more likely he is to pay for the goods that he acquires. I have in mind those who are unemployed who live in large council house schemes and who do not have the ability to own a freezer or a motor car. Those who are in that position have to use the corner shop, where, on average, prices are much higher than in supermarkets. Such people cannot buy in bulk, so they have to shop daily. That means that they pay a higher price for everything that they purchase.
  Mr. Lewis Stevens: Is the hon. Gentleman aware that many supermarkets run buses so that people can be taken specifically to their supermarkets? This means that those who live out of town can shop at a supermarket.
  Mr. Maxton: I accept that there are some stores which operate buses, but they are few and far between. I know that most of those who live in a large housing scheme in my constituency do not use a supermarket bus. The bulk of them have to shop daily, and consequently have to pay higher prices for the goods that they purchase.
  Mr. Pike: Does my hon. Friend accept that when the Transport Bill is enacted many people who do not live on main and popular bus routes — I accept that those who live on or near such routes may benefit from the Bill—will be forced into the position that my hon. Friend is outlining? In other words, they will be forced to use more expensive shops as a result of Government legislation.
  Mr. Maxton: My hon. Friend makes a good point. The poor often have to pay higher prices for the goods that they buy. Secondly, a much larger percentage of their income is used to buy items which, to use an economic term, are inelastic. They spend a higher percentage of their income on the services provided by public utilities than do others within our society.
  Mr. Nichols: I hope that I shall not embarrass the hon. Gentleman too much by saying that I agree with everything that he has said about the effect of inflation on the poor and the vulnerable. Everything that he has said about that is absolutely right. However, he is presumably content that under the previous Labour Government inflation peaked at 25 per cent. Even now, when inflation is at a peak of 7 per cent., it is better than the rate achieved by the previous Labour Government at any time during their period in office. Given his compassion and concern, that is the problem to which he should be addressing himself.
  Mr. Maxton: The hon. Gentleman tends to forget that there was an inflation rate of 19 or 20 per cent. following the election of a Conservative Government in 1979. However, I do not necessarily blame all inflation on the Government who are in office. The two large increases in oil prices in 1974 and 1979 have been major causes of inflation over the past 15 years. That applies to Britain and to the world generally.
  I contend that housing costs for the poor are higher than for those who are wealthy. That can be said of electricity
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  and gas charges, and of the charges that are made for other forms of heating. The poor pay more for the use of public transport as a percentage of their income than do others. They cannot spend large sums in areas where, in part, the rate of inflation has been kept down. I am thinking of consumer durables such as television sets, video recorders, home computers and cameras. The same can be said of holidays abroad. The level of inflation in those areas is considerably lower than it is in basic foodstuffs. It is lower, too, than the self-imposed inflation that the Government have introduced to the public service sector. The Government have imposed inflation upon us, and especially upon those who can least support it. It is that element of their policy to which I object most strongly.
  It seems that I shall be the only Member representing a Scottish constituency to participate in the debate. The effect of inflation on energy costs — for example, gas and electricity charges — is greater in Scotland than in England, although I accept that the average energy cost per therm for gas and electricity tends to be lower in Scotland than in the rest of the United Kingdom. However, regard must be had to climatic conditions in Scotland. The same can be said of northern England. Climatic conditions become more unfavourable the further north one goes. This means that the energy burn over the year of someone living in Scotland is considerably greater than that of someone living in the south. For example, a person who lives in Glasgow spends 20 per cent. more on energy throughout the year than someone living in Bristol, and someone living in Aberdeen will spend 30 per cent. more.
  There are other differences. Basic foodstuffs in Scotland, especially in the west of Scotland, are higher in price than those in the rest of the United Kingdom. The price of such items in Scotland is even higher than in the south-east. When addressing ourselves to inflation we must give more consideration to these factors.
  The Government are implementing policies that are designed to increase the level of inflation. They are doing so deliberately and they disregard the problems that the people have to face. I have dealt with the problems of higher electricity, gas and transport charges as well as the problem of higher rents and rates.
  There are those who argue that many of the basic items in a household budget are paid for by the Government when unemployment strikes. The Fowler review, if its findings and recommendations are implemented, will make it harder for the poor to ensure that the basics in life are paid for by the Government. That will apply especially to housing benefit.
  One of the promises on which the Government came to power was that they would increase the difference in income between a man who worked and a man who was unemployed. I remember that promise being made at the 1979 general election. It is curious that the Government's policies are reducing the gap. Whenever there is an increase in bus fares, the man who has to buy a bus ticket to travel to work finds that the differential between himself and someone who is unemployed is decreasing, and not increasing. The unemployed person does not have to pay that bus fare. Thus, the Government are again reneging on that promise.
  I am sorry that my hon. Friend the Member for Leeds, Central (Mr. Fatchett) is not in the Chamber, because he pointed out that the average rise in local authority costs was 2 per cent., whereas the average rise in domestic rates was 9 per cent. Of course, he was talking as a Member of

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  Parliament for an English constituency. This year, the average domestic rate rise in Scotland is 16 per cent. That is the average. There are people who will pay 2·9 times more than before. I accept that the Government have agreed to a rebate on the proportion that is over three times the amount paid last time, but people will still have to pay enormous increases in their domestic rates.
  As in England, there is a teachers' pay dispute in Scotland. Teachers rightly feel that their salary increases have not kept pace with inflation. Indeed, I know of a senior teacher who is not far off retirement. He lives in a decent house in a decent area of Glasgow, but the salary increase of 3·5 per cent. which the Government are prepared to pay would not even cover the rise in his rates bill this year, let alone any other price increases. Most Conservative Members will not suffer greatly from price rises. The percentage of their incomes that is spent on Government-imposed increases in the public sector and in public services which are well above the level of inflation is minute compared with the percentage spent by the poor people of my constituency.
  For real people, the Government have made life more miserable by increasing unemployment and imposing cuts in public services. People live in public and private sector housing which is poorer than it was in 1979. The hon. Member for Teignbridge said that nothing more could be offered. Surely he is not trying to boast that the Government's economic policy has been good for the people of this country or that people are better off under this Government. The people of this country, and particularly my constituents, are poorer, live in worse housing, have poorer public services and face higher health costs than before. They are desperate to see the end of this Government. I assure the hon. Gentleman that the opinion polls in Scotland are right, and that Conservative Members will be looking for a shadow Secretary of State for Scotland from among the English constituencies after the next general election.
  8.23 pm
  Mr. Edward Leigh: It is a great pleasure to speak in the same debate as the hon. Members for Great Grimsby (Mr. Mitchell) and for Glasgow, Cathcart (Mr. Maxton), as I shall deal with some of the points with which they dealt.
  My constituency is, of course, nowhere near Cathcart, but is is within three or four miles of Great Grimsby. I often enjoy reading the comments of the hon. Member for Great Grimsby in the Grimsby Evening Telegraph. Indeed, seldom a day passes when that populist Member is not talking about the ordinary man—[Interruption.] I do not know whether he is popular. Hardly a day passes without him talking about the effect of the Government's policy on the ordinary man — a subject that he dwelt on at length today.
  The burden of the speeches of both hon. Members was that the Government are so blinded by their adherence to economic dogma and to concepts such as the PSBR, inflation and their "friends in the City"—as Opposition Members call them—that they are leading the country's economy to destruction. I think that the hon. Member for Cathcart said that the economy was not an end in itself but a means to an end. Of course I agree with that. We are concerned with concepts such as the PSBR, academic
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  though they may be, because such concepts directly affect the ordinary people of Grimsby and Gainsborough. They directly affect those ordinary people, because a high PSBR will lead to high interest rates and high inflation.
  It is strange that the motion, which I have read carefully, should deal with prices but fail to mention inflation. It is surely common sense that it is impossible to hold down prices if the Government have not succeeded in holding down inflation. I am sorry that the hon. Member for Great Grimsby is not in the Chamber to hear my comments, but perhaps he will read about them in the Grimsby Evening Telegraph tomorrow. Indeed, I am sure that his speech will be in that paper.
  It is a pity that the hon. Gentleman thinks of inflation as an academic policy. Perhaps he does not want to talk about the Government's record on inflation, because he knows that the Government have reduced it to a quarter of the level that it reached under the last Labour Government. They have succeeded in doing that without having to have recourse to the prices and incomes policy to which the Social Democrats and Liberals are wedded. Incidentally, I am sorry that there are no SDP or Liberal Members in the Chamber. The Government have also succeeded in reducing inflation without having to have recourse to dividend or price control.
  Mr. Maxton: They have used unemployment instead.
  Mr. Leigh: The Government have not used unemployment. Rather, they have adopted sensible policies. They have looked at the PSBR and succeeded in reducing interest rates and inflation, thus making Great Britain more competitive in world markets.
  In recent weeks, the Opposition have made great play of inflation rising to 7 per cent. Surely, that rise points to the need to be even more circumspect in our management of the economy and to ignore the policies of higher Government spending that the Opposition have asked us to pursue today. They would inevitably lead to a higher PSBR, higher interest rates and eventually higher inflation.
  The increase in inflation to 7 per cent. is a result of the strengthening dollar. As hon. Members have said, that has forced the Government to increase interest rates. It shows that we must continue our policies and that we must exercise great care. But the long-term prospects for Great Britain remain good. In May, raw material and fuel prices fell by 1·1 per cent., which is the best figure since 1982. As my hon. Friend the Member for Teignbridge (Mr. Nicholls) said, inflation is still lower than in any month under the Labour Government. At the end of Labour's period of office, the trend was decidedly upwards.
  Thus, I say to the hon. Member for Great Grimsby that the PSBR is not an academic subject, but is of concern to his ordinary voters in Great Grimsby. The hon. Gentleman refused to look at the facts and figures for the PSBR. For 1985–86, the PSBR is £7 billion or 2 per cent. of gross domestic product. That is as low as it has been since 1971–72. In 1975–76, it was £10·7 billion, and rising. Incidentally, shortly after that, the hon. Member for Great Grimsby was first elected to the House with a very small majority. In 1979, his majority increased to about 6,000. However, as a result of the successful policies pursued by the Conservative Government between 1979 and 1983, his majority fell from 6,000 to a matter of hundreds at the last election.
  Mr. Maxton: On that basis, perhaps the hon. Gentleman can explain why my majority rose from 1,700 to 4,250.
  Mr. Leigh: Perhaps it was because the hon. Gentleman was no longer opposed by my skilful hon. Friend the Member for Southend, East (Mr. Taylor). I can speak only for the area that I represent. I think that it is strange that the hon. Member for Great Grimsby's majority should fall so dramatically between 1979 and 1983. His majority fell to the level at which it stood when he won a by-election when the Labour Government were in office and the PSBR was high.
  Opposition Members have told scare stories about VAT on children's shoes and food. They were inaccurate, just as the scare story about VAT in tonight's motion is. Indirect tax changes have little effect on the retail prices index.
  Increases in indirect taxation have enabled the Government to reduce direct taxation. The hon. Members for Great Grimsby and for Cathcart allege that the Government are concerned only about the rich. I tried to intervene earlier, but the hon. Member for Great Grimsby would not give way. If we are concerned only with the rich, why are personal allowances 20 per cent. higher than they were when the Government came to office?
  Personal allowances help everyone—the low income earner as well as the high income earner. Why is it that 1·25 million fewer ordinary people now pay tax than when the Government came into office? Is that because the Government are concerned only about protecting the pockets of the rich? That is an absurd claim, which is not borne out by the facts or by the Conservative Government's record in raising the tax thresholds for low-paid workers.
  The hon. Member for Great Grimsby gave the impression that the economy was grinding to a halt. The facts do not bear that out. This is the fifth year of growth. The growth rate has been 2·5 per cent. each year since 1981. The forecasts are that the United Kingdom will have the fastest growth rate in Europe.
  There is no shortage of demand. The country's problems are related not to a shortage of demand, but to the failure of British industry to meet the demand in the home and international markets. Retail sales were up 4 per cent. in the three months to April this year.
  In 1984 we experienced the fifth year of current account surplus trade in world markets. We have created 600,000 new jobs since 1983. We have created more jobs than the SDP promised to create in its manifesto, in which it also said that it would increase the public sector borrowing requirement by £2 billion.
  I am sorry that the SDP spokesman, the hon. Member for Woolwich (Mr. Cartwright), was not present for the earlier part of my speech. He will not have heard my warnings about increasing the PSBR.
  We hear a lot about the increase in gas prices. How did the Labour Government hold down gas prices between 1974 and 1979? They held prices down at the expense of the industrial consumer—and the industrial consumer provides jobs in Great Grimsby and Cathcart. The industrial consumer in those areas was subsidising the domestic consumer in Surrey.
  We do not hear much from the hon. Member for Great Grimsby about the 30 per cent. of householders in rural areas who have no gas supplies. I represent a large rural
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  constituency consisting of 170 parishes and covering over 750 square miles. The village where I live, in the middle of my constituency, does not have a gas supply. Some villages in rural Lincolnshire were subsidising the domestic consumers in the urban areas, and the industrial consumer was also subsidising domestic consumers. That could not be allowed to continue.
  Electricity prices have increased under this Government. No one welcomes that, but it is an economic reality. Under this Government electricity prices have increased by only 6 per cent. in the last three years. Under the Labour Government, electricity prices increased on average by 2 per cent. every six weeks.
  Our gas prices are the lowest in the EEC. Since 1983 gas prices have risen only twice—by less than tie rate of inflation. The Government's policies are encouraging a sense of conservation. Under Labour, between 1974 and 1979, domestic gas prices rose by 19 per cent. and industrial gas prices rose by 112 per cent.
  Water charges are of interest to my constituents. I have received letters expressing anxiety about increased charges by the Anglian water authority. The rate of return for water authorities is only 1 per cent. We are asking the Anglian and other water authorities to increase that return to 1·4 per cent. in 1985–86 and to 1·7 per cent. in 1986–87. I do not think that that is too much to ask.
  The targets compare with the rate of return for other nationalised industries. The figure for the electricity supply industry is 2·5 per cent., for the gas industry it is 4 per cent., and for British Airways it is 5·7 per cent.
  A current cost rate of return averaging 9 per cent. for major non-oil industrial and commercial companies in the private sector in 1983 was reported in the Bank of England Quarterly Bulletin published in September 1984. Making every allowance for the special circumstances and responsibilities of water authorities, a rate of return of between 1 and 2 per cent. is in no way excessive. I am sure that the House shares that view. The improved rate of return, while reducing the water authorities' demand on public sector borrowing, will also finance an increase in capital expenditure of £80 million, or 12 per cent., in the present financial year. Further real increases in capital expenditure are likely in the following two years.
  The average increase in water charges in England in 1985–86 will amount to less than 17p per week. Water charges account for only about 1 per cent. of the average householder's budget. That puts the matter into perspective. I am sure that the public will therefore support the Government's determination to force water authorities to achieve a higher rate of return. Unless they achieve that rate, it will not be possible to privatise the water authorities.
  My constituents will support a privatisation policy. The Government's programme of privatisation measures, of which the sale of shares in British Telecom is the best example, shows that privatisation leads to increased efficiency, enterprise and competition and to greater employee involvement through share ownership by the work force.
  In Lincolnshire we have a proud record of self-employment and of people becoming involved in their own industries. I remain confident that the Government's policies on gas and electricity pricing, on water charges and on privatisation, far from leading to the Government's demise, as the hon. Member for Cathcart alleges, will lead to a resounding Conservative victory at the next election.
  8.38 pm
  Mr. Frank Haynes: I have read the Opposition's motion and listened to my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), who stuck rigidly to the motion. He set out in detail where the Government are going wrong in relation to representing all the people in the nation. The Government amendment tries to describe what has happened and what will happen in the future in the interests of the nation.
  Having looked at the Opposition motion and the Government amendment, I come to the Chief Secretary, who presented the Government's case. He reminds me of what happens at Sunday markets. More often than not, those markets include auctioneers. I have another name for them—I call them Flash Harrys. The Chief Secretary made a Flash Harry contribution. We know what will happen during the next couple of years and what will happen when we have our first opportunity to get rid of this Government and put in their place people who are really interested in acting for all the people, not just a few.
  The Chief Secretary's speech clearly showed where everything has gone wrong. People in the lower income groups are suffering. In a flashy contribution, the right hon. and learned Gentleman tied up the problem with a blue ribbon in the hope that he would get away with it. He and his Government will not get away with it. I shall tell the few Conservative Members who have sat here during almost all of the sitting—[HON. MEMBERS: "What about the Opposition?"] I have the Floor. When the Conservative Benches are full, as at Prime Minister's Question time, I have looked along each row and thought how many Conservative Members are involved in financial institutions. That is the problem. They do not know anything about the practical side of life and about how the ordinary folk live. Their minds are stuck on finance all the time. That is where their minds are, even when they go to bed.
  Mr. Brandon-Bravo: Will the hon. Gentleman give way?
  Mr. Haynes: The hon. Gentleman has already spoken and had his bite. Other hon. Members want to have a bite as well. The hon. Gentleman happens to be one of those hon. Members who have their heads stuck in the financial institutions.
  Labour Members clearly understand what is happening, and they do not want any more. The people are demonstrating and saying in no uncertain terms that they have had enough of what the Government are doing. This is particularly so in the towns where by-elections are held.
  Massive profits have been made from gas, yet the Government are making the authorities increase prices at a time when that money is not needed. The same is true of electricity. The electricity authorities have been told to increase charges. I do not want a brush-off from the Secretary of State on this issue.
  What a story there is to tell about water. The Severn-Trent water authority was instructed by the Government to increase water rates by 12 per cent. What did the chairman of the Thames water authority say when the authority was instructed to increase water rates by 9 per cent.? He said on television, "We need only a 3 per cent. increase." Yet, once again, water rates are being bumped up for the ordinary folk. Never mind about the rich; they
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  can look after themselves. This Government do a good job of looking after them. The ordinary folk will have to meet the bills that the Government have forced on the public authorities.
  About three years ago, I told the House that this Government would be the first to achieve a price of £2 a gallon for petrol, and they have done it. They can do anything with their massive majority. They do not realise what this means, because their heads are stuck in the clouds and financial institutions. When petrol prices are increased to that level, every price in the shops is affected because of the cost of transportation. The Government are half asleep. They cannot see that side of the argument. In fact, they do not want to see it.
  Mr. Don Dixon: What about prescription charges?
  Mr. Haynes: Hon. Members have referred to prescription charges. The Secretary of State for the Environment, who is a former Secretary of State for Social Services, is sitting on the Treasury Bench at the moment. He played a big part in the increase in prescription charges. He should be ashamed of himself. The right hon. Gentleman can grin, but this is a serious matter. When he was Secretary of State for Social Services, the Government were planning behind closed doors — no doubt the right hon. Gentleman will deny this, but the many leaked documents have informed us of what happened—to charge patients for going to a doctor. The right hon. Gentleman may deny it, but we know that it is true. This is the way in which the Government make the ordinary people pay.
  What about rates and local authorities?
  Mr. Dixon: The Secretary of State is responsible there too.
  Mr. Haynes: That is right. We shall probably refer to him again in relation to increases in rates and prices. Because of the reduction in RSG, rates have had to be boosted—
  Mr. Brandon-Bravo: Will the right hon. Gentleman give way?
  Mr. Haynes: I am not a right hon. Gentleman, and I shall not give way.
  Mr. Brandon-Bravo: Will the hon. Gentleman give way on this point?
  Mr. Haynes: I shall not give way.
  Because of the reduction in RSG, local people will have to put their hands in their pockets again to pay for increased rates.
  Before the 1979 election, the Conservative party said that there should be less Government control. The present Secretary of State for Defence was bawling and shouting — just as I am doing now—that there should be less Government control. I remember when the present Secretary of State for the Environment was speaking from the Dispatch Box one night and Mr. Speaker could not control this place. He had to adjourn the House for 10 minutes. The Secretary of State was saying that local authorities had to increase their rents by £2·50 a week. He set a precedent. Previously, local authorities had determined their own rates. The Secretary of State wanted a massive rents increase, and this has continued ever since under his administration.
  Mr. Brandon-Bravo: Will the hon. Gentleman give way?
  Mr. Haynes: I shall not give way. Will you tell the hon. Member for Nottingham, South (Mr. Brandon-Bravo) to sit down. Mr. Deputy Speaker?
  I do not deny that the sale of council houses is a good measure. Nevertheless, we have had arguments about it. What has happened? We do not hear Conservative Members talk about their surgeries. I shall tell them about the people who have bought their council houses. They have come to my surgery on a Saturday morning and told me that they cannot keep up with the repayments because of the Government's policy. The Government are driving people from their homes. This is happening in the public and the private sectors.
  These serious subjects are not funny. We are talking about a Government who are doing the wrong thing and making life rough for the lower income groups. The message is getting through. The people of Britain have had a bellyful of Conservative policies and they do not want much more of them.
  I recall listening to some comments made one night by the right hon. Member for Old Bexley and Sidcup (Mr. Heath) when the present Home Secretary was speaking. We were told that the nation was getting up off the floor and that the economy was improving. The right hon. Member for Old Bexley and Sidcup said that, in his view, we had not yet reached the bottom. I fear that, even now, we have not yet reached the bottom. The trouble is that, the longer the recession lasts and we have Conservative policies, the worse the situation becomes.
  What the Government are perpetrating today is a racket, a con trick. I regularly visit pensioners' groups and hear their complaints. I tell them what the Conservatives are doing. Among their complaints is the present situation of TV licences. Friction is bound to be generated among elderly groups when some pay only 5p and others have to pay the full whack. My hon. Friends and I twice tried to persuade the Government to remedy that state of affairs, but they refused to take action, complaining that public expenditure had to be reduced. They can find millions for the rich, but cannot help the poor pensioner.
  Standing charges represent an enormous rip-off. Whenever the Treasury is looking for money, standing charges are increased, and those in the lower income groups and the pensioners suffer. They must find the extra money to finance the idle rich—that is what I call them — who are raking in the money at the expense of the poor.
  I made a discovery the other day, which I trust will be noted by Conservative Members. I gather that an allocation of cheap EEC butter was made to the House of Commons. Despite the salaries that we in Parliament receive, 1½ tonnes of EEC butter came here. I did not notice any price reductions in this place. It is disgusting that cheap butter should come here. It should have gone elsewhere, where it was needed.
  Mr. Dixon: Is it not a fact that the Government would sooner give cheap butter to Russia to feed their troops than to Britain's old-age pensioners?
  Mr. Haynes: My hon. Friend makes a valid point. We frequently hear the Prime Minister — in this place, on television and at meetings — referring to the "rotten Russians" and saying that we must stand up to them. She
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  claims that we must have nuclear weapons so that, if necessary, we can knock them about a bit. As the Government are party to the EEC, why are they permitting butter to be sold to Russia at 10p per lb?
  Mr. Peter Hardy: Is my hon. Friend aware that, in addition to giving the Russians butter at concessionary prices, for five successive years the EC has allowed the Russians to double their purchases of wine at about 4½p a litre, presumably to promote alcoholic euphoria?
  Mr. Haynes: My hon. Friend is obviously an expert on the subject. I am obliged to him for that intervention, because I did not know that fact. It is clear that, the more one talks about these problems, the worse the situation becomes.
  When the present Foreign Secretary was Chancellor of the Exchequer, he was questioned about how much was involved in the black economy, and he replied that the figure was about £4 billion. When asked what he intended to do about it, especially from the income tax point of view, he replied that he did not have the money to put more people on the job of chasing up the money that was due. He had just sacked 160 people from the Treasury; they could have investigated the matter.
  We are still in much the same situation, with the black economy as large as ever. All that income tax is owed by people who get away with it, while the ordinary workers pay their tax through PAYE. It is clear that those getting away with it contribute to Conservative party funds. As always, the Government are looking after their own kind.
  The hon. Member for Teignbridge (Mr. Nicholls) spoke about history. My hon. Friend the Member for Glasgow. Cathcart (Mr. Maxton) replied to that speech, but even he did not go back far enough. It is clear, for example, that the policies that were being pursued in the 1920s by the then Tory Administration are the very policies that are still being pursued by the Conservatives. History is repeating itself.
  I must comment on the remarks of the hon. Member for Gainsborough and Horncastle (Mr. Leigh), who took a swipe at my hon. Friend the Member for Great Grimsby (Mr. Mitchell) and spoke of my hon. Friend's majority. As usual, the hon. Member for Gainsborough and Horncastle got it wrong. I agree that my hon. Friend's majority fell at the last general election, but we have had the Conservatives in office for the last six years and, as part of their actions, we have had boundary changes. Those changes, as usual, have been in favour of the Government of the day. Some rich Tory areas were included in Great Grimsby, and down went my hon. Friend's majority.
  Mr. Leigh rose—
  Mr. Haynes: I will not give way to the hon. Gentleman, who made his point, which I have disposed of.
  The people of Britain have got the message. They have had enough. They have had a bellyful of the lot who are now in power. The sooner we get the opportunity to kick them out, and put our lot in, the better off we shall all be.
  8.58 pm
  Mr. David Maclean: I apologise for not being in my place for about one and a

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  half hours of the debate. I hope that during that period something more enlightening was said than I heard during the opening stages of the debate.
  Having read the motion and heard the opening remarks of the right hon. Member for Birmingham. Sparkbrook (Mr. Hattersley), I was not sure which side to support. I was in a bit of a quandary. It appeared to me that the Labour party was being converted to the fight against inflation and that I might have to lend it my support in the Lobby. However, I was wrong on two counts. First, the Opposition were not converted to the fight against inflation. Only three or four Opposition Members were present in the Chamber. Half a dozen Opposition Members are present now, but this is a major Opposition attack and it is the Opposition's 15th allotted day.
  The Conservatives do not need massed ranks on their Benches to defend themselves. This is not a Government motion, with all the Conservatives being wheeled in to vote for it. This is a major Opposition attack, during which three or four Opposition Members have been present. Of those Opposition Members who have been present, most have had no policies to offer, but merely humbug—the same old humbug that we have had from the Opposition over the last few years. We have had humbug over inflation from the party which continually presided over an inflation rate of more than 20 per cent. when it was in office.
  Mr. William Powell: My hon. Friend will recall that for most of the time the only five Opposition Members present on the Back Benches were four current Whips and one ex-Whip.
  Mr. Maclean: My hon. Friend is right. That is why they attempted to filibuster. They have nothing else to offer.
  We had humbug over inflation, and humbug over taxation from the party which promised to tax the rich until the pips squeaked. The hon. Member for Oldham, West (Mr. Meacher) believes that the rich are families with incomes of £15,000 to £20,000 and over.
  We then had humbug over electricity prices from the party which put up electricity prices by 2 per cent. every six weeks when it was in office.[Interruption.] Sedentary interventions from Opposition Members will serve only to delay me further. If Opposition Members had spoken more shortly, there would be more time for other Back Benchers to speak.
  We had humbug over mortgages from the party which hates home ownership and which fought against 1 million people in the country owning their own homes. The final example of humbug was over water rates from the party which urges the Government to spend more on water infrastructure.
  There are many matters which I could mention, but I wish to mention only one. It was not referred to by any Opposition Members who spoke, because the Opposition do not like mentioning it. I am referring to food prices. During their period in office the Labour Government presided over inflation rates of 18 per cent. in 1974, 26 per cent. in 1975, 23 per cent. in 1976, 17 per cent. in 1977 and 10 per cent. in 1978. Food prices, which always rise at only half the rate of inflation, were creeping up at exactly half those rates. When Opposition Members talk
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  about the misery of the unemployed and the poor, it should be borne in mind that food prices are a major contributory factor and are rising at only half the rate of inflation.
  The final point that I make so that Opposition Members may be allowed to continue the humbug with which they began the debate is this. I asked the Chancellor of the Exchequer in a written question some weeks ago to give the relationship between food prices and the average incomes for the ordinary average industrial worker in 1973–74 and now, because that is the crucial point. Do people today have to work longer and harder to buy the basic foodstuffs than before? The answer is no. If one considers every major commodity — milk, eggs, beef, pork, lamb, back bacon, chicken, butter, cheese, tomatoes—one sees that the ordinary average worker can pay for those commodities today by working for a fraction of the time that he had to work in 1974. The only exceptions are sugar and potatoes. That is a typical point, and one which has been ignored by the Opposition.
  Food prices are the most important part of the fight against inflation. Those who are most affected are the poor, pensioners and those on fixed incomes, and they will be protected by our guarantee to increase social security benefits by 7 per cent. The country and the House owe a debt of gratitude to British farmers for keeping food prices at half the level of inflation. [Interruption.] The Opposition cannot stand that. That is why they do not mention it.
  I hope that my right hon. Friend will pay attention to the level of food price increases in the country, which are only half the current level of inflation of 7 per cent., and to the fact that that figure is much less than the figure in any month when the Labour Government were in office. I know that the hon. Member for Kingston upon Hull, East (Mr. Prescott) cannot stand my telling him that when the Labour Government were in office the rate of inflation, every month, was greater than it is now. That is a fact, and it will not go away when I finish my speech.
  I hope that my right hon. Friend will not tolerate the humbug that the House has had to tolerate during the four or five hours of the debate. The people of this country are better protected by this Government and by their control of inflation than they would be by all the ratbag nonsense that we have heard from the Opposition.
  9.4 pm
  Dr. John Cunningham: This debate has been about prices, but it has also been about the Conservative Government's philosophy and the practical implications of that philosophy for the people of Britain and the British economy. It has been a somewhat mixed debate. There have been a number of combative speeches from both sides of the House. A few minutes ago, I was feeling rather sorry for the hon. Member for Penrith and The Borders (Mr. Maclean) because I thought that he would not be called to speak. I regretted that quietly, but when he was called, I regretted that more, because his time was not effectively used.
  The House has again heard the well-rehearsed Tory arguments against public service provision, against the cost of such services and about the need to reduce public expenditure. The debate has provided another opportunity for us to demonstrate the huge and increasing gap between current Tory thinking and Labour party policies about the

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  future provision, finance and cost of services that are not only essential for social well-being in a plural democratic society but for the economic success of the country.
  Since 1979, and increasingly since 1983, we have seen a remorseless attack on the public services so necessary for people's everyday lives — their housing, energy, education, health, transport and local government. Through deliberate acts of policy, the Government have forced people to expend more of their family incomes to pay for such services, while increasing the tax burden on everyone except the highest paid in our society. Those points have been made effectively by my hon. Friends the Members for Glasgow, Cathcart (Mr. Maxton), for Leeds, Central (Mr. Fatchett) and for Great Grimsby (Mr. Mitchell).
  While we renounce that approach and the whole market forces philosophy of the Government, and the social market policies of the alliance as well, we complain that even now the Adminstration seek to disguise the true nature of their intentions from the country. Nowhere is that charge more true, and more clearly illustrated, than in the Government's treatment of the social security review and the tawdry attempts to withhold figures and deny Parliament and the people the truth.
  As a central part of that political philosophy, the Government continue to shift burdens from the well-off, the large income earners, to those less able to bear them. As a cornerstone of Tory policy, like all previous Tory Governments, the Administration undermine the foundations of community provision and introduce higher charges at the same time, requiring people to pay more for a less effective, and often lower-quality, service.
  In addition to this attack on the belief in public services and the indifference of Conservatives, which we have seen amply demonstrated in the debate, to the consequences for millions of people who have no choice but to use those services, Ministers argue that, for economic policy reasons, such charges are essential. I was astonished by one facet of Conservative contributions to the debate. In the time that I was in the Chamber, not one Conservative Member mentioned unemployment and its consequences.
  Mr. Brandon-Barvo: I did.
  Dr. Cunningham: I may not have heard all the hon. Gentleman's speech, so I apologise. However, I did not hear any Conservative Member talk at any length about the consequences for the nation or for individuals of the inexorable growth in unemployment as a result of six years of these policies.
  The Prime Minister, perhaps above all, has made, and continues to make, grandiose claims about her Government's approach, but the reality is different. No matter how fine the phrases or quotations from St. Francis, the talk of more freedoms and more choice, the rhetoric is a million miles from the facts. The facts are that the Government's policies blur decency and kindness, breed ill will and discontent, and cheapen human life and our society. The Government have acted deliberately and directly to increase prices across the rang of family expenditure, as the record of the past six years clearly demonstrates. VAT has doubled, and there has been a tenfold increase in prescription charges. The hon. Member for Teinbridge (Mr. Nicholls) in an aggressive attack on the Labour party, said that prescriptions did not cost as much as they did under the Labour Government. Yet under
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  the Labour Government a prescription cost 20p, whereas they now cost £2 per item. That seemed a strange bit of economics or even simple arithmetic to me.
  With such cuts, the Government have cynically cast aside their election promises. Housing costs have rocketed for all families, whether they pay rent and rates or mortgages and rates. Indeed, the Government have deliberately forced up rents, mortgages and rates. Average rents have increased by more than 166 per cent., and in some areas by much larger figures. Some Tory councils subsidise the council's activities by making huge transfers from the housing account, thereby effectively taxing local council house tenants. In addition, more and more of the costs of maintenance and repair fall on the tenants as financial support for local authorities to maintain their housing stock is reduced.
  My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said that mortgage interest rates are at record levels and have been consistently high throughout the Government's term of office. Rates have been deliberately forced up by the systematic reduction in rate support grant, which has been continued by the Secretary of State for the Environment. That view is held not only by the Opposition, as some Conservative Members have suggested, but by the Audit Commission, the Comptroller and Auditor General, a Select Committee and every local authority association.
  Average weekly rates payments, including water charges, have risen from £3·19 in 1978–79 to £8·27 in England and Wales. In Scotland, the increase is even higher, from £2·54 a week to £7·63 a week—a threefold increase. That is a measure of the impact of the Government's policies on housing costs to millions of families. At constant prices, those figures represent a weekly extra cost of £2·20 in England and Wales and £2·70 in Scotland.
  Those additional costs, which are the deliberate and inevitable result of Tory policies, strike at the heart of family budgets and family life. It is no wonder that a major consequence in the public sector and among owner-occupiers is that 3·5 million houses are now in an unsatisfactory state of repair, as the right hon. Gentleman's Green Paper on improvement grants confesses on the first page. It is no accident that a second consequence of these policies is that homelessness is on the increase.
  Mr. Brandon-Bravo: Does the hon. Gentleman accept that, as a direct result of the Government's policies, the right to buy produces for 50,000 families in Nottingham a rent reduction of £3·60 a week? That is the value to the housing revenue account in a city such as Nottingham of the profit from the right to buy. I have tried more than once to get the hon. Gentleman to understand the difference between capital receipts and the revenue benefit that flows from them.
  Dr. Cunningham: If the hon. Member for Nottingham, South (Mr. Brandon-Bravo) says that that is true in the city of Nottingham, I believe what he says. I am not suggesting that he is trying to mislead the House. I assume that he is referring to the Labour-controlled Nottingham city council when he talks about the good administration of the city's affairs. As for his point about revenue and capital receipts, of course I understand the difference — [Interruption.] I regret that the hon.

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  Gentleman, from a sedentary position, is being offensive even though I gave way to him. If I misheard what he said earlier, I apologise, but I thought that he was making a spurious point and I said so.
  I was making a point about the deteriorating state of the national housing stock and about homelessness increasing. The Royal Institute of British Architects — hardly a bastion of Socialism—in a recent publication described what it saw as "decaying Britain." It said:
  "The Government's attitude to the built environment can best be described as conditioning people to the death of the places in which they live, work and bring up their children."
  That is a graphic description of what is happening to the built environment in Britain.
  Yet worse is to come. We learn from the Green Paper that improvement grants are likely to be reduced in scope and value, thus exacerbating the decline in the nation's housing stock. In addition, between 3 million and 4 million pensioners and families face extra burdens with their rates because the social security review suggests that in future they should contribute up to 20 per cent. themselves. They are currently receiving 100 per cent. rebates because of their low incomes. They include about 1 million pensioners.
  Over the same period, the record is similar for energy charges—a tax on gas, public transport fares, charges for school meals—where they still exist—and, under some Tory authorities, additional charges for home helps and meals on wheels.
  I was much taken by comparisons with what has been happening with energy prices and rising costs between the last Labour Administration and the present Government. Every Conservative Member — including the Chief Secretary — carefully omitted to mention that between 1974 and 1979 there was a world energy crisis. Oil prices were being hiked up by colossal amounts. Britain had massive import bills for oil running into billions of pounds. The Chancellor and the Prime Minister—and, indeed, everyone on the Treasury Bench — have enjoyed a unique opportunity among western industrial nations. We are the only country in the western industrial world to be self-sufficient in energy—to be producing more oil than we need and even, currently, to be producing more than Saudi Arabia. It is a massive advantage and a huge difference between the circumstances in the middle to late 1970s and those of the present time.
  The reality is that that massive opportunity is being recklessly squandered by the Government. We have it on good authority—it has been confirmed by Conservative speakers today—that the Government's stated intention is that more of the same is to follow—what of the intended claims for this philosophy and its attendant economic nostrums. Millions of people are worse off than ever before; unemployment is rising inexorably; investment and industrial output has slumped—that is the price that the country has paid for the failed economic doctrines of Thatcherism.
  I contrast starkly what the Chancellor said during the general election campaign about unemployment—that it was likely to fall. His best estimate was that unemployment would go down. Shortly after his appointment he was interviewed on the television programme "Face the Press". In boxing parlance, he was
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  caught cold. I have the transcript here and I shall quote the right hon. Gentleman verbatim. When he was asked about his promise that unemployment would fall he said:
  "I didn't believe with, with ah, ah, particular confidence, I just said that speaking purely personally, ah, my ah best guess was that there was a good chance that that might happen. Ah, it's very very difficult to — to predict the course of unemployment".
  Having recently been promoted to his important, senior position in the Government, that was what the right hon. Gentleman had to say. The story has been different since that interview. Ever since then, and ever since the right hon. Gentleman's appointment as Chancellor of the Exchequer, unemployment has continued to get worse and worse and worse. That is the biggest price that the people are paying for the failed economic doctrines of this Administration.
  It is not as though the goals look like being achieved in the time scale of the right hon. Gentleman's famous medium-term financial strategy. In regard to the Government's claims about public expenditure, in 1979 it was taking 39·5 per cent. of national income. Last year, it took 42·5 per cent. The Government, having committed themselves to the control of public expenditure, are presiding over the taking of a bigger share of the national cake.
  In Britain, in 1979, inflation was 0·6 per cent. above the OECD average. In 1985 it is 1·4 per cent. above that average. Taking the figure of 100 for national income in 1979, in the OECD, national income has risen on average by 9·7 per cent.; in Britain the rise has been 3·9 per cent. In 1979 unemployment in Britain was 5·5 per cent. compared with the OECD average of 5·1 per cent.; today the British figure is 13·5 per cent. and the OECD average is 8·2 per cent. Those are the records of the Government in international comparisons. The goals are not being achieved and they do not look like being achieved.
  The Prime Minister in opposition once said of the Labour Government:
  "The Labour Government loves to blame every ill and error on nameless world trends."
  Now she enjoins us to consider world conditions. We do. Her record is miserable when compared with the top six industrial nations which are equally, if not more, adversely affected by prevailing world conditions than Britain, particularly because of our energy self-sufficiency. Not one of those countries — the United States, Canada, Japan, the Federal Republic of Germany, Italy or France — has enjoyed the massive economic boost and the security of self-sufficiency in energy that Britain and this Prime Minister, alone of all Prime Ministers, have enjoyed.
  The British people are told to be patient. In 1981, in 1982 and again in 1983, the right hon. Lady, the present Foreign Secretary and, more recently, the present Chancellor of the Exchequer all forecast recovery and success for their policies. In his contribution to the debate, the hon. Member for Gainsborough and Horncastle (Mr. Leigh) urged people to be patient. He said that, in the face of the difficulties, the Government should go on being prudent; Patience and Prudence—a pair of Tory twins in tweeds and twinsets.
  Mrs. Edwina Currie: And pearls.
  Dr. Cunningham: And pearls, if the hon. Lady says so.
  Mr. Straw: Fake pearls.
  Dr. Cunningham: The country is running out of patience. That was demonstrated last year in the local government elections, it was demonstrated again this year in the county council elections, it will be demonstrated in the Brecon and Radnor by-election and it will be demonstrated even more forcefully next year in the local government elections. The Government are on the way out, because the nation's patience is running out.
  There are no successes for the Government's philosophy and there are no successes for their economic policies. Some years ago, the Foreign Secretary said that, in two or three years, the Government would have inflation down to 3 per cent. As my right hon. Friend the Member for Sparkbrook said today, the Prime Minister repeated that claim on her tour of south-east Asia. I offer the Chancellor of the Exchequer or the Secretary of State for the Environment the opportunity to intervene now or to say in winding up when inflation will be at 3 per cent. The Prime Minister's promise to the nation is that it will be there before the next general election—perhaps two or two and a half years from now. Rather like the right hon. Lady's frequent promise to abolish the rates, it is rather hollow.
  I have said that unemployment is the Government's biggest failure. It is a huge failure and the biggest price that we all pay. We are told that, with patience and prudence, unemployment will start to come down. I am reminded of Ambrose Bierce, who wrote:
  "Patience is a form of despair disguised as a virtue",
  and of an old Chinese proverb which sums the Government up:
  "Prudence stretched too far blocks the road to progress."
  The Government are indeed blocking the road to progress for the British people. The price for the Government's appalling and contemptible failures is being paid by the British people. The money cost of unemployment is about £20 billion annually. There is a higher price and a greater cost however. It was perhaps best described in the brilliant and enduring work of Jacob Bro—"The Ascent of Man"—when he wrote:
  "The personal commitment of a man or a woman to their skill, the intellectual commitment and emotional commitment working together as one, has made the ascent of man."
  The biggest price being paid by men and women, young and old, black and white, as a result of the Government's failures is the absolute denial of the fulfilment of those commitments.
  9.28 pm
  The Secretary of State for the Environment (Mr. Patrick Jenkin): It might come as news to many of those Opposition Members who have joined the debate in the last few minutes that, for almost all of this debate on an Opposition motion and on a day when they have chosen the subject, there were perhaps never more than half a dozen Opposition Members present.—[HON. MEMBERS: "Look behind you."] It is the Opposition's debate. I must tell the Opposition that that was forecast last Friday in The Guardian under the heading, "Empty Bench Problem." The article said:
  "Labour will do well to have the benches full next Wednesday for their Opposition debate on price increases forced on the public by the Government through the public corporations."
  The Opposition did not do well, because until the last few minutes there have been very few. I imagine that Opposition Members have only recently returned from Ascot.
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  There have been some interesting speeches in the debate. I particularly congratulate my hon. Friend the Member for Lewisham, West (Mr. Maples), who made a speech about the causes and origins of inflation which I think would be well worth re-reading by hon. Members. I also congratulate my hon. Friends the Members for Teignbridge (Mr. Nicholls) and for Gainsborough and Horncastle (Mr. Leigh) on having exposed the hypocrisy of the Labour party in attacking the Government on the subject of inflation.
  I listened, too, to the speech by the hon. Member for Great Grimsby (Mr. Mitchell). It was a most astonishing and misguided oration. He did not seem to realise that at present this country is enjoying the highest growth rate in the European Community and that it now has a record volume of investment in the public and private sectors taken together. I do not believe that he can have read the report in the Financial Times this morning—
  Mr. Hattersley rose—
  Mr. Jenkin: No, I have only just started—under the heading, "Five-year peak for industrial output". It says:
  "UK industrial output rose in April to its highest level for five years, according to Central Statistical Office figures."
  It goes on:
  "The figures show the fastest increase within manufacturing in recent months to have been in the capital and intermediate goods categories."
  Dr. Cunningham rose—
  Mr. Jenkin: No. I will give way later.
  Dr. Cunningham rose—
  Mr. Deputy Speaker: Order. The Secretary of State quite clearly is not giving way.
  Dr. Cunningham rose—
  Mr. Jenkin rose—
  Mr. Deputy Speaker: Order. I am trying to protect the Secretary of State by appealing for a fair hearing for him. I want to hear his speech and I hope that hon. Members will allow me to do so.
  Mr. Jenkin: The hon. Member for Copeland (Dr. Cunningham) made a speech about a great many subjects which appeared to have little or nothing to do with the motion. I should like to to come back straight away to what has been the essential theme of the speeches in this debate on both sides of the House, and that is the whole question of prices in the economy.
  It is a fact which seems to have escaped the attention of many Opposition Members that all services provided by the public sector have to be paid for by somebody. They can be paid for by charging, they can be paid for by taxes or they can be paid for by borrowing and leaving future generations to pick up the bill. We could have a sensible debate about the right balance between the methods of payment and about how much the public sector ought to provide in total. What we cannot do, it seems to me, is to have a sensible debate about prices in isolation. Any attempt to hold prices down in isolation from other factors means either that those services are starved of resources or, if the demand is to be met at the reduced price, that taxation and borrowing are higher than they otherwise would be because of the subsidies necessary to ensure supply.
  Of course, a Government can always hold down public sector prices by giving subsidies, but the cost has to be

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  paid by someone. There are two kinds of cost. If money is spent on subsidising a service — for example, bus fares, coal or water charges—something else on which that money might be spent goes without. It might be more investment in roads, opening new mines or repairing sewers.
  The hon. Member for Rother Valley (Mr. Barron) referred to coal. What would the Labour party have done had it been faced with Mr. Scargill's demands last year? Would it have stood up to him and kept the subsidy under control?
  Mr. Barron rose—
  Mr. Jenkin: I shall not give way.
  Would the Labour party have sustained investment in new pits?
  Mr. Barron rose—
  Mr. Jenkin: It would not, because in every debate we have had it made perfectly clear that it would have given in to the NUM's demands, sent the coal subsidy soaring and starved the industry of new capital. There is no greater humbug than for the Labour party at one and the same time to castigate the Government because we are not spending enough on capital investment and, as tonight, to castigate us because we do not increase subsidies on public sector prices.
  Let us look at what Labour did when in office. By failing to ensure that the public industries charged economic prices—in effect, by subsidising those public goods and services — the last Labour Government starved the public services of capital investment. When Labour was in office, capital investment in the Health Service fell by 17 per cent., in roads by 30 per cent. and in the water industry by 33 per cent. Conversely, under the Conservatives, investment in hospitals, roads and water has increased. We are making the sensible choice of asking people to pay sensible charges so that we can maintain and increase capital investment.
  Dr. Cunningham: I am grateful to the right hon. Gentleman for at last working up the courage to give way. He boasted about output. When will output under this Government get back to its 1979 level?
  Mr. Jenkin: The hon. Gentleman asks about total output, and that is well above the 1979 level.
  The second cost of subsidy is hidden, and it is perhaps all the more dangerous for that. If a service is subsidised, a whole range of economic decisions are taken on that basis. The pattern of investment is distorted, buying decisions reflect not consumer choice in the market but the political preferences in Whitehall, and the damage is all the worse if this happens in the public sector monopolies, dominated by public sector monopoly unions, where subsidy breeds inefficiency.
  I make no apology for restating these facts. The Labour party has always refused to accept that if we pour out money on subsidy in one direction, we have less money to spend in another. If the Labour party had its way—if the motion means what it appears to mean—we would return to all the fudge of subsidy and price control—no-one knows more about that than the right hon. Member for
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  Birmingham, Sparkbrook (Mr. Hattersley) —and all the distortion caused by taking resources from capital spending to subsidise revenue spending.
  Mr. Hattersley: Does the right hon. Gentleman recall that he was the Minister for Energy who in 1974 left the gas and electricity industries with huge operating deficits? How does he justify that against what he said a moment ago? Will he answer the question that the Chief Secretary signally refused to answer? Were the last Labour Government right to avoid the subsidies that he had paid, even though he now preaches quite the opposite doctrine?
  Mr. Jenkin: The right hon. Gentleman knows perfectly well that I was Minister for Energy for just seven weeks, but I want to give him a sensible answer. Yes, the Labour Government were right in their first two years to try to get back to sensible economic pricing in the light of the quotation by my right hon. and learned Friend the Chief Secretary of Mr. Eric Varley's White Paper on energy pricing. But the Labour Government failed to stick to that, and in their last two years they allowed prices to slip further and further behind and the industries to be more and more subsidised.
  We believe in bringing home to people the economic cost of the goods and services for which they pay. At the same time as reducing subsidy, we are reducing monopoly, increasing competition and thus improving efficiency. In that way, costs are being held down, so investment can be sustained without raising taxes or increasing borrowing. The figures prove my case. Under Labour, despite subsidies, the price of goods and services produced mainly by the nationalised industries rose by 18 per cent. per year. In the first two years of the Conservative Government, when we had to correct the massive distortions of the last Labour years, the figure rose to 22 per cent., but in the last three years the average annual increase in nationalised industry prices has been little more than 7 per cent. That is markedly different from the Labour Government's record.
  The hon. Member for Ashfield (Mr. Haynes) is not present, but he and others argue that the Government's record has been achieved at the expense of poorer households—
  Mr. Haynes: On a point of order, Mr. Speaker. The Secretary of State says that I am not here. I am right here.
  Mr. Jenkin: I apologise handsomely to the hon. Gentleman. I hope that he will listen to what I have to say. He will then see that he was wrong.
  Under Labour, prices for pensioner households rose faster than inflation. Since 1979, the pensioner index has risen less than the general level of inflation. Labour's inflation hit everyone, but it hit the pensioners hardest. Even now, the Labour party has not grasped the fact that subsidy is the wrong way to help the worst off because the subsidy goes to all consumers. The better off a person is, the more he can afford to buy and the more he is subsidised. That is not a sensible way to spend money.
  The hon. Member for Copeland referred to the water industry. We have slimmed down manpower in that industry from 63,000 to under 52,000 and we have brought real operating costs down, despite higher volumes and higher standards. We have made the new boards more efficient and businesslike. That is not my verdict. It is the verdict of the Monopolies and Mergers Commission. We

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  now want the water industry, like British Telecom, to look to investors rather than to taxpayers for capital. That is why we are examining the possibility of privatising the water authorities. The 33 per cent. cut in investment under Labour contrasts strongly with our policy. In cash terms we are increasing investment over the next three years from £738 million last year to £931 million in 1987–88 —an increase of 22 per cent. The Labour party cut investment. We are increasing it.
  Mr. Barron rose—
  Mr. Jenkin: I am coming to the hon. Gentleman's point.
  The argument in this debate is about who should pay for the investment. Should it be the taxpayer? Should we increase borrowing? This Government were not elected to raise taxes or to increase borrowing. Is it really so unreasonable to ask the industry to increase its return on assets from 1 per cent. per year to 2 per cent. per year? My hon. Friend the Member for Harrow, West (Sir J. Page) regards it as very reasonable, and I agree with him.
  The hon. Member for Leeds, Central (Mr. Fatchett) mentioned rents. He received a good answer from my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) when he accused the Government of forcing up council rents. It seems that he has forgotten what the Labour party's policy was when in government. The Labour Government's housing policy Green Paper stated:
  "The Government consider that over a run of years rents should keep broadly in line with changes in money incomes."
  That was their policy.
  When the Labour party gained power in 1974, average council house rents in England and Wales represented about 9·4 per cent. of average male earnings, but the Labour Government failed to follow their own policy. Instead, they went for the political option of allowing rent rises to fall further and further behind incomes. By 1979–80, average rents represented only 7 per cent. of male earnings. The Government have recognised that higher rents are necessary to finance management and maintenance. We therefore set rent guidelines substantially above inflation for the first three years. Since then, the guidelines have been in line with inflation. Average rents are now back to where they were 12 years ago in relation to incomes. This year, the proposed rent increase is just 60p per week.
  Mr. Fatchett rose—
  Mr. Jenkin: I want to respond to the debate, and I have only a limited time in which to do so.
  The right hon. Member for Sparkbrook accused the Government of forcing up rates. Coming from the Labour party, that is rich. Under the previous Labour Government the average annual increase in domestic rates was 15 per cent. a year. Under this Government, average rate increases have been in single figures for three years, and that at a time when support from the taxpayer has been falling, quite rightly, to increase accountability to local ratepayers.
  What about Labour's black sheep—the 16 Labour-controlled rate-capped councils? Early this year they told me what they would want to spend if they were free to do so. The figures came to more than £3·5 billion. We proposed a reduction of £400 million, and the rate limits
  382
  were set accordingly. Rate-capping has succeeded. Ratepayers in the rate-capped areas have had the relief that we promised.
  We have been told that high rates do not cost jobs. I am sure that many of my right hon. and hon. Friends have seen the advertisements placed by Leicester city council in mainline London tube stations. What do they say? They state:
  "The lowest rates in the East Midlands. Come to Leicester."
  Why is Leicester district council advertising the lowest rates in the east midlands? The answer is that we made it cut its rate by one third.
  This Opposition day debate is about inflation, and, as a number of my hon. Friends have said, it is on inflation that every Labour Government have come to grief. No Government have ever been more discredited by their failure to control inflation than the previous Labour Government. Between 1974 and 1979 the average increase in prices was over 15 per cent. a year. In the first two years of this Government, it fell below 15 per cent. In tie last three years the average increase has been just over 6 per cent.
  The right hon. Member for Sparkbrook was asked by my hon. Friend the Member for Teignbridge to confirm that this month's 7 per cent. increase in inflation is a lower percentage increase than every month's increase in inflation under the previous Labour Government. Not surprisingly, the right hon. Gentleman declined to answer my hon. Friend's question. My hon. Friend was right. It is true that 7 per cent. was exceeded in every month of every year of the previous Labour Government's term in office. Inflation hits everybody, and the Labour Government made it hit the poor the hardest.
  As my hon. Friend the Member for Penrith and The Border (Mr. Maclean) said, the price of food, on which the poor spend a greater part of their money than others, rose under the Labour Government over 10 per cent. faster than general inflation. Under the Conservatives, since 1979 food prices have risen 16 per cent. less than the general rate of inflation. In today's money, food costs less now than it did under Labour.
  My hon. Friends the Members for Lewisham, West and for Warwickshire, North (Mr. Maude) mentioned electricity. Under Labour, electricity prices rose by 2 per cent. every six weeks throughout their period of office. Under us, electricity prices have risen by 2 per cent. over the whole of the past two years. Why should our record be so much better than that of the Labour Government? The answer lies in a well-known fact: that sooner or later all Labour Governments are forced to choose between looking after the country by keeping down inflation and looking after their trade union paymasters by letting pay rise. Last time pay was allowed to run away—
  Mr. Wainwright: The Secretary of State is now embarking on the last part of his speech. Does he accept that the people of this country, particularly the people of mid-Wales, are no longer interested in the party that was in government six years ago? Will the right hon. Gentleman tell the House what the Government intend to do about prices today?
  Mr. Jenkin: I can understand that the hon. Gentleman should be interested in Brecon and Radnor, as the alliance has a lot to catch up before it enters the race. If the people of Brecon and Radnor are told that the latest increase in inflation under this Government is still smaller than every

  383
  single price increase under the last Labour Government, they will know where to put their crosses. Under Labour—
  Dr. Cunningham rose—
  Mr. Jenkin: Under Labour, pay was allowed to run away until the Government's credit ran out. We were told to pin our hopes on the social contract. That brings me to the recent utterances of the right hon. Member for Sparkbrook. The right hon. Gentleman knows that he has no hope of controlling inflation unless the unions let him do so. We were told before, and we are being told now, that Labour is the party that can manage the unions and that Labour has a special relationship with them. Now the right hon. Member for Sparkbrook has launched his mark 2 version of his pay policy, which he calls a "social compact" — [Interruption.] First, we had a compact, then a contract, then a concordat, and now we have a compact again.
  Mr. Straw rose—
  Mr. Jenkin: The right hon. Member for—
  Mr. Straw rose—
  Mr. Speaker: Order. I do not think that the Secretary of State is giving way.
  Mr. Jenkin rose—
  Mr. Straw rose—
  Mr. Speaker: Order. Mr. Secretary Jenkin.
  Mr. Jenkin: The right hon. Member for Sparkbrook recently wrote that he would need "a pay norm." He is quite honest about it. He says that a Labour Government just cannot govern without a pay norm. He is also quoted in yesterday's edition of The Guardian as saying:
  "It is not weak-mindedness which makes me say we can't go any further than the trade unions negotiate with us or we decide with the trade unions. It is a statement of fact … We can only go as fast as union members will accept".
  The right hon. Gentleman is telling the truth. A Labour Government would be a Government in name only. The union bosses would be at their elbow. I have studied the right hon. Gentleman's writings, and I note that in the New Socialist he wrote:
  "The compact is different, It's offering"
  the unions
  "a new opportunity to take part in Government."
  But, bar the union bosses, who wants that? Labour has tried too often to powder their noses with this compact. The Labour party is showing not a new face, but the same raddled old face, wrinkled and worn. The whole House is sick of Labour's cosmetics.
  If the Opposition table a motion disapproving of the Government's handling of the economy, they must offer credible alternative policies. The only new thing in their jobs and industry campaign is the razzmatazz, the tee-shirts, pop concerts, break dancers and body-bopping—[Interruption.] The right hon. Member for Sparkbrook may laugh, but all that is being done in his party's name.
  As for credibility, Labour is still committed to the policies that lost them the last election. Labour Members still talk about import controls, exchange controls, incomes policy, price controls, the repeal of trade union legislation, more subsidies, massive increases in public
  384
  spending and wholesale nationalisation. They still stand for those policies. They have not learnt a thing. We know what a Labour Government would do. They would impose higher taxes on everyone. The Opposition admit that. There would be more borrowing. Some Labour Members are proud of that. There would be higher inflation. That is featured in the right hon. Gentleman's writings.
  By pushing up inflation, the Labour party hopes to cut unemployment, but under the last Labour Government inflation went up to 27 per cent. and unemployment doubled. The recipe is to tax, to borrow and to inflate. The result would be recession, depression and despair.
  "Labour have lost the economic argument,"
  Those are not my words. They are contained in an internal Labour party document leaked to the New Statesman. Labour's policies are "dangerously opaque." Again, those are not my words. The right hon. Member for Sparkbrook will recognise them as his.
  In Tribune, on 10 May, the right hon. Gentleman is quoted as saying:
  "Very much of the flight from confidence in previous Labour Governments has not been because antagonists abroad did not agree with what we did. It was because they feared we didn't know what the hell we were doing."
  They still do not know.
  Mr. Hattersley: I have been longing for the moment when the right hon. Gentleman could not resist giving way. Will he now answer the question asked at the beginning of the debate and later: are the Government committed to the Prime Minister's promise of 3 per cent. inflation by election day?
  Mr. Jenkin: The Government's settled intention is to manage the economy so that inflation is steadily brought under control. We are committed to policies that will squeeze inflation out of the economy.
  If people will behave sensibly about pay, if they will recognise that higher pay inevitably is reflected in higher costs unless it is matched by higher productivity, and if people can bargain sensibly about pay, bearing in mind not only those in work but those out of work, there is no reason why, by the time of the next election, we cannot get inflation in line with what the Prime Minister said. There is no reason why unemployment should not also begin to come down.
  Dr. Cunningham rose—
  Mr. JenkinBritain is the only country in Europe which is creating more employment. It is only a matter of time before the number of new jobs exceeds the number of unemployed. Then we shall have achieved our objective.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 166, Noes 272.

  Division No. 243]

  [10 pm

  AYES

  Abse, Leo

  Bermingham, Gerald

  Alton, David

  Bidwell Sydney

  Anderson, Donald

  Blair, Anthony

  Archer, Rt Hon Peter

  Boothroyd, Miss Betty

  Ashton, Joe

  Boyes, Roland

  Bagier, Gordon A. T.

  Brown, Gordon (D'f'mline E)

  Banks, Tony (Newham NW)

  Brown, Hugh D. (Provan)

  Barron, Kevin

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

  Beckett, Mrs Margaret

  Brown, Ron (E'burgh, Leith)

  Bell, Stuart

  Bruce, Malcolm

  Benn, Tony

  Caborn, Richard

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

  Campbell, Ian

  385

  Carter-Jones, Lewis

  Lewis, Ron (Carlisle)

  Cartwright, John

  Lewis, Terence (Worsley)

  Clark, Dr David (S Shields)

  Litherland, Robert

  Clay, Robert

  Lloyd, Tony (Stretford)

  Clwyd, Mrs Ann

  McCartney, Hugh

  Cocks, Rt Hon M. (Bristol S.)

  McDonald, Dr Oonagh

  Cohen, Harry

  McGuire, Michael

  Concannon, Rt Hon J. D.

  McKay, Allen (Penistone)

  Cook, Frank (Stockton North)

  McKelvey, William

  Cook, Robin F. (Livingston)

  MacKenzie, Rt Hon Gregor

  Corbett, Robin

  McTaggart, Robert

  Corbyn, Jeremy

  McWilliam, John

  Cowans, Harry

  Madden, Max

  Cox, Thomas (Tooting)

  Martin, Michael

  Craigen, J. M.

  Mason, Rt Hon Roy

  Crowther, Stan

  Maynard, Miss Joan

  Cunliffe, Lawrence

  Meacher, Michael

  Cunningham, Dr John

  Michie, William

  Dalyell, Tam

  Mikardo, Ian

  Davies, Rt Hon Denzil (L'lli)

  Milian, Rt Hon Bruce

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

  Miller, Dr M. S. (E Kilbride)

  Deakins, Eric

  Mitchell, Austin (G't Grimsby)

  Dewar, Donald

  Morris, Rt Hon A.(W'shawe)

  Dixon, Donald

  Morris, Rt Hon J.(Aberavon)

  Dormand, Jack

  Oakes, Rt Hon Gordon

  Douglas, Dick

  O'Brien, William

  Duffy, A. E. P.

  O'Neill, Martin

  Eadie, Alex

  Park, George

  Eastham, Ken

  Parry, Robert

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

  Patchett, Terry

  Evans, John(St. Helens N)

  Pavitt, Laurie

  Ewing, Harry

  Pendry, Tom

  Fatchett, Derek

  Penhaligon, David

  Faulds, Andrew

  Pike, Peter

  Field, Frank (Birkenhead)

  Prescott, John

  Fields, T. (L'pool Broad Gn)

  Radice, Giles

  Fisher, Mark

  Randall, Stuart

  Foster, Derek

  Redmond, M.

  Foulkes, George

  Rees, Rt Hon M. (Leeds S)

  Fraser, J.(Norwood)

  Richardson, Ms Jo

  Freeson, Rt Hon Reginald

  Roberts, Ernest(Hackney N)

  Freud, Clement

  Robinson, G.(Coventry NW)

  Garrett, W. E.

  Rooker, J. W.

  George, Bruce

  Rowlands, Ted

  Gilbert, Rt Hon Dr John

  Sedgemore, Brian

  Godman, Dr Norman

  Sheerman, Barry

  Golding, John

  Sheldon, Rt Hon R.

  Gould, Bryan

  Shore, Rt Hon Peter

  Gourlay, Harry

  Short, Ms Clare (Ladywood)

  Hamilton, James(M'well N)

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

  Hancock, Mr. Michael

  Silkin, Rt Hon J.

  Hardy, Peter

  Skinner, Dennis

  Harman, Ms Harriet

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

  Harrison, Rt Hon Walter

  Soley, Clive

  Hart, Rt Hon Dame Judith

  Spearing, Nigel

  Hattersley, Rt Hon Roy

  Steel, Rt Hon David

  Heffer, Eric S.

  Stewart, Rt Hon D.(W Isles)

  Hogg, N.(C'nauld & Kilsyth)

  Straw, Jack

  Holland, Stuart(Vauxhall)

  Thomas, Dr R.(Carmarthen)

  Home Robertson, John

  Thorne, Stan (Preston)

  Howell, Rt Hon D.(S'heath)

  Tinn, James

  Howells, Geraint

  Wainwright, R.

  Hoyle, Douglas

  Welsh, Michael

  Hughes, Dr. Mark (Durham)

  White, James

  Hughes, Robert (Aberdeen N)

  Williams, Rt Hon A.

  Janner, Hon Greville

  Wilson, Gordon

  John, Brynmor

  Winnick, David

  Kaufman, Rt Hon Gerald

  Woodall, Alec

  Kennedy, Charles

  Young, David (Bolton SE)

  Kilroy-Silk, Robert

  Lambie, David

  Tellers for the Ayes:

  Lamond, James

  Mr. Frank Haynes and

  Leighton, Ronald

  Mr. John Maxton.

  NOES

  Adley, Robert

  Arnold, Tom

  Aitken, Jonathan

  Ashby, David

  Alexander, Richard

  Aspinwall, Jack

  Amess, David

  Atkins, Rt Hon Sir H.

  Ancram, Michael

  Atkins, Robert (South Ribble)

  386

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

  Fry, Peter

  Baker, Nicholas (N Dorset)

  Gale, Roger

  Baldry, Tony

  Galley, Roy

  Banks, Robert (Harrogate)

  Gardiner, George (Reigate)

  Batiste, Spencer

  Garel-Jones, Tristan

  Bellingham, Henry

  Gilmour, Rt Hon Sir lan

  Bendall, Vivian

  Glyn, Dr Alan

  Benyon, William

  Goodhart, Sir Philip

  Best, Keith

  Goodlad, Alastair

  Bevan, David Gilroy

  Gorst, John

  Biggs-Davison, Sir John

  Grant, Sir Anthony

  Blackburn, John

  Gregory, Conal

  Body, Richard

  Griffiths, Sir Eldon

  Bonsor, Sir Nicholas

  Griffiths, Peter (Portsm'th N)

  Boscawen, Hon Robert

  Grist, Ian

  Bottomley, Peter

  Ground, Patrick

  Bottomley, Mrs Virginia

  Gummer, John Selwyn

  Bowden, Gerald (Dulwich)

  Hamilton, Hon A. (Epsom)

  Boyson, Dr Rhodes

  Hamilton, Neil (Tatton)

  Braine, Rt Hon Sir Bernard

  Hampson, Dr Keith

  Brandon-Bravo, Martin

  Hanley, Jeremy

  Bright, Graham

  Hannam, John

  Brinton, Tim

  Hargreaves, Kenneth

  Brooke, Hon Peter

  Harris, David

  Brown, M. (Brigg & Cl'thpes)

  Harvey, Robert

  Browne, John

  Haselhurst, Alan

  Bruinvels, Peter

  Havers, Rt Hon Sir Michael

  Bryan, Sir Paul

  Hawkins, Sir Paul (SW N'folk)

  Buchanan-Smith, Rt Hon A.

  Hawksley, Warren

  Buck, Sir Antony

  Hayhoe, Rt Hon Barney

  Budgen, Nick

  Hayward, Robert

  Bulmer, Esmond

  Heathcoat-Amory, David

  Burt, Alistair

  Heddle, John

  Butcher, John

  Henderson, Barry

  Butler, Hon Adam

  Hickmet, Richard

  Butterfill, John

  Hicks, Robert

  Carlisle, John (N Luton)

  Higgins, Rt Hon Terence L.

  Carlisle, Kenneth (Lincoln)

  Hind, Kenneth

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

  Hirst, Michael

  Carttiss, Michael

  Holt, Richard

  Cash, William

  Hordern, Sir Peter

  Chope, Christopher

  Howard, Michael

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

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

  Clark, Dr Michael (Rochford)

  Howarth, Gerald (Cannock)

  Clarke, Rt Hon K. (Rushcliffe)

  Howell, Rt Hon D. (G'ldford)

  Clegg, Sir Walter

  Howell, Ralph (N Norfolk)

  Cockeram, Eric

  Hubbard-Miles, Peter

  Colvin, Michael

  Hunt, David (Wirral)

  Cope, John

  Hunt, John (Ravensbourne)

  Cormack, Patrick

  Irving, Charles

  Couchman, James

  Jackson, Robert

  Cranborne, Viscount

  Jenkin, Rt Hon Patrick

  Critchley, Julian

  Jessel, Toby

  Crouch, David

  Johnson Smith, Sir Geoffrey

  Currie, Mrs Edwina

  Jones, Robert (W Herts)

  Dickens, Geoffrey

  Jopling, Rt Hon Michael

  Dorrell, Stephen

  Joseph, Rt Hon Sir Keith

  Douglas-Hamilton, Lord J.

  Kellett-Bowman, Mrs Elaine

  du Cann, Rt Hon Sir Edward

  Kershaw, Sir Anthony

  Dunn, Robert

  Key, Robert

  Durant, Tony

  King, Roger (B'ham N'field)

  Dykes, Hugh

  King, Rt Hon Tom

  Eggar, Tim

  Knowles, Michael

  Emery, Sir Peter

  Knox, David

  Evennett, David

  Lamont, Norman

  Eyre, Sir Reginald

  Lang, Ian

  Fallon, Michael

  Latham, Michael

  Farr, Sir John

  Lawler, Geoffrey

  Favell, Anthony

  Lawrence, Ivan

  Fenner, Mrs Peggy

  Lawson, Rt Hon Nigel

  Finsberg, Sir Geoffrey

  Lee, John (Pendle)

  Fletcher, Alexander

  Leigh, Edward (Gainsbor'gh)

  Fookes, Miss Janet

  Lightbown, David

  Forman, Nigel

  Lilley, Peter

  Forsyth, Michael (Stirling)

  Lloyd, Ian (Havant)

  Forth, Eric

  Lloyd, Peter, (Fareham)

  Fox, Marcus

  Lord, Michael

  Franks, Cecil

  Luce, Richard

  Fraser, Peter (Angus East)

  Lyell, Nicholas

  Freeman, Roger

  McCrindle, Robert

  387

  McCurley, Mrs Anna

  Rathbone, Tim

  Macfarlane, Neil

  Rees, Rt Hon Peter (Dover)

  MacGregor, John

  Rhodes James, Robert

  MacKay, Andrew (Berkshire)

  Rhys Williams, Sir Brandon

  MacKay, John (Argyll & Bute)

  Ridsdale, Sir Julian

  Maclean, David John

  Roberts, Wyn (Conwy)

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

  Rost, Peter

  Major, John

  Rowe, Andrew

  Malins, Humfrey

  Sainsbury, Hon Timothy

  Malone, Gerald

  St. John-Stevas, Rt Hon N.

  Maples, John

  Sayeed, Jonathan

  Marland, Paul

  Shaw, Giles (Pudsey)

  Marlow, Antony

  Shepherd, Colin (Hereford)

  Marshall, Michael (Arundel)

  Silvester, Fred

  Mates, Michael

  Skeet, T. H. H.

  Maude, Hon Francis

  Smith, Sir Dudley (Warwick)

  Maxwell-Hyslop, Robin

  Smyth, Rev W. M. (Belfast S)

  Mayhew, Sir Patrick

  Speed, Keith

  Merchant, Piers

  Speller, Tony

  Meyer, Sir Anthony

  Spicer, Michael (S Worcs)

  Mills, Iain (Meriden)

  Stern, Michael

  Mills, Sir Peter (West Devon)

  Stevens, Lewis (Nuneaton)

  Moate, Roger

  Stewart, Allan (Eastwood)

  Molyneaux, Rt Hon James

  Stokes, John

  Montgomery, Sir Fergus

  Stradling Thomas, J.

  Morrison, Hon C. (Devizes)

  Taylor, Rt Hon John David

  Moynihan, Hon C.

  Thomas, Rt Hon Peter

  Murphy, Christopher

  Thompson, Donald (Calder V)

  Neale, Gerrard

  Thompson, Patrick (N'ich N)

  Needham, Richard

  Thorne, Neil (Ilford S)

  Nelson, Anthony

  Thurnham, Peter

  Newton, Tony

  Townsend, Cyril D. (B'heath)

  Nicholls, Patrick

  Trippier, David

  Norris, Steven

  Twinn, Dr Ian

  Oppenheim, Phillip

  Vaughan, Sir Gerard

  Osborn, Sir John

  Waddington, David

  Ottaway, Richard

  Wakeham, Rt Hon John

  Page, Sir John (Harrow W)

  Walden, George

  Page, Richard (Herts SW)

  Walker, Bill (T'side N)

  Parris, Matthew

  Walker, Rt Hon P. (W'cester)

  Patten, J. (Oxf W & Abdgn)

  Ward, John

  Pawsey, James

  Wardle, C. (Bexhill)

  Peacock, Mrs Elizabeth

  Warren, Kenneth

  Percival, Rt Hon Sir Ian

  Watson, John

  Pollock, Alexander

  Watts, John

  Porter, Barry

  Wheeler, John

  Portillo, Michael

  Winterton, Nicholas

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

  Wood, Timothy

  Powell, William (Corby)

  Young, Sir George (Acton)

  Prentice, Rt Hon Reg

  Price, Sir David

  Tellers for the Noes:

  Proctor, K. Harvey

  Mr. Michael Neubert and

  Pym, Rt Hon Francis

  Mr. Mark Lennox-Boyd.

  >Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No.33 (Questions on amendments):—
  The House divided: Ayes 271, Noes 165.

  division No.244]

  10.13pm

  AYES

  Adley, Robert

  Bendall, Vivian

  Aitken, Jonathan

  Benyon, William

  Alexander, Richard

  Best, Keith

  Amess, David

  Bevan, David Gilroy

  Ancram, Michael

  Biggs-Davison, Sir John

  Arnold, Tom

  Blackburn, John

  Ashby, David

  Body, Richard

  Aspinwall, Jack

  Bonsor, Sir Nicholas

  Atkins, Rt Hon Sir H.

  Boscawen, Hon Robert

  Atkins, Robert (South Ribble)

  Bottomley, Peter

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

  Bottomley, Mrs Virginia

  Baker, Nicholas (N Dorset)

  Bowden, Gerald (Dulwich)

  Baldry, Tony

  Boyson, Dr Rhodes

  Banks, Robert (Harrogate)

  Braine, Rt Hon Sir Bernard

  Batiste, Spencer

  Brandon-Bravo, Martin

  Bellingham, Henry

  Bright, Graham

  388

  Brinton, Tim

  Harvey, Robert

  Brooke, Hon Peter

  Haselhurst, Alan

  Brown, M. (Brigg & Cl'thpes)

  Havers, Rt Hon Sir Michael

  Browne, John

  Hawkins, Sir Paul (SW N'folk)

  Bruinvels, Peter

  Hawksley, Warren

  Bryan, Sir Paul

  Hayhoe, Rt Hon Barney

  Buchanan-Smith, Rt Hon A.

  Hayward, Robert

  Buck, Sir Antony

  Heathcoat-Amory, David

  Budgen, Nick

  Heddle, John

  Bulmer, Esmond

  Henderson, Barry

  Burt, Alistair

  Hickmet, Richard

  Butcher, John

  Hicks, Robert

  Butler, Hon Adam

  Higgins, Rt Hon Terence L.

  Butterfill, John

  Hind, Kenneth

  Carlisle, John (N Luton)

  Hirst, Michael

  Carlisle, Kenneth (Lincoln)

  Hogg. Hon Douglas (Gr'th'm)

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

  Holt. Richard

  Carttiss, Michael

  Hordern, Sir Peter

  Cash, William

  Howard, Michael

  Chope, Christopher

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

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

  Howarth, Gerald (Cannock)

  Clark, Dr Michael (Rochford)

  Howell, Rt Hon D. (G'ldford)

  Clarke, Rt Hon K. (Rushcliffe)

  Howell, Ralph (N Norfolk)

  Clegg, Sir Walter

  Hubbard-Miles, Peter

  Cockeram, Eric

  Hunt, David (Wirral)

  Cope, John

  Hunt, John (Ravensbourne)

  Cormack, Patrick

  Irving, Charles

  Couchman, James

  Jackson, Robert

  Cranborne, Viscount

  Jenkin, Rt Hon Patrick

  Critchley, Julian

  Jessel, Toby

  Crouch, David

  Johnson Smith, Sir Geoffrey

  Currie, Mrs Edwina

  Jones, Robert (W Herts)

  Dickens, Geoffrey

  Jopling, Rt Hon Michael

  Dorrell, Stephen

  Joseph, Rt Hon Sir Keith

  Douglas-Hamilton, Lord J.

  Kellett-Bowman, Mrs Elaine

  du Cann, Rt Hon Sir Edward

  Kershaw, Sir Anthony

  Dunn, Robert

  Key, Robert

  Durant, Tony

  King, Roger (B'ham N'field)

  Dykes, Hugh

  King, Rt Hon Tom

  Eggar, Tim

  Knowles, Michael

  Emery, Sir Peter

  Knox, David

  Evennett, David

  Lamont, Norman

  Eyre, Sir Reginald

  Latham, Michael

  Fallon, Michael

  Lawler, Geoffrey

  Farr, Sir John

  Lawrence, Ivan

  Favell, Anthony

  Lawson, Rt Hon Nigel

  Fenner, Mrs Peggy

  Lee, John (Pendle)

  Finsberg, Sir Geoffrey

  Leigh, Edward (Gainsbor'gh)

  Fletcher, Alexander

  Lennox-Boyd, Hon Mark

  Fookes, Miss Janet

  Lightbown, David

  Forman, Nigel

  Lilley, Peter

  Forsyth, Michael (Stirling)

  Lloyd, Ian (Havant)

  Forth, Eric

  Lloyd, Peter, (Fareham)

  Fox, Marcus

  Lord, Michael

  Franks, Cecil

  Luce, Richard

  Fraser, Peter (Angus East)

  Lyell, Nicholas

  Freeman, Roger

  McCrindle, Robert

  Fry, Peter

  McCurley, Mrs Anna

  Gale, Roger

  Macfarlane, Neil

  Galley, Roy

  MacGregor, John

  Gardiner, George (Reigate)

  MacKay, Andrew (Berkshire)

  Garel-Jones, Tristan

  MacKay, John (Argyll & Bute)

  Gilmour, Rt Hon Sir Ian

  Maclean, David John

  Glyn, Dr Alan

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

  Goodhart, Sir Philip

  Major, John

  Goodlad, Alastair

  Malins, Humfrey

  Gorst, John

  Malone, Gerald

  Grant, Sir Anthony

  Maples, John

  Gregory, Conal

  Marland, Paul

  Griffiths, Sir Eldon

  Marlow, Antony

  Griffiths, Peter (Portsm'th N)

  Marshall, Michael (Arundel)

  Grist, Ian

  Mates, Michael

  Ground, Patrick

  Maude, Hon Francis

  Gummer, John Selwyn

  Maxwell-Hyslop, Robin

  Hamilton, Neil (Tatton)

  Mayhew, Sir Patrick

  Hampson, Dr Keith

  Merchant, Piers

  Hanley, Jeremy

  Meyer, Sir Anthony

  Hannam, John

  Mills, Iain (Meriden)

  Hargreaves, Kenneth

  Mills, Sir Peter (West Devon)

  Harris, David

  Moate, Roger

  389

  Molyneaux, Rt Hon James

  Shaw, Giles (Pudsey)

  Montgomery, Sir Fergus

  Shepherd, Colin (Hereford)

  Morrison, Hon C. (Devizes)

  Silvester, Fred

  Moynihan, Hon C.

  Skeet, T. H. H.

  Murphy, Christopher

  Smith, Sir Dudley (Warwick)

  Neale, Gerrard

  Smyth, Rev W. M. (Belfast S)

  Needham, Richard

  Speed, Keith

  Nelson, Anthony

  Speller, Tony

  Neubert, Michael

  Spicer, Michael (S Worcs)

  Newton, Tony

  Stern, Michael

  Nicholls, Patrick

  Stevens, Lewis (Nuneaton)

  Norris, Steven

  Stewart, Allan (Eastwood)

  Oppenheim, Phillip

  Stokes, John

  Osborn, Sir John

  Stradling Thomas, J.

  Ottaway, Richard

  Taylor, Rt Hon John David

  Page, Sir John (Harrow W)

  Thomas, Rt Hon Peter

  Page, Richard (Herts SW)

  Thompson, Donald (Calder V)

  Parris, Matthew

  Thompson, Patrick (N'ich N)

  Patten, J. (Oxf W & Abdgn)

  Thorne, Neil (Ilford S)

  Pawsey, James

  Thurnham, Peter

  Peacock, Mrs Elizabeth

  Townsend, Cyril D. (B'heath)

  Percival, Rt Hon Sir Ian

  Trippier, David

  Pollock, Alexander

  Twinn, Dr Ian

  Porter, Barry

  Vaughan. Sir Gerard

  Portillo, Michael

  Wakeham, Rt Hon John

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

  Walden, George

  Powell, William (Corby)

  Walker, Bill (T'side N)

  Prentice, Rt Hon Reg

  Walker, Rt Hon P. (W'cester)

  Price, Sir David

  Ward, John

  Proctor, K. Harvey

  Wardle, C. (Bexhill)

  Pym, Rt Hon Francis

  Warren, Kenneth

  Rathbone, Tim

  Watson, John

  Rees, Rt Hon Peter (Dover)

  Watts, John

  Rhodes James, Robert

  Wheeler, John

  Rhys Williams, Sir Brandon

  Winterton, Nicholas

  Ridsdale, Sir Julian

  Wood, Timothy

  Roberts, Wyn (Conwy)

  Young, Sir George (Acton)

  Rost, Peter

  Rowe, Andrew

  Tellers for the Ayes:

  Sainsbury, Hon Timothy

  Mr. Ian Lang and

  St. John-Stevas, Rt Hon N.

  Mr. Archie Hamilton.

  Sayeed, Jonathan

  NOES

  Abse, Leo

  Clark, Dr David (S Shields)

  Alton, David

  Clay, Robert

  Anderson, Donald

  Clwyd, Mrs Ann

  Archer, Rt Hon Peter

  Cocks, Rt Hon M. (Bristol S.)

  Ashton, Joe

  Cohen, Harry

  Bagier, Gordon A. T.

  Concannon, Rt Hon J. D.

  Banks, Tony (Newham NW)

  Cook, Frank (Stockton North)

  Barron, Kevin

  Cook, Robin F. (Livingston)

  Beckett, Mrs Margaret

  Corbett, Robin

  Bell, Stuart

  Corbyn, Jeremy

  Bonn, Tony

  Cowans, Harry

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

  Cox, Thomas (Tooting)

  Bermingham, Gerald

  Craigen, J. M.

  Bidwell, Sydney

  Crowther, Stan

  Blair, Anthony

  Cunliffe, Lawrence

  Boothroyd, Miss Betty

  Cunningham, Dr John

  Boyes, Roland

  Dalyell, Tam

  Brown, Gordon (D'f'mline E)

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

  Brown, Hugh D. (Provan)

  Deakins, Eric

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

  Dewar, Donald

  Brown, Ron (E'burgh, Leith).

  Dixon, Donald

  Bruce, Malcolm

  Dormand, Jack

  Caborn, Richard

  Douglas, Dick

  Campbell, Ian

  Duffy, A. E. P.

  Carter-Jones, Lewis

  Eadie, Alex

  Cartwright, John

  Eastham, Ken

  390

  Evans, John (St. Helens N)

  Maynard, Miss Joan

  Ewing, Harry

  Meacher, Michael

  Fatchett, Derek

  Michie, William

  Faulds, Andrew

  Mikardo, Ian

  Field, Frank (Birkenhead)

  Milian, Rt Hon Bruce

  Fields, T. (L'pool Broad Gn)

  Miller, Dr M. S. (E Kilbride)

  Fisher, Mark

  Mitchell, Austin (G't Grimsby)

  Foster, Derek

  Morris, Rt Hon A. (W'shawe)

  Foulkes, George

  Morris, Rt Hon J. (Aberavon)

  Fraser, J. (Norwood)

  Oakes, Rt Hon Gordon

  Freeson, Rt Hon Reginald

  O'Brien, William

  Freud, Clement

  O'Neill, Martin

  Garrett, W. E.

  Park, George

  George, Bruce

  Parry, Robert

  Gilbert, Rt Hon Dr John

  Patchett, Terry

  Godman, Dr Norman

  Pavitt, Laurie

  Golding, John

  Pendry, Tom

  Gould, Bryan

  Penhaligon, David

  Gourlay, Harry

  Pike, Peter

  Hamilton, James (M'well N)

  Prescott, John

  Hancock, Mr. Michael

  Radice, Giles

  Hardy, Peter

  Randall, Stuart

  Harman, Ms Harriet

  Redmond, M.

  Harrison, Rt Hon Walter

  Rees, Rt Hon M. (Leeds S)

  Hart, Rt Hon Dame Judith

  Richardson, Ms Jo

  Hattersley, Rt Hon Roy

  Roberts, Ernest (Hackney N)

  Heffer, Eric S.

  Robinson, G. (Coventry NW)

  Hogg, N. (C'nauld & Kilsyth)

  Rooker, J. W.

  Holland, Stuart (Vauxhall)

  Rowlands, Ted

  Home Robertson, John

  Sedgemore, Brian

  Howell, Rt Hon D. (S'heath)

  Sheerman, Barry

  Howells, Geraint

  Sheldon, Rt Hon R.

  Hoyle, Douglas

  Shore, Rt Hon Peter

  Hughes, Dr. Mark (Durham)

  Short, Ms Clare (Ladywood)

  Hughes, Robert (Aberdeen N)

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

  Janner, Hon Greville

  Silkin, Rt Hon J.

  John, Brynmor

  Skinner, Dennis

  Kaufman, Rt Hon Gerald

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

  Kennedy, Charles

  Soley, Clive

  Kilroy-Silk, Robert

  Spearing, Nigel

  Lambie, David

  Steel, Rt Hon David

  Lamond, James

  Stewart, Rt Hon D. (W Isles)

  Leadbitter, Ted

  Straw, Jack

  Leighton, Ronald

  Thomas, Dr R. (Carmarthen)

  Lewis, Ron (Carlisle)

  Thorne, Stan (Preston)

  Lewis, Terence (Worsley)

  Tinn, James

  Litherland, Robert

  Wainwright, R.

  Lloyd, Tony (Stretford)

  Welsh, Michael

  McCartney, Hugh

  White, James

  McDonald, Dr Oonagh

  Williams, Rt Hon A.

  McGuire, Michael

  Wilson, Gordon

  McKay, Allen (Penistone)

  Winnick, David

  McKelvey, William

  Woodall, Alec

  MacKenzie, Rt Hon Gregor

  Young, David (Bolton SE)

  McTaggart, Robert

  McWilliam, John

  Tellers for the Noes:

  Madden, Max

  Mr. Frank Haynes and

  Martin, Michael

  Mr. John Maxton.

  Mason, Rt Hon Roy

  Question accordingly agreed to.
  Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House supports the Government's sound financial policies to reduce and contain inflation, to provide the basis for a fifth successive year of economic growth and to secure a sustained rise in living standards.

  Frozen Foodstuffs
  10.23 pm
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I beg to move,
  "That this House takes note of European Community Document No. 9402/84 on the approximation of laws relating to quick frozen foodstuffs for human consumption; and supports the Government's intention to oppose Community measures in this field, unless they can be modified to meet United Kingdom interests.
  The Ministry's explanatory memorandum which is before the House sets out the background for this evening's debate concerning a proposal by the Commission for a Council directive relating to quick frozen foodstuffs for human consumption. The directive is an attempt by the Commission to harmonise member states' laws on frozen foodstuffs which they consider constitute a barrier to intra-Community trade. Let me, however, fill in some details about what the Commission is proposing and why.
  The Commission has had plans to introduce proposals for harmonisation on quick frozen food for the past 10 years. The first working group meetings began in Brussels in 1975. The United Kingdom made it clear from the start that it did not favour a directive in this area and was certainly opposed to one applying to the local distribution and retail end of the frozen food chain as these were essentially domestic issues which did not affect intraCommunity trade. Since that time, the Commission has produced various drafts for discussion at working group level, and each time the United Kingdom has argued strongly that there has been no need for such a directive.
  Despite those criticisms, in September 1984 the Commission finally put formal proposals to the Council. Under this directive, all frozen food, with the exception of ice cream, that had undergone a defined freezing process would have to be kept at minus 18 deg C or colder up to the point of retail. Certain upward fluctuations in temperature would, however, be permitted during storage, local distribution and in retail display cabinets. Member states would be required to conduct random checks on the equipment used for quick freezing and on the temperatures of quick frozen products.
  The Commission introduced these proposals because it claims that legislation covering all links in the cold chain guarantees the consumer a high quality finished product regardless of country of origin, and by means of appropriate labelling enables the consumer to distinguish a quick frozen product from refrigerated or other frozen products. It provides figures to show how the consumption of frozen food has grown rapidly over the last few years and which, incidentally, put the United Kingdom at the top of the league, but makes the point that intra-Community trade remains low. Why is that? The Commission claims that, according to the frozen food industry itself, the lack of trade between member states stems from the absence of common rules. To back that up, the Commission quotes examples of national laws made by France and Italy tending to put up technical barriers to trade. It does not believe that the UN-ECE agreement on the international carriage of perishable foodstuffs concluded in Geneva in 1970 solves these trade problems.
  Thus, the Commission says that a directive is necessary to protect consumers by guaranteeing product quality. It
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  does, however, recognise that at present some equipment used for local distribution or retail sales of frozen food is not able to run at the temperatures proposed in the directive and that there should therefore be a transitional period of 10 years to allow for normal depreciation of existing equipment.
  The House may ask, therefore, why the United Kingdom, alone among member states, has remained unconvinced by the Commission's arguments that a horizontal directive is required in that area. We do not consider that the Commission has adequately demonstrated that there are real intra-Community trading problems that would be overcome by a frozen food directive. The mere fact that there is a growing market for frozen food products is not in our view a reason in itself to introduce harmonisation measures. The commission cites the example of national laws introduced by France and Italy as proof that there are technical barriers to trade. Certainly in the case of France, whatever the theoretical position, we have had no real evidence that a French decree that has been in existence since 1964 has hindered British exports of frozen food. As to the Italian case, I can only say that if there have been difficulties that were peculiar to the frozen food sector arising from an Italian decree, our own exporters have not so far brought them to our notice.
  However, our chief reservation on the Commission's proposals arises from the fact that the directive would extend right through to local distribution and retail. We feel very strongly that these areas are a national matter, since any shortcomings would have little or no effect on the intra-Community trading position. It is not surprising, therefore, that retailers and wholesalers are the strongest opponents in the United Kingdom of a directive.
  Our retailers argue that there is no evidence that legislation is required on health grounds. They consider that it is inappropriate to introduce measures relating to the quality of frozen food, since quality is determined by a range of factors concerning the handling of the product which cannot satisfactorily be subject to legislation. They are concerned that the temperatures proposed could not be maintained during summer without additional air conditioning and they fear that the energy implications particularly for the small business man could be enormous, not to mention the capital costs involved in re-equipping with new freezer cabinets. These higher costs, they say, could well mean the abandonment by many retailers, especially the smaller ones, of quick frozen foods. In addition, they are proposing to introduce their own voluntary guidelines to regulate retail handling of frozen food.
  The wholesalers have expressed the same fears that the higher costs involved could hit the small businessman hard and in the long term could lead to a less competitive, more expensive market for frozen food. The manufacturers of frozen food have close contacts with other European manufacturers and have not been opposed to the principle of a directive, although they have not argued either that this proposed directive will lead to the removal of trade barriers.
  Mr. Austin Mitchell: What the hon. Lady is saying about the retailers prompts two questions. If we are alone, is it not our intention to use the veto to stop this from coming into force? If we do not intend to do that but rather, as the motion indicates, to seek

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  modification of the measures to meet United Kingdom interests, does that mean that the prime modification that this country wants is the omission of the retailers? That would he to get the worst of all worlds. It would create a ludicrous position with a chain that ended before the retailer.
  Mrs. Fenner: No. I hope I can develop the argument and reassure the hon. Gentleman. I am talking basically about the wholesale and retail distributors and the manufacturers, but the view of our consumer organisations is balanced. Consumers see advantages in consistent rules affecting the whole of the frozen food chain, but any reduction in the number of outlets selling frozen food would be a disadvantage for the consumer.
  So much for the position within the United Kingdom. We know from discussions in the past in Brussels that our doubts about the need for a directive are not shared by other member states. France and Belgium see the proposal as a means of overcoming any problems that might arise particularly on the Italian frontier. Germany and the Netherlands also support the measures and the other member states have raised no objections to them. The Economic and Social Committee has given its backing, and the European Parliament is soon likely to. The formal proposals thus have now gained a new momentum. Despite the Government's own strong reservations about the need for this directive, and the opposition—or at least lack of enthusiasm—among our own trade and consumer interests, the Government recognise that serious consideration must be given to the views of other Community members. It may therefore be worth exploring whether amendments could be made to the proposals which would lead to rules which were not onerous and would enable us to move from our present position of outright opposition.
  Mr. Tony Marlow: If I remember rightly—I think I do—the Government were elected on the basis of various promises. One promise was that we would introduce the minimum possible legislation. My hon. Friend has said that she is opposed to this measure but that, if it is modified slightly so that she is not then so opposed to it, she might see her way to agreeing to it. That would mean introducing unnecessary legislation in breach of the promise that we gave to the British people. Surely she can be a little stronger than that.
  Mrs. Fenner: We also, in a referendum, reaffirmed our partnership in Europe.
  Mr. John Home Robertson: But not to this.
  Mrs. Fenner: No, there are indeed occasions when we battle our corner. We are alone in this but believe that there could be amendments which would enable us to move from our outright opposition. We could not do that unless our major anxieties are dealt with adequately in some revision of the present proposals.
  When the first working groups meet in Brussels to discuss the proposals, we shall have a much clearer idea of the possibilities of getting changes to the present draft. However, there have been signs during past negotiations that encourage us to believe that the Commission is not so firmly committed to the present draft that it would try to resist well argued changes in certain provisions. We should prefer the omission of the retail and local
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  distribution provisions. However, if they can be modified so that retailers and local distributors have a permanent right to keep quick frozen food at a slightly ligher temperature than required under the directive for the rest of the cold chain, we should have gone a long way to overcome our most serious criticism of the proposals.
  Mr. Douglas Hogg: What is the objection to the temperature of minus 18 deg C?
  Mrs. Fenner: We do not believe that it is necessary for health reasons or for the protection of the food. Minus 18 deg C is 0 deg F, and might have been chosen for that reason.
  Mr. Hogg: I appreciate that. Is my hon. Friend saying that most retailers do not have the equipment to achieve that temperature? Does it impose additional costs?
  Mrs. Fenner: I am so sorry that my hon. Friend did not hear me. I said at the beginning that the temperature will incur capital costs in the form of different freezer cabinets. That is why achieving a slight modificaton so that the temperature can be a little higher than minus 18 deg C would overcome the most serious criticisms.
  There are other changes that we would also like at a more technical level. For example, we will be looking carefully at the scope of the directive to see whether certain foodstuffs and ice cream should be omitted because other rules apply to them. The provision laying down the point at which the temperature of a quick frozen product is to be measured must also be considered carefully. Similarly, the enforcement provisions must be weighed up to see whether they need changing.
  Since the United Kingdom is the largest producer and consumer of frozen food products in the Community, our views on the practicalities of particular provisions ought to carry great weight, and we will not lift our general reserve on the proposals until our essential aims have been achieved.
  To sum up, therefore, we do not consider that the Commission has made a convincing case for the need to introduce legislation on frozen food, but we are prepared to give it further consideration provided that essential amendments can be agreed, particularly to protect our retail and local distribution interests.
  10.40 pm
  Mr. John Home Robertson: The Minister's attitude to this matter seemed to be less than convincing at some stages during her speech. We have learned to expect something called "the resolute approach" from this Government, but I am not sure that that is what we have been hearing about from the Minister.
  The common agricultural policy is in a state of collapse. The European Council has refused to deal with the crucial problems of cereal surpluses. The Commission does not know what to do about all these problems. But when we have the maximum disharmony on matters of importance we can always rely on the European Commission to produce a draft directive for the harmonisation of details. The show must go on, and here we are with a draft directive which would stipulate that the temperature of the centre point of each and every frozen pea in Europe must remain below minus 18 deg-C subject, of course, to permissible fluctuations of 6 deg-C.
  European harmonisation proposals generally start from a serious point and then reduce to the absurd, and this one

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  is no exception. This proposal for harmony in the refrigerators of Europe is intended to promote trade and to protect consumers. It will also, I suppose, promote the employment of an amazing new breed of cold store inspectors with special thermometers for taking the temperature at the centre of blocks of ice.
  It seems to me that this directive is most unlikely to promote trade and will do precious little for the protection of consumers. It gets off to a bad start because it is badly drafted. The Minister has already referred to that point.
  Mr. Hugh Dykes: Is the hon. Gentleman not aware that the Consumers Association is enthusiastically in favour of the proposal?
  Mr. Home Robertson: If the hon. Member can contain himself for a minute or two, I will come to that. He and I have for a long time been equally enthusiastic about the principle of European unity on various issues, so I hope we shall not break that unity on this issue.
  There is one very fundamental drafting point which I think we ought to clear up. Why does this directive deal only with quick-frozen foods? If it is desirable to impose common standards for frozen foods, why not apply them to all sorts of frozen foods—deep-frozen, quick-frozen, the whole lot? I know that a number of other detailed points about drafting have been made to the Government by interested organisations and I assume that they will be properly considered by the Government and by the Commission. Perhaps the Minister will say a bit more about that in due course.
  In the interests of consumers, clearly the most important consideration must be food hygiene and the risk of food poisoning. The Minister for Health told me in a written reply yesterday that there has not been a single case of food poisoning caused by quick-frozen food in Britain during any of the last five years. So there seems to be very little evidence of need for change on that account. But on the more general point of the quality of food products, I see that the Consumers Association—this is the point to which the hon. Member for Harrow, East (Mr. Dykes) referred—has welcomed the objective of ensuring what it refers to as
  "a consistent temperature chain for the distribution of frozen foods based on sound practice".
  The Consumers Association has identified a problem in retail outlets. It says that some retail frozen food cabinets are not up to the appropriate British standard. That raises two important points. The first is, as I understand it, that where there is any risk to public health from an inefficient or overloaded retail freezer cabinet local authority environmental health officers should have ample power to deal with the problem already. It would be helpful if the Minister could confirm that point.
  The second point is that, where a retail cabinet may be cold enough to prevent health risk but not cold enough to maintain the texture or the taste of the product, I have no doubt that both the consumers themselves and the manufacturers of the products will take appropriate steps to ensure that the retailer puts his shop in order. Once again, as I understand it, local authority trading standards officers would have the power to deal with such cases. Perhaps the Minister could confirm that point also.
  Mr. Austin Mitchell: Would my hon. Friend agree that a third point arises from the Consumers Association's
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  evidence on this matter, because it gives the impression that several retail food cabinets maintain temperatures above minus 20 deg C? If that is so, and if the Government are seeking to get the retailers out of the coverage of this piece of legislation, we are protecting piggy conditions in retailing by imposing severe restraints on the manufacturers, who will be harmed by those restraints.
  Mr. Home Robertson: If there is a problem in a corner shop in Grimsby, that would be most appropriately dealt with by local authority trading standards officers or environmental health officers. I cannot understand what European directives have to do with an issue such as that. I understand that powers already exist, and I would be obliged if the Minister could confirm that they do.
  Mr. Marlow: Will the hon. Gentleman give way?
  Mr. Home Robertson: No. I want to get on.
  It is essential that the interests of consumers be protected. The Government must ensure that local authorities have the resources needed to exercise their duty to supervise the hygiene and quality of frozen food in British shops. There is legitimate concern on this count, especially in view of the cuts in local authority finances in recent years, and the Government must be clear about their duty as well as the duty of local authorities.
  The Minister spoke of the cost to consumers of keeping food colder then necessary. She also mentioned the extra cost of new bureaucratic controls. I suppose that those problems could be overcome by phasing the introduction of any new standards and by adopting more sensible enforcement measures. But if there is any doubt about the correct maximum temperature to protect the interests of consumers, we would want the Government to err on the safe side—the cold side.
  Enforcement is likely to be of exclusively British interest, if experience in other areas of Community rules is anything to go by. I have tried to solve the puzzle of how one establishes the temperature at the centre of a frozen haggis or indeed, a frozen pea. Just how does one locate the epicentre of a fish finger? Even if one has established all those things, how does one do them without horribly mutilating the product with a drill? Even if one gets to the core of the frozen haggis and discovers that it is only minus 12 deg C, instead of minus 18 deg C, who is to say that that temperature rise is not a permitted fluctuation of
  "6°C during local distribution and in retail display cabinets" under article 5.2 of the draft?
  Apart from all that, I foresee some fine arguments about whether a cash and carry store is a local distribution centre. That brings me back to the method of measuring the temperature of products in store. I have done some homework on this, and read an intriguing suggestion by the Royal Environmental Health Institute of Scotland that we should consider the introduction of a temperature control technique that is in use in parts of the United States.
  This apparently involves placing a small thermometer capsule in each consignment in each cold store. I understand from the institute that this capsule comprises a small red ball of frozen liquid surrounded by frozen clear water. When there is a significant temperature rise, the frozen water and the red ball melt and mix. The capsule is sealed and the process cannot be reversed, and any consignment or container found with this defect in the

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  capsule is presumed to have thawed and it can therefore no longer be considered to meet the temperature control requirements for frozen food.
  That is one intriguing possibility, but it would be even simpler to improve the standards for refrigeration equipment in distribution stores, lorries and retail premises as well as in domestic freezers, as has been suggested by the United Kingdom Association of Frozen Food Producers, among others. That would be simpler than any of the other things we have talked about to ensure proper refrigeration standards all the way down the chain.
  This exercise is supposed to promote trade in frozen foods. We know that the United Kingdom agriculture, fishing and food industries can produce food products that are second to none. British and especially Scottish meat, fish, vegetables and soft fruit are of the highest quality. We have a highly developed processing, freezing and distribution industry and we now consume 16·6 kg of frozen food per head per year—67 per cent. more than the average for other EEC countries.
  With that combination of high quality raw materials and a highly developed freezing and marketing industry we ought to be able to take full advantage of the export potential of markets such as Italy, France and Germany, but it seems that that is not happening. According to a written answer from the Department of Trade and Industry which I received on Monday, both the value and the volume of our frozen food exports to other EEC countries are falling, while the value and volume of our imports from those countries are rising steadily.
  Since 1980, frozen fish exports have fallen from 24,000 tonnes to 22,000 tonnes, frozen fruit exports have fallen from 7,000 tonnes to 3,000 tonnes and frozen vegetable exports have fallen from 33,000 tonnes to 24,000 tonnes. Meanwhile, imports of frozen fish have risen from 30,000 tonnes to 42,000 tonnes, frozen fruit imports have doubled from 3,000 tonnes to 6,000 tonnes and frozen vegetable imports have increased from 40,000 tonnes to a massive 137,000 tonnes. We should therefore be taking steps to achieve some import substitution and export promotion in the area.
  I have discussed the draft directive with people from Birds Eye, Christian Salvesen and the excellent Scotfresh company which markets frozen vegetables not just from my constituency but from my own farm, so perhaps I should have declared an interest at the outset. None of those firms has complained about restrictive regulations affecting exports which could be relevent to these proposals. Nevertheless, there is clearly a serious problem in our trade balance with our European Community partners, presumably due to the fluctuating value of the pound. I shall be interested to hear the Minister's comments on that.
  The Government should be taking urgent steps to promote exports of British frozen food, but the Minister will be relieved to hear that the Opposition are inclined to agree with her that the directive as it stands is ill considered and could harm the United Kingdom food industry without achieving anything worthwhile for the consumer. We therefore agree with the general position that the Government have adopted on this.
  The message from this House to the European Commission and to the Council of Ministers should be that they are unlikely to achieve much harmonisation or
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  harmony even in the rarefied atmosphere of cold stores until they get to grips with some of the more fundamental problems of the common agricultural policy.
  10.53 pm
  Mr. John Watts: I support the robust opposition of my hon. Friend the Minister to the proposed directive. She has explained clearly that it is unnecessary and potentially damaging to our frozen food industry. My concern, however, is that it would reduce our ability to protect British consumers.
  Despite the pious protestations of the explanatory memorandum to the directive that the consumer
  "should be able to benefit from the products that suit hail best regardless of their country of origin"
  and
  "would be offered a range of products of faultless quality,"
  I am not optimistic that it will achieve that happy outcome.
  I am especially interested in paragraph 7 of the explanatory memorandum, which makes a critical reference to an Italian ministerial decree of 15 June 1971. Apparently the decree stipulates that quick frozen food produced abroad may not be imported into Italy unless it comes from establishments which are recognised as satisfactory by the Italian health authorities.
  If we had an equivalent control in our law, one of my constituents might have been spared a most disturbing experience recently. Her purchase of ratatouille, which had been imported from Spain, proved not to be of the faultless quality to which the enthusiasts of the directive have referred. Indeed, it proved not to be wholly vegetable, as there was animal as well. To her horror, she found the tasty morsel on the end of her fork was mouse, not aubergine. She complained to the local environmental health department but found that as the product came from abroad there was no action which could be taken against the producer. The producer in Spain was outside the scope of English law. I have been unable to detect any powers to exclude from our markets products such as the rodentatouille, if I may so describe it, that was purchased by my constituent.
  If the Government's approach is to seek to improve the directive, one essential modification to ensure that it meets the interests of British consumers is the provision of powers to prosecute any producer who supplies unsatisfactory goods. We should have the power also to ban further imports from that source of supply.
  As I hope that the implementation of the directive in English law is far off, both because of my fears of what it would do for the protection of our consumers and for the cogent reasons advanced by my hon. Friend the Parliamentary Secretary, I ask my hon. Friend to review the current regulations on imported frozen foods and to consider whether we need any further powers to protect the interests of consumers, such as my unfortunate constituent.
  10.57 pm
  Mr. Austin Mitchell: Grimsby has the greatest concentration of the frozen food industry within the United Kingdom, so the directive is of particular importance to my constituency, where the fish of the North sea and the north Atlantic meet the vegetables of the rich Lincolnshire farmlands in the factories of Birds Eye, Findus, Icelandic, Chaldur, Ross, Wold Farm and others. Grimsby is Britain's premier freezing and food

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  processing town and, therefore, the directive is an important measure for it as it is for the United Kingdom generally.
  Britain leads the world in the freezing industry. It was the first country to develop it on any scale and Britain has the most highly developed industry in the EEC, the highest consumption of frozen food per capita and the highest ownership of home freezers in the EEC. As we have the most highly developed industry, we have the most to lose from inadequate regulations or regulations which will impose harm on the industry. Britain's industry should have been more adequately consulted and its practice should have been taken more closely into account in the development of the proposals. A 10-year gestation period is an enormously long one and that is a measure of the failure to take British practices into account.
  The proposed regulations are remote from the practical side of the industry and that is the source of the main accusations against them. They amount to harmonisation pretty well for the sake of it. That is something with which we want to have no truck.
  It is understandable that the reaction has been adverse. It could be said that the reaction of the industry to the proposals has been a chilled one or that it has been praising the measure with faint damns. The United Kingdom Association of Frozen Food Producers says:
  "unlikely to serve any useful purpose for the UK industry or for UK consumers."
  The Wholesale Distribution Federation says:
  "The proposals would lead in the long term to a less competitive, more expensive and much smaller market for frozen food and one of the first victims would be the small business man."
  The National Cold Storage Federation is unhappy about the proposals'
  "atmosphere and the feel of what they say."
  The British Poultry Federation gives the proposals the bird and says that they are
  "unnecessary so far as the poultry industry is concerned."
  The detailed representation deals several body blows to the draft legislation. The frozen food producers emphasises that the proposal for date marks is misguided. The crucial factor is not the date, but the temperature. It does not matter how long a product has been kept, but whether it has been kept at the right temperature. It would be more sensible to mark the date of sale. If a product is stored at home under less than perfect conditions deterioration will begin when it is sold. Date marking relating to production is not the solution.
  As my hon. Friend the Member for East Lothian (Mr. Home Robertson) asked in his humorous analysis, how will the temperature at the centre be found? Will it have to be smashed, bored, drilled? Will Euro-inspectors armed with braces and bits have to travel around testing centre temperatures? The provision is ludicrous. The peripheries are as important as the centre when one eats.
  Article 13(2) is incorrect because the intention is to give retailers a sensible period in which to bring their cabinets up to standard. However, the tolerances in article 5, which should apply up to 1 January 1995, will not be available until after that date. After then goods must be maintained at minus 18 deg C for the transitional 10 years. That seems to stand the draft provisions on its head.
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  The Consumers Association say that tests reveal that the temperature in some retail cabinets is above minus 10 deg C, because they are too old, incapable or overloaded. That is not good enough.
  The standing group on food freezers recommended in 1976 that the trade should be allowed to deal with the problem voluntarily. But it has not been dealt with. We must face the need for reform at the retail end of the trade. It would be wrong to protect that section from its own inadequacies at the expense of imposing burdens on the rest of the trade.
  Why cannot we provide that cabinets be closed, as several EEC countries do? If temperatures rise to unsafe levels, particularly in the top layers, it would be sensible to ensure that the cabinets are kept closed.
  The trade says that it is better to have regulations based on International Standardisation Organisation standards for refrigeration. That is a more sensible way to impose control because it does not necessitate inspectors shoving bits and thermometers into fish fingers.
  Mr. Peter Thurnham: Is the hon. Gentleman aware that a British standard covers refrigeration equipment and that a code of good practice takes care of any inadequacies?
  Mr. Mitchell: Of course I am aware of that, but we are talking about machinery which might have to operate in Spain or Greece as well as in Britain. Therefore, the ISO standards are probably the more relevant standards to which to refer on a European-side basis. They relate to the class of countries in which that equipment can operate.
  The trade has put another point, not in evidence but in informal representations and discussions. The trade knows that, if the regulations are accepted on a European-wide basis, they will be enforced rigorously in Britain, because this is a law-abiding country, but will not be enforced with the same vigour and concern in other EEC countries. The burden that we are imposing on the most advanced industry is greater than the burden imposed on its competitors.
  What should we say in answer to these proposals? As one who has never been known to be a Euro-enthusiast, my answer is that we want to have nothing to do with it. Always be suspicious of Europeans bearing regulations. The firms in my constituency to which I have talked are not keen on these regulations. They see no advantage to be gained from them. My hon. Friend the Member for East Lothian made an important point when he chronicled the decline in our exports of frozen goods and the increase in imports. We imported £34 million of fish in 1980 and £53 million of fish in 1984 while our exports have decreased. Imports of vegetables increased from £14 million in 1980 to £62 million in 1984. This especially affects a firm such as Wold Farm, which is a large exporter of frozen vegetables. This decline in exports is due mainly to the overvaluation of sterling compared with other European currencies.
  We must ask whether the regulations will mean trade advantages. This brings me to the crucial point of the debate. I am suspicious — perhaps unfairly — of the Government's motion. The real question is: are we isolated? The Parliamentary Secretary appeared to say that we are on our own in opposing the regulations. Some trade associations have accepted them. Our key trade association does not think that great advantages will be gained from accepting the regulations.

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  If we are on our own in opposing the regulations, will we impose a veto? Do we have the nerve to say, "We are on our own"? The Parliamentary Secretary did not answer that crucial question. What will we do about the regulations? The motion states:
  "unless they can be modified to meet United Kingdom interests."
  I understand from that statement that we will not impose a veto but that we will try to modify the regulations in favour of United Kingdom interests. If those interests are the ones that I have mentioned, OK, but it would be wrong to modify the regulations to defend inadequate sales by retailers and wholesalers. It would mean getting the worst of all worlds. We shall be imposing an inspection regime with increased costs and difficulties on the manufacturers and those involved in the cold stores and the distribution system — the competitive part of our industry which needs to compete overseas — but not imposing it on retailers. We shall gain nothing. It is a case of all or nothing, because the food chain is a continuous process in which food must be maintained at a certain temperature until it gets to the home freezer and the table. Retailers are the weakest link in that chain. There is no point in regulating these other aspects unless they are properly integrated into the food chain. A chain with a weak link breaks, and that is what we shall be creating if we justify the opting out of retailers.
  I should be happier, therefore, if the motion did not contain that provision. If the Government are saying that we should accept it but not have it applied, say, to wholesalers and certainly to retailers, that would be wrong. We should reject it — we should defend the industry by vetoing it—but, if we are forced to accept it, we should accept it all, modified only to make sense of it and applied to the technical points that the industry has raised, not to excuse inefficient retailing.
  11.11 pm
  Mr. Peter Thurnham: The hon. Member for Great Grimsby (Mr. Mitchell) said that he was suspicious of the Government's motives. I am suspicious of the motives of the people in Brussels.
  Indeed, I am disappointed that the directive has reached this point. I thought we had knocked it on the head a long time ago. It is nearly two years since I wrote to the Minister — I also wrote to the Secretary of State for Energy and the Minister of Agriculture, Fisheries and Food—about the problems inherent in the directive. The replies that I recieved then suggested that we were so opposed to it that we would hear no more about it.
  I am disappointed, therefore, that it has reached this stage and that the European Parliament is thinking of proceeding with it. I wonder what is going on in Brussels and what our people are doing there. If we must belong to this club, why not shift its headquarters to this country so that we can run it properly.
  I should declare an interest, because I run a refrigeration engineering business. But all hon. Members have an interest, because the British people consume an enormous amount of frozen food. This is a sphere about which we have considerable knowledge.
  The directive is so wrong that we can find little in it with which to agree. I support the Government in saying that we want to amend it so that we can use it, and the two issues that we must face are the need to reduce burdens on business generally and to remove Common Market barriers.
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  The hon. Member for Great Grimsby misses the point when he says that the directive should aim at the retail industry. Nobody will pop over from Brussels or anywhere else to Grimsby to buy a packet of peas. We must make trade in the wholesale product and in refrigeration equipment easier so that we can export freely and have a good market. We should not impose burdens on the retailer when, frankly, they are not necessary.
  I know from my experience of the industry that we have not had many health and hygiene difficulties. My problems are related mainly to trying to make a profit. Any problems that might present themselves are more likely to be related to noise, for example. I should be interested to hear whether any hon. Members have had brought to their attention problems relating to refrigeration. The only one that has been brought to my attention related to noise.
  It is estimated that, if the directive is applied, the energy consumption of equipment in Britain will double, the noise factor will double and the extra investment in equipment will be £500 million—but to what effect? It has been pointed out that there has not been a serious case of food poisoning reported in the last five years.
  The number of people who would be affected by the proposed legislation is great. There are said to be 34,000 independent retailers in Britain selling frozen food. They can already look to British standard 3053 and to the proposed code of practice, which the retail consortium has put forward, entitled,
  "Guidelines for the handling of frozen foods at retail levels."
  I should have thought that they were satisfactory. They comply with long-established practice in this country, where, I remind the hon. Member for Great Grimsby, the climate is not the same as in Italy. It is ridiculous to impose on retailers here the same conditions for retail equipment as would be needed in countries with much higher ambient temperatures.
  All the comments from the industry are that this legislation is not necessary. Why cannot the people who represent us in Europe get the point across? To improve trade, we should be removing the barriers and looking for legislation that finds common factors between member states and builds on them, rather than aiming at something that is way beyond what the country with the greatest experience in the industry is doing.
  We should seek to amend the legislation to include practices that are agreed here and that can be used as the basis for common points throughout the Community. We could then apply that as a directive, so that we do not have any immediate changes imposed here, and build from there. If it is then felt necessary to move towards the stipulation of minus 18 deg C, whether it is applied at air temperature or at the core, it can be done at a rate on which everybody agrees, without imposing burdens on business. Not only in this country, but in the Community as a whole, there are many unemployed people, and I am sure that they are not unemployed because of a lack of directives along these lines.
  11.16 pm
  Mr. Charles Kennedy: I share the apprehension that the hon. Member for Bolton, North-East (Mr. Thurnham) and every other hon. Member have expressed. However, I do not know how far down the line I would go in support of the hon. Gentleman's thesis, which seemed to be in favour of something that I would support—a truer Common Market—while saying that

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  there is not a place for some moves towards harmonisation. Although we are not very happy with this directive, we cannot have our cake and eat it—even a frozen one. That is one of the difficulties that we face.
  I agree with the hon. Member for Great Grimsby (Mr. Mitchell) about the difficulties with the sea fishing related industries. He will appreciate that my constituency has similar interests, although they are not as concentrated as in his constituency. I can envisage a similar lack of enthusiasm for the directive in my constituency.
  However, I should be interested to learn about the attitude of Lord Cockfield towards the directive. He has made his name in a more robust and dramatic way than the Prime Minister may have anticipated when she first sent him to Brussels, through his fairly aggressive—and often laudatory — attitude towards the breaking down of barriers within the Common Market. How is the Conservative appointee viewing this development?
  The policing that would be involved in carrying out the directive could lay considerable burdens on the British taxpayer, and doubtless on the industry and the retailing outlets. The hon. Member for East Lothian (Mr. Home Robertson) spoke of the written answer giving facts about the absence of food poisoning as a result of frozen food over the past five years. That shows clearly that our policing, and the standards that we are enforcing, must be pretty good.
  Although we would be interested to learn a little more about the Government's intentions, as one who generally supports the move towards majority voting in Europe—I accept that that might not command much support among certain hon. Members—I would not expect the Minister to say this far in advance whether the Government intend to cast a veto on the directive. That would not be good politics now, and would hardly encourage the granting of concessions, which the Government will look for in due course.
  We wish the Government well in trying to make more sense of the proposal from Europe. We share the anxieties which have been expressed from both the political and the constituency points of view. With that in mind, we hope that, during the remainder of this year and next year, steps will be taken to the satisfaction of Britain and in harmony with our partners in Europe.
  11.20 pm
  Mr. Hugh Dykes: I agree with the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) that the veto is abhorrent, especially in a case such as this, I was glad to see my hon. Friend the Minister shake her head in disapproval of it and to hear her say that that would be too much. In addition to the fundamental rejection of the veto, there is the lack of enthusiasm about revealing the negotiating position. It is good that the United Kingdom Government are becoming more enthusiastic about the idea of banishing veto-itus. Indeed, last week the Government would surely have been tempted to denounce the Germans for an utterly selfish stance on the refusal to consider the reduction in cereal prices and for applying a national veto to a relatively minor matter, caused only by a schism in the two main German ruling parties.
  On this issue one sees the virtues of the way in which Community legislation is originally proposed by the Commission, processed through the Council of Ministers,
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  consulted about with the European Parliament, and then passed through a civilised process of consultation and general agreement. That should be the basis on which qualified majority voting takes place, if a vote is necessary. That virtue of the Community is often beyond the comprehension of Members of Parliament. With conflict politics, with which we are all so drenched, we cannot understand having a process of consultation and a gradual elaboration of sensible legislation between various institutions and the countervailing forces that they represent. How awful! How immoral! Surely we must have the gladiatorial clash, a tremendous vote and schism, and the other party saying that it will repeal the legislation when it is in power. Otherwise it is not the macho behaviour to which we as legislators in the British Parliament are used. The Community has shown us another way in which to produce legislation, similar to the habit and custom of other member states, such as Germany and Italy. We must get used to the process, even the hon. Member for Great Grimsby (Mr. Mitchell), because we have been a member of the Community since 1973.
  The Minister has got the matter about right by saying that there are considerable misgivings about the details, including the temperature stipulation, but that we shall have further discussions and elaborate it finally into a rather good directive, which will be good for United Kingdom industry. It was interesting and amusing to see all the contradictions in various speeches. The advice of the hon. Member for Great Grimsby became so tortuous and complicated, one was almost unable to follow it. He advised not to apply the veto—
  Mr. Austin Mitchell: Will the hon. Gentleman give way?
  Mr. Dykes: I will not because of lack of time and because the hon. Gentleman made a much longer speech.
  Mr. Mitchell: I wish to make my advice clear to the hon. Gentleman.
  Mr. Dykes: I am sorry not to give way, but I have been asked to speak briefly, which is why I am rushing my words now. I think I know what the hon. Gentleman meant. However, he reflected to some extent the contradictions that people feel.
  The directive is imperfect now but is potentially extremely good. It would help United Kingdom domestic industry, which is the most powerful among member states. It should be exporting much more. Why does it not? The directive will eventually help the industry to do so. A directive on a technical matter, such as this, always looks rudimentary and primitive when it starts, but 10 years after it has been passed it will be the basis of a great expansion of trade in a particular product or series of products. The directive is good incipiently and will be better if the Government make robust efforts to ensure that the negotiations lead to a constructive conclusion.
  11.25 pm
  Dr. Ian Twinn: I am pleased to note the all-party opposition to the directive. It is a worry to hon. Members on both sides of the House who still have some remnants of a European ideal to see directives rolling from the Commission that can bring no benefit to Europe, and certainly not to this country. We are, for the most part, dealing with a trade that is within this country and not intra-Community trade. There may be some need for

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  harmonisation in dealing with intra-Community trade, but not for the bulk of the trade which is within the United Kingdom.
  I cannot share the hope of my hon. Friend the Member for Harrow, East (Mr. Dykes) that consensus will produce sensible results. This directive has been rolling around the Commission for 10 years—it has produced rubbish even after 10 years. I do not know how much longer we need to produce a sensible directive; I suspect that we will not achieve one.
  There are no benefits to this country, certainly not in trade, and it is doubtful whether there will be any for consumers. There is no evidence of a health hazard, and few problems result from that industry. The United Kingdom experience is good. Our standards are higher than the United States, which is the largest consumer of frozen foods—and we have a reasonably healthy trade there—and we hve the highest standards in Europe. Our voluntary code for the large manufacturers and distributors is approaching the standards in the directive. Therefore, we are approaching the standards in the directive by voluntary means.
  The Commission wants us to produce some system of inspectors wandering around the countryside — as we have humorously heard — boring holes in frozen fish fingers to find out their core temperature. That is an amusing thought, but it is technically known as destructive sampling, which is precisely what will happen. It will produce additional costs for retailers, manufacturers and the consumers. The price of a fish finger will rise if the directive goes through. It may not rise by very much, but it will certainly add to the cost of living. We should not contribute towards that.
  There is also the cost to the taxpayer. We have an efficient system of trading standards — something of which we can be proud. However, that creates problems when we start talking to our European partners. We will comply with the directive if it is passed; we will be frighteningly efficient in our compliance with it. We will have more trading standard officers wandering around boring holes in food and saying, "No, no, this food has risen above — 12 deg C, so it has to go."
  Italy has virtually no system of trading standards, so I cannot see how it intends to implement the directive. The same is virtually true for France. The truth is that it has little intention of implementing the directive. One wonders why the country which initiated the scheme in the first place is pushing behind the scenes.
  We need to look at the retail trade and the corner shop, where retail cabinets may fall below standard because they are old or overcrowded, need maintenance or because the retailers bought cheap Italian products that do not meet British standards. However, I recommend that we look to the International Standards Organisation standards. If we want to ensure that we have good standards to protect the consumer and if we are convinced that the consumer needs protecting, we should enforce ISO standards for cabinets. That is relatively simple without raising costs.
  I encourage my hon. Friend to resist the directive and not to lead us down the path of increased costs of an inspectorate, increased costs to the industry and no tangible benefit to the consumer.
  11.29 pm
  Mr. David Maclean: I congratulate my hon. Friend the Parliamentary Secretary
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  not only on the substance of what she said, in that she resisted this most meritorious of Brussels directives, but on the fact that she managed to keep a straight face—as an excellent politician should be able to do — when reading out the reasons why the Commission thought the directive was essential.
  The directive started life being so nonsensical that it forced us to go into protracted dialogue with our European colleages and to become more communautaire and more pro-European in the process. It is an interesting exercise, but if, as my hon. Friend the Member for Edmonton (Dr. Twinn) said, we started with rubbish, went through all this marvellous dialogue and came out with rubbish, we will have done a great disservice to the British people and to Parliament.
  There are only two reasons for any legislation on food safety grounds. The first, and by far the most important, is health and safety. Is a particular law necessary to safeguard the lives of our citizens who may eat the product? We all know that this requirement is not necessary. We have heard on numerous occasions tonight that there have been no examples of serious illness or death in the last five years. The reference is to the last five years, because that is the only period for which the Government can answer. If we checked the records, no doubt we would find that over the preceding five years, and the five years before that, there was no death or serious injury caused by any health problem associated with quick-frozen food
  The cases in hospitals and elsewhere that have caught the headlines about terrible outbreaks of salmonella and so on were caused not by frozen food but by poor hygiene in regard to food that had already been cooked and left out all day. So there is no health ground for the directive.
  The second reason for enshrining something in legislation would be sound commercial grounds. Again, this directive fails the test of commerciality. We have already been told that in this country we have one of the most vigorous frozen food industries. We are one of Europe's largest and most successful producers. The British housewife is one of Europe's largest users of frozen food. Therefore, there is no consumer resistance in the United Kingdom to buying quick-frozen food. In fact, one of the biggest worries of many of the farming unions is that there is a move towards easy-to-cook frozen foods and away from the traditional roast. We should recognise that and gear our marketing accordingly. Therefore, there is no consumer resistance to force us to adopt the directive and to persuade consumers that it is safe and good for them to eat quick-frozen food.
  Nor is there any commercial interest in regard to the export market. We have always been poor at exporting much of our food products. We have failings in the marketing of frozen food, as we have in all other commodities that are not within the scope of the directive. The solution is not to go ahead with the directive. It will not open up vast markets overseas that we will be able to capture easily. If our experience of the last 15 years is anything to go by, we know that the reverse is true.
  The only reason why we have the draft directive is that we have a frozen food market that is ripe for plucking. The other EEC countries recognise that, as they have done in other of our commodities in which they wanted to capture a large share of the market. The directive fails the test of commerciality.
  What, therefore, should my hon. Friend do? Being reasonably communautaire, we cannot reject the directive

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  outright. We must continue the process of negotiation to get something more sensible. In that regard it is not right to stick to the temperature requirement of minus 18 deg C. That is dangerous and unnecessary. We have heard that it would be impossible to enforce with teams of inspectors checking the insides of peas, fish fingers or Brussels sprouts. I shall not go into the technicalities. I merely repeat that a temperature of minus 18 deg C. is an unnecessary and penal restriction when we have for generations lived on quick-frozen food that may have been colder or less cold. That temperrature is not required for health and safety reasons.
  My hon. Friend the Minister said that there are 38,000 retailers of quick-frozen food. That is an underestimate. There might be that many big retailers, but almost every village in my constituency has a post office or little shop, perhaps even a garage, with freezers containing ice cream and frozen foodstuffs.
  Mr. Thurnham: Does my hon. Friend agree that the one small glint of sense in the directive is that ice cream is not to be included, so that might reduce the number of outlets that my hon. Friend has in mind?
  Mr. Maclean: I was not suggesting that ice cream is not to be included. The freezers that I have seen also have frozen foodstuffs that would come within the scope of the directive.
  It would be iniquitous to insist that all outllets should keep food at minus 18 deg C, or within a tolerance of plus or minus 3 deg. C, at all times. As the hon. Member for Great Grimsby (Mr. Mitchell) said, it would be ridiculous, just to meet rigid but unnecessary European standards, to get inspectors to check food at the point of manufacture, at the point of transport and at the point of distribution, but, when it gets to the final link in the chain, to say, "We will not inspect it at this point." That would be nonsense.
  If we must go along with the directive, the only way forward is to pursue ISO standards or British safety standards for refrigeration equipment. My hon, Friend the Member for Bolton, North-East (Mr. Thurnham) should be pleased about that, as it would generate more business for his company. It is honourable of him to oppose a directive which would generate business for the refrigeration industry because he does not believe that it is sensible.
  There is no point in pursuing the minimum temperature part of the directive, because that would be inherently dangerous for our trade. We should pursue the line of safety standards of equipment. It is easier to police and we could do it alone, just as we have in the past. There is no need for a European directive, but we must harmonise European standards. We must also protect our retailers.
  When I lived in the constituency of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) and we had one of those terrible winters when we were cut off for nine days, we discovered on the second day that it would be a long time before the electricity supply would be restored, so we emptied the deep freezes and threw the food outside. We were not being profligate. I do not know whether the temperature outside was minus 18 deg C, but it was pretty dashed cold. We buried the food in 6 foot of snow and it tasted pretty good when we dug it out again. No doubt the Sicilians will not understand that story, but I feel quite fit
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  and hearty. I went to a Burns supper and used my Skean-dhu to open the haggis. The temperature inside was pretty hot and the whisky made it even hotter. We are alive and kicking today.
  The draft directive has been called horizontal legislation. We should turn it into vertical legislation and put it straight down into the bin.
  11.38 pm
  Mrs. Fenner: There have been some very witty speeches. Perhaps I should follow up the more serious ones first.
  The hon. Member for East Lothian (Mr. Home Robertson) asked why only quick-frozen food is covered. The draft directive imputes a wide meaning to the term "quick-frozen", which includes all products except those frozen in still air. We shall in the working groups seek clarification of the term's coverage, so that there are no anomalies in the directive.
  The hon. Gentleman made much of measuring the centre of the product. There has been a lot of criticism of taking the temperature at the centre of the product. The directive says that it should be at the centre of the product and although techniques exist for this, we shall be discussing with manufacturers and retailers whether they would prefer air temperature or temperature at the centre of the product. There is a risk that temperatures measured elsewhere than at the centre could result in even tighter controls and greater energy expenditure. So we shall have to look at our arguments on that to make sure that we are not imposing an additional burden.
  The hon. Member for Great Grimsby (Mr. Mitchell) asked whether we had consulted industry properly on this. We have consulted repeatedly with our manufacturers in the United Kingdom. We have said that the directive as drafted, however, does not take account—we agree with the hon. Member for Great Grimsby—of their technical or manufacturing expertise, and we shall aim to be correcting this in discussions on the basis of what we regard as our greater technical knowledge in this field.
  My hon. Friend the Member for Slough (Mr. Watts) raised the disturbing matter of the constituent who had ratatouille — rodentatouille, he called it, rather appropriately. But whether or not there is a directive on frozen food will not affect any occurrence such as this, which is due to manufacturers' human error in not checking sufficiently closely at the packing stage that there are no foreign bodies. Incidentally, I spent the morning at a seminar on foreign bodies in food, so I am up to date on that.
  Foreign objects can be, of course, and sometimes are, found in any foodstuffs, whether or not they are frozen. A dead mouse is a pretty horrible object in food, whether it is frozen or thawed. When complaints are made to enforcement officers by the public, if, as in this case, they concern imported food, those officers usually ask the Ministry of Agriculture, Fisheries and Food to approach the embassy concerned and ask them to approach the appropriate enforcing authority in their country for an investigation. As much detail as possible to facilitate identification of the foreign manufacturer is given and the Ministry asks for and often receives the results of the investigation.
  Of course, if an object is found in food produced in the United Kingdom, the enforcement authorities can take action against the guilty parties and prosecutions are

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  usually instituted under section 2 of the Food Act 1984—that is, on the ground that the food is not of the nature, substance or quality demanded. My officials will take up with the Spanish embassy the matter raised by my hon. Friend the Member for Slough if he would care to provide me with the relevant details.
  We were asked whether we could tighten up import controls in this respect. We have sent out a consultative document on the review of food legislation. We shall be considering the comments on that document to decide whether steps should be taken to go ahead with changes in food legislation. One of the recommendations of the consultative document is to tighten up the requirements of the importers' code of practice and determine just how much they should do to ensure that their suppliers have followed hygienic production methods, and so on. So the importers would have the responsibility of ensuring that they were importing from a supplier who used hygienic methods.
  The hon. Member for Great Grimsby asked whether, if we are concerned about retail and wholesale distribution standards, we should not be discriminating against manufacturers if we did not carry it right through the chain. There is less problem with maintaining a minus 18 deg C temperature at manufacturing and international distribution levels, partly because those sectors tend to be already geared to working at that temperature and partly because handling conditions are so very different.
  For example, in a retail shop, the opening and shutting of cabinets makes it much more difficult to maintain a very low temperature, even when tolerances are allowed, than in a factory. A retailer might be forced to keep his cabinets well below this level, and might even have to install air conditioning to have any chance of the temperature at the centre of the product being minus 18 deg C. Similarly a van making local deliveries might have to open and shut the door at several shops, and would therefore find it much more difficult to maintain minus 18 deg C. than a long-distance carrier making a large delivery at the end of a long journey to a single depot.
  The attempt in the directive to cover purely domestic arrangements such as local distribution provisions and conditions in retail shops seems to go beyond what can be justified as a directive under article 100 of the treaty of Rome, which is concerned with the removal of obstacles to the establishment and maintenance of a Common Market. I should tell my hon. Friend the Member for Harrow, East (Mr. Dykes) and the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) that we are concerned with maintaining a true Common Market, but we believe that at the local distribution and retail levels this is not concerned with intra-Community trade.
  There is no virtue in maintaining a temperature that is lower than justified on grounds of health and quality. Rather, it constitutes a waste of energy and money. As my hon. Friend the Member for Penrith and The Border (Mr. Maclean) said, it could also reduce the number of retail outlets carrying frozen foods, even though at present they are demonstrably capable of handling a range of wholesome quality products. As a number of hon. Members have pointed out—the hon. Member for East Lothian had this confirmed in a written reply—there have been no health problems at all with frozen foods sold by retailers. We are determined not to be left with a directive that will impose real and unnecessary economic costs, particularly on small enterprises serving local needs.
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  As I told my hon. Friend the Member for Grantham (Mr. Hogg), who I believe has had to leave, there is no scientific case for minus 18 deg C. It just happens to be 0 deg F., and we believe that was set as an easy marker.
  My hon. Friend the Member for Edmonton (Dr. Twinn) said that the directive was rubbish. I take issue with him. The hon. Member for Great Grimsby asked for a statement on the use of the veto. The hon. Gentleman will accept that we are the largest producer and consumer of frozen foods in the Community, so our views can be expected to carry considerable weight because we speak from wide practical experience.
  Hitherto, we have argued on the principles of the directive. We have not been greatly concerning with the detailed, technical features of the proposals. But once we address ourselves to these issues, we will be in a good position to influence opinion on this subject.
  The Government will not argue for temperatures to be tolerated that would involve any risk to health, but I reiterate that minus 18 deg C goes far beyond what is necessary on health grounds. We think that quality can be adequately safeguarded by voluntary control The manufacturers already have a code of practice, and the Retail Consortium is in the process of finalising guidelines for the handling of quick-frozen foods. There will be a marked disadvantage to consumers if over-strict regulations lead to closure of retail outlets which previously supplied frozen food or the imposition of unnecessary costs on retailers.
  My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) asked why we had brought this forward when we so resolutely opposed it, and he submitted a paper based on his wealth of experience in the refrigeration industry. We still do not accept that the Commission has adequately shown that there are real intra-Community trading problems which would be overcome by a frozen food directive on the lines proposed. Nevertheless, the Commission's views have gained much support from other member states, they have the backing of the Economic and Social Committee and they will probably be supported by the European Parliament. In those circumstances, it is sensible to re-examine the proposals to see whether they can be made to conform more closely with United Kingdom interests.
  Mr. Thurnham: Will my hon. Friend bear in mind the fact that the directive would mean a massive investment of £500 million in equipment that this country cannot possibly provide and which would have to be imported mainly from the EEC? Does she agree that we should be on our guard against any underlying motive of that kind by other member states, given that the United Kingdom is the biggest market in the Community for such equipment?
  Mrs. Fenner: I have made it clear that we are concerned about the capital investment that would be required if small retailers had to meet these proposals, but I do not think that my hon. Friend should be too pessimistic about motives. We are mindful of the cost, and we take the view that unless the proposals can be made to conform more closely with out interests and the unnecessarily onerous features removed from them, continued opposition is the only possible course. We hope, however, that it may be possible to safeguard our interests by seeking commercially sensible and technically sound amendments.

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  I hope that I have covered all the points raised in the debate. It is clear from the number of Members present at this time of night that there is great interest in this matter, and we shall carefully consider the views that have been expressed. There is now considerable momentum behind the proposals and this is an opportunity to consider what is the best course of action, taking into account the various interests throughout the United Kingdom.
  I believe that there is no option but to oppose the directive in its present form. It is unnecessary and goes far beyond what is justified in terms of facilitating intra-Community trade. It fails to take account of the practical realities of local distribution and retailing of frozen food and in some areas it appears to contain technical inaccuracies and confusions. Nevertheless, I believe that it is worth trying to get the proposals modified so that they become sounder and more acceptable to the United Kingdom, particularly at the local distribution and retail levels.
  This approach offers an ultimate safeguard against attempts to impose extensive and unjustified constraints and allows more constructive tactics to be employed. Given the favourable climate of opinion in other member states, it will probably offer the best chance to reach generally acceptable conclusions on the treatment of frozen food.
  Question put and agreed to.
  Resolved,
  That this House takes note of European Community Document No. 9402/84 on the approximation of laws relating to quick frozen foodstuffs for human consumption; and supports the Government's intention to oppose Community measures in this field, unless they can be modified to meet United Kingdom interests.

  Mental Health Act
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert].
  11.54 pm
  Mr. Richard Ottaway: I wish to draw attention in this short debate to what I believe to be a deficiency in the Mental Health Act 1983. Before going into what I believe to be the difficulties with the Act, I shall refer to a case which came to my attention in my constituency involving Mr. Lionel Clarke. I make no apologies for broadcasting his name, as I first heard about the case via the national television channels, so the background to his case is a matter of common knowledge.
  Mr. Clarke, who is a negro in his 20s, has a long history of mental illness, and the social report produced by the Nottinghamshire county council shows that he has a background of aggression and that he is especially difficult to handle. This manifests itself in a number of violent tendencies. He has been in and out of a number of mental institutions. He was in Rampton, and after his discharge in 1980 he returned to his home and was peaceful for a while. However, in 1982 he threatened to kill his neighbour. He went back into a local mental hospital where he caused a considerable amount of damage, including tearing radiators from the hospital walls. His aggression increased over the years until in 1984 he broke down the door of his neighbour's house after he had been refused entry. He threatened his neighbour's children and had to be arrested by the police. It required 12 officers to detain him with a number of police cars and police dogs, and the incident caused a great deal of local concern.
  Mr. Clarke was readmitted into Highbury hospital, which is a local mental hospital, and was released in July 1984. His mother was most concerned about his release and expressed her concern. She felt that she could not cope with someone of such violent tendencies living in her home. Her fears were justified, because a few weeks later he broke into his grandmother's house, broke it up, smashed up the cars of the police officers who came to detain him and generally caused havoc. In January 1985 he broke up his mother's house and threatened to kill her. He was remanded in custody for the damage which he had caused to his mother's house. As there were no suitable settings for him in the local health authority area he was put in Lincoln prison where he was remanded pending trial for the offences which he is believed to have committed.
  It was against the seriousness of Mr. Clarke's background and the nature of his behaviour that Nottinghamshire county council prepared a report for the Nottinghamshire magistrates' court. The council decided that he was a definite risk to his family, to the neighbourhood and to the community generally. In preparing the report for the magistrates' court, no fewer than five psychiatrists were consulted over Mr. Clarke's condition. One psychiatrist came to the conclusion that, though he was a difficult person, he was not mentally ill. Of the other four, they all felt that he should be in a secure unit. Two of the four thought that that secure unit should be Rampton, which is under the control of the DHSS, which is an important feature in this case.
  I shall quote a small extract from the consultant psychiatrist at Rampton. If he does not know what the matter with the man is, no one will. He wrote:
  "I still consider that he presents a grave danger to others and that it is only a matter of time before he causes serious injury to

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  someone. I consider that at the present time he needs treatment under the high degree of security, which is provided by Rampton Hospital."
  Faced with reports of that nature, the Nottinghamshire magistrates decided that Mr. Clarke should be the subject of a hospitalisation order under section 57 of the Mental Health Act 1983. Under section 39, a request was made to the Nottingham health authority to provide the court with details of a secure setting for Mr. Clarke so that the magistrates could make a hospitalisation order and put him into a secure setting.
  On 23 April the Nottingham health authority said that there was no suitable secure accommodation for Mr. Clarke in the region, or in any other region. Under section 39 of the Act the authority had been asked to provide details of a place in the region and the authority said that no spare place was available. It was not that a place could not be found but that the man was so dangerous and his condition so serious that suitable treatment could not be found in the region.
  My information after that date is a little woolly, but someone then approached the DHSS, which controls Rampton, and said that the man should be admitted to Rampton. The DHSS admissions panel, in spite of the psychiatrists' report, decided that he should not be admitted to Rampton.
  The magistrates were put in a difficulty because they could not keep the man on remand indefinitely. They had to try him. He was found guilty of offences and fined, and then—lo and behold—he was discharged. This was a man who a consultant psychiatrist at Rampton thought would eventually cause someone injury. No order was made.
  This caused considerable concern to Mr. Clarke's family and the community. It attracted publicity. He was sent home with no obligation except to behave himself. That clearly could not continue, but it was not until his mother applied to start the process again that the man was taken to a local mental hospital. Within a month he was transferred to Rampton.
  I have not mentioned civil liberties, because it is not appropriate, but civil liberties are a concern. I have not mentioned section 41 of the Mental Health Act, which places a duty upon the Home Secretary to protect the public's interest in such circumstances. The case that I have described shows that there is a lacuna in the operation of the Mental Health Act in that a man who is clearly mentally unwell can be set free.
  I should like to ask some questions which if not answered tonight should eventually be answered. First, on what grounds did the DHSS refuse to admit the man to Rampton? The psychiatrist's report was available to the admission panel, but it was ignored. Secondly, why had the process to be restarted? Section 39 of the Act has been shown to be ineffective. The only obligation under that section seems to be to say whether a place is or is not available.
  We should change the legislation to oblige the health authority to find a place for such a person. That was discussed in the Committee considering the measure and the Minister told the Committee that he would rather strengthen the guidelines than rely upon legislation. Clearly, those guidelines are not working. I hope that, if legislation is introduced, they will be reinforced. It is not sensible to set such people free on the streets and cause us
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  great concern. I should like to know about the Department's plans to block this loophole, which cannot be left in its present position.
  12.5 am
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I am grateful to my hon. Friend the Member for Nottingham, North (Mr. Ottaway) for raising this point. He is rightly concerned about the welfare of one of his constituents, chat person's family, the community and those who might be adversely affected by his actions. I shall try to answer all my hon. Friend's points in relation to the particular case and by using the case as an illustration of our general difficulties. These difficulties arise not so much because of the Mental Health Act 1983 but because of the nature of a relatively small number of cases, such as that cited by my hon. Friend, which fall within the difficult-to-place or difficult-to-categorise categories or where there is a dispute between clinical specialists about the exact nature of the illness or handicap.
  At least one other hon. Member will remember a similar debate a few weeks ago when my hon. Friend the Member for Plymouth, Drake (Miss Fookes) raised the case of a young woman who fell into a similar category. I should like to use some of the arguments tonight that I used then to show that better placement may be achieved not necessarily by a change in the law but by improvements in practice and better handling of difficult-to-place patients. We are dealing with a small handful of people in this respect.
  A patient can be admitted to hospital for treatment if the hospital thinks that it can help and if the patient is willing to seek such help. The Mental Health Act is specific about detention. Ministers make no apology for the strictness of the criteria.
  My hon. Friend said that he did not want to raise the civil liberties aspect and that this was not an appropriate occasion on which to discuss it. I have read with interest what he has said in the House on another occasion about civil liberties. It is important to remember that to deprive a person of his civil liberty is a serious matter. It is right that such a decision should be taken only after the most careful consideration.
  I make no apology for the application of four strict criteria. The patient must be suffering from one or more—although not necessarily all—of the four forms of mental disorders set out in part I of the Mental Health Act and the mental disorder must be of a nature or degree that makes it appropriate for the patient to receive medical treatment in hospital. Ministers looking at those conditions are immediately and properly in the hands of medical advisers, clinicians and psychiatrists who make these judgments on society's behalf. It is not always easy for those judgments to be made clearly by medical authorities and it is sometimes very difficult for Ministers to make up their minds about particular cases. I would not wish to hide the difficulties that are faced by my right hon. Friend the Secretary of State and other Ministers in the Department. We spend a great amount of time trying to evaluate these cases.
  Furthermore, it must be necessary under the Act for the health or safety of the patient or for the protection of others—in this case, my hon. Friend would probably say for both — that he or she receives this treatment, and it

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  cannot be provided unless he or she is detained; for example, should the patient be unwilling to stay in hospital on a voluntary basis.
  Whether those conditions are met in any case depends on at least two medical practitioners making the necessary recommendations. Provided all the conditions are met, the courts have the power, when dealing with someone who has committed offences punishable by imprisonment, to order admission to hospital under section 37 of the 1983 Act.
  The Act did not, however—this point was debated at length during the passage of the measure; my hon. Friend has read the Committee proceedings and referred in his speech to some of those debates—confer on the courts the power to direct either a regional health authority to take or an individual doctor to treat a patient. Those who read the Committee proceedings will see why the Minister argued that that should be so.
  Nevertheless, the ability of the courts to make hospital orders has been enhanced by the Act, especially by enabling them to get information from regional health authorities under section 39. That places a duty on regional health authorities to respond to requests from courts for information about a hospital or hospitals within its region or elsewhere which could give accommodation to a man or woman in respect of whom the courts are considering a hospital order. The section was specifically designed to help the courts to establish what facilities are available and which is the appropriate hospital catchment area for a patient.
  Before coming to the question of patients, and to the particular patient to whom my hon. Friend referred, it might be of interest to the House if I give a resumé of the operation of the Act so far. In the past year the Department has monitored the occasions when section 39 has been invoked by the courts, and we have monitored the outcome. There have been only 29 requests for information by the courts. That represented just over half of cases, 18 patients, being admitted to NHS hospitals, some of whom might have fallen by the wayside and gone to prison instead had section 39 not existed. Thus far, therefore, for those 18 patients, there has been a considerable advance. The 29 references made by the courts gives a picture of the dimension of the problem—a relatively small number of people, but that is not to say that they are not an important handful of people.
  Mr. Ottaway: I was confused when reading section 39 by the fact that no reference seems to be made to consideration of placing patients in very secure units, for use of a better expression, such as Rampton, which are under the control not of the local health authority but of the Department of Health and Social Security. How do those hospitals come within the ambit of section 39?
  Mr. Patten: We have discretion to admit to special hospitals subject to the advice of the panel which assists Ministers.
  It is true that an approach through section 39 is limited to the courts, and that answers my hon. Friend's question. But in the last two years the Department has taken its own initiative—because we have seen some of the problems—by having detailed discussions with each of the 14 health regions in the country involving senior officers of the NHS authorities, consultants and senior nursing staff
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  from individual hospitals—we are indeed grateful to the nursing staff in some of these hospitals for dealing with patients who cause such difficulties—directors of social services and prison medical officers. We got all those people together and talked about this single category of difficult to place patients—those at the margin—and by getting those most concerned to look at the problem in that way, we have a much clearer picture of the total pattern of services and what developments are necessary to ensure that there is a comprehensive service in each region.
  Further developments are needed in some regions, but some are not so much to do with bricks and mortar and staff as with a better understanding of how to manage some of these patients and redistribute them through separate hospitals in regional secure units or, as a matter of last resort, in places such as Rampton. There will always be cases that do not readily fit into the pattern of available facilities, so that will be problems in placement.
  That leads me to the case that my hon. Friend has chosen as the subject for his debate. As I have explained before, I do not think that it is proper for me, as a Minister, and it may not be in the interests of the person concerned, to discuss the details of the individual case in public. Sometimes these details are highly personal. My hon. Friend dealt with great delicacy and sensitivity with a case that has already been widely broadcast. None the less, some points raise sensitive issues of confidentiality, and to answer those points I prefer to address my hon. Friend by letter. I am not trying to dodge the issue.
  The case to which my hon. Friend refers is one in which the court clearly wanted to make a hospital order. However, it was prevented from doing so because the Trent regional health authority could not offer a hospital placement either in its region or elsewhere. The court had requested information under section 39. My right hon. Friend the Secretary of State did not consider that a special hospital place was appropriate. My hon. Friend has outlined the sequence of events, and how that decision came to be taken. He has also asked some questions which involve confidentiality and individual details, and I shall write to him about them.
  The court had no option but to impose a custodial sentence. Because of the period spent on remand, the man concerned was released back into the community. However, in this case there had been some disagreement between doctors about the nature of the mental disorder. Sometimes, cases that to lay people look like mental illness may be cases of mental handicap, with additional behavioural problems. Such considerations bore on the region's decision not to offer a place in its secure unit.
  In the event, although strictly speaking treatment in a maximum security unit was not warranted, my right hon. and learned friend the Minister for Health intervened speedily after my hon. Friend's concern was made known and asked if, after looking at the case again, the region decided that it could not look after the man, a place at Rampton should be made available. We try to act as sensitively as possible on individual cases causing concern, such as this, when the way in which the law has worked has left someone falling between all the available stools.
  After further detailed discussions between my Department and the region, the latter, still not being prepared to offer a permanent hospital place, offered a bed as a temporary measure in a local hospital, and the patient was therefore transferred to Rampton hospital. He is there

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  now, and treatment is available from skilled staff for that man who needs our help. That also means that the people from the area from which he came—neighbours and relatives—who were concerned, have no more reason to be concerned, and that is important.
  On the wider issues, I hope that I have said enough to demonstrate that there has been some real progress under the Mental Health Act, even if my hon. Friend feels that in this case that progress has not been shown.
  I shall certainly consider the point that my hon. Friend made about the possibility of there being a lacuna in the law. Many, if not all, of the problems caused by difficult-to-place patients, where section 39 is involved, will during
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  the next few years be greatly aided by the considerable progress that we are making by keeping in close touch with all the people in the different categories that I listed, who are concerned with this small but important minority of patients who do not fit readily into any system. I suspect that we shall never design a perfect legal system to encompass all those whose needs must be tackled on an individual basis.
  Question put and agreed to.
  Adjourned accordingly at twenty minutes past Twelve o' clock.