Commons Sitting of 22 October 1985

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

    GREATER LONDON COUNCIL (GENERAL POWERS) BILL
    Yorkshire Water Authority Bill Clwyd County Council Bill [Lords]
    Considered; to be read the Third time.

    HEREFORD CITY COUNCIL BILL [Lords]
    Considered
    Amendments agreed to.
    To be read the Third time.

    WORCESTER CITY COUNCIL BILL [Lords]
    Considered.
    Amendments agreed to.
    To be read the Third time.

  PETERHEAD HARBOURS (SOUTH BAY DEVELOPMENT)

    ORDER CONFIRMATION BILL (By ORDER)
    Order for Second Reading read.
    To be read a Second time upon Thursday.

Oral Answers to Questions
  DEFENCE

    WG/30 Helicopter
    Mr. Hayesasked the Secretary of State for Defence what recent discussions he has had with Westlands about the future of the WG/30 helicopter.
    Mr. Easthamasked the Secretary of State for Defence, if he will make a statement concerning the Puma and Wessex V replacement.
    The Minister of State for Defence Procurement (Mr. Norman Lamont): The review of requirements for support helicopters about which my predecessor informed the House on 26 March last is continuing.
    Mr. Haynes: Will the Government underwrite the Indian order? If not, why not?
    Mr. Lamont: My right hon. Friend and Mr. Gandhi discussed the order. Mr. Gandhi made it clear that he did not intend his visit here to be a purchasing visit. Decisions have not yet been announced, although we hope that the Indians will announce decisions shortly. The Government have made it clear that the £65 million of aid that has been earmarked is still available.
    Mr. Eastham: I remind the Minister that an engineering force of 8,000 workers depends on the
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    Westland helicopter contract. Although it might be possible to get the Indian order, it probably means only one or two years' work. Does the Minister agree that the British Government should show confidence in British helicopters by buying them, thus encouraging sales to the rest of the world?
    Mr. Lamont: The Government have shown strong support for Westland helicopters in launch aid for the WG/ 30 and for the EH 101. We have placed £80 million worth of work there, orders for spares and support amount to £60 million a year, and I have mentioned the £65 million of aid that is available. The Government have shown that they are prepared to go a long way to support Westland. We want Westland to prosper. The company's ability to meet the armed forces' requirement is extremely important to us.
    Sir Antony Buck: We welcome my hon. Friend to the Dispatch Box for the first time in his new capacity. Will he repeat that he shares our view that it is vital to maintain an indigenous helicopter building capability and that this matter must be considered in that context?
    Mr. Lamont: We want the company to prosper. That is why we have made such large resources available to it and why we have given it enormous support to help it sell its products. As my hon. and learned Friend says, the ability to supply helicopters and spares to our forces is extremely important.
    Mr. Ashdown: I also welcome the Minister to his new appointment. Is he aware that Westland has shown great courage in carrying the considerable risks involved in the pursuit of the Indian order, at the behest of the Government? Why will the Government not now carry the minimal risk involved in underwriting that order until the Indians go firm in perhaps a matter of weeks? Does he agree that a company such as Westland deserves better from the Government'? Is not the Minister's shilly shallying threatening jobs and the integrity of a great company?
    Mr. Lamont: I thank the hon. Gentleman for his kind words, which preceded an outrageous suggestion.
    The Government have provided large sums for the development of the WG/30, and have paid the bill for a large part of its development. The taxpayer has also provided aid to underpin orders. That seems to be considerable support, and that is what we have done. That amounts to considerable sums.
    Mr. Maxwell-Hyslop: Will my hon. Friend bear in mind the extremely valuable, and probably unique, experience which Westlands now has of modem helicopters in combat following the Falklands war, and ensure that that valuable experience is put to the best use in the export market through the ECGD giving cover wisely, which it has not been doing sufficiently in recent months?
    Mr. Lamont: I shall certainly bear in mind my hon. Friend's comments. We shall do everything that we can to support the company in export markets.
    Mr. McNamara: I also welcome the hon. Gentleman to his new post, but he seems to be starting as disastrously as his predecessor. How can the Government possibly justify seeking to maintain our defence industries at the expense of the overseas aid budget, when they should be

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    spending money from their budget to support our indigenous defence industries? Will the hon. Gentleman, in his new position, take the opportunity to instruct his right hon. Friend the Secretary of State that the problem faced by Westland and many of our defence companies is the reluctance of his right hon. Friend to face up to the present strains and pressures on the defence budget, and that the best thing that his right hon. Friend can do is to cancel Trident and get on with our conventional defence?
    Mr. Lamont: The hon. Gentleman may not have been on the Opposition Front Bench for long, but he must have been there long enough to know that the WG/30 is not a defence helicopter. That is why it is perfectly proper for us to use the aid budget to help its sales. What does the hon. Gentleman want? Does he, or does he not, want us to help to sell the aircraft? If we did not support sales of it, he would be the first to criticise us. We have done everything we can, and we shall continue to support the sales of the aircraft.

    Privatisation
    Mr. Thurnhamasked the Secretary of State for Defence what are the current estimated savings by his Department for 1985–86 as a result of privatisation schemes.
    Mr. Norman Lamont: No private capital has been introduced this year into any organisation which is the responsibility of my Department. The royal ordnance factories were established as a public limited company at the beginning of this year. When private capital is introduced, I am confident that the current trend towards increased efficiency will be strengthened.
    Mr. Thurnham: While I welcome the plans to move defence establishments to the north, what total savings can be expected from using private contractors?
    Mr. Lamont: Regarding my hon. Friend's first point, we are studying that matter. We intend to see whether there can be some deployment of establishment and offices. No central estimate is available of the savings from commercial management and contractorisation, but I have asked that such a central estimate should be prepared, and I intend to make it available to the House. The present position is that 100 different functions have been contracted out, and 1,000 contracts for support services are being let annually. I intend at the earliest opportunity to make available to the House our estimate of the savings that have resulted from that.
    Mr. Gordon Brown: If the Minister cannot tell us anything about the savings from his privatisation experiments, will he tell us something about the costs? Will he be making a statement about the overrun in costs and the deficiencies associated with the private sector refits of Redpole, Otter and Euryalus? Will he explain to the House why public sector money is being used to advertise the privatisation of the royal dockyards before the Minister has any parliamentary authority to go ahead with those schemes?
    Mr. Lamont: I did not say that we could not tell the House anything about the savings from commercial management. Of course figures are available. For example, the Department is saving about £12 million a year from contracts that have been let for cleaning in MOD
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    establishments. I said that I intended that a global figure for savings from contractualisation should be made available to the House. HMS Redpole was put out for refit in East Anglia. It has gone into Rosyth for post-refit work and I very much regret that the labour force there is blacking the ship. Instead of blacking ships, it should be demonstrating its efficiency.
    Mr. Key: Does my hon. Friend agree that the least pleasant side of contractorisation and privatisation studies is the uncertainty that surrounds an otherwise loyal and stable work force? Can he help the Sunday school teachers in my constituency by telling us whether he intends to contractorise or privatise the shepherds on the Portland ranges?
    Mr. Lamont: In the seven weeks in which I have been in the Department I have not yet turned my mind to the shepherds, but I shall certainly give them the most careful consideration. There is always uncertainty when measures to improve efficiency are taken. That is inevitable, but we must pursue those measures.
    Mr. Denzil Davies: Will the Minister withdraw the slur that he cast on the work force at Rosyth when he said that it should demonstrate its efficiency? The workers have done that over a very long period, to the benefit of the local economy and the Royal Navy. The real question is why the Government do not drop their privatisation plans, which will only further damage the prospects of the Royal Navy and of Rosyth.
    Mr. Lamont: I do not think that I cast any slur on anyone. My remarks were simple common sense. When work comes to Rosyth, what good does it do the men themselves or the reputation of Rosyth if a ship is blacked? The men ought to be demonstrating that if even if there is greater competition, they can compete efficiently.
    Mr. D. E. Thomas: Has the Minister had an opportunity to read the report produced by Dyfed county council on the likely effects of contractorisation on the Cardigan bay range? Does he agree with the estimate of job losses in that report?
    Mr. Lamont: I have not had a chance to study that report, but I shall do so and I shall be in touch with the hon. Gentleman.

    BAOR (Equipment)
    Mr. Ashdownasked the Secretary of State for Defence what plans he has to improve the equipment available to the British Army of the Rhine.
    Mr. Norman Lamont: I refer the hon. Member to the "Statement on the Defence Estimates 1985" and my right hon. Friend's statement in his opening speech in the defence debate on 12 June.
    Mr. Ashdown: Has the Minister read the recent articles in The Economist, which show that Britain has the most poorly equipped army on NATO's central front, with less heavy artillery than the Dutch, fewer tanks than the French and the Germans, 100 fewer helicopters than we need to do our task and no anti-aircraft guns at all? If the Government are seriously interested in supporting NATO, why are they about to spend £12 billion on being independent, in a nuclear sense, from NATO instead of reinforcing NATO where it is weakest and fulfilling our scandalously inadequate commitment?
    Mr. Lamont: As the House well knows, we have extensive plans to strengthen the British Army of the Rhine. We plan to introduce six regiments of Challenger into BAOR. Some will replace the existing Chieftain regiments, and some new armoured regiments are being formed. We also have plans to introduce the MLRS—the multiple launch rocket system — a weapon of devastating quality, which will add enormously to our forces in Germany.
    As regards the hon. Gentleman's question about Trident, no amount of expenditure of that money on conventional forces could possibly provide the same deterrent effect.
    Mr. Denzil Davies: Is it not a fact that BAOR will never get the equipment that it deserves and should have while the Government stretch the defence budget over so many areas? Why do the Government not realise that the British economy and the British defence budget cannot possibly maintain a proper conventional contribution to NATO, to the proper defence of Britain, to the Trident nuclear missile system and to an increasing out-of-area capability? If the Minister is concerned about BAOR, he should cancel Trident and eventually end our out-of-area commitment.
    Mr. Lamont: I note what the right hon. Gentleman said about out-of-area commitments, and I am sure that his remarks will be well noted outside the House. The right hon. Gentleman has just made an extremely interesting initial policy announcement.
    As to the effect of Trident on the conventional equipment budget, the right hon. Gentleman ignores the fact that we have increased the defence budget by 20 per cent. in real terms. Of that 20 per cent., only one-fifth has gone on Trident, so there is plenty of headroom for an improvement in equipment for our conventional forces.
    Mr. Cormack: Will my hon. Friend promise that there will be no cut in defence expenditure this year?
    Mr. Lamont: My hon. Friend knows that the Government's expenditure plans are set out in the White Paper.
    Mr. Home Robertson: Come on.
    Mr. Lamont: I am coming on. My hon. Friend also knows that in the normal way in which public expenditure is reviewed, discussions are taking place within Whitehall.

    RAF Pilots (Training)
    Mr. Beithasked the Secretary of State for Defence if he will make a statement on the operational effectiveness of the current content and levels of training for pilots in the Royal Air Force.
    The Minister of State for the Armed Forces (Mr. John Stanley): We aim to produce RAF pilots of the highest standard of operational effectiveness. The operational performance of RAF crews in tasks such as intercepting Soviet aircraft in the United Kingdom air defence region; in regularly saving lives in search and rescue operations; and in the RAF's massive air lift of food in Ethiopia in very demanding flying conditions shows that such a standard is being achieved.
    Mr. Beith: I recognise that low-flying is an important component of a high standard of training, but is the
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    Minister satisfied that there are not large swathes of the country which are not taking their fair share of this disruptive activity? Does he accept that the activity should be shared more evenly? Is he satisfied that enough is done in the training programme to impress upon pilots the need to observe the 250 ft limit, which is not always observed?
    Mr. Stanley: I am grateful to the hon. Gentleman for acknowledging the operational importance of low-flying training, which is fundamental to the survivability in modern warfare conditions of our advanced combat aircraft.
    We examine closely the areas within which low flying is restricted. It makes sense to avoid areas of high population or where there are hospitals. Our broad policy is to try to spread the low-flying load as widely and therefore as thinly as possible so as to cause the minimum disturbance in any locality. We train our pilots intensively to ensure that the 250 ft limit is observed.
    Sir Hector Monro: Does my right hon. Friend agree that the RAF's airmanship standard is the highest in the world and that that can be maintained only if sufficient fuel is provided for adequate flying hours each month? Can he assure me that that will be available?
    Mr. Stanley: I am grateful to my hon. Friend for his comment about the RAF's standard of airmanship, and I endorse what he said. I think that RAF pilots are second to none in the world.
    We have been able to make some increases in fuel supplies after initial cuts announced this year. There will be only a small reduction this year. I can assure my hon. Friend that our combat pilots' flying hours are higher than the NATO minimum.
    Mr. Campbell-Savours: Is it true that the aircraft disaster over Cumbria three weeks ago involving two Jaguar aircraft flying in a dangerous manner cost the MOD £21 million? Is that not rather a lot of money to be involved when two aircraft were flying in the manner described by people who saw the accident?
    Is the Minister aware of the unrelenting public hostility throughout Cumbria to low-flying exercises, and is it not time that the policy was reviewed? Is the Minister further aware that I have more letters in my office on this matter than on almost any other subject? May we have some action from the Government. who so far have been insensitive to protests from the general public?
    Mr. Stanley: I hope that the hon. Gentleman will reconsider the criticisms that he appeared to direct at the air crew who were tragically involved in that accident, even though the results of the board of inquiry are not yet known.
    I hope that the hon. Gentleman and the House recognise that, in order to achieve the very demanding flying standards necessary in today's modern warfare conditions, the Royal Air Force combat pilots expose themselves to grave risks and must practise intensively to achieve their very high standards.
    Mr. Maclean: Will my right. hon. Friend pass on our condolences to the families of the pilots who were tragically killed in that accident? That crash, about which the hon. Member for Workington (Mr. Campbell-Savours) spoke, happened in my constituency.
    Does my right hon. Friend accept that the vast majority of my constituents dearly wish that low flying was not

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    necessary, but realise that it is preferable to have our pilots flying over the constituency at 250 ft than to have foreign aggressors at 10,000 ft?
    Mr. Stanley: I am grateful to my hon. Friend for his remarks. I am sure that the relatives of the pilots will appreciate what he said.
    I fully endorse his remarks about the critical relationship between demanding flying standards and the survivability of aircraft in modern warfare conditions.

    Royal Dockyards
    Mr. Hicksasked the Secretary of State for Defence how many representations he has now received following publication of the consultative document on the future of the royal dockyards; and if he will make a statement.
    The Secretary of State for Defence (Mr. Michael Heseltine): More than 100 letters have been received by my Department since the announcement on 17 April of a period of consultation on subjects relating to the future management of the royal dockyards. In addition, some 2,000 postcards have been addressed to the Prime Minister by dockyard employees. There has also been a continuing correspondence with industry on aspects of the plans to introduce commercial management to the dockyards.
    Mr. Hicks: Will my right hon. Friend confirm that since he announced in July his firm decision to introduce agency management into the royal dockyards there has been a distinct lack of support and enthusiasm? Will he assure the House that between now and the Queen's Speech he will re-examine his proposals with a view to introducing a more sensible option for the future management of the dockyards?
    Mr. Heseltine: I know that my hon. Friend feels strongly about this matter. There is, of course, a period of uncertainty in the early stages of any change. After careful consideration, the Government reached the view that it would be in the best interests of the Royal Navy, the local economies and, most certainly, the defence budget to move towards a process of commercial management. I would not wish to give my hon. Friend the false impression that I might be prepared to reconsider.
    Dr. Owen: Will the Government reply to the criticisms of the Public Accounts Committee, especially that the proposals could increase the cost of the defence budget? In view of the massive strain now being placed on the defence budget, is the right hon. Gentleman prepared to consider this whole question afresh?
    Mr. Heseltine: No, because one of the purposes of moving to commercial management was to secure tens of millions of pounds of possible economies from the enhanced efficiency in the dockyards. Obviously, that must be my prime responsibility as Secretary of State.
    Mr. Douglas: Should not the Secretary of State refer to the strictures of the Select Committee on Defence about his preferred option? Will he acknowledge that what is happening at Rosyth and Devonport is a diminution of morale in a very essential part of our labour force? Will he assure us that what happened with Redpole will not happen again—when a ship put into the hands of private enterprise had a number of deficiencies, was hawked into the yard at Rosyth and the work force took grave exception
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    to the way in which it was treated? When does the Secretary of State hope to report to the House on the effect of that on our strategic deterrents?
    Mr. Heseltine: The hon. Gentleman has given a very one-sided account of what happened. The work force at Rosyth would do itself more good if it was actually showing the efficiency that it can achieve. and which it pointed out as being an option within the management of the dockyards.
    The most encouraging development that has emerged since I last reported to the House on this matter is that, following informal consultations with the dockyard industrial work force, it appears that we shall be able to secure the enhanced efficiency and the reduction of numbers that we seek largely through voluntary redundancy and early retirement.
    In those circumstances, although a state of redundancy technically has to be declared, the process from today's position to the enhanced procedures and efficiencies appears to offer an easier passage than even I believed possible when I first made the proposals.
    Mr. Denzil Davies: Is it not a fact that there is no support whatever, either in the House or among informed opinion outside, for the suggestion of commercial management that the right hon. Gentleman is putting forward? The proposal is based not on any form of rational analysis, but is purely party dogma. Will he, even at this late stage, drop this hare-brained scheme, which can only put thousands of people out of work, damage the economies of Devonport and Rosyth and provide a worse service for the Royal Navy in this crucial area?
    Mr. Heseltine: I must take a view which puts on the one hand the views of the right hon. Gentleman and on the other the views of the Admiralty Board. I find no difficulty in reaching an easy decision to back the Admiralty Board.

    Eastern Atlantic (Naval Forces)
    Mr. Dixonasked the Secretary of State for Defence if he will make a statement concerning United Kingdom naval forces in the eastern Atlantic.
    Mr. Stanley: I refer the hon. Gentleman to paragraphs 432 to 445 of volume I of the Statement on the Defence Estimates 1985.
    Mr. Dixon: Will the strain on the defence budget have any effect on the ordering of the new frigates? Is the right hon. Gentleman aware that if it does, that will have serious repercussions for shipyards on the Tyne? Would it not make more sense to cancel the Trident project and concentrate the money on the more conventional service vessels?
    Mr. Stanley: As the hon. Gentleman knows, a substantial amount of shipbuilding is now taking place at Swan Hunter and that a substantial amount of repair work is going to the Tyne repair yards. The answer to his question about Trident is that we could in no way protect this country against nuclear blackmail with destroyers and frigates.
    Mr. Viggers: Will my right hon. Friend bring us up to date on his thinking about the replacement of Fearless and Intrepid, which are needed for the marine reinforcement of the northern flank, and which are likely to end their useful lives by about 1990?
    Mr. Stanley: As my hon. Friend will be aware, both Intrepid and Fearless are undergoing refits. That will improve their capabilities and extend their lives until the mid-1990s. As the House has been told, we are examining the various amphibious options for their replacement. That examination is on schedule and, as we have said, we shall be in a position to take decisions next year.

    Submarine Statistics
    Mr. Wigleyasked the Secretary of State for Defence how many suspected incidents have been investigated by his Department over the past 12 months of submarines being involved either in collisions with other vessels or fouling fishing nets within United Kingdom territorial waters.
    Mr. Stanley: In the last 12 months, the Ministry of Defence and the Department of Transport have investigated two losses of fishing vessels as a result of fouling their gear where it was initially alleged that submarines might have been responsible. Both investigations concluded that submarines were not involved.
    Mr. Wigley: Will the Minister confirm that those two cases concerned the Mhari L, involving the loss of five lives earlier this year, and the South Stack from Holyhead, which was lost last summer with the loss of three lives? Will he further confirm that the Government have received strong representations from the Irish Government about dangers arising from submarines in the Irish sea? Will the Government now give a stronger warning to fishermen about the movement of submarines, to try to minimise the dangers arising from such movements?
    Mr. Stanley: The two incidents in the last 12 months to which I was referring involved the Mhari L, which the hon. Gentleman mentioned, and the Channel Avenger, which sank off Portland Bill in December 1984. As he will be aware, there have been a number of incidents in the last 10 years in which there has been some involvement of submarines with various fishing vessels. We keep our procedures carefully under review and, as far as practicable, every possible precaution is taken to avoid such incidents taking place, and I am glad to say that there have been no such incidents in the last 12 months.
    Mr. Bill Walker: Will my right hon. Friend confirm that submarines involved in deterrent and other activities have been entering and leaving the Clyde area for the last two decades? During that time there have been a number of allegations. In a recent one, concerning the constituency of my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang), it was alleged that a fishing vessel had been sunk after being involved with a nuclear submarine. That turned out to be untrue, with positive evidence to show that the ship had fouled something underwater and had had nothing to do with a submarine.
    Mr. Stanley: My hon. Friend is entirely right. There have been a number of incidents where the initial allegation has been that a fishing vessel has fouled a submarine. Subsequent investigations have shown that no submarine has been involved.
    Mr. Hoyle: Does the right hon. Gentleman agree that on almost every occasion when an allegation has been made it has been met with a denial? It was denied that a submarine was involved when the Irish trawler was sunk,
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    until it was proved conclusively that a submarine had been involved. Should not warnings be given to fishing vessels of the dangers that arise, especially in the Irish sea, from the activities of submarines?
    Mr. Stanley: The hon. Gentleman will be aware that certain areas are marked on maritime maps as being those of naval activity, in some instances submarine activity. I think he will understand that, given the sensitivity of submarine operations, it would be irresponsible of us to give public acknowledgements of submarine routes and deployments.

    Low-flying Aircraft (Powys)
    Mr. Livseyasked the Secretary of State for Defence what representations he has received concerning the frequency of military aircraft engaged in low-flying over Powys.
    Mr. Stanley: Over the past 12 months the Ministry of Defence has received 24 representations concerning the frequency of military aircraft flights in the Powys area.
    Mr. Livesey: My constituents, tourists, animals, young children and others are having tremendous hardship inflicted upon them by low-flying. Will my right hon. Friend seek immediately to reduce low-flying in Powys by 50 per cent.?
    Mr. Stanley: When the hon. Gentleman considers my answer, he will perhaps conclude that 24 representations over the past 12 months is not exactly symptomatic of what he fears on behalf of his constituents and their animals. 'We must return to the point that I made in answering a previous question on low-flying, which is that if we reduce low-flying in the hon. Gentleman's constituency and the county in which it is situated, that can only be at the expense of the constituents of other hon. Members.
    Mr. Wilkinson: Does my right hon. Friend agree that to maintain the combat efficiency, proficiency and flight safety of Royal Air Force aircrews it is necessary that they obtain adequate low-flying experience, including occasionally over Powys? Will he bear in mind that it is equally important to retain experienced crews? Will he consider the article that appeared in Flight International, on American flying reserves, which describes the excellent value for money that they provide for the United States air force?
    Mr. Stanley: I am grateful to my hon. Friend for his point about reserves, which I accept. I endorse fully what he has rightly said about the critical relationship between the effectiveness of the RAF and its ability to have regular and intensive flying at low level.

    South Atlantic (Force Levels)
    Sir John Biggs-Davisonasked the Secretary of State for Defence if he will make a statement about the reduction of Her Majesty's forces in the south Atlantic.
    Mr. Stanley: The Falklands force level is maintained at the minimum size necessary to defend the Falkland Islands, South Georgia and the South Sandwich Islands, but it has proved possible to reduce numbers steadily over the past year or so. Once the new airport at Mount Pleasant and the garrison facilities are complete we should be able to reduce still further the level of forces permanently stationed on the islands.
    Sir John Biggs-Davison: Against this lessening cost should we not set the splendid training facilities for all three services on the Falklands and the British stake in the vast economic potential of the region? Secondly, are there not naval and air forces which are admirably suited to police a fishing zone, which has been so unconscionably delayed by the Foreign Office?
    Mr. Stanley: I think that my hon. Friend will wish to pursue his second point with my right hon. and learned Friend the Foreign Secretary. I endorse what he said about the training facilities on the Falkland Islands. The islands provide some near unique training opportunities for us, and that certainly should be put into the balance against the cost of the Falklands garrison.
    Mr. Dalyell: Will the Minister formulate a considered response to the article in the Sunday Post on the conditions of the 3,000 civilian workers on the Falklands? The article alleges drunkenness, drugs and "wacky taccy" parties.
    Mr. Stanley: I think the hon. Gentleman will be aware that the conduct of the civilian work force is not a matter for Defence Ministers. I am not sure whether that is a matter for Ministers in any other Department, but, if it is, it would fall to my right hon. Friend the Secretary of State for the Environment.
    Mr. Cyril D. Townsend: Will my right hon. Friend continue to emphasise that the garrison is purely defensive and represents no conceivable threat to the mainland? Will he emphasise also that it must not be considered to be a NATO base, because it is not one?
    Mr. Stanley: I assure my hon. Friend that the garrison does not represent any threat to the mainland. We seek to maintain the garrison only at the minimum size necessary to carry out our defence obligations to the Falkland islanders. The House will have noted the statement by the official Opposition spokesman that, for the first time, the Labour party apparently intends withdrawing out-of-area forces. This would, of course, include removing the defence forces from the Falkland Islands.
    Mr. McNamara: Will the Minister confirm, or deny, statements in the press about the possibility of a new aerodrome being built on the island of St. Helena? Is that, or is that not, the Government's policy?
    Mr. Stanley: I do not believe that the Government have reached any such conclusions on that matter.
    Sir Bernard Braine: Does my right hon. Friend agree that defence expenditure is well justified if it provides a framework within which the peaceful development of the resources of the Falkland Islands can be undertaken? If so, will he take note of the increasing puzzlement at the fact that we are allowing the vast marine resources that surround the Falkland Islands to be developed by nations other than Britain?
    Mr. Stanley: I understand my right hon. Friend's point. When I was in the Falklands during the recess the Falkland islanders expressed much concern about fishing exploitation. My right hon. and learned Friend the Foreign Secretary deals with that matter. Our defence dispositions show our determination to provide a continuing free way of life for the Falkland islanders.

    Washington (Visit)
    Sir William van Straubenzeeasked the Secretary of State for Defence when he next proposes to visit Washington for discussions with his United States counterpart.
    Mr. Heseltine: I have no immediate plans to do so. On current plans, I will next meet the United States Secretary for Defence at the meeting of NATO's nuclear planning group in Brussels at the end of this month.
    Sir William van Straubenzee: In view of some of the reservations expressed by senior American Ministers and others about western Europe's determination to defend itself, will my right hon. Friend take the opportunity of the next meeting to point to the recently signed European fighter aircraft deal that was entered into by four western European countries, not only for its own sake, but as an example of western Europe's determination to play an effective part in its own defence?
    Mr. Heseltine: I am most grateful to my hon. Friend. I think that the successful conclusion of the decision by Germany, Italy and Britain— I welcome the fact that Spain has now joined the arrangement — to build a European fighter aircraft is one of the greatest manifestations of Europe's determination to defend itself and of Britain's determination to play a full part in that process.
    Mr. Boyes: Irrespective of the decision made this week on chemical weapons by the United States Congress, will the right hon. Gentleman inform his counterpart in the United States that Britain will under no circumstances accept chemical weapons on its soil? Will the right hon. Gentleman say also that the American stocks that are held in West Germany will be neither added to nor improved?
    Mr. Heseltine: I would be more likely to ask my counterpart about his views on the 300,000 tonnes of Soviet chemical weapons that are based in positions that could be used aggressively against the Western Alliance.
    Sir Geoffrey Johnson Smith: When my right hon. Friend meets the United States Secretary of Defence, will he urge upon him the necessity to consult the Secretary of State at the State Department so that they can get their act together to decide what is or is not allowed under the ABM treaty when pursuing their strategic defence initiative?
    Mr. Heseltine: The Prime Minister has already agreed with the United States President our views about the ABM treaty and the strategic defence initiative. It would be something of an impertinence for a member of one Government to lecture another Government about what might appear to be two voices within one Administration.
    Mr. Cartwright: Will the Secretary of State make it clear to the American Administration that Her Majesty's Government will not endorse a re-interpretation of the ABM treaty which would allow the development, testing and deployment of anti-ballistic missiles in space?
    Mr. Heseltine: The hon. Gentleman will recognise that it was my right hon. Friend the Prime Minister who first made clear the role of the ABM treaty in the context of SDI and, therefore, perhaps placed on the world record one of the most important decisions that Mr. Reagan has made in that context.

    Royal Ordnance PLC
    Mr. Strawasked the Secretary of State for Defence when he expects that shares in Royal Ordnance PLC will be offered to the public.
    Mr. Norman Lamont: Subject to the usual caveats of trading performance and stock market conditions, we would hope that the company could move to the private sector in mid-1986.
    Mr. Straw: When does the Minister intend to meet the trade unions to discuss the implications for their members of privatisation? In particular, why has he refused their offer to submit the outstanding problem of pensions to arbitration?
    Mr. Lamont: I am perfectly prepared to meet the trade unions. It is important that I should do so at an early date. As regards pensions, the Government have made their position on no detriment clear. There have been a series of meetings between my predecessor and the trade unions. I do not believe that there is much to be added on that subject.

  PRIME MINISTER

    Engagements
    Mr. Peter Bruinvelsasked the Prime Minister if she will list her official engagements for Tuesday 22 October.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): I have been asked to reply.
    My right hon. Friend is attending the Commonwealth Heads of Government meeting in the Bahamas.
    Mr. Bruinvels: Is it not highly irresponsible of leading Left-wing Labour councillors like Bernie Grant to refuse to condemn violence against the police? Should not we, and all other parties, be united in maintaining law and order and in supporting our police by giving them adequate protection and the resources to maintain law and order?
    Mr. Biffen: My hon. Friend is right. The role of the police in those areas is absolutely crucial, because without effective law enforcement there can be no prospect of social cohesion or advance.
    Mr. Skinner: I wonder whether the Leader of the House will today meet those who are lobbying against world poverty. Is he aware, for instance, that it has cost the world about &800 billion to produce weapons of war, which is almost equivalent to the amount of money that is owed by the poorest countries to the banks, mainly in the Western world? Will he tell the lobbyists that one of the things that the Government will do is to join others and cancel the debts of the lesser developed countries so that we can feed the impoverished people in Ethiopia and countless others in Africa and central and south America?
    Mr. Biffen: I shall be meeting members of the world development lobby from north Shropshire later this afternoon. I have no doubt that they will put the arguments in a much more temperate and convincing fashion that the hon. Gentleman. I shall, in the course of our exchanges, draw attention to the fact that in the last three years the Government's programme on overseas aid has been rising faster than prices. I shall point out the role that the Government have played in trying to produce balanced disarmament.
    Mr. Temple-Morrisasked the Prime Minister if she will list her official engagements for Tuesday 22 October.
    Mr. Biffen: I have been asked to reply.
    I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Temple-Morris: Does my right hon. Friend agree that, on the subject of rate reform, the time for decision and indeed for some action is very much overdue? Reviews of this subject are extremely dated. Will my right hon. Friend take on board the fact that a manifesto pledge, yet another on this subject, will be insufficient and will not carry much credibility?
    Mr. Biffen: My hon. Friend is inviting me to stray into somewhat delicate territory, but I have to tell him that it is very prudent that a consultative document is to be issued by my right hon. Friend the Secretary of State for the Environment on local authority finance at the turn of the year. We shall have to see how matters proceed thereafter, but I know that in the discussion which will follow there will be very keen interest in Herefordshire and neighbouring agricultural counties in seeing which political parties support the rating of agriculture.
    Mr. Shore: May I turn the right hon. Gentleman's mind to the depressing subject of the United Kingdom economy? Is he aware that in the three months since he last answered Prime Minister's questions unemployment in Britain has risen by over 111,000, that our visible trade deficit has increased by over £250 million and that the index of industrial production has dropped by 0·5 per cent.? Is it not all too clear that policies and attitudes, as last week's report of the House of Lords Select Committee on Overseas Trade affirmed, need
    "to change and change radically if we are to avoid a major social and economic crisis in our nation's affairs"?
    Does the right hon. Gentleman not agree that the panic and knee-jerk reaction of the Secretary of State for Trade and Industry to this report, within hours of its publication last Tuesday, was both insulting and irrelevant, and that it is not changes in the presentation of policies that are required, but fundamental changes in the policies themselves?
    Mr. Biffen: It is an absolute caricature to describe the reaction of my right hon. and learned Friend the Secretary of State for Trade and Industry in the way that the right hon. Gentleman has done. This was an important report, produced by a distinguished group in the other place, and it commanded sufficient public attention to merit an immediate Government response. However, it raises wider issues about the nature of the economy and the fundamental changes that are overtaking not only the United Kingdom but every west European country, because the fall in manufacturing as a share of the total economy can be found in broadly similar terms in both the United States and Germany. My right hon. and learned Friend was merely putting the matter into context by his intervention.
    Mr. Shore: The truth of the matter is that the Secretary of State for Trade and Industry totally caricatured the findings of the Select Committee in order to try to neutralise, if not obviate, their impact upon public opinion. If the Leader of the House really thinks that it was a report prepared by distinguished people—as indeed it was—does he really think it right, and is it now to be

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    Government policy, for Select Committee reports to be dealt with by immediate, 12-hour reactions rather than to be the subject of considered and serious reply?
    Mr. Biffen: The Government have a very good and well developed record of considered replies to Select Comittee reports, which compares very well indeed with many of the instant comments which have come from the Opposition Benches. What the right hon. Gentleman is complaining about is that the Government have effectively demonstrated that there is a wider and much more advantageous context into which that report is to be placed. This is a comment that was also made by a whole number of distinguished economic commentators in Fleet Street.
    Mr. Shersbyasked the Prime Minister if she will list her official engagemens for Tuesday 22 October.
    Mr. Biffen: I have been asked to reply.
    I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Shersby: Will my right hon. Friend convey to the Prime Minister the congratulations of the House on the way in which Home Office Ministers are tackling the very serious problem of drug trafficking? Will he also make it clear that the new agreement with Pakistan to end production is widely welcomed? Will he say what further steps the Government intend to take in Britain to end this traffic?
    Mr. Biffen: My hon. Friend will have noted that Home Office Ministers are here this afternoon to take account of his comments, which I believe to be both generous and fully merited, for not only was my hon. Friend the Parliamentary Under-Secretary of State, Home Office successful in his recent visit to Pakistan, but I believe that the House will have heard with approval of the decision from the lips of the Home Secretary' yesterday that a further 50 are to be added to the drug squad in London. That is an indication to my hon. Friend of the urgency with which this serious social problem is regarded.
    Mr. Steel: Will the Leader of the House confirm to the House and to his constituents this afternoon that the overseas aid programme has been cut by 17 per cent. in real terms and that this means that, while the United States contributes $37 a head, Belgium $47 and Denmark $88, our contribution is $25 a head? Is this another teeny-weeny contribution to world affairs in which the Prime Minister rejoices, and are the thousands of people lobbying today to be dismissed as yet more moaning Minnies?
    Mr. Biffen: I can confirm that over the past three years the United Kingdom overseas aid programme has been rising faster than prices. Of course, it is true that the per capita contribution from the United States is much greater. It is a question of comparing economies that are quite dissimilar in their inherent ways.
    Mr. Gouldasked the Prime Minister if she will list her official engagements for Tuesday 22 October.
    Mr. Biffen: I have been asked to reply.
    I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Gould: Before the Leader of the House is tempted to dismiss the House of Lords Select Committee, as so many other critics of the Government have been
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    dismissed, as nothing more than moaning Minnies, will he concede the peculiarity of the fact that the damage which the Select Committee documents have inflicted has been done in the name of a monetarism which the Chancellor, in formal terms at least, now seems to have abandoned?
    Mr. Biffen: I am not sure that I would accept that. I have made a balanced comment on the House of Lords report. It is a valuable contribution to the economic debate. The Government are wholly entitled to set alongside it other considerations that put the economy in a more realistic and favourable light.
    Mr. Hannamasked the Prime Minister if she will list her official engagements for Tuesday 22 October.
    Mr. Biffen: I have been asked to reply.
    I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Hannam: In view of the widening split in the National Union of Mineworkers, caused directly by the extremism of Mr. Scargill, does my right hon. Friend agree that now is the time for the leadership of the Labour party officially to recognise the new union in Nottinghamshire, South Derbyshire and South Durham?
    Mr. Biffen: These are very delicate issues. I do not want to say anything from this Box that would unnecessarily complicate the matter. However, my hon. Friend must be right in saying that the emergence of the Union of Democratic Mineworkers on the basis of the clear and evident balloting that has taken place must necessarily require a response from the Trades Union Congress and the Labour party.
    Mr. Eastham: When the Leader of the House next meets the Prime Minister, will he make special reference to ex-prisoners of war who were in Japanese hands? There were many thousands of prisoners who were deprived, suffered and some of whom died. Meagre compensation has been paid out by the Japanese Government. A constituent of mine has received three payments so far, totalling £76, for all the misery that he suffered. Is it not about time, considering the wealth of the Japanese Government, to make representations on behalf of ex-prisoners of war that something be done about that?
    Mr. Biffen: I have great sympathy with the hon. Gentleman's point. I shall certainly draw my right hon. Friend's attention to it. Perhaps we have tended to draw a veil over the extraordinarily intense suffering undergone by British prisoners in the far east in the last war.
    Mr. Marlowasked the Prime Minister if she will list her official engagments for Tuesday 22 October.
    Mr. Biffen: I have been asked to reply.
    I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Marlow: Will my right hon. Friend take this opportunity to debunk the bogus mythology of Scarmanism? Is it not the approach that says that one should police only at a level acceptable to the most aggressive minority in a community which has led to a flourishing of drug trafficking in our inner cities and which has been the main cause of the recent riots that we have had to suffer?
    Mr. Biffen: Lord Scarman is a distinguished son of Shropshire, and I prefer to leave any debunking to another

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    day. My hon. Friend is perfectly right to say that once a society slides into partial standards of policing, that not only undermines the whole society in the areas that become less policed, but destroys the inherent cohesion of the national society.
    Mr. Dobsonasked the Prime Minister if she will list her official engagments for Tuesday 22 October.
    Mr. Biffen: I have been asked to reply.
    I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Dobson: How can the Leader of the House justify the £88 million reduction in aid to Bangladesh under this Government compared with the level of aid going to that impoverished country in 1979?
    Mr. Biffen: The distribution within the aid budget clearly must be a matter of judgment, essentially on developmental grounds. The total national aid budget over the last three years has been rising faster than prices.
    Mr. Michael McNair-Wilson: In his busy day, has my right hon. Friend had a chance to consider the consequences of the Law Lords' judgment in the case of Mrs. Victoria Gillick'? Does he agree that the majority ruling of the judges appears to drive a coach and horses through the concept of an age of consent as laid down in the 1956 Sexual Offences Act? If that is the case, will the Government bring forward revised legislation?
    Mr. Biffen: I note what my hon. Friend says on an issue that clearly gives rise to the most deep and delicate feelings. My right hon. Friend the Secretary of State for Social Services is reviewing the guidance to be given in the light of the Law Lords judgment. We had better wait for the outcome of that review.

M6 Motorway (Accident)
3.32 pm
Mrs. Elaine Kellett-Bowman(by private notice) asked the Secretary of State for Transport if he will make a statement on the crash on the M6 between Garstang and Preston which occurred at 1.30 p.m. on Monday 21 October.
The Minister of State, Department of Transport (Mrs. Lynda Chalker): I am sure that the whole House will wish to join me in expressing condolences to those so tragically bereaved in this terrible accident and in sending to the injured our best wishes for a speedy recovery.
The accident to which my hon. Friend referred occurred on the southbound carriageway of the M6 motorway between junctions 32 and 33 in Lancashire. A coach and 13 other vehicles were involved in the accident. Thirteen people were killed and 34 were injured, some seriously. Three of the fatalities were in the coach and 10 in the other vehicles.
The site of the accident was 600 yd before a point at which the nearside and middle lanes of the southbound carriageway were closed to enable essential repair works to be done. The weather at the time of the accident was fine and bright, and the carriageway was dry.
The precise circumstances of the accident are not yet clear. The accident is being investigated by the police, and by my Department's vehicle inspectors, who are examining the vehicles involved. We shall consider all the reports very carefully, in order to see what lessons can be learnt for the future.
Mrs. Kellett-Bowman: I thank my hon. Friend for her reply and for her expression of sympathy to the relatives involved, and I pay a warm tribute to the nurses and police and members of the ambulance services who in my constituency, sadly, have faced this sort of sad task twice in 17 months, first at Abbeystead, and now on the motorway. I especially draw my hon. Friend's attention to the quick wit of the fire fighting services in managing to create a small bath in which they were able to soak gas cylinders which otherwise would have exploded and destroyed many more lives.
I ask my hon. Friend to look once more at the urgent necessity for banning coaches in the fast lane, which is already used by lorries. At the same time, I should like to pay a tribute to her for the speed with which repairs are being carried out since she adopted the motorway rental system, so that this menace to my constituents of restricted carriageways will be removed at the earliest possible moment.
Mrs. Chalker: I thank my hon. Friend for her remarks and join in the tribute which she has paid to the nurses and doctors, and all the emergency services who gave such outstanding assistance. One of the things that I will look at is the lanes in which coaches may travel safely, and I shall also look at all the other evidence which the police will provide following their inquiries. I spoke to the chief constable of Lancashire at 3.15 this afternoon. I may not have a full report for a week or two, but I hope by early next week to have established the preliminary facts of the awful situation. I thank my hon. Friend for what she said about lane rental, but the House will note that this accident did not occur on a restricted part of the motorway and that the weather was fine, clear and dry.
Several Hon. Members rose——
Mr. Speaker: Order. I should draw attention to the fact that the question refers to the tragic accident between Garstang and Preston, and not to other motorways. I have no knowledge, of course, of which hon. Members have constituents who were involved.
Mrs. Gwyneth Dunwoody: I am sure that all hon. Members will wish to send their deepest sympathy to those who lost relatives in this appalling accident, and their very best wishes to those still in hospital as a result of the injuries that they sustained. It is also important to pay tribute to the work of all the emergency services. Their speed of reaction is vital in helping people who are desperately injured, and we are deeply grateful for the part that they played.
I hope that the Minister will look very carefully at the whole question of contraflow in this area. Am I right in believing that there was another accident in that area a very short time previously? Will the Minister satisfy herself that roadworks are adequately signed, as 600 yd is not a long distance on a motorway, given the speed at which modern traffic travels?
I hope that the Minister will also look closely at the whole question of enforcement of speed limits in relation to coaches, as well as coach safety in general. The design of coaches is extremely important in view of the danger to those travelling in them if there is a serious accident.
Is the Minister absolutely certain that the present policy of carrying on roadworks into the winter season is justified, given the difficulties which can arise, not just in relation to weather, but as a result of the restrictions invariably brought about by various barriers on the motorway?
Finally, whatever evidence emerges, will the Minister undertake to come back to the House very soon and ask her right hon. Friend the Leader of the House to arrange a debate on the whole question of road safety in relation to motorways? The increasing traffic on our road system puts many more people at risk, and we must be satisfied that there is sufficient protection for the traveller.
Mrs. Chalker: I thank the hon. Lady for what she has said. We shall, of course, give very careful attention to all aspects of this terrible tragedy.
The contraflow systems, which have clear separation between the carriageways, are far better than they used to be, but we shall not stop revising them if further revision is needed. I give the hon. Lady that assurance.
The earlier accident to which the hon. Lady referred occurred in totally different conditions, although it was not very far from the site of yesterday's accident.
I am told that the first indication of the roadworks 600 yd south of the site of the accident was about 1,500 yd before the roadworks, and not merely 600 yd as some press reports have suggested. Nevertheless, I shall consider the sufficiency of signing in these and other circumstances.
The enforcement of speed limits is a matter for my right hon. Friend the Home Secretary, and I am discussing these very matters with my hon. Friend the Minister of State, Home Office, who is here with me today.
This country has led the world in coach safety. In Europe we have been pressing for greater protection for those who travel by coach, and we shall continue to do so following the discussions in Europe in July on greater safety for coaches.

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Roadworks are carried out where they are essential. In a sense, we are doing no more now than we were before, but essential repairs must be carried out, because there is nothing so unsafe as an unsafe surface. I intend to ensure that our road surfaces are safe, but I need the co-operation of drivers in this country. They must keep within the speed limits, slow down if weather conditions are unsuitable and keep a safe distance behind other vehicles, a distance which will be greater if the weather is inclement. It is also important that they use their lights and that they clean their lights before setting out on a journey.
Lastly, safety on motorways is better than on other roads. As I believe the hon. Lady knows, motorways are about seven times safer than other roads. Nevertheless, we shall examine every aspect of the matter.
Mr. Terence Higgins: I join in the expressions of sympathy. Does my hon. Friend agree that excessive speed kills? Was there a temporary speed limit in force at the site of the accident? Are temporary speed limits mandatory? If not, will my hon. Friend take steps to make sure that they are?
Mrs. Chalker: I thank my right hon. Friend for that question. Since the accident occurred some 600 yd to the north of the roadworks there was no speed limit in force at that point, apart from the normal speed limit of 70 mph, which applies to all motorways. Temporary speed limits are, in general, advisory. We have been experimenting with mandatory speed limits, which we hope will be more easily enforceable than advisory speed limits.
Mr. John Morris: Does the Minister recall saying in 1982 that she was satisfied that in normal conditions coaches could travel safely at up to 70 mph but that she would consider violations of the speed limit? Is she not aware that there are wholesale violations by coaches on motorways? It is all very well for her to shelve responsibility to the Home Office, but how often are the tachographs inspected by the traffic commissioners' representatives or by Department officials?
Mrs. Chalker: The enforcement of speed limits, like the rest of the law, is a matter for the police, but they are well aware of their responsibilities to the House. I assure the right hon. and learned Gentleman that, in the light of the facts of this terrible accident, I shall be examining the whole matter. It would not be right to start going into detail on the violations, of which there are far too many. We have continually warned operators and drivers about the speed of coaches, and we shall continue to do so. There is a responsibility on every driver, not just on coach drivers.
Mr. Robert Atkins: As a nearby resident and regular user of this section of motorway, I join my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) in expressing condolences to the relatives of those who were killed or injured. As the Member who has the privilege of representing the area in which the headquarters of the Lancashire police are situated, may I point out that they performed an outstanding task in difficult circumstances. Finally, does the Minister agree that the standards that are adhered to by manufacturers of coaches, such as Leyland Bus, are among the highest in the world? Is she aware that Leyland Bus, along with many other manufacturers in this country, in other parts
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of Europe and the world, are prepared to discuss further improvements in safety so that such accidents do not happen?
Mrs. Chalker: I thank my hon. Friend for what he has said. I have already passed on my personal thanks to the chief constable of Lancashire for the work of the police. I have also thanked the other emergency authorities. I agree that British coachbuilders adhere to higher standards than those anywhere else in the world, but we are seeking to make sure that all coach manufacturers produce coaches to a higher standard, because that is important for all travellers. I shall be happy to have discussions to learn from manufacturers anything that will help to prevent tragedies of this type.
Mr. Stephen Ross: May I offer condolences from the alliance parties to the relatives of those who were injured or killed in this terrible accident. May I encourage the Minister to pursue investigations into the speed limit? As one who travels at 70 mph on motorways and is passed by almost everything under the sun, particularly heavy lorries, I bring that matter to her attention. There was a serious crash at Birmingham the other day which, fortunately, did not cost any lives. Is there now a mandatory speed limit in force in the area where the accident took place, because we do not yet know what the outcome of the accident inquiry will be?
Mrs. Chalker: There is a 70 mph speed limit on the road. I note what the hon. Gentleman said about the speed of other vehicles. Like him, I feel like a snail when I am doing 70 mph on a motorway and everything passes me. I ask him to wait for the facts, because then we can use that information to try to prevent accidents.
Mr. Robert Adley: My hon. Friend might not like my saying this, but is it not likely that legislation encourages coaches to travel at excessive speeds to beat the competition? My hon. Friend has told me that the Department of Transport does not have separate statistics for coach accidents. Will she now have discussions with the Home Office to see that that error is put right immediately and, in the meantime, take the advice of my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) and keep coaches out of the third lane of motorways and subject them to a 50 mph speed limit?
Mrs. Chalker: No operator or driver is encouraged in any way to break the law. Operators are required to operate within a reasonable timetable and to meet safety standards. I am not prepared to accept that operators have to do other than that. If any operator is doing other than that, that is a matter for the traffic commissioners.
Mr. Harry Ewing: Is the Minister aware that the coach involved in this tragic accident was going from Edinburgh to London and is owned by the Scottish Bus Group, which has an outstanding safety record on that route? Is she further aware that the same cannot be said of other coaches travelling that route? May I observe as gently as I can that it is little use the Minister lecturing the House about speed limits as she must be aware that I wrote to her Department before the summer recess complaining about a bus company, which I shall, not name, which has been charged and convicted three times for exceeding the speed limit on the motorway? The

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Secretary of State sent me a dismissive reply in which he told me that he did not propose to take any action. The Minister can have that reply if she wants it.
Mrs. Chalker: My hon. Friend the Parliamentary Under-Secretary of State for Scotland, who is here, and I are well aware of the good safety record of many bus operators, including the Scottish Bus Group. I shall consider what the hon. Gentleman has said, but I cannot comment further today.
Several Hon. Members rose——
Mr. Speaker: Order. I remind the House that a private notice question is an extension of Question Time. There are two statements to follow.

Teachers' Dispute (England and Wales)
3.46 pm
The Secretary of State for Education and Science (Sir Keith Joseph): With permission, Mr. Speaker, I should like to make a statement about the teachers' dispute in England and Wales.
Intense efforts have been made in recent months by the Government to bring this damaging dispute to a satisfactory conclusion. I regret to say that they have, so far, been unsuccessful. Some of the teacher unions have chosen to continue to disrupt the education of the pupils in their charge rather than accept—or even to discuss—the offer made to them. I deplore this, the damage it causes, and the example it sets.
In August, the Government offered the prospect of an additional £1,250 million for teachers' pay over four years from next April, a sum equivalent to an extra 4 per cent. on the present pay bill rising to an extra 9 per cent. by the fourth year. On 12 September, the employers made an offer constructed upon the conditional Government willingness to see this substantial extra investment on teachers' pay. Under that offer, all teachers stood to receive increases in April and November. Those on their scale maxima would have got additional increases in either September or next March. The average end-of-year increase would have been over 8 per cent. in addition, one in five classroom teachers would have benefited significantly from the additional 70,000 promotions planned from September 1986. All of this would have been on top of any normal annual increase negotiated from April 1986.
All classroom teachers at present on scale 1 or scale 2, even without promotion, could have looked forward to £10,500 a year plus whatever is negotiated each year on pay. In return for these proposals, which would have brought real benefits to the education service, as well as substantial improvements in pay for large numbers of teachers and in promotion prospects, the teachers were asked for a clear commitment to the professional fulfilment of their duties and an acceptance of a pay system which would have offered relatively greater rewards to promoted teachers and to those holding senior leadership posts.
The teacher unions took just 20 minutes to reject this offer. Since then some unions have been engaging in forms of industrial action explicitly intended to cause the maximum disruption to the education service at the minimum cost to the teachers involved in the disruption. This is deplorable and underlines why we so urgently need an agreement to define more clearly the teachers' professional responsibilities.
Since then I regret to say that the employers, by a small majority, have been willing to make offers relating to pay alone. Even before the teacher unions confirmed that their demands far outstripped the employers' capacity to pay, I repeated the Government's position. We refuse to provide any additional resources for a "no strings" pay deal which would be a reversion to the discredited approach where negotiations on pay are separated from negotiations on pay structure and conditions of service. Separation has for years meant, "You pay us now and we will talk about reform later." Simultaneous negotiation of all elements provides the only credible way forward. Notwithstanding the passage of the original deadline, therefore, the

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Government remain ready to consider whether additional resources could still be approved within the £1,250 million envelope for 1986–87 and subsequent years provided the conditions for reform are met. The Government are also willing to set aside resources from within the total of £1,250 million to help employers cover the cost of supervising pupils at midday. I have discussed that proposition with the employers, and it is agreed between us that officials should now clarify the way ahead.
The Government will continue to make every effort to see a bargain struck, which would provide improved pay and prospects for teachers in return for a better career and promotion structure, the clarification of teachers' duties, and an end to the disruption.
Our objective is to improve the standard of teaching in schools and the quality of our education system. That is why we have agreed to the commitment of such substantial additional resources towards improving teachers' salaries. But we are not prepared to release the resources without simultaneous action on teachers' duties and the pay structure to ensure that the nation receives a fair return for the extremely large investment.
Mr. Giles Radice: Whenever the Secretary of State makes a public statement, he makes the dispute harder to solve. Most hon. Members will agree that nothing he has said this afternoon has done anything to bring a settlement of the 1985 claim any nearer, particularly his remarks about teachers.
Is the Secretary of State aware that the Opposition value the work of the teaching profession? Will he acknowledge that throughout the past few months the Labour-led local authorities have been doing everything in their power to reach a settlement, and that the main obstacle to a solution is the Government's unfair and inconsistent public sector pay policy? Has the Secretary of State noted that even his Conservative predecessor, the right hon. and learned Member for Warrington, South (Mr. Carlisle), has admitted that the Government's approach to teachers' pay is unjust? Will the Secretary of State now recognise that the best way out of the chaos that he has created is to establish an independent inquiry into teachers' salaries with a remit to report as soon possible and with a firm commitment from the Government to fund its findings.
Sir Keith Joseph: The hon. Gentleman rightly gave his teachers his advice to accept the offer on the table and to stop the disruption, as did my right hon. and learned Friend the Member for Warrington, South (Mr. Carlisle), who was my predecessor in this office. Regarding the idea of an inquiry, as far as I know the teachers rejected it out of hand.
Mr. Mark Carlisle: Is my right hon. Friend aware that I have never described the Government's approach to the teachers as unjust, and that, like my right hon. Friend, I deplore what is happening in the school rooms today, and believe that the National Union of Teachers is completely wrong in being unwilling to sit down and discuss the terms and conditions of service together with pay? The point that I wished to make, and which I now make, concerns the long-term and my belief that we must get away from annual disputes.
In those circumstances, will my right hon. Friend consider the establishment of a pay review board for teachers, such as we have for doctors, nurses and other
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professions, and accept that it should take account of the salaries paid to people with comparable abilities and qualifications in other occupations?
Sir Keith Joseph: I accept that a substantial number of teachers are not willing to disrupt education and are not doing so, but I must ask my right hon. and learned Friend whether he thinks that the behaviour of the majority of teachers is such as to make my right hon. Friends in government look kindly on the idea of a review body, especially as the majority of nurses, for instance, will not neglect the interests of patients.
Mr. Clement Freud: We, too, regret that there is nothing new or optimistic in the Secretary of State's statement. Does he remember explaining in "Better Schools" that it is the duty of the Secretary of State to secure the well-being of education? While he is talking about LEAs possibly suing teachers in courts of law, is he satisfied that he is carrying out his own legal obligations.
Sir Keith Joseph: Yes, I am so satisfied, though I always consider on its merits any complaint put to me. On the substance of the hon. Gentleman's question, I must remind him that successive authorities from Lord Houghton onwards, including successive Governments and employers, have said that we shall not get better schools until teachers accept explicitly the conditions of service.
Mr. David Madel: Instead of arguing among themselves on the teachers' panel, thereby prolonging the dispute, should not the unions and employers approach ACAS to try to get help to create a new negotiating machinery, in the absence of which classroom disruption continues and there is an increasing risk that the introduction of the important new system of examinations will have to be postponed?
Sir Keith Joseph: But my understanding is that the employers have been to ACAS, and I think that ACAS has seen representatives of the teacher unions, so far in vain.
Mr. Martin Flannery: When will the Secretary of State admit that he and his Government, in their sheer intransigence, are directly responsible for a moderate section of the community having to take industrial action? The right hon. Gentleman says that he is doing his best for teachers and schools, but will he read the report of the National Confederation of Parent Teacher Associations which reveals that schools are drifting into a state of chaos and that we have not seen such inadequate buildings and poor conditions for children and teachers for many years? When will the Secretary of State put some new money on the table to get the teachers back to work?
Sir Keith Joseph: I regret that the growing of a beard does not seem to have changed the hon. Gentleman's attitude. In fact, the Government have put, on condition. a very large sum of extra money on the table.
Mr. Harry Greenway: Will my right hon. Friend accept that the great tragedy of the strike is that the children of this nation are suffering so badly? That includes ordinary children, disabled children and children taking examinations. Does he agree that teachers are sick of the strike, children are sick of the strike and parents are sick of the strike? It is wrong for the leadership of the NUT

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to use its controlling majority to prevent other unions that wish to negotiate their members back to work from doing so. Will my right hon. Friend do all in his power to get the NUT leadership to negotiate, negotiate and negotiate again for the sake of the children of this country and their future?
Sir Keith Joseph: I think that very large numbers of teachers, including some who are disrupting, must be very, very sad indeed at the damage that they are causing to pupils. Let there be no doubt that the disrupting of children's education is the fault of some teacher unions and their members.
Mr. Mark Fisher: Does the Secretary of State not understand that the tone and content of his statement will anger all teachers, whom he has once again run down and insulted, and that it will also depress the local authorities? If he is serious about a settlement, will he offer local authorities a disregard for penalties? Is the right hon. Gentleman aware that last week's inadequate 6·9 per cent. offer would cost local authorities £193 million in penalties? If the right hon. Gentleman will not find the money and will penalise local authorities if they try to find the money, how can he expect a solution to the problem?
Sir Keith Joseph: I hope that the hon. Gentleman agrees with his hon. Friend the Member for Durham, North (Mr. Radice) that the teachers should have accepted the offer and ended the disruption.
Mr. William Shelton: May I congratulate my right hon. Friend on standing firm on this difficult issue? Is he aware that the teachers are suffering no financial penalty from their industrial action? Has he any advice which might rectify the problem?
Sir Keith Joseph: I am grateful to my hon. Friend. I have no brand-new advice, but I remind the House that unless the teachers' unions accept that they should be bound by the conditions that have been absolutely normal for generations of teachers we shall not have the best schools that we want for all our children.
Mr. Dafydd Wigley: Is not the Secretary of State aware that the frustration felt by teachers, pupils and parents is becoming more and more directed at the Government for not taking a firm lead in trying to sort out the problem? Is it not time that the right hon. Gentleman took a positive initiative to try to bring people together to find an answer now before a generation of children suffer?
Sir Keith Joseph: The Government have provided—on condition—£1,250 million extra money which the teachers' unions, led by the NUT, rejected after 20 minutes. After all, the disruption is being caused by some teacher unions. Do let the House remember that. It is they who are refusing to sit down and discuss.
Mr. Andrew Hunter: As a former teacher in both the public and the private sector, I deplore what is happening in our schools. I welcome and applaud what he has just said? I seek clarification on one matter. Is my right hon. Friend aware that many teachers have objected to the 12 September offer on the ground that the £1·25 billion does not constitute new money, whatever they mean by that. Will my right hon. Friend take the opportunity to clarify that aspect?
Sir Keith Joseph: My hon. Friend is on to the legitimate point made by teachers, that the money being made available by the Government is that which is available for spending by local education authorities and which would be subject to a contribution by the taxpayer at the level decided for the year concerned for the taxpayer's contribution to the rate support grant. To that extent it is the same as any other money which the local authorities and local education authorities are entitled to spend with rate support grant support.
Dr. John Marek: Does the Sectetary of State accept that if he and his friends maintain their attitude and refuse to move one inch towards a settlement of the dispute, and if the many tens of thousands of teachers of all political persuasions refuse to move the dispute will continue for a very long time? Does he accept that he will not be able to count this as one of his successes on which to look back when he retires?
Will the Secretary of State make one more effort to see whether an independent inquiry, with agreed terms of reference, can be instituted as a means of escape from this tortuous and long dispute?
Sir Keith Joseph: The hon. Gentleman forgets that the Government have put forward a very large sum of extra money, admittedly on condition, in order to achieve that which successive Governments and Lord Houghton wanted — explicit conditions accepted by teachers. Surely that is an initiative which should not be dismissed and yet the hon. Gentleman did not even accept it as an initiative.
Mr. Michael Stern: What advice would my right hon. Gentleman give to parents who believe that they are paying rates and taxes to provide, among other things, education for their children and who now find that that desire—one might even say contract —is being frustrated by militant teachers?
Sir Keith Joseph: That is a difficult question to answer. The parents of the children who are suffering now are being asked — I hope for not much longer — to endure damage in order to improve education for all children, including their own, in the future if the employers, with the help of the Government, can reach the desired bargain. That is not much comfort to the parents of children who are on the verge of leaving school, but the employers' and Government's objective in seeking the reform so lengthily desired is a noble objective.
Mr. Guy Barnett: Does the right hon. Gentleman agree that, appropriately, negotiations on terms and conditions of service should be between employers and representatives of the employees? In view of that, will he comment on the fact that the NUT has for many months been waiting for such negotiations to begin?
Sir Keith Joseph: I am surprised that the hon. Gentleman should take that line. In December 1984 the NUT walked out of discussions and in this last month, by a majority over the other teacher unions, the NUT ended any possibility of negotiations.
Mr. Alan Haselhurst: Does my right hon. Friend believe that the majority of teachers understand all the details of the offer which has been rejected on their behalf? If he believes that they do not, can any other steps be taken to project the contents of the package to them?
Sir Keith Joseph: I have come to think that most teachers now recognise the offer. I think that most teachers are apt to compare the offer with the rewards available to some, but not all, teachers if they moved to business and lived a life with many more risks than are attached to the award which they might receive.
Dr. Oonagh McDonald: Does the Secretary of State think that £8,000 a year is adequate pay for a married woman school teacher whose career has been interrupted by family responsibilities, whose qualifications cover two degrees and who has 14 years of teaching experience? That is the pay which many ordinary classroom teachers have to live on. Is the right hon. Gentleman aware that unless he tackles the pay of the average classroom teacher he will not find a settlement to the dispute and education will never improve.
Sir Keith Joseph: I think that I should revise my answer to my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) because the hon. Lady clearly does not know the circumstances. The employer's offer, with the help of the extra money made conditionally available by the Government, would raise the pay of those teachers to £10,500—a £2,000 increase.
Mr. Patrick Nicholls: Does my right hon. Friend agree that, no matter what view one takes about how we came to the present impasse, it is beyond dispute that the children cannot possibly be responsible? Does my right hon. Friend agree that, no matter how badly the teachers feel about the Government, it is unjustifiable and grossly immoral for them to take their disagreement out on the children?
Sir Keith Joseph: Allow me to give a one word and wholly unqualified answer. Yes.
Mr. Tony Lloyd: Does the Secretary of State realise the damage that is being done to the teaching profession? Is he aware that morale is as low as it is possible to be and that the problems that the dispute will cause will blight the future for children who are not yet at school? When does he intend to ensure that a settlement to the dispute is found?
Sir Keith Joseph: I do not underestimate the damage that is being done by the teachers and by the teachers' unions, but if the Goverment were to enable peace to be bought with no reforms the disruption would start again relatively soon and better schools would not be available for all children.
Mr. Michael Morris: Since my right hon. Friend's offer and position is continually distorted or undermined, will he consider communicating directly with teachers, however large a job that might be? Does he agree that the evidence from the miners' strike is that only when one communicates with individuals do they fully understand what is on offer?
Sir Keith Joseph: I do not employ the teachers in the way that the National Coal Board employs the miners. I would have liked to be able to write to every teacher, but I neither employ them nor do I know all their names and addresses. I meet them on as many occasions as possible to ensure that I know their point of view and that they know mine. I am afraid that I cannot do what my hon. Friend suggests.
Mr. David Young: As a former teacher, I say to you that it is about time that you carried out your obligations to provide the resources necessary for the profession. Is it not about time that your Government stopped using the children as hostages for your own policies? Is it not about time that you stopped making emotive statements, such as that about using the law? We all know that you can take a horse to water, but you cannot make it drink——
Mr. Speaker: Order. There are too many "yous".
Mr. Young: May I ask you——
Mr. Speaker: Order. The answer to that will have to be no.
Sir Keith Joseph: The hon. Gentleman is forgetting the very large amount of conditional additional money that the Government have put on offer, and which the teachers unions, led by the NUT, have refused even to consider.
Mr. William Cash: Is my right hon. Friend aware that there are many moderate teachers? During this year, will he do everything possible to help those moderate teachers to achieve a reasonable pay settlement, and to hive them off from the NUT as soon as possible?
Sir Keith Joseph: How can I answer other than yes?
Mr. Roland Boyes: Is the Secretary of State aware that today's statement will be seen as a kick in the teeth to an already demoralised teaching profession, which, besides facing a 34 per cent. erosion in pay is, according to the National Confederation of Parent Teacher Associations, facing a decline in building standards, larger average class sizes and cuts in resources? In view of the right hon. Gentleman's unwillingness or inability to do anything, has he not abdicated his right to oversee the education system? is not 12 minutes past four today as good a time as any to announce his resignation?
Sir Keith Joseph: The hon. Gentleman has joined the large number of those who are ignoring what the Government have already offered. The hon. Gentleman's hon. Friend, the hon. Member for Durham, North (Mr. Radice), rightly suggested that teachers should accept the offer and stop the disruption.
Mr. Geoffrey Dickens: On a very serious note, is my right hon. Friend aware that to satisfy their industrial action some teachers are virtually releasing children on to the streets unbeknown to their parents? Is that not a disgrace, and irresponsible when we think about the dangers to children —especially in the light of what we have read during the summer.
Sir Keith Joseph: If that be true, it is indeed disgraceful.
Mr. Allen McKay: Has not the right hon. Gentleman allowed the dispute to drift into a position that will be difficult to resolve? Is he taking no positive action? Should we not take into consideration the fact that the children are at risk and that their parents are very concerned about the quality of education and the quality of our schools? Into what is the Secretary of State leading our educational system? If he is convinced that his case is just, why does he not allow an independent body to justify his action?
Sir Keith Joseph: But the Government and I have taken considerable action and have offered additional conditional money. It is the teachers' unions that have refused even to discuss it.
Mr. Peter Hubbard-Miles: Does my right hon. Friend accept that one encouraging aspect of the present position is that the number of teachers joining the no-strike union, the Professional Association of Teachers, has risen to 300 a week? Will he commend those teachers for taking a truly professional attitude towards teaching?
Sir Keith Joseph: Yes.
Mr. Roger King: As the parent of two children at home because of the strike in Birmingham this afternoon, I deplore the present position. However, has my right hon. Friend noted that many teachers are not wholly aware of what is actually on the table? More important, the parents do not realise what is on the table. Is it not possible to advertise in newspapers explaining the position?
Sir Keith Joseph: I ask my hon. Friend to give me evidence of his suggestion, and in the light of that I will again consider advertising. However, I cannot commit myself because I should have liked to act with the agreement of the employers.
Mr. Douglas Hogg: Although I deplore the tactics of the teaching profession and support my right hon. Friend's policy of funding increases only against agreed changes in contracts, does he agree that, judged by most objective standards, the teaching profession is ill-paid? Is that not leading to a substantial decline in morale, especially in moderate areas such as Lincolnshire?
Sir Keith Joseph: It is because the Government concede that we need to recruit, retain and motivate teachers of the right quality and that a different pay structure is needed, that we put at the employers' disposal, with conditions, a substantial fund of additional money.
Mr. Peter Bruinvels: I wish to confirm that in Leicestershire there is some misunderstanding about my right hon. Friend's very fair offer. Will he consider not only advertising but writing to teachers? Could not a little more be offered on the condition that a no-strike clause be incorporated into the agreement? No one wants the children to be out on the streets.
Sir Keith Joseph: I ask my hon. Friend to let me have evidence of what he said.
Mr. Kenneth Hind: Is my right hon. Friend aware of the drop in morale among teachers, especially in Lancashire, and the feeling that the dispute is not approaching settlement? Does he not feel that, eventually, the drop in morale will work its way through to the pupils in the classroom and affect the standard of teaching? In November, when the structure of the Burnham panel is changed and the effective block of the NUT is removed, will he consider making further efforts finally to settle this dispute and to produce a long term solution to an intransigent problem?
Sir Keith Joseph: The consultation process on my provisional decision to change the structure of the teachers' panel ends at the end of this month. The Government will then arrive quickly at a decision.
Mr. Andrew Faulds: On a point of order, Mr. Speaker. Is it not unseemly for a Secretary of State, particularly with responsibility for education, to make animadversions against those of us who are virile enough to have grown fine bushy beards—rather better than that thin imperial thing there?
Does not the Secretary of State realise that none of us are unkind enough to make comments on the Struwwelpeter appearance of the Secretary of State?
Mr. Speaker: Order. I think that I would be very unwise to make any comment. I must say that I think that beards suit the hon. Gentleman and his hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) very well.

Teachers' Dispute (Scotland)
4.20 pm
The Secretary of State for Scotland (Mr. George Younger): With permission, Mr. Speaker, I should like to make a statement about the teachers' dispute in Scotland, and in particular the report last week of the Educational Institute of Scotland's ballot.
In July, the management side of the SJNC (School Education) submitted proposals to me involving a substantial redefinition of teachers' conditions of service and the restructuring of pay scales. In early August I told the management side in reply that if a package on these lines could be negotiated within the SJNC I would be prepared to make additional resources available, on a scale building up to 10 per cent. of the present salary bill, over a period of four years beginning in 1986–87. This would be over and above the normal annual pay negotiations and would add an extra £125 million to teachers' salaries over four years.
The management side then put an abbreviated form of its proposals to the teachers' side and asked it to consider it as a basis for a settlement should funding additional to what I had offered be made available.
The teachers' side replied that it saw this as a non-offer and pronounced certain aspects totally unacceptable. It refused to fall in with the management side's proposal of a joint approach to the Government for additional funding for the management side proposals and indicated that it would reject any proposal which would lead to deterioration in the conditions of service of teachers.
In a further attempt to find a way forward, I invited representatives of the teachers' side to meet me on 27 September. It was suggested at that meeting that, provided substantially more money were offered without preconditions, the teachers would be prepared subsequently to discuss conditions of service and curricular development.
My officials have explored aspects of the proposals with representatives of the teachers' side to see if a basis could be found for negotiations which might lead to a settlement. These discussions have produced some useful clarification of the teachers' position and I hope they will continue, but I have to say that, as they stand, the teachers' proposals do not appear to me to offer a way forward.
Meantime, the EIS announced last Wednesday a majority vote in favour of a boycott of public examination procedures in 1986. This is causing great anxiety for pupils who are working for qualifications to secure their own future. I must, therefore, make quite clear the Government's position in the light of the EIS decision.
The Scottish Examination Board has a statutory duty to conduct examinations each year for the award of certificates relating to secondary education. There should be no doubt whatever in the minds of any pupil, parent or teacher that the board is determined to do everything in its power to carry out that duty and that the Government are fully committed to doing everything possible to ensure that candidates now working for SCE and CSYS examinations in 1986 will not be let down.
The present position, therefore, is that the teachers have asked for a large pay settlement without any commitment on their part to changes, especially in the contractual conditions governing the teacher's job. The local authority employers and I are entirely agreed that it is impossible to
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run an effective school system if teachers have the power to pick and choose which pieces of work they will do. The examinations boycott demonstrates exactly what I mean.
I have always recognised the vital contribution which teachers have in the past made to the running of the education service by their work outside the normal school day, particularly in carrying forward new developments in the curriculum and examinations. We need the continued involvement of teachers in these activities, and the purpose of the package prepared by the local authority employers in July was to give fair and appropriate recognition to this fact in a fresh approach in conditions of service, the definition of the teachers' role and a new pay structure.
It was in recognition of this that I was able to announce that substantial additional resources could be made available over the next four years. The offer remains open, at least for the time being. But I hope that there is no misunderstanding about its status. It was made conditional on negotiation, within the SJNC, of new conditions of service.
I know that many teachers desperately want to see this dispute resolved, as do I and the local authority employers. But I have to say that after all the damage that has been caused, and particularly in the light of this latest threat, the public have a right to expect that one element in a settlement should be a firm clarification of teachers' duties so that they cannot again inflict such chaos and demoralisation on our schools at so little cost to themselves.
Mr. Donald Dewar: The Secretary of State's statement is deeply disappointing. It reflects no more than a flat summary of his known position. It is unlikely that the teachers will respond to what is a homily from the right hon. Gentleman on their duty, a homily which has overtones that are sanctimonious and which will impress no one. He offers no hope and he shows no appreciation of the damage that is resulting from an impasse that owes a great deal to his own obstinacy.
The right hon. Gentleman has attacked the teachers persistently and with some energy on what he sees as their inflexible, but I believe understandable, commitment to the principle of an independent pay review. Will he not accept that the unions—I use the word "unions" in the plural—have shown a willingness to seek a solution by indicating that they are at least prepared to look at a significant cash offer on the table and, once that has been settled, to move on to negotiations on terms and conditions? Will he not accept that 10 per cent. of this year's salary bill spread over four years is not the kind of offer that is likely to enable us to break out of the present difficulties?
I note the only optimistic part of the right hon. Gentleman's statement when he says that he hopes that discussions can continue. Will he please do everything he can, by showing some flexibility, to make sure that they continue? Will he give an assurance that he is not in effect slamming the door when he says that the teachers' proposals do not appear to him to offer a way forward? It is vital, as the whole House will agree, that we keep the sides talking in the present situation, particularly when, as I say, the teachers have made a significant move in an effort to achieve a solution to the impasse.

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May we have further information about the contingency plans that no doubt are being formed as a result of the recent ballot on examinations? The right hon. Gentleman says that the Scottish Examination Board will
"do everything in its power."
That does not help the House much. We are entitled to much more information about exactly what the right hon. Gentleman anticipates happening should the present situation continue.
We on this side are sad about the impasse. The Secretary of State refers to a majority vote in the EIS on the boycott. He will recall that it was 87 per cent. for and only 13 per cent. against. That reflects the feeling of frustration and bitterness and, I believe, an overwhelming wish on the part of all teachers to jolt the right hon. Gentleman into some positive action.
Will the right hon. Gentleman recognise that the vast bulk of opinion in Scotland sympathises with the teachers in that wish and that all those people wish to dissociate themselves from the remarks of the right hon. Gentleman's colleague south of the border, the Secretary of State for Education and Science, on television on Sunday night when he referred to the Scottish teachers "sinking so low" in their attempts to solve the dispute? Will the right hon. Gentleman do the same and dissociate himself from that unfortunate form of words?
Mr. Younger: I am grateful to the hon. Gentleman for his expressed view, which I share, that the existence of discussions, even though they are not negotiations because I am not a party to them—[HON MEMBERS: "Oh?"] I am not a negotiating party. I am grateful to the hon. Gentleman for his agreement that it is valuable that discussions should be taking place and that they should continue. I confirm my hope that they will continue, and I hope that they continue in a good spirit.
I agree also with him that many teachers are only too anxious to get a solution and would dearly like to see one. I am bound to say, however, in the kindest way I can, that when rather surprisingly, I produced an astonishing extra sum of money in the summer, that was rejected on television without those concerned even waiting to see the nature of the offer. I hope that future negotiations can take place at a more careful pace than that.
The hon. Gentleman said that 10 per cent. was not enough——
Mr. Dewar: Over four years.
Mr. Younger: He said that 10 per cent. was not enough over four years, and that was a perfectly legitimate view to express. However, it must be put in its proper context. It is 10 per cent. over four years in addition to the normal increases each year. I am sure that many teachers would wish that more money than that could be available, but few other employees are looking forward in the next four years to anything of that nature. That is a measure of my recognition that the teachers have a case. I have always made it clear that I do not deny that case and that I wish to help to meet it.
The situation on examinations is immensely serious because if the full boycott were carried out as suggested there would be no way in which 100 per cent. proper exams could be conducted by the examination board. However, the board has made it clear—and I support it
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utterly in the matter—that it would do everything in its power, whatever the circumstances, to produce exams as best it possibly could. It will, of course. have to study carefully the problems. what resources would be needed and where they would be available, and I shall give all the help I can in its study of those issues.
One of the most shattering aspects of the ballot last week was not so much that it showed a majority as that there was such a vast majority for the choice of using examinations and the future of the children as a bargaining counter—[Interruption.] I said recently that I thought that that was a heart-breaking decision. In my view, that was the correct word to use to describe it.
Sir Hector Monro: Will my right hon. Friend accept that I welcome the large sum of money—over —100 million—which is being made available over and above normal negotiated annual salary increases? Does he agree that it is a sum upon which the EIS should at least negotiate through the proper channels in terms of both pay and conditions of service? Will he make one more effort to ask the EIS to do just that in the interests of children and of parents, who face great uncertainty over selective strikes? Will he continue to do everything possible to bring the dispute to an end? All Scotland feels that the EIS has let it continue for far too long.
Mr. Younger: I am grateful to my hon. Friend. I undertake to continue to do everything that I possibly can to bring the dispute to a solution. In fairness, I think that that is the wish of many on the teachers' side. I suggest to hon. Members on both sides of the House that there is a danger of it appearing absurd to write off an extra sum of the scale that I have described in the context of these discussions. When the dispute was being discussed in the summer many people asked me whether I could provide even as much as had been provided at that time to help the ratepayers of Scotland. As we all know, that was about —30 million. We are now talking about —125 million of additional money, and it is absurd to regard that as negligible. In fact, it is an extremely generous sum.
As for conditions of service, it is not realistic—and I think that the hon. Member for Glasgow, Garscadden (Mr. Dewar) will agree with this if he reflects fully—to think about negotiating major changes in pay without having some regard to conditions of service. Secondly, it is not my wish to try to make conditions of service worse. My approach is to try to make conditions of service reflect what teachers are doing in the schools and what they have been doing for some time. Surely that is a correct aim.
Sir Russell Johnston: The Secretary of State has referred to the 87 per cent. EIS vote. Is he aware that those of us who have children at state schools — I am one of them — are more and more appalled and find it increasingly difficult to understand, as the strike goes into its second year, why the Secretary of State refuses to contemplate an objective view of the teachers' salary structure, the result of which would not commit the Government more than they were committed by the recommendations of the Top Salaries Review Body? They were not committed by that body's recommendations; they accepted them, which is rather different.
Does the right hon. Gentleman agree that it is not true and not fair to say, as he did, that teachers have asked for a large pay settlement without any commitment to change?

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If the Government are determined to link pay and conditions, as they appear to be, surely at least he could establish an independent body to consider the two factors together and to report before Christmas. That would seem to be a constructive thing to do. Or is the right hon. Gentleman prepared to soldier on until perhaps he gets his own way on his own terms, which would suggest that he is not prepared to consider other attitudes?
Mr. Younger: That is not my attitude and it never has been. I am willing to explore every way of trying to resolve the dispute. As for the original demand for an independent review of pay only, I thought that it was the position of most of the parties represented in the House that any review would have to be directed to pay and conditions of service. I may be wrong, but I thought that the Liberal party had made that clear. I thought that it took the view that conditions of service must be included in the review. That is the first objection to the teachers' original proposal.
Secondly, I cannot see any merit in asking a body of outsiders to consider teachers' pay and conditions when the SJNC has been set up for precisely that purpose. It has in its number representatives of the employers and the teachers, both of whom are highly involved in teaching in our schools. I cannot see the sense in bringing together a body of outsiders to consider pay and conditions when there are many insiders who know the job perfectly well and who could make a decision if they could only get down to doing so.
Mr. Alexander Fletcher: Is it not a fact that the EIS is occupying an absurd position by refusing to discuss pay and conditions of service with the employers in the same way as would any other organisation or profession? Its insistence on waging a war of attrition against pupils and parents in Scotland cannot continue indefinitely. Will my right hon. Friend advise local authorities that those in secure jobs cannot do what they like in such unreasonable circumstances?
Mr. Younger: I am grateful to my hon. Friend. I agree with him that all those in employment nowadays are used to having their salaries or pay scales, whatever it may be, related to conditions of service and what it is that they are requested or required to do as part of their job. The teachers are in no different position from others in this respect except that their job is different from that of other employees, and that should be recognised in their conditions of service.
I would always regard a war of attrition as regrettable and undesirable. With great respect to all concerned, it is unacceptable that that should happen when the teachers are not faced with a Secretary of State or a Government who refuse to recognise their demands. Indeed, we have moved a long way to meet them. We are prepared fully to discuss the matter in a sensible and adult way with the teachers. We cannot regard it as acceptable that pupils should be used as weapons in a war. That must stop, for it is entirely unacceptable.
Mr. Willie W. Hamilton: How can the Secretary of State escape responsibility for the fact that morale in the teaching profession is now at an all-time low? The right hon. Gentleman has spoken of a generous offer, but is it not the case, as my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) has said, that it
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represents 2·5 per cent. per year on top of the 3 per cent. that the Government are determined to inflict on teachers and others? This means that they are being offered about 5 per cent. per year over the next four years. Does he think for a moment that any responsible profession would accept that?
Does the right hon. Gentleman agree that the highest possible salary' available in the teaching profession throughout Scotland is less than the increase which the Government, without hesitation, gave to those receiving top salaries? That is something to which the teaching profession objects strongly. The Government are practising double standards and are prepared to treat some people differently from others. Unless the Government are prepared to accept the need for an independent pay review, we must suspect them of going for the kill in their approach to the teaching profession. That might be because the Secretary of State thinks that it is weak and moderate.
Mr. Younger: It is uncharacteristic of the hon. Gentleman to be short on facts but, as usual, he has been long on rhetoric. His supplementary question does not marry up with any of the facts. I have made it clear throughout the dispute that I accept that the teachers have a case and that it must be recognised that they feel that they have been badly treated. I have found a considerable amount of extra money to help to demonstrate that recognition, which no Opposition Member ever dreamt I would do. Against that background it is not acceptable to use children as a battering ram. The Government are only too willing sensibly to settle the issue with the teachers.
Lord James Douglas-Hamilton: Will my right hon. Friend emphasise that negotiations remain on offer, that the £125 million is over and above normal pay rises, and that the precise extent of normal pay rises is a matter for negotiation?
Mr. Younger: My hon. Friend is right; and he has corrected the misapprehensions of the hon. Member for Fife, Central (Mr. Hamilton).
Mr. Donald Stewart: Is the Secretary of State aware that the result of the EIS ballot is regarded by most people in Scotland as marking the lengths to which a moderate and responsible profession has been obliged to go by the actions of the Scottish Office? Is he aware also that there is general agreement among the public that the teachers are entitled to a substantial increase in salary without any strings whatsoever? Surely that part of the dispute could be dealt with by an independent pay review, which the profession has been demanding. The refusal of the Secretary of State to accede to that demand shows how aware he is of the weakness of his case. Is he aware that, as the dispute continues, the public have no doubt that the responsibility lies with him?
Mr. Younger: I have answered the point about the independent pay review, and I have nothing more to add. I believe that, irrespective of any of the issues, to threaten children's examination prospects — possibly the only chance in their lives—is not an acceptable method of pursuing an industrial dispute.
Mr. Gerald Malone: Is it not the case that throughout this dispute a number of initiatives have been taken all of which have come from my right hon. Friend the Secretary of State? Now that the last

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stumbling block which was articulated in July—that no precise figure had been put on the amount available—has been removed and my right hon. Friend has cited an amount, would it not be better for the negotiations if the threat to examinations were removed? Would not that measure promote some goodwill in Scotland and give fair speed to the negotiations?
Mr. Younger: My hon. Friend is correct. There is a need for movement on both sides.
There were three phases in this dispute. The first was the demand for an independent pay review only. It was then said that there was no point in my trying to negotiate unless I produced some money. I offered in December to find some extra money from within the Scottish block to help to resolve this dispute. That offer was turned down by the teachers on the ground that the matter could not be discussed until they knew how much money was involved. In August I specified the amount, but the offer was turned down on television without those involved ever having listened to it. With that sort of lack of movement, it is not surprising that we have a difficult dispute. I shall continue to try to find ways of moving in the direction of the teachers if I can, and I hope that they will do the same for me.
Mr. Michael J. Martin: The right hon. Gentleman knows not only that my constituents have been faced with the problem of the teachers' industrial dispute but that 800 pupils in the old senior secondary school system have been involved in a previous dispute. The right hon. Gentleman knows that if the children in my constituency do not receive a decent education it will be difficult for them to get a job in areas where youth unemployment is about 50 per cent. If the negotiations have broken down, surely the right hon. Gentleman is under a legal obligation to ensure that children in my constituency and in Scotland generally are properly educated.
Mr. Younger: I have a responsibility, and I have intervened repeatedly to try to solve the dispute. I wish that the hon. Gentleman would put his concerns about the children to the teachers.
Mr. Michael Forsyth: If the pay of teachers has fallen behind, is that not a dreadful condemnation of the EIS and those who negotiate on its behalf? Is not the insistence on an independent pay review a cop out by the teachers because they feel that they are not able to make the case in negotiations like everyone else? Does my right hon. Friend agree that, if ever there were an illustration of the Marxist doctrine that the ends justify the means, the examination boycott is a good example?
Mr. Younger: I agree with my hon. Friend. I do not think that that particular end can ever justify those means. When there is a perfectly well-constituted body representing both sides whose job is to negotiate between the two sides, that is the right place for this dispute to be resolved.
Mr. Robert Hughes: Does the right hon. Gentleman recall that, before the House went into recess, he was specifically warned that this dispute would not go away and that he was living in dreamland if he thought that the summer holidays would see an end to the
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problem and we would come back to peace and quiet. As the right hon. Gentleman has acknowledged, unlike the hon. Member for Stirling (Mr. Forsyth), that the 87 per cent. vote by the EIS demonstrates that the vast majority of teachers in Scotland are thoroughly fed up and wholly behind the campaign—this is a matter not of one or two people running others but of virtually the whole of the teaching profession in Scotland—does he recognise that in these serious and desperate circumstances for the education of Scottish children he will need to make a supreme effort to go further and to concede the independent pay review? If the right hon. Gentleman makes that effort, I think that we would all urge a return to normality in schools.
Mr. Younger: I know that hon. Members have been away during the recess, but the hon. Gentleman's account of movements at the beginning of the recess is highly inaccurate. I did not go away for a luxurious holiday to stretch out on the beach and forget about the dispute. While the hon. Gentleman went on holiday, I spent the first part of the recess fighting for extra money, and I got 10 per cent. above the normal increases. That is the measure of my commitment to spending time to try to solve this dispute.
I entirely agree that a supreme effort is needed to settle this dispute before more damage is done to the children. I do not doubt that teachers feel strongly about this matter. The ballot, my mailbag and what teachers say to me show this. I am not denying their case; I am trying only to solve the dispute. I wish that some members of the teaching profession would try harder to meet me, just as I have tried to meet them.
Mr. Barry Henderson: Is my right hon. Friend aware that parents are becoming increasingly anxious about their children's education and increasingly bewildered at the way in which the EIS uniquely has not been prepared to budge one millimetre despite the various efforts made by my right hon. Friend, the employers and, equally as important, other teacher unions in an effort to break the deadlock? Will my right hon. Friend urge the teachers to use the time of disruption — they talk of years—more fruitfully in talking about how a settlement might be reached rather than shouting from an entrenched position?
Mr. Younger: My hon. Friend is correct in thinking that not only the public in general but almost everyone is bewildered by the lack of movement in this dispute. As I have moved on many occasions to meet the teachers' point of view, I hope that all those concerned on the other side will do their best to move at least a little in my direction so that a solution to the dispute may take a step forward.
Mr. Norman Buchan: Will the Secretary of State explain how the statement's insensitive language can help to bring about a settlement? He said that he intended to take measures to prevent such action being taken again. What does he mean by those sinister words? Does he mean that in future teachers will have no right to take industrial action?
Mr. Younger: What I mean is what I should have thought the vast majority of the public in Scotland mean.
Mr. Buchan: I am asking what the right hon. Gentleman means.
Mr. Younger: What I mean is what I think the vast majority of people in Scotland mean — that, whatever solution comes out of the dispute, it had better be a solution that ensures that this sort of chaos never happens again.
Mr. Bill Walker: Does my right hon. Friend agree that the joint negotiating body as established by statute is in many ways a model on how one should resolve industrial disputes? For that model to be effective the component parts must be prepared to use all their skills, training and talents to bring about sensible solutions. Those sensible solutions must be based on, first, the available cash; secondly, the available resources; and, thirdly, the customers, including the parents but primarily the children. Taking all those factors into account, it seems strange to me and, I am sure, to many other active trade unionists who understand what negotiations mean — [Interruption.] Those who know nothing about industrial relations are always amused. They have never had to take part in industrial relations or to try to solve problems. That is why they are amused, especially the middle-of-the-road people who do not understand these matters. Does my right hon. Friend agree that Scottish parents are fed up with seeing their children—I include one of my children who is taking an examination this year—affected? Of course children will be adversely affected if the examinations are not conducted properly. Naturally, I and the rest of the parents are concerned about the facts that the machinery in existence to find answers is not being used.
Mr. Younger: Everyone on all sides would certainly expect not only me but the other parties to the dispute to do everything that they could to achieve a compromise. I shall play my part if they will play theirs. Everyone, whatever his view about the dispute, will agree with me that, whatever the circumstances, everything possible must be done to ensure that children do not needlessly lose perhaps their only chance of sitting an important examination.
Mr. Gavin Strang: Will the right hon. Gentleman acknowledge that what he has offered is inadequate to meet the teachers' case? Will he acknowledge that the 87 per cent. vote in the ballot in relation to the 1986 SCE examinations makes it absolutely clear that no settlement is on offer? Will he face up to the fact that he has a responsibility to come forward with an initiative to avert the damage that is being done to our children?
Mr. Younger: I do not agree with the hon. Gentleman that my offer was inadequate. If I may say so, it is easy for him to say that as he does not have to find the money to fund it. It was extremely generous in comparison to what was offered to all the other people in the public sector, and that should be borne in mind.
I do not agree with the hon. Gentleman that the ballot shows that no acceptable settlement has been offered. The ballot shows one thing only —that a huge number of Scottish teachers felt that they should go to the length of denying their pupils the chance of sitting examinations next year. I understand the feelings which may have been expressed in the ballot. I make it clear that I respect that. I hope that many of those teachers will think thoroughly, long and hard before they inflict that on their pupils.
Mr. Michael Hirst: Does my right hon. Friend agree that the teachers' refusal to co-operate with curriculum development and in-service training is having a much more severe effect upon the future of Scottish education than strikes or even a possible examination boycott? Does he agree that it is essential that teachers' contractual duties should be redefined so that worthwhile developments in education cannot be frustrated in future? I recognise the efforts that he has continually made to try to find a solution to this impasse. Will he persist with his efforts and perhaps consider a no-strike agreement?
Mr. Younger: On the latter point, the teachers have not suggested or requested such an agreement. If they did, it could of course be considered.
My hon. Friend is right to stress the importance of curriculum development. I emphasise that changes in curriculum development were in no sense imposed upon the teachers or the teaching profession. They were devised within and through the teaching profession. They were piloted by teachers in schools and they were universally welcomed until this dispute arose. The duties need to be clearly defined. I accept that we must work out whether they need to be altered. I have shown my willingness on that. If we pay teachers to do a job, we expect them to do that job.
Mr. Robert Maclennan: Why has not the Secretary of State seized the opportunity offered by the teachers' proposals of 27 September and recognised that they have offered to negotiate conditions of service within the SJNC following the management side's proposal to put a substantial sum of money on the table? Both elements are crucial. The Secretary of State seems to be sweeping aside an opportunity based on proposals put forward outside the profession by the churches. Why does he show himself to be so obdurately unwilling to seek to bridge the gap?
The right hon. Gentleman said in answer to a question from the hon. Member for Glasgow, Garscadden (Mr. Dewar) about the current discussions taking place with the Scottish Office that he was not a party to negotiations with the teachers. Does he not realise that the people of Scotland whose children's education is now at risk are asking why he is not negotiating with the teachers? Will he start negotiating now?
Mr. Younger: The answer to that question is a factual one: I am not an employer of any teachers, and I cannot negotiate with them.
On the hon. Gentleman's other two points, I assure him and the House that when the September offer was made, I was, and remain, desperately anxious to find a way of accepting it. I am bound to say, as I said in my statement a few minutes ago, that as it stands that proposal does not seem to offer a way forward. It requires a large up-front payment straight away in return for later undefined discussions about conditions of service. I wish that I could say that that was an acceptable way forward, but it is not realistic as it stands. However, I shall be glad to continue to discuss it with the teachers.
I was pleased to see the churchmen. I discussed the matter in great depth with them. They have made their suggestions for solving the matter which I respect and take careful note of. It must be borne in mind that the churches

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are not obliged to find any of the money needed to solve the problem, and it was not difficult for them to suggest that extra money should be paid.
Mrs. Anna McCurley: Much has been made about morale — and we know that it is low at the moment—but has it not been pointed out to the teachers that morale will be even lower when they return to school, that it will be far more difficult for them to gain the children's respect and that discipline will have gone to bits by the time they return?
Mr. Younger: My hon. Friend is correct. That point has been made to me forcefully by teachers, their representatives and some of the teachers that I met formally yesterday. The children's lack of respect for their teachers is an unfortunate by-product of this dispute. That will take some repairing. I have no doubt that once we solve the dispute that can be repaired with goodwill all round. It is about time that we got on with it.
Several Hon. Members rose——
Mr. Speaker: Order. I shall call the hon. Members who have been standing. I ask for brief questions because we have a heavy day ahead of us.
Mr. David Lambie: In his statement the right hon. Gentleman said that the teachers have asked for a large pay settlement. That is not true. The whole campaign over the past 18 months has been associated with the need for an independent pay review. that has been ratified by two annual general meeting decisions of the EIS, supported by the ballots of the members. If the Secretary of State is so sure of his case, why does he not put it to independent arbitrators in a pay review? If he does not do that, strikes will accelerate and conditions will worsen.
Mr. Younger: The hon. Gentleman is technically correct that the teachers have not made a formal proposal for a large pay increase, but in their meeting with me in September they put forward, as was made clear in the newspapers, a suggestion that there might be a way forward if a large pay settlement was made as a starter. They would be prepared later to discuss conditions of service. That all seemed to be a second-best option compared with discussing the matter in the body that is properly set up to do so and which represents the two sides that know what school teaching is all about. That is the place to solve the dispute.
Mr. Dick Douglas: Does the Secretary of State concede that he is deluding no one when he says that he is not party to the negotiations, because what he has been doing since the summer recess is negotiating? May we make it clear that the damage to the children's future is being embarked upon now because, although the examinations might be in May 1986, the prelims and all the preparations have to take place now?
When does the right hon. Gentleman see this vexatious dispute coming to an end? When will he use his powers to put a clear offer on the table, because the teachers have moved their position. It is wrong to say that they have not. I concede that the Secretary of State has moved his position. It is monstrous that our schools are going through
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these difficulties. Both the bodies should get around the table and solve the dispute. He is negotiating and he should grant a substantial pay increase.
Mr. Younger: The hon. Gentleman is correct to say that it is monstrous, that damage to the children starts now, and that next year's examination problem starts now. He is not correct when he asks why I, as Secretary of State, do not put an offer on the table. The fact is, whether he likes it or not—I do not know whether I like it myself—I cannot put any offer on the table because I do not employ any teachers. I cannot do that. It can be done only by the employers' side of the SJNC. It is important for hon. Gentlemen, whatever their views on the matter, to understand the facts. The only person who can put forward an offer is Dr. Malcolm Green, who is chairman of the employers' side, because he has control over the substance of the offer. I have done the nearest thing that a Secretary of State in my position can do to putting an offer on the table. I have given a large sum of extra new money, in addition to what the local authorities can offer, to help to resolve this dispute. I am grateful for the fact that the hon. Gentleman at least acknowledges that I have tried to move.
Mr. James Hamilton: Will the right hon. Gentleman recognise that all the schools in Bellshill — half of my constituency—both secondary and primary, are on strike this week? Will he concede that the cornerstone of the request by the unions is for an independent salaries review and that if that is granted all the other things will fall into place? Is he further aware that at some stage I visited every school in my constituency and that, without exception, I found the morale of the teachers in all these schools the lowest I have ever known in Scottish education? Will he resolve the problem by granting the teachers an independent salaries review?
Mr. Younger: I am afraid that the answer is no. For the reasons that I have given, it would be totally improper to do so. It is quite unrealistic to ask for a review of pay only without a consideration of conditions of service. I agree with the hon. Gentleman that morale is a problem that we must try to solve and that it requires both sides to solve it.
Mr. John Maxton: Will the Secretary of State personally read the constitution of the Scottish negotiating committee in which he will see that he is a full voting member of the management side? Will he give a guarantee that the measly 2·5 per cent. that he is offering over and above normal pay negotiations will go hand in hand at least with an increase every year in line with inflation in that year, because if he fails to do so the 2·5 per cent. is totally meaningless? Does he agree with the teachers that what they are concerned about is erosion over the past 10 years and not future conditions of service, and that only when that erosion has been made good will they talk about future conditions of service?
Mr. Younger: I recognise the force in all those questions, and I have recognised it in finding extra money to help to resolve this problem.
With the greatest respect, I must point out that, although I have two representatives on the employers' side of the SJNC, that does not imply a controlling majority position. What I have been asked to do by the hon. Gentleman and others is to put an offer on the table. I am not in a position to do that. The SJNC employers' side is

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able to do that. Although my representatives are on the SJNC, they are not able to dominate that body and it is quite right that they should not.
I should perhaps make something clear. The 10 per cent. over four years need not necessarily be 2·5 per cent. in any one year; it is open for us to discuss how that is broken up. That is on top of whatever the negotiated figure for the normal annual negotiations may be, after those negotiations are completed. The hon. Member for Fife. Central (Mr. Hamilton) expressed that as 3 per cent., but on no occasion in recent years has it been 3 per cent.; it is entirely his figure and his invention which I think has no validity.
Mr. Tam Dalyell: Was not the answer given to my hon. Friends the Members for Dunfermline, West (Mr. Douglas) and Glasgow, Cathcart (Mr. Maxton) the answer that was given by the Levite 2,000 years ago as he passed by on the other side of the road? May I be forgiven for being a little personal? Who imagines that if the Secretary of State's children and those of his ministerial colleagues had been personally affected this dispute would have been allowed to run on and on?
Mr. Younger: The last remark does not come up to the hon. Gentleman's usual high standards.
Mr. Dalyell: I am personally affected.
Mr. Younger: I accept that the hon. Gentleman is personally affected, but that is no excuse for making unnecessary allegations against other people. There is no call for that. We should be able to carry on our arguments without personal remarks of that sort.
Mr. Dalyell: If your children were affected— —
Mr. Speaker: Order. The debate has been very good natured so far.
Mr. Younger: It is much better to keep it that way, and I hope that the hon. Gentleman will note that.
On the question of passing by on the other side, I cannot match the hon. Gentleman in his Biblical references, but I can say that if I had had the power as employer to take part in these negotiations it might have made my role a great deal easier in the past few months. However, I have no such power, and it is no use my trying to fool the House into thinking that I have.
Dr. Norman A. Godman: In the light of the EIS ballot result last week and the implacable hostility of the Secretary of State to an independent pay review, when, in the right hon. Gentleman's opinion, will this dispute be resolved? Is it likely to enter a third year?
Mr. Younger: In my view, this dispute need not go on any longer because we have a Government whose response
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has been flexible. They are prepared to meet the teachers and discuss their worries in any way possible. That is the solution to this dispute. It will end with negotiations at some time. It is no use both sides digging in and thinking that they can get away with it. The dispute has to be properly negotiated, and I will play my part in trying to get it solved as soon as possible.
Mr. George Foulkes: Does the Secretary of State concede that parents and pupils affected, particularly in Ayr — I can speak with experience, as the Secretary of State knows—will be deeply disappointed that he has come to the House to make a statement but has failed to put forward one new idea or initiative? Yet, as he knows, not only is he a member of the management side; he is the main paymaster for any deal that is concluded. Instead of coming up with a new initiative, he is a pale carbon copy of his English counterpart.
Will the Secretary of State confirm that he has received from a number of people, including the organisation representing the parents of pupils in targeted schools, a specific new proposal that an independent arbiter or go-between should be asked to talk to all those involved and to try to come up with a solution? Will he say w hat his response to that has been? Is he still considering t? Has he rejected it? If he has rejected it, why? It is at least a positive proposal which will stop the negotiation through the media in which he has been involved as well.
Mr. Younger: There is no way of copping out of the difficult issues by thinking that there is some magic gentleman or lady who can act as arbiter and solve the problem. The two parties concerned already possess all they need to solve this dispute themselves. We have the facts and what is more we have a Government, in the shape of myself, who have found a great deal of money to help to oil the wheels for a solution.
I do not know whether the hon. Member was wilfully misunderstanding me, but I urge him, if he does nothing else, to understand what is and what is not possible in this situation. Of course, I am ultimately the paymaster for matters within Scottish expenditure. That is not denied. I have brought forward more money for the dispute because of it. But it does not alter the fact that, although I might wish to be, I am not the employer of any teachers.
Mr. Foulkes: I know how the committee works, and the right hon. Gentleman knows how it works.
Mr. Speaker: Order. The hon. Gentleman has asked his question. He must not interrupt the Secretary of State's reply.
Mr. Younger: It occurs to me to wonder whether the hon. Gentleman asks questions to get answers or simply as part of an ego trip.

Fight World Poverty (Lobby)
5.7 pm
Mr. Anthony Nelson: On a point of order, Mr. Speaker. May I raise with you a matter which I believe touches in no small part on the rights and exercise of discretion of all members of the House?
During the recess I, like many other colleagues, was approached by "Fight World Poverty" which sought to arrange a meeting with my constituents. I, and other hon. Members, met lobbies from our own constituencies today and arranged directly our own interview rooms for that purpose. I make no objection to any lobby, least of all this, desiring to put forward its point of view, but I am concerned, in this initial invitation, that this particular lobby said that the office of the Serjeant at Arms had asked it to administer bookings of interview rooms and the Grand Committee Room on behalf of hon. Members. Whilst not wishing to overstate this, I suggest that there is a difficulty in terms of precedent which may arise if we allow any outside lobby group, however worthy its objective, to take over the booking of rooms here, which should be the sole responsibility of Members of Parliament.
I was additionally concerned when I went down to the interview rooms this afternoon to find outside, seated behind a table, an organiser who asked what she could do for me and indicating to which room I should go to meet my constituents, when I had booked a room directly. I inquired of her whether our own attendant for the interview rooms was not sufficient but she advised me that she had taken over for today.
As we are charged with responsibility for the security of people who come to the House as our guests and visitors, and as it is for hon. Members to decide whether to meet people, when they do so and whom they meet, we should zealously guard our right to book our own committee rooms. After all, worthy as the objectives of any lobby may be, we may have pressing individual cases
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raised by our constituents which in our judgment take precedence over the wider objectives of any lobby, and it would be a shame if Committee Rooms in which to meet them were pre-empted because this responsibility had been handed over to any other lobby.
I ask you if you will be good enough to look into this.
Mr. Speaker: The hon. Gentleman raises a very important point. I confirm that it is the prerogative of hon. Members to book rooms. I understand that the booking took place because the organisers of that lobby came to the Serjeant at Arms' office during the recess, and it was considered that this was the most orderly way of dealing with the matter. However, it is not a precedent that will be followed in future, and I shall certainly look into it.
Mr. Albert McQuarrie: Further to that point of order, Mr. Speaker. With regard to what my hon. Friend the Member for Chichester (Mr. Nelson) has just said and the comments that you made, Mr. Speaker, about the fact that the organisation asked for the rooms during the recess, surely Members of Parliament who wished to obtain Committee Rooms for parliamentary business immediately after the recess was concluded were placed in an unfortunate position, as I was. Two weeks before the recess was over, I endeavoured to book a Committee Room, but could not even get an interview room in Norman Shaw. Every single Committee Room in the House and interview room in any of the buildings in the Palace of Westminster had been booked by that organisation. I confirm what my hon. Friend said, that the organisation said that it was responsible for the bookings of those rooms. I am glad that you are taking up the matter. Mr. Speaker.
Mr. SpeakerIt was not my information that the organisation had booked all the Committee Rooms. I understood that it had been allowed to book W interview rooms off Westminster Hall. However, I repeat that I shall look into the matter.

European Communities (Finance) Bill
5.13 pm
Mr. Tony Marlow: On a point of order, Mr. Speaker. The Bill deals with an amendment to the European Communities Act 1972. It also deals with a surrender of parliamentary sovereignty over a certain amount of taxpayers' money, some of which will be eventually controlled by the EEC Commission. So that we know in advance, can you tell us, Mr. Speaker, what will happen in the other place if the Bill is passed after today's debate? Can you say what the other place will be able to do, what debates it can have, what amendments it can consider and what action can be taken?
Mr. Speaker: I am not responsible for what goes on in the other place. I can only advise and help the hon. Gentleman as to what may go on here.
Mr. Marlow: Further to that point of order, Mr. Speaker. Can you say whether it is a money Bill?
Mr. Speaker: In accordance with long-standing practice, I take that into consideration when and if the Bill is given a Third Reading and not before. My decision will be published in the Votes and Proceedings.
Mr. Teddy Taylor: Further to that point of order, Mr. Speaker. If you make that announcement tomorrow, is it true that there will be only six sitting days for the other place to go through the full process of considering this fundamental constitutional Bill? If the other place does not manage to complete consideration those days, is the Bill dead?
Mr. Speaker: I am not in any way concerned with what goes on in another place. I cannot help the hon. Gentleman.

Public Opinion Polls (Prohibition at Election Times)
5.15 pm
Mr. Ray Powell: I beg to move,
That leave be given to bring in a Bill to prohibit the holding of and publication of the results of opinion polls about voting intentions at times prior to general elections and by-elections for the House of Commons.
To try to help the House after the laborious points of order and everything else, I shall try to be as brief as possible and not deal extensively with market research opinion and so on.
All right hon. and hon. Members fully understand chat the only poll that matters finally in an election is the result of the votes counted at the ballot box. Many years ago that depended on the political parties' presentation of their policies. The electors listened to speeches on street corners, in parks or local halls and coverage by radio or other means had very little impact. But now, in 1985, with mass media coverage on the box in the corner of many homes, electors are easily persuaded by the announcement of the result of opinion polls.
Considerable sums of money are spent on the commissioning of those polls. We are all aware of the international code of practice that pollster organisations are obliged to follow. Nevertheless, the honesty, objectivity, efficiency and techniques used can result in the presentation of biased, manipulated results for partisan political purposes. Most hon. Members are well aware of many polls that predicted a totally different result from the actual result at the counting of the votes.
I refer in particular to the recent by-election at Brecon and Radnor. On the day of the election, one opinion poll gave the Labour candidate an 18 per cent. lead. That undoubtedly resulted in many known voters not voting, thinking that the candidate would be elected with a substantial majority. In fact, the alliance candidate won by 1·5 per cent.
I could give many more examples of similar results and predictions, such as one recent announcement that was not only a maverick but was absolute nonsense. It was bold enough to suggest to thinking, intelligent electors on 19 September that the alliance had a 9·5 per cent. lead over Labour. Surely that is proof enough that the Bill, with its objectives, is absolutely necessary.
Many countries ban opinion polls before elections— Portugal recently adopted legislation on similar lines. If we are to preserve the true democratic process of electing a Government by the majority accepting the presentation of political parties' policies, we must ensure that pollsters are not the deciding factor and that they are not allowed to sway electors to vote for a party the policies of which are not liked just to keep out another party that is liked even less. Tactical voting is encouraged by the present applied system. Until the electorate votes according to conscience, principle and the policies presented, uninfluenced by somewhat bizarre pollster predictions, we are allowing the franchise won for us after a considerable struggle by former generations to be lost to the fancies and favourites of the few large influential pollster organisations.
I conclude by hoping that those organisations will understand the real need for legislation. Only today I received a letter from the chairman of the Market Research

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Society, Mr. Peter Bartram, confirming discussions that I had with Phyllis Vangelder, Gordon Heald and himself welcoming the setting up of an all-party parliamentary working group to discuss matters of concern relating to the commissioning, execution and reporting of election polls.
I therefore urge all hon. Members to support my request for leave to bring in the Bill so that a fair, sound and practical solution is found for this extremely worrying problem.
5.20 pm
Mr. Clement Freud: I oppose this Bill which has the same chance of reaching the statute book whether I got up or indeed whether the hon. Member for Ogmore (Mr. Powell) had got up. The Bill comes under the loose heading of finding cures for which there is no disease. It is a sour grapes Bill. If we look at the history we find it is quite simply that the Labour party was peeved that for once it had come top of an opinion poll —and commissioned the printing of a lot of newspapers with a lot of misleading headlines—and found at the end it had not won the election.
One has only to look at the identity of the person bringing it in, someone who lives not a million miles from Brecon and Radnor where we had such success and Labour had such failure, to see that the Bill is suggested by a whinger, an honourable whinger.
Were it ever to become an Act of Parliament it would be an instrument for suppression of the freedom of the press, suppression of professional opinion. It is an anti-free speech measure and an ineffective one because, given the way the Bill is proposed, only professional organisations will be barred from publishing, which means that if an amateur were to come up with findings there would be no way in which he could be stopped. The effect of the Bill would be rather like banning meteorologists from forecasting the weather a week before a garden party in case anyone might be put off from going. [Interruption.]
As I listened to the hon. Member for Ogmore, which is more than his hon. Friends seem to be doing to me, it appeared that he was against the publication of a technically devised, scientifically evolved opinion poll. If this were a Bill to gag MORI, that most inaccurate of opinion poll organisations, there might be a lukewarm argument in favour of it, but I should still oppose it because it is right for anyone who comes to a finding to have the right to publish that finding. We on these Benches have more respect for the virtue and responsibility of the electorate than to believe they are going to be vastly moved by an opinion poll, inaccurate as opinion polls have been found to be over the years.
In 1967 a Speaker's conference suggested that opinion polls be barred from publication for 72 hours before an election. The Labour Government that year very properly threw out that recommendation. In 1969 in West Germany legislation was brought in making it illegal to publish the results of opinion polls. The Times of London conducted a survey in West Germany and published it, and it was reported in the West German newspapers in their foreign affairs pages. That is what happens when you bring in legislation which is as impractical as that was.
This Bill would charter amateurs and would make illegal the professional findings of organisations which
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have spent much money and time trying to find a solution. If it were accepted it would be the precursor of a whole range of Labour legislation to ban what Labour does not like to hear. Anyone who believes in the freedom of the press, must oppose this Bill.
Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at Commencement of Public Business):—
The House divided: Ayes 124, Noes 128.

Division No. 294]

[5.24 pm

AYES

Adley, Robert

Jones, Barry (Alyn & Deeside)

Anderson, Donald

Kaufman, Rt Hon Gerald

Archer, Rt Hon Peter

Lambie, David

Ashley, Rt Hon Jack

Lamond, James

Bagier, Gordon A. T.

Leighton, Ronald

Barnett, Guy

Lloyd, Tony (Stretford)

Beckett, Mrs Margaret

Lofthouse, Geoffrey

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

Lord, Michael

Bermingham, Gerald

Loyden, Edward

Bidwell, Sydney

McKay, Allen (Penistone)

Boyes, Roland

McNamara, Kevin

Bray, Dr Jeremy

McQuarrie, Albert

Brown, Ron (E'burgh, Leith)

McWilliam, John

Buck, Sir Antony

Madden, Max

Caborn, Richard

Marek, Dr John

Callaghan, Jim (Heyw'd & M)

Marshall, David (Shettleston)

Clark, Dr David (S Shields)

Martin, Michael

Clarke, Thomas

Mason, Rt Hon Roy

Clay, Robert

Maxton, John

Cocks, Rt Hon M. (Bristol S.)

Maynard, Miss Joan

Cohen, Harry

Meacher, Michael

Coleman, Donald

Michie, William

Conlan, Bernard

Montgomery, Sir Fergus

Conway, Derek

Morris, Rt Hon A. (W'shawe)

Corbyn, Jeremy

Oakes, Rt Hon Gordon

Cox, Thomas (Tooting)

O'Brien, William

Crowther, Stan

Ottaway, Richard

Cunliffe, Lawrence

Page, Richard (Herts SW)

Dalyell, Tam

Park, George

Davies, Ronald (Caerphilly)

Patchett, Terry

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

Pavitt, Laurie

Deakins, Eric

Pike, Peter

Dormand, Jack

Powell, Raymond (Ogmore)

Douglas, Dick

Prescott, John

Dunwoody, Hon Mrs G.

Radice, Giles

Dykes, Hugh

Raffan, Keith

Eadie, Alex

Redmond, M.

Eastham, Ken

Richardson, Ms Jo

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

Roberts, Allan (Bootle)

Evans, John (St. Helens N)

Rooker, J. W.

Fields, T. (L'pool Broad Gn)

Rowlands, Ted

Fisher, Mark

Sheerman, Barry

Flannery, Martin

Skinner, Dennis

Forrester, John

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

Foster, Derek

Snape, Peter

Foulkes, George

Soley, Clive

Godman, Dr Norman

Spearing, Nigel

Golding, John

Stewart, Rt Hon D. (W Isles)

Greenway, Harry

Straw, Jack

Griffiths, Peter (Portsm'th N)

Thorne, Stan (Preston)

Hamilton, James (M'well N)

Tinn, James

Hamilton, W. W. (Central Fife)

Torney, Tom

Hardy, Peter

Walker, Bill (T'side N)

Harman, Ms Harriet

Wardell, Gareth (Gower)

Harrison, Rt Hon Walter

Wareing, Robert

Heffer, Eric S.

Weetch, Ken

Hogg, N. (C'nauld & Kilsyth)

Welsh, Michael

Home Robertson, John

Wilson, Gordon

Hoyle, Douglas

Woodall, Alec

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport East)

Tellers for the Ayes:

Hughes, Sean (Knowsley S)

Mr. Don Dixon and Mr. Frank Haynes.

Hunter, Andrew

Jessel, Toby

179

NOES

Aitken, Jonathan

Latham, Michael

Ashdown, Paddy

Lawler, Geoffrey

Aspinwall, Jack

Lawrence, Ivan

Atkinson, David (B'm'th E).

Lewis, Sir Kenneth (Stamf'd)

Banks, Robert (Harrogate)

Lightbown, David

Batiste, Spencer

Macfarlane, Neil

Beaumont-Dark, Anthony

MacKay, Andrew (Berkshire)

Beggs, Roy

Maclennan, Robert

Beith, A. J.

McNair-Wilson, M. (N'bury)

Bevan, David Gilroy

Meadowcroft, Michael

Biggs-Davison, Sir John

Miller, Hal (B'grove)

Blackburn, John

Mills, Iain (Meriden)

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

Mitchell, Austin (G't Grimsby)

Bowden, Gerald (Dulwich)

Molyneaux, Rt Hon James

Braine, Rt Hon Sir Bernard

Morris, M. (N'hampton, S)

Brown, M, (Brigg & Cl'thpes)

Moynihan, Hon C.

Bruce, Malcolm

Murphy, Christopher

Budgen, Nick

Nelson, Anthony

Carlile, Alexander (Montg'y)

Nicholls, Patrick

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

Page, Sir John (Harrow W)

Cash, William

Parris, Matthew

Chapman, Sydney

Pawsey, James

Clark, Sir W. (Croydon S)

Penhaligon, David

Cockeram, Eric

Percival, Rt Hon Sir Ian

Colvin, Michael

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

Coombs, Simon

Powell, William (Corby)

Corrie, John

Powley, John

Currie, Mrs Edwina

Price, Sir David

Dickens, Geoffrey

Proctor, K. Harvey

Dicks, Terry

Rathbone, Tim

Dover, Den

Roe, Mrs Marion

Evennett, David

Ross, Stephen (Isle of Wight)

Farr, Sir John

Rossi, Sir Hugh

Fookes, Miss Janet

Rost, Peter

Forth, Eric

Rowe, Andrew

Fox, Marcus

Sackville, Hon Thomas

Franks, Cecil

Sheldon, Rt Hon R.

Freud, Clement

Silvester, Fred

Gardiner, George (Reigate)

Soames, Hon Nicholas

Gardner, Sir Edward (Fylde)

Speed, Keith

Gilbert, Rt Hon Dr John

Speller, Tony

Glyn, Dr Alan

Spence, John

Gower, Sir Raymond

Stanbrook, Ivor

Grant, Sir Anthony

Stern, Michael

Gregory, Conal

Stewart, Andrew (Sherwood)

Griffiths, Sir Eldon

Sumberg, David

Grist, Ian

Tapsell, Sir Peter

Ground, Patrick

Taylor, John (Solihull)

Hamilton, Neil (Tatton)

Taylor, Teddy (S'end E)

Harris, David

Thomas, Dafydd (Merioneth)

Hayes, J.

Thurnham, Peter

Heathcoat-Amory, David

Townend, John (Bridlington)

Hickmet, Richard

Townsend, Cyril D. (B'heath)

Hill, James

Wainwright, R.

Hind, Kenneth

Wallace, James

Holt, Richard

Warren, Kenneth

Howells, Geraint

Watson, John

Hubbard-Miles, Peter

Wells, Bowen (Hertford)

Johnston, Sir Russell

Wells, Sir John (Maidstone)

Jones, Gwilym (Cardiff N)

Wigley, Dafydd

Kellett-Bowman, Mrs Elaine

Wood, Timothy

Kennedy, Charles

Wrigglesworth, Ian

King, Roger (B'ham N'field)

Kirkwood, Archy

Tellers for the Noes:

Knight, Greg (Derby N)

Mr. David Alton and Mr. Rob Hayward.

Knowles, Michael

Question accordingly negatived.

Orders of the Day

  European Communities (Finance) Bill
  Considered in Committee [Progress, 1 July] [MR. HAROLD WALKER in the Chair]
  Mr. Teddy Taylor: On a point of order, Mr. Walker. I wish to ask whether it is in order to proceed with the Bill in the light of the following circumstances. On Second Reading on 25 June, as reported at column 801 of the Official Report, the Minister introducing the Bill said that on the basis of his calculations our contribution this year would he £750 million. Only two weeks ago, however, the Government published a White Paper, Cmnd. 9633, saying that our net contribution would be £1,212 million. In view of the uncertainty created by that enormous difference of more than £500 million would it not be best to adjourn the debate and ask for a statement from the Chancellor to explain why that alarming difference has arisen in three short months?
  The Chairman of Ways and Means (Mr. Harold Walker): These are not matters for the Chair although they are clearly matters that can be discussed in the debate and taken into account by the House when it makes its decision on Third Reading.
  Mr. Eric Deakins: On a point of order, Mr. Walker. We are now in Committee on the Bill but we have not proceeded to any amendments and I understand that provisionally none has been selected. The first sitting of the Committee began on 1 July and ended at 12.12 the following morning. At that stage there was an understanding between the usual channels—I appreciate that you, Mr. Walker, would not have been a party to this or take cognisance of it—that, for a very good reason, the Bill would not be proceeded with any further before the summer recess. That was indeed the case, as in the remaining four weeks of parliamentary time no further progress was made and no attempt was made by the Government to cause the Committee to sit again. Our proceedings today are the result of that arrangement. The Milan summit meeting forced the Government to realise that they might have to make certain concessions and they wished to have a bargaining counter—the passage or non-passage of the Bill — to use in international negotiations.
  In the course of the summer, a number of meetings of Foreign Ministers and Finance Ministers took place but so far there has been no opportunity for the House to consider the progress of those deliberations, many of which have a most important bearing on the Treaty of Rome, the powers of the European Assembly, the competence of the Commission and various other issues with which I shall not weary the Committee. As those issues have not been resolved, the Committee should now be looking for a statement from the Government explaining why no statement has been made about the results of the deliberations which originally caused them to postpone the Committee stage in July.
  The Chairman: I have listened patiently to the hon. Gentleman but there is no point of order for me. Disputes about what did or did not happen through the usual channels must be pursued with the usual channels and not

  181
  with me, although it seems to me that the matters raised by the hon. Gentleman are matters which the House will wish to take into account in deciding whether the Bill should be given a Third Reading.
  Mr. Nicholas Budgen: On a point of order, Mr. Walker.
  The Chairman: If it is on a different matter I will take the point of order.
  Mr. Budgen: Further to the latter part of what the hon. Member for Walthamstow (Mr. Deakins) said, it was well understood——
  The Chairman: Order. We cannot have a debate in Committee about what might or might not have been said or understood between the usual channels. They have nothing to do with me.
  Mr. Budgen: Of course not. I did not intend to refer to that. What the Committee anticipated was that if there were international discussions which might affect the value of the dollar, which is a crucial factor in deciding the cost——
  The Chairman: Order. I am sorry. We cannot have a debate about these matters under the guise of points of order. They are not points of order. They are not matters for me; with respect, they are not matters for the Committee. If the hon. Gentleman seeks to catch the Speaker's eye, they may be relevant on Third Reading, but they are not matters for the Committee.
  Mr. Budgen: The only point I wished to make was whether the Committee would want to proceed. We have the good fortune to have the Chancellor of the Exchequer here this afternoon. He has been engaged in international negotiations designed to reduce the value of the dollar against other currencies. That could have a horrifying effect on the cost of the common agricultural policy.. He has an opportunity——
  The Chairman: Order. I must check the hon. Gentleman. He is raising highly contentious and debatable matters. If I allow him to continue, in fairness to the Committee I would have to allow other hon. Members to follow his line of reasoning. That I cannot do. It would be out of order. The Committee should continue with——
  Mr. Budgen rose——
  The Chairman: Order. The Committee should continue with its proper business.
  Question put, That the Bill be reported, without amendment, to the House.
  The House proceeded to a Division—
  Mr. Teddy Taylor (seated and covered): On a point of order.
  The Chairman: The Question was put. The hon. Gentleman should have sought to catch my eye before I put the Question. The Committee is now dividing.
  Mr. Budgen: With great respect, that is what we were trying to do because we anticipated that the Committee might not wish to proceed further. We sought as best we could to raise those points that might concern the Committee. If the mood of the Committee had been that we should continue we would not have wished to take the
  182
  matter to a Division. Since it seems impossible to discuss these preliminary matters, we are forced to bring the matter to a Division.
  The Chairman: The motion before the Committee was not debatable and it would not have been in order for me to allow the hon. Gentleman to pursue a line of argument on the Question that was before the Committee. The Question has been put and the Committee is dividing.
  Mr. Teddy Taylor (seated and covered): On a point of order, Mr. Walker. Can you explain why the official Community document which relates to Cmnd. 9548 has different words on it from the one that was presented to the House? Is it therefore in order to proceed with the debate? I can give the papers to you.
  The Chairman: Perhaps the hon. Gentleman will bear with me for a moment.
  Mr. Teddy Taylor (seated and covered): On a point of order, Mr. Walker. I was raising a serious point of order but clearly you do not wish to consider it. May I put a second point of order? As a guardian of the interests of hon. Members you must be aware that at least 20 hon. Members wished to participate in the debate but did not stand up because they thought that you were considering points of order. Surely it is a negation of the rights of hon. Members that you should not permit a debate to take place.
  The Chairman: I thought I had made it clear to the Committee that the Question before the Committee could not be debated. The only Question before the Committee is the Question that I put, and it is not debatable.
  Mr. Teddy Taylor (seated and covered): Why is it not debatable?
  The Chairman: I hope that the hon. Gentleman will not persist in challenging my rulings.
  Mr. Neubert and Mr. Donald Thompson were appointed Tellers for the Ayes but, no Member being willing to act as Teller for the Noes, The Chairman declared that the Ayes had it.
  Question accordingly agreed to.
  Bill reported, without amendment.
  5.45 pm
  The Minister of State, Treasury (Mr. Ian Gow): I beg to move, That the Bill be now read the Third time.
  Perhaps it would be in order to express the hope that those of my hon. Friends who sought to speak earlier may catch your eye, Mr. Deputy Speaker.
  When my right hon. and learned Friend the Foreign Secretary moved the Second Reading of the Bill on 25 June he described it as
  "the most significant piece of primary legislation affecting our position in the Community since the European Communities Bill 1972."—[Official Report, 25 June 1985; Vol. 81, c. 797.]
  The Bill before the House has two purposes. First, it is to enable the United Kingdom to ratify the Community's new own resources decision, which implements the Fontainebleau agreement of 26 June 1984. That agreement provides for an abatement system for the United Kingdom and for the raising of the Community's VAT ceiling to 1·4 per cent. with effect from 1 January 1986. Secondly, it is to enable the Government to pay their contribution of some £250 million under the intergovernmental agreement of 24 April 1985 on supplementary financing for this year's Community budget.

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  The first of these purposes is by far the more important. The agreement reached at Fontainebleau constituted a fundamental change in the operation of the Community. It provided for a lasting and automatic mechanism for reducing the UK's net contributions to the Community budget—
  Mr. Austin Mitchell: Temporary.
  Mr. Gow: —the kind of mechanism which successive British Governments have been seeking since we joined the Community on 1 January 1973. [HON. MEMBERS: "Temporary."] Despite the dissent of some of my hon. Friends, I use the word "lasting" deliberately because the new system will last until such time as all member states —[Interruption.] I invite Opposition Members to listen. The new system will last until such time as all member states, including the United Kingdom, agree unanimously to change it. I welcome the former Foreign Secretary because the Government are now celebrating an achievement which eluded him when——
  Mr. Dennis Healey: On a point of order, Mr. Deputy Speaker. I am grateful that the right hon. Gentleman thinks I was Foreign Secretary. That is after the next election.
  Mr. Gow: I apologise to the right hon. Gentleman. I should have said the former Chancellor of the Exchequer.
  Neither the 1·4 per cent. VAT ceiling nor the abatement system can be altered save with the consent of the House. The principle and the mechanics of an abatement system have been established.
  Mr. Tony Marlow (Northampton, North): I apologise for coming in so quickly, but my hon. Friend said that this is to be a permanent and durable system. Will he give a commitment to the House at this stage that there will be no soft loans, intergovernmental agreements, whip rounds or any other form of temporary subvention to the Community in the meantime?
  Mr. Gow: I was developing the argument that the present arrangements can be altered only with the House's consent. We have an abatement system which lasts until the House decides otherwise.
  The years of protracted argument about whether there should be such a system and, if so, what form it should take, are behind us. As my hon. Friend the Economic Secretary to the Treasury has said, Fontainebleau has changed the rules for good.
  A second advantage of the new abatement system is that it is automatic. The United Kingdom now has an absolute and guaranteed entitlement to VAT abatement linked to our budgetary position. With effect from January 1986, we shall recover 66 per cent. of the gap in the previous year between our own VAT share of the Community's allocated budget and our share of receipts from the budget.
  In Committee on 1 July, hon. Members expressed concern that the Commission had been entrusted with the task of calculating the amount of our abatement, but the Commission has always been responsible for making calculations of this kind. It has access to all the relevant figures and is better equipped for the task than anyone else. It goes without saying that the Treasury, and notably the Minister of State, will be monitoring the Commission's calculations most carefully.
  I remind the House that, a fortnight ago, the Commission proposed an increase in the provision for our
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  1986 abatement. I should explain how this has come about. After the Commission had prepared the preliminary draft budget for 1986, the United Kingdom made an additional payment, in accordance with the Community's established practice, to adjust for an underpayment of VAT in respect of 1984 and earlier years. This payment is eligible for abatement and the Commission has therefore proposed a correction, which would increase the provision for our abatement in the 1986 budget from about £830 million to about £980 million.
  Mr. Eric Forth (Mid-Worcestershire): Can my hon. Friend help the House by giving his estimate of the VAT percentage represented by the 1986 preliminary draft budget as it is known at this stage? Can he help us further by saying when he thinks the Community will reach the full extent of the 1·4 per cent:. of VAT? Moreover. can he give an absolute undertaking that under no foreseeable circumstances will the Government ask the House to go beyond the 1·4 per cent.?
  Mr. Gow: I shall deal with my hon. Friend's first point later in my speech. As for the other two, my hon. Friend knows that the 1·4 per cent. ceiling that was agreed at Fontainebleau applies unless and until it is altered by the House. That was made clear by my right hon. and learned Friend the Foreign Secretary.
  Mr. Budgen: Perhaps my hon. Friend will give his interpretation of why, in the Fontainebleau agreement, 1·6 per cent. was mentioned.
  Mr. Gow: My hon. Friend well knows that, alas, some members of the Community are not as keen as the Government to restrain the growth of Community spending. That is why that figure was put in. The Government are determined to do everything that they can to restrain the growth of Community spending.
  Mr. Budgen: That is what people said about sanctions in South Africa.
  Mr. Teddy Taylor: My hon. Friend might have misunderstood the question asked by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth). He was asking whether the Government will give a commitment that they will not come to the House with another intergovernmental payment additional to the 1·4 per cent. and quite apart from any increase in own resources. The Government have said that they regretted doing that. Will they give a categorical assurance that they will not do it again?
  Mr. Budgen: Even a teeny one?
  Mr. Gow: Provided that the budgetary discipline that has been agreed is observed, as I hope that it will be. there will be no need to come back to the House for another intergovernmental agreement.
  The effect of the Fontainebleau agreement is that, taking one year with another, our net contribution will be about half of what it would have been if we had insisted on retaining the VAT ceiling but had been unable—as would almost certainly have been the case—to negotiate any further refunds and abatements. As it is, over this and the next two financial years we expect to receive abatements totalling some £2·6 billion.
  Our own VAT contribution rate is likely to remain below 1 per cent. throughout the lifetime of the 1·4 per cent. ceiling. On the basis of the 1986 draft budget

  185
  established by the Council last month, and taking account of the Commission's correction to our abatement, our VAT rate in 1986 would be about 0·56 per cent. The other member states will be paying about 1·2 per cent.
  Earlier this month the Government laid before Parliament the White Paper on the 1985 Community budget that gave an estimate of £1·2 billion for our net contribution for this calendar year. That figure is very high —it is far too high—but, mercifully, it is an erratic figure which will be reflected automatically in a particularly high abatement in 1986.
  There are two special features about the 1985 figure which I must emphasise to the House. First, 1985 is the last year in which we are due to receive a flat-rate correction to our net contribution. On the assumption that the new own resources decision is ratified by all member states, the full automatic abatement of our VAT contribution, as agreed at Fontainebleau, will take effect from 1 January. That means that next year's abatement will be much greater than this year's. The Commission's latest estimate is for an abatement of some £980 million next year compared with £590 million this year.
  Secondly, this year's net contribution figure has been inflated artificially by two exceptional factors. It includes our special contribution of some £119 million under the intergovernmental agreement for the 1984 budget as well as the special contribution of some £250 million in respect of the 1985 budget. It also includes a payment of £75 million of VAT own resources which has resulted from the change in 1984 in the United Kingdom's system for collecting VAT on imports.
  The 1·2 billion for our net contribution this year also includes some £135 million in respect of the United Kingdom's contribution to the Community's overseas aid programme. That £135 million is part of the United Kingdom's overseas aid budget, and is shown as such in our public expenditure White Paper.
  Mr. Deakins: Can the Minister assure the House that the special contributions of ·250 million for 1985 to top up the budget will not be repeated in any form? By giving the figure for our net VAT contribution, the hon. Gentleman is in danger of misleading the House and the country about the United Kingdom's total payments to the EEC, as they must take account of the possibility of the big rebate that we hope to get next year and of the possibility, which is not ruled out by this legislation, of a further special contribution under another intergovernmental agreement.
  Mr. Gow: It is extremely difficult to envisage the circumstances in which the situation that the hon. Gentleman describes would arise.
  The second element in the Fontainebleau agreement was the increase in the VAT ceiling from 1 per cent. to 1·4 per cent. The Government have been criticised for agreeing to it, but the United Kingdom's VAT rate is virtually certain, because of our abatement, to remain below 1 per cent. Moreover, the raising of the ceiling was necessary to enable the other member states to fund our abatement. As our VAT rate goes down, theirs has to go up to maintain the Community's revenue. This would have been impossible within a 1 per cent. ceiling.
  My right hon. Friend the Member for Worthing (Mr. Higgins) said during the Second Reading debate that he
  186
  regretted that the Government had agreed to link the questions of our abatement and the increase in the VAT ceiling in a single package. With the greatest respect to my right hon. Friend and to the work of his Committee, that criticism is not justified. It was only as part of a package that the United Kingdom was able to secure an abatement system at all. What we have secured is immensely valuable to us and infinitely preferable to that continuation of the status quo, which some right hon. and hon. Members say that they would have preferred.
  Mr. Terence Higgins: I am grateful to my hon. Friend for making that reference. However, the Government did not start from that position, but from the position that we were being unfairly treated and had no reason to give a quid pro quo.
  My hon. Friend's response to an earlier intervention was extremely worrying. When asked if there would be any further topping-up above the 1·4 per cent. ceiling before negotiations were held to raise that ceiling, he said that that might be the case if the budgetary discipline did not work. Yet the whole basis on which we are being asked to agree to the Bill is that effective budgetary discipline is in place. How, then, can there be any question of increasing the amount above the 1·4 per cent. ceiling by IGA or another device between now and any negotiations on raising that ceiling?
  Mr. Gow: I repeat that the 1·4 per cent. ceiling is in place. It can be altered only with the consent of the House and with the unanimous agreement of the Governments and Parliaments of other member states. It is impossible to envisage the kind of circumstances in which it would be necessary for the Government to come back to the House in the way which my right hon. Friend the Member for Worthing describes.
  Mr. Higgins: I apologise for interrupting my hon. Friend a second time. but I do not understand what he just said. Are we to understand that he thinks it impossible that there will be any need to come back to the House before any negotiations on raising the 1.4 per cent. ceiling take place? If so, can he give us a categorical assurance that the Government will not in any way increase the sums available to the Common Market before those negotiations take place?
  Mr. Gow: I repeat that I find it impossible to envisage circumstances in which the Government will come back to the House in the way that my right hon. Friend describes.
  Mr. Ron Leighton (Newham, North-East): Give a guarantee.
  Mr. Gow: No, I cannot give a guarantee, but I find it impossible to envisage circumstances in which my right hon. Friends or I would come back to the House.
  Mr. Forth: Does my hon. Friend understand the basis of the unhappiness at this state of affairs? For many years and until only a few months ago the Government assured us that they found it difficult to envisage any circumstances in which the 1 per cent. ceiling would have to be breached, precisely because it was a source of discipline on the Community. Does my hon. Friend accept that the cause of unhappiness among some of us now is that he is giving the same assurance about the 1·4 per cent. ceiling as was repeatedly given about the 1 per cent. ceiling, and that we doubt its validity for the same reason?
  Mr. Gow: I am not saying that the Government will never come back and seek an amendment to the 1·4 per cent. ceiling. My right hon. Friend the Member for Worthing made a different point about the IGA. I am telling the House that it is sovereign in the matter. Only if Parliament agrees to an increase in the 1·4 per cent. ceiling, can that ceiling be raised.
  Mr. Nigel Spearing: Will the Minister give way?
  Mr. Gow: I should like to make progress as I have already given way.
  Some hon. Members have sought an assurance that the House will be kept fully informed about the financial implications for the United Kingdom of the new own resources decision and, in particular, about the United Kingdom's VAT abatement. I give the following undertaking. We will continue to provide to the House the most comprehensive information about the United Kingdom's transactions with the Community. White Papers and explanatory memoranda will draw specific attention to figures relating to the United Kingdom's abatement.
  I turn next to the point raised by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) about budgetary discipline. The Government have never claimed, and I certainly do not claim this afternoon, that last December's budget discipline agreement is perfect. My hon. Friend the Minister of State, Foreign and Commonwealth Office, made this clear when the House discussed the agreement. What we have said, as I do today, is that the agreement is an enormous advance on what has gone before.
  Community spending is still too high. Nevertheless, the Commission has agreed to make all its proposals on agriculture in the light of the guideline limiting the rate of growth of agricultural guarantee spending to the rate of growth of the own resources base. The Commission's price proposals in June, and its budget proposals, are consistent with the guideline figure established for 1986. As a result, agricultural market support expenditure next year for the 10 member states is planned to grow by only 2·5 per cent., compared with 27·6 per cent. in 1983, 16·1 per cent. in 1984 and 8·9 per cent. in 1985. The downward trend is continuing. Last year, real price cuts of 4 per cent. were imposed on the CAP. This year there are real cuts of 3·5 per cent. Prices for most product regimes have been frozen.
  Last month the Council established a draft budget for 1986 which respected the budget discipline conclusions and the reference framework set by the ECOFIN council in July, with limited additions for enlargement. The extra expenditure in 1986 on account of enlargement is covered by the extra revenues which Spain and Portugal will contribute.
  Mr. Teddy Taylor: Does my hon. Friend accept that the assurances and safeguards about restrictions on agricultural spending become worthless and of no account, if the majority of member states consider that there have been exceptional or aberrant circumstances and can define what they are? It might mean rain on a Wednesday afternoon.
  Mr. Gow: I do not agree with my hon. Friend, because there is a clear resolve on the part of the Community, and
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  certainly an emphatic resolve on the part of the Government. that the budget disciplines laid down should be strictly adhered to. I am glad to say that that discipline has been observed in the draft budget agreed. in Luxembourg last month.
  Mr. Budgen: On this important point my hon. Friend asserts that there is an emergence of political will to reform the CAP by reducing prices. Apart from the draft budget, can he point to any evidence that any of our European partners are determined to act by reducing prices?
  Mr. Gow: Yes I can, because prices for most product regimes have been cut or frozen. I made that point earlier, and I am sorry that my hon. Friend was not listening at that point in my speech.
  I turn now to the IGA for the 1985 budget. I share the disappointment, which has been expressed, that the Community found it necessary to ask for the extra money in 1985. However, we were satisfied that the extra money was essential, and was the irreducible minimum required to meet the Community's obligations.
  The United Kingdom's gross payment under the IGA is some £250 million. That is a large sum. But about half will return to the United Kingdom in the form of receipts, and the remainder will be eligible next year for abatement under the Fontainebleau system. Our eventual net contribution will therefore be reduced from about £250 million to £40 million.
  I remind the House that, without the IGA. the 1985 budget could not have included provision for our agreed £590 million abatement in respect of 1984.
  I refer briefly to the intergovernmental conference set up at the Milan European Council in June. My hon. Friend the Minister of State, Foreign and Commonwealth Office represented the United Kingdom at a meeting of the conference yesterday. If he should catch your eye, Mr. Speaker, he will be reporting to the House later in the debate. It is not yet clear what conclusions the conference will reach. What is clear, is that the United Kingdom's interest will be served by ratifying the own resources decision, providing for our VAT abatement, whatever those conclusions may be. No part of the own resources decision is dependent on the outcome of the intergovernmental conference.
  Mr. Marlow: I think that my hon. Friend will want to clear up one point. He said that we shall not be paying more than 1 per cent. VAT after rebate, but for the past four years our VAT payment after the subsequent rebate has amounted to 0·5 per cent. My hon. Friend says that it will not now be more than 1 per cent., although other people say that it will be more.
  What additional benefits will we get from the EEC that we did not get when we were paying only 0·5 per cent. net of rebate?
  Mr. Gow: I am sorry if my hon. Friend was not listening, but I said that the estimate for next year is 0·56 per cent.
  When my right hon. Friend the Prime Minister returned from the European Council at Fontainebleau she said that the agreement reached there was good for Britain and good for the Community. It has changed the status quo for the United Kingdom. Previously, we had to fight each year for refunds of our excessive net contribution. Now we have a system for automatic abatement—a system of the kind

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  which successive British Governments have striven to obtain and a system which will continue to operate unless and until the House agrees to change it.
  Our position is far better than it was before Fontainebleau, far better than it might have been and far better than it would be if the new agreement were not ratified. The Prime Minister and the Foreign Secretary have fought tenaciously for the interests of the United Kingdom. The purpose of the Bill is to enable the United Kingdom to ratify the agreement that they have won. I commend the Bill to the House.
  6.11 pm
  Mr. George Robertson: When the Government abandoned the Bill in the early hours of the morning of 2 July, the House was told that it was a decision to allow more time for debate. Of course, it was nothing of the sort.
  The decision on 2 July was a retaliation against the humiliation of the Prime Minister at the Milan summit —a pretty feeble gesture to our European partners that the much trumpeted enthusiasm of the British Government to be the first with the new own-resources decision had been diluted by the egg that was running down the Prime Minister's face that week.
  In June, the Bill was urgent, necessary, desirable and, of course, a great illustration of the magnificent negotiating skills of our revered leader. Overnight, as the great British initiative at Milan died a much-publicised death, the enthusiasm died too, and the mad dash to get ratification of the 1·4 per cent. increased ceiling on the EEC's own resources and the endorsement of yet another £250 million supplementary levy to the EEC suddenly ground to a slow, humbling crawl for cover.
  It is no wonder that we were crawling and no wonder that the former Economic Secretary to the Treasury, the hon. Member for Hertfordshire, North (Mr. Stewart) has scuttled away from his regular sandbagging by the Select Committee on the Treasury and Civil Service, away from the hand-on-head cross-examinations that he so rigorously faced and failed and away, at last, from the endless, shaming excuses that had to be put forward lamely each time that another unforeseen supplementary payment was required.
  Of course, the hon. Member for Hertfordshire, North never rose to the dizzy ambitions of his successor. In January, the hon. Gentleman came to the House for a debate on the supplementary payments that are so exercising the House today. He said:
  "I should like to think that supplementary budgets for the European Community would not be a thing of the future, but that would be too optimistic."—[Official Report, 22 January 1985; Vol. 71, c. 884.]
  Hon. Members will have noticed the confidence with which the Economic Secretary's successor finds it inconceivable that there will be circumstances that could drive the Government to bring back to the House yet another intergovernmental agreement. If the new Minister can carry off that trick, it will be the first year in the history of this Government that the trick has been carried off. As I shall demonstrate, all the experience in the four months that have passed since we last debated this subject shows that that will not happen.
  Sir Russell Johnston (Inverness, Nairn and Lachaber): Is the hon. Gentleman saying that he does not envisage any time at which there would be a need to increase the Community's own resources?
  Mr. Robertson: The hon. Gentleman misunderstands me. The cross-examination is of the Government's intentions and commitments and the assurances that have been given to us today. The question is whether they are tenable or sustainable. We are not having a hypothetical debate about whether the Community will need an increase in own resources. Is the budget discipline that has been talked about previously a reality and are the Minister's assurances likely to stand up? Previous assurances have not stood up.
  The new incumbent on the Treasury EEC team is the man once dubbed "Supergrass". He has been parachuted in over the recess to fill the EEC straight-man spot and he instantly becomes the EEC's Marie Antoinette as he tells the starving million in Africa to drink the rain and abandon the idea of more food aid or emergency reserves from Europe.
  The Minister's predecessor was the archetypal grey man—God's own accountant, with a clueless mastery of how to mangle statistics. Now we have Bob Geldof in reverse: a Treasury Minister who can deny the evidence —seen nightly on television—of people continuing to die in the Sahel of Africa from lack of food. a Minister who can ignore all the facts that although the rains came, the seed had been eaten and had not been sown. With the arrogance and, on a day when we have a lobby by the world development movement, the indecency and insensitivity of a master at work, the Minister says that no reserve is necessary—that is what it is claimed that he said—because the rains had come and eased the famine.
  We have a Minister who can lead the Common Market budget Ministers, in one of the richest conglomerations of nation states on earth. into a decision to cut food aid to Africa by 6 per cent. in real terms next year, saving a miserable £130 million in a total budget of £20 billion. I believe that the House will repudiate such an attitude.
  Today of all days — the anniversary of the first showing on BBC television of the horrifying film from Ethiopia, which so galvanised and electrified our people —the Minister comes blandly to the House and does not even tell us about that decision in his account of the Budget Council. That is a mockery of what concerns the British people. This is the man who served the Prime Minister so well and is now set loose to do the same promotional job in the world at large. Even the strongest opponents of the EEC. and there are plenty of them present tonight, must wonder what the Community has done to merit the attentions of the hon. Gentleman.
  Mr. Marlow: Many of us agree with what the hon. Gentleman has said about the vast waste of money by the Community and how it could be better spent, particularly in some areas of great distress. Many of us have also read that the Labour party is to mount a massive campaign in Parliament against Government policies. With all the tragedies and the waste of money, and with the new impetus of the Labour party, why does the hon. Gentleman have only four Back-Bench colleagues behind him?
  Mr. Robertson: There is a massive campaign in the country. The hon. Member for Northampton, North (Mr. Marlow) should examine the real force of the arguments

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  and recognise that the majority of his hon. Friends are here tonight to attack the Government and not to praise them. The hon. Gentleman has to make a ritual criticism of the Labour party to save his own face at the end of the debate, but the Government are being put on the rack by their supporters and the official Opposition.
  Four months ago, before the Government's conversion, the Opposition warned that the Bill was a confidence trick. We said that Britain had given up the main—indeed, the only—negotiating weapon which would bring sanity to the Community's out-of-control finances. We said that the Government had given that up in return for worthless guarantees on financial discipline; for an unwritten agreement so shot full of loopholes and exemptions as to be a recipe for the opposite of discipline. We said that it would not be long before the House was faced yet again with a demand for yet more cash to feed the black hole of a runaway EEC agriculture budget. It took less than four months for us to see, writ large, the incontestable evidence of all that we had said.
  First came the 1986 draft budget from the European Commission proposing 34·9 billion ecus on a budget up 12 per cent. on what it was in 1985. That involved taking the EEC spending up to 1·35 per cent. in terms of VAT. That is just below the 1·4 per cent. ceiling that the Bill is designed to ratify. There is a gap therefore of only 900 million ecus for all contingencies in 1986.
  After that came the famous Budget Council on 17 September when the new Minister of State sprang upon the EEC stage. The Budget Council cut the Commission budget by 3 billion ecus, still leaving 2·3 billion ecus above the self-imposed ceiling set by the Finance Ministers to which the Minister rather riskily referred tonight.
  How were the 3 billion ecus cut from the Commission's proposals? Was it by reducing the overbearing impact of agriculture on the budget from its present level of 74 per cent. of the total? Was it by setting realistic limits on the proportion of Community funds which will be devoted to piling up surpluses and then destroying them? Of course it was not. The 20·45 billion ecus represented by agriculture guarantees were left unscathed and completely protected. Instead, the budget Ministers cut the Commission's proposals by yet again squeezing the regional and social funds.
  For the first time in the EEC's history the preliminary budget proposals for increases in the social and regional funds are lower than the maximum possible rate. Only 5 per cent. is proposed instead of a potential 7·1 per cent.
  After the Fontainebleau summit last year the Prime Minister said:
  "With regard to regional expenditure, we hope that expenditure on the economic and social funds will take a bigger proportion of the European budget, not a lesser one as it has in the past."—[Official Report, 27 June 1984, Vol. 62, c. 1006.]
  I do not know what briefing the Prime Minister's former Parliamentary Private Secretary took with him to the Budget Council but it cannot have been based on those words uttered only a little over a year ago.
  Then, the Budget Council, like Billy Bunter waiting for his postal order, made savings by postponing paying the bills for former commitments. It then disgracefully cut the proposed increases in food aid. All the fine decisions taken in Milan about transferring some of the obscene surpluses in Europe to places where people had nothing to eat; all the fine words about the needy and the starving designed
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  to capture the public mood aroused by the film about Ethiopia a year ago, were discarded. The surpluses still mount up and the millions in Africa continue to starve.
  Since June, four short months ago, when we last considered the issue, the surpluses have continued to mount. Since June, beef stocks have risen by 85,000 tonnes and now stand at 785,000 tonnes. Butter has piled up to more than 990,000 tonnes— within reach of 1 million tonnes—and stocks have increased by 150,000 tonnes since June. Another 208,000 tonnes are in private stocks on the Continent.
  Skim milk powder mountains now total 500,000 tonnes and have risen by 88,000 tonnes since June. The sugar mountain contains over 2 million tonnes and has risen by almost 310,000 tonnes since June. This is when millions of people continue to starve in Africa. The surpluses continue to mount and the Minister tells the world on 17 September that no further food reserves are required.
  The saving of £130 million on a budget of £20 billion is at the expense of dead children and dead people in the Sahel of Africa. That is a blight on the Minister and on the Government he serves. We in the Opposition repudiate their blindness and callousness. The Government's attitude is unworthy of the concern which was shown so vividly throughout the last year and which is displayed in all its vividness outside the House today by the huge lobby of Parliament.
  At the end of the cheese-paring at the Budget Council meeting, what was the result? A comprehensive package, perhaps, for 1986; a coherent plan for the next 12 months costed within the budget discipline; a framework perhaps? Perhaps, but chance would be a fine thing.
  Jean-Pierre Cot, the European Parliament Budget Committee chairman, said:
  "The council is incorrigible. In 1985 it proposed a budget over 10 months and not 12. In 1986 it proposes a budget for 10 member states instead of 12."
  Here is the crunch. The new budget is jammed up against the 1·4 per cent. ceiling and that is workable only if this and 11 other Parliaments allow it. It is prey to all the imponderables of demand and of the rise and fall of the dollar. The new draft budget does not take account of the cost of the accession on 1 January next year of two new member states—Spain and Portugal. That is unbelievable. With that bizarre quality to which only EEC budgets can rise, the cost of the accession has been missed out in the crucial budget discipline paraded before us. We have not a clue about what that cost will be.
  We are told that 400 million ecus will have to be found if Spain and Portugal are not to be net contributors to the Community. That was pledged during negotiations on the accession.
  Secondly, Mr. Jean-Claude Juncker who is the Luxembourg president of the Budget Council, admitted and was quoted in Agence Europe on 27 September that:
  "If commitments undertaken with regard to Spain and Portugal were to be fulfilled, this draft budget would have to be amended."
  "Pacta sunt observanda" was his comment. The classics scholars in the Library tell me that that means that the agreement must be observed. He said that about 2·5 billion ecus was required to make up the shortfall—and that on a budget which is only 900 million ecus away from the 1·4 per cent. sound barrier. It is in the land of the funny money.

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  I remind the House that on 10 July 1984 the Foreign Secretary said about the deal which is to be rubber stamped in this Bill, and which arises from the Fontainebleau summit:
  "Let me repeat that only when Finance Ministers have adopted the necessary measures on budget discipline will the Government be prepared to recommend to the House that the own resources ceiling should be increased."—[Official Report, 10 July 1984; Vol. 63, c. 897.]
  How do those words appear in the dazzling light of the September Budget Council and its 10-nation budget for a 12-nation Community?
  One week later, the Financial Times had it right when, after the farm Ministers had met, it said:
  "Unanimously they agreed that something needed to be done. But to a man, they disagreed as to what it should be. But the ministers did find one area of agreement — that budgetary discipline provisions restricting farm spending should not necessarily be rigidly imposed in future."
  Britain's leading financial daily newspaper concludes:
  "However, it was not clear whether Mr. Jopling was in the room at the time of this discussion."
  The central issue of tonight's debate and of this massive, important constitutional Bill is being decided at the farm Ministers meeting. They are abandoning the budget discipline that has been trumpeted as the central feature of the Bill— and nobody knows whether the Minister of Agriculture, Fisheries and Food was even in the room while they abandoned that central pillar of budgetary discipline.
  Mr. Christophersen, who is the Budget Commissioner, said authoritatively;
  "The Budget Ministers' discussions have resulted in more a book-keeping exercise than a real budget. The outcome is quite unsatisfactory and difficult to understand."
  In the midst of all that, the Chancellor—who graced the Treasury Bench for the Minister's speech—appears to be missing the whole point, as usual. He was whistling in the wind yet again at the Tory party conference. The Guardian said:
  "The Chancellor was in boisterous mood"—
  it is rare that he is described in that way—
  "boasting that he had cut where cuts were needed — in Britain's contributions to the EEC, handouts to nationalised industries and new council house building."
  He was boisterously boasting about something that was not true. Net contributions to the EEC during the six years that the Prime Minister has been in office have totalled £4,245 million, an average of £708 million a year. Under the Labour Government, the average was £450 million a year. If the Chancellor is capable of being boisterous, I suggest that he picks stronger ground.
  In September the Financial Times quotes the Chancellor on the limit of 29·6 million ecus for the 1986 budget set by Finance Ministers using the new budgetary disciplinary system for the first time as saying that it was "a very positive development in the context of budgetary discipline."
  Yet by October, a month later, the Finance Ministers—including our Minister — had already exceeded the Chancellor's limit by more than 2 billion ecus. If that was in one month, what will be the position after a few more months?
  This is the vivid, unquestionable truth about the so-called budget discipline. It gives the lie to the empty triumph of Fontainebleau and the very foundations of the Bill. In reality, budget discipline is now little more than
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  a joke. As Mr. Christophersen said, it is little more than a book-keeping exercise, bloating yet again the agricultural budget and trimming the valuable, essential job of reinvigorating the European economy and getting people back to work. The deal sold to Britain at Fontainebleau is seen as a fake—a self-delusion that the Prime Minister and the Foreign Secretary swallowed far too easily for this nation's good. On the Government's own criteria, the conditions for an increase in own resources have not been met, and will not and cannot be met.
  The ludicrous boast of the hon. Member for Hertfordshire, North (Mr. Stewart), the former Economic Secretary when he was in charge of the Treasury team quoted in The Times in June as
  "Fontainebleau has changed the rules for good"
  is seen simply for what it was—an attempt to kid only himself, and even he has now departed from the scene.
  The very basis on which the Bill was laid—that it represented a good deal for Britain—is now seen to be demonstrably untrue. I call on all hon. Members on both sides of the House with the nation's interests genuinely at heart to vote against Third Reading.
  6.36 pm
  Mr. Terence Higgins: On Second Reading I stressed that the Bill raised strong passions. Although the House is only now returning from recess, perhaps like a hospital patient recovering from anaesthetic, there is no doubt that the passions remain strong. Therefore, it is right to have this debate this evening.
  I disagree strongly with the hon. Member for Hamilton (Mr. Robertson) on the role of the previous Economic Secretary in our discussions. The fact is that, before the Select Committee—and, I believe, on the Floor of the House—he has been immensely helpful in seeking to clarify many highly complex issues. If it had not been for the Select Committee and the help of the former Economic Secretary and his senior officials—one in particular—it would have been difficult for the House to have the remotest idea of what was really happening.
  The Select Committee had occasion to complain about the bad documentation that has been a feature of the whole affair from the so-called Fontainebleau communiqué right through the proceedings. Having said that, we should pay tribute to the presentation of the statement on the 1985 Community budget, Cmnd. 9637. Certainly the story is spelt out with great clarity. Unfortunately, it is a very sad story of a succession of positions that have steadily deteriorated. The document shows that our net contribution over the year is to be about £1,212 million — a marked contrast with the statement made by the Foreign Secretary when he placed the Bill before the House for Second Reading. He said that the figure would be half of the £1·5 billion that we would have paid had the figure remained at the 1 per cent. ceiling. That deterioration has been very marked in a matter of only a few months.
  While there are obviously some exceptional circumstances—to which my hon. Friend the Minister referred in his opening speech—they clearly should have been anticipated when the Foreign Secretary made his speech suggesting that the House should give the Bill a Second Reading. Had he done so, the House might have taken a different view.

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  In addition to congratulating the Government on the clarity of this White Paper. congratulations are due to the draftsmen of the Bill. It has proved difficult to table amendments that seek to reassure hon. Members who have doubts about these proposals.
  I do not wish to delay the House by repeating what I said on Second Reading, but I wish to refer to one point raised by my hon. Friend the Minister. It is wrong that we should be presented with a package. The Prime Minister's original position clearly was that we were being unfairly treated and that that should be rectified. To then say that we have to give something in exchange to achieve that rectification is not right. We had the case to be treated more fairly without giving any quid pro quo. My hon. Friend said that we had to increase the figure to 1·5 per cent. overall so that we could obtain a refund, but that only shows the extent to which Community finances have become out of control. It should have been possible to obtain that refund without raising the own resources ceiling. That was the position of the Government at the beginning of the negotiations.
  As I said on Second Reading, my complaint is not simply about the position of the United Kingdom but about the Community as a whole, because to have raised the ceiling in the way in which we have is not desirable. The Community had a real opportunity to get the CAP under control. It has lost that opportunity by agreeing to the increase in own resources.
  I interrupted the Minister earlier to ask for an assurance that the Government would not again resort to intergovernmental agreements, reimbursable advances, non-reimbursable advances or other devices, in advance of any further negotiations, to raise the ceiling from 1·4 per cent. to 1·6 per cent. My hon. Friend said that he found it impossible to envisage any situation in which the Government would wish to do that.
  That was a strange remark for my hon. Friend to make. I do not see it as being impossible by any means. It is likely that things will again get out of control and that it will be necessary for further devices to be introduced. Not only may it not be impossible, but the Government may regard it as necessary. It seems highly undesirable to have a limit on own resources of 1, 1·4 or 1·6 per cent. and then, each time the limit is exceeded, top it up, going outside that limit. What is the point of having a limit on own resources if it is constantly being exceeded as the result of other negotiations? That has happened on this occasion and I was asking the Minister for an assurance that it would not happen again.
  My hon. Friend declined to give that assurance, and he was unwise not to give it. It might be wise to have such an assurance on the record, and I commend that course to the Minister of State, Foreign and Commonwealth Office, who might care to give such an assurance when he replies to the debate. Then, should matters deteriorate again, he could enter the negotiating chamber and say, "We cannot go along with that because we have given an assurance to the House of Commons not to do so." There is every reason for the Minister to give that assurance and I hope that he will give it.
  In his opening remarks, the Minister of State, Treasury, referred to the whole issue of budgetary discipline. We were told that effective budgetary discipline was a condition and that unless it was met, we would not raise
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  the own resources ceiling. As the Select Committee and the hon. Member for Hamilton pointed out, the budgetary discipline, so-called, is not likely to be effective.
  It was frightening to hear the Minister say that if it did not work we should have to resort to other intergovernmental agreements. The argument becomes circular. Unless budgetary discipline will be effective, we should not undertake the Third Reading of this measure.
  The common agricultural policy is tied up with the whole idea of budgetary discipline, remembering that we have been told that the agricultural budget will not go up as fast as total spending. There is no case for increasing subsidies to agriculture, and no case has been made before this House in support of the Bill in that respect. We were told that the figure was likely to go down, from over two thirds to under two thirds of Community expenditure, but the latest White Paper, published only this month, says that it is likely to be not less than two thirds but 73 per cent.
  There are two other aspects of the agricultural policy that should be stressed. First, I spent some time this summer in the United States, and I am worried about the protectionist pressures that are building up there. There is no doubt that an area where the Administration there will be under great pressure, given what is happening to farming in the United States, is concern about protectionism in American agriculture, which is already heavily supported, in relation to the EC.
  There is no doubt that the Bill increases the protectionism that is given to the CAP and, as a result, is likely to exacerbate the difficulties of trade negotiations between ourselves and the United States. It is important for us to resist protectionist pressures—I thought that that was common ground—and clearly those pressures are not diminished by spending more on agriculture.
  The second aspect was dealt with by the hon. Member for Hamilton, and it is appropriate for us to consider it when there is a large lobby today inside and outside the House on the subject of overseas aid and agricultural surpluses. It is important for us to consider the real cost of giving assistance by way of food aid to Third world countries.
  It is clear from the figures that storage costs are extremely high. The suggestion that if we got rid of stocks by shipping them to Africa it would result in our having to pay the shipping and other costs is not a good argument because we would still save money by shipping the stocks out.
  The counter-argument is that, once the stocks got to Africa, somebody would have to move them on. While that may be so, it is no reason for piling up ever bigger agricultural surpluses at huge storage costs when those stocks are desperately needed elsewhere. They are doing nobody any good here, remembering that their costs in financial terms have already been met. I hope that the Government will review the position and do something to ameliorate the adverse effects that some of the consequences of the Bill will create.
  In Committee I asked the Minister of State, Foreign and Commonwealth Office, a question which he did not answer, mainly because he misunderstood the point I was making. We are overpaying this year, not in terms of the abatement but because of the way in which the timing of the payment is worked out. In Committee, the Minister replied in terms of the abatement. We are overpaying and are due a refund. I asked what guarantee existed that we would get that refund. I also asked whether we would

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  receive interest for paying earlier than we were supposed to pay. Will he give that information tonight? And when does he expect to have to return to the House to ask for the 1·4 per cent. increase in the VAT figure to be raised yet again?
  6.48 pm
  Sir Russell Johnston: The right hon. Member for Worthing (Mr. Higgins) has been critical and some of his criticisms have merit, but I believe that the Government and other members of the Community—and let us not forget them—deserve credit for achieving this agreement. The points made at the outset by the Minister about the difference in our contribution are facts that cannot be denied or lightly set aside.
  I say that despite the fact that I still profoundly disagree with the style that the Government felt it was necessary to adopt in the negotiations. They could have adopted a more reasonable stance and obtained the same result. I am certain that that has caused long-term damage to this country's capacity to exert constructive influence in the councils of the Community. It has left many scars, as I dare say the Minister, who is new to this responsibility, is finding out.
  The Minister concentrated exclusively —not so the hon. Member for Hamilton (Mr. Robertson)—on the British position, and in doing so he followed the pattern of his predecessors. That was bad because his predecessors were also wrong to approach the matter in that way. If the Community is to be examined in this House simply and exclusively—as is the case with anti-marketeers— in terms of its direct effect on this country, rather than in terms of evolving a structure of which we are a part and which is seen by all participants as being not only competently managed but fair in operation. the Community will not work.
  The hon. Member for Hamilton referred, rightly and properly, to enlargement. I can remember saying in the Chamber previously during debates on enlargement that if the process was to work, our political enthusiasm for it in the aftermath of dictatorships in Spain and Portugal would have to be matched by financial generosity.
  Spain and Portugal are normally lumped together and it can be argued that that was a mistake in the enlargement negotiations and that it might have been better if the two countries had been dealt with separately. It must be recognised that they are very different. Spain is quite a large economy while Portugal is the poorest country in Europe by some measure. I agree with the hon. Member for Hamilton that it is monstrous that it should end up as a net contributor. As the right hon. Member for Worthing said, we are dealing with a Community issue in which we are all involved. Therefore, we should be expressing our concern about Portugal's position. If we are seized of the reality, it must surely mock any of the ideals of economic convergence which inspired the Community's founding fathers.
  Ministers say repeatedly that the United Kingdom is a good Community member. That is trotted out in debate after debate. It seems that they fail to understand that if any collective organisation is to work it is necessary to show an interest in the problems of others as well as those
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  that face us directly. That applies all the more, and not least in the case of Portugal, when the others are much less well off than ourselves.
  I understood and sympathised with the remarks of the hon. Member for Hamilton about the Community's failure, despite its considerable food surpluses, to respond to the famine in central Africa. It has to be appreciated, despite the remarks of the right hon. Member for Worthing, that it is pretty likely that if considerable allocations were made from the surpluses for the purpose of famine relief, the result would be an on cost for the Community. It is doubtful whether saved storage costs could be set against new transport costs. The reality is that such allocations would probably require some supplementary estimates. When the Labour party was last in government I did not perceive any evidence that it would have been willing to have advocated such a course, as the hon. Member for Hamilton appeared to do. I do not believe that it would have done so if it had been faced with comparable circumstances.
  This is not the occasion to dilate on the common agricultural policy. There is a large area of agreement about the CAP, although sometimes one would not guess that, between those who are in favour of the Community and those who are opposed to it. Believe it or believe it not, those of us who are, like myself, much in favour of the Community agree entirely that there is a necessity to exercise discipline and control and to stop the policy expanding endlessly, which it appears to be doing.
  Mr. Teddy Taylor: Tell us how that is done.
  Sir Russell Johnston: If the hon. Member for Southend, East (Mr. Taylor), whose dulcet tones I have heard so often in debates on this subject, would bide his whisht for a second, if I may use a Scotticism, it was always a mirage to imagine that that discipline and control could suddenly be exercised. Anyone who knows anything about agriculture knows that nothing significant can be done in less than four or five years to change direction.
  Mr. Terry Dicks: So we shall still go on paying?
  Sir Russell Johnston: I make the assertion and leave it at that. It is a mistake to imagine that movement could be introduced instantly. Also, some hon. Members appear totally to ignore any of the consequences for rural populations that would follow such a change in direction. It appears sometimes that they are entirely indifferent.
  Mr. Richard Body: Does the hon. Gentleman agree that when the Liberal party repealed the Corn Laws there was great prosperity in the countryside four years afterwards?
  Sir Russell Johnston: I fear that if I engaged in a prolonged historical dissertation with the hon. Gentleman I should probably be ruled out of order, and for that I would be grateful.
  I understand that the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), the Minister of State, Foreign and Commonwealth Office, is to reply. We have been led to understand by the remarks of the Minister of State, Treasury that he will deal with the Luxembourg summit. I hope sincerely that the Minister will be able to tell us that the British Government are not taking a lambent position in the negotiations and are not merely waiting for someone else to make proposals so that they can consider whether

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  they are reasonable or unreasonable. That would be no way for the United Kingdom to behave. It has been said by Conservative Ministers on many occasions that Britain will take a lead in the European Community. We have an opportunity to do so and I hope that we shall propose constructive reforms instead of merely responding to the proposals of others.
  Mr. Jonathan Aitken: I begin by congratulating my hon. Friend the Member for Eastbourne (Mr. (Gow), the Minister of State, Treasury, on his new appointment. I take some comfort from the fact that he is now to be at the helm of our financial affairs in Europe. That is not entirely because of what he said this afternoon but because of my happy memories of his pre-ministerial days as a Back Bencher, when he always displayed a vigorous and healthy scepticism of public expenditure at home and abroad. I hope that he will live up to those youthful ideals. I must warn him that one of the matters which concern some of us is that there seems to be a degree of belt-tightening at home in areas of expenditure which are dear to our constituents and by no means such a disciplined attitude to expenditure on the EEC. I hope that my hon. Friend will not turn out to be the equivalent of a puritan at home and, in financial terms, a libertine abroad. I wish my hon. Friend well in his new appointment.
  When our proceedings broke up in some disarray on the night of 1 July, I was the last Back-Bencher to be called before Progress was reported. I warned then that we seemed, in EEC expenditure terms, to be at a level of 1·35 per cent. of own resources and perilously close to the limits which we were then debating. I said that those of us issuing warnings saw that we were heading towards breaking the level of 1·4 per cent., and I predicted that we were shortly to be joined by a new and powerful ally, which might he described as the march of events.
  In the ensuing months, events have more than justified the point of view so eloquently expressed by my right hon. Friend the Member for Worthing (Mr. Higgins) and others. We are witnessing the failure to achieve adequate budgetary discipline in the EEC. Let us not forget that it is a fundamental condition of the Bill that effective budgetary discipline should be imposed in the EEC. The twin pillars of the debate are abatement and budgetary discipline. As my right hon. Friend the Prime Minister said on 5 December 1984:
  "All of them have, however, agreed that the Council, which is the deciding unit in the whole Community, shall be bound by the clause on financial budgetary discipline.—[Official Report, 5 December 1984; Vol. 69, c. 354.]
  The picture of budgetary discipline in the EEC over the past few months is far from satisfactory.
  Last year's EEC farm budget breached its ceiling of 16·5 billion ecu by 11 per cent. The total overspend of 1·8 billion ecu would have been 900 million ecu higher had not the strong dollar last autumn created savings in the sum allocated to cover export subsidies for cereals. On putting last year's EEC farm expenditure under the microscope, one must conclude, first, how vulnerable it is to dollar fluctuations. Every time the dollar slips one point against the ecu, it costs the EEC budget approximately £60 million. The dollar has slipped several points since the budgetary assumption for 1966 was fixed at $1 = 1·2 ecu. Secondly, one must conclude just how disastrous to
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  budgetary forecasting and discipline are the effects of unsold surpluses. Merely storing the EEC beef mountain costs 2·7 billion ecu—an increase of 700 million ecu.
  This brings me to the ultimate madness of CAP—the growing and mounting surpluses. The EEC has 14 million
  tonnes of grain, 800,000 tonnes of beef, 1 million tonnes of butter, 427 million tonnes of milk powder and 2 billion litres of wine in store, and all are increasing.
  Mr. Budgen: My hon. Friend is understating his case. According to The Times on 16 July—just before the new cereal harvest— 20 million tonnes of EEC cereals in stock remained unsold.
  Mr. Aitken: I am grateful to my hon. Friend. Perhaps a cheap Soviet side deal changed the figures. Either way, it is highly unsatisfactory.
  Fifty per cent. of the EEC's entire budget now goes on the storing, distribution or dumping of these food surpluses. As the problem mounts, the EEC Commission is becoming increasingly desperate and is resorting to crazier and crazier measures. The Commission has announced that, in order to dispose of the butter mountain, it will feed a large part of the butter surplus back to the cattle that originally produced it. What nonsense. We have heard of jobs for the boys; now we have butter for the cows. Marie Antoinette, where are you now? The phrase which was said to have started the French Revolution—"Let the peasants eat cake" — has been replaced with "Let the poor people in Africa starve while the EEC cows eat butter." The only result of budgetary discipline so far is that the smack of firm government has been used to drive cattle towards the butter trough. That is nonsense.
  The butter situation is only the tip of a massive surpluses iceberg which is building up problems for the ideal of budgetary discipline. The cold storage space for beef in Europe is so full that the Commission has had to hire additional cold stores in Austria, Switzerland and other countries. Ships with cold storage space have had to be chartered in France and Italy. Beef is pouring into the intervention stores at a rate of 25,000 tonnes a week because of a recent decision to extend intervention of beef carcases. Even with an expected sale of 75,000 tonnes of surplus beef to the Soviet Union, the EEC will still have a beef surplus of well over 1 million tonnes by the end of the year, at enormous cost.
  Other factors make budgetary discipline in the EEC increasingly impossible to achieve. An item in The Sunday Times on 5 October, which was headed "EEC's £600m fraud", began:
  "The official auditors to the common market have uncovered evidence of wholesale fraud in the trade of farm produce. Exporters are claiming millions of pounds in subsidies for food which in many cases does not exist."
  The article gave some examples, stating:
  "Northern Irish farmers were sending the same cattle across the border so frequently that, in the words of one customs official, 'the cattle knew the way themselves'."
  The article continued:
  "The European Commission …'could not confirm or deny' an … estimate that the irregularities account for more than 10 per cent. of the £6 billion spent on export refunds each year, because it 'does not have the information'."
  I turn now to the 1986 budget which so far has had several different manifestations. Originally Ministers set a ceiling of 29 billion ecu, or £17 billion. The Commission then produced a draft budget of 35 billion ecu, or £20 billion. In September EEC Ministers, attempting

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  budgetary discipline, set a budget of 32 billion ecu, or £18·4 billion. Those levels which, however one looks at them, amount to increases of between 8 per cent. and 17 per cent. over the July ceiling were achieved not by the desirable objective of cutting agricultural spending but by accountants' conjuring tricks or creative book-keeping.
  I can do no better than quote Mr. Jean-Pierre Cot, the chairman of the European Assembly's Committee on Budgets, who said:
  "The Council of Ministers is incorrigible. In 1985 they proposed a budget for 10 months instead of for 12 months. Now for 1986 they are proposing a budget for 10 member states instead of 12 member states."
  A furious row about the future budgetary treatment of Spain and Portugal is emerging. Those countries expected to be beneficiaries in their first year, but instead they are turning out to be contributors. We seemed to be assuring them that, because of the desirable ideal of strengthening democracies, they would be helped financially. Instead, for them it is more a case of pay up, pay up and pay the game. I believe that a dangerous political backlash will emerge in those countries when it is discovered how they will be treated under these proposed budgetary arrangements. Spain and Portugal will have to contribute 3·3 billion ecu under this budget.
  There have also been cuts —to many observers these are unacceptable — in the social and regional funds, instead of cuts in agricultural subsidies. Perhaps the complete freeze on food aid to Third world countries is the most unacceptable budget policy of all. The motto seems to be, "Let us go on enriching the grain barons but do not feed the hungry and starving of Africa." This is morally unacceptable.
  A sorry picture emerges on this crucial issue of budgetary discipline. What a bleak outlook for sound accounting. When we discussed this matter in July, the rising cost of the budget had pushed the EEC's level of expenditure up to 1·35 per cent. of own resources—perilously close to the 1·4 per cent. limit which we are supposed to be authorising in the Bill. My hon. Friend the Minister of State, Treasury, said that he thought that it was impossible that we would soon be considering this issue again, but I think that it is almost certain that we shall be back regretting that we did not take a stand with this Bill at the 1 per cent. level so that we have to fight against a 1·4 per cent. increase. It seems like an annual Christmas pantomime. In comes Buttons, the Foreign Secretary, asking us all to clap our hands and show that we believe in the good fairy, Tinkerbell, who represents the good fairy of effective budgetary discipline in the EEC.
  Mr. Austin Mitchell: That is the way to do it.
  Mr. Aitken: The hon. Gentleman, with his previous career in show business, knows exactly how to clap at the right time when one is asked to believe in fairies. He would have us all walk through the Division Lobbies saying that it is now time for Mother Goose to lay a golden egg worth £1 billion or more to the EEC. Mother Goose, instead of living at No. 10 Downing street, will be at No. 10.4, No. 10.6 or No. 10.8 Downing street.
  Mr. Budgen: Each teeny weeny bit.
  Mr. Aitken: Let us get away from the pantomime and return to reality. We must force effective budgetary
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  discipline, as the Bill does. By holding the 1 per cent. limit we have missed our chance to reform the CAP. We cannot continue with this madness, which is offensive to the Third world and bad for the consumer who, it is estimated, will have to pay an extra £7 a week from the family budget for these extravagant CAP surpluses. Sooner or later the public's patience will crack and they will say, "This dance will go no further." Although some of us are saying this with our votes, it is a great pity that we are not all saying it in this debate..
  7.9 pm
  Mr. Ron Leighton: I come as hon. Members will be aware, from the London borough of Newham. There we are asking the Government for partnership status, which might give us an extra £10 million a year to ameliorate the bleak conditions of our inner city. So far, the Government are resisting. They seem to be saying to us that they do not have the money. They do not have the money for British inner cities, yet they seem to have hundreds and hundreds of millions of pounds to throw down the black hole of the Common Market. They are throwing good money after bad. I find that unacceptable.
  What we are doing in the Bill is the opposite of what we should be doing. Against the background of agricultural surpluses, as the right hon. Member for Worthing (Mr. Higgins) said, there is no case for any increase in agricultural expenditure. Increasing the VAT contribution by 40 per cent. will only encourage further overproduction, and then 1·4 per cent. will not be enough.
  In the Bill we are throwing away one of the few cards that we held. We are abandoning the only limit that we had on the lunacy of the common agricultural policy. That was the 1 per cent. VAT limit. We were told that a condition of agreeing this increase was the obtaining of financial discipline. The hon. Member for Southend, East (Mr. Taylor) asked many questions about that. We were told that before we agreed there would be a watertight arrangement for financial discipline. That has not been achieved, and no one can say that it has. There is nothing legally binding. There is nothing in any treaty.
  Why not? The Prime Minister explained that to us on 5 December 1984 when she said:
  "It is not being embodied in a treaty or technically —legally—into the budgetary process. … Because one simply cannot get agreement from all 10 countries." — [Official Report, 5 December 1984; Vol. 69, c. 354.]
  There we are. That says it all.
  The so-called guidelines arrived at at Fontainebleau are in my view completely worthless. The new Minister will discover that as he goes along. I note that he did not give any guarantees to the House this evening. The agreement is full of phrases, as he is aware, such as "exceptional circumstances" and "barring aberrant developments" and all the rest. As he will soon find, the Common Market is an aberrant development.
  If there were budget discipline, we should not need the Bill or any increased spending. We were told that we had to agree to the increase to get our rebate. What is that rebate? It is a percentage of our own money coming back. Before, rebates were unconditional. This rebate is conditional on us agreeing that we shall pay even higher taxes to the EEC. In other words, we are paying for our own rebate plus some extra. As everyone should be aware, we shall be paying more in net terms than we were before.

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  According to the Treasury—it admitted that in 1985 — we shall contribute an astonishing figure of £1·2 billion net. I have been speaking this evening to some of the people who came to lobby the House about British aid to the Third world. I wonder what they think when they hear that we give virtually twice as much to subsidise the richest countries in Western Europe as we give to the Third world. I do not believe that that makes any sense.
  What is that money for? Why should we pay anything in net terms? After all, we are one of the poorest members of the Common Market. Why should we pay anything? Why should we subsidise our richer neighbours, many of whom pay nothing in net terms and yet draw benefit? Why should we pay more than anyone else? I have never had that explained satisfactorily. What do we get for the money? What special benefits do we receive that others do not? Why should we spend £1 billion to obtain what they get for nothing? The House should ask those questions because we are supposed to be the custodians of the taxpayers' interests. If Newham cannot have £10 million, before we have a riot, why should we give those huge sums to the Common Market?
  We should also ask how long the 1·4 per cent. VAT ceiling will last, because the effective VAT rate for 1984 and 1985 was well over 1 per cent. That is why the difference was made up in the intergovernmental agreement—the so-called intergovernmental whipround. In 1986, the EEC will already be spending 1·35 per cent. In other words, expenditure will already be bumping along the ceiling. Is it not clear that the life expectancy of the 1·4 per cent. ceiling will not be long? Then, because the Government propose to sell the pass now unless the House can stop them, we shall be asked to pay even more. What are we spending that money for? We should be clear that it is for the indefensible common agricultural policy. There have been no changes in the common agricultural policy. It continues to increase production, which results in uncontrolled rises in expenditure. Food prices are divorced from any economic criteria. They are political prices, not economic ones.
  Income support for the smaller or less efficient farmers is guaranteed by fixing high consumer prices and keeping out and penalising products from overseas, regardless of the disruptive effect on poorer Third world countries. Prices high enough to keep less efficient farms in being mean excessive profits — a bonanza — for the large producers, while not even ensuring a reasonable income for the smaller ones. Moreover, those artificial prices have stimulated over-production and resulted in huge surpluses that cannot be absorbed. The open-ended commitment to buy into intervention links subsidies to production. In other words, those who produce most benefit most.
  As taxpayers, we pay to produce what, as consumers, we cannot afford to buy. The burden of agricultural support is placed upon the consumer. That discourages consumption. It penalises the poorest in our society because they spend more of their income on food. It has even more damaging effects. It gives incentives to expand production through capital investment and the costly input of energy and fertiliser. That pushes even the large farmer into an economic trap due to the high costs of his overheads and because of rising land prices. Even he finds that his future is mortgaged and fears that the bubble will burst, as eventually and inevitably it will.
  Such a policy threatens our environment and the quality of the soil. It encourages intensive monoculture systems
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  of farming and the amalgamation of farms, the grubbing-up of hedges and woodlands and the massive injection of chemicals and fertilisers into the land. Those surpluses have further to be subsidised and sold abroad at a loss, disrupting the economies of our friends overseas and some of the poorest developing countries. Furthermore, that crazy price support mechanism is the opposite of an instrument for social or regional policy. It works to the advantage of the largest and the well-to-do producers who are to be found primarily in the north of Europe, where heavily supported products such as cereals, milk and sugar are produced.
  It is an astonishing fact that farm incomes in the five most prosperous regions of the EEC are nearly seven times more than the average farm incomes of the five poorest regions. These disparities are growing wider every year so this public money is going to richer farmers, not poorer.
  Mr. Forth: Will the hon. Member concede, in developing this point, that this position is very likely to change because if we allow Spain and Portugal to come into the Community and the political balance shifts towards the south, we may find that the available money under either a 1 per cent. or a 1·4 per cent. ceiling will go increasingly to the southern producers and not ours? That development would reverse the trend that he has described. He might also care to think about the effect it would have on our own people here, farmers and others.
  Mr. Leighton: The hon. Member is well known in the House for his expertise on these matters and what he says may well be true. Were that to be the case, it would mean a lot more money. We would have to go well above 1·4 and 1·6 per cent. We would have to be taxed more highly in order to give even greater subsidies.
  Producers' co-responsibility, quotas or levies are not a solution, mainly because they envisage no reduction in prices, which would still provide the present stimulus to over-production. Again, the rigidities and the unfairnesses that they would cause would lead to constant presure for their removal or their increase. Crucially, whilst prices are fixed politically, there would be irresistible demands from farmers for prices to be raised to compensate them for reduced production.
  By not allowing demand to regulate or at least influence supply, we have a huge waste of economic resources. Because of an open-ended commitment to buy in whatever is produced, the whole system is out of control. This is why agriculture consistently swallows the vast bulk of the budget. The proportion of the budget going into agriculture has gone up again; I think that the Minister of State will admit that it is now running at a rate of 73 per cent. Not only is there no market discipline, there is no budgetary discipline, because agricultural spending alone is classified as compulsory. It is demand-led. All the rest —social, regional, industrial policy—competes for any crumbs left.
  Mr. MarlowThe hon. Gentleman has just made a point that agriculture expenditure is going to take 73 per cent. of the budget. He will know that way back in 1977 agriculture took 73 per cent. of the Community's budget. It was a much smaller budget in those days but we were told then that salvation was just around the corner, that there would be new policies, restraints and controls and that everything would be all right. It was not right then. Why is it going to be right now?
  Mr. Leighton: The hon. Member has put his finger on a very valid point. This is one of the causes of our frustration. We listened to the new Minister being very optimistic. When we asked him to give a guarantee, he did not do so because I think he knows in his heart that there is no guarantee.
  When will the House learn? Are we ever going to learn? When will the Conservative Whips' Office learn, when the Minister says that it will be decided by the House? Perhaps that is really the question that we have to ask. Nevertheless the Government tonight are asking the House to throw even more money into this crazy system which is so damaging to British interests, when I believe and, I think, hon. Members on the Government Benches believe, that we should be doing precisely the opposite.
  Agriculture and food policy should be repatriated and brought once again under the control of the House. We should set prices that would bring demand and supply together, prices rather nearer to world levels. We should once again open our ports to efficiently produced food from the Commonwealth and from the prairie countries. If we wished, as I am sure we would, to give income support to our farming community, it should be done directly rather than by artificially high consumer prices. Such a sensible policy would be in the interests of Britain, in the interests of poorer people and in the interests of world trade. It is long overdue and we should begin its introduction as soon as possible.
  7.25 pm
  Mr. Tony Marlow: I oppose this Bill because it is bad for Britain. What it means is that we will have to spend more money. Our net contribution will increase and we shall have to spend more money gross for exactly the same mish-mash that we have had in the past. I oppose the Bill because it is un-Conservative, because it means more public expenditure — and less adequately controlled expenditure at that. Public expenditure which was controlled by this House will now be in the hands of the Commission in Brussels. Money which we would have spent will be spent elsewhere by people in whom no Member of this House has faith when it comes to spending the money wisely, efficiently, without fraud and without waste.
  The Bill is of course of benefit to some. Some people will welcome it — the "Europeans", that very small minority which wants to see a United States of Europe by stealth.
  Mr. Teddy Taylor: Just a lunatic fringe.
  Mr. Marlow: My hon. Friend says, "The lunatic fringe". I was about to say, "European Assembly". I leave it to hon. Members to decide for themselves whether the two are compatible. The Spinellis, the people who want European union, will be in favour of this; it will be moving in their direction. The ratchet will be moving slowly towards European unity—the Dooge report, the people who want to see the gradual achievement of a homogeneous judicial area, the same laws throughout the Community, the promotion of common cultural values, the same culture throughout the Community, the development of new media in a Europewide context, a European broadcasting corporation. How will that be financed? Through the VAT contribution? Or are we to have another licence fee?
  Mr. Forth: Does my hon. Friend agree and is he not reassured by the fact that one of the joint budgetary authorities in the Community is the directly elected European Parliament? Is he not confident that the elected members of that body will join in exercising strict budgetary control over future Community budgets?
  Mr. Marlow: I wonder whether my hon. Friend is so confident? He has spent some time there. It is my view — I do not know whether he will agree — that the members of the European Assembly would like to increase European competence and dominance. They would like to increase European policies over which they have control. Basically what they wish to do is to increase European expenditure. It gives more power to bureaucracy and less power to democracy. It allows——
  Sir Russell Johnston: I give way frequently to the hon. Gentleman, so he must allow me a little pleasure as well. He cannot jump in this illogical fashion from, at one moment, condemning the European Parliament on the ground that it takes the sort of decisions he does not like to saying that, of course, all this means an increase in bureaucracy and a reduction in democracy. He cannot have it both ways—although he almost always tries to.
  Mr. Marlow: The European Parliament is not a legislature; it does not have legislative powers or functions. It is an assembly. When we discuss in the House treaties or documents dealing with it, it is always called the European Assembly.
  The European Assembly is for ever trying to increase its powers and competence. It is not a legislature, nor a parliament; it is a lobby and that is the problem. The European Assembly wants to spend public money that it does not earn itself, just as Liverpool wants to spend public money that it does not earn itself.
  May I trouble the House very briefly with a private address to my friendly neighbourhood Whip? I shall be voting against this nonsense tonight. I am second to none in my admiration for the Prime Minister — [Interruption.]—if my hon. Friend will listen—because nobody could have negotiated on this issue a better deal than she did. She was dealt an appalling hand by her predecessors. The Government were in a difficult position. Nobody can negotiate as effectively and efficiently as the Prime Minister. Nobody bats for Britain as well as she does. On this issue, she has done as good a job as possible. For example, our future rebates will be by abatement rather than other people being allowed to discuss, decide and deliver what is in effect our money.
  Mr. Hugh Dykes: Is not that illogical, as was a previous point made in an intervention? My hon. Friend says that the Prime Minister has done the best possible negotiating job. She has wholeheartedly, unequivocally and without exception or exclusion recommended the intergovernmental agreement and the legislation to the House. Therefore, why cannot my hon. Friend, logically and directly connecting the two concepts, vote for the Bill?
  Mr. Marlow: I am pleased that I gave way to my hon. Friend because I enjoyed the courtesy of doing so, but in a way I am sorry because I was proposing to answer the question before he asked it. We are not the Prime Minister. We are the House of Commons of England— [HON. MEMBERS: "Of Britain."] We are Parliament. The Prime

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  Minister is in a specific personal position. She negotiates with other Prime Ministers in the EEC. She has to deal with those Prime Ministers on a day-to-day basis. There is a limit to how far she can press an argument, whereas we in Parliament do not have to take the same direct view as the Prime Minister. If we as Parliament believe that by withholding our agreement from the measure we can secure a better deal for Britain, that is possible. We are in a different position from the Prime Minister. We have different powers and a different relationship with the Community. We have a different job to do.
  If we vote against the measure tonight — [HON. MEMBERS: "When."] When some of us vote against the measure tonight, I hope that there will be a sufficient number of people here to defeat it. The immediate effect would be no increase in Community own resources. Europe, like Liverpool, would be rate-capped. If rate capping is good for Liverpool, why is it not good for Brussels? For the first time Europe would be required to live within its means. It would have to restrain waste on existing policies.
  We talk a lot about our net contribution and what will happen to it. However, we must not lose sight of the gross contribution. The United Kingdom's gross contribution to the European Community went up by 50 per cent. in the three years from 1981 to 1984. As far as I know, the policies run, administered and decided by the Community have been much the same over that period yet we are paying 50 per cent. more. It must be grossly, crassly inefficient. If we denied more money, that waste would have to be tackled at source.
  If we restrained the Community's expenditure by not voting for the Bill, it would not be able to embark on new money-based policies. There is a great vested interest: there is a lobby; there is a machine; there is an engine of Europeanisation in Brussels. The Commission proposes policies. It wants to see the influence and interests of Europe expanded. So does the European Assembly. A ceiling on expenditure would restrict the number of money-based policies that can emanate from Brussels.
  There is much that we want to do with our partners and friends in Europe. There are harriers to trade that we want to break down. There is bureaucracy that we want to cut. However, none of that will cost money. If we increase the resources available to the Community, people will think of expensive policies additional to the existing ones and in some cases additional to the policies that we operate in this country—more policies, more laws, more public expenditure. Those are reasons for imposing a ceiling.
  As I said in an intervention in the speech of the hon. Member for Newham, North-East (Mr. Leighton), in 1977 the common agricultural policy accounted for 73 per cent. of the Community budget. Now, after years of being told that the matter was being gripped and would be sorted out, and that the obscenities of the surpluses would be dealt with, Community expenditure on agriculture has doubled. That has happened in the past four years. Since 1977 it must have trebled or quadrupled. Now we are still spending 73 per cent. of the Community budget on agricultural policy.
  Various undertakings have been given, but as my hon. Friend the Member for Southend, East (Mr. Taylor) has said, if it rains on a Wednesday afternoon those undertakings cannot be met. Some 15 or 20 years ago Professor Mansholt had a plan for reducing Community expenditure on agriculture and making it more effective
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  and efficient. What happened to that? What happened to all the plans and promises, all the commitments that have been given in the past? They have all been swept aside by the lobbies, the vested interests and the political realities in some of our European neighbours' countries. That is what will happen now because we have not put a cap on the CAP because we have not put a ceiling on Community expenditure.
  If we give way once, the lesson is there— we have given in and we shall give way again. We have heard all the talk about it being up to the House and expenditure not being increased again unless the House wants it. We know what happens with a Government with a massive majority, and an effective and pleasant Whips' office. If the Government say that, because they have given a commitment on the other side of the channel, Community expenditure will be increased, they can deliver. Barely half a dozen hon. Members begin to understand the Community financing system. I do not include myself in that number, and I take an interest in the issue. If the Government ask for more money, is it possible or likely that the House of Commons will act as a restraint on the Government's decision?
  The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): Given my hon. Friend's stated admiration for my right hon. Friend the Prime Minister, does he seriously believe that she and the Government as a whole would at any stage wish to make to the House any recommendation involving increased expenditure unless they were entirely convinced that it was in the national interest of the United Kingdom to do so?
  Mr. Marlow: I respect the Prime Minister, and I understand what my hon. Friend says. My hon. Friend's predecessor was asked whether the Government would give an undertaking that they would not ask for another intergovernmental agreement. He did not give that undertaking. The reason was that the Community is a system of barter. If one wants a sensible policy on reducing non-tariff barriers and on freedom for the City of London to trade insurance policies in Germany, Paris and so on, one must scratch the other person's back too. Because of that, the Minister could not give a commitment from the Dispatch Box that he would not come back for more money. The Prime Minister is part of it. She cannot help it. It is part of the institution of which she is a member as Prime Minister.
  That does not mean that we here in Parliament have to take the same view. I shall be interested to hear what my hon. Friend the Minister of State says at the end of the debate. I still do not understand why the Government cannot give the commitment that my right hon. Friend the Member for Worthing (Mr. Higgins) requested in his excellent speech, that we shall not give a loan or agree to distend this excessive expenditure further.
  People might say that if we were to throw out the measure there would be massive retaliation from our partners in Europe, life would become unbearable, we would not get any rebates in future and so on. That cannot be true. When we joined the Community we had a balance of payments balance with the Community. This year, on the latest figures, we expect to have a deficit of £9,000 million in manufactured trade with the Community. We are a massive market for the industries of continental Europe. We buy their foodstuffs to a greater extent than

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  they buy ours. We are a market for their food and manufactures. Even at a lower level of financial net contribution to the EEC, we would still be a net payer. Europe with us is more powerful politically and in foreign policy than Europe without us. We have a massively strong position and if my dream were to come true and we were to defeat this measure tonight, there is nothing Europe could do which would be against our interests. We are in a stronger bargaining position than we give in account of ourselves.
  There are several myths, too, which ought to be dispatched. First, there is the myth that if we did not have this agreement we would have to pay more. After this agreement we will be paying more net than we were paying before the agreement, and it is not conceivable that whatever we do we would not have an agreement. Let us try to compare apples with apples and not apples with oranges. We are worse off now than we were before the agreement, and to say if we did not have an agreement we would be worse off is really a weak, shallow and shabby argument and it does nobody any credit to use that argument.
  Secondly, under the new arrangements we will be paying less than 1 per cent. VAT. As I said in an intervention in the speech of the Minister, over the past four years we have paid an average of 0·5 per cent. My hon. Friend came back as quick as a flash and said, "But next year we shall be paying only 0·56 per cent." My hon. Friend knows that we shall be paying 0·56 per cent. next year because of our massive payment this year which will entitle us to this exceptionally large rebate next year. However, the likelihood is that we will get it up to that 1 per cent. so that we will be paying more net after rebate —almost twice as much more—than in the past. Let us not be political about everything and try to disguise everything. Let us state the facts and show things as they are, warts and all.
  As I have said many times before, we all want to control and reorganise the CAP. It is a policy which might suit continental farmers, but it is not a particularly good policy for our farmers. However, continental farmers have the votes, so they persist in it and we persist in paying for it. As I said, this is good for the Europeans, good for those who want a national Europe, a European state, but that is not what the people of this country want and that is not what the people of this country have been told they will get. But drip, drip, slowly, slowly, we are moving towards a European state, and this measure moves us a step further in that direction.
  The Bill is bad for Parliament. We are losing control over people's money and giving that control to non-elected bureaucrats. It is bad for Britain. We are trying to deal with the problems of big, nationalised organisations which are answerable to nobody, yet here we are passing money to an organisation which is not directly answerable to anybody. It is also bad for Europe. What we want in Europe is mutual deregulation, we want free trade, and we want to cut out bureaucracy. We do not want new, expensive policies. We do not want to feed the appetites of the bureaucrats, and that is what this measure will do.
  7.35 pm
  Mr. Nigel Spearing: This Bill is about money and about power. It is about the transfer of
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  money and therefore about the transfer of power. My hon. Friend the Member for Newham, North-East (Mr. Leighton) spoke last from the Labour side and I commend his speech to the House. He mentioned the people of the area we represent. They do not have much money and they do not have much power. The Government have power to provide money for the economy and that will provide young people in that borough with jobs. They should do that instead of voting it away from the United Kingdom.
  My hon. Friend also mentioned that we have a massive lobby, concerned not with domestic affairs, grievous though they are, particularly for young people, but for those in some parts of the world who cannot even expect to live. The Government have the power to provide resources and money to prevent famine and starvation. Instead, at the express behest of the Prime Minister through the Rayner cuts, the scientific units of the Overseas Development Administration were butchered. Select Committees have asked for those cuts to be reversed but they have not been. The Government are providing neither the money nor the power even to do what the Prime Minister claims the country is trying to do in respect of the prevention of famine.
  Mentioning the Prime Minister brings me to the hon. Member for Eastbourne (Mr. Gow), whom I welcome to this debate on the EC. He is going to find a certain degree of difficulty—even, if I may suggest, greater difficulty than is inevitable for almost anybody in housing. He illustrated that himself, perhaps unwittingly, when he was interrupted by the right hon. Member for Worthing (Mr. Higgins), the Chairman of the Select Committee on the Treasury and the Civil Service and he could not give an undertaking. If I remember his words correctly, and I do not want to do him down, he said, "I cannot conceive of circumstances where it would be necessary."
  The hon. Gentleman has a lot to learn about EC affairs because I suggest to him that this Bill illustrates in both its clauses those very circumstances that he claims he could not conceive of. The first part of clause I deals with the new arrangements for own resources and the second part, sub-paragraph (f), deals with the undertaking irregularly to top up the EC budget for 1985 because those own new resources are not yet ratified in the vote. It is flowery and eloquent to talk about not conceiving the circumstances. He did not understand that those very circumstances are with us at this minute in debating the Third Reading of this Bill.
  This brings me to paragraph 1(f) itself. It relates to this intergovernmental agreement, at which is presumably an international treaty because it has been added to the terms of the European Communities Act 1972 and its terms are set out in Cmnd. 9548 on one page. It refers to an undertaking. I have attempted to identify the nature of this international agreement, at which Ministers were present, who appended the signatures and so on. All that the Library and the Minister could provide was a rather scrappy piece of paper which relates to Ministers meeting within the Council and idly agreeing to put hundreds of millions of pounds of taxation on their respective constituents in European countries.
  That might just be legal. I understand that if the Command Paper tells us it is a treaty we have to accept it. The Ministers themselves might look at those procedures a little more carefully, but let us say that that is just legal. I doubt very much whether it is legal in terms of the treaty of Rome, because as we all know, that treaty

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  says the Community must keep within its own resources. As was pointed out in the earlier Committee debates, paragraph 1(f) is highly unlikely to be fully legal. It may indeed he ultra vires and it is demeaning this House to put such a proposal before it on Third Reading.
  Paragraph 1(e) is the decision, the Fontainebleau package, the 1·4 per cent. VAT increase. I should like to reiterate something, which ought to be reiterated time and time again, that it is not 1·4 per cent. of VAT, it is not 1·4 per cent. of the 15 per cent. nor is it 1·4 per cent. of the VAT take. That well-known newspaper The Times seemed to reiterate this on 24 June 1985 in an article which said:
  "At the moment it can claim a maximum of 1 per cent. of this VAT revenue."
  That was an article in The Times written by a gentleman called Ian Murray. Of course, that is not correct: it is 1 per cent. of the VAT base which is equivalent to a rateable value assigned to us, and of course we are now paying about 11 per cent. of that take from VAT. Any Chancellor —it might even be the hon. Member for Eastbourne or perhaps even the right hon. Member for Worthing—in future would have to pay upwards of 11 per cent. and perhaps more if sterling drops or the 1·4 per cent. goes up, at least 11 per cent. and perhaps up to 15 per cent. of the VAT take straight to Brussels. Do not pass Go; do not pass Whitehall; do not pass the Treasury; do not even pass Parliament because it is paid out of the Consolidated Fund under the 1972 European Communities Act without even leave of the statutory instrument. That will be the position of any future Chancellor so long as the legislation remains in force.
  Finance is power and the transfer of power weakens the giver. By this legislation the Chancellor's hand will be weakened in relation to the poor and needy in Newham as much as to the poor and needy in Africa. Thus will the power of any future Government be constrained. Their life blood—their taxation powers—will be less than would otherwise be the case because it will automatically be siphoned off, away from these shores.
  There is, of course, the rebate, but it is not two thirds of the VAT share. We have been told how difficult it is to express clearly, but it is two thirds of the gap between what our share would be if we paid the full VAT rate, whatever it might be, and what we get back as a proportion of Community expenditure. We must not forget, however, that what we receive consists not just of grants for visible projects such as roads and for regional projects or youth projects but of all the allocated expenditure. That, of course, includes all the common agricultural policy expenditure to which my hon. Friend the Member for Newham, North-East (Mr. Leighton) referred, because that, too, is "money for Britain", so the more money that is poured into the agricultural industries and the agriculture support industries of this country the smaller the gap, and therefore the rebate, becomes. In other words, the more that is spent on inappropriate support the smaller will be the rebate in relation to which the Minister so proudly proclaims the Government's success.
  The Minister's predecessor said in Committee that the Government would try to present all these complex calculations as clearly as possible. The Commission has been given competence to do the calculations but the Government, we are told, will monitor them. The Government. however, have no power to change them.
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  The Council of Ministers also has no such power. That power rests entirely in the hands of the Commission. The Minister's predecessor said
  "The Government will endeavour to provide the necessary information in as clear a form as possible."—[Official Report, 1 July 1985; Vol. 82, c. 141.]
  I have here their first attempt. On 14 October the Government deposited in the Vote Office, under the signature of the Minister of State, an explanatory memorandum on the preliminary draft budget of the European Communities for 1986. That document contains a description of the rebate mechanism. According to the description given of the expected rebate for 1986, the gap is between 21·3 per cent. VAT-related expenditure and 13 per cent. allocated expenditure—that is, about 8 per cent. The Minister says that we shall thus receive a rebate of £870 million and pay about £73 million per month less than we otherwise would have paid. The explanatory memorandum, however, fails to show the calculations. I should have thought that the Government, having undertaken to provide a step-by-step child's guide, would have taken the opportunity to do so in the first explanatory memorandum in which they could boast of the success of their scheme, but no such thing appears in this document.
  The memorandum, however, helps us considerably by stating that the VAT rate for 1986 is likely to be 1·24 per cent. of the VAT base. Thus, in the first year, we are more than halfway to reaching the 1·4 per cent. My hon. Friends have been asking how long this arrangement will last and how soon we shall be back in the same position. If things continue at the present rate, it will be next year. I admit, however, that the present figures include the paying back of certain loans and money drawn out, so two or three years might be a more reasonable estimate. So much for the Minister's suggestion of a lasting arrangement.
  Interestingly, too, the explanatory memorandum shows that Community expenditure this year is up no less than 23 per cent. Tell that to the people north of the border, to the people in Liverpool, in Newham and in the Sudan. Tell that to the staff of the scientific units of the Overseas Development Administration, now fewer than they were a few years ago.
  That is bad enough in itself, but there is also no discipline. In November 1983 the then Chancellor said that the Government were prepared to consider an increase in own resources provided,
  "first, that agreement was reached on an effective control of the rate of increase of agricultural and other expenditure, and, secondly, that it was accompanied by an arrangement to ensure a fair sharing of the financial burden."—[Official Report, 14 November 1983; Vol. 48, c. 609.]
  There may be a fairer sharing of the Community burden but without any doubt at all the burden is now much heavier than before. Indeed, it will be 23 per cent. heavier next year than it was this year.
  There may be a fairer sharing, but there is clearly no discipline. As my hon. Friend the Member for Newham, North-East pointed out, the Prime Minister has said that there is no discipline. The Select Committee on European Legislation, of which I have the honour to be Chairman, has also said that there is no discipline. Our second report states:
  "The Committee do not perceive any legal implications in the Conclusions as presented in this document"—
  that is, the document relating to financial discipline. Thus, in the first big parliamentary debate since the publication of certain newspaper articles, the Prime Minister and a

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  Select Committee of the House of Commons are in full agreement that there is no financial discipline in the pretence put before us in earlier debates.
  I began by saying that the Bill was about money and power and the use of both. It is clear that the expenditure of the EC has increased and is increasing. Thus, the powers of the EC have increased and are increasing. It is also patently clear that the powers of this House have decreased and are decreasing. All who vote for the Third Reading of the Bill today will be adding to that process. They will be accelerating the decline of the powers of this Parliament and, by that token, the legal powers and rights of the British people within their own land.
  7.58 pm
  Mr. Nicholas Budgen: The hon. Member for Newham, South (Mr. Spearing) ended his speech on the high ground of constitutional propriety and loss of sovereignty by the House to the institutions of the EEC. I suppose the English frame of mind is more inclined to look towards the practical arguments. The proponents of Fontainebleau said that we had got firm control of expenditure within the EEC because we had a cast-iron system of budgetary control. They said that the Fontainebleau agreement was but the beginning of the manifestation of a firm political resolve to come to terms with the ever-growing expenditure in the EEC and, most of all, with the distortions and waste of the CAP. Not so, said those of us who were from the start opposed to Fontainebleau. We said that by allowing an increase in the contribution that we made through VAT we had taken away the one firm barrier to increased expenditure in the EEC.
  There are advantages in the delay that the House has enjoyed as a result of the earlier protracted discussion of the Bill. Three more months have elapsed and we are entitled to consider the new evidence to see whether it tends to support the Government's position or the position of the opponents. All the evidence since late June and early July tends towards support for those of us who were opposed to an increase in own resources.
  Let us consider for a moment the broader issues of public opinion. Of course, no man in the pub knows exactly what our contribution is to the EEC. When he is told that the Prime Minister has secured an automatic, lasting and cast-iron agreement, the man in the pub tends to believe it. He does not notice that, as it is put, teeny-weeny concessions are made here and there. It is only at a later stage that he adds up the various teeny-weeny concessions and begins to notice that there has not been strong control of expenditure.
  There are broad areas where public opinion is beginning to notice the disadvantages of the common agricultural policy. In July the Halvergate marshes issue came to a head. What caused that? It was caused by farmers responding to price stimuli. Instead of leaving ancient meadows in the state in which they had been for centuries, the farmers wanted to plough them up. The Government could not say that this was inevitable because of market forces, albeit a distorted market, and that if wheat is selling at over £100 per tonne people will prefer to grow wheat on the Halvergate marshes rather than run store cattle on them. The Government could not say that. They had to say that by a mixture of planning control and countervailing
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  subsidy they would endeavour to persuade the farmers to keep the marshes in the state they had been in for centuries.
  The swing of public opinion is such that people are beginning to notice that the enclosures that were a beautiful part of our countryside for over 200 years are rapidly being ruined by being turned over to prairie farming, not because of great wickedness by farmers but because they are responding to price stimuli when cereal farming has become extremely profitable.
  We are grateful to my hon. Friend the Member for Southend, East (Mr. Taylor) for pointing out the rising interest in the effect that food may have upon the human body. There is increasing interest in the amount of nitrogen used on cereal crops and the effect that that nitrogen has when it drains off into water courses.
  Those two matters have drawn to the attention of the public the effect of high cereal prices on the common agricultural policy. I do not pretend that the man in the pub will say tomorrow, "I heard a splendid speech by Mr. Terence Higgins in the House of Commons and I agree with all that the Treasury Select Committee has said about the common agricultural policy." But people notice when someone says that if 5 cwt of nitrogen is put on an acre of marginal land it may go into the water courses and cause various forms of cancer. They notice when Bert in the village rips up a large number of hedges and explains that he has done so because he needs to cash in on the cereal bonanza.
  Public opinion has moved since July in favour of those of us who were highly sceptical of the Fontainebleau agreement. Other factors are moving in our direction. The Chancellor of the Exchequer was a party to an agreement to attempt by intervention to reduce the value of the dollar against other currencies. The right hon. Member for South Down (Mr. Powell) is smiling at the impertinence and arrogance of central bankers who believe that they can, by intervention, permanently affect the value of currency. With that I agree, but I am sure he would agree that if the Americans are serious about wanting to reduce the value of their currency against other currencies they can do it by printing more dollars. I am not sufficiently expert in American politics to know whether they are serious about wanting to do that. but if they increase the quantity of dollars and thus reduce the price, it will have a horrifying effect upon the principal cost within the CAP — the disposal of the surplus upon world markets. We should have had an explanation of the effect upon the CAP and upon the budget of the EEC.
  The supporters of the Fontainebleau agreement also said that it was not a botched-up, linked agreement but the beginning of a new political initiative in Europe by which the common agricultural policy would be transformed. It was said that it was not a desperate step to hike up the funds by sharp footwork but the beginning of a sustained political endeavour. It became clear when we examined the details of the agreement that there were so many ways in which member states could avoid the effects of the so-called system of budgetary discipline—by the aberrant circumstances clauses and all the rest — that it all depended upon the political will of member states.
  We have had a quiet political time since the end of July but the EEC met throughout September. Through the good offices of the Financial Times we have been able to see which way the wind seems to be blowing in the EEC. On 20 September the Financial Times reported:

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  "Mr. Henning Christophersen, the Budget Commissioner … launched a strong attack on member states for agreeing to cuts which, he said, make the new members substantial net contributors".
  That is significant because a commissioner, as a hybrid between a politician and a bureaucrat, is anxious to feel the political wind throughout the Community. He takes the view that it is necessary to expand the budget. If that is thought to be an aberrant view, as compared with that of the Commissioners, I invite the House to consider the Financial Times of 8 October which carried an interesting report by Mr. Ivo Dawnay in which he says that, because of political disagreement, proposals that had been made earlier to reduce the price of cereals — and thus the enormous cereal surplus which The Times says was running at 20 million tonnes before the present harvest came in — came to nothing. Everybody knows that although the harvest was difficult to get, it was very large. We have got a great deal of second grade corn. Before that harvest, there was a surplus of 20 million tonnes in store. We learnt that the Commission had proposals to reduce that surplus, but they were left vague. I do not want to read every word of Mr. Ivo Dawnay's report, but he said that the Commission concluded that there was simply not enough political will in the EEC to make any reductions in cereal prices.
  The delay that the House has enjoyed, and which has given us a further period of reflection, reveals yet more evidence that the Fontainebleau agreement was not the beginning of the new political resolution to cut the budget and to reform the common agricultural policy, but merely a short-term desperate measure to persuade Parliaments of the EEC to give more money. All that has happened since July shows that we shall be back again and that we have thrown away the only real lever to control the vast expenditure of the EEC. It is so vast that nobody can understand it without a few hours of head scratching. I do not pretend that the British people understand the EEC's finances but, as they look at the countryside that they love and which has been a great feature of our national way of life, they see changes. They do not like those changes and, in the end, will express their dislike.
  8.12 pm
  Mr. Austin Mitchell: I do not want to follow the hon. Member for Wolverhampton, South-West (Mr. Budgen) down all the avenues in his concise, telling and effective speech, except to assure him that, on this matter, he speaks for England as surely and more devastatingly than the hon. Member for Northampton, North (Mr. Marlow) shouts for it.
  The Bill is born out of dithering and duplicity. The dithering involves the procedures by which the Government decided to implement intergovernmental agreements, although they later changed their minds. In 1984, the Government introduced the first intergovernmental agreement under the European Communities Act 1972 and as being ancillary to the treaty, although it was a fairly fundamental constitutional matter. They were implementing an IGA which specifically stated that it was outside the treaty by procedures developed for passing treaty agreements. When that was challenged in the courts by Mr. Oliver Smedley, the Government changed their mind and decided not to use the procedure but laid Estimates and introduced a Consolidated Fund Bill. This Bill is the third approach.
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  Yet, having implicitly accepted Mr. Smedley's criticisms of the procedure by changing their approach, surely it is incumbent upon the Government to pay the considerable expenses that he incurred in clarifying the law for them. Their generosity to the EEC is in appalling contrast to their meanness to Mr. Smedley by the Government dithering about how to implement the IGA.
  The Bill is being pushed through on the basis of misinformation and after a considerable hiccup in the proceedings. Initially, the Government intended to push it through fairly quickly at the end of June and the beginning of July but they then grasped the idea that it might be useful to drag their feet after the Prime Minister's humiliation at the Milan summit. She was humiliated largely because of the contrast between the decisions reached at that summit and the Foreign Office's propaganda about the quiet British takeover of the Common Market and how Britain was giving the lead. The sad contrast between that and reality meant that it was ill-advised, even for this Government, to rush through a Bill showering money on the EEC. The Government therefore agreed to what they should have accepted all along—delay.
  The parking meter has now run out and the Bill must be passed if we are to get the principle of a rebate accepted. The Government want that principle in their financial calculations especially because of their current massive struggle to cut Government expenditure. The Prime Minister has to feed in more money to the Euro-meter or have the rebate towed away.
  Even now, the Bill is being urged on misleading and fallacious arguments. The argument on which the case for the Bill is put is that we have a concession in return for the EEC's acceptance of budgetary discipline. Successive hon. Members have said that the only effective way in which to achieve budgetary discipline is to use the weapon that was in our hands before we agreed to the principle of this legislation—refusal to increase the ceiling on own resources contributions to the Community. That was the one method by which we could automatically, inevitably and certainly have forced the EEC into sensible budgeting, because implicit in that refusal was the threat of bankruptcy unless it mended its ways. It was a pistol directly to the head. We have thrown it away for a mess of Euro-promises.
  It is a distortion to talk of budgetary discipline being achieved when, for no good reason, we have thrown away the only means by which it could have been enforced. There is no possibility of budgetary discipline in a CAP when an increase in production means an increase in subsidy. There is no discipline from the market—there is no discipline on production. There is not the discipline of the market because the subsidies guarantee the production. There is equally no budgetary discipline on production and as production increases, so does he cost of the CAP. We are throwing money into a bottomless pit and creating an environment in which there is no possibility of budgetary discipline.
  Even in the so-called provision for budgetary discipline there is the amazing exception that the ceilings do not apply in "aberrant circumstances", whatever they may be. What way of enforcing discipline is that, for example, if there is a bumper harvest? More important, discipline is essentially a political decision taken by nations which have a vested interest in paying more to farmers and in ignoring their own brave words about discipline because of the

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  political strength of the farming lobby in their systems. The Germans did that when they imposed the veto on the cut in cereal prices. They pay more to farmers because they are politically dependent on the farming community. Given that these are political decisions taken by a collection of states which have a vested interest in paying more to their farmers, there is no way that budgetary discipline will be enforced. In this matter as in others, we shall be in a minority of one.
  All the evidence—the volume even since our debates in July is impressive—shows how inadequate the so-called discipline is. One can cite examples. The recent year-long investigation by the Court of Auditors concluded that the EEC has virtually no control over the payment of export subsidies. Those export subsidies make up a quarter of the farm budget. A recent report in The Sunday Times pointed out that the Commission was unable either to confirm or deny that £600 million-worth of fraud was involved because it
  "did not have the information".
  The auditors state that the Commission is powerless to enforce its own regulations.
  A further report of the auditors relates to the olive oil regime, which takes up 5 per cent. of FEOGA spending, and which will rise after the enlargement of the Community. The report occupies 10 closely typed pages. Twenty substantive criticisms are made, none of which the Commission has answered.
  Regarding projections for the future, the Home Grown Cereals Authority calculates that on present policies the cost of supporting cereals alone—the enormous, insane attempt to turn the whole of England into second-rate prairies—could reach 14 billion ecu by 1991. That is just 1·8 billion ecu short of all agricultural spending in 1983, and more than five times the cost of supporting cereals this year. To pay so much to encourage production so that one must then pay more to store it, is yet another folly. The 2 to 3 per cent. increase in yields per annum is certain to continue. Indeed, Agra Europe, which is a respected authority on these matters, estimates that we are now heading for a 50 million tonne grain mountain. That is yet a further folly. Yet the Foreign Secretary shows a touching faith in the Commission's ability to administer budgetary discipline.
  The Commission—the body charged with implementing budgetary discipline — had to implement the supposedly automatic 5 per cent. cereal cuts this year. It tried and found that it could not hold the line on a 3·6 per cent. cut, and it now seems as if it will be unable to implement a 1·8 per cent. cut. Indeed, the Commission has now made so many concessions to the German farming interest that Mr. Andriessen has said that the effect of the changes so far agreed will be to cut cereal prices by something less than 1 per cent. So much for budgetary discipline and for the 5 per cent. automatic cut. The cut of less than 1 per cent. is at a time when cereal prices are about 20 per cent. or more too high. The 1986 budget assumes a mere 1·8 per cent. cut in cereal prices.
  In addition, the Commission has been sending out its scouts for storage space not only in EEC countries because it is fast running out of storage space. It is now busy hiring storage space for the growing surpluses outside the Community in Switzerland, Austria and elsewhere. Beef is pouring into intervention at the rate of 25,000 tonnes a
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  week, which will produce a surplus of 1 million tonnes by the end of the year. Agra Europe—an eminent source on these matters — notes that since the Council has refused to agree even to the Commission's reform measures, expenditure will climb steadily towards and collide with the Community's own financial resource limit.
  According to Mr. Andrew Cahn, agricultural policy adviser to Lord Cockfield,
  "At the end of 1985, intervention stocks will be worth Ecu 9 billion more. The annual cost of servicing these stocks is about Ecu 3·5 billion, which represents a contingent liability which has not been paid for."
  In other words, there is a cost of 3·5 billion ecu, which has not been budgeted for. That figure is equal to 10 per cent. of the entire 1986 budget, yet it has not been allowed for in the calculations that are held so beguilingly before us to tell us about budgetary discipline.
  We are being asked to push this measure through quickly at this washing-up end of the session because all the evidence, information and facts conspire to invalidate the promises of budgetary discipline which Ministers have held out to justify the measure. I welcome the Minister to his new job, but it is an awful one. In the past, the response to assault has been to lie back and think of England, but now it is to stand up and lie for Europe while Europe conspires to pull the rug from under every argument held out by Ministers to justify their actions. The proceedings over the 1986 budget demonstrate how far the rug is being pulled out from under Ministers' promises of budgetary discipline.
  On 18 September, when the Council met to consider the Commission's draft budget, it agreed to a budget totalling 32 billion ecu, which was well above the Finance Ministers' self-imposed limit of 29·7 billion ecu. The Council agreed to nearly 3 billion ecu more than that limit. Although it cut nearly 3 billion ecu from the Commission draft, it was achieved by the various procedures which hon. Members have pointed out.
  The Council postponed decisions on the accumulation of past commitments to regional and social policies. How will those commitments be paid? They have been postponed and left out of the calculation. Just as, in the past, the Community has assumed a 10-month year, it now assumes a 10-member community. It has taken no account of the advent of Spain and Portugal in the year in which they join, and has budgeted only for 10 members. Most monstrous of all, as the Labour Front Bench pointed out, it cut 130 million ecu from the Commission's proposed food budget. That would leave the food aid budget static, and represents a real cut of about 6 per cent.
  In one of the Minister's first tasks in his new job, he assured the Community that that was acceptable because there had been reports of rain in Africa. As Minister for Housing, he dreaded the prospect of rain because it would have revealed the inadequacy of the Government's housing programme, yet in his new job he welcomes the prospect of rain because it allows him to cut our contributions to the food budget and therefore impose some budgetary discipline at the expense of starving people in Africa.
  That is how the figures were manipulated by the Council of Ministers on 18 September, and that bodes ill for future control.
  The CAP budget overshot by 11 per cent. last year, simply because of unforecast increases in beef intervention

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  and continuing high dairy costs. The same problems will happen, perhaps with different products, remorselessly year after year, particularly because of the fall of the dollar. The budget assumes an ecu-dollar exchange rate of 1·20, which is approximately the current level, but the dollar is coming down and we are told that the policy of European Governments will be directed to getting the dollar down further.
  However, for every percentage point fall in the dollar below 1·20 to the ecu, CAP costs will increase by between 70 million and 100 million ecu. In other words, if Governments achieve the object of their exchange rate policy we shall be imposing on ourselves an ever higher CAP burden.
  By the so-called budgetary discipline, we are strengthening agricultural protectionism, which is bad for the world and particularly had for this country and bodes ill in the climate of increasing industrial protectionism towards which we are heading as a result of the American trade deficit. What right have we to argue against American protectionism when, for no valid reason, we have so eagerly accepted agricultural protectionism at such enormous cost? We are essentially legislating lies, or at least gross distortion.
  The process of argument and justification for the Bill must encourage a cynical view of the Community. There are lies, damn lies and Euro-truths. Ministers defend the indefensible, pretend that suffering in the market is a benefit and that the unacceptable is not happening and justify it all with a new framework of distortion.
  Ministers could have said that it is a bad deal, but that it is the only one we can get and that if we are to stay in the Common Market and derive all the myraid benefits of membership we shall have to accept it. They could have said that we are getting a bit back and it is worth having to pay a lot more to get that bit back. They could have said that the Common Market had us over a barrel over the rebate, but had offered us a few promises of good behaviour — which it does not mean — so that the Government could save face in the House.
  The Government could have justified the measure in those honest but minimal terms, but they did not. They went so far as to say that this is a new beginning and that tough, dynamic negotiations by our abrasive Foreign Secretary had won a major advance. They said that there had been a dramatic change, that the whole of Europe is different, that budgetary discipline would be imposed and that we had a permanent settlement of which we could be proud — at least until we have to increase our contribution to 1·6 per cent., when the whole thing is up for grabs again.
  Ministers justified their case with a hype that took distortion to ludicrous lengths. When giving us those distortions, Ministers ought to think about what justifications and excuses they will be able to give when they have to return to justify the increase in agricultural expenditure that occurs after the imposition of the so-called budgetary discipline, a sudden new intergovernmental contribution for another Christmas present for the Common Market and the early increase in the own resources ceiling which is inevitable and will come quickly. Having trundled out every possible excuse, distortion and argument as hostages to get this inadequate Bill, what excuses will Ministers be able to give us in the future?
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  Why are the Government so generous to the Common Market? Why are they so strict, stern and mean towards every useful purpose of spending in this country and so generous in handing money over to that inadequate institution? Why is housing being slashed in this country? Why is there no money to expand our economy? Why are our local authorities being rate-capped and local government spending and services castrated? Why is our infrastructure creaking? Why is Britain shabbier, meaner and nastier than ever before? And why, in those circumstances, are the Government handing out money in an unquestioning fashion and with half-baked excuses to a Common Market from which we get so little?
  What do we get for our contribution, which will be £1,200 million this year and £1,000 million in a year after the settlement comes into force? We know the massive benefits in trade — a turning round of a surplus in manufacturing trade of £2,000 million in 1970, at 1983 prices, to a deficit of about £8,000 million or £9,000 million. We know the benefits in terms of the cost of food and the food mountains. We know what benefits we have given to underdeveloped countries by distorting their trade, with Europe producing highly subsidised and expensive sugar while the sugar industry of underdeveloped countries staggers into ruin.
  Can the Government please quantify the benefits that we get in return for our massive contributions of £1,200 million this year and £1,000 million a year after the settlement goes through?
  8.37 pm
  Mr. Richard Body: Once again, I follow the hon. Member for Great Grimsby (Mr. Mitchell) in a Common Market debate and once again I agree entirely with the hon. Gentleman, though his peroration went slightly awry.
  My hon. Friend the Member for Northampton. North (Mr. Marlow) said that he opposed the Bill because it was bad for Britain. I oppose it because it is bad for Europe. It is almost exactly 30 years since, as a new hon. Member, I joined a small band of colleagues to argue for this country to be represented at the Messina conference and to join the Common Market. After three decades, all that we seem to have is a common agricultural policy. No one can really dispute that.
  As several hon. Members have said, we shall be back again in a year or two being asked for more money to hand over, not for Europe—do not let us deceive ourselves about that—but for the CAP.
  The hon. Member for Great Grimsby spoke about the increase in output. If anything, he understated the figures. We are poised for a remarkable expansion of food production. My hon. Friend the Member for Wolverhampton South-West (Mr. Budgen) spoke about nitrates. We are developing varieties of wheat that will be able to absorb and make much greater use of nitrates, so that by the 1990s we shall be growing about twice as much wheat as we are growing now. On land where 3 tonnes to the acre is grown—that is about the national average on good land for this year's harvest —6 tonnes per acre will be grown. It will not be milling wheat suitable for consumption by people in this country or even in Ethiopia. It will be feed wheat, of poor quality, to be used for making food compounds to be consumed by cattle, pigs or poultry. Those who say, in good faith no doubt, that we

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  should send such food to Ethiopia do not understand the poor quality of so much of the wheat being produced in northern Europe.
  Mr. right hon. Friend the Member for Worthing (Mr. Higgins) spoke of his visit to the United States. There millions of acres capable of growing good quality milling wheat for human consumption are out of production. Two or three years ago I was in Australia and flew over tens of thousands of acres of land capable of growing top quality milling wheat which were out of production and reverting to scrub. That is a direct consequence of the common agricultural policy. Large areas throughout the world which could grow wheat for human consumption are not being cultivated while in the United Kingdom and northern Europe we are laying waste to our countryside. We are draining the wetlands, as my hon. Friend the Member for Wolverhampton, South-West said; and we are ripping up the hedgerows, as another hon. Member said, to produce food for the intervention stores.
  We began the last harvest with a surplus of 3 million tonnes of feed wheat or cattle food. After the harvest the surplus is even larger. The Select Committee on Agriculture begins on Thursday to investigate what will happen to the feed wheat. The evidence will probably be that large quantities are to be destroyed by pests such as weevils and that no market for this surplus feed wheat exists.
  By giving more and more money to the common agricultural policy we are stimulating further output in types of food which the world does not want. Not even Ethiopia wants it. I hope that no one will suggest that we should send our vast surpluses of butter and sugar to people suffering from malnutrition.
  In the next few years resources will be transferred to southern Europe in an effort to support agriculture in Greece, Italy, southern France, Spain and Portugal. Anyone who has visited those countries knows that just as a tremendous potential exists for expanding the production of northern European foodstuffs, so there is a tremendous possibility of expanding the output of olive oil, tobacco, lemons, oranges, wine and paddy rice. We do not produce such crops so our farmers have no interest in them. That is a major argument for repatriating agricultural policy.
  The CAP is a mechanism for continually increasing output, but it fails to support farmers. Throughout the Common Market there is a steady exodus from the land. When the CAP was introduced 20 million European families earned their living from the land. Today fewer than 8 million families succeed in doing so. Families leave the land in their hundreds and thousands each year. The CAP is inherently wrong. It increases output yet fails to support farmers.
  We need a policy which has the opposite effect. It should cool down the system, curb output and support farmers in the way in which the hon. Member for Newham, South (Mr. Spearing) described. The CAP is damaging to agriculture in western Europe. It will cause great troubles in the future.
  Only a few Euro-fanatics are present today. Perhaps we should devise a new rule for Common Market debates so that only hon. Members who attend a debate may vote. We would swamp them by two to one at least every time we voted.
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  I ask the Euro-enthusiasts who are here — one of whom is sitting on the Government Front Bench —whether we shall achieve any European unity in what matters by continuing to encourage the CAP on its present course. If we are in earnest about reforming the CAP we must be firm. We do not want rancour or bitterness. We should simply say to our partners that the CAP is not achieving what we set out to achieve in the 1950s. We must bring it to an end and, quietly and patiently, without a row, say that we shall give no more money to the common agricultural policy. Until we do that — and Britain can do it—there will never be any real reform of the CAP. That is why I hope that those who wish to see some movement towards European unity will think again about the Bill.
  8.48 pm
  Mr. Eric Deakins: I agree with almost everything that the hon. Member for Holland with Boston (Mr. Body) said. He is a noted expert on agriculture, as is my hon. Friend the Member for Great Grimsby (Mr. Mitchell), with his wealth of statistics. I shall devote most of my speech, not to agriculture, but to the circumstances surrounding the Bill.
  I expect that the Minister of State will tell the House boldly that the Bill marks a new stage in the financial relationships between the United Kingdom and the rest of the Common Market. I have no doubt that he will believe that. However, we must remember that this is just another crisis in the continuing series of financial crises and problems connected with the relationship between Britain and the rest of the Common Market.
  Similar crises have arisen under both Labour and Conservative Governments. Each time the crisis has been patched up with agreements, some of which were better than others. Not a single agreement on finance has been reached since Britain became a member of the Community in January 1973 which has not subsequently been unravelled or turned up in a different form, presenting another problem for the House and the Government of the day.
  I am sure that we shall be told that the Bill marks a new beginning in the financial relationship between Britain and the rest of the Community. I think that we should take such assertions with a pinch of salt.
  That the debate is taking place after the events of 1 July and 2 July in Committee shows that the Prime Minister has had a substantial change of mind. I hope that the Minister of State will explain the background because it is a mystery.
  After Second Reading we moved on to the Committee stage on 1 July, before the recess. The Committee continued into the small hours of 2 July. We disposed of all the amendments. Before the Committee stage began we had an agreement—I hesitate to say in this context that it was an inter-party agreement—that all stages up to Third Reading would be taken in one sitting. Only one vote took place in Committee. In return for that agreement the Government said that they would not bring the Bill back to the House before the recess.
  The events about which I am speaking happened at least four weeks before the summer recess. Usually we would have expected the Committee stage to be concluded in the following week and the Bill then to have moved to Third Reading and to the House of Lords. That did not happen for one good reason—the Prime Minister, and not in a

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  fit of pique, was alarmed at the proceedings at the Milan conference. She decided to reserve the Bill as a useful weapon so that if other countries did the dirty on Britain in the post-Milan negotiations we would have a weapon up our sleeves to repay them in the same coin by withholding assent to the 1·6 per cent. agreement reached at an earlier meeting.
  I hope that the Minister will enlighten us on what has happened since 1 July to render the Prime Minister's fears and worries nugatory. The negotiations in various fringe meetings of the Council have been taking place throughout the summer, and are not concluded. I accept the Prime Minister's feelings about that major threat, and it remains a threat. It consists of possible amendment to the treaty of Rome—we would find any amendments unacceptable—a major extension of competence for the EEC into areas such as education and the environment and an extension of the powers of the European Assembly. Those were being discussed at fringe meetings during the Milan conference.
  I want the Minister to tell us what assurances we have received since 1 July, when the Committee stage of the Bill was postponed, to show that we are now safe and that there will be no amendments to the treaty of Rome, no extension of competence for the EC into areas that are not covered by the treaty and no extension of the powers of the European Assembly.
  I know that the Minister will almost certainly say that negotiations are continuing—but that he can assure the House of the British Government's attitude. With great respect, that is not good enough when we are considering a Bill on Third Reading. Once it has been passed, we will not see it again and the damage will have been done. We have a duty to ensure that the Government retain the weapon that they required following the Milan conference.
  The Minister can give us no assurance that the three points that I have mentioned will not take place. The Minister will tell us that the Government will resist such change, but they have resisted EEC proposals before. There was a time when the Prime Minister was on record as saying that the Government would resist to the utmost any increase in the 1 per cent. VAT limit. We have now conceded such an increase—although I make no party political point about that.
  What assurances are we likely to receive? There will be none from the Minister tonight. That must mean that the Prime Minister has changed her mind on the vital issue of protecting British national interests. Once the Bill has been passed, she will have no weapon with which to answer those in the EEC who wish to push the country and the Community further towards federalism. That would involve treaty amendments, an extension of power of the European Assembly and an extension of competence for the EEC.
  As we said in July, the intergovernmental agreement is one of the most amazing pieces of paper ever to be put before this House in the guise of a legal agreement. The interesting question is why it should be an intergovernmental agreement. It involved all the same Ministers who were meeting in the Council, so why could they not have taken a Council decision? We know that that is because the Council would then have been going against its declared policy on the VAT limit and own resources. In 1984, and again in 1985, the Ministers invented a subterfuge to get around the member states meeting in council, but not meeting as a council.
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  I have a copy of the French text, which puts things beautifully. It is much better than the English version before the House. It refers to one of the objectives of the member states, meeting "au sein du Conseil", which means "in the bosom of the council". That is a heartwarming expression and much better than "within the council", which is the English translation. It conveys the flavour of the character of the subterfuge in which they were indulging at our expense.
  The members of the Council were unable to do something acting as the legally constituted Council of the European Community. They were foiled in their attempt to do anything under the basic treaties, so they invented a new mechanism. That raises a problem for the House. We are told that the Bill will clarify the future of our financial relationship with the Community. It will be put on a sound footing and, as the Minister said, there will never be any need to come back for additional money. Indeed, I think that his actual words were that that would be "impossible to conceive."
  As the Minister of State, Foreign and Commonwealth Office is to reply to the debate, it is apposite to draw attention to a parliamentary answer that he gave to the hon. Member for Southend, East (Mr. Taylor) on 20 June. He said:
  "The new own resources decision, like the existing own resources decision, makes no provision for additional sums to be made available in the event of the VAT ceiling being reached but neither does it exclude them. Sums provided under intergovernmental agreements are not own resources." —[Official Report, 20 June 1985; Vol. 81, c. 204.]
  There is another subterfuge now. Not only has the Council invented a new mechanism entirely outwith the scope of the treaties that will put more money into the budget of the European Community, but we now have a mechanism for getting around any conceivable decision taken by any national Government on own resources. We now have a mechanism for pushing money into the EEC from member states which, we are told, has nothing to do with own resources.
  The member states, meeting in the bosom of the Council, have invented a new financial mechanism. We will, of course, be told that that is still subject to parliamentary control. It is nice to be told that, but we have not been consulted, and I bet that the other member Parliaments have not been consulted, on whether they want an additional financial mechanism. Why is not the VAT and own resources system good enough? It proved not to be good enough in both 1984 and 1985, so we now have intergovernmental agreement.
  That is not the end of the matter. The status of the intergovernmental agreement is uncertain in Community law. If we had a Government really looking after British interests and concerned to ensure that everything done by the European Community was in accordance with the basic treaties, rules and regulations laid down and decided by member states, they would be challenging this intergovernmental agreement in the European Court. It is not within the scope of the treaties. It is ultra vires.
  Ministers — whether they are meeting within the Council or within the bosom of the Council or as the Council—do not have the power to take such action. Nevertheless, meeting within the bosom of the Council, they have arrogated to themselves powers which no Parliament and no basic treaty has given them.
  I am surprised that more has not been made of that point. We shall return to it because, despite the soothing

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  words of the Minister—in which he said that he found it impossible to conceive that the new financial mechanisms would not give the Community the money that it required —I fear that we must take the matter with a pinch of salt because we have received such assurances before.
  For example, we were told that 1 per cent. would be enough. We are now told that we can be sure that 1·4 per cent. will be enough. However, on the basis of the figures given by my hon. Friend the Member for Great Grimsby, it seems that 1·4 per cent. will soon not be enough.
  Much has been said about budgetary discipline, so I will not weary the House on the subject. While the system of budgetary discipline even on paper did not look too good, some of us were willing to give it a chance. Indeed, we had no choice but to do so. There has been some cut back on the dairy products side because of the milk quotas, but those who know and have worked in agriculture appreciate that farmers do not respond to incentives in the same way as to other sections of the community.
  If quotas are cut and prices reduced, the chances are that some farmers will produce more. I appreciate, of course, that some will go out of production. The result is likely to be that the end position will be no better than the earlier position. It could conceivably be worse.
  If we cut cereal prices this year or next year, which is the hope of this and some other Governments, that will not reduce the cereal mountain because, as with "Alice Through the Looking Glass," farmers will run twice as fast to stay in the same place; they will produce more to maintain their net incomes and profits, and we shall have to shoulder that burden.
  I fear, therefore, that the CAP is out of control, and I draw the attention of the House to the wise remarks of the hon. Member for Holland with Boston in connection with Mediterranean agriculture. This aspect has worried me at least for the last 10 years in view of previous agreements on Mediterranean agriculture. This country has not played any real part in those agreements, because of our lack of Mediterranean-type agriculture, and we have let the southern Europeans get on with it. The Germans have done the same, although we are the paymasters of the Community.
  With Spain and Portugal coming in, there will be a large expansion of production in items such as olive oil, citrus fruits and wine. The cost of disposing of those will eventually approach the current cost of disposing of the beef surplus, though perhaps not as high as the dairy surplus and certainly not as high as the cereal surplus.
  I am concentrating on the trend in common agricultural expenditure. I challenge any Minister to deny that that expenditure will continue to go remorselessly upwards. That would happen even if the budgetary discipline agreement were adhered to by everybody, and we know that it will not because there are sufficient loopholes in it to drive through a coach and horses.
  The agreement before the House tonight is based on a trade-off, the sort of bargaining to which we have got used during our 12 years' membership of the Community. It is ironic that in our 13th year of membership we should still be talking about finally resolving our. financial relationships with the Community. It may be an unlucky thirteenth because the Bill marks a new departure since 1 January 1973, and it is significant on that account.
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  We bargained away the 1 per cent. VAT limit. As the right hon. Member for Worthing (Mr. Higgins) pointed out to the Minister in an intervention, the Prime Minister's original intention was to stick to the justice of our case. We should now constantly emphasise the fact that in our relationships with the rest of the EEC we can no longer, as the Bill shows, rely on getting justice simply because of the justice of our cause. Justice in the European Community now, as the Bill shows, must be purchased by concessions. Justice in itself is no longer good enough. We must buy it. That has been the case with many societies and institutions in the past, and hon. Members in all parts of the House must be critical of such an approach.
  That is a bad deal for Britain and we are likely to see further developments towards federalism. We have thrown away all the financial weapons that we ever had. The Minister says that we still have to move from 1·4 per cent. to 1·6 per cent. and that that can happen only with the agreement of all Governments. However, the issue will not be presented to the House in that way in one year's or two year's time. There will be a trade off. We shall be told by our partners that if we do not agree to 1·6 per cent. there will be no rebate for us, or we shall be denied something else that we want. We shall have to bargain and in the end we shall concede because 1·6 per cent. will be on the statute book.
  The presence of 1·6 per cent. on the statute book, or provision for it, is a sign that the Government accept that the ceiling of 1·4 per cent. will eventually be breached. That can be only because the budget discipline mechanism within the common agricultural policy will not work. If it worked, there would be no need to breach 1·4 per cent. It is a fact that we are making provision for the breach, albeit with the safeguards of parliamentary scrutiny and approval. The principle is before us. We know that a ceiling of 1·6 per cent. will appear on the statute book. That is a sign that the Government have no confidence in the financial discipline mechanism.
  If the proposal that is before us were put to the British people and explained to them, I believe that they would reject it. We must continue arguing our case in the absence of our colleagues who are likely to flock into the Chamber prior to supporting the Government when the Division takes place. It is a bad deal and a bad Bill and I hope that more and more Members, especially on the Government side, where the influence really lies, will object to it and show that objection by voting against it.
  9.7 pm
  Mr. Terry Dicks: It is with great trepidation that I contribute to the debate in the presence of so many experts on both sides of the House. The issue before us is not one in which I have taken a great deal of in-depth interest. I shall speak from the point of view of someone who obtains information from the newspapers, be they the Daily Telegraph or The Sun. In other words, I contribute to the debate as an ordinary person. That is the person that the Government must bear in mind when they make these decisions.
  My hon. Friend the Minster of State, Foreign and Commonwealth Office, made an intervention to ask whether it was believed that the Government would recommend additional expenditure if that were not in the public interest. Surely that depends on how one conceives the national interest. I do not believe that the national interest is being reflected by the Government on this issue.

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  The ordinary person is sick of ever-increasing expenditure on the EEC budget, especially at a time when the contribution from central Government to local authorities is declining. The public are asked why restrictions are being places on local authority spending if we can afford to waste money by directing it to the EEC.
  The public are also sick of unfulfilled promises. We have heard much about tighter financial discipline within the EEC and I was rather surprised when I read the speech that the Home Secretary made last week on additional manpower for the Metropolitan police. He made it clear that he expects greater efficiency and more value for money in the Metropolitan police before he will provide additional resources. It is a pity that the Government do not take that view about EEC expenditure. If we adopted the same approach to the EEC, the British people might be more receptive to some of the things that take place within it.
  The Government might say, "Do not worry, we shall get something from the additional expenditure." The same argument applies when it is advocated that more money should be made available to local authorities. The same can be said of additional expenditure on the police. I am sure that the local authorities would say—I speak as a local councillor—"If we are given more money, we can improve local services, such as the roads and housing. We shall ensure that the police provide better patrolling, especially in the inner city areas." The argument that we get more for paying more is justified nationally as well as internationally.
  The ordinary British person is sick of wasted expenditure, which leads to the production of surpluses that are stored, destroyed or sold to Russia at give-away prices. The people cannot understand how we can continue encouraging overproduction and the sale of the produce for almost nothing to our sworn enemy, the Soviet Union. How on earth can that be justified? How can it continue at its present level? Surpluses in beef, butter, skimmed milk and sugar are still growing.
  Hon. Members, whether those who have been present in the Chamber or those who will flock in later to vote, who believe everything said by my hon. Friend the Minister will believe anything.
  9.10 pm
  Mr. Bill Walker: I take part in this debate because of the effect of the common agricultural policy on my constituency. It must be obvious to my Front Bench colleagues that this is not the most popular Bill before the House this Session. It is certainly not popular among Conservative Back Benchers. That view is taken not just by people who are hostile to the EC. We are adopting the same attitudes to Europe as we adopt towards local government expenditure. Later this evening we shall debate the clawback from Scottish local authorities. It is interesting to note some of the local authorities that are listed for clawback. If anyone had said to me six years ago that I would be supporting a Bill to deal with Perth and Kinross district council as an authority that spends vast sums I would have said "Bonkers". We are asked to penalise one of the most prudent authorities that I have come across during my years in politics. Local authorities have been affected by factors that are largely outside their control.
  Against that background I have to say to the farmers in my constituency, "You realise that one of the reasons why
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  we are agreeing to this additional expenditure and why our local authority is being penalised is that the measure will benefit farmers in the country at large." They do not believe me. They tell me that they find it difficult, if not impossible, to involve themselves in long-term planning. If this policy were to benefit the country at large, even farmers in my constituency would accept that it was worth while. The problem is that they do not believe that these measures will benefit them or the country at large. They recognise that the production of surpluses cannot go on for ever.
  The raspberry crop in Scotland does not enjoy massive EC funding and does not generate surpluses. Other member states have been cheating — I use the word carefully and deliberately—by exporting EC soft fruit surpluses and selling them to the United Kingdom. Raspberries have been dumped in Britain as below production costs. Raspberries have been grown in Scotland throughout this century and for a large part of the last century. This Scottish production has largely met the demands of the United Kingdom market and has had export potential. However, the raspberry crop in Scotland no longer gives the returns that it should and could produce in a free market. We are not asking for anything other than a free market. Farmers are unhappy because they believe that the way in which we are operating the CAP in the long term will be damaging to the country at large. They believe that the original strategic reason for exporting agricultural products has been forgotten. It will continue to be forgotten because Europe does not have the same strategic interest in these islands that we have. The farmers in Perthshire and North Tayside feel that they would be looked after better by the Westminster Government than by Brussels.
  We must study the Bill against that background. One may not be hostile to the European concept or against trying to make something work in Europe, but the common agricultural policy is not working to the farmers' advantage, as they see it. It is not working, as the taxpayers see it, to their advantage, and it is not working to the advantage of Third world countries, which have seen their economies substantially damaged first, by the way that we have operated the CAP and, secondly, by the way that we have disposed of surpluses.
  This Government of all Governments have a policy of prudent management. I support that fully. I do not equivocate on that. But within prudent management there must be sensible and logical management. It must be seen by the public to be sensible and logical.
  No one should under-estimate the difficulties facing our Ministers when they go to Europe. Anyone who thinks that to take part in the horse trading that goes on in Europe is a sinecure has made no attempt to discover the pressure under which everyone there works. Whether one is a politician in France, Germany or the United Kingdom, one of the difficulties that must be faced in a democracy is that we all have to go for re-election. European politicians may be under much greater pressure because of the way the CAP operates to their advantage. We have a responsibility to adopt a much more positive and tougher line.
  My hon. Friends on the Front Bench may just get away with things tonight, and in terms of votes the result may look good, but they should not for one minute think that the vote will represent how people in the House or the country view the way Europe is going with the common agricultural policy.
  9.17 pm
  Mr. Teddy Taylor: Like my hon. Friend the Member for Tayside, North (Mr. Walker) I hope that one thing is achieved tonight. I hope that the Government will think carefully about the fact that every Conservative Member who has spoken has spoken against the Bill. They have said that they will either vote against the Bill or not support it.
  This is the first time in the 21 years that I have been in the House of Commons when traditional Euro-people have not been putting what is called the other side of the case. The numbers have not declined. The so-called Euroenthusiasts have not been here. We know that that is because they are acutely embarrassed by the Bill. It goes against everything for which Conservative Governments stand. That is bad for Britain and for the future of the Common Market.
  We cannot ignore the fact that the purpose of the Bill is to increase public spending on the Common Market by about 25 per cent. We must ask ourselves how that is consistent with the attitude that Ministers have taken over every other authority. My health authority's cash has been clobbered. We have had to make cuts in the things that we need. Our county councils cannot repaint our schools because, rightly, the Government have said that we must curb public expenditure. Our district councils have great difficulty in maintaining parks and playgrounds for children because public expenditure must be controlled in the public interest.
  My hon. Friend the Member for Hayes and Harlington (Mr. Dicks) eloquently asked how the blazes more public expenditure on the Common Market is good but more public expenditure in Britain is bad. Have we any evidence that the Common Market spends money more sensibly than local councils and health authorities? The sad fact is that all the evidence shows that the Common Market spends money like a drunken sailor, and everyone knows it. The Government also know that. We are to increase the Common Market's money by 25 per cent. and give it billions of pounds more to spend on our behalf.
  But, of course, the argument is: maybe more money is going in, but we will probably get more money out. The Minister of State, who opened the debate, is certainly, as a sensible and prudent person, more aware than anyone that when we talk about the money coming back it is not a question of money coming out of one pocket and going into another. Where does the money go? The Minister may recall that I got an answer in Parliament only today about where some of Britain's money goes to, and what we get back. Last year £400 million of the money that we got back did not actually come to us; it was given to traders as a subsidy to dump food in the Soviet Union. So the £400 million does not really come to us. When Government say, therefore, that this year our net contribution is £1,200 million after payments to ourselves, it must be remembered that a lot of payments are not to ourselves, they are simply subsidies for dumping food abroad at a very low price. So we must ask ourselves why we are doing it.
  What I think is a tragedy for those who accept the Common Market is that we have thrown away the one chance in 12 years of obtaining reforms of the agricultural policy. Everybody admits that the CAP is nonsense, that it is appalling. There are some who are slightly cautious. I remember the hon. Member for Inverness, Nairn and
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  Lochaber (Sir Russell Johnston) saying that his policy was that, while we had to change it, nothing must happen quickly, nothing must damage farming, particularly in Inverness.
  Most do not accept that point of view. We say that change must come but we know that there is no will whatsoever in Europe to change the CAP. Everyone knows that it is crazy, but I believe that even in the Government quite a few Ministers are happy that other member states are blocking the reform of the CAP because they know that it would not be very popular, that it would involve some harsh decisions and that some people would be hurt.
  Surely, if we really believe that the CAP should be reformed, we cannot pass this Bill. The only way we will reform the CAP is to hold back on the cash. The only way to stop wasteful expenditure is to hold back on the cash. Why is it that what is good for Lambeth and Liverpool is not good for the Common Market?
  It would not be so bad if the money were not wasted in such an appalling way, but, according to a parliamentary answer only the other day, 51 per cent. of every penny now spent by the Common Market on all its activities is spent on either destroying or dumping food or on storing surpluses, with the Soviet Union and east Europe being the main beneficiaries. I wonder how many Conservative Members are aware that. since the Conservative Government came to power, the export of cheap, subsidised food to the Soviet Union has increased tenfold—by 1,000 per cent.—and an answer in Hansard only this morning shows that this year it has increased yet again by 50 per cent.
  We are now sending 200,000 tonnes of cheap food to Russia every week at crazy prices. I said in an earlier debate that we were sending top quality beef at 40p a pound; we are now sending it at 19p under a special deal. We are sending butter at 18p a pound, sugar at 5p a pound and, of course, we are sending wine at this crazy figure a 5·5p a litre.
  That is where the money will go, so let those here tonight be fully aware of what we are doing. We are allowing more cash to be spent by this Government on dumping more cheap food in the Soviet Union. That is absolutely crazy. Of course, the Government said that we have an assurance from the Common Market that it will try to spend less on farming in the future, but the Government know that that is wholly bogus because this so-called agreement says that we can exceed that by any amount we want at any time if the majority of member states say that it has been an exceptional year. We know that every year has been an exceptional year, as every year will be an exceptional year; and we have absolutely no protection. We have no veto. We cannot stop it. With this Bill, if the Common Market wanted to increase its spending on agriculture by 50 per cent. next year, we could do nothing about it. Our only protection would consist in the majority of states agreeing that it has not been an exceptional year.
  Today most of us have been seeing people who are concerned about world poverty. They talk about how crazy it is that we have all these food surpluses and starving people. There is a far greater danger to the Third world. Why is there so much poverty? Why cannot those countries pay their debts? Why do we find so much starvation and misery in the Third world? The main reason

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  is that world food prices are at an all-time low, and those wretched countries are not getting a decent price for their agricultural produce.
  Why are food prices at an all-time low? The only reason is that the Common Market is dumping more and more food. If we want to do something for the Third world, we do not want to send those countries more wheat that they cannot consume or transport. Instead, we should not distort world food prices, as we are now doing, and deprive those people of a decent price for their food. For example, the Common Market export rebate for beef is almost its total price, when we are dumping it at 18p a pound. How do we expect people to compete with that? When we are dumping sugar at £80 at tonne on the world market because we buy it in at £400 a tonne and then dump it, how do we expect the poor people of Pakistan, Mauritius and other places to get a decent return on their produce?
  If we pass the Bill, it will mean more money to spread devastation, misery and distress in the Third world. It will mean more countries unable to pay their debts or buy goods from Britain. In my heart, I believe that every Tory here knows that this is a wretched Bill, which will stop Common Market reform. It will mean more waste of our money going to the wrong policies. At some stage we shall have to say no. I wish that we would do it tonight.
  9.27 pm
  Mr. Eric Forth: I should like to break the mould referred to by my hon. Friend the Member for Southend, East (Mr. Taylor) and make a small contribution as a Euro-person— that is, someone who has slaved for five years in the trenches of the European Parliament trying to build a better and greater Europe. It is in that spirit that I wish to make a few remarks, but in a context that has not been given full consideration.
  One of the main reasons that has been given —although little reference has been made to it in the debate —for the increase in the budgetary requirements of the EC is the enlargement of the EC. I make no apology for returning to that theme, because I think that I am correct in saying that the only time that the subject has been touched upon in the House since 1978 was during my Adjournment debate just before Easter this year. My hon. Friend the Minister of State may remember it because he and I discussed the very important matter of the enlargement of the EC. I say "he and I" deliberately because it was he and I. It is an important matter in respect of the argument.
  One of the main reasons that we are given for increasing the Community's resources is that it will enable us to finance the enlargement of the Community to include the entry of Spain and Portugal. Those of us who have given the matter any thought are few to date, although it will be brought to us between now and the end of the year. I hope that it will be fully debated by the House. We should cast our minds back to those who argued for the entry of Greece to the EC some years ago, and consider the effects that that has had.
  Greece is a small country. I was going to say that it is a peripheral country, but it is not even geographically contiguous to the Community. Yet we have brought her in and it has caused nothing but trouble since. Politically, in terms of external relations and political co-operation, to say nothing of the budget, the entry of Greece into the Community has been an unmitigated disaster. We are now
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  being told that the entry of two much more significant countries will be of great benefit to the Community, with all the budgetary implications.
  The argument is based on two or three important legs. One is the strategic argument about NATO. It has always puzzled me because, in the Community, Ireland is neutral and not a member of NATO. France's connection with NATO is variable and dubious. Greece is in the European Economic Community and will probably keep Turkey, the single most important member of NATO, out for as long as she can. Yet we are asked to accept that the entry of Spain and Portugal is somehow linked with their continuing membership of NATO.
  Then we are asked to be persuaded that there will be benefits to the people of the Community and of this country by the entry of those two countries. Let us consider Spain because it is by far the more important and significant. I ask hon. Members to consider how we shall benefit by bringing into the Community, which allows the benefits of free trade and free movements of goods, a country such as Spain which enjoys lower labour costs and greenfield automobile manufacturing sites. Those things will enable her to compete more directly and competitively with our own manufacturing industry, particularly in the west midlands, which I happen to know best. It has a drop forging industry and an automotive industry, together with the related industries. We are asked to agree that, by bringing such a major potential competitor into the Community, we shall benefit. I doubt that.
  Even more significantly, our horticulturists and those involved in agriculture are being asked to accept that when we are asked to spend our money irrigating Spain to increase the productivity of Spanish agriculture we shall benefit. I ask those hon. Members with horticultural interests to go to those involved and say, "How will you benefit from the inclusion of Spain in the EC?".
  I ask the House to consider further how altering the political balance of the Community from one which has been, quite frankly, dominated by the northern countries to a potential alignment of Greece, Spain. Italy, Portugal and France—when it suits her purpose—will benefit us. How will we benefit from that? Those countries have already given the signals in all the Mediterranean plans that have been referred to.
  We shall see a significant shift in the political, economic and financial balance of the Community towards the south. That is directly related to budgetary matters. The argument will be a powerful and persuasive one: that the poor countries of the south need our assistance and support. But, make no mistake, we will have to answer to the people of this country because the benefits which our farmers have obtained from the Community will. in a direct and relevant sense, suffer in the future when the resources of the Community are shifted, as they will inevitably be, to the south of the Community if we accept these two countries into membership.
  Sir Russell Johnston: The only argument which the hon. Member has not dealt with in putting up these Aunt Sallies and knocking them down is the basic argument that both Spain and Portugal were under dictatorships, and the European Community will provide them with the political stability which they previously lacked. It was never argued that it would be of direct benefit to this country, for those countries to come in.
  Mr. Forth: I wondered whether that might arise. I am not entirely persuaded by that argument, for two important reasons. If we bring those countries in and the political nature of their Governments change, there is no mechanism in the Community for throwing them out. The hon. Member knows probably better than I, because he has long experience of such matters, that there is no mechanism in the EC for ejecting a member country. For that reason I do not follow the hon. Gentleman's argument. Nor do I accept that mere membership of the EC is necessarily some guarantee of democracy, however we may define that. Nor do I know who is to judge whether a shift in the political system in any member state is acceptable.
  I am not sure that I could ask my electorate to pick up the financial tab for guaranteeing democracy in a country like Spain or Portugal. I am not convinced that their democratic regimes are as necessary to the defence of the West as many people imagine. But that must be left to individual judgement. I am not arrogant enough to seek to impose my political views or my political system on a country with a political tradition, such as that in Portugal, which is much longer than ours.
  I am at a loss to understand why I am expected to endorse this major increase in Community resources in order to give me, my constituents or my country the benefits that it is said would flow from enlargement of the Community. That is my principal reason, although many others have been referred to by many of my hon. Friends. I look forward to returning between now and Christmas to the issue of enlargement of the Community. I hope that we will have a full debate on the matter before being asked to agree. It is for that reason that I shall vote against the Bill as my first gesture to warn the House on the arguments about the enlargement of the Community.
  9.34 pm
  Dr. Oonagh McDonald: Hon. Members on both sides have put a large number of important questions to the Government. They have asked for a guarantee that the Government will not bring in another Bill of this kind asking for endorsement of a further intergovernmental agreement and yet more money to be given to the Community. They have asked when the VAT ceiling will be raised to 1·6 per cent. and for the Government's views on that. Even more fundamentally, they have raised important issues about the powers of the European Assembly and whether there will be any further encroachment on British sovereignty.
  All those issues have properly been raised by hon. Members on both sides in today's debate and we now await the winding-up speech of the Minister of State, Foreign and Commonwealth Office, but we know that none of the questions will be answered. Instead, the Minister will make one of his usual speeches. First, he will put both hands on the Dispatch Box, making a great show of the fact that he has no notes before him. His speech will be delivered with great style. There will no stopping the endless flow of words, but none of them will answer any of the questions. It will be words, words, words. There will be no substance at all. That is why the hon. Gentleman's speeches are so rarely quoted in the press — because they have no substance at all. Part of his speech, of course, has been prepared — a few cheap jibes about the Labour party with which he will hope to win a few smiles and little warmth from the Conservative
  234
  Benches, and no doubt he will succeed. Perhaps that will make up for the fact that he did not obtain a Cabinet seat and remains the best Secretary of State that Scotland never had.
  The Minister will have nothing to say about the deep concern that has rightly been expressed today about the 6 per cent. cut in real terms in the EC food aid budget. On this very important day when, as the hon. Member for Southend. East (Mr. Taylor) and others have pointed out, many of us have been meeting the food aid lobby, I hope that the Minister will show some concern about Africa. I hope that he will show more concern than the shocking complacency of the Minister who opened the debate in Brussels and was reported as saying that, as the rains had now brought an end to the famine, there was no need to worry about further food aid there. That view is tragically wrong and I am sorry that the Minister concerned did not have the grace to apologise to the House for words which, spoken by a British Minister, will be taken to represent a British view of what has happened.
  As we know full well, the budget proposed by the Commission left food aid at the same level as last year, but Ministers proposed a cut of 130 million ecu. That means a 6 per cent. cut in the food aid budget at a time when famine continues in Ethiopia and other parts of Africa. Sadly, it was left to the Irish and the Danes to call for a generous increase in food aid and the Italians and Greeks both rejected the budget at least partly on the same grounds.
  It is a pity that Britain was not among those countries which asked for an increase in food aid when that small amount of money—the £290 million proposed by the Commission and subsequently cut—compares so badly with the £12 billion going to CAP agricultural support. It contrasts badly with the surpluses which continue to exist when 1 million tonnes of butter are insanely fed back to the very animals which produced it, when ships with cold storage facilities are being hired in France. Italy and Ireland to hold yet more surplus beef and when the surplus of cereals continues to rise.
  Much has been said in the House in the past about the obscenity of the surpluses. The hon. Member for Southend, East was entirely correct in his argument that it is not so much the existence of surpluses as the fact that world commodity prices are held down by over-production in the Community, that makes it impossible for Third world countries to earn the foreign exchange that they badly need to pay off their debts or to bring about investment in their own countries. I hope that the Minister of State will say something about Britain's performance on the 1986 budget and that what he says will go some way towards putting right the wrongs perpetrated in our actions in cutting part of the 1986 budget.
  We have before us a Bill to lend the Community another £250 million as a face-saving device for the German agriculture minister who last June vetoed the cereal price cut. Even more important, do we not have here a Bill that throws away the trump card which the Prime Minister once brandished? Hon. Members asked what has changed between 1 July and now which makes the Prime Minister and the Government prepared to put forward a Bill to allow Parliament to consent to an increase in the United Kingdom's VAT contributions without ensuring an effective budgetary discipline. Does this not mean that the

  235
  Prime Minister will go on to play sister bountiful to the Community? A long time ago, in November 1979, the Prime Minister said:
  "I must be absolutely clear about this … I cannot play sister bountiful to the Community when my own electorate are being asked to forgo improvements in the fields of health, education, welfare and the rest."
  Interestingly enough, hon. Members on both sides of the House have admitted that they have experienced cuts in health, education and welfare in their own constituencies. They are rightly concerned about those cuts. All they see is a 1985 budget in which we give even more; we give £1·2 billion to the common agricultural policy yet we cannot find the odd £100 million that might be needed urgently for the Health Service somewhere in this country or as a small part of the cure for the state of our schools and educational system.
  The money is always there for the Community. It is not there for the needs which all hon. Members have referred to in the debate. Contrary to what she once said, the Prime Minister is prepared to play sister bountiful to the Community. She knows full well that she will go on playing sister bountiful. She is no fool; she knows that the budgetary discipline is shot full of holes. She knows full well that rules which allow for exceptional circumstances and aberrant conditions to justify price increases do not mean budgetary discipline. Of course she is aware of that, but she is prepared to take the consequence, which is to go on playing sister bountiful to the Community. She must know that she has thrown away the one important opportunity that she had of putting pressure on the Community to reform fundamentally the CAP.
  Unless that is done, there is no hope of budgetary discipline, yet the Commission is proposing only adjustments to agricultural policy. Any suggestion that price support he cut is met with the utmost resistance by the Commission, just as it will be by many agriculture Ministers.
  The Prime Minister knows full well, as does the Minister of State if only he would admit it, that the 1986 budget cannot possibly be confined to the ceiling laid down by budgetary discipline. It is bound to overrun. The Minister knows that that budget will bring significant political problems in its train.
  Hon. Members rightly said that the budget covers only 10 Community members. What will happen with the entry of Spain and Portugal? These are fundamental questions, and they are not just economic. We are not just talking about millions of ecu. There will be political consequences of proposing budgets such as this leaving out those two countries. What answers has the Minister for the fundamental questions raised by the 1986 proposals?
  I hope that we shall hear a different speech from the Minister today. I hope that we shall hear some answers. Unless he provides them, Conservative Members will vote against him or abstain. I hope that they are many because we know that the Government have no answers and that the Bill ought never to have been brought forward. It should be rejected firmly.
  9.46 pm
  The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): It was extremely kind of the hon. Member for Thurrock (Dr. McDonald) to reply to the debate by almost exclusively trying to anticipate my
  236
  speech. I regret to say that she will be disappointed because I intend to concentrate on answering many of the important issues that have been raised.
  The hon. Member for Hamilton (Mr. Robertson) and some of his colleagues made some extraordinary propositions. He and the hon. Member for Walthamstow (Mr. Deakins) suggested that we were debating the Bill's Third Reading at this stage in the Session because of some extraordinary last-minute change of strategy by the Prime Minister in the light of the Milan summit. A more extraordinary example of fantasy from Opposition Benches it would be difficult to contemplate. Nothing at the Milan summit and nothing that flows from it has the slightest effect on the Government's views about desirability of the House approving the Bill.
  The hon. Member for Hamilton spent a considerable time attacking my hon. Friend the Minister of State, Treasury for decisions that were taken at the Budget Council concerning food aid. He and the hon. Member for Thurrock suggested that they reflected a heartless approach by the Government. He should remind the country that a substantial majority of Ministers at the Budget Council made that decision. The hon. Gentleman's accusations are absurd. It was decided to agree a level of food aid equivalent to the historically high level of the current year. The point at issue was not whether the Community would respond to an emergency with adequate food aid but whether, in addition to the normal food aid programme, there should be a new mechanism for a parallel food programme. The majority of members of the Council of Ministers in the Budget Council thought that emergency aid should be provided through the normal programme of the food aid available through the Community, which can be increased if necessary and if emergencies require it.
  The hon. Gentleman's third point, which other hon. Members have also raised, was that somehow the Foreign Secretary misled the House by not saying that the figure of £1,200 million of net contribution, which appears in the Budget White Paper, was the appropriate one. It was suggested that that has only been revealed in recent months. The earlier figure to which the hon. Gentleman referred was the one in the Public Expenditure White Paper based on the financial year. The figure of £1,200 million reflects the calendar year and is a different reference. As my hon. Friend the Minister correctly and cogently pointed out, the reason for the unduly high sum this year is primarily that two, not one, intergovernmental agreements have to be included in the figure, as well as overseas aid and other temporary considerations. Those important factors are highly relevant to the matter.
  The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) asked specifically about the implications for Portugal and Spain arising from their accession to the Community. The position agreed in the accession negotiations, which will be honoured, is simply that for Spain there will be financial neutrality, while Portugal will become net modest beneficiaries. It is intended that that should be honoured from the moment when they enter the Community.
  My right hon. Friend the Member for Worthing (Mr. Higgins) asked a specific question which was not answered during our last debate because I had not properly understood his question. He asked whether, if part of the 1,000 million ecu, which is to be our refund for the current year, had to be paid in cash because of the way in which

  237
  the system operates, there was a guarantee that that sum would be paid and whether interest would be paid on it. The guarantee that the sum will be paid is found in the fact that the sum is in the 1985 budget, which has been approved, and also in the own resources decision, which, under the terms agreed, will come into effect immediately on ratification of the own resources decision by all the member states. There is no provision for interest in the own resources decision and, therefore, no interest will be paid on that sum. But there is a guarantee that the sum will be made available.
  Mr. Higgins: Why is no interest being paid since we paid the sum before we had to and we are getting it back later?
  Mr. Rifkind: When the figure of 1,000 million ecu was fixed—the last occasion on which the rebate was a fixed sum — the delay in its payment was not anticipated. The payment is guaranteed, but interest is not provided for in the original agreement. Moreover, I believe that there is no tradition of interest being paid on such payments.
  Mr. Higgins: Why not?
  Mr. Rifkind: I have given the answer, and on another occasion we may develop the question whether an alternative approach would be preferable. At present that is the legal position. There were a series — [Interruption.] That was the position in the own resources decision. The basis on which we are entitled to that sum flows from that decision and, therefore, the question of interest must be determined under it.
  Speeches from Opposition Members and some Conservative Members pointed to various defects in the way in which the European Community operates. The Government do not dissent from many of the criticisms. There is no disagreement about the fact that there are many defects in the Community. However, differences exist about the best way of rectifying those problems. Primarily Opposition Members, but also some Conservative Members, are essentially opposed to British membership of the Community and do not wish to see it reformed. [Interruption.] If the House will allow me to explain, hon. Members will find that there is no basic disagreement on this. Many Opposition Members and some Conservative Members are hostile to our membership of the Community, and passionately desire to see the United Kingdom out of the Community. No one will dispute that. I also accept that many Conservative Members consider themselves to be committed believers in the Community, want it to be successful, and want Britain to be a member state. I address my remarks primarily to them, because they have the most open minds on the issue. I say to those who consider themselves to be in that position that they and the Government must consider what is the most effective way of ensuring that the interests of the Community and of the United Kingdom are best safeguarded.
  I hope that my hon. Friends share the Government's view that in a Community of 10 members it is impossible for all the United Kingdom's objectives to be achieved in one go. I hope that most of my hon. Friends acknowledge that the Government have achieved a substantial amount
  238
  through the Fontainebleau agreement. We have ensured massive rebates for the United Kingdom and I say to my hon. Friends and to Opposition Members who wish to listen that if, in the real world, it is not possible to achieve all the reforms within the period that we should like to achieve them, the minimum requirement that the nation would expect of the Government is that we should at least ensure that, until all the reforms can be achieved, we provide the maximum protection for the United Kingdom taxpayer. That is what the Government have achieved.
  Hon. Members know that as a result of the Fontainebleau agreement, which the Bill incorporates, Germany will pay 32 per cent. of any increase of the net expenditure of the Community and France will pay 26 per cent. of any such increase, but the United Kingdom will pay only 7 per cent. instead of the 21 per cent. that we paid before the Fontainebleau summit.
  Mr. Marlow: My hon. Friend says that there are defects in the Community. One is that if the Community is given a glimpse, a sniff or a sight of more money, it will spend that money. We have seen that tonight. Will my hon. Friend enhance his reputation and save hon. Members many sleepless nights in the House by saying that under no circumstances will the Government agree to any further subventions, IGAs or handouts to the Community?
  Mr. Rifkind: If my hon. Friend had listened to what has been said, he would be aware that 93 per cent. of the payments required to finance any additional net expenditure of the Community will have to be found by other member states. The suggestion that the United Kingdom will be the only member state interested in economy or budgetary discipline does not accord with the facts. Through the Fontainebleau agreement we are protected more than any other member state. The House recognised that fact when it voted overwhelmingly in favour of the Fontainebleau mechanism some time ago.
  Mr. Budgen: Will my hon. Friend please leave his optimistic generalities for a moment and tell us what evidence there is from the past three months to show that there is a sustained political will within the Community to reform the common agricultural policy?
  Mr. Rifkind: I think that my hon. Friend will admit that a fascinating and long overdue feature of not just the last few months, but the past three years is that on each occasion when the price fixing of the European Community has been determined, the debate has been not about increases, but about cuts. We have had cuts in real terms in each of the past three years.
  Even this year, when Germany was holding out against the other nine members of the Community, it was significant that the dispute was not about the size of an increase in agricultural prices, but about the size of the cut that should take place. All member states, including Germany, accepted that some cut was inevitable and nine states wanted a more substantial cut than Germany.
  Mr. Deakins: Does the assurance just given by the Minister apply to sums raised by intergovernmental agreements?
  Mr. Rifkind: The inter-governmental agreement must be lawful and any group of member states can agree to finance expenditure in that form, subject always to approval by their national Parliaments. Precisely for that

  239
  reason, one of the Bill's provisions ensures that the United Kingdom payment will be made only if Parliament's approval is obtained.
  It being Ten o'clock, the debate stood adjourned.
  Ordered,
  That. at this day's sitting the European Communities (Finance) Bill may be proceeded with, though opposed, until any hour.—[Mr. Archie Hamilton.]
  Question again proposed, That the Bill be now read the Third time.
  Mr. Rifkind: Some hon. Members asked whether the intergovernmental conference has any relevance. The two sessions of the conference that have taken place show that, despite a multitude of amendments, not one would diminish the national veto, a major pre-occupation for the United Kingdom. The discussions so far have identified the extent to which increasingly member states are concentrating on more realistic options rather than on the wilder fantasies which have been a feature of such debates.
  Mr. Forth: Have proposals at the intergovernmental conference been made for increases in the European Parliament's powers? I ask that because the European Parliament has attempted to increase Community expenditure each year. Will my hon. Friend comment on proposals for increases in the European Parliament's authority since that might have a bearing on future Community budgets?
  Mr. Rifkind: Proposals for increasing the European Parliament's powers have been made. The United Kingdom has made it clear that, although we want the European Parliament to have a useful role, we do not believe that the case has been made for increasing its powers in a significant or substantial form. I am happy to say that that is the view of the majority of member states.
  One of the most attractive features of the Fontainebleau package is that for the first time the European Parliament will have no power to interfere with payments to the United Kingdom. In recent years the Parliament has exercised that power in a negligent and irresponsible fashion. That power will cease to exist because of the Prime Minister's achievements at the Fontainebleau summit.
  Sir Russell Johnston: The Minister has told the House about the various propositions that the Government oppose. Can he say whether the Government are proposing anything?
  Mr. Rifkind: We have proposed many changes which do not require treaty amendment because they would be quicker to implement. We shall consider any suggestions which require treaty amendment on merit, and if they are thought to be in the United Kingdom's interests or in the interests of the Community as a whole, we shall make a positive response. At this stage, we continue to believe that changes that do not require treaty amendment will be quicker to implement, and therefore should command greater attention.
  The debate has concentrated on the anxieties understandably expressed by many hon. Members about what they believe to be defects in the way in which the Community operates. The Government have never maintained that the Community is in an ideal form or that there is no cause for concern. However, we believe that the Fontainebleau package offers the British taxpayer
  240
  unprecedented protection against increases in expenditure by the Community by ensuring that 93 per cent. of any additional expenditure has to be paid by other member states.
  Over the next three years it is expected that £2·6 billion will be refunded to the United Kingdom by reductions in our contributions. That is an achievement that eluded the Labour party through all the years that it was in office. It did not achieve a single, solitary' ecu for the United Kingdom when in office.
  The Government are quite content to appeal to the House to support the Bill on the basis of what we have achieved so far and what we are seeking to achieve over the years to come. I commend the Bill to the House.
  Question put, That the Bill be now read the Third time:
  The House divided: Ayes 307, Noes 190.

  Division No. 295]

  [10.05 pm

  AYES

  Adley, Robert

  Corrie, John

  Alison, Rt Hon Michael

  Couchman, James

  Amess, David

  Critchley, Julian

  Ancram, Michael

  Crouch, David

  Ashdown, Paddy

  Currie, Mrs Edwina

  Aspinwall, Jack

  Dickens, Geoffrey

  Atkins, Rt Hon Sir H.

  Dorrell, Stephen

  Atkins, Robert (South Ribble)

  Douglas-Hamilton, Lord J.

  Atkinson, David (B'm'th E)

  Dunn, Robert

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

  Durant, Tony

  Baker, Nicholas (N Dorset)

  Dykes, Hugh

  Baldry, Tony

  Edwards, Rt Hon N. (P'broke)

  Banks, Robert (Harrogate)

  Emery, Sir Peter

  Batiste, Spencer

  Evennett, David

  Beith, A. J.

  Eyre, Sir Reginald

  Bellingham, Henry

  Fallon, Michael

  Bendall, Vivian

  Farr, Sir John

  Benyon, William

  Favell, Anthony

  Best, Keith

  Fenner, Mrs Peggy

  Bevan, David Gilroy

  Finsberg, Sir Geoffrey

  Biffen, Rt Hon John

  Fletcher, Alexander

  Biggs-Davison, Sir John

  Fookes, Miss Janet

  Blackburn, John

  Forman, Nigel

  Bonsor, Sir Nicholas

  Forsyth, Michael (Stirling)

  Bottomley, Peter

  Fowler, Rt Hon Norman

  Bottomley, Mrs Virginia

  Fox, Marcus

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

  Franks, Cecil

  Bowden, Gerald (Dulwich)

  Fraser, Peter (Angus East)

  Braine, Rt Hon Sir Bernard

  Freeman, Roger

  Brandon-Bravo, Martin

  Freud, Clement

  Brittan, Rt Hon Leon

  Gale, Roger

  Browne, John

  Gardiner, George (Reigate)

  Bruce, Malcolm

  Gardner, Sir Edward (Fylde)

  Buchanan-Smith, Rt Hon A.

  Garel-Jones, Tristan

  Buck, Sir Antony

  Gilmour, Rt Hon Sir Ian

  Bulmer, Esmond

  Goodlad, Alastair

  Burt, Alistair

  Gow, Ian

  Butcher, John

  Gower, Sir Raymond

  Butler, Hon Adam

  Grant, Sir Anthony

  Butterfill, John

  Greenway, Harry

  Carlile, Alexander (Montg'y)

  Gregory, Conal

  Carlisle, Kenneth (Lincoln)

  Grist, Ian

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

  Ground, Patrick

  Carttiss, Michael

  Grylls, Michael

  Cash, William

  Gummer, Rt Hon JohnSelwyn

  Chalker, Mrs Lynda

  Hamilton, Hon A. (Epsom)

  Chapman, Sydney

  Hampson, Dr Keith

  Chope, Christopher

  Hancock, Mr. Michael

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

  Hanley, Jeremy

  Clark, Sir W. (Croydon S)

  Hannam, John

  Clarke, Rt Hon K. (Rushcliffe)

  Harris, David

  Clegg, Sir Walter

  Haselhurst, Alan

  Colvin, Michael

  Hawkins, C. (High Peak)

  Coombs, Simon

  Hawkins, Sir Paul (SW N'folk)

  Cope, John

  Hayes, J.

  Cormack, Patrick

  Hayhoe, Rt Hon Barney

  241

  Hayward, Robert

  Miller, Hal (B'grove)

  Heathcoat-Amory, David

  Mills, Iain (Meriden)

  Heddle, John

  Miscampbell, Norman

  Henderson, Barry

  Monro, Sir Hector

  Heseltine, Rt Hon Michael

  Montgomery, Sir Fergus

  Hickmet, Richard

  Moore, John

  Hicks, Robert

  Morris, M. (N'hampton, S)

  Hind, Kenneth

  Morrison, Hon P. (Chester)

  Hirst, Michael

  Moynihan, Hon C.

  Hogg, Hon Douglas (Gr'th'm)

  Mudd, David

  Holland, Sir Philip (Gedling)

  Neale, Gerrard

  Hordern, Sir Peter

  Nelson, Anthony

  Howard, Michael

  Neubert, Michael

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

  Newton, Tony

  Howell, Rt Hon D. (G'ldford)

  Nicholls, Patrick

  Howell, Ralph (N Norfolk)

  Onslow, Cranley

  Howells, Geraint

  Oppenheim, Rt Hon Mrs S.

  Hubbard-Miles, Peter

  Ottaway, Richard

  Hunt, David (Wirral)

  Page, Sir John (Harrow W)

  Hunt, John (Ravensbourne)

  Page, Richard (Herts SW)

  Hunter, Andrew

  Parris, Matthew

  Hurd, Rt Hon Douglas

  Patten, Christopher (Bath)

  Irving, Charles

  Patten, J. (Oxf W & Abdgn)

  Jackson, Robert

  Pattie, Geoffrey

  Jenkins, Rt Hon Roy (Hillh'd)

  Pawsey, James

  Jessel, Toby

  Percival, Rt Hon Sir Ian

  Johnson Smith, Sir Geoffrey

  Pollock, Alexander

  Johnston, Sir Russell

  Porter, Barry

  Jones, Gwilym (Cardiff N)

  Portillo, Michael

  Jones, Robert (W Herts)

  Powell, William (Corby)

  Joseph, Rt Hon Sir Keith

  Powley, John

  Kellett-Bowman, Mrs Elaine

  Price, Sir David

  Kennedy, Charles

  Pym, Rt Hon Francis

  Kershaw, Sir Anthony

  Raffan, Keith

  Key, Robert

  Raison, Rt Hon Timothy

  King, Roger (B'ham N'field)

  Rathbone, Tim

  Kirkwood, Archy

  Rees, Rt Hon Peter (Dover)

  Knight, Greg (Derby N)

  Renton, Tim

  Knight, Dame Jill (Edgbaston)

  Rhodes James, Robert

  Knowles, Michael

  Rhys Williams, Sir Brandon

  Knox, David

  Ridley, Rt Hon Nicholas

  Lamont, Norman

  Rifkind, Malcolm

  Lang, Ian

  Roberts, Wyn (Conwy)

  Latham, Michael

  Robinson, Mark (N'port W)

  Lawler, Geoffrey

  Roe, Mrs Marion

  Lawrence, Ivan

  Rossi, Sir Hugh

  Lawson, Rt Hon Nigel

  Rost, Peter

  Lennox-Boyd, Hon Mark

  Rowe, Andrew

  Lewis, Sir Kenneth (Stamf'd)

  Rumbold, Mrs Angela

  Lightbown, David

  Ryder, Richard

  Lilley, Peter

  Sackville, Hon Thomas

  Livsey, Richard

  Sainsbury, Hon Timothy

  Lloyd, Ian (Havant)

  Sayeed, Jonathan

  Lloyd, Peter, (Fareham)

  Shaw, Giles (Pudsey)

  Lord, Michael

  Shaw, Sir Michael (Scarb')

  Lyell, Nicholas

  Shelton, William (Streatham)

  McCrindle, Robert

  Shepherd, Colin (Hereford)

  McCurley, Mrs Anna

  Shersby, Michael

  Macfarlane, Neil

  Silvester, Fred

  MacGregor, Rt Hon John

  Sims, Roger

  MacKay, Andrew (Berkshire)

  Skeet, T. H. H.

  MacKay, John (Argyll & Bute)

  Smith, Tim (Beaconsfield)

  Maclean, David John

  Soames, Hon Nicholas

  McQuarrie, Albert

  Speed, Keith

  Madel, David

  Speller, Tony

  Major, John

  Spence, John

  Malins, Humfrey

  Spencer, Derek

  Malone, Gerald

  Spicer, Jim (W Dorset)

  Maples, John

  Stanbrook, Ivor

  Marland, Paul

  Stanley, John

  Marshall, Michael (Arundel)

  Steen, Anthony

  Mates, Michael

  Stern, Michael

  Maude, Hon Francis

  Stevens, Lewis (Nuneaton)

  Mawhinney, Dr Brian

  Stevens, Martin (Fulham)

  Maxwell-Hyslop, Robin

  Stewart, Allan (Eastwood)

  Mayhew, Sir Patrick

  Stewart, Andrew (Sherwood)

  Meadowcroft, Michael

  Stewart, Ian (N Hertf'dshire)

  Mellor, David

  Stradling Thomas, Sir John

  Merchant, Piers

  Sumberg, David

  Meyer, Sir Anthony

  Tapsell, Sir Peter

  242

  Taylor, John (Solihull)

  Ward, John

  Temple-Morris, Peter

  Wardle, C. (Bexhill)

  Thomas, Rt Hon Peter

  Warren, Kenneth

  Thompson, Donald (Calder V)

  Watson, John

  Thompson, Patrick (N'ich N)

  Watts, John

  Thornton, Malcolm

  Wells, Bowen (Hertford)

  Townsend, Cyril D. (B'heath)

  Wells, Sir John (Maidstone)

  Trippier, David

  Wheeler, John

  Trotter, Neville

  Whitney, Raymond

  Twinn, Dr Ian

  Wolfson, Mark

  van Straubenzee, Sir W.

  Wood, Timothy

  Vaughan, Sir Gerard

  Woodcock, Michael

  Viggers, Peter

  Yeo, Tim

  Waddington, David

  Young, Sir George (Acton)

  Wakeham, Rt Hon John

  Younger, Rt Hon George

  Waldegrave, Hon William

  Walden, George

  Tellers for the Ayes:

  Walker, Rt Hon P. (W'cester)

  Mr. Carol Mather and Mr. Robert Boscawen.

  Wallace, James

  Walters, Dennis

  NOES

  Abse, Leo

  Douglas, Dick

  Adams, Allen (Paisley N)

  Dover, Den

  Aitken, Jonathan

  Dubs, Alfred

  Anderson, Donald

  Dunwoody, Hon Mrs G.

  Archer, Rt Hon Peter

  Eadie, Alex

  Ashley, Rt Hon Jack

  Eastham, Ken

  Atkinson, N. (Tottenham)

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

  Bagier, Gordon A. T.

  Evans, John (St. Helens N)

  Banks, Tony (Newham NW)

  Ewing, Harry

  Barnett, Guy

  Fatchett, Derek

  Beckett, Mrs Margaret

  Faulds, Andrew

  Beggs, Roy

  Field, Frank (Birkenhead)

  Bell, Stuart

  Fields, T. (L'pool Broad Gn)

  Benn, Tony

  Fisher, Mark

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

  Flannery, Martin

  Bermingham, Gerald

  Foot, Rt Hon Michael

  Bidwell, Sydney

  Forrester, John

  Blair, Anthony

  Forth, Eric

  Body, Richard

  Foster, Derek

  Boyes, Roland

  Foulkes, George

  Bray, Dr Jeremy

  Freeson, Rt Hon Reginald

  Brown, Gordon (D'f'mline E)

  George, Bruce

  Brown, Hugh D. (Provan)

  Godman, Dr Norman

  Brown, M. (Brigg & Cl'thpes)

  Golding, John

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

  Gould, Bryan

  Brown, Ron (E'burgh, Leith)

  Gourlay, Harry

  Buchan, Norman

  Hamilton, James (M'well N)

  Budgen, Nick

  Hamilton, Neil (Tatton)

  Caborn, Richard

  Hamilton, W. W. (Central Fife)

  Callaghan, Jim (Heyw'd & M)

  Hardy, Peter

  Campbell, Ian

  Harman, Ms Harriet

  Campbell-Savours, Dale

  Harrison, Rt Hon Walter

  Canavan, Dennis

  Hart, Rt Hon Dame Judith

  Carlisle, John (N Luton)

  Hawksley, Warren

  Clark, Dr David (S Shields)

  Haynes, Frank

  Clarke, Thomas

  Heffer, Eric S.

  Clay, Robert

  Hogg, N. (C'nauld & Kilsyth)

  Clwyd, Mrs Ann

  Holland, Stuart (Vauxhall)

  Cocks, Rt Hon M. (Bristol S.)

  Home Robertson, John

  Cohen, Harry

  Howell, Rt Hon D. (S'heath)

  Coleman, Donald

  Hoyle, Douglas

  Conlan, Bernard

  Hughes, Dr. Mark (Durham)

  Cook, Robin F. (Livingston)

  Hughes, Robert (Aberdeen N)

  Corbett, Robin

  Hughes, Roy (Newport East)

  Craigen, J. M.

  Janner, Hon Greville

  Crowther, Stan

  John, Brynmor

  Cunliffe, Lawrence

  Jones, Barry (Alyn & Deeside)

  Cunningham, Dr John

  Kaufman, Rt Hon Gerald

  Dalyell, Tam

  Kinnock, Rt Hon Neil

  Davies, Rt Hon Denzil (L'lli)

  Lambie, David

  Davies, Ronald (Caerphilly)

  Lamond, James

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

  Leadbitter, Ted

  Deakins, Eric

  Leighton, Ronald

  Dewar, Donald

  Lloyd, Tony (Stretford)

  Dicks, Terry

  Lofthouse, Geoffrey

  Dixon, Donald

  Loyden, Edward

  Dobson, Frank

  McDonald, Dr Oonagh

  Dormand, Jack

  McKelvey, William

  243

  MacKenzie, Rt Hon Gregor

  O'Brien, William

  McNamara, Kevin

  Park, George

  McTaggart, Robert

  Pavitt, Laurie

  McWilliam, John

  Pendry, Tom

  Madden, Max

  Pike, Peter

  Maginnis, Ken

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

  Marek, Dr John

  Powell, Raymond (Ogmore)

  Marlow, Antony

  Prescott, John

  Marshall, David (Shettleston)

  Proctor, K. Harvey

  Martin, Michael

  Radice, Giles

  Mason, Rt Hon Roy

  Redmond, M.

  Maxton. John

  Rees, Rt Hon M. (Leeds S)

  Maynard, Miss Joan

  Richardson, Ms Jo

  Meacher, Michael

  Roberts, Allan (Bootle)

  Michie, William

  Roberts, Ernest (Hackney N)

  Millan, Rt Hon Bruce

  Robertson, George

  Miller, Dr M. S. (E Kilbride)

  Robinson, G. (Coventry NW)

  Mitchell, Austin (G't Grimsby)

  Rooker, J. W.

  Morris, Rt Hon A. (W'shawe)

  Ross, Wm. (Londonderry)

  Morris, Rt Hon J. (Aberavon)

  Rowlands, Ted

  Nellist, David

  Sheerman, Barry

  Oakes, Rt Hon Gordon

  Sheldon, Rt Hon R.

  244

  Shepherd, Richard (Aldridge)

  Tinn, James

  Shore, Rt Hon Peter

  Torney, Tom

  Short, Ms Clare (Ladywood)

  Townend, John (Bridlington)

  Silkin, Rt Hon J.

  Walker, Cecil (Belfast N)

  Skinner, Dennis

  Wardell, Gareth (Gower)

  Snape, Peter

  Weetch, Ken

  Soley, Clive

  Welsh, Michael

  Spearing, Nigel

  White, James

  Stewart, Rt Hon D. (W Isles)

  Whitfield, John

  Stott, Roger

  Williams, Rt Hon A.

  Strang, Gavin

  Wilson, Gordon

  Straw, Jack

  Winnick, David

  Taylor, Teddy (S'end E)

  Woodall, Alec

  Thomas, Dafydd (Merioneth)

  Thomas, Dr R. (Carmarthen)

  Tellers for the Noes:

  Thompson, J. (Wansbeck)

  Mr. Sean Hughes and Mr. Allen McKay.

  Thorne, Stan (Preston)

  Question accordingly agreed to.
  Bill read the Third time, and passed.

  Local Government (Scotland)
  10.19 pm
  The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): I beg to move,
  That the Rate Support Grant (Scotland) (No. 3) Order 1985, dated 2nd July 1985, a copy of which was laid before this House on 4th July. be approved.
  The order has two purposes. The first is to adjust the amount of rate support grant payable to Scottish local authorities in respect of 1984–85, increasing it by £28·9 million. The second is to reduce the amount of grant payable in respect of 1985–86 by£126·6 million. My right hon. Friend the Secretary of State announced his decision to make these changes in grant in his statement of 27 June and the order before us was laid a week afterwards. Before dealing with the details of the order, I should like to set out the background and the circumstances which make this order necessary.
  Local authority expenditure accounts for half of the expenditure for which the Secretary of State is responsible. Control of such a significant part of his programme has always been an important task for a Secretary of State under any Government. Since coming to office we have made our policy clear: that public expenditure has to come down and that local authority expenditure as a major component of public expenditure has to be reduced. Despite this, no reduction has taken place in local authority expenditure. Although the rate of growth has flattened, in volume terms expenditure is still 1·8 per cent. above the level it was in 1978–79. In cost terms—measured against the inflation rate in the economy as a whole—the equivalent figure is 10·6 per cent.
  As my right hon. Friend told the House in July, Scottish local authorities are planning to overspend in 1985–86 by £91 million, or 3·2 percent. This is less than the overspend against budgets in 1984–85 when authorities planned to overspend by £114 million, or 4·2 per cent. This is a welcome sign that authorities are gradually coming closer to our plans. However, it must be recognised that the main contribution towards closing the gap was made by the Secretary of State increasing expenditure provision for 1985–86 by £98 million—a move to which there was a disappointing response by many local authorities. The result is that the planned overspending, in 1985–86 is still much higher than we can accept.
  In 1984–85 the total of grant penalties was 78 per cent. and no authority suffered a grant penalty of more than 100 per cent., however high its overspending. My right hon. Friend warned that penalties in 1985–86 would be more severe. This year the total of grant penalties is 138 per cent. of overspend, with grant penalties on individual authorities going up to 170 per cent. of overspend. I accept that these penalties are severe, but my right hon. Friend gave authorities ample warning, writing individually last year to every provost and convener. It was a warning that did not go entirely unheeded, since 30 authorities budgeted at guideline in 1985–86 compared with 15 in 1984–85. However, this throws into sharper relief the continued overspending of the remaining authorities. It is still, of course, open to the overspending authorities to reduce their overspending and produce a real benefit for their ratepayers. If their overspending is reduced at outturn,
  246
  under the new arrangements that we introduced last year, the penalty will be reduced and grant paid back to authorities in direct proportion to their improvement.
  I should now like to turn to the order and to the details of what I have been describing in general terms.
  The order falls into two parts. First, it reduces the grant payable to all authorities which planned to overspend in 1985–86. That is done by reducing the total of aggregate Exchequer grant by £126·6 million, and within that the needs element has been reduced by the same amount. For the 35 overspending authorities, the needs element has been reduced according to a tariff which starts at a grant loss of 70 per cent. of overspend, rising to a 90 per cent. grant loss for a 1 per cent. overspend, 110 per cent. for 2 per cent. and on an increasing scale to a maximum of 170 per cent. for a 3·5 per cent. excess and above. Annex 2 of the report on the order explains the tariff and illustrates it with a graph. The individual authority penalties are shown in column 7 of page 8. The 30 authorities on or within guidelines suffer no penalty at all.
  It has been suggested, and I suspect that it will be suggested tonight, that only small authorities can spend within guidelines. However, the 30 authorities within guideline include seven of the 12 regional and island authorities, among them Grampian regional council. Among the districts planning to spend at guideline, I was particularly glad to note that Stirling district council, which has in the past planned to overspend by substantial amounts, has this year budgeted within guidelines. So has Kirkcaldy district council, which was the subject of selective action in 1983–84.
  Mr. Malcolm Bruce: Will the Minister acknowledge that Grampian regional council has pointed out that, if it is to meet the essential roads programme to deal with its traffic problems, the guidelines that are being allocated will be £30 million short? It has put in a special application and asks that the Government look kindly on the fact that it is Conservative controlled and deserves fairer treatment.
  Mr. Ancram: The hon. Gentleman will be aware that road construction is a capital item, and plainly we study closely the bids that authorities make to us at about this time of the year before we decide their capital allocations. We shall do so this year as we have in the past, in the light of the bids that are made to us by all authorities in Scotland and available resources.
  The opportunity is there for authorities above guideline to think again about their expenditure even at this stage. There is a real incentive for authorities to look for savings in order to reduce their grant penalty at outturn. Some authorities have already realised that and are reducing their expenditure, and the second part of this order illustrates the value of this in respect of 1984–85.
  The second part of the order revises the penalties for that year. At the request of the convention, it does that much earlier in the year than before by using provisional outturn figures and making an interim revision combining the adjustment for the previous year's penalties with the imposition of the current year's. Incidentally, that new arrangement is a clear illustration of the extent to which we do pay close attention to the views of COSLA during our regular consultation meetings. The second part of the order gives back to authorities almost £29 million of the

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  £90 million penalty imposed in 1984–85 in recognition of the reduction in spending between budget and provisional outturn.
  Mr. Dennis Canavan: Will the Minister stop boring the House with all this financial gobbledegook and tell us something about the social and human implications of this devastating cut in local government expenditure? Is he aware that, a few days after the Secretary of State made the announcement in June, he went with Her Majesty the Queen to the opening of the new Mariner centre in Falkirk? Falkirk district council has told me that as a result of the cut in local government expenditure if it is to meet the Secretary of State's guideline on leisure and recreation it will have to close the Mariner centre, the Hallglen centre and the Grangemouth stadium. Is that not an insult to Her Majesty the Queen, Falkirk district council and the people of Falkirk district?
  Mr. Ancram: I am obviously delighted to hear of the new-found concerns of the hon. Member, but I have to say that for him to describe over six years in cost terms a 10·6 per cent. increase as a dramatic cut really does defy explanation. The simple fact is that local authorities in real terms, however they are calculated, are still spending more in Scotland than in 1978–79, and it was not a Conservative Minister who, as long ago as 1976, told councils that the party was over. The fact is that the party continued after that, and it is only just now being brought under control.
  When my right hon. Friend announced the penalties for 1984–85, he urged local authorities to bring their expenditure down to guideline so that their ratepayers would benefit from the grant being restored. I was pleased to see that 14 of the 15 authorities which budgeted within guideline stayed within their budgets and a further 13 authorities which had budgeted above guideline brought their expenditure down within it. Most authorities spent less than they had budgeted for and part of the grant penalty is being restored to them. Members will find the list of authorities unaffected by penalties at both budget and provisional outturn stage in annex 3 of the report on the order, the revised penalties in column 6 of annex 4, the original penalty in column 7 and the difference between them in column 8.
  Unfortunately, a few authorities actually increased their spending between budget and outturn, and that has increased their penalty.
  On 10 October we issued current expenditure guidelines for 1986–87 to all authorities. I believe that these guidelines are fair and achievable. They give greater recognition to the client group assessments of relative expenditure need than in the past. The assessments continue to be refined in consultation with the convention. Twenty-one authorities will in 1986–87 have guidelines identical with their assessments, almost double the number in the current year. At the suggestion of the convention, we have retained an unallocated margin to ensure that no authority is expected to make an unrealistic cut from its present level of expenditure. We have also recognised the concern of authorities, also expressed in the House last year, whose guidelines remain below assessed need. Their guidelines will be set at 7 per cent. above their present level of spending, somewhat above the present forecast rate of inflation. Penalties for overspending these guidelines will be severe and I would strongly urge authorities, many of which will be at the formative stage
  248
  of their budgets, to plan now to spend within the guidelines. We have no desire to impose large grant penalties in 1986–87. It is in everyone's interest to look for ways of bringing expenditure down to guidelines and thereby making penalties unnecessary. That is our wish and local authorities have it in their own hands to achieve it.
  The aim of the order is to apply pressure to local authorities to bring their expenditure into line with the Government's plans, an aim which has been common to all Governments. The basis on which this is done is much fairer than the simple reduction in total grant used by the Labour party when it was in power and faced a similar problem. Increasing numbers of authorities are now budgeting in line with guidelines. There is a real incentive for them to do so. I hope that in 1986–87 the number will be still further increased. The order is designed to put pressure on authorities to spend in line with provision. It does so in a fair and increasingly effective way and I commend it to the House.
  10.33 pm
  Mr. Jim Craigen: The Minister made it clear that he is really seeking to reduce public expenditure. I thought it significant that he did not say that he is hoping to reduce income tax, because I wonder at times how a Government who have had the windfall of North sea oil, have creamed off more indirect taxation from VAT and the rating system and have had the benefit of the rake-off from the sale of public assets still cannot substantially reduce income tax. This state of affairs is a measure of the Government's industrial incompetence and social malevolence.
  One of the points that emerges from these guidelines has been the difficulties facing education authorities in Scotland in meeting the guidelines that the men—and the women—in St. Andrew's house set down for them. I hope that my right hon. Friend the Member for Glasgow, Govan (Mr. Millan) will develop this point, but it would be useful if the Minister could tell us what consultation there has been with COSLA over the salaries settlement that the Government hope to achieve with the teaching profession in Scotland, so as to avoid a difficulty for authorities in the coming years over the operation of the penalty system that the Government have instituted.
  We accuse the Government of deliberately destroying the working relationship that is essential to good dealing between Government and local authorities. There has not been a time in living memory when relationships between local authorities and the Scottish Office have been so bad. Matters reached the stage where there was a special meeting of the Convention of Scottish Local Authorities to discuss the deteriorating relationship. I understand that COSLA is setting up a tribunal to inquire into the current state of local government in Scotland. There is a touch of irony in the fact that in the very month that that was announced Lord Wheatley announced that he was going to retire from the Court of Session. I do not know whether he will be invited to chair the tribunal, but I would not wish such a disappointing retirement on anybody.
  Twenty years ago the Wheatley commission examined the structure and role of local authorities, recommending that they have the power to get on with the job, having the ability to do it effectively, looking after local democracy and at the same time involving local participation. It is

  249
  significant that now all those things have been thrown to the wind and there is a terrible relationship between local authorities and the Government.
  In the annual report issued by Strathclyde regional council I noted the words of councillor Dick Stewart, who I think the House will agree has had a lifetime of distinguished service in local government. He said:
  "For 1986–87 the prospects for local government are even more grave with Government providing for an increase of only 3·9 per cent. in local authority spending in Scotland against an anticipated inflation rate of 5 per cent."
  That is consistent with the Government's approach to rate support grant, reducing the percentage and lowering the indexation year after year. Moreover, it is significant that Dick Stewart says that the number of people on supplementary benefit has increased by 86 per cent. since the Government came to office, and the number of divorces has gone up by 50 per cent., with the havoc that that wreaks in many households.
  Mr. Andrew Rowe: Will the hon. Gentleman give way?
  Mr. Craigen: I shall not give way.
  We accuse the Government of shifting the burden of expenditure and the blame for their own policies on to the ratepayers and the local authorities respectively.
  COSLA has provided us with some interesting figures. Had the Government maintained the level of rate support grant in 1980–81 the possible reduction in the average domestic rates bill would have been £97 in Dumfries and Galloway, where the average domestic rate bill for 1985–86 is £285. In north-east Fife the average domestic rates bill for 1985–86 is £422. That could have been £107 less had the Government sustained the same rate support grant that operated in 1980–81.
  Mr. Barry Henderson: Does the hon. Gentleman agree that if Fife regional council had set a rate based on guidelines the ratepayers of north-east Fife would have had to pay 10p in the pound less in this years rates bill?
  Mr. Craigen: Of course, the figures that I am quoting do not suit the hon. Member.
  Sir Hector Monro: What would the rate of inflation be if there had been a free-for-all in local government expenditure?
  Mr. Craigen: Nobody has suggested there would be a free for all. The Government set the approved relevant expenditure and the rate support grant. I know that the hon. Member is delighted that he is getting a cross barrier in the A74, but he must accept that his own ratepayers are being done down as a result of the withdrawal of Government support. I will deal later with Eastwood. The average domestic rates bill there for 1985–86 is £663, and that could have been reduced by £147 if the Government had kept the same rate support grant. These are significant figures.
  Mr. Ancram: The hon. Member is quoting figures which have been produced for hon. Members for today's debate and which, as I am sure he realises, depend on the assumption that, if rate support grant were maintained at a steady proportion, expenditure would not increase. The history of local government finance does not suggest that is true. During the four years under the previous Labour
  250
  Government when grant was held steady at 68·5 per cent., expenditure rose by £240 million in real terms. Those are the facts.
  Mr. Craigen: The Under-Secretary of State chose to intervene because he is so embarrassed by the figures I have quoted. The average ratepayer in Scotland would be £74 per annum better off if the Government had maintained the same rate of support grant as that which operated in 1980–81.
  Mr. William McKelvey: I am outraged at what the Minister has said. I have before me the minutes of the Scottish Affairs Committee which dealt with this question, and Councillor Fagan, who was the vice-chairman of COSLA at that time, asked the Minister and his officials about the £1,000 million that they filched from local government in the cutbacks on rate support grant. The Secretary of State for Scotland passed the buck to his officials. The right hon. Gentleman said:
  "Could I ask Mr. Penman to say something about the £1,000 million figure you have quoted, Mr. Chairman."
  Mr. Penman said:
  "Could I say that I think that there is no disagreement between the Scottish Office and COSLA on the arithmetic."
  That was the £1,000 million filched out of the Scottish economy by those gangsters on the Government Benches.
  Mr. Craigen: My hon. Friend has mentioned gangsters. The £1,000 million the Government took out of the system makes the great train robbers seem like petty pilferers. Had the Government sustained the rate support grant at its 1980–81 level, they would have done immense good to the commercial and industrial ratepayers as well as to the domestic ratepayers of Scotland.
  The Government have determined the approved total of expenditure and the Government have to hand the disbursement among the 65 local authorities in Scotland of that rate support grant. The Minister talked about guidelines, but one of the concerns of COSLA is the way in which the guidelines have been fluctuating, not just from year to year, but among the various authorities. For example, he may be able to enlighten us as to why in Eastwood the fluctuation has been so considerable from year to year. It is going up by 16·4 per cent. next year, although it will give Glasgow only an extra 1·7 per cent. An angry Conservative association executive may have had a good deal to do with that. I hope that the Minister will tell us more about how these things come about because I suspect that the guidelines are more of an art than a science in the way in which they are operated at the Scottish Office.
  We accuse the Government of vindictiveness in determining the scale of the penalties. Even Shylock wanted only a pound of flesh, but in many instances the Secretary of State for Scotland wants £1·70 and there is certainly no Portia at No. 10 Downing street. There is no explanation for the treatment of seven of the 34 authorities in which expenditure needs are greater than the guidelines and 10 of the 34 authorities in which expenditure is less in real terms than in 1978–79. The Government are ignoring the requirements for services that Parliament has laid down to be fulfilled by local authorities and it is astonishing that even the funding of voluntary bodies is now being affected because of the cuts in local authority expenditure.
  The Minister quotes chapter and verse about local authorities keeping to guidelines, but perhaps he will tell

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  us today how such miscalculations can occur at the Scottish Office in relation to a mere £50 million in terms of the revaluation relief package announced at the Conservative party conference in Perth. The Secretary of State would have done Paul Daniels out of a job with the scheme that he described at Perth. We understand that the take-up will be only £29 million. When one thinks of the song and dance act that the Chancellor did over that £50 million, one cannot see why he lost any sleep over it.
  Here we are talking about £90 million in excess of the guidelines for more than £3 billion expenditure by the 65 local authorities in Scotland. The Minister should recognise the gross disparity between his own incompetence in relation to the revaluation relief package and the general approach of the local authorities in doing their damndest to keep within the guidelines. We know that from year to year the outturn is invariably lower than the authorities' original estimates. That is why the Minister can tell us today that £28·5 million in rate support settlement is to be repaid for last year.
  We shall oppose the order, but we want to hear a bit less from the Under-Secretary of State about the great things to come in terms of reforming the system and a bit more about the inconsistencies between him and his right hon. Friend the Secretary of State who is to take the high road and produce a go-it-alone Scottish reform while the Under-Secretary of State works with the other two wise men and realises that he will have to keep in tandem with a United Kingdom approach.
  The Government are not giving the ratepayers of Scotland a fair deal and they are not getting the best out of local authorities by the shameful way in which they are dealing with them on a day-to-day basis. Above all, the Government are not being open and honest with the public about the extent to which the culprit in terms of higher local authority expenditure is in fact the Scottish Office which, as my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) has said, has filched more than £1 billion from the system.
  10.49 pm
  Sir Hector Monro: The hon. Member for Glasgow, Maryhill (Mr. Craigen) did much name-dropping, from Portia to Houdini. He seemed to be remote from what the people in Scotland are interested in—paying less rates. The only thing on which I agree with him is that it is good that in the long term the Government will try to make local government finance more simple and to reform the system of rates. I am glad my hon. Friend has given the assurance that we shall have that legislation before us in the not too distant future.
  Of course it has been a difficult year for local authorities and Government in regard to local government finance. It is easy to say, as the hon. Member for Maryhill is keen to, "Give them as much rate support grant as they want." It is more difficult to insist that public expenditure is kept within bounds to contain inflation. Many people fail to realise that local government expenditure is just as much public expenditure as central Government expenditure. If either goes up, inflation will rise. Opposition Members, who are in a hungry-looking mood tonight, will be only too glad to welcome the fact that inflation is so low, considering the roaring inflation they left with us in 1979.
  Within the constraint of maintaining low inflation over the last few years, I want a fairer distribution of the rate
  252
  support grant, particularly for rural areas. I have been critical of the elusive formula, which I do not understand, which produces guidelines for needs elements, for resources element, for the budget, and relevant expenditure, which are all seriously affected by revaluation. I am not surprised that few people understand local government finance.
  The Government are moving in the right direction to get the formula right. The two districts that I represent within Dumfries and Galloway will be much happier in the coming financial year than they have been in the past. The formula for 1985–86 that was published the other day is much more favourable.
  Mr. McKelvey: I share with the hon. Gentleman concern about the formula that is used for the guidelines. Since he is happy with the formula, can he tell me what percentage the Government have used for inflation in that formula? Until now I have been baffled. The Government do not seem to have taken account of the rate of inflation.
  Sir Hector Monro: I am sure the Minister will be delighted to deal with that question. I did not say that I understood the formula; I said that I was pleased that it was more favourable for rural areas.
  I am glad that the Minister was able to see Nithsdale district council representatives with my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang) and myself only last week to discuss the matter. Nithsdale was naturally disappointed that it was receiving only 83 per cent. of assessed need. Of the 27 authorities with guidelines below assessed needs, no fewer than 19 have been able to keep their expenditure within guidelines. It can be done. It is painful, but the penalties of which some authorities are complaining can be avoided. I hope that, after our constructive meeting with Nithsdale, it will achieve its guideline and avoid the penalties that it would have to make under the present scheme.
  Beyond the difficulties of the current year I see a great deal of light and good news. I am glad that, next year, Nithsdale will have a 15·6 per cent. increase. That is far above the rate of inflation and no Opposition member can say that it is an unfair settlement. Annandale is to receive a 7 per cent. increase and the region. Dumfries and Galloway, is to receive a 7·4 per cent. increase. Authorities that husband their resources well receive good guidelines. All authorities should aim for that.
  Mr. David Lambie: What about the farmers?
  Sir Hector Monro: Even the hon. Gentleman must know that this has been the wettest August and September in living memory. I hope that he has been writing to my right hon. Friend the Secretary of State for Scotland asking for financial assistance to help an industry that is important to Scotland through a peculiarly difficult time. If the hon. Gentleman fails in his reponsibilities to his constituents, I am sure it will be reflected at the next election.
  The Government have listened to the representations of COSLA and individual local authorities, and that is reflected in the coming year's settlement. We must all welcome that. It is wrong to say that the Government cut everything, because, in real terms, much more is being spent on health and other services. We all know that it is not true that they are being cut to ribbons, as Opposition Members say, weekend after weekend.

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  My right hon. Friend the Secretary of State and my hon. Friend the Minister have done a first-class job in difficult economic circumstances by presenting a settlement that helps the country. All public expenditure is counted in inflation, and reducing inflation is the best way in which to provide jobs in the long run—and that is what we are determined to do.
  10.58 pm
  Mr. Bruce Millan: I have made my views about this pernicious system of penalties clear many times and I do not intend to deal with the matter in any detail. I should like to concentrate on one aspect of the crisis in the relationships between the Government and local government in relation to the dispute about teachers' salaries, about which there were exchanges in the House earlier today.
  The real crisis in the rating system and local authority finance has arisen because of the Government's continued cutting of the amounts and the rates of grant during the past six years. Irrespective of whether we reform the system, it will not operate satisfactorily unless a proper relationship between central and local government is established. The Government's crises and troubles are the direct result of their actions during the past six years.
  I shall deal with teachers' salaries and the point of my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) about inflation assumptions in the figures imposed in the Government's guidelines.
  At one time Government disclosed the inflation assumptions, but now they are careful not to disclose them. From the little information from central Government, we know that in every year since 1979 the inflation assumptions have been less than the actual inflation outturn. That is the main reason why we have the so-called excesses of budgets over Government guidelines. It is all right for Government to talk about inadequate inflation factors, but local authorities which pay the bills must make realistic assumptions in the budgets they prepare.
  A major budget item is the assumption about pay increases in the forthcoming year. Already, because of the agreement reached with local authority manual workers, Scottish local authorities are faced with additional expenditure in the current year. Expenditure for authorities which are suffering penalties is multiplied. For example, if an authority pays any group of workers 1 per cent. more than it has assumed in its budget and, like Strathclyde, has a grant penalty of 1·65 per cent., the extra 1 per cent. will cost the authority 2·65 per cent. —1 per cent. for the workers and the 1·65 per cent. deduction in rate support grant. That is one of the particularly pernicious effects of the system, which operates in relation to the teachers' dispute. Opposition Members judge the Secretary of State's anxiety to settle the teachers' dispute, and to get teachers back to school and education back to normal, in that context.
  One of the ironies is that if the dispute is not settled in the current year — we must all profoundly hope that there will be a settlement—and local authorities do not have to pay any increase to teachers for which they have budgeted, those authorities will save the teachers' increase and receive penalties back. If no increase is payable, for example, in Strathclyde region, which may have assumed
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  6 per cent. for a teachers' salaries increase in the current year, it will get that 6 per cent. back with a further 10 per cent. It will get 16 per cent. back simply because there is no settlement. Could there be a more absurd system of local government than that? There is actually a financial incentive to local authorities, which I am glad to say they are not taking advantage of, not to reach a settlement in the current year. That is absurd.
  The system is particularly pernicious when local authorities want to make a generous settlement with employees. Unless there is an increase in the relevant expenditure and unless the penalties are removed, any act of generosity towards the teachers or another group—by that I mean any act intended to be fair and just—will be penalised twice or three times under the order. Certainly the major Scottish authorities will all suffer penalties under the order.
  It is nonsense to claim, as the Secretary of State claimed earlier, that he is not involved, because, as my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) pointed out, he is a member of the negotiating committee. The right hon. Gentleman has his representatives there. In addition, he effectively controls the total offer made to the teachers, partly by his contribution through the rate support grant and even more because of the operation of the penalty system.
  There was some justice in an arrangement under which the Secretary of State said, "I am willing to pay so much and if you wish to pay more you can pay it out of the rates." But local authorities do not now have that freedom. If they wish to pay more, they not only pay the extra, with no contribution from the Secretary of State, but they pay penalties on top of that. It costs them two or three times as much as it would under any sensible system of local government finance.
  The Secretary of State pretended in the House this afternoon that the reason why he did not grant an independent pay review was that the teachers did not wish to include pay and conditions in the review. But even if they had done so. the right hon. Gentleman would have not granted an independent pay review, because he is frightened of the independence of a review and not its exact terms of reference.
  The Secretary of State has come up with £125 million over four years, which is less than the penalties being imposed in one year under this order. If the £125 million were built up gradually over the four years, the sum involved in 1986·87 — the right hon. Gentleman is giving nothing for 1985–86 — would be trivial in comparison with the need of teachers. We are told that it would be about 2·5 per cent. on the going rate. But what is the going rate?
  The Government have announced today that they will no longer have pay norms for the Civil Service and presumably they intend something similar for the rest of the public sector. The pay norms have been 3 or 4 per cent. and what is the use of saying to teachers, "You can have 3 per cent. and another 2·5 per cent." when the Government may decide that next year's pay norm will be nil or 1 or 2 per cent.?
  No genuine negotiations are taking place anywhere in the public sector and they are certainly not taking place with the teachers. The order is another turn of the screw for local authorities and another example of Government interference in what they pretend are free negotiations between the management and the teachers.

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  In any case, the extra £125 million is not extra Government cash. It is only extra relevant expenditure, of which they are paying a decreasing percentage. They have decreased the percentage of grant in every year since they took office in 1979 and I have not the slightest doubt that they will do the same next year and the year after if they are still in power. The extra money could easily be siphoned away by reductions in grants, penalties and the rest.
  If the Secretary of State continues in this way, the crisis in Scottish education can only worsen. I have never known a situation like the present one in which teachers have voted to ban participation in the SCE examinations.
  The Secretary of State for Scotland (Mr. George Younger): Hear, hear.
  Mr. Millan: The Secretary of State says, "Hear, hear," but he is the man responsible for driving teachers to that position. He has done it by a mixture of penalties on local authorities, over-control of local authority expenditure, insensitivity to the teachers' case and blatant dishonesty, which he displayed this afternoon, as he has displayed it on every occasion on which he has dealt with the teachers' pay claim.
  The order is another nail in the coffins of local government democracy and Scottish education. It will have disastrous effects for many of our young people. In voting against the order, we shall be voting against the whole process of Government control over local authorities since 1979, which has produced such disastrous results. Unless the Secretary of State changes his ways —there is not the slightest sign that he will do so—he will do immeasurable damage to Scotland and particularly to Scottish education.
  11.10 pm
  Mr. Barry Henderson: The right hon. Member for Glasgow, Govan (Mr. Millan) displayed astonishing selective amnesia in his speech. I cannot recall exactly when he was Secretary of State for Scotland and I apologise for that, but under the Government of which he was a member teachers' pay was held back considerably compared with that of other groups of workers. When the Conservative Government came to power they had to put that right with a substantial award. The right hon. Gentleman raised that subject with characteristic boldness.
  The right hon. Gentleman also seems to have forgotten that the bidding-up by one group of workers against another in pay rounds, with a consequential rise in the rate of inflation, further fuelled the inflation rate when his Government were in power. That helps no one. It creates paper increases in wages and increases dissatisfaction.
  In the rate support grant settlement, although there were no negotiations this year on an annual pay increase for teachers because the EIS would not participate in discussions, provision was made for an assumed cash limit increase in teachers' salaries. Since no pay increases have been given to teachers this year what are the local authorities doing with the money? Are they spending it on something else or are they banking it for the day—not too far away—when a settlement is reached?
  As the Minister said, the penalties arrangements which he introduced have persuaded Fife regional council to reduce its excessive expenditure. It is a pity that it did not reduce it much earlier. The amount by which it has
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  reduced its excessive expenditure seems to be remarkably akin to the amount that it could have been spending on teachers' pay increases.
  In the last 10 years Fife regional council has turned the lowest rated area in Scotland into the highest rated area. That has nothing to do with the rate support grant provided by the Secretary of State in that period. It is entirely the result of expenditure policy decisions by the Fife regional council as a consequence of which ratepayers this year —because of the overspend in guidelines last year and this year—will have to spend lop in the pound more than if the council had operated on guidelines.
  As a result, instead of a rates increase which, even with revaluation, could have been within the inflation rate, Fifers will have to suffer a 25 per cent. or more increase in their rates bills. Many of the ratepayers are teachers. I hope that Ministers will continue to press Fife regional council to be more responsible in its expenditures.
  Assessment of the resources element seems to exacerbate the unfairness in the way in which the rating valuation system operates. I hope that Ministers will bear that in mind next year when considering at what to set the various elements.
  11.15 pm
  Mr. Donald Stewart: I intend to be brief, because experience has shown me that the Government do not intend to listen to any representations on this subject but are simply carrying out the instructions of the Treasury. This order in one of the vindictive measures with which they intend to strangle local democracy in Scotland.
  The decision to penalise Scottish local authorities to the tune of £126·5 million, which is £36·5 million more than the £90 million expenditure above guidelines, will mean a further reduction in essential local services. The whole exercise, apart from exemplifying the dictatorial centralism that typifies the Government, is one in hypocrisy. It is compounded when the Minister quotes the number of authorities that have met their guidelines and pretends that they have been convinced by a rational case put forward by the Scottish Office. Everyone knows that they are deeply resentful of what the Government are doing — cutting essential services that the people of Scotland have a right to expect.
  Local authorities are expected severely to cut spending while central Government are unable to achieve that. Local authorities are forced to be the instruments by which the Government attempt to hold down public expenditure to target levels.
  Even the total Scottish Office budget expenditure can be split into that incurred directly and that incurred via local authorities. Between 1983–84 and 1985–86, local authority spending is expected to rise by only 1·2 per cent. That incurred directly by central Government will rise by 11·5 per cent. Those figures are taken from Scottish Office figures published in February this year.
  In other Government Departments between 1983–84 and 1987–88 the pattern is expected to be the same. Expenditure on defence will rise by 22 per cent. and on law and order by 21 per cent. Overall, between those years the total will rise by 18 per cent. Yet local authorities are expected by the Secretary of State to perform the miracles that central Government are quite unable to perform.
  In Scotland the expenditure guidelines have not been increased in line with inflation and the guideline figures

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  are wholly arbitrary. No one understands how they are determined. Local authorities throughout Scotland must curse the day that they were first introduced by a Labour Government. They have proved a useful and effective tool for the Tories in Scotland to manipulate and suffocate local government. My party is wholly opposed to that disgraceful treatment of local democracy.
  Given indicators in recent elections and public opinion polls, the days of the Tory Administration are numbered. It gives me pleasure to say that the days of the British Administration are numbered. The other day there was a poll of 30 per cent. of people in Scotland who want a completely independent Parliament. They are now giving the issue a high priority, and that is the way that it should be. Scotland is waking up to the fact that a Scottish Parliament is absolutely necessary to protect local government in Scotland, the future of steel and coal industries and the whole of the Scottish economy.
  11.18 pm
  Mr. Allen Adams: Listening to the Secretary of State and his team talking about Scottish local authorities, it would seem that they hold them in such contempt that I am surprised that they have not attempted to introduce legislation not only to abolish them but to have them shot. Listening to the Secretary of State, one would think that they were the devil incarnate.
  We should not be here this evening discussing how little Scotland is to get; we should be sitting in Edinburgh discussing how much it should get. Even the Glasgow Herald, that mouthpiece of the Marxist-Leninist front, cannot be all that wrong in its recent publication.
  I do not think that the electors of Scotland should look at the Secretary of State's stance on rate support grant this year in isolation. They should look at the position that he has adopted over the past four or five years. We are witnessing a deliberate downward spiral in public expenditure. Harry Truman summed it up when he remarked, "Save a buck and sacrifice the people." This situation has arisen at a time when not only was an increase in public expenditure desirable, but when it could easily have occurred in Scotland. It is nonsense for the Secretary of State to claim that there is a shortage of resources in Scotland. To the 5 million people of Scotland, that is clearly not the case.
  The Conservatives have embarked on a strategy born of contempt for Scotland. Not only are they in a minority in Scotland, as they have been since 1945, but it looks likely that after the next election they will be in an even smaller minority. They also have a contempt for compassion. They have indulged this year, as they have in the last three or four years, in a basic arithmetical exercise in which need and compassion do not feature.
  My hon. Friends have said, and I repeat, that embodied in the Government's proposals is a contempt for democracy. They talk about decentralisation and privatisation, but apparently such concepts apply only to those who agree with the Government. Those who oppose them have restrictions—called guidelines—imposed on them. They may be called guidelines, but they are mandatory dictates giving no room for manoeuvre.
  I would not be surprised if at some time in the not too distant future a Minister at the Scottish Office, or at any rate in the Cabinet, adopted towards Scotland the attitude
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  that has been taken towards the GLC and other local authorities that have had the audacity to oppose Conservative policies. Will the Secretary of State give an assurance that no such attempt will be made to abolish Scottish local authorities?
  The Government have given up all pretence of matching rate support grant with inflation. Whereas we are talking about a 2 per cent. increase in Scotland this year, an increase of 6 to 7 per cent. is needed, and if there had been a 7 to 8 per cent. increase in the last five or six years we should nevertheless just be standing still. But many of us in Scotland, unlike the Conservatives, do not just want to stand still. We would like to expand and improve our services. Not only are the Government prepared to see services stagnate, but with banners flying and bands playing they are happy to march backwards, producing a level of services in Scotland that has not been as bad for perhaps 25 years.
  The Secretary of State has been to the top of the mountain and had his dream turned into a nightmare, and the people are suffering. He dreamt of being strong with the weak and weak with the strong. He is strong with local authorities wishing to build council houses. They have hardly built one for five years, with the result that many young couples born and brought up in decent council houses have gone into the slums and old properties that their parents left 20 years ago.
  In my local authority area, Renfrew district, 10,000 people, largely youngsters, are on the housing waiting list. We have an aging population in Scotland, so that we urgently need more home helps, especially for people in the poorer and more deprived areas. We need more people in the child care, adoption and fostering services, and more staff in children's homes. I should like to hear the Minister deny that there is a need for that sort of provision. I should like to hear him tell us that there is a need for fewer staff in these services. Is there or is there not a need for these services to be expanded?
  As I have said, the Secretary of State is strong with the weak and weak with the strong. He is weak when it comes to the Barratts, Brasleys and Salversons, who have been jackbooting around our towns over the past two or three years showing a blatant and open contempt for town planning. They have filled a vacuum that was created deliberately by the Secretary of State when he cut the feet from local authorities by not giving them enough money to build decent council houses of the sort that the people wanted. He created the vacuum and let his friends fill it.
  The Secretary of State has been at his weakest in confronting the Treasury and the Prime Minister. He has been a poor and pathetic voice for Scotland. He has done exactly what he has been told. All that we can say in Christain humanity is that we must hope that history is kind to him and forgets him. It might be appropriate when discussing Scottish affairs to remember the words of Robert Burns, who said that we were bought and sold for English gold. That is certainly true of the Secretary of State. The tragedy is that the price is so low.
  11.27 pm
  Sir Russell Johnston: There is not much wrong with the Government that would not be put right by a fair voting system and a fair system of local government. [Laughter.] I note that the hon. Member for Falkirk, West (Mr. Canavan) chortles, but that is a fact. Such reforms would dramatically reduce the

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  false and wasteful conflict between central and local government which has been referred to by almost every Member who has participated in the debate, a conflict which the Government have done much to fuel.
  The hon. Member for Glasgow, Maryhill (Mr. Craigen) mentioned the Wheatley report. Speaking as someone who served on the Wheatley Royal Commission between 1966 and 1969, I continue enthusiastically to endorse the proposition that with the creation of larger authorities, more resources and greater functional integration, local authorities would enjoy much greater independence from central Government. That was the Wheatley argument and it is depressing 20 years later to see the degree of central Government supervision growing daily, to the extent that one meets local councillors throughout Scotland who are beginning to say, "There is so little scope for us to make our own decisions, what is the point of continuing?"
  Mr. Michael Forsyth rose——
  Sir Russell Johnston: There is little time left before the debate must end, so I shall continue with my remarks.
  The hon. Member for Maryhill was right in spending time to draw attention to the deterioration in central Government and local government relationships.
  I shall advance three short arguments, because I am aware that time is limited. First, I think that the Government are indicted by their failure to maintain local government support, especially over the past quinquenninum. The hon. Member for Maryhill referred to the sum of £1 billion. In fact, we are talking of a reduction of in support of relevant expenditure from 68·5 per cent. in 1980–81 to 56·6 per cent. at the beginning of the year. Each of the district councils in my constituency, according to the COSLA tables which were referred to by the hon. Member for Maryhill, has suffered a reduction in support of one third when compared with the 1980–81 level.
  Secondly, I should like to know how the guidelines are set. This is an issue on which the right hon. Member for Glasgow, Govan (Mr. Millan) touched and it remains to me one of life's great mysteries. The guidelines are supposed to be an aggregation of individual service assessments, but the assessments are not guidelines. It is the total of the assessments that is a guideline. I find that exceedingly difficult to follow, as does the Highland region. I recall the argument that it had with the Minister over the police. I presume that it is assumed that the Highland region, for example, is spending far too much on education.
  Thirdly, many questions arising from Government cuts should be raised. Because of the shortage of time I shall raise only two. The teaching issue can be bypassed, because the right hon. Member for Glasgow, Govan (Mr. Millan) made the points cogently. First, will the Minister say something about the relief on revaluation? What will happen to the underspend? Will the money just go back to the Treasury? What will happen next year? What will be the effect next year on the rates of small businesses? Secondly, the hon. Member for Paisley, North (Mr. Adams) mentioned housing, which is a source of ever-present worry for district councils. There has been much brouhaha about the sale of council houses, but only about 9 per cent. of council houses have been sold. Apparently this sale was a major issue, but what is being done for those who cannot buy their own houses and then cannot find rented accommodation either? The districts cannot build because of reductions in grant. That is scandalous.
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  The alliance will vote against the order. I agree with the statements made by every Opposition Member. I disagree especially with the hon. Member for Dumfries (Sir H. Monro), who practically made sycophancy into an art. The order is another step along the road to undermine local government.
  11.31.pm
  Mr. David Lambie: I shall vote against this order, just as I have voted against every rate support grant order since I entered Parliament in 1970), irrespective of the side of the House on which I sat.
  I speak from a strong position. I speak on behalf not only of the Labour party in Cunninghame, South but of the officials of the Cunninghame, South Conservative and Unionist Association who have told the Prime Minister that they will resign if the Government do not change the British Steel Corporation's decision to close Gartcosh and will not put up a candidate against me at the next election. I am happy about that. In the last two general elections I won more than half the votes in my constituency, and the 20 per cent. of votes that the Tories win in my constituency will make little difference to the result.
  The officials of Cunninghame, South Conservative and Unionist Association have not taken this action solely because of the decision to close Gartcosh. That was the final straw, but there had previously been the fiasco of the rating revaluation which caused many problems for the Conservative Government and Scottish Ministers. Since the Conservative party took power in 1979 there has been one crisis and fiasco after another, until the Conservatives are no longer a political party in Scotland. They are nearly running neck and neck with the Scottish National party, and that is going down some way.
  From listening to the Tory party conference it became increasingly clear that the Government were no longer considering reforming the rating system in the United Kingdom and that they were considering the publication of another consultative document. I do not know how many consultative documents I have seen on the reform of the rating system since I entered Parliament, but there will now be another one. It is becoming increasingly clear as the discussions continue between the three wise men, including the Under-Secretary of State for Scotland—the hon. Member for Edinburgh, South (Mr. Ancram)—that the Government have no intention of reforming the rating system because they see no satisfactory alternative to it.
  I am disturbed not by the fact that the Government are to renege on their promises to the ratepayers but by what is happening in Scotland. The Secretary of State for Scotland, supported by the Under-Secretary, is saying, "We are going to go it alone. If the Government are not prepared to change the rules and reform the rating system, we shall reform the rating system in Scotland." We shall have a fiasco similar to the one that occurred when, under both parties, the Scottish Office decided to continue with revaluation when their colleagues in England and wales stopped it.
  I do not know when Scotland will learn that, it we change the rules in Scotland but do not change them in England, Scotland suffers. Scotland is suffering now because we continued with revaluation in 1973 w hen England stopped it.
  Mr. Younger: Is not the hon. Gentleman a bit rusty? Does he not remember that he and I fought against the

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  1978 revaluation when the increases in our area were considerably higher than they were this year? He received no support, money or help for ratepayers from the Labour Government, whereas the present Government have been generous in helping them.
  Mr. Lambie: I do not want to take up that point, except to say that when he and I took deputations to my right hon. Friend the Member for Glasgow, Govan (Mr. Millan) he was in opposition. When I asked him this year, on the last revaluation, when he was in government, to come with me and make representations to the Government. he refused. When he is in opposition he is willing to take part in deputations to the Government, but when he is in government he is unwilling to take the actions he advocated when he was in opposition.
  If the Scottish people are to be kidded again, and if the Secretary of State for Scotland and the Under-Secretary are to change the rating system in Scotland for a mixture of the present property tax and a poll or residence tax, the Scottish people will again find that they are subsidising the Exchequer in England. English ratepayers will be laughing at us. Scotland has suffered from continuous revaluations while there have been no revaluations in England and Wales. If we make changes in Scotland without making corresponding changes in England and Wales, Scottish ratepayers will suffer again. That is why I hope that the Secretary of State will withdraw the order and think twice about taking unilateral action to change the rating system in Scotland. We should have a system which covers the whole of the United Kingdom.
  11.38 pm
  Mr. Michael J. Martin: The Secretary of State knows that Glasgow has done a great deal to help industry because it has a responsibility to do so. The fact that he is withholding money from Glasgow will cause it great difficulties.
  In my constituency, BREL Springburn announced redundancies, and Glasgow district council said that it was prepared to undertake a feasibility study. I hope that the Minister will take on board the fact that BREL in Derby has refused to allow Glasgow district councils consultants on to its premises. BREL Derby has in effect refused to co-operate with a feasibility study designed to see what the future holds for the work force. This is shameful and absolutely scandalous because the Under-Secretary knows that if redundancies take place in what is the only railway workshop left in Scotland the local authority will have to pick up the pieces— and Derby says that it will not help.
  I hope that the Government take this matter on board and make representations on behalf of the people in my constituency, to do something to help a local authority which is acting in a very responsible manner.
  11.40 pm
  Mr. Ancram: It may be helpful if I answer some of the points that have been raised in this debate. Listening to the hon. Member for Cunninghame, South (Mr. Lambie), it became clear to me that his views are so akin to those of the Conservative party that the Conservatives in his area see that within him.
  The basic point arising from the debate is the suggestion, originally made by the hon. Member for
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  Glasgow, Maryhill (Mr. Craigen) in quoting figures, that, if the rate support grant proportion had been maintained, this would in some way have helped the ratepayers of Scotland and of particular areas of Scotland. As I asked the hon. Member to take into account. that assumes that if rate support grant is held proportionately at the same level, expenditure remains the same. I have to repeat that experience shows that when rate support grant has been so held, expenditure has risen.
  The hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) made the same point. While it is true arithmetically to say that a higher rate of grant—he mentioned certain figures—would mean more grant to local authorities, it would also historically mean higher local authority expenditure. The effect would be not only to increase the burden on the taxpayer, who is producing that rate support grant, but also to increase the burden on the ratepayer. The policy that the hon. Member advocated that the Government should follow would be precisely the opposite of that which the Government have sought to follow, of protecting ratepayers and taxpayers alike.
  The other central question raised during the debate was also raised by the hon. Member for Maryhill. He looked at the provision which, he was quite rightly informed, is the figure from which the guidelines stem. He made the point that the provision this year had been increased by only 3·9 per cent. as against an inflation rate which is likely to be higher. It was a valid point to raise, but, if he thinks about it—since the Government's policy is to reduce local authority expenditure, and since we have set out the reasons why we believe that that expenditure is still too high—he will see that it would have been totally illogical to allow expenditure in real terms to continue at the present rate. It is. therefore, quite deliberate that the provision after the enhancement we made this year of £59 million will, in fact, require a real-terms reduction by local authorities across Scotland. Had that not been the case we would merely have been underlining the level of overspending that exists within local authorities at the moment.
  My hon. Friend the Member for Fife, North-East (Mr. Henderson) asked what authorities are doing with the provision for teachers' salary increases. The question was also put by the right hon. Member for Glasgow, Govan (Mr. Millan). Obviously, local authorities will have made provision for their estimate of teachers' salary increases this year, and equally clearly they will not have had to make us of it so far. It must be for them to decide what they will do with it at the present time. I would think, however, that at this stage of the financial year no prudent authority would have committed it elsewhere, in view of the uncertainty of whether it would or would not be required before the end of the financial year.
  I must say to my hon. Friend that, as far as I am aware, Fife's reduction is the result of a sensible reappraisal of all its services. It shows in a major way the benefits that can be achieved for ratepayers by authorities which have been subjected to penalties. Given that Fife budgeted way over guideline to the disadvantage of its ratepayers, as my hon. Friend pointed out, and given that it is now seeking to reduce its budget and may, by next year have made a substantial reduction in its budget at outturn, it will be possible for the authority to make a return if it wishes—I am sure that my hon. Friend will press it so to do—of some 3·6p in the pound to the ratepayers of Fife. That shows other authorities in a similar position that there

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  remain substantial benefits to be gained on behalf of their ratepayers, even at this stage of the financial year, if they can bring their budgets either down to guideline or as near to guideline as possible.
  Following representations made to us by COSLA, which said that the return of penalty arrived too late in the financial year for proper use to be made of it, this year we introduced the new system whereby, on the provisional returns in June, which is just one quarter into the financial year. the benefits of reduced expenditure in the previous year would he made available in rate support grant returned to those authorities. Therefore, I hope that authorities that have been subject to the penalties that we are debating tonight will seriously consider that they should seek to reduce their expenditure and return the benefits to the ratepayers.
  My hon. Friend the Member for Dumfries (Sir H. Monro) rightly said that not only is the distribution of rate support grant increasingly being carried out on a fairer basis, as the client group approach is implemented, but equally the guidelines are being refined year to year, and those refinements are becoming increasingly clear.
  The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) asked perhaps the most complicated question. He asked how the guidelines are set. It was said earlier that the guidelines seem to vary from year to year. Some of the major variations — indeed, those that benefited district councils in many areas of Scotland—were as a result of direct representations to the Scottish Office about the needs assessments in previous years, particularly in relation to leisure and recreation, where it was felt that the needs assessment did not accurately reflect the needs of authorities on the ground. If we look at the guidelines and needs assessments this year, we see that the district authorities have benefited from the refinement that has been made, which I believe to have been warmly welcomed.
  The hon. Gentleman asked how the guidelines were arrived at. It is only right that I try to explain in reasonably simple terms. As in each of the past four years, the first step in arriving at guidelines is the calculation by means of the client group method of the relative expenditure needs assessments. That is the basis. However, as the hon. Gentleman will appreciate, if all authorities were brought to their needs assessments in terms of their guidelines, we would not only be requiring major and dramatic reductions by some that are way above their needs assessments at the moment, but equally, we would be allowing for expenditure increases for others that are below their needs assessments, which they would not be able to pay for in terms of rates. Therefore we have built various limits into the formula, which allow us to ensure that no authority is asked to make a reduction which is unachievable and that no authority receives such an enhancement of its guidelines that it would be impracticable.
  Therefore, the order sets out to try to achieve the cooperation with local authorities that the right hon. Member for Govan was talking about. The best way of getting away from confrontation and achieving co-operation between local authorities and the Scottish Office is if authorities across Scotland this year do what 30 authorities, including seven of the regions and islands, managed to do last year —to budget within the guideline. If they do so, their ratepayers are served and the taxpayer is served, and they can make sure that the services that they wish to provide for their local electorates are provided.
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  The final point that arose during the debate—
  It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).
  The House divided: Ayes 296, Noes 170.

  Division No. 296]

  [11.49 pm

  AYES

  Adley, Robert

  Farr, Sir John

  Aitken, Jonathan

  Favell, Anthony

  Alison, Rt Hon Michael

  Fenner, Mrs Peggy

  Amess, David

  Finsberg, Sir Geoffrey

  Ancram, Michael

  Fletcher, Alexander

  Aspinwall, Jack

  Forman, Nigel

  Atkins, Rt Hon Sir H.

  Forsyth, Michael (Stirling)

  Atkins, Robert (South Ribble)

  Forth, Eric

  Atkinson, David (B'm'th E)

  Fowler, Rt Hon Norman

  Baker, Nicholas (N Dorset)

  Fox, Marcus

  Baldry, Tony

  Franks, Cecil

  Batiste, Spencer

  Fraser, Peter (Angus East)

  Beaumont-Dark, Anthony

  Freeman, Roger

  Bellingham, Henry

  Fry, Peter

  Bendall, Vivian

  Gale, Roger

  Benyon, William

  Gardiner, George (Reigate)

  Best, Keith

  Gilmour, Rt Hon Sir Ian

  Bevan, David Gilroy

  Goodlad, Alastair

  Biffen, Rt Hon John

  Gow, Ian

  Blackburn, John

  Gower, Sir Raymond

  Bonsor, Sir Nicholas

  Grant, Sir Anthony

  Boscawen, Hon Robert

  Greenway, Harry

  Bottomley, Peter

  Gregory, Conal

  Bottomley, Mrs Virginia

  Griffiths, Peter (Portsm'th N)

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

  Grist, Ian

  Bowden, Gerald (Dulwich)

  Ground, Patrick

  Braine, Rt Hon Sir Bernard

  Grylls, Michael

  Brandon-Bravo, Martin

  Gummer, Rt Hon John S.

  Brinton, Tim

  Hamilton, Hon A. (Epsom)

  Brittan, Rt Hon Leon

  Hamilton, Neil (Tatton)

  Brown, M. (Brigg & Cl'thpes)

  Hampson, Dr Keith

  Browne, John

  Hanley, Jeremy

  Buchanan-Smith, Rt Hon A.

  Hannam, John

  Buck, Sir Antony

  Harris, David

  Budgen, Nick

  Haselhurst, Alan

  Bulmer, Esmond

  Hawkins, Sir Paul (SW N'folk)

  Burt, Alistair

  Hawksley, Warren

  Butcher, John

  Hayes, J.

  Butler, Hon Adam

  Hayhoe, Rt Hon Barney

  Butterfill, John

  Hayward, Robert

  Carlisle, John (N Luton)

  Heathcoat-Amory, David

  Carlisle, Kenneth (Lincoln)

  Henderson, Barry

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

  Heseltine, Rt Hon Michael

  Carttiss, Michael

  Hickmet, Richard

  Cash, William

  Hicks, Robert

  Chalker, Mrs Lynda

  Higgins, Rt Hon Terence L.

  Chapman, Sydney

  Hind, Kenneth

  Chope, Christopher

  Hirst, Michael

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

  Hogg, Hon Douglas (Gr'th'm)

  Clark, Sir W. (Croydon S)

  Hordern, Sir Peter

  Clarke, Rt Hon K. (Rushcliffe)

  Howard, Michael

  Colvin, Michael

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

  Conway, Derek

  Howarth, Gerald (Cannock)

  Coombs, Simon

  Howell, Rt Hon D. (G'ldford)

  Cope, John

  Howell, Ralph (N Norfolk)

  Corrie, John

  Hubbard-Miles, Peter

  Couchman, James

  Hunt, David (Wirral)

  Crouch, David

  Hunt, John (Ravensbourne)

  Currie, Mrs Edwina

  Hunter, Andrew

  Dickens, Geoffrey

  Jackson, Robert

  Dicks, Terry

  Jessel, Toby

  Dorrell, Stephen

  Johnson Smith, Sir Geoffrey

  Douglas-Hamilton, Lord J.

  Jones, Gwilym (Cardiff N)

  Dover, Den

  Jones, Robert (W Herts)

  Dunn, Robert

  Joseph, Rt Hon Sir Keith

  Durant, Tony

  Kellett-Bowman, Mrs Elaine

  Edwards, Rt Hon N. (P'broke)

  Kershaw, Sir Anthony

  Evennett, David

  King, Roger (B'ham N'field)

  Eyre, Sir Reginald

  Knight, Greg (Derby N)

  Fallon, Michael

  Knight, Dame Jill (Edgbaston)

  265

  Knowles, Michael

  Rhys Williams, Sir Brandon

  Knox, David

  Ridley, Rt Hon Nicholas

  Lamont, Norman

  Rifkind, Malcolm

  Lang, Ian

  Roberts, Wyn (Conwy)

  Lawler, Geoffrey

  Robinson, Mark (N'port W)

  Lawrence, Ivan

  Roe, Mrs Marion

  Lawson, Rt Hon Nigel

  Rossi, Sir Hugh

  Lennox-Boyd, Hon Mark

  Rost, Peter

  Lester, Jim

  Rowe, Andrew

  Lightbown, David

  Rumbold, Mrs Angela

  Lilley, Peter

  Ryder, Richard

  Lloyd, Ian (Havant)

  Sackville, Hon Thomas

  Lord, Michael

  Sainsbury, Hon Timothy

  Lyell, Nicholas

  Sayeed, Jonathan

  McCrindle, Robert

  Shaw, Giles (Pudsey)

  McCurley, Mrs Anna

  Shaw, Sir Michael (Scarb')

  Macfarlane, Neil

  Shelton, William (Streatham)

  MacGregor, Rt Hon John

  Shepherd, Colin (Hereford)

  MacKay, Andrew (Berkshire)

  Shepherd, Richard (Aldridge)

  MacKay, John (Argyll & Bute)

  Shersby, Michael

  Maclean, David John

  Silvester, Fred

  McQuarrie, Albert

  Sims, Roger

  Madel, David

  Skeet, T. H. H.

  Major, John

  Smith, Tim (Beaconsfield)

  Malins, Humfrey

  Soames, Hon Nicholas

  Malone, Gerald

  Speed, Keith

  Maples, John

  Speller, Tony

  Marland, Paul

  Spence, John

  Marlow, Antony

  Spencer, Derek

  Marshall, Michael (Arundel)

  Spicer, Jim (W Dorset)

  Mates, Michael

  Stanbrook, Ivor

  Mather, Carol

  Stanley, John

  Maude, Hon Francis

  Steen, Anthony

  Mawhinney, Dr Brian

  Stern, Michael

  Maxwell-Hyslop, Robin

  Stevens, Lewis (Nuneaton)

  Mayhew, Sir Patrick

  Stevens, Martin (Fulham)

  Mellor, David

  Stewart, Allan (Eastwood)

  Merchant, Piers

  Stewart, Andrew (Sherwood)

  Meyer, Sir Anthony

  Stewart, Ian (N Hertf'dshire)

  Miller, Hal (B'grove)

  Stradling Thomas, Sir John

  Mills, Iain (Meriden)

  Sumberg, David

  Miscampbell, Norman

  Tapsell, Sir Peter

  Moate, Roger

  Taylor, John (Solihull)

  Monro, Sir Hector

  Taylor, Teddy (S'end E)

  Montgomery, Sir Fergus

  Temple-Morris, Peter

  Moore, John

  Thomas, Rt Hon Peter

  Morris, M. (N'hampton, S)

  Thompson, Donald (Calder V

  Morrison, Hon P. (Chester)

  Thompson, Patrick (N'ich N)

  Moynihan, Hon C.

  Thornton, Malcolm

  Mudd, David

  Thurnham, Peter

  Murphy, Christopher

  Townend, John (Bridlington)

  Neale, Gerrard

  Townsend, Cyril D. (B'heath)

  Needham, Richard

  Trippier, David

  Nelson, Anthony

  Twinn, Dr Ian

  Neubert, Michael

  Viggers, Peter

  Newton, Tony

  Waddington, David

  Nicholls, Patrick

  Wakeham, Rt Hon John

  Onslow, Cranley

  Waldegrave, Hon William

  Oppenheim, Rt Hon Mrs S.

  Walden, George

  Ottaway, Richard

  Walters, Dennis

  Page, Sir John (Harrow W)

  Ward, John

  Page, Richard (Herts SW)

  Wardle, C. (Bexhill)

  Parris, Matthew

  Warren, Kenneth

  Patten, Christopher (Bath)

  Watson, John

  Patten, J. (Oxf W & Abdgn)

  Watts, John

  Pattie, Geoffrey

  Wells, Bowen (Hertford)

  Pawsey, James

  Wells, Sir John (Maidstone)

  Percival, Rt Hon Sir Ian

  Wheeler, John

  Pollock, Alexander

  Whitfield, John

  Porter, Barry

  Whitney, Raymond

  Portillo, Michael

  Wolfson, Mark

  Powell, William (Corby)

  Wood, Timothy

  Powley, John

  Woodcock, Michael

  Proctor, K. Harvey

  Yeo, Tim

  Pym, Rt Hon Francis

  Young, Sir George (Acton)

  Raffan, Keith

  Younger, Rt Hon George

  Rathbone, Tim

  Rees, Rt Hon Peter (Dover)

  Tellers for the Ayes:

  Renton, Tim

  Mr. Tristan Garel-Jones and Mr. Peter Lloyd.

  Rhodes James, Robert

  266

  NOES

  Adams, Allen (Paisley N)

  Haynes, Frank

  Anderson, Donald

  Heffer, Eric S.

  Archer, Rt Hon Peter

  Hogg, N. (C'nauld & Kilsyth)

  Atkinson, N. (Tottenham)

  Home Robertson, John

  Banks, Tony (Newham NW)

  Howells, Geraint

  Barnett, Guy

  Hoyle, Douglas

  Beckett, Mrs Margaret

  Hughes, Dr. Mark (Durham)

  Beith, A. J.

  Hughes, Robert (Aberdeen N)

  Bell, Stuart

  Hughes, Roy (Newport East)

  Benn, Tony

  Hughes, Sean (Knowsley S)

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

  Janner, Hon Greville

  Bermingham, Gerald

  Jenkins, Rt Hon Roy (Hillh'd)

  Bidwell, Sydney

  John, Brynmor

  Blair, Anthony

  Johnston, Sir Russell

  Boyes, Roland

  Jones, Barry (Alyn & Deeside)

  Bray, Dr Jeremy

  Kaufman, Rt Hon Gerald

  Brown, Gordon (D'f'mline E)

  Kennedy, Charles

  Brown, Hugh D. (Provan)

  Kirkwood, Archy

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

  Lambie, David

  Brown, Ron (E'burgh, Leith)

  Lamond, James

  Bruce, Malcolm

  Leadbitter, Ted

  Buchan, Norman

  Leighton, Ronald

  Caborn, Richard

  Lloyd, Tony (Stretford)

  Callaghan, Jim (Heyw'd & M)

  Lofthouse, Geoffrey

  Campbell, Ian

  Loyden, Edward

  Campbell-Savours, Dale

  McDonald, Dr Oonagh

  Canavan, Dennis

  McKay, Allen (Penistone)

  Carlile, Alexander (Montg'y)

  McKelvey, William

  Clark, Dr David (S Shields)

  MacKenzie, Rt Hon Gregor

  Clarke, Thomas

  McNamara, Kevin

  Clay, Robert

  McTaggart, Robert

  Clwyd, Mrs Ann

  Madden, Max

  Cocks, Rt Hon M. (Bristol S.)

  Marek, Dr John

  Cohen, Harry

  Marshall, David (Shettleston)

  Coleman, Donald

  Martin, Michael

  Conlan, Bernard

  Maxton, John

  Cook, Robin F. (Livingston)

  Maynard, Miss Joan

  Corbett, Robin

  Meacher, Michael

  Corbyn, Jeremy

  Michie, William

  Cox, Thomas (Tooting)

  Millan, Rt Hon Bruce

  Craigen, J. M.

  Miller, Dr M. S. (E Kilbride)

  Crowther, Stan

  Morris, Rt Hon A. (W'shawe)

  Cunliffe, Lawrence

  Morris, Rt Hon J. (Aberavon)

  Cunningham, Dr John

  Nellist, David

  Dalyell, Tam

  Oakes, Rt Hon Gordon

  Davies, Rt Hon Denzil (L'lli)

  O'Brien, William

  Davies, Ronald (Caerphilly)

  Park, George

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

  Patchett, Terry

  Deakins, Eric

  Pavitt, Laurie

  Dobson, Frank

  Pendry, Tom

  Dormand, Jack

  Penhaligon, David

  Douglas, Dick

  Pike, Peter

  Dubs, Alfred

  Powell, Raymond (Ogmore)

  Dunwoody, Hon Mrs G.

  Prescott, John

  Eadie, Alex

  Radice, Giles

  Eastham, Ken

  Redmond, M.

  Evans, John (St. Helens N)

  Rees, Rt Hon M. (Leeds S)

  Ewing, Harry

  Richardson, Ms Jo

  Fatchett, Derek

  Roberts, Allan (Bootle)

  Faulds, Andrew

  Roberts, Ernest (Hackney N)

  Field, Frank (Birkenhead)

  Robertson, George

  Fields, T. (L'pool Broad Gn)

  Robinson, G. (Coventry NW)

  Fisher, Mark

  Rooker, J. W.

  Flannery, Martin

  Rowlands, Ted

  Foot, Rt Hon Michael

  Sheerman, Barry

  Forrester, John

  Shore, Rt Hon Peter

  Foster, Derek

  Short, Ms Clare (Ladywood)

  Foulkes, George

  Silkin, Rt Hon J.

  Fraser, J. (Norwood)

  Skinner, Dennis

  Freeson, Rt Hon Reginald

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

  George, Bruce

  Snape, Peter

  Godman, Dr Norman

  Soley, Clive

  Gould, Bryan

  Spearing, Nigel

  Hamilton, James (M'well N)

  Stewart, Rt Hon D. (W Isles)

  Hamilton, W. W. (Central Fife)

  Stott, Roger

  Hardy, Peter

  Strang, Gavin

  Harman, Ms Harriet

  Straw, Jack

  Harrison, Rt Hon Walter

  Thomas, Dr R. (Carmarthen)

  Hart, Rt Hon Dame Judith

  Thompson, J. (Wansbeck)

  267

  Thorne, Stan (Preston)

  Wilson, Gordon

  Tinn, James

  Winnick, David

  Torney, Tom

  Woodall, Alec

  Wallace, James

  Young, David (Bolton SE)

  Wardell, Gareth (Gower)

  Welsh, Michael

  Tellers for the Noes:

  White, James

  Mr. John McWilliam and Mr. Don Dixon.

  Williams, Rt Hon A.

  Question accordingly agreed to.
  Resolved,
  That the Rate Support Grant (Scotland) (No. 3) Order 1985, dated 2nd July 1985, a copy of which was laid before this House on 4th July, be approved.

  Unemployment (Northern Region)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Donald Thompson.]
  12.1 am
  Mr. Ted Leadbitter: I wish to draw the attention of the House to the problems of unemployment in the norther region. The economic problems of the region have been the subject of a mass of reports over the years. There have been many grand designs, all ending with some form of declaration about the prospects.
  The region has not lacked attention. As the subject of analysis it has been a very tolerant patient. Its past contribution to the wealth of the nation is acknowledged and its present fitness to survive and make the best of its opportunities is undoubted among those who live and work there. The future depends on that confidence being accepted and acted upon through national policies and a new economic strategy to match the competence of the regional leadership and effort.
  One of the more interesting reports on the region was commissioned by BBC North East. It was the result of a considerable amount of research in particular areas, including my own, where a third of the male population are out of work. This was followed by a study of Consett and what has happened there since the closure of the steelworks. Those reports conclude that the efforts to regenerate communities devastated by economic disaster were seriously deficient and inadequate.
  Two months ago BBC North East published a further report, a study of Cleveland, which said:
  "This time we have examined the economic change in Teeside showing how this area has experienced a spectacular and remarkable economic collapse."
  Here we have a description of a transformation from the greatest hopes of expansion to one of the highest levels of unemployment. Not long ago Cleveland was considered to be an economic success story and one of the nation's most important industrial centres, yet now in this report it is described as grim. The region, and this part of it, ought not to have a future that looks grim. If there is heartache instead of hope, despair instead of confidence and misery instead of happiness it is because the reality of unemployment in my region is an experience that has lasted too long for too many thousands of people. The past they know, they expect something better for the future. They live in the land of the three rivers—theTyne, the Wear and the Tees. It is ideal for industrial development. Their ports have trading links with Europe and the world. The road systems supporting them provide a network of accesses to the first-class locations available for industrial development. The rail and air services complete our communication advantages. The concentration on the cultivation of the environment recently continues to be art impressive bonus for a region renowned for its variety of physical attractions.
  History has recorded the nature and character of the people. There are no doubts about the industry, tenacity and tolerance. There is an abundance of evidence of their adaptability and responsiveness to change. They have produced some remarkable leaders in politics, the trade union movement and commerce and industry, establishing a framework of social, economic and local government institutions in which new industrialists can find fulfilment in their business, cultural recreational and educational aspirations.

  269
  Why, then, have we a grim account of the region? Where does responsibility lie? I am not aware of one organisation, individual or local authority in the region active in industrial promotion and the provision of employment which lacks the spirit of co-operation or the professional standards needed for success. Why, then, the assertions of economic collapse? Some recent news, which continue the drama of decline, absolve the region of any responsibility. On 16 October, the Northern Echo, published in Darlington, ran a headline:
  "North job shock—1,000 axed in a day."
  That was the full meaning of a the closure of coke works, an electronics factory, a heating equipment works and redundancies in a telephone company in different areas and towns in the region. Three days earlier, the Mail, in Hartlepool, had a front page headline:
  "Region is dying on its feet".
  It referred to a report from the transport workers' leader, Mr. Joe Mills — a man known for his care and moderation—to his regional committee. The newspaper described it as a crisis report. These are the latest signs of the blight in the lives of a fine people who have watched the years of closures in their steel, coal and shipbuilding industries, observed the withering of the construction industry and the redundancies in the chemical and allied trades, metal manufactures and mechanical engineering.
  None of this arises from any action of the region. The nature of the closures, the industries involved and the contraction in the major industries that I have mentioned suggest that the cause rests elsewhere. We are fully aware that the employment structure had to become more diversified and that the traditional base of heavy industries would be shifted. The capital investment was directed to more capital — intensive industrial replacement and productivity which did not provide the employment levels needed to match displacement. That fact, and the causes related to it, give the Government a greater responsibility to understand the changing world and its impact on regions such as the north. What is happening in world and home markets? New technologies are displacing traditional methods, new forms of production are being introduced, and a complex of new tariff and credit conditions in international trade and other factors external to the region have an impact.
  It is convenient that the House of Lords Select Committee on Overseas Trade has just issued a remarkable set of conclusions after years of study. The first volume of the document published on 30 July 1985 states
  "Government should give more and not less support to those bodies which are engaged in promoting exports, such as the Export Credits Guarantee Department, the British Overseas Trade Board, the Foreign and Commonwealth Office and the Overseas Development Administration."
  I have studied the matter with care over the years, and it is high time we increased the amount of aid in the aid and trade provision programme. Moreover, there is a need for concern in the regions, where many jobs could have been made available, if the Government had been vigorous and active regarding the Bosporus bridge contract.
  Clearly, national policies are needed to bring about effective conditions for regional survival and growth. I hope that the Minister will not give us a tutorial about what we can do for ourselves. We have had enough lecturing from Whitehall. I assure the Minister that the region is not short of industrial and professional standards, or the
  270
  armoury of commercial and local government agencies well suited to promote and exercise all that is needed to attract new industries.
  Nor do we want from the Minister a repeat of comparative performances of different Governments. The unemployed in my region are hungry for hope, not a history lesson on past failures. After six years of Tory rule they are entitled for once to hear the Government accepting their full responsibility, recognising that time has placed the ball fully in their court, and that it is their intentions in that matter.
  The Cleveland experience may well concentrate the mind. A Cleveland review from 1974–84 addressed itself to the broader national trends and the analysis of industrial shift, to which I have already referred. The report stated that the unemployment rate doubled between 1979 and 1981, and that by 1984 the county job gap was about 67,000. Service employment as a proportion of total employment rose to 60 per cent. from 44 per cent. 10 years earlier.
  That briefly describes the massive loss of manufacturing jobs. The scheduled transfer of central Government offices to the area never took place. Three thousand jobs were involved, but the transfer was rescinded in 1979. By 1982 the position had become so bad that the area was designated a special development area. That is not only the story of Cleveland, but of the region, where 244,000 people are now unemployed. Aid that might have come was withdrawn and policies never matched the nature of the problem.
  The Government are ever ready to take credit for their rare successes. Let them now accept the responsibility for their failure. We have heard from one former Tory Prime Minister who supports the line of Government responsibility. The right hon. Member for Old Bexley and Sidcup (Mr. Heath), with his experience as a former Secretary of State for Industry, Trade and Regional Development, made a significant speech to the Sunderland Conservative association on 14 January this year in which he said:
  "My message is, do not despair. The situation is not hopeless. The North has faced these problems in the past and has come through them … the White Paper on the North East … is now more than 20 years ago, but there are lessons to be learned. The first is that a strategy can be developed to deal with the problems of economic decline, the second is that the strategy can be successfully implemented … It should be possible to create a thriving industry in the North East … And it is here that the Government has a role to play. It can help indentify key sectors of industry and co-ordinate their development."
  No prevarication there. The message is clear: no doubt remains about what ought to be done and what can be done. How different from the reply of the Prime Minister to my hon. Friend the Member for Easington (Mr. Dormand), who asked about the effects of the Budget on unemployment in the northern region. She said:
  "Although unemployment is very high in the north, indeed it is the highest of all, the wages in the region are also comparatively high … The two might be related."—[Official Report, 21 March 1985; Vol. 75, c. 986.]
  That was the Prime Minister's reaction. The fact she acknowledges; the responsibility she does not. Months later, during a fleeting visit to the region, she told the people there, "Don't be moaning Minnies." That was petulant, imprudent and unjustified. Then she ordered, "Stop it." Such posturings gain her no great credit and it is regrettable and sad that in the time that has elapsed she has taken no opportunity to make some redress and

  271
  perhaps admit that the region has a long-standing reputation for objectivity in presenting its views. How different it would have been if she and her Government had matched that objectivity. Instead, we have a Government obsessed with promoting failure as success, a Government suffering from tunnel vision, obscuring reality and the consequences of their own policies, and a Government who act out of prejudice against the GLC and spawn a Local Government Bill abolishing all metropolitan county councils, under the pretence of needed reform. Tyne and Wear county council is an important authority and damage to it is damage to the region.
  We have a Government spending many months of parliamentary time on ratecapping legislation and imposing penalties on local authorities and, yes, we have a Government who are oblivious to the social and economic costs of their own surgical operations although in my region there has already been too much blood letting. We have a Government who have become abrasive and intolerant.
  It is no wonder that another former Tory Prime Minister said in another place that it was breaking his heart to see what was happening to Britain. It is breaking my heart to see what is happening to my region; it is breaking my heart to see the despair of young people, the anxiety of parents and the misery of poverty.
  We are not so poor in this land that we cannot afford better regional regeneration. We are not so rich that we can neglect the young and the future that their training, their work and their health can provide. We need the will to do what is right and the guts to find the resources for the support of peace and work and leisure—resources that are so easily found for war and related purposes.
  In drawing attention to unemployment in the northern region, I am pointing to the need to invest in Britain. The Government have had six years. They have had their chance. They refuse to change with the times or from their own course. They have no new strategy and they refuse to consider one.
  No doubt the Minister will seek to deploy some selective material to provide a better face for the Government. It will be of no avail. The balance sheet of failure is there for all to see. We need a new board of directors for the business of Great Britain, and the electors in my region are waiting to make that possible.
  12.20 am
  The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark): In an eloquent and finely constructed speech the hon. Member for Hartlepool (Mr. Leadbitter) raised a number of issues about unemployment in the northern region and in his constituency. I shall try to answer fully.
  The Government, who now have two Ministers in the Cabinet dealing with employment matters, are only too well aware of the seriousness of unemployment, particularly in the north where there have been longstanding and deep-seated problems. I shall try to answer all the hon. Gentleman's questions, although he did not observe the convention under which we share the time available equally on such occasions.
  I shall first dispel the legend which the hon. Gentleman described. The Prime Minister did not call the people in
  272
  the north of England "moaning Minnies." The context in which those words were used has been distorted and gone into mythology. It is inaccurate.
  Mr. Don Dixon: The words were used.
  Mr. Clark: The Prime Minister was describing some of the success stories in the region. Alas, they are few, but she was trying to give hope to those who live in the region. The journalists round her would not accept that and pressed her with unpalatable and familiar statistics. She reproached them for not allowing her, even for a few minutes, to disclose some of the good news to encourage people and to emphasise that the north is not a total and abject failure. The Prime Minister was behaving correctly, but the incident was portrayed as if she categorised the people living in the area as "moaning Minnies.' That is inaccurate, as those who saw the incident on television will confirm.
  I admit that over the past 20 years more than 200,000 jobs in traditional industries in the north-east have been shed, largely as a result of the world recession, technological change and market shifts. The people of the area have, therefore, had the difficult task of moving away from the old heavy industries towards the growth sectors of the economy. That brings continuing problems and much still needs to be done, but it is encouraging that the rate of redundancies in the region is about half what it was in 1981.
  There are many encouraging signs. We should emphasise them without minimising the problem. For example, self-employment in the region has grown significantly. The number of self-employed people is now 87,000, which is over 50 per cent. more than when we took office.
  Growth sectors are increasingly important. About 16,000 people are engaged in electronics in firms such as Isocom, the components manufacturer whose new factory in the Hartlepool enterprize zone will be employing up to 500 workers by 1988, and Middlesbrough's CADCAM computer centre which could bring 5,000 jobs to the area by 1995.
  The pharmaceutical industry has grown from virtually nothing to an industry employing 5,000. The north-east has a firm foothold in the future with such industries as biotechnology and advanced manufacturing technology. Much of the good news is not publicised as widely as it should be.
  Another example is the Nissan factory at Washington which should create 4,500 jobs if all goes well, with a further seven overseas companies attracted to the region this year—[Interruption.] Unfortunately, I cannot hear everything that is said from a seated position. I was not left as much time to reply as I should have liked. I have detailed some of the good news and some of the new growth sectors. If another hon. Member succeeds in obtaining another Adjournment debate, we may deal with other matters.
  On the retail side, the Metrocentre, due to open in Gateshead in 1986, will be the largest out-of-town shopping complex in the United Kingdom creating up to 5,000 new jobs.
  My Department has recently taken responsibility for tourism, and here, too, there are good opportunities for new employment — not only in the traditional tourist areas but in regions such as the north-east.

  273
  Over the past three years, the Northumbria tourist board has been able to assist directly more than 84 tourism projects with Government assistance of £1·3 million. There has also been substantial Government support for major tourism and leisure developments in the region, such as the Beamish open air museum.
  The English tourist board has set up tourism development action programmes at Tyne and Wear and Kielder to develop the potential of the areas which will create new sources of employment for the local population. I hope that the hon. Gentleman accepts that there is significant scope for new employment in tourism in the region.
  The region is far from being without hope and there are no insuperable disadvantages. With the right help much has been achieved and much more will be achieved. The right help includes a major infusion of Government assistance of various kinds, all of which has a direct effect on employment.
  The hon. Gentleman will be aware that almost the whole of the region has assisted area status. It has benefited by well over £500 million since 1979 through regional development grants and selective assistance. The Department of the Environment has funded economic, social and environmental projects of nearly £300 million, especially in inner urban areas in the region. Only last week my hon. Friend the environment Minister announced an additional £15 million to tackle inner-city deprivation, £2·5 million of which will go to the north-east.
  Middlesbrough, Hartlepool and Newcastle-Gateshead have enterprise zones. Newcastle-Gateshead also has a city action team to co-ordinate local and central Government action, especially on job creation, environmental recovery and housing improvement. In Cleveland, which the hon. Gentleman mentioned on a number of occasions, the Department of the Environment has launched the Cleveland initiative for a co-ordinated programme of action on major areas of derelict and underused land.
  I must mention the Manpower Services Commission schemes. Government aid to support and encourage economic recovery and the creation of jobs in the region amounts to well over £1 billion since 1979. In that period, the Manpower Services Commission spent more than £300 million—and the planned expenditure this year is £151 million—in helping to create work or provide vocational training. As a result of the expansion of the community programme to help the long-term unemployed, 27,200 places are to be provided by May 1986 in the region—more than double last year's target.
  In vocational training, lack of qualifications among the young is a particularly worrying problem. We recognise
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  the value of a well-trained young work force, which is why the youth training scheme is to be extended nationally to two years, leading to vocational qualifications for school leavers from 1 April 1986. That is a major step towards ensuring that all young people under 18 are in work, in full-time education or undergoing high quality training, so that unemployment need not be an option for them from now on.
  Organisations in the northern region have generally responded positively to YTS and the Manpower Services Commission plans to provide more than 25,000 places for young people on the scheme in the northern region this year.
  Under the adult training strategy, we are focusing on known labour market needs. We plan to help to train nearly 13,000 people in the northern region this year under the adult training programme—an increase of 82 per cent. over the last year—and to help more than 18,000 people next year. At least three quarters of those helped this year will have been unemployed.
  We recently announced our endorsement of the expansion of jobclubs to 200 by the end of the year. We were particularly encouraged to do that by the success of two of the first jobclubs, which were established in Durham and Middlesbrough. They have been doing an excellent job in helping the long-term unemployed to help themselves by providing advice and facilities for job hunting. So far, three quarters of unemployed people leaving jobclubs have found jobs, the majority of them quickly.
  My Department has recently taken over responsibility for policy on small firms, which have an excellent potential as job creators through their ability to respond quickly to market demands, their flexibility in filling gaps in the market and their capacity for innovation. We aim to stimulate the development of small businesses and to create an economic climate which will be conducive to their sustained growth. There are nearly 80 proposals in my noble Friend's recently published White Paper, "Lifting the Burden", further to reduce unnecessary bureaucracy and regulation in this sphere.
  I ask the hon. Gentleman to accept that the Government fully recognise the problems faced by many areas in the north. A great deal of well-focused assistance has been directed to those places that have been worst hit by the world recession. We should recognise also that there are encouraging signs; people in the north-east are responding well to the problems and challenges that they face——
  The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-nine minutes to One o'clock.