Commons Sitting of 7 July 1986

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

PRIVATE BUSINESS
CLIFTON SUSPENSION BRIDGE BILL [Lords]
Read the Third time, and passed, without amendment.
LONDON DOCKLANDS RAILWAY (CITY EXTENSION) BILL
As amended, considered; to be read the Third time.

Oral Answers to Questions
  ENERGY

    Oil Exploration (Merseyside)
    Mr. Wareingasked the Secretary of State for Energy if he will make a statement on the present position in respect of onshore oil exploration in the Merseyside area.
    The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): In the recent onshore licensing round I awarded four new petroleum exploration licences in the Merseyside area. These are in addition to the three exploration and three production licences already in existence.
    Mr. Wareing: Can the Minister tell me the names of the constituencies in which these licences have been granted?
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    Are they progressing well in terms of permissions from the landowners, occupiers and local authorities? Is he able to say when employment possibilities are likely to arise on Merseyside as a result of these developments?
    Mr. Buchanan-Smith: The whole of the Merseyside area is covered by the existing and new licences. If the hon. Gentleman would like further information I shall be happy to provide it. I understand that exploration work is proceeding, but unless some discovery is made one cannot tell what activity may flow from the exploration.
    Mr. Patrick McNair-Wilson: As further developments in Merseyside or elsewhere are likely to be affected by the continuing fall in oil prices, is my right hon. Friend aware that the industry is becoming increasingly anxious about the tax regime and especially about the ring fencing of oilfields? Has he had discussions with the Chancellor of the Exchequer about this urgent matter to ensure that further inducements exist for continued exploration and development?
    Mr. Buchanan-Smith: I am certainly aware of the problems of the falling oil price. There is no evidence that any existing activity or any developments recently approved or developments at an advanced stage of consideration by my Department have been inhibited by the current tax regime. If activity is hindered, 1 assure my hon. Friend that I and my right hon. Friend the Chancellor will look carefully at it.

    Coal Imports
    Mr. Lofthouseasked the Secretary of State for Energy what are the latest available figures of imports of coal into the United Kingdom and from what sources.
    Mr. Evansasked the Secretary of State for Energy if he will list the countries from which the United Kingdom imports coal; and what proportion of United Kingdom enegy needs are met by coal imports.
    The Secretary of State for Energy (Mr. Peter Walker): The latest available figures for imports of coal into the United Kingdom cover the period January to April 1986.

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    I shall publish the information in the Official Report. On a primary fuel input basis, 4 per cent. of United Kingdom energy needs were met by coal imports in 1985.
    Mr. Lofthouse: Now that the Foreign Secretary is not going to South Africa, does the Secretary of State think that a good response from him would be to ban all imports of this blooded coal? Does he appreciate that the continued import of coal is a kick in the teeth for the mining communities and the miners? The Secretary of State is aware that there is to be a rundown of miners' jobs. Will he assure the House that any miners made redundant after March 1987 will under a new scheme receive benefits equivalent to those that they receive now?
    Mr. Peter Walker: As the hon. Gentleman knows, the European leaders have agreed upon an approach to South Africa which after three months would include action on a number of materials, including coal. That is the right approach and I hope that it will have some influence on negotiations in the coming months. The hon. Gentleman asked about benefits for miners. The present scheme ends in March 1987, and if further redundancies are required it will be the responsibility of the Coal Board to decide what measures are needed.
    Mr. Evans: Will the Secretary of State explain to the British people why, when we have massive coal reserves and over 4 million people unemployed, we need to import coal, especially from countries with regimes like that in Poland, which has no free trade union movement, or South Africa, which has no freedom? Surely this is one case where sanctions against South Africa would be of benefit to Britain and Britain's work force?
    Mr. Walker: I understand the hon. Gentleman's point of view. Figures that I shall publish in the Official Report will show that in the past six months Britain imported far more coal from Poland than from South Africa. However, during the period of the last Labour Government pits were being closed and unemployment increased, and imports from South Africa and Poland continued throughout the whole of that period.
    Sir Trevor Skeet: Is my right hon. Friend aware that a recently negotiated agreement between the Central Electricity Generating Board and the National Coal Board makes little provision for imports, the result of which is likely to be that the public will be deprived of the opportunity of cheap coal from countries other than South Africa, which would be greatly to their advantage?
    Mr. Walker: On the other hand, the CEGB wants continuity of supply and our coal industry to continue to provide the volume of coal that is necessary to meet electricity demand. It is perfectly reasonable therefore for it to enter into long-term contracts to ensure that that supply continues to be available.
    Mr. Neil Hamilton: Does my right hon. Friend agree that were it not for the activities of the private sector in coal production, imports would be higher than they are? Given that the private sector is anxious to expand its operations, does it not make sense to strike off the restrictive shackles that have been placed upon it so that it can expand its output and thereby cut our import bill still further?
    Mr. Walker: If we look at the totality of coal production, we must recognise that under the present
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    system of nationalisation there is a very substantial coal industry in which this Government have invested heavily. It is providing very substantial yields of coal, with much better productivity figures. No Government can ignore those factors.
    Mr. Mason: Is the Secretary of State aware that for every 1 million tonnes of coal imported 1,000 jobs are lost in the British coal industry and in supporting industries? Over 12 million tonnes of coal were imported last year, which means that 12,000 British jobs have been lost. Where does the Secretary of State's interest really lie? Does it lie with South Africa and those countries which export cheap coal to Britain, or does it lie with the British miner and the British coal industry? In view of continuing low-cost oil imports, 20,000 more jobs in the British coal industry are threatened. That is another reason why all coal imports should cease.
    Mr. Walker: If the right hon. Gentleman really believes that last year's figures were so important for unemployment, I should point out to him that the reason for the enormous rise in imports was the disastrous strike led by Arthur Scargill, supported by the Labour party. The reason for the rise in unemployment is completely, in my view, to be laid at the feet of Arthur Scargill and nobody else. As for imports, the right hon. Gentleman also knows, as a former Cabinet Minister, that every Government of which he was a member closed pits and also imported coal.
    Mr. Redmond: On redundancy payments, is the right hon. Gentleman saying that this Government will make finance available to the Coal Board if it wishes to continue to make the same kinds of payments?
    Mr. Walker: We shall discuss, as would any Government, the financial requirements of the Coal Board in the years that lie ahead and the public expenditure that it requires. Because of his great interest in the coal industry, the hon. Gentleman knows that the scheme that has been operated by the Government was a temporary scheme, and it was announced that it was a temporary scheme to bring about the considerable transition in the coal industry that was necessary. When that major transition ends, it is perfectly reasonable that that responsibility should be returned to the Coal Board.
    Mr. O'Brien: Is the right hon. Gentleman aware that the European Commission that is concerned with coal believes that imports into member states are necessary? If so, what will be the influence of the EEC's policy on the size and output of the British coal industry?
    Mr. Walker: Imports over the past six months were about 4 per cent. of our coal requirements, and some of those imports were of specialist coals, some of which are not available here. Had we not had the disastrous strike, there would not have been such a rise in imports. I hope that now, if there is stability in the industry, we can reduce imports.
    Mr. Orme: Is the Secretary of State aware that last week I met the president and general secretary of the South African National Union of Mineworkers, who impressed two points on me? The first was about the imprisonment and internment of trade unionists in South Africa, including members of the South African NUM. The second was their desire to see the imports of South African

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    coal into Britain stopped. I note what the Secretary of State said about consideration by the EEC. That is insufficient.
    Mr. Walker: I remind the right hon. Gentleman that during the whole period that he was a Minister, the regime in South Africa was just as intolerant to the position of the blacks, and imports from South Africa came in every year.
    Following is the information:

    Coal Imports January-April 1986

    (thousand tonnes)

    Country

    Coal Imports

    Australia

    1,361

    United States

    1,139

    Poland

    493

    South Africa

    196

    F R Germany

    184

    Canada

    143

    Netherlands

    115

    Belgium

    47

    Columbia

    35

    Others

    65

    Total

    3,781

    (Figures may not add to total because of rounding.)

    Energy Efficiency
    Mr. Andy Stewartasked the Secretary of State for Energy what is his estimate of energy efficiency savings so far achieved by Government Departments; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): All Government Departments have been made aware of the need to establish and implement effective energy management practices during Energy Efficiency Year.
    Mr. Stewart: I recognise the valuable work that my hon. Friend has done during Energy Efficiency Year, but is there not still a shocking waste of energy in Government Departments and offices, particularly here in the offices in the Palace of Westminster?
    Mr. Hardy: Hot air.
    Mr. Stewart: Will my hon. Friend give me an assurance that he, as the Minister, will set an example for the rest of industry to follow?
    Mr. Hunt: My Department's energy manager has already cut the consumption of electricity under his control by about 10 per cent. My hon. Friend is right to emphasise the considerable savings that can still he made. As to the Palace of Westminster, I hope that the hon. Member who shouted "Hot air" will realise that I am not an expert in these matters. I understand that there is a great deal of surplus heat in the Palace of Westminster and I know that the Accommodation and Administration Sub-Committee would greatly welcome any practical suggestions as to how best it could usefully be re-cycled.
    Mr. Rowlands: In addition to savings in Government Departments, does the hon. Gentleman recall the Public Accounts Committee report, which said that huge savings could be made in the National Health Service which could be used for better patient care? How much progress has been made towards the targets that the PAC said should be set?
    Mr. Hunt: The hon. Gentleman has made a good point. He will be aware that I and my hon. Friend iat the Department of Health and Social Security launched a major initiative with all the regional health authorities, and he will be aware of the publication of the Encode, which has gone to all managers in the Health Service. I hope that we shall soon see those ambitious but, nevertheless, necessary targets being met.
    Mr. Rost: Is my hon. Friend aware that the enormous savings in the Health Service, Defence Department and all other parts of the public sector will not be achieved until he persuades the Treasury to remove the stupid restriction that prevents private enterprise third party financed energy management companies from offering services to the public sector without it being added to the public sector borrowing requirement, even if the investment is financed from outside by the private sector?
    Mr. Hunt: I shall convey my hon. Friend's views to my right hon. Friend the Chancellor of the Exchequer.

    Coal Industry
    Mr. Leighasked the Secretary of State for Energy what are the latest productivity figures for British Coal; and if he will make a statement.
    Mr. Gerald Howarthasked the Secretary or State for Energy how the latest productivity figures for the coal industry compare with those in 1978–79; and if he will make a statement.
    Mr. Peter Walker: British Coal's average deep-mined revenue productivity for the week ending 21 June was 3·25 tonnes, the highest weekly figure achieved so far. This compares with an average of 2·24 tonnes during the financial year 1978–79. This further growth in productivity reflects a continuing effort by all concerned to reduce costs, which provides the industry with its only sure route to a viable future.
    Mr. Leigh: Will my right hon. Friend congratulate the management and work force of British Coal on achieving the best productivity figures ever? In view of the progress being made by the industry towards achieving improvements in productivity, would it not be madness for Arthur Scargill to attempt to foment further industrial action? Does my hon. Friend agree that it would be the action of a madman, such as Arthur Scargill has proved himself to be, to put so callously and pointlessly at risk the future of the industry and its work force?
    Mr. Walker: Alas, it is not the actions of Mr. Scargill that concern me, but just his words. Every time he makes one of those speeches, a number of industrialists who are contemplating converting to coal decide that while such speeches are being made they cannot take the risk. That is doing real damage to the industry.
    Mr. Howarth: May I add my congratulations to the management of British Coal to those of my right hon. Friend? May I invite my right hon. Friend also to congratulate the western area of British Coal, which has achieved record productivity of 3·49 million tonnes per man shift, which is 9 per cent. up on the record of the preceding month? Does my right hon. Friend agree that if such progress continues throughout British Coal we shall see it breaking even by 31 March 1988?
    Mr. Walker: Yes, Sir. I should like to see that target achieved. British Coal has the added problem of lower oil prices and the competition which has resulted from that, which means that it will achieve somewhat lower revenue than it anticipated. Certainly the improvements in productivity at last show after all these years some return on the enormous investment by British taxpayers in the industry.
    Mr. Hardy: In response to those impressive figures, will the Secretary of State ensure that the importation of coal from dumping countries is deterred in Europe and prevented in Britain? Also, in response to that performance within the industry, will he advise the NCB to extricate itself immediately from its international arrangements which involve the promotion of and trading in South African coal?
    Mr. Walker: The action on South African coal has been agreed by the European Community, and we must see the effect of that in the negotitations that will take place in the coming months. One of the great factors of the improved productivity is that it will genuinely eradicate the potentality of coal imports.
    Mr. Douglas: Will the Secretary of State reflect on the productivity of the Castlehill mine in my constituency which is in existence only because two men who have been victimised by the NCB stayed underground to save the mine? Without them the high productivity there would not exist. Further, will he reflect on the deal between the South of Scotland Electricity Board and British Coal which was concluded last week and which reduced the coalburn to 3·6 million tonnes a year at a time when the SSEB is having a high oilburn and is promoting a high nuclear content in its operations?
    Mr. Walker: It is a matter for negotiation. As the hon. Gentleman will know, the obligation placed on the electricity industry by a statue introduced by a Labour Government for the nationalisation of electricity makes it clear that the boards must provide the cheapest possible electricity.
    Mr. Portillo: Is my right hon. Friend not also impressed by the productivity in the private sector mines, although they must pay royalties to the NCB on their production? Has the time not come to review the procedures for licensing private sector coal mines to put them on the same footing as the NCB?
    Mr. Walker: No, Sir. If the NCB is put on the same footing, which would mean that for each highly productive pit it could charge one price and for the others it could charge a higher price, that would be absurd. Obviously the licensing system is constantly reviewed, but at present it is working satisfactorily.
    Mr. Rogers: Will the Secretary of State join me in congratulating the miners of the south Wales coalfield on achieving all the productivity targets set for them during the past year as a result of their having, for the first time, their proper share of capital investment, especially in heavy duty face support development? In doing so, will he ask the director of the NCB in south Wales to stop moving the goal posts in setting targets over and above and beyond what they are at present achieving, which will result in even more closures, as the Secretary of State well knows?
    Mr. Walker: I welcome the substantial improvement in productivity in south Wales. The problem for the NCB
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    management is that, without its desiring it, the goal posts move because a sudden massive drop in the price of its major competitor affects it.
    Mrs. Currie: Does my right hon. Friend agree that it is important to maintain these good productivity figures into the future? Is he yet able to make a statement about the proposed development at the Cadley Hill colliery in my constituency, which my hon. Friend the Parliamentary Under-Secretary of State visited on 20 June which, if agreed, will enable me to go on representing in the House efficient coal miners into the next century?
    Mr. Walker: I know how much my hon. Friend the Parliamentary Under-Secretary of State enjoyed his visit to that coal mine, but obviously, as my hon. Friend the Member for Derbyshire, South (Mrs. Currie) knows, decisions on these matters are for the NCB.
    Mr. Eadie: Yes, the miners deserve congratulations on their increased productivity, but is the right hon. Gentleman aware that a crisis of confidence is emerging in the mining industry? He will be aware that on Saturday the Fraser of Allender institute said that 4,000 mining jobs in Scotland would go west, with a total of 8,000 as a consequence. Does the right hon. Gentleman not realise that such stories will affect productivity and that the message in the mining industry will be that the harder one works the more pit closures and redundancies there will be?
    Mr. Walker: In giving his congratulations, and with his considerable knowledge of this industry, the hon. Gentleman should reflect that under "Plan for Coal" money was poured in for 10 years but productivity agreements were never implemented. Instead of achieving 4 per cent. productivity per annum outlined in "Plan for Coal", 4 per cent. was achieved over 10 years. Thank heavens, for the future of that industry, at long last improved productivity is taking place.

    Energy Efficiency Year
    Mr. Spencerasked the Secretary of State for Energy if he will make a statement on the progress so far of Energy Efficiency Year.
    Mr. David Hunt: Energy Efficiency Year continues to make a strong impact. The "Monergy" logo, and the slogan "Get More for Your Monergy" are well established, and over 800 "Monergy" events have already take place. To reinforce the strong tide of interest, we shall be running a major autumn campaign of television and press advertising to coincide with the start of the heating season.
    Mr. Spencer: Does my hon. Friend agree that in Energy Efficiency Year it would be a great breakthrough if he were able to accept the proposals of the combined heat and power consortium in Leicester?
    Mr. Hunt: I am very grateful to my hon. and learned Friend for his constant lobbying and support for the consortium. Aware of the significance of this subject, I await with interest the consortium's report, which I understand is likely to be the first of the lead city consortia to complete work.
    Mr. Evans: Will the Minister acknowledge that the prospects for Energy Efficiency Year would be greatly

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    improved if local authorities had more finance available for loft insulating grants? Is he aware, for instance, that the St. Helen's authority is already informing its citizens that it can accept no more applications for such grants because it has no money left?
    Mr. Hunt: I am very surprised to hear that, and I shall follow up that case immediately. As the hon. Gentleman will be aware, the history of the homes insulation scheme is, sadly, one of underspend. Indeed, the arrangements made by the Department of the Environment this year were primarily laid down to ensure that no local authority would run out of money. I shall, of course, investigate the point that he has made.
    Mr. Speller: Does my hon. Friend not agree that for commerce and industry, Energy Efficiency Year is, frankly, the flattest of flat pancakes?
    Mr. Hunt: The targets and the potential for industry and commerce are so enormous that any assessment of progress so far must of necessity be something of an anticlimax. But we have already been able to identify the fact that industry and commerce have been able to make savings of £500 million as a result of my Department's programmes.

    Electricity (Privatisation)
    Mr. Deakinsasked the Secretary of State for Energy whether his Department has had any discussions on the privatisation of the electricity industry.
    The Parliamentary Under-Secretary of State for Energy (Mr. Alastair Goodlad): There have been no recent discussions on this subject. The Government have no present plans to privatise the electricity supply industry,.
    Mr. Deakins: Will the Minister confirm that the Government have no objection in principle to privatising the electricity supply industry, which has the largest holding of state assets in western Europe? Will he also confirm that the Government will seek to ensure that this is a manifesto commitment for the next general election?
    Mr. Goodlad: I cannot give the hon. Gentleman that undertaking.
    Mr. Proctor: Will my hon. Friend take steps to privatise the electricity industry as soon as possible, in view of the fact that it is not sensible to have the gas industry in private ownership and the electricity industry in public ownership because of the unfairness of that situation to the electricity industry?
    Mr. Goodlad: I note my hon. Friend's view, but as I said earlier, the Government have no present plans to privatise the electricity supply industry.
    Mr. Bruce: The House might welcome that, but it is a less than complete assurance. Will the Minister acknowledge that there would be great anxiety about the privatisation of the electricity industry, as that would involve the privatisation of nuclear power, which he may have something to say about later? Will he also acknowledge that there is a great desire to decentralise electricity in the public sector, and will he undertake to give more discretion to regional boards and less control to the Central Electricity Generating Board?
    Mr. Goodlad: The Government have already encouraged a more open market in electricity supply by
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    removing the legislative and institutional constraints on private generation and establishing a framework for fair dealing between private generators and electricity boards.

    British Gas
    Mr. Greenwayasked the Secretary of State for Energy if he will make a statement about the terms on which he expects shares in British Gas to be made available to the corporation's customers.
    Mr. Peter Walker: As I announced on 18 June, we shall be making special arrangements for gas consumers and other small investors to purchase shares in British Gas. Domestic gas consumers who register their interest in advance will be guaranteed to receive a certain number of shares when they apply. Full details will be announced before the sale.
    Mr. Greenway: Will my right hon. Friend confirm that upwards of 16 million households will be entitled to buy shares in British Gas under the privatisation proposals? Will he take steps to ensure that those shares are not confiscated by a possible future Labour Government, as the Labour party proposes to confiscate the shares of the 1·5 million shareholders in British Telecom by nationalisation under another name?
    Mr. Walker: The 16 million customers of British Gas will, for the first time, have direct participation in the industry of which they are customers. As for the Labour party's plans, I must confess that I am torn between deploring the morality of the proposals and being delighted at the political advantage that they will give to the Conservative party.
    Mr. Wrigglesworth: When does the Secretary of State expect British Gas to come on to the market?
    Mr. Walker: This autumn.
    Mr. Portillo: Does my right hon. Friend recognise that the privatisation of British Gas offers a remarkable opportunity to extend share ownership to the many millions of British Gas customers? Does he agree that it will be more successful than the privatisation of British Telecom? Will he ensure that the terms sufficiently reflect those interesting possibilities?
    Mr. Walker: I am delighted at the possibility of large numbers of customers, employees, small invest ors and pension schemes having direct participation in the industry. I look forward to successful privatisation taking place this autumn.
    Mr. Orme: Is the Secretary of State aware that his noble Friend has created some confusion over the proposed sale of the shares? Will he clear that up for the House? May we now have the details of how the shares will be launched, the number and at what time they will be made available to the public?
    Mr. Walker: On the latter point, I should have thought that the right hon. Gentleman would declare his personal interest in the matter. We will let him have the details, and I will send him a special form as soon as possible. As for the House of Lords, my noble Friend is coducting matters with immense care. I do not think that there is any misunderstanding.

    Gas Prices
    Mr. Hannamasked the Secretary of State for Energy when he next expects to have a meeting with the chairman of British Gas to discuss gas prices.
    Mr. Buchanan-Smith: Prices are a matter for the commercial judgment of the British Gas Corporation.
    Mr. Hannam: With regard to industrial gas prices, when my right hon. Friend meets the chairman of British Gas, will he discuss different gas prices for consumers on interruptible contracts, who receive good, competitive price charging, compared with those on long-term firm contracts for gas supply, whose contracts are still subject to price increases far out of touch with the present energy position?
    Mr. Buchanan-Smith: My hon. Friend is right. There has been a considerable drop in the price of interruptible gas. The price for the supply of firm gas by contract is a matter for each contract commercially negotiated by British Gas. I understand that some planned increases have been cancelled and in some cases there have been reductions.
    Mr. Rogers: When the Minister meets the chairman of British Gas to discuss prices, will he ask him how they will be affected by the flotation of British Gas shares, especially as most will go to foreign investors and British Gas customers will own a very small percentage of the shares that will be sold?
    Mr. Buchanan-Smith: The hon. Gentleman knows that privatisation of itself has no effect on the price of gas. As for the availability of shares, I simply ask him to await the details. A real opportunity will be given to many millions of people—who recently, for the first time, and under a Conservative Government, have enjoyed having shares in industry—as a result of this exciting and enterprising flotation.
    Mr. Peter Bruinvels: Is my right hon. Friend aware of the sterling work carried out by energy cost analysis companies, which have negotiated very reasonable prices for gas all over the country? Does he agree that there is now an opportunity to promote some of these private arrangements so that other major companies can benefit from a tariff analysis which is fair to them?
    Mr. Buchanan-Smith: For interruptible gas, many companies already enjoy very favourable tariffs from British Gas. I note what my hon. Friend said about the opportunities provided by consultancies and others. No doubt they will make their services available to those who find them useful.
    Mr. Rowlands: As the Government plan to raid British Gas accounts to the tune of £2·5 billion on privatisation, to collect nearly £500 million in the gas levy and still leave British Gas with a large profit, instead of trying to benefit some gas consumers with some shares, why not benefit all gas consumers by reducing gas prices?
    Mr. Buchanan-Smith: We are trying to give the British public, for the first time, a genuine share in the ownership of one of our greatest industries. Many people outside now realise how the hon. Gentleman and the Labour party would deny them an opportunity of which I know many people will avail themselves.

    British Gas
    Mr. Sackvilleasked the Secretary of State for Energy when he last met the chairman of the British Gas Corporation to discuss the terms of the privatisation of the corporation.
    Mr. Peter Walker: I regularly meet the chairman of the British Gas Corporation.
    Mr. Sackville: Does my right hon. Friend agree about the importance of reaching a good and effective code of practice for the elderly and disabled?
    Mr. Walker: Yes, Sir, and that will be done.
    Mr. Douglas: When the Secretary of State meets the chairman, will he be kind enough to explain to him why it is wrong for the Gas Corporation to have drilling and exploration activities when it is in the public sector and right for it to have drilling and exploration activities when it is in the private sector.
    Mr. Walker: There is no need to explain it. He is delighted about going into the private sector, for that reason.
    Sir Dudley Smith: When my right hon. Friend sees the chairman, will he tell him that a fair minority of my constituents look forward to privatisation and even now would be prepared to pay the going rate for gas if only they could get connected to it? Is he aware that they are increasingly irritated by the splendid television advertising of the virtues of gas? Is it not a scandal that they are asked to pay prohibitive connection charges?
    Mr. Walker: The problem with connection is that the cost of linking places to gas, especially in rural areas such as my hon. Friend represents, has been difficult. Under the process of nationalisation, there has been a clear basis according to which British Gas has had a statutory duty to connect potential consumers. That basis will continue unchanged after privatisation. The difference is that, after privatisation, if other groups wish to take on areas which British Gas has not taken on, they will be free to do so.
    Mr. Bruce: When the right hon. Gentleman meets the chairman of British Gas, will he explain that, although British Gas has got away lightly in the Gas Bill in terms of the lack of effective regulatory control, if it abuses its monopoly in the private sector, a future Government, which might be a Conservative Government, will have no hesitation in imposing stronger regulators?
    Mr. Walker: In view of the policies and differences in the alliance at the moment, I do not imagine that the hon. Gentleman will have any influence on any future Government.

    Nuclear Installations Inspectorate
    Mr. Hardyasked the Secretary of State for Energy if he remains satisfied that the Nuclear Installations Inspectorate has the staff and the resources to fulfil the responsibilities in respect of which it reports to him to appropriate standards of competence and expedition.
    Mr. Goodlad: The Nuclear Installations Inspectorate is able to meet its essential commitments. The Health and Safety Executive is now seeking to recruit over 20 per cent. more well qualified inspectors to deal with further work.
    Mr. Hardy: Is the Under-Secretary of State aware that I recall his categorical and emphatic response to a question

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    that I asked on 14 April, when he assured me that there were no deficiencies in the staffing and resources of the inspectorate? Does he accept that that answer was an extremely grave example of misleading the House on a matter of great importance? Can we be absolutely sure that the Government's responses to our questions will be accurate in future, especially when we are dealing with a matter of such importance and concern?
    Mr. Goodlad: There were and are no deficiencies in the Nuclear Installations Inspectorate. As the hon. Gentleman knows, matters about the strength and recruitment of nuclear inspectors are for my right hon. and learned Friend the Paymaster General. As I said to the House, the Health and Safety Excutive is to start a recruitment exercise this month to recruit up to a maximum of 20 more inspectors. In addition, discussions on the pay of nuclear inspectors are going forward.
    Mr. Richard Page: I thank my hon. Friend for that encouraging reply. Is it not true that the supply of energy has a price? Every year in the coal mining industry tens of people are killed, 400 are injured and thousands suffer from lung-related diseases, and in addition we have problems with acid rain. Of course, that is an improved safety record compared with a few years ago. Therefore, would my hon. Friend like to compare that with the safety record of our nuclear industry? Would we not need a Chernobyl incident every three or four years if we were trying to match the safety record of the coal industry?
    Mr. Goodlad: My hon. Friend is right. The safety record of the nuclear industry compares favourably with other forms of electricity generation.

  THE ARTS

    Merseyside
    Mr. Wareingasked the Minister for the Arts what recent discussions he has had with the Arts Council about funding of the arts on Merseyside; and if he will make a statement.
    The Minister for the Arts (Mr. Richard Luce): I have discussed the Merseyside situation with the chairman of the Arts Council, and my officials have been in constant touch with officers of the Arts Council and the Merseyside Arts Association. I am very pleased that a satisfactory settlement has been reached, which secures the future of all the major arts organisations on Merseyside.
    Mr. Wareing: Bearing in mind that it took eight months of intense negotiation to reach a settlement for the performing arts, I do not think that the people on Merseyside can be as glad about the situation as the Minister's answer suggests that he is. Is he resisting the attempts of the Treasury to cut the Arts Council's budget? Does he realise that not only the voluntary sector on Merseyside will be at stake, but that institutions such as the Philharmonic Hall could still be threatened with closure next year if the budget is cut and the Government's contribution is any less than it was this year?
    Mr. Luce: The people who live on Merseyside have every reason to be pleased that there is now a conclusion to the long negotiations. I am glad that the Arts Council, which contributed over £1 million, and the local authorities are playing a positive part in that settlement.
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    It is the last of the areas to reach a settlement. I believe that there is a positive long-term future for all the major arts bodies on Merseyside.
    Mr. Ottaway: When my right hon. Friend was considering Arts Council funding for Merseyside, was he aware of the large sums being made by Sir Peter Hall and Trevor Nunn, which could well be used on Merseyside and in the east midlands?
    Mr. Luce: I note what my hon. Friend has said. As I have already made plain, as has the chairman of the Arts Council, the question of the guidelines for the terms and conditions of directors of organisations, such as the National theatre and the Royal Shakespeare company, have been referred to the Cork inquiry, which is looking into the future of subsidised theatre.
    Mr. Alton: I thank the Minister for the personal help he has given this year in securing funding for many of the arts institutions on Merseyside. Has he had a chance to consider the representations made to him about the "Act Now" venture, which he saw earlier this summer, and will he be able to provide any funding for that in the future? Will he also comment on business sponsorship for the arts on Merseyside and how successful that can be?
    Mr. Luce: I have already had a meeting with representatives of those who have been behind the "Act Now" venture, and I have great admiration for the work that they have done. I am considering the points that they made to me and I hope to have a meeting with them in Plymouth next week during meetings of the Council of Regional Arts Associations.
    On sponsorship, the Digital Equipment Company has come in with support to the tune of just under £400,000, supplemented by extra sponsorship and awards from the Government, which makes a total of £500,000 for dance and ballet throughout the country, not just in London. That is a supremely good example of what businesses can do to help the arts. I hope that businesses on Merseyside will play their part in this.

    Parthenon Marbles
    Mr. David Atkinsonasked the Minister for the Arts what recent representations he has received from his Greek counterpart on the future of the Parthenon marbles.
    Mr. Luce: There have been no formal representations from the Greek Government on the future of the Parthenon marbles since Her Majesty's Government's reply to the request for their return through UNESCO in October 1985.
    Mr. Atkinson: Is my right hon. Friend aware that the Parthenon marbles are housed in nine museums in six countries? Does he agree that the Greek representations would be a little more credible, and the Labour party's response a little less pathetic, if similar requests were made to the Governments of all six countries in which the marbles are housed?
    Mr. Luce: My hon. Friend is right, to the extent that the British museum possesses only about 50 per cent. of all the Parthenon sculptures. Apart from some in Greece, the rest of them—at least nine — are placed in other European centres. My hon. Friend is right on that. However, I must also ask whether the Opposition have

    15
    considered the precedent that would be set if the marbles were returned. What would be left of the British national collections in many areas?
    Mr. Robert Sheldon: Is the right hon. Gentleman aware that if the marbles were to be returned to the Parthenon that would be one matter; but, as that is not practicable, to move them out of one museum and put them into another does not make much sense? Is the right hon. Gentleman further aware that if we were to pursue that line of cultural apartheid many works of art might leave our shores, and all that we would get in return would be a few statues of Queen Victoria and possibly old London bridge?
    Mr. Luce: The right hon. Gentleman puts the point most effectively. That would set a precedent, which would lead to a major reduction in our great national collections, in which all the objects, including the Elgin marbles, have been acquired legally. The right hon. Gentleman should also put that question to his hon. Friend the Member for Paisley, South (Mr. Buchan), who appears to be committed to the return of the Elgin marbles.
    Mr. Jessel: As it is clear that the British museum has looked after the Elgin marbles very well for 150 years, can my right hon. Friend say what sort of care was given to them by the locals when the marbles were in Greece?
    Mr. Luce: It would not be right for me to comment on that in detail, but I can say that the museum looks after the marbles magnificently. It has an excellent conservation service. Moreover, what is really important is that they were acquired legally, and it would require an Act of Parliament to change the position to compel the trustees to return them. I do not believe that that would be the wish of this Parliament.
    Mr. Buchan: Rather a lot of rubbish has been talked, and it will be difficult to deal with all the rubbish in a short reply. May I point out, in the form of a question as a reply to the Minister, that when it is argued that the marbles were legally acquired, in fact they were sold by an occupying country? In other words, would the Minister say that the pictures that were removed by the Third Reich from Holland, Belgium and France, which, among other things, had been acquired by Goering, had been legally acquired? We said that they should have gone back to the countries of origin. In the same way, we believe that the marbles properly belong to Greece and that more British people will see them in Athens than in London. We unswervingly adhere to the proposition that they should be returned.
    Mr. Luce: It is firmly established that the Elgin marbles were legally acquired under the sovereignty of the Ottoman empire as it was at that time. In 1816 the British Parliament passed an Act of Parliament that gave the authority to the British museum to retain the Elgin marbles.

    Public Libraries (Loan Charges)
    Mr. Murphyasked the Minister for the Arts if he has any plans to introduce legislation to require local authorities to introduce charges for the loan of books from public libraries; and if he will make a statement.
    Mr. Luce: I have no such plans. The Government intend to maintain the present arrangements for freel
    16
    ending of books and other basic library services for individuals, but I encourage library authorities to develop other sources of revenue.
    Mr. Murphy: I appreciate my right hon. Friend's support for the library service. Does he agree that the opportunity might be given to libraries to charge for fiction loans so that the extra resources can be used within the library service in the same way as charging for records already takes place?
    Mr. Luce: My hon. Friend's point is perfectly legitimate. I know that other countries, including New Zealand, have a distinction between fiction and nonfiction. I have come to the view that, on educational grounds, it is difficult to draw a distinction between fiction and non-fiction. Therefore, it is best to retain the great traditions of a free lending service. It is possible for libraries to make charges in other areas, and a number of libraries do so with a great deal of enterprise.
    Mr. Freud: I thank the Minister for his reply and welcome what he said. Will he steadily remember the importance of free access to books, whether fiction or nonfiction, for those studying.
    Mr. Luce: I am grateful to the hon. Gentleman. I have already made it plain that I intend to maintain that service. At the same time, I reinforce the view that I think there is scope for libraries to raise revenue in other ways, and they should be encouraged to do just that.
    Mr. Buchan: The Minister has taken something of the sabre away from his answer. We want a firm response that in no circumstances will libraries be permitted to charge for the loan of books. The Government are trying to do that with museums. I believe that they are also trying to do it in other aspects of libraries. We want a clear and unequivocal statement that in no circumstances will that happen.
    Mr. Luce: It would be good news if the hon. Gentleman would listen to my answers sometimes. I have made it plain that we have no intention of changing any of the existing plans to maintain a free basic library service.

  CIVIL SERVICE

    Unions (Meetings)
    Mr. Soleyasked the Minister for the Civil Service when he last met representatives of the Civil Service unions; and what was discussed.
    The Minister for the Civil Service (Mr. Richard Luce): have had no formal meetings with the Civil Service unions, but I did meet them informally on 25 March, and I attended the dinner of the First Division Association on 14 May. Topics of mutual interest were discussed informally.
    Mr. Soley: When the Minister next meets the unions, will he raise with them the future of the Crown Suppliers and confirm the decision of the review staff that to privatise the Crown Suppliers would be against the public interest? Will he assure the House that he respects that decision by his own review team? Will he publish the supplementary report by the central purchasing unit that seems to be causing Ministers some embarrassment and is at the moment hidden from public view?
    Mr. Luce: I shall look at the latter point that the hon. Gentleman raised. I am not absolutely clear that his first point is within my remit. I shall look into the matter and let the hon. Gentleman know.
    Mr. Wrigglesworth: Next time the Minister meets the trade unions, will he consider with them the damage that has been done by the Government's actions over GCHQ to industrial relations, to GCHQ itself and to the position of staff at GCHQ? In the light of all that, will the Minister reverse his decision and restore trade union rights at Cheltenham?
    Mr. Luce: The position at GCHQ has been made clear repeatedly by my right hon. and learned Friend the Foreign Secretary, and I have nothing further to add.
    Mr. Leigh: In the light of the election of a Militant. supporter to the general secretaryship of the CPSA, will my right hon. Friend reflect on the sadness of the fact that he and his colleagues on the Treasury Bench did not accept the amendment put forward by myself and other colleagues of his in favour of secret postal ballots?
    Mr. Luce: I note my hon. Friend's views. As my right hon. Friend the Prime Minister made plain last week, the election of officers of a trade union is entirely a matter for the membership itself. We have a long tradition of impartiality, professionalism and loyalty in the Civil Service. I hope and believe that that tradition will continue.
    Mr. Terry Davis: Does the Minister think that it would he a good idea, when he next meets representatives of Civil Service unions, to discuss the need for more training for equal opportunities officers?
    Mr. Luce: There are designated officers in each Government Department who look after the problems of equal opportunities. I am satisfied that that is working well.

    Employment Qualifications
    Mr. Peter Bruinvelsasked the Minister for the Civil Service if, pursuant to his answer of 16 June, Official Report, column 743, to the lion. Member for Leicester, East, he will list the groups regarded as subversive for the purpose of prohibition on employment on work vital to the security of the state.
    Mr. Luce: No, Sir.
    Mr. Bruinvels: Will my right hon. Friend include members of the Militant Tendency and its supporters who, I believe, are subversive? Does he recall that it was Militant that organised the great dispute at the DHSS office in Newcastle, costing the taxpayer £170 million? Does my right hon. Friend realise that John Macreadie's election is a danger to this nation's security, is anti-democratic and involves an organisation that seeks to undermine our valid Parliament? Surely something should be done urgently to purge Militant from the Civil Service.
    Mr. Luce: I understand what my hon. Friend says, but I must point out that the general secretaries of these unions are union officials, not civil servants. Therefore, they have no more access to the Civil Service than an ordinary visitor, and the ordinary security precautions prevail. I repeat what I have said before to my hon. Friend:
    "No one is precluded from employment in the Civil Service because of membership of a particular organisation. However, no one may he employed on work vital to the
    18
    security of the state who is or has recently been a member of a Communist or Fascist organisation or of a subversive group whose aims are to undermine or overthrow parliamentary democracy by political, industrial or violent means," [Official Report, 16 June 1986; Vol. 99, c. 743.]
    Mr. Soley: Is there not a case for looking again at Lord Denning's wise judgment, that "subversion" should be defined as undermining the state by unlawful means? That would enable people, including the hon. Member:for Leicester, East (Mr. Bruinvels), to give evidence to the police, or else deal with the matter in the normal way.
    Mr. Luce: The criterion is well established. It was established in 1975 by the former Labour Government, and I am content to stick to that.
    Sir Anthony Grant: Is my right hon. Friend aware that the worrying aspect of this infiltration is that, if it increases, there will be an increased tendency for Ministers, whatever their party, to bring into government their political nominees, and we shall thereby lose the benefits, which we have had for many years, of an impartial Civil Service?
    Mr. Luce: I strongly reinforce my hon. Friend's comments on the need for an impartial Civil Service. The heart of the stability of our system is that we should have an impartial Civil Service which is loyal to any elected Government. We are entitled to that, and I believe that we have a Civil Service which, broadly speaking, is impartial, loyal, dedicated and professional.
    Dr. MacDonald: Is the Minister aware that, despite his statements about the need for an impartial Civil Service and the fact that that is what we have—I entirely support those sentiments—the Government have worsened relationships between the Civil Service and the trade unions by their ban on trade union membership at GCHQ? Will he confirm, or deny, today's press reports that the director of GCHQ, Sir Peter Marychurch, has been asked to stay on until June 1988. one year after he is due to retire? Does he agree that the Government are perhaps hoping thereby to ensure that management at GCHQ is able to persuade an incoming Government to maintain the trade union ban'? Will he take on board the fact that the Labour party, when it takes office after the next general election, will do nothing whatsoever of the kind and that it will reverse the Government's decision and allow trade union membership to continue at GCHQ?
    Mr. Luce: I have already said on several occasions that the question of GCHQ is a matter for my right hon. and learned Friend the Foreign Secretary. It is wrong to take the view that the Government have not taken account of conditions in the Civil Service. The latest pay settlement shows that we are taking fully into account movements in the pay sector outside the Civil Service.
    Mr. Gow: Will my right hon. Friend reconsider his earlier answer, when he said that the conduct of elections of trade union officials is a matter for the trade union? Does he agree that there is a wider and legitimate national interest in securing that elections for office in trade unions are conducted in every respect with scrupulous fairness and integrity?
    Mr. Luce: I entirely agree with my hon. Friend.

    Permanent and Deputy Secretaries
    Mr. Wainwrightasked the Minister for the Civil Service how many permanent secretaries and deputy

    19
    secretaries at the present time are members qualified by examination of a United Kingdom chartered professional body.
    Mr. Luce: This is not uncommon. Detailed records are not held centrally.
    Mr. Wainwright: Is the Minister aware that my question was about the number ofpeople in top jobs in the Civil Service who have professional qualifications? Will he answer it?
    Mr. Luce: We do not have a specific record, but, if it is any help to the hon. Gentleman, roughly one in six of all those who are permanent secretaries or deputy secretaries have professional qualifications.

    Early Retirement
    Mr. Wattsasked the Minister for the Civil Service what are the cost implications of negotiations to facilitate early retirement from the Civil Service.
    Mr. Luce: The negotiations are intended to secure more flexible early retirement arrangements within the Civil Service. The intention is that the average cost of early retirement will not increase.
    Mr. Watts: Can my right hon. Friend confirm that civil servants will not be able to retire on full pensions at the age of 50, as has been reported in recent press articles?
    Mr. Luce: I can confirm that there has been inaccurate press reporting of the matter. The proposal, which is part of a comprehensive package which is still being discussed,
    20
    is that civil servants should be given the right to retire on actuarially reduced pensions at no extra cost to the Exchequer.

    Non-departmental Public Bodies
    Mr. Dickensasked the Minister for the Civil Service how many non-departmental public bodies have been (a) abolished or (b) reformed since May 1979.
    Mr. Luce: Between 1979 and 1985 a total of 756 non-departmental public bodies were abolished, rationalised or substantially reduced. During that period 242 new bodies were set up, resulting in a net reduction of 514.
    Mr. Dickens: Can my right hon. Friend confirm that the Government's quango hunt has not run out of steam?
    Mr. Luce: I can confirm that. In the past year, in which there has been a review of the number of quangos, there has been a continuing net reduction.
    Mr. Tony Banks: Does the Minister believe that when non-departmental bodies are set up by the Government, particularly when they replace democratically elected bodies — I am thinking specifically of the residuary bodies that were set up to replace the democratically elected Greater London council and the metropolitan county councils — Ministers should have the guts to answer questions about the activities of those non-departmental bodies?
    Mr. Luce: I think that we are referring here to transitional bodies. The criterion whether a new quango should be set up is whether it can be proved to be the most cost-effective means of fulfilling Government policy.

South Africa
3.31 pm
Mr. Denis Healey(by private notice) asked the Secretary of State for Foreign and Commonwealth Affairs whether it remains his intention to visit South Africa, and if so what are his plans.
The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): I intend to make an early start on the mission entrusted to me at the recent European Council meeting in The Hague. I accordingly proposed last week to the Governments of Zambia, Zimbabwe and South Africa that I should visit them in the period 9 to 11 July on the first stage of the mission. The Zambian authorities have confirmed that a visit this week is convenient. The Zimbabwean authorities have given a similar indication, but we are still waiting for confirmation. The South African Government have made it clear that they are ready to receive me, but have proposed alternative dates. These are now under consideration. I shall therefore proceed with the visit to Lusaka and Harare, leaving from Strasbourg tomorrow evening, and plan to visit South Africa later in the month. Further visits to and within the region are, of course, not excluded.
Mr. Healey: I thank the right hon. and learned Gentleman for his statement. Does he agree that, following the refusal of black leaders in South Africa to see him, the humiliating snub from President Botha confirms all his initial doubts about the wisdom of his mission? Will he use this example to persuade the Prime Minister that she is not always right and that the Foreign Office is not always wrong?
The Opposition welcome the Foreign Secretary's visit to Zambia and Zimbabwe this week. The Government have left a lot of fences to be mended in those countries and there is a real risk of the Commonwealth breaking up unless he takes advantage of his mission to take more notice of the views expressed by those countries than the Government have taken so far.
Does the postponement of the Foreign Secretary's visit to South Africa mean that he intends to meet the conditions set for his visit to President Botha and, if so, what are those conditions? Can the right hon. and learned Gentleman assure the House that he is not seeking to delay matters until after the Commonwealth summit?
Does the Foreign Secretary accept the view expressed by President Mitterrand and the Prime Minister of the Netherlands and Denmark that the Government are committed to sanctions if his mission fails and does not secure the unconditional release of Nelson Mandela and the unbanning of the African National Congress? Incidentally, will the Foreign Secretary take the opportunity, while he is in Lusaka, to visit the ANC, as emissaries of President Reagan have been doing over the past few days?
Finally, do the views expressed by the Prime Minister to Mr. Malcolm Rutherford and set out in last Friday's Financial Times now represent Her Majesty's Government's policy, in particular, that the unconditional release of Nelson Mandela will depend. as the article says, on the threat of sanctions and that the Government are prepared to go to the Security Council for mandatory sanctions if his mission fails?
Sir Geoffrey Howe: I accept no responsibility for answering the right hon. Gentleman's more fanciful inquiries based on newspaper articles, for which neither my right hon. Friend the Prime Minister nor I have any responsibility. Nor do I intend to respond, in the spirit in which the right hon. Gentleman put it, to suggestions of snubs or anything of that kind.
The position—I should like the right hon. Gentleman to understand this—is that I have been entrusted by the Community with a mission of some importance and outstanding difficulty. I intend to pursue it with patience and determination to see, so far as I can, all those whom I ought to see in discharge of the objective of trying to promote an opportunity for dialogue to take place.
I am not yet able to say when the mission will come to a conclusion. I intend to pursue it patiently and as far as I can.
As my right hon. Friend the Prime Minister told the House in her report on the meeting at The Hague, certain measures have been taken in the past against South Africa and certain other contingencies are being studied in the terms set out in The Hague communique.
If it turns out to be convenient and possible. I shall certainly be prepared to consider an opportunity of meeting representatives of the ANC, because it is important to urge them as well as others of the need, above all, to turn away from violence in southern Africa and try instead to go down the path of dialogue, negotiation and conciliation.
With regard to broken fences in South Africa. I shall try my best to repair those which the right hon. Gentleman has destroyed.
Mr. Tim Rathbone: Will my right hon. and learned Friend accept that the good will and good wishes of every sensible person in Britain and in Europe will go with him in his attempts to bring an increasingly tragic state of affairs in southern Africa to as speedy an end as possible?
Will he also accept that many Conservative Members, I hope all, believe that his visit is necessary in order to counterbalance the impression created by the right hon. Member for Leeds, East (Mr. Healey), the Opposition spokesman on foreign affairs, and many other Members of the House?
Thirdly, will he accept that many people in the House, and most people in the country, will welcome his readiness to meet the ANC when he visits Lusaka?
Sir Geoffrey Howe: I am grateful to my hon. Friend for each of his three comments. I appreciate that on almost every aspect of this case it is not easy to do anything that commands universal assent. Subject to that, I am most grateful for his support.
Mr. David Steel: Is the Foreign and Commonwealth Secretary aware that we on these Benches wish his series of missions all success and hope that he will be able to talk to all those whom he wishes to see, but does he recognise that his chances of doing that will be greater if he stresses that he is going as President of the Council of Ministers of the European Community, and that as such he will not be handicapped by the public foot-dragging on sanctions of the Prime Minister? Will he also make it clear to the South African Government that the question is not whether white

23
minority rule changes, but when and how, and that most of us would prefer it to be sooner and peacefully, rather than later and violently?
Sir Geoffrey Howe: The right hon. Gentleman made some observations for which I am grateful, but he spoilt his intervention by a rather graceless reference to my right hon. Friend the Prime Minister. The important point that he makes, which I want to underline, is the extent to which one must try to build on positions that are common as far as possible. President Botha has said that apartheid is an outmoded system and that he looks forward to a system that will be without domination by any race. All those things are pointers in the right direction and will help me in the difficult search for a way to dialogue.
Sir Anthony Kershaw: Are not these matters rather too serious for the juvenile debating points that are all that the right hon. Member for Leeds, East (Mr. Healey) has in his armoury? Will my right hon. and learned Friend make it clear that he goes with the support not only of this Government but of that of the 11 other almost most important Governments in the world?
Sir Geoffrey Howe: I am grateful to my hon. Friend for underlining that point. It is important for it to be understood, and I think it is, that I am going as the Foreign Minister and the current President of the European Council of Ministers, and that I am supported by the other 11 Governments.
Mr. Tom Clarke: When the Foreign Secretary eventually visits South Africa, will he accept that the release of Nelson Mandela, long overdue as it is and universally welcomed as it will be, will not in itself be enough? Does the Foreign Secretary recall that in an interview with a British newspaper last year Nelson Mandela said that his own freedom and the freedom of his fellow citizens are indivisible?
Sir Geoffrey Howe: The hon. Gentleman has made an important point and it is in line with the point made in the statement by the European Council at the Hague, which said:
"This dialogue cannot take place as long as recognised leaders of the Black community are detained and their organisations are proscribed."
It is plain that a furher amplification of the scope for democratic dealogue is important. Most people recognise that the prospect of the release of Nelson Mandela is far and away the most important key, if there can be a key.
Mr. Cranley Onslow: Is my right hon. and learned Friend aware that the tone of the questions by the right hon. Member for Leeds, East (Mr. Healey) and what he has been saying in the media and elsewhere make it doubly clear that his principal objective is to try to sabotage the Foreign Secretary's mission before it starts? That is sheer mischief making. On this occasion, is it not right that every responsible hon. Member who wishes not to jeopardise the prospects of the success of this mission should not press my right hon. and learned Friend too hard? Mr. Speaker, these exchanges need not be prolonged indefinitely.
Sir Geoffrey Howe: As far as I can, I acknowledge the force of the points made by my hon. Friend. I hope that the wisdom that exudes from his present important position will penetrate at Leeds, East.
Mr. David Winnick: Does the Foreign Secretary realise what a farce this has become and that he was right in the first place to have many reservations about his trip to South Africa? When will he persuade the Prime Minister that there is no effective alternative to sanctions against the apartheid regime and that trips to South Africa or anywhere else are no substitute for such action? The Foreign Secretary may know that such action was advocated last night by his Minister of State on a television programme.
Sir Geoffrey Howe: I wish that this problem could be resolved as easily as the hon. Gentleman so readily implies. He knows, or he ought to know, that it is far too superficial to argue that this long-standing and difficult problem can be resolved by the mounting of comprehensive sanctions against South Africa. The position set out last week by my right hon. Friend the Prime Minister is the position adopted by my hon. Friend and by me. Over the years certain measures have been taken against South Africa. Certain contingency plans outlined in The Hague communiqué are being made.
"We do not think that threatening further sanctions immediately or automatically will help to bring about the negotiations that we desire".—[Official Report, 1 July 1986; Vol. 100, c. 822.]
That was said by my right hon. Friend the Prime Minister, and it represents the position of the Government.
Mr. Hugh Dykes: Does my right hon. and learned Friend realise that his mission is bound to get the good will and support of all people of wisdom and common sense in every European country, but particularly in Britain, in view of his position as President of the Council of Ministers? Over the weekend there was an outburst by the South African Foreign Minister against sanctions. Does my right hon. and learned Friend draw an optimistic, or pessimistic, conclusion from that stance, which appears to be a change of line on the part of the South African Government? It is not a wish not to have sanctions imposed. They are defiantly saying, "Come and get us, we do not care."
Sir Geoffrey Howe: I am grateful to my hon. Friend for the first part of his question. As for the second part of it, it is tempting in circumstances of this kind to feel obliged to comment on almost every statement that is reported in the newspapers or elsewhere, but I do not think that that is helpful, even though I understand why my hon. Friend has made that point.
Mr. Norman Buchan: The right hon. and learned Gentleman has stressed that he is going to South Africa to represent the EEC as well as this country. Will he keep in mind the circumstances that give rise to his visit—that sanctions are wanted immediately, but that he and the Prime Minister want sanctions, if they are to be imposed at all, to be postponed? Will he keep in mind that the bulk of his fellow Ministers in the Community favour sanctions, not because they or we believe that sanctions are the only solution, but because they are a necessary solution to bring home to the South African white regime that it must come to terms and an agreement on the basis eventually of one man, one vote?
Sir Geoffrey Howe: I shall bear in mind my own assessment of the views formed and the advice given by the other members of the Council of Ministers. I shall certainly bear in mind that the Heads of Government of

25
a number of other countries took the same view as Britain and that many of those who considered the matter carefully were increasingly impressed with the need to adopt a patient and cautious approach to this matter. That is why the conclusion set out in the communique was unanimous.
Sir John Biggs-Davison: Would not sanctions, as called for by the Opposition, have a catastrophic effect upon some of those other countries that my right hon. and learned Friend is about to visit, with our goodwill? Does it not also show a misunderstanding of the South African Government and the Afrikaners generally to suppose that sanctions will bring about any desirable effect? It is not important to encourage as well as to warn?
Sir Geoffrey Howe: There is real force in both of my hon. Friend's points, and I endorse the last part of his question.
Mr. John Evans: If Britain's Foreign Secretary, who is President of the EEC Council of Ministers, has not been snubbed and humiliated by the South African Government, will he tell the House the date of his rearranged visit to South Africa and whether it will take place before the Commonwealth summit? Will he also make it a condition of his rearranged visit to South Africa that even if he does not see the President and the Minister of Foreign Affairs of South Africa, he must see Nelson Mandela?
Sir Geoffrey Howe: I shall tell the House of the date, or dates, of my further visits when those are clear. I told the House in my original statement that they are still the subject of further discussion. Those whom I shall hope to see certainly include all those who were mentioned by the hon. Gentleman.
Sir David Price: Will my right hon. and learned Friend accept that he goes to South Africa with the total goodwill not only of this House but of the whole of Europe? Will he also explain to those who are criticising his mission that this country started this century with nearly 500,000 men-at-arms against the Afrikaners, that 22,000 perished in South Africa at the beginning of this century and that our track record in opposing the Boers is impeccable?
Sir Geoffrey Howe: I am always grateful to my hon. Friend for the depth and breadth of his historical analysis, and I shall hear in mind what he said, but I shall also try to bear in mind more recent events than that.
Mr. Laurie Pavitt: In view of the Foreign Secretary's understandable request for patience and time, has he seen the announcement in this morning's edition of The Guardian, which reminds us that more or less the same thing was said in 1963, 25 years ago? Does he have in mind a shorter time span than 25 years?
Sir Geoffrey Howe: I have no doubt that the longer the unresolved policy of apartheid has continued in South Africa, the harder has become the task of its removal, but in making that kind of assessment one should take account of the steps that have been taken in the last year or two. I know that it is fashionable to discount them completely. They should not be so discounted. We have to try to start from where we now are and move as quickly as possible towards a solution that is founded on dialogue, not on violence.
Several Hon. Members rose——
Mr. Speaker: Order. I have to bear in mind that this is private Members' day and that this is a private notice question. I shall call two more hon. Members, one from each side of the House.
Viscount Cranborne: Would my right hon. and learned Friend's task be made any easier if the buccaneering tendencies of the right hon. Member for Leeds, East (Mr. Healey) could be restrained, as he is increasingly behaving like the Captain Morgan of foreign policy?
Sir Geoffrey Howe: I am always content to accept my hon. Friend's judgment on the performance of' the right hon. Member for Leeds, East (Mr. Healey).
Mr. Frank Field: Will the Foreign Secretary's bargaining position be strengthened, or weakened, if it is clear that the European Community will take further action should his mission fail?
Sir Geoffrey Howe: The position of the European Community is clearly stated in the communiqué to which I have referred the House. It is clearly to the effect that further measures that might be needed are now the subject of contingency planning, as my right hon. Friend the Prime Minister told the House last week.
Several Hon. Members rose——
Mr. Speaker: Order. I have endeavoured today to give priority to those hon. Members who were not called on previous exchanges, and I hope the House will think that that is fair.

STATUTORY INSTRUMENTS, &C.
Ordered,
That the Local Authorities' Cemeteries (Amendment) Order 1986, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Fireworks (Safety) Regulations 1986, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Hovercraft (Civil Liability) Order 1986, be referred to a Standing Committee on Statutory Instruments &c.
That the draft International Finance Corporation (1985 General Capital Increase) Order 1986, be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Malone.]

EUROPEAN COMMUNITY DOCUMENTS
Ordered,
That European Community Documents No. 4092/85 and 4058/86, a proposal for a Regulation laying down measures to discourage the release for free circulation of counterfeit goods, and a proposed Amendment to the draft Regulation be referred to a Standing Committee on European Community Documents.
That European Community Document No. 4044/86 concerning a proposal for a Council directive on the protection of workers from the risks related to exposure to benzene at work be referred to a Standing Committee on European Community Documents—[Mr. Malone.]

PUBLIC TRUSTEE AND ADMINISTRATION OF FUNDS BILL [Lords]
Ordered,
That the Public Trustee and Administration of Funds Bill [Lords] be referred to a Second Reading Committee — [Mr. Malone.]

Future of Manufacturing Industry
3.51 pm
Mr. Kenneth Carlisle: I beg to move,
That this House agrees that manufacturing industry has a central part to play in the future prosperity of the United Kingdom, and, that, in order to succeed in a fiercely competitive world, it must use the most modern manufacturing methods, and market its products with skill; notes further, that the importance of manufacturing must he recognised by society generally and by schools and colleges in particular, so that industry can surmount the present shortage of skills; and believes finally that success in manufacturing can only be won in any enterprise through the united efforts of all the workforce.
I feel very fortunate in having won the ballot for a motion today. When I became a Member of Parliament I was told that the chances of any private Member winning the ballot for a private Member's motion during his time in Parliament were so remote that if he did so he could well become a statistic.
I want to debate the future of manufacturing industry, because I know that our success in manufacturing is central to our future prosperity. Some say that we can earn our wealth in other ways and give the impression that the decline in manufacturing is inevitable, and even tolerable, and that service industries, financial earnings, tourism and raw materials can plug the gap. Sadly, they are badly wrong. Although we need a balanced economy and services have a great role to play, manufacturing industry is the engine of our prosperity and generates that essential spark that gives vitality to the rest of our economy.
The Italians were the first bankers in Europe just because they were at the hub of medieval commerce. Insurance and the vast network of wealth that spread from it were born in this country because of our growing commercial dominance, and our tremendous success in the service industries flourished in the wake of our manufacturing prowess in Victorian times. In the same progression we can be sure that Japan, with its present industrial strength, will be the centre for services in the next century. If we cannot reverse the trend in our manufacturing decline, our services will sink in tandem.
To resuscitate and expand manufacturing is a national priority. It is our lifeline to the future. Right now, manufacturing supports one quarter of all our jobs, that is, 5·5 million people. It creates one quarter of our annual wealth and still contributes nearly half of our overseas earnings. The picture and history are grim. This is a story of decline over many years, and its statistics are felt in every household and high street in Britain.
In 1964 we made 14 per cent. of world manufactures, but the figure for 1986 is half that. Our balance of trade in many key sectors, such as motor vehicles and electrical and electronic engineering, has turned from surplus to deficit, and we all know the sad story of our once proud motor bike industry. However, we have a duty also to praise what has gone right. In the past five years huge efforts have been made to reverse the trend. Our steel industry has been saved from extinction and is now one of the most efficient in Europe. Our motor industry has struggled to overcome the despair of the 1970s, and what we do best—our Jaguars and Rolls-Royces—has kept the name of British car making alive in the world. Since 1982 productivity in manufacturing has grown by one quarter.
Mrs. Elaine Kellett-Bowman: Does my hon. Friend think that there is cause for concern in the Bank of England's bulletin for June 1986, issued today, which states that our labour unit costs rose by only 0·2 per cent. in 1983, but that in 1985 by rose by 3·1 per cent., thus making our competitive position that much more difficult?
Mr. Carlisle: My hon. Friend is right. We cannot regain our position in the world unless we are truly competitive. However, there are outstanding individual successes.
In my constituency of Lincoln, Ruston Gas Turbines is at the forefront of turbine technology. In the past eight years its output has nearly trebled, 90 per cent. of which is for export. During that period it has created a new business in its control equipment department, which now employs 120 people and designs sophisticated controls for turbines. It has invested heavily in plant and technology, and needs people of great skill to hold its own. Although its production has trebled the number of people employed has remained roughly the same, about 2,500. The lesson is clear: to sustain employment in manufacturing in an age of technology a business must be both competitive and expand its sales. There are successes, but we have still not reversed the general historic trend of decline, and we must do that.
In this debate we should all accept that for manufacturing to flourish we need a stable, healthy economy and that, as exporters, we need markets for our products. The Labour party's extravagant plans for a ruinous binge of spending offer no comfort, and its trade policy, which yearns for protection, is not a policy but a mirage of a policy which offers no future for industry.
A crucial task of any Government is to face reality, insist that trade should be fair, fight for an open trading system, which in the end, as a trading nation, we need. It must analyse the reasons for the decline in manufacturing and construct a policy for success.
Mr. David Winnick: I congratulate the hon. Gentleman on winning the ballot, but before he turns his arrows to Labour party policy, would it not be wise to deal with the way in which British manufacturing industry has been decimated in the past seven years and the fact that mass unemployment has returned to areas such as the west midlands which was once the most prosperous area in the United Kingdom, but where unemployment is now higher than the national average? Moreover, in parts of the west midlands, such as in my constituency, during the past three years unemployment has been running at about 17 per cent. or more.
Mr. Carlisle: As usual, the hon. Gentleman exaggerates his case. I was arguing that manufacturing has no chance unless the economy in which it functions is stable and has some hope for the future. We all know that under the Labour party's plans the economic structure within which industry would operate would indeed be dicey.
All the recent studies of manufacturing, including the Finniston report on engineering and the House or Lords report on trade, point to a kind of cultural weakness in Britain. In Germany the engineer is revered. Here he has no particular status. His pay is too low, and that of the banker, whose very existence depends on him, is too high. That cultural failing is now recognised in this country, and it must be a major strand of Government policy that such a failing should he reversed from the earliest age in education.

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In truth, there is no career finer, more constructive or more valuable for this country than one of making products that one's fellow humans want and need. It is not enough to say that— we must act on it. Much depends on the quality of education and the relevance of our training. We are facing a famine of people with the right skills, and it is a terrible paradox that even at a time of unemployment there are growing skill shortages.
In 1980 Finniston said:
"We genuinely fear a chronic shortage of engineers over the last decade of the century unless in the meantime there is a major increase in the proportion of young people opting for an engineering career".
We now produce 9,000 engineers a year, but if we trained them in the same ratio as Japan, we would have between 30,000 and 40,000 new engineers each year. Our industries spend about 0·15 per cent. of their sales turnover on adult training, but overseas the figure is often between 2 and 3 per cent.
Mr. Eric S. Heffer: The hon. Gentleman is clearly referring to professional engineers rather than to engineers who are apprentices. Is he aware that in certain parts of the country apprenticed engineers have finished their apprenticeships but have no hope whatever of employment — for example, on the northeast coast and on Merseyside? Incidentally, even if they manage to get the odd job, they can find nowhere to live.
Mr. Carlisle: I was referring to professional engineers coming out of our colleges of higher education and universities, but I accept the hon. Gentleman's point. There is also a great need for highly skilled engineering workers. Our training must also be directed towards that section, because there is a genuine need. However, the solution is complex and it must grow from a partnership between the Government and industry. Each must do more.
Much has already been done. For example, one welcomes the growth of the TVEI programme in schools, the expenditure of £43 million on the engineering and technology programme to create an additional 5,000 graduates, and the effort of industry in the Information Technology Skills Agency, but we cannot be complacent. We must increase our efforts. We must ensure an adequate supply of mathematics and physics teachers, even though the measures required do not fit snugly into accepted educational thinking. Schools must have strong and working links with local industry. Local colleges of technology must have the necessary facilities, and training relevant to local industry. In higher education, we must reinforce the recent trend to give better support to science and engineering.
Industry must also shoulder its share of responsibility for training. We should aim to make matters more favourable for those companies which do train than for those which do not. We should also insist that in their annual reports companies explain what they are doing about training.
Just as six years ago the Finniston report called for a transformation in training, so recently the Coopers and Lybrand report on training was entitled "A challenge to complacency". On all sides the message is clear —without the skills we cannot succeed. But even if we magically acquire a legion of highly skilled workers, only one fraction of the problem would be solved. It is like a
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car with one wheel. We must also have good management, rigorous and skilful marketing and investment in new technology.
In the last five years the Government's general industrial support for new technology in industry has more than doubled, after allowing for inflation, but I still believe that we can —and must—refine and extend this, not merely to sustain industry, but to act as a spur and a support in the harsh world of new development. Clearly targeted support is more productive than general regional subsidy.
Mr. Edward Leigh: Does my hon. Friend consider that employment in both our constituencies has been helped by the fact that Scunthorpe, with development area status, is siphoning off employers?
Mr. Carlisle: Clearly the proximity of a development area acts as a blight on the regions next door. One of the problems is that four years ago the development areas were more clearly defined. My hon. Friend speaks of a real problem from which we suffer in Lincolnshire.
Management also has a key role to play in the crucial area of human relations in industry. Marks and Spencer always talks about human relations in industry, not just about industrial relations. That is a major reason for its success. However, as a nation we have for too long been locked in an abyss of industrial relations, and we must break out of it before we are left with no relations at all.
Teamwork and involvement are vital. More manufacturers should adopt the use of quality circles, and more still should embrace profit sharing. Only some 550 companies have profit-sharing schemes under the Finance Act 1978, despite the added incentives that our Government have given. It is crucial for good human relations in industry that all the work-force should share in the success of their company, just as they must share the burden of difficulty and failure. Teamwork involves unity of purpose between management and unions for the benefit of both business and work-force. We must add to the incentives for profit sharing and ensure a major and rapid spread of these schemes.
I dare say that there is not a Member of Parliament who at some time in his or her constituency has not witnessed an example of the perilously high cost of these failures of human relations in industry. In my own constituency we are at a critical moment. We have a business called Clayton-Dewandre, which employs 700 people. It is a company of skill and good technology and is a major supplier of braking systems to the British truck industry. Yet that company faces disaster because for more than 20 years there has been a poverty of good human relations. Unless an agreement can be reached very soon to enable the business to face competition, that company will leave Lincoln to manufacture elsewhere, either in the United Kingdom or in Germany.
I am not here to apportion blame, but this is a desperately serious matter both for the people who work in the business and for the city. The root cause of the crisis is not lack of skill, but lack of unity, lack of teamwork and a lack of involvement in the business stretching back more than 20 years, the effect of which has bred distrust and a cynical view of the future. I appeal to all in that business to get together once again to keep it in Lincoln. Events here sadly show just how hard we must work to involve all in the success of their business.

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I feel deeply that as a country we have much to do to rebuild and sustain our manufacturing industry. We must radically change our cultural and psychological attitudes towards manufacturing. We need urgent action in education and training. Management must become more receptive, creative and professional.
Mr. Hugh Dykes: Will my hon. Friend give way?
Mr. Carlisle: No, I am sorry. Human relations in industry must become human, otherwise there will be no relations and no industry. I believe that the Government understand the problem and are seeking to redress it through a series of measures. I also believe that the Opposition recognise the problem, but they wish to implement policies which would remove us further and fatally from the world market place. The cost of that to the taxpayer would be intolerable, and the cost to the nation and its future incalculable.
Any Government can create only the framework. Without a true marriage with industry, we are doomed to even further decline. There is no greater challenge that faces this country, and therefore no greater challenge that faces this House. I hope that in this debate we can add our weight to the urgency and give an impetus to success.
4.10 pm
Mr. Roy Jenkins: The hon. Member for Lincoln (Mr. Carlisle) opened this debate with a reflective and interesting speech. The debate is certainly on an important subject and I congratulate the hon. Member for Lincoln on choosing this topic and I believe that we should have a worthwhile discussion on the matter.
Several fallacies have been accepted too freely recently about the position of our manufacturing industry in the balance of our economy. The biggest fallacy is the view that salvation lies in services, and only in services. The corollary to that is that it is inevitable and desirable that over the past two decades there has been a reduction of nearly 3 million in employment in manufacturing industry. That is a massive reduction and represents nearly 40 per cent. of the total in manufacturing industry over that time.
I do not believe that that should have been the case. That has been precipitate and dangerous and it has not been associated with an increase in productivity which has led to our maintaining our relative manufacturing position.
Between 1975 and 1984, Japan increased manufacturing output by 61 per cent.; the United States by 41 per cent.; West Germany by 16 per cent.; Italy by 22 per cent. and our manufacturing output actually fell by 4·5 per cent..
We already have the largest service sector of any large developed economy with the exception of the United States. One might say that that is fine. The United States is the richest economy in the world and has the largest service sector. As a natural development from that, we, as the second richest economy, should have the second largest service sector. Unfortunately, there is a snag in that logic: we are very far from being the second richest economy in the world. All the other advanced economies of comparable size have a substantially smaller service
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sector and a substantially bigger manufacturing sector than we have. That is especially so in Germany and Japan, and less substantially so in France and Italy.
Mr. Dykes: I agree with the right hon. Member. Does he agree that although the motion proposed by my hon. Friend the Member for Lincoln (Mr. Carlisle) is in every way excellent and effective, as he said, it is surprising that amidst all the references to the need for a much higher investment ratio and new public and private assets in this country, especially for high technology, the United Kingdom invests less than any of the other advanced OECD countries?
Mr. Jenkins: I do not wish to be committed to the terms of the hon. Gentleman's motion. He has opened the subject up by his motion, but I do not think that it contains a complete catalogue of recipes for our present ills in this respect.
Mr. Michael Fallon: Will the right hon. Gentleman give way?
Mr. Jenkins: No, I should like to make some progress.
It is impossible to sustain the belief that a large service sector is the symbol of success. In our case it is the reverse. We have already gone too far in that direction, although some movement in that direction was clearly inevitable and even desirable.
It is important to bear in mind that services are difficult to export. Some are almost unexportable. They can only be performed or consumed on the spot. Even when they can be exported, they are mostly operating—regrettably in many ways—in much more protected markets than goods. I hope that we can make progress to change that position, especially in the European Community. It would be a mistake to count Lord Cockfield's chickens before they are hatched. There is no doubt that services operate in a more protected market than does manufacturing industry.
The position is that 64 per cent. of our labour force is employed in services, which produces only one quarter of our overseas trading income. A little more than 20 per cent. still employed in manufacturing industry must produce the rest. That is a good reason why we should cherish that 20 per cent.
Mr. Fallon: The right hon. Gentleman has correctly concentrated on the large size of the service sector in the British economy. Does he accept that one reason why it is so large is that public sector service employment is included in that definition?
Mr. Jenkins: That is a factor, but it is by no means the only factor, and nor are we the only country with large public sector employment. For instance, Italy has a lower proportion in the service sector but has just as large a proportion of its population in public service employment as we have. The hon. Member for Darlington (Mr. Fallon) has made a valid point, but it does not explain the whole position.
Another fallacy about the balance of industry is that unemployment is essentially technological and therefore inevitable and incurable. I do not accept that, for several reasons. First, it is difficult to reconcile that proposition with the fact that both Japan and the United States—the two countries furthest into advanced technology—have the lowest rates of unemployment. Their rates are very significantly lower than ours. I also do not believe

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that that proposition has historical validity. The revolution of information technology has not had a greater effect on labour than the vast reductions in the numbers of those working on the land and in domestic services which were features of our changing employment demography over the past 100 years.
The devastating weakness of manufacturing employment and prospects in this country has been caused by a combination of four factors. First, in the past decade and a quarter from 1973 the whole industrialised world, with certain exceptions—the United States in 1983–84 and some of the countries of the Pacific basin—has found it much more difficult to maintain rapid and sustained growth than previously.
Secondly, the United Kingdom was less competitive in manufacturing industry than most other countries, and we still are after seven years of this Conservative Government.
Thirdly, we pursued a remarkably foolish exchange rate policy in 1980 and 1985 which was a very vulnerable period. That has had a permanent effect on manufacturing industry from which we have not nearly recovered. In fact, we are not pursuing a very wise exchange rate policy now, even though it is not as foolish as the policy to which I have referred.
The fourth point is related to demography. This has continued for longer than was expected 10 years ago and has continued to work against us in the sense that more people are seeking to come on to the labour market than come off it. That position should change by the early 1990s.
As a result of these factors we have suffered unnecessary and dangerous de-industrialisation. It is worth remembering as a sombre fact, in view of the other difficulties in the world, that in this country we have effectively twice the male unemployment rate of America, Japan, France, Germany or Italy. That is a pretty devastating criticism of the state of our industry.
One of the dangers of precipitate and excessive closing down of industry is that it is extremely difficult to reverse. Almost by its very nature it is an irreversible process. It is a new thing to look at the 1930s favourably, but it is instructive to consider the precedent of that decade. At the beginning of the decade, unemployment was at about the present level. It was somewhat worse in reality for a short time in relation to the size of the economy then—from 1931 to 1933.
An unemployed man in 1931 suffered far greater absolute poverty than does an unemployed man today, but his prospects of getting a job rapidly became considerably better than has happened in the 1980s. By 1935, unemployment was down to just below 2 million and, by 1937, it was down to 1·5 million.
Perhaps even more important was the fact that the capacity of basic industries was not then permanently destroyed. They had a very bad time in the first part of the decade. That was symbolised, perhaps, by the famous example of work on the Queen Mary at the John 'Brown yard at Clydebank, which was suspended for two and a half years because the Cunard company ran out of money. Work was started again with Government subsidies. The important difference was that the yard was not dismantled or closed. Steelworks, coal mines, heavy engineering plant and even textile mills survived and were available. They were called back into service, sometimes in a slightly different form, first with rearmament and then when the war brought rapidly soaring demand.
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I have come increasingly to the view that the Government stand back too much from industry. In my experience, they do so more than any other Government in the European Community. They do so more than the United States Government. We have to remember the vast US defence involvement in industry. They certainly stand back more than do the Japanese Government. To some extent, the motive is the feeling that we have had an uncompetitive and rather complacent industry which must be exposed to the full blasts of competition, and if that means contracts, even Government contracts, going overseas, we should shrug our shoulders and say that the wind should be stimulating.
That process has been carried much further in Britain than in any other comparable rival country. I am resolutely opposed to protectionism. I am sure that it diminishes the employment and wealth-creating capacity of the world as a whole. That would be the result of plunging back into that policy. I also believe, however. that this totally arm's-length approach in the relationship between Government and industry is something that no other comparable Government contemplate to the extent that we do. It is not producing good results for British industry and it is a recipe for a further decline in Britain's position in the Western world. The Government should examine it carefully and reverse it in several important respects.
4.22 pm
Mr. Cecil Parkinson: I congratulate my hon. Friend the Member for Lincoln (Mr. Carlisle) on his choice of subject. It is good that Parliament should debate such an important subject in the unacrimonious atmosphere of a private Members' day. Whichever party is in power, the manufacturing sector will remain vital. I do not regard today as a chance to score points. Rather, it is a chance to discuss a vital subject.
I am pleased to join the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) in saying that what is sometimes presented as a choice, but is not, between Britain being a manufacturing or a service country is utterly spurious. We must succeed in both.
I should like to pick up a point that the right hon. Gentleman made. He talked about our exchange rate policy in 1980–81. I was the Minister for Trade at the time and saw many industrialists who said that if the exchange rate was at $2 to the pound we could sweep the world. During that period the Government never charged the rate of interest that matched the rate of inflation. We never had a real rate of interest paid to savers. The Government did not offer a real rate of interest — they offered one substantially below the rate of inflation.
The Government had recently been elected on a sound money platform, following a Government who, until they were stopped by the International Monetary Fund, had followed a very unsound money policy. The world's money markets put a substantial value on sterling. The Government were committed to trying to protect sterling's value, and they were prepared to charge the borrower a higher rate of interest than had been charged before, but never a real rate. People who argue about our exchange rate policy in 1980–81 are saying that the Government should have perpetrated an even bigger cheat on the saver by having a rate of interest which was even further below the rate of inflation.

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People such as the right hon. Member for Hillhead are arguing that we should have continued to rob the saver so that we could support the borrower. Put in those terms, it is clear that such a view is not nearly as noble as saying in a rather sweeping way that the Government got their exchange rate policy wrong. I do not think that they did get it wrong. They were seen by the the financial markets as prepared to follow sensible policies and to charge a rate of interest which began to approach, but never got very near to, the rate of inflation. I do not accept the rather dismissive argument that everything can be traced back to the Government's exchange rate policy.
Nor do I accept the statements that are now made so often that they are almost accepted as true that Britain's manufacturing industry is in terminal decline. The facts do not support that thesis. Industrial production last year was clearly recovering dramatically from the low point of 1981. I know that Opposition Members say that 1981 was an all-time low, but if manufacturing was still in decline, the figures would continue to fall. We have reversed that trend. Manufacturing production is growing substantially. To the dismay of our opponents, it should achieve all-time record levels next year.
There is nothing to be complacent about, but the statement that our industry is still in decline is not borne out by any test which any fair-minded person would care to apply. Production has bounced back substantially and is continuing to rise. For the first time, exports of manufactured goods reached a value of £52 billion last year — £1 billion a week. Industry invested nearly £7 billion last year and nearly 6 million people were employed in manufacturing. If we constantly talk about our industry having no prospects, and if we write it off, we will help to produce just what we complain of. Who buys his car or anything else from a business which is about to close down and has no future? For us to dismiss the efforts of the 6 million-plus workers in our manufacturing sector as people who are somehow misguidedly dedicating their lives to trying to breathe life into a corpse is not only to mislead the world and the British public, but to cause damage where we need help and support.
Mr. Dykes: I am sure that we would all agree with that. However, does my right hon. Friend agree that the £7 billion figure that he gave is less than 2·5 per cent. of gross domestic product, the lowest figure of any advanced Organisation for Economic Co-operation and Development investing country?
Mr. Parkinson: That may be the case. However, my point is that to dismiss our manufacturing sector as something that people are not interested in and has no future is to mislead the country and the House. The market was prepared to invest £7 billion in its future in 1985. Perhaps we should be investing more, but £7 billion is a substantial sum of money, and it is put up by people who believe that they are investing in something that has a real future, and so do I.
Let us take the anecdotal evidence. For instance, a constituent came to see me on Saturday who is a director of MFI. He told me that in 1976 MFI imported 60 per cent. of everything it sold. That figure is now down to below 25 per cent. MFI is in fact using more and more British goods because they are excellent value.
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Goodness knows, as Minister for Trade I took part in many debates about the textile industry. Last year textile production was near to an all-time record high and textile exports were at an all-time record high. This year the British engineering industry will invest £850 million in computers and software, and a recent survey suggests that outside Japan the British engineering industry makes more use of high technology and engineering computers than any other engineering industry in the world. British industry was in decline for a time, but the decline has been arrested and the climb back has begun in real earnest. There is a very good prospect for Britain in an area which, far too often, we talk about dismissively.
If we apply the wrong tests to the statistics that emerge, we can turn success into failure and failure into success. For example, I heard the right hon. Member for Chesterfield (Mr. Benn) making an interesting speech about the steel industry. He said that we should look at the good old days when steel employed 250,000 people and it now employs only 100,000. To him that was proof that our steel industry was in a state of decline. However, when the steel industry employed 250,000 people it was losing nearly £3 million a day. We had a steel capacity which we simply could not use and which nobody wanted. Therefore, we had 250,000 insecure jobs. We have moved from that position to having the best and most efficient steel industry in Europe producing as much steel with 100,000 people as it used to produce with 250,000. With 250.000 employees losing £3 million a day it is a national asset by the test of the right hon. Member for Chesterfield; with 100,000 employees producing steel at a very competitive price it is a national problem. That is absolutely wrong.
Dr. Jeremy Bray: The right hon. Gentleman is making an interesting point about steel. Is he aware that an even more competitive steel industry in Japan, faced with a similar fall in orders and intense competition from Korea and other new producers, is maintaining its employment and diversifying in order to maintain a policy of lifelong employment? Does he not think that that kind of policy is more relevant in this country today?
Mr. Parkinson: It depends where one starts from. I shall give an example from a different industry in Japan, the motor industry. In 1978 the motor industry in Japan was producing 65 vehicles per employee on average, and we were producing in our worst company, five and a half. At that level of productivity one can start to think in terms of lifelong employment, because one starts at a high level of productivity. However, if one has an industry which is losing substantial sums of money and is unproductive, it is unrealistic to talk of ensuring lifelong employment. The hon. Member for Motherwell, South (Dr. Bray), who studies these things carefully, must realise that.
First, I am saying that it is wrong to talk as though British industry is still in decline. It is starting to recover. It is wrong to draw the wrong conclusions from the available statistics. Industry does not exist to create jobs; it exists to create products. The industries which are efficient at creating viable products produce the best insurance of long-term employment.
Secondly, we continually draw attention to the fact that we have a huge and growing deficit on manufactures. That is true, but the conclusion we draw from that is the wrong one. We say that we need more Government demand

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injected into our economy. The bigger the level of our imports, the more evidence there is that there are customers here who want to buy. The argument that a deficit on manufactures is somehow evidence of a need for further demand to be injected into the economy by the Government again seems to be drawing totally the wrong conclusion from the facts that stare us in the face.
It was interesting to read in The Times today that a survey of British management said that the first priority for a better industrial performance was to improve the product. I thought immediately of Jaguar. Jaguar is now a highly profitable company selling the same range of motor cars as it was selling six or seven years ago. It has moved from being a disaster to a success because it has improved the quality of its performance. The product is the same, the range has not changed, but the prospects for those in the company and for this country, as the country in which Jaguar is based, have changed. The reason is that the quality of the product has improved out of all recognition.
Far too often in the House, especially in our economic debates, we have arguments about whether an extra £1 billion or £2 billion of Government-injected demand would turn the economy round. If it was as simple as that I might he tempted to join the argument for reflation. However, I hasten to tell the House that I will not, because I think that it is distracting us from the fundamental problem, which is how does this country compete for the business which is there? At home there is a great demand for the whole range of manufactured goods. World trade in manufactures is expanding. The customers are there overseas as well, and the real question which the House, the Government and British industry have to address is how we get a bigger share of the business which is there rather than how we generate artificial demand.
I do not underestimate the difficulties of trade union leaders at a time of high unemployment having to persuade their members that the way forward may be to reduce employment in industries because with new technology and a whole host of advances we can produce more with less people. I recognise the enormous difficulties that that presents for trade union leaders. I believe that we should pay tribute to the many trade union leaders and members who have co-operated with management in improving productivity in British industry.
I end as I began. I believe that if we continue to talk down our prospects as a manufacturing country, and if we continue to talk about our decline as if it were terminal, we must not be surprised if people start to believe us and if we produce the results that we do not want. This country has bright prospects. Way into the foreseeable future, we shall have a very important manufacturing sector. We have a strong service sector. We are prolific earners of invisible earnings. We have substantial overseas investments. Although we talk about it as if it is a problem, we still have energy self-sufficiency.
This country has a very bright future to add to its glittering past, but we shall need, as a country, and especially within industry, to produce that cohesion, that co-operative attitude that is the source of the success of all our major rivals. The question for Britain is: how do we compete? One of the answers—such an obvious one—is: working better together. Britain's future as a manufacturer stretches ahead of her. She has a fine past, but a very promising and exciting future.
4.41 pm
Mr. Don Dixon: I add my congratulations to the hon. Member for Lincoln (Mr. Carlisle) on introducing this debate. I worked in the manufacturing industry from the time I left school at the age of 14 until I arrived in this place in 1979, I am one of the small band of Members of Parliament who has not only seen but worn a pair of overalls.
The right hon. Member for Hertsmere (Mr. Parkinson) said that union leaders had to be told that we had to have fewer men and more efficiency. But let me talk about the American motor car industry some time ago, when General Motors had just modernised one of its factories. The general secretary of the Automobile Workers Union was invited to come along and see the new automated factory. He was taken round the factory and shown the robots that were doing all the work that was previously done by members of his union. He was taken upstairs for a drink, after he had been shown round. He was told, "There you are. You have seen the factory. You will not be able to get any of those robots into your union." The general secretary of the union said to the manager of General Motors, "Nor will you be able to sell them any of your cars." The point is that if there are no workers,, what is the company to do with the manufactured goods unless it gives them away or gives people the money with which to buy them?
I should like to talk about the north-east. In spite of what has been said by some Conservative Members, we see it as a danger that this country's manufacturing base is being eroded. A survey of the north-east, carried out in the 1970s, showed that 28 per cent. of male employment in the region relied on heavy manufacturing industry. What has happened over the past 10 years — not just the past seven years — in the steel industry, for example? The number of people employed in the north-east has dropped from 22,000 to 7,600. There has been a loss of jobs of almost 21,000 in the north-east, an area that has had high unemployment for a considerable time.
In an intervention, it was said that Scunthorpe had got something at the expense of' Lincoln. I should like to tell the House that Scunthorpe has just got a new steel plant at the expense of Jarrow and Warrington. British Steel has closed its Jarrow and Warrington plants. A private company called Caparo Ltd. has decided to open a plant in Scunthorpe. I met the manager of Caparo and suggested that the company should try and do something in Jarrow. The workers and management in Jarrow were even prepared to carry out a buyout of the plant in Jarrow because it was economical. British Steel wanted nothing to do with that. The problem was not that the plant could not compete, but that there was such a thing as an EEC quota, and we could produce only a certain quantity of steel. When one talks about free competition and producing things economically, one has to take those things into consideration.
Therefore, there has been deterioration in the steel industry over several years. We have lost 21,000 jobs. The number employed in the coalmining industry has fallen from 35,000 to 18,000. It is said that we cannot keep uneconomic pits open. Uneconomic pits have been closed in Durham and Northumberland. Incidentally, it has never once been suggested that we should close uneconomic farms. They are still kept going with Government subsidies.

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The number of people employed in shipbuilding and ship repairing in the north-east has dropped from 31,000 to 10,000 — a loss of 21,000 jobs. That does not take into account the 2,600 job losses announced recently by British Shipbuilders or the 825 announced by Swan Hunter.
We talk about training for the future. Swan Hunter has decided to take on no apprentices this year, in spite of a request by the trade union. How shall we build boats in the future? If we have another Falklands dispute how will the Prime Minister get together another task force to go to the Falklands? There will be no one to build or repair the ships unless we have apprentices.
People talk about competition in the shipbuilding and ship repairing industry. A tender was put out recently. If the men in the shipbuilding industry had decided to work for nothing, they could not have undercut the price that the Koreans offered. So, how do we tell the workers in the shipbuilding industry that they should be more competitive? The industry is not competitive because for years there was no investment when shipbuilding was in private hands. It is no good the right hon. Member for Hertsmere shaking his head. I worked in the industry when it was in private hands, and when we had the Patten report in 1962, the Geddes report in 1966 and the Booz Allen report in 1972. Every one of those reports talked about the lack of investment in the British shipbuilding industry, so we do not need lessons about investment. The British shipbuilding industry is in the state that it is today because of lack of investment. While other countries were investing, the private builders in this country would not put a penny into the industry. They were prepared to pay 27 per cent. dividends. When I worked in Hawthorne Leslie, that is what the company paid to its shareholders.
The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) referred to the Queen Mary being repaired on Clydebank before the war. What he said is perfectly true. The workers in Clydebank were lucky. Because of overcapacity, an organisation called British Shipbuilding Security Ltd., which was a firm of merchant bankers, ship owners and shipbuilders, decided not to let ships lie up and rust in the dock, but to close down yards and put on a 40-year embargo. It came to Jarrow. Palmer's yard in Jarrow was one of the best enterprises in the world. The ships came in as iron ore and went out as complete ships. The workers used to roll their own steel, make their own bolts and rivets and put the ships together. They sailed up the Tyne as a complete entity.
In 1934 British Shipbuilding Security Ltd. came along and decided, because of over-capacity, that there had to be rationalisation. Palmer's yard was closed and a 40-year embargo was imposed. The company was embarrassed five years later when the second world war broke out and ships needed to be built and repaired. People who had been trained in the shipbuilding industry were needed to build the ships. They were needed very much. At that time if people worked less than the 47-hour week they were fined by a tribunal. That is how important the shipbuilding industry was when the war started. That is one of the reasons why we should be protecting our industrial base, which is rapidly becoming eroded. Unless the Government are prepared to take some action, we shall have no shipbuilding or ship repairing industry in this country. It will be like the motor cycle industry, which disappeared.
Mr. James Couchman: The hon. Gentleman is making much of lack of investment in the shipbuilding industry over many years. As I understand it, he is talking about a yard which closed 50 years ago. I suspect that may not be relevant to today's position. What proportion of blame would the hon. Gentleman ascribe to trade union demarcation disputes and the dreadful industrial relations which have pervaded shipbuilding for far too long?
Mr. Dixon: I shall explain the question of demarcation to the hon. Gentleman. I do not want to take up too much time. Many hon. Gentlemen think that demarcation was introduced by trade unions, trade union officials or work men. Demarcation in any industry arises as a result of management practice. I was a shop steward in the shipbuilding industry for almost 30 years. Demarcation occurred when the management decided, in view of past practice, that a particular trade was the best one to do a particular job. Demarcation disputes occur only when there is unemployment. There are no demarcation disputes when there is full employment. If a person who had served his time in a particular trade for five years and had worked on a previous ship found that some of his colleagues were out of work and the management had given the job to another trade, because it was more experienced, a demarcation dispute occurred. I agree that there were too many demarcation disputes.
Industrial relations in the shipbuilding industry were like a jungle. There was no such thing as industrial relations. The management did not care about trade unions. When I worked in the industry, we used to hold bits of steel on plates for the welders and the management refused to provide us with industrial gloves to protect our hands. Every night we used to go home with septic burns on our hands. We had to go to a tribunal in York so that we could get gloves for men who had to hold red-hot plates. That is what industrial relations were like in the shipbuilding industry. They did not exist. Management was interested only in profit. There were no industrial relations under private management.
I could speak for a considerable time on the shipbuilding industry. Listening to some Conservative Members, I think that a lesson on shipbuilding would be appropriate. Some Conservative Members know more about lying on a deck chair on the poop deck than building a ship. One of the problems in this House is that when we have debates on unemployment, views are put forward which would be more appropriately debated in universities than in the House of Commons whose Members are supposed to represent the unemployed.
A firm called N. E. I. Reyrolds in my constituency used to employ 13,000 people. It had over 2,000 apprentices. In fact, it had more apprentices a few years ago than it has bodies on the premises now. The firm is trying to compete overseas and it is trying to obtain orders. One of the problems is that there is no refurbishment or replacement of power stations. The Government should say to the CEGB, "Let us have a sensible programme for refurbishing and replacing power stations, so that we can keep our power industry." Otherwise, there will be no jobs left in that firm.
As well as expanding and improving manufacturing industry, we want a decent regional policy. We have virtually no regional policy. Since the Conservative party came to office in 1979, regional policies have been cut. It

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is no good the chairman of the Tory party telling people that they should get on their bikes and look for work. If they do, what will happen to the areas which young and active people have left? When people leave an area to look for work elsewhere, they do not take the community centres, old people's homes and hospitals with them. A disproportionate number of old people are left. The Government should have a regional policy and they should put the work where the people are. Unless they do that, we will not solve the housing, schools and hospital problems. If people move from one area to another to look for work, vacant houses wil be left. We require not only a boost in manufacturing industry, but a decent and sensible regional policy from the Government.
I thank you, Mr. Deputy Speaker, for allowing me to intervene briefly and make those few comments.
4.55 pm
Mr. David Knox: I congratulate my hon. Friend the Member for Lincoln (Mr. Carlisle) on his good fortune in the ballot, and, perhaps even more, on his choice of subject this afternoon. I do not think that the House discusses manufacturing industry nearly enough. Like the hon. Member for Jarrow (Mr. Dixon), before my election to this House I spent my working life in industry. I have a strong belief in the central importance of manufacturing industry to this country's economic prosperity. I reject absolutely the view expressed in some quarters that manufacturing industry no longer matters and that we should concentrate all our efforts on the service sector. I can think of nothing more damaging to the British economy than a further acceleration in the decline of our manufacturing base. Let there be no doubt that there has been a decline over the past 12 years.
A brief look at the statistics will show, first, that, although the number employed in manufacturing industry fluctuated a little, between 1960 and 1973 employment was fairly stable. Since 1973, employment has fallen by almost one third. Secondly, subject to minor fluctuations, manufacturing output rose steadily from the end of the war to 1973. Between 1973 and 1975, it fell back steeply. Between 1976 and 1978, it rose a little. Between 1979 and 1982, it fell back steeply. Since then, it has risen a little. The position today is that manufacturing output is not only lower than it was in 1979, it is still lower than it was in 1973.
Thirdly, until 1983, the balance of trade in manufactured goods showed a comfortable surplus. Since then, it has shown a deficit which, as output from the North Sea oil starts to decline, is worrying in the long-term. Fourthly, following disastrously low investment in manufacturing industry, in 1981, 1982 and 1983, there has been a welcome increase in the past two years. Nevertheless, investment in manufacturing industry in 1984 and 1985 was still lower than in any year since 1963, except for the 1981–83 period. The figures show all too clearly the decline in manufacturing industry in recent years.
I accept that a decline in the numbers employed in manufacturing is a feature of modern advanced economies, but a fall in output is not. I find that the decline of almost one third in the numbers employed and the fall in actual output over the past 12 years alarming. I find the deficit in the balance of manufacturing trade and the low level of investment equally alarming. For reasons already given by my hon. Friend the Member for Lincoln (Mr.
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Carlisle), a strong manufacturing base is essential to this country, if only because the export potential of the manufacturing sector is so much greater than that of the service sector—a point made by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins).
Why have things gone wrong? The blame should not be attributed to one source. It is true that in recent years the conduct of management and of the trade unions has left something to be desired, but so, too, has the conduct of successive Governments. I should like to concentrate on the latter. During the past 12 years, under Labour arid Conservative Governments alike, economic policy has not contributed to the expansion of manufacturing industry and, indeed, at times has seemed to discriminate against the expansion of the most efficient and modern parts of the manufacturing sector.
Over this period, Government economic policy has involved a continuing policy of demand deflation, with total effective demand in the economy as a whole being held below the economy's supply potential. Some of the reasons for that have been quite respectable, but the result has been to stifle the expansion of domestic demand for the products of manufacturing industry, especially for new products and the products of capital-intensive industries. Consequently, unit costs have been higher than those of some of our competitors and sales at home and abroad have suffered to the detriment of the British manufacturing sector. In addition, successive Governments have pursued high interest rate policies, largely to maintain the strength of sterling. At home, the effect has been to place a heavy burden of those who borrowed money to invest and to benefit those who put profits into fixed interest securities. That is hardly the way to encourage efficiency in the manufacturing sector.
In recent years, one of the most damaging aspects of Government policy on the manufacturing sector has been. the exchange rate policy. First, for most of the time during the past 12 years, and especially in the early 1980s, sterling has been at a much too high rate in relation to other currencies. The result has been to make British manufactured goods uncompetitive at home and abroad, to encourage imports and to discourage British exports. Secondly, there have been frequent and sometimes violent changes in exchange rates. This is a particular problem for those manufacturers whose primary functions are to design, manufacture and sell products but who rarely have an interest in finance and the financial implications of exchange rate variations.
My final point on the deficiencies of Government is the lack of an industrial strategy. I am not one of those who believe in detailed economic planning — so beloved of the Labour party in opposition and scorned by it in government — but there is much evidence that the industrial strategies adopted by the Governments of countries such as Japan and France enable their manufacturing sectors to perform better than does the British manufacturing sector. In the modern world I believe that we suffer because the Government have no manufacturing and industrial strategy.
We all want British manufacturing industry to expand and prosper. My hon. Friend the Member for Lincoln and others who have spoken in the debate have outlined the measures that they believe industry must take. I agree with many of their points hut, against my criticisms of the

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policies of successive Governments, I should like to suggest what the Government might do to help our manufacturing industry in the years ahead.
First, the level of total effective demand in the economy as a whole should be brought more into line with the supply potential of the ecomomy. This should be done by increasing public expenditure and by reducing taxation. Not all the extra demand will go into the manufacturing sector, but quite a lot will. Such an increase in domestic demand would enable unit costs to be reduced, would lead to an increase in the demand for British exports and would encourage investment in manufacturing industry.
Mr. Dykes: I apologise for interrupting my hon. Friend's excellent and compelling speech, with which I agree. Does he agree that the urgent need to increase public spending is even more important on capital account than on current account? Does he agree that on capital account once again there has been inadequate investment, which has been cut back much more easily, drastically and quickly than current account spending, which has increased because the rest of the economy remained truncated?
Mr. Knox: I agree with my hon. Friend. The emphasis should be on the capital side but, given the amount of slack in the economy, I see no reason why there should not be an increase in current expenditure as well.
I come to the second point to which the Government should pay attention — interest rates. They must be reduced below their present excessively high level. This would encourage investment by reducing the cost of borrowing money. It would have the added advantage of not giving support to sterling at an absurdly high level, which would be beneficial to manufacturing industry as well.
Thirdly, I believe that Britain should join the exchange rate mechanism of the European monetary system. That would bring exchange rate stability for about 60 per cent. of the country's trade and would remove the unnecessary uncertainty in Europe for our manufacturing sector—a point which is made to me repeatedly when I visit manufacturing firms in my constituency.
Finally, the Government should embark on widespread consultation with industry and the trade unions, perhaps through the National Ecomomic Development Council, with a view to developing an industrial strategy. This would show everyone the direction in which the Government believe the manufacturing sector should be moving. It would enable British manufacturing industry to move forward more confidently and effectively in the years ahead.
5.6 pm
Mr. George Park: It is clear that the right hon. Member for Hertsmere (Mr. Parkinson), who used to be a member of the Government, is still wearing his Government blinkers. To state the facts is not to talk the country down.
We are indebted to the hon. Member for Lincoln (Mr. Carlisle) for choosing this topic. A minority of 3 million to 4 million unemployed is simply not good enough. It is not good enough to point to the 6 million people in work
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in manufacturing industry when there are such numbers out of work. What does it take to make the Government realise, as the motion states,
"that manufacturing industry has a central part to play in the future prosperity of the United Kingdom"?
I suppose that it is understandable for the Government to brush aside Opposition protests as something to be expected from an Opposition, but a few days ago the West Midlands Engineering Employers Association met a group of Conservative Members of Parliament and left them in no doubt about the urgent need to halt the decline in that area. Perhaps the most pertinent point made by the association's chief executive was his comment: "If you do not want to lose votes, you must change your policies." He went further, and said, "You must stop pussyfooting around and do something to help ailing West Midlands industries." His feelings were underlined last week by a report by the West Midlands chamber of commerce and industry, which found a marked reversal of fortunes among the 435 firms which were sent a questionnaire. Orders at home and abroad are down, with little sign of new investment to create jobs.
Recently, several hundred people lost their jobs at GEC in Coventry. Last week, several hundred people at a Nuneaton factory lost their jobs. This week, Coventry Climax Forklift Trucks announced that another 90 jobs would go. Former busy factories in my constituency now stand silent and derelict, and in some areas of the west midlands unemployment is nearly 40 per cent. It is futile for the Chancellor of the Exchequer to imagine that service industries can take the place of manufacturing. Services must service something. Leaner and fitter has led to anorexia. The Government have said that they cannot create jobs. That is as may be, but they can do much to make trade fair. They can do something about unfair tariffs and special taxes, such as the 10 per cent. tax on cars.
Foreign Governments assist their industries by their purchasing policies. They do not place orders overseas for basic items of equipment needed in that country. They help industry by various means: in research and development, in energy costs, and, as has been mentioned, in the reduction of interest rates. The Government could do many things. It is ironic that companies say that there is a skills shortage. It would be negative of me to say that one of the first casualties in any recession is training, but it is painfully obvious that our competitors such as West Germany do not follow that course.
In appealing to the Government to revise their policies, there is considerable scope for improvement in industry's attitude to training. It cannot always expect to obtain its skilled labour by poaching. Increased wages, which is another favourite dolly shy of the Chancellor of the Exchequer, is not the reason for industrial decline in the west midlands, which has gone from the top to the bottom of the wages league, despite huge increases in productivity of about 30 per cent. in companies such as British Leyland and Peugeot. They rightly boast of that increase in productivity.
Manufacturing industry is the bedrock on which Britain's prosperity can rest. We cannot prosper by taking in each other's washing. If the Government cast that aside, they also cast aside their future. That does not greatly worry me, but I am worried that Britain is two nations

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—those in work and those out of work. I wish the latter group to be given some hope for the future and for the entire country to have a thriving manufacturing industry.
5.13 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): May I join all contributors to the debate in congratulating my hon. Friend the Member for Lincoln (Mr. Carlisle) on his choice of subject, on the timeliness of his choice of subject and on the manner in which he deployed his argument. He used vivid examples from his constituency to illustrate some significant points. He said clearly, and I agree with him entirely, that there is no inevitability about the decline of manufacturing industry. With other hon. Members who have spoken in the debate he has helped to scotch the myth that we in the Chamber take that view.
My hon. Friend gave a good example from his constituency of the successes and the dilemmas which are posed by success. He referred to Ruston Gas Turbines, which exports 90 per cent. of its output in key areas, but then he said — this issue, among others, exercises us tonight —that that company has had a static payroll but it has trebled the value of its production.
My hon. Friend immediately came to one central truth which should pervade the debate: that it is perfectly possible to crank up the engine of wealth creation, but not to obtain a commensurate increase in employment in the manufacturing sector. My hon. Friend then analysed sonic of the reasons for decline, and invited other participants in the debate — I assume that he also means representatives of the Department of Trade and Industry —to construct a policy for success.
I hope soon to reassure my hon. Friend that inside the Department of Trade and Industry we have matched the adjustments which have taken place in the economy during the past few years. We now have a suite of policies which are relevant for the latter half of the 1980s and the early 1990s, rather than a group of policies which borrow far too much from the prescriptions which failed in the 1960s and 1970s.
The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) spoke on an issue which has exercised all of us —the role of the manufacturing and service sectors and the fact that they are complementary, not competitive. The right hon. Gentleman asked for a catalogue of the recipes for success. I shall not be airing that before the House tonight, but I shall suggest some ideas in answer to the question, "Do we have an industrial policy?" If we have such a policy, is it correct to call it a strategy, or has the word strategy been discredited after the practices of the 1960s and the 1970s? Should we use other language to define our new, and—I hope that the House will agree —formalised objectives in industrial policy?
The hon. Member for Jarrow (Mr. Dixon) spoke passionately, as ever, in defence of the shipbuilding industry and in defence of utilising the skills of his constituents and of the north-east generally. I shall return to that issue in a moment. My hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) talked about the link between interest rates and the value of sterling, although he was careful to ensure that he reaffirmed the need to control public expenditure generally to give us more freedom to manoeuvre in interest rate policies. It is precisely that dilemma which constantly exercises the wits of successive Chancellors of the Exchequer.
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I begin my remarks by following naturally from the comments made by the hon. Member for Coventry, North-East (Mr. Park). In so doing, I am not trying to be controversial by responding to his remarks on employment. Rather, as I hope the hon. Member for Dunfermline, East (Mr. Brown) may concede, as a historian, I am seeking an area of consensus, in terms of our analysis of the problems, from which to proceed. I quote the hon. Member for Paisley, South (Mr. Buchan), admittedly from some time ago, but it has relevance today. In August 1978, the hon. Gentleman said in an article in the Glasgow Herald:
"The 1,500,000 unemployed is entirely due to an expansion of the workforce in Britain. And over the next decade, an additional 1,500,000 more will he in the labour force. That leaves us, even with improved growth in the economy, facing a possible 3 million unemployed by the end of the eighties. To try to blame this on the mishandling by any Government— Tory or Labour—doesn't get us very far."
That gave us a prediction of 3 million unemployed by the end of the 1980s.
Then I turn to a report in which the hon. Member for Dunfermline. East may have had a hand. I hope at least that he would have been consulted about it. It is a report put out by the Labour party's finance and economic affairs sub-committee in November 1976. I believe that there was an attempt to squash it, but the lion. Member for Liverpool, Walton (Mr. Heifer) will remember it clearly. He may recall that the report was not published because, from first reading, it appears to be a full-blown justification to the Labour party, perhaps not to others, for import controls and a massive increase in public expenditure. That will be grist to the hon. Gentleman's mill.
Let me return to the analysis and the projections for unemployment. I quote from Robert Taylor's article in The Observer:
"Unemployment at 2,500,000 by 1980 is predicted in a gloomy confidential paper produced by the Labour Party's finance and economic affairs sub-committee."
He then quoted from the report:
"'By 1981 the population of working age will have increased by more than 1,000,000. The actual number entering the labour force is sensitive to a number of assumptions, but the official figure of 774,000 is a reasonable estimate. Thus if the growth performance of 1964–1973 were repeated unemployment would he approaching 2,000,000 in 1980.'
The document suggests that this figure is an underestimate. It reckons private investment would need to grow by 8 per cent. a year just to maintain the 1964–1973 average growth of total investment of 3·5 per cent. a year. The document notes such a figure was achieved only once in that period … It also says the 'initial gain in competitiveness conferred by devaluation up to and including the first quarter of 1976 has already been eroded.'"
Opposition Members may be confortable with the conclusion of the report, which argues for import controls and a massive boost in public expenditure, but I hope that they will not dispute yet again the projection that, if those trends had continued, there would have been the prospect of 2·5 million unemployed in 1980. The authors of that report were not to know then that the worst world recession since the war was on its way. When one adds that factor into the balance, plus the structural defects in our economy that have been developing for decades, Conservative Members could say that those who blame the Government for all the 3·25 million unemployed are, to put it mildly, misguided, or if they are being deliberate, are

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mischievous. Jobs are the political imperative. I am sure that that was in my hon. Friend's mind when he launched the debate.
We are here to discuss the role of manufacturing industry as a wealth-creation engine so that manufacturing industry can be restored to health and have a multiplier effect on the rest of the economy, in the service sector as well as upstream manufacturing activities. This is a big area where my hon. Friend, some Opposition Members and I could agree.
Our share of world trade has undoubtedly plummeted. It went down from 14 per cent. in 1964 to 9 per cent. in 1979. It is now bumping around the 8 per cent. mark, but there is a sign— I am not in the business of counting chickens today—that at long last trade is starting to increase. The reversal of that decline in our share of traded goods and services is at the heart of the Government's job-creation programme. When the Government go on and on, as we do, about the right products at the right time at the right price and of the right quality, we are talking about the paramount importance of the job-creation programme.
One could argue that, in the 1960s and 1970s, policy was dominated by panacea politics. There was the white heat of the technological and industrial revolution. Does anyone remember that? Can anyone see its effects today? What happened during the 1960s and 1970s, exaggerated and exacerbated by the recession, was the development of a mismatched economy. Many people, and large amounts of plant and equipment, were dedicated to producing things for which demand was low, stagnant and falling, and not enough were dedicated to producing things for which demand was high, rising and dynamic. Our policies attempt to put right that mismatched economy, through either the Treasury or the Department of Trade and Industry, and to begin to tackle the unemployment problem.
Mr. Gerald Howarth: Does my hon. Friend agree that, at that time, because there was no real uplift in the new technologies, and because of the artificial restraint on wages in manufacturing industry imposed by the then Labour Government, many of our best brains and most able skilled people went overseas? Is there any talk of a brain drain today?
Mr. Butcher: There is evidence that managers are returning from, for example, the United States. Indeed, in talking to such people, we are complimented on the great changes that have taken place in British management during the past five years. Once again, British managers are being tough, professional, ambitious and competent. What is equally important is that the work force is being tough, ambitious, professional and competent. The partnership, which we should have been invoking for a long time, is at long last coming together. An example is the increase in productivity and the dramatic reduction in the number of working days lost through disputes.
I am grateful to my hon. Friend for raising that point and I can tell him that the brain drain is not the acute problem with which we had to contend some time ago.
I have been asked whether services and manufacturing are in conflict or whether they are complementary. Of course they are complementary, but I recall—my right hon. Friend the Member for Hertsmere (Mr. Parkinson),
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who was then my boss, will remember this— that for some time I asked the Department's economists for an answer to the question: "What proportion of manufacturing output is internationally tradeable, and what proportion of service sector activity is internationally tradeable?" The answer has been checked, rechecked and compared with the research of colleagues in Whitehall, and I can now report that, in general, 80 per cent. of manufactured output is internationally tradeable. By contrast, in general, 18 per cent. of service sector activity is internationally tradeable. There is, therefore, no choice, and this has not been disputed when I have spoken from the Dispatch Box: manufacturing must be at the core of our wealth-creation process. It earns a buck for United Kingdom Ltd's people. It is the way in which we pay our way in the world.
However, there is no gainsaying the fact that even in the teeth of the recession the service sector has been a magnificent job creator. About 700,000 jobs have been created in the service sector since 1981–82. It has done so imaginatively; and much of the activity which has been generated is internationally tradeable.
Although manufacturing may thrive again, as it is beginning to do, it may not create enough employment to make a major hole in the unemployment queues. Manufacturing can increase its share of world trade. It can increase its performance; and the income that it earns will disseminate through the economy, the market, the City, the payroll, through subsidiary companies and suppliers to generate jobs in other parts of the economy. That must be at the core of our appreciation of the role of manufacturing.
I do not wish to detain the House on the general issues that would normally come under the heading "Getting the climate right". I shall simply say that any hon. Member who had a conversation with industrialists in 1981–82, and who had that conversation 500 times, as I did during the west midlands initiative, was left in no doubt that their concern centred on inflation, interest rates, exchange rates and public utility costs. We must agree that the same conversation today would produce a less vivid account of the strength of the difficulties facing industrialists. The problems are coming under control.
Dr. Keith Hampson: On training, which is fundamental to improving the manufacturing effort, will my hon. Friend confirm, that, as was reported this weekend, the Government will set up a "College of the Air" using radio and television to help to retrain young people, and, indeed, adults, or is this simply an extension of the Open Tech?
Mr. Butcher: The best response that I can make to my hon. Friend's question is to extract the answer from my right hon. and noble Friend the Secretary of State for Unemployment — [HON. MEMBERS: "Hear, hear."]— the Secretary of State for Employment. That is not an issue with which the Department of Trade and Industry is involved, but I am sure that the record of this afternoon's debate will invoke that response.
Mr. Park: I should be interested to know what the Minister would say to the engineering employers and the chambers of commerce in the west midlands, because it is evident that the people he is meeting do not belong to those organisations.
Mr. Butcher: I attended the meeting with the Engineering Employers Federation four or five weeks ago and I maintain regular contacts with the federation. I value those contacts, as I do my contacts with the chambers of commerce, particularly those in Birmingham and Coventry. I read their surveys and their analyses of business confidence, and I note the factors that they list. In the next few minutes I shall list what I would say to the EEF.
Mr. Alan Williams rose——
Mr. Butcher: I will give way for the last time. I must press on.
Mr. Williams: I am grateful to the hon. Gentleman. A few moments ago he mentioned the need to consult the Secretary of State for Unemployment. Perhaps he will be kind enough to explain which Government Department he holds responsible for that function.
Mr. Butcher: There are times when giving way is unwise. I thank the right hon. Gentleman for making a fairly small point and I hope that he will accept that the Secretary of State for Employment is the Minister who appears to he leading on the question raised by my hon. Friend the Member for Leeds, North-West (Dr. Hampson).
Mr. Tony Baldry: Will my hon. Friend give way?
Mr. Butcher: I must press on. I hope that my hon. Friend will have a chance to speak in the debate.
Six objectives are incorporated in the Department of Trade and Industry's policy. They are designed to tackle the issues by my hon. Friend the Member for Lincoln (Mr. Carlisle).
The first objective is to support and disseminate best practice in getting world-heating products to the market. These are post-research and development projects; they are market driven and product driven. A number of my hon. Friends who have been studying the business and technical advisory services will know that our policies on design, quality, productivity and marketing are working. The clients who receive that support say clearly in post-study evaluations that they value the work done under those heads of account.
The Government do not say "'This is how to design a product'" or "'This is how to increase the quality of your product.'" Practitioners are well respected in the market, the schemes are administered by third parties and the taxpayer covers the costs. We can put the best people into virtually any company with fewer than 500 employees to implement best practice in those key areas. It is about products and market penetration; and that is where jobs will come from.
The second objective is to enhance the competitive environment. Where competition is impaired or does not exist, we introduce the minimum safeguards required to protect the consumer properly, while encouraging efficiency.
There is, of course, a comprehensive competition policy. We believe that competition is the driving force for wealth creation and that it safeguards the consumer and keeps company managements on their toes.
In the past few years, not enough attention has been paid to policy on regulating monopolies, whether in the private or the public sectors. My right hon. Friend the
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Member for Hertsmere will remember the excellent work done by Mr. Stephen Littlechild of Birmingham university who first brought us the RPI minus X formula, which is a magnificent way of regulating monopolies. We have discovered a way of encouraging British Telecommunications to maximise its return on capital, without putting up prices in its monopoly environment. The formula encourages efficiency and protects the consumer. It may have a big future when we consider other denationalisation proposals and deregulation schemes.
There is also an international dimension to competition policy. It is our duty to promote free markets, whether through the GATT or the EC. I see it as the cornerstone of the Department's efforts during the United Kingdom's presidency of the European Community that we should do all that we can to deliver the truly internal market in the Community.
But — and this is a major but—where international markets are defective, it is not for us to disarm unilaterally. Where necessary, we should secure the multilateral removal of barriers and, if necessary, provide support for British firms that must compete with companies that enjoy support from their own Governments.
The third objective is to tackle the regional legacy arising from the mismatched economy — the unhappy legacy of wasted human resources about which the hon. Member for Jarrow spoke with such fervour. I am sure that the hon. Gentleman agrees that DTI regional policy is not the only method of tackling the problem. There are other ways, including some of the measures recently introduced by the Secretary of State for Employment.
The hon. Member for Jarrow should welcome the changes made to regional policy. He may argue about the expenditure levels, but I hope that he will agree that we were right to concentrate on job creation and conservation as part of our review of regional policy which was implemented just over two years ago.
We have shifted towards selective assistance and away from automatic assistance. We made rigorous checks on the viability of products. It is no use throwing money into a company if the management cannot cope with the demands that companies have to meet in the market place or cannot manage innovation or production development. That is money down the drain.
We made checks to ensure that projects are viable. Those checks are carried out not by civil servants, but by people under the guidance of an industrial development advisory board which is made up of industrialists. We have also said that, under normal circumstances, there will be no simple job shifting from one part of the country to another. I know that that practice caused great discomfort to a number of hon. Members on both sides of the House.
Mr. Tony Favell: Can my hon. Friend assure us that one criterion in judging whether assistance should be given in an assisted area is the effect that it will have on competitor companies elsehwere?
Does my hon. Friend know that printers in non-assisted areas are very worried about new printing companies that are being set up in assisted areas such as Wales? The new firms could drive out of business other firms who cannot compete with the lower overheads of those in the assisted areas.
Mr. Butcher: Job displacement is one of the factors that assessors have to consider. I hope that my hon. Friend will

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draw some encouragement from the changes that we have implemented. In normal circumstances, simple job shifting will not take place.
However, I am sure that my hon. Friend agrees that there will be occasions when a bid from an assisted area represents the UK Ltd. bid for some inward investment. At that point we may have dilemmas to resolve within our economy, particularly if a United Kingdom competitor feels threatened. That is an excruciating difficulty, but it has to be faced.
The fourth objective is to achieve the maximum economic impact from the United Kingdom's aggregate research and development spending, in the light of rapidly changing markets.
Mr. Gordon Brown: Before the Minister leaves regional policy, will he agree that to appear to support regional policy, but then to deny areas that have been worst hit by the loss of manufacturing jobs—halving regional expenditure between 1979 and 1985 and halving it again between 1985 and 1989—is to deny the regions any chance of recovery?
How does the hon. Gentleman react to suggestions by former Ministers—the right hon. Member for Henley (Mr. Heseltine) and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) — that the English regions need development agencies or bodies similar to the Welsh Development Agency and the Scottish Development Agency, which were set up in the 1970s?
Mr. Butcher: That is an interesting proposition, particularly in the context of solving some of the problems of urban dereliction, although I suspect that some members of the Labour party in various parts of the country would oppose such a move. I believe that there are signs of the Birmingham Labour party not being too enamoured of that proposition. I hope that, as a fair-minded spokesman for the Opposition, the hon. Gentleman will concede that one must look at a package of measures when talking about a shift in cash from the south to the north, not least when one looks at the rate support grant settlement and policies emerging from the Department of the Environment. There is nothing for the Government to feel defensive about in terms of resources deployed in the north.
In the time available I want to complete the six objectives. This is the first time in 1986 that we have had a chance to set out the Department of Trade and Industry's industrial policy. If I can do that, I shall resume my seat as quickly as possible.
Our fourth objective is to achieve maximum economic impact from the United Kingdom's aggregate research and development spend in the light of rapidly changing markets. All we are saying is that there is a legitimate role for pre-competitive research spending, but it is right that the Department of Trade and Industry's shift in expenditure should move closer to what the market wants —working with the grain of market forces. Therefore, it is our objective to add the second "D" to the R and D equation. Research, development and design should be the order of the day. That takes us closer to the markets.
The fifth objective is to change attitudes in order to improve the supply and quality of people available to industry and commerce in a world of increasingly international markets. We could argue at great length on
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why for so long our brightest and best have not been attracted into front-line commercial and industrial management. There has been an anti-enterprise culture, an anti-industry culture and an anti-training culture; but we have learnt through the information technology skills exercise, which I chaired on a multi-departmental basis, that it is possible to bring a new partnership to the business of training and to bring it into the heart of the higher education sector. Private sector companies are now welded into the decision-making process as to which courses in the new technologies, and engineering in particular, should be supported with a mix of public and private sector funds. It is interesting to see the recommendations that are now coming from all quarters that we should take that new partnership upstream into the further education sector. Some would even argue that that should occur in the statutory school sector.
The sixth objective is to secure the broader implementation of the public purchasing initiative. All hon. Members should be aware, if they are not already, that the public sector nationalised industries and Whitehall spend £40 billion a year on services and goods which are bought elsewhere. Some 90 per cent. of that is spent in the United Kingdom. Under the public purchasing initiative, by implementing enlightened purchasing policies we could produce a situation in which those national concerns buy British because it is best and has become best as a result of the implementation of the PPI. That is consistent with our commitments under GATT and the EEC and there is still much mileage available to us in obtaining value for money from that £40 billion.
I am delighted to report to the House that examples of that policy are already under way. We are discussing non-warlike purchasing with the Ministry of Defence. We are discussing supply questions with the Department of Health and Social Security on consumables and medical equipment and the Crown suppliers are already implementing good design policies.
Does that amount to interventionism? Is it a strategy? Not in the sense of industrial strategies of the 1960s and 1970s. There is no bureaucratic or detailed national plan. There are no sector or industry targets. There is no omniscient Department of Economic Affairs and no intervention-driven Ministry of Technology. Instead, we are operating in an environment of a demand economy rather than a comand economy. But there is an objective. It was reported to the House in a written answer on 28 February 1986 when I told my hon. Friend the Member for Crawley (Mr. Soames), who is in his place:
"The continuing aim of the Department is to increase the national production of wealth, to promote and enhance the vitality and competitiveness of British trade, industry and commerce within a proper regulatory framework and to increase the United Kingdom's share of world trade" —[Official Report, 28 February 1986; Vol. 92, c. 723.]
Our objective is to reduce or eliminate barriers which impede British companies' ability to sell goods and services in the international markets, and, secondly, where support is necessary, in terms of policy or spending taxpayers' money, to ensure that such support works with the grain of market forces and enhances rather than undermines the determination of companies to compete.
5.44 pm
Mr. Eric S. Heffer: The Under-Secretary of State concluded his remarks by saying that the

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Government have no plan, no command economy, no sector targets, and so on. He seems to be proud of that fact.
Mr. Nicholas Soames: Of course he is.
Mr. Heffer: Of course he is. But the other side of the coin is that, without any planning of any kind, without any real Government intervention, with the abolition of the National Enterprise Board and the changes that have been described by my hon. Friend the Member for Dunfermline, East (Mr. Brown) in relation to regional policy, we have the highest levels of unemployment in the Western world. Therefore, there must be some correlation between the two.
If we decide that there will be no planning of any kind, that there will be a completely free market, that competition will be rampant, it is not surprising, certainly to me, that there will be higher unemployment and the type of problems that we have at present.
One thing that the Under-Secretary of State said is absolutely untrue—that any sector of the Labour party has ever said that all unemployment in Britain is due to the Government's policies. Nobody has ever said that. What we have said is that the serious nature of the crisis in the Western capitalist world has been aggravated in Britain by the Government's policies. An already serious crisis has been made worse. We are not putting all the blame on the Government. Instead of the Government tackling the problem in an intelligent way, their policy of open and free competition has aggravated it. They have not tried to deal in a serious way with the needs of the British people and of industry.
I am grateful to the hon. Member for Lincoln (Mr. Carlisle) for instituting this debate. I do not endorse all his philosophical attitudes towards solving the problem, but is is clear that he is deeply concerned about it and has rightly raised one of the most serious issues facing Britain today. I agree with the right hon. Member for Hertsmere (Mr. Parkinson) that we want and must have an improved service sector economy, but that must not be at the expense of manufacturing, which is what has happened. We need a good manufacturing sector. We cannot rebuild and re-industrialise our economy unless we have a sound, serious manufacturing base.
Why has the decline taken place? In particular, why has it taken place since the end of the second world war? There are many factors. The first is that at that time we were no longer the workshop of the world. We came out of a most serious war, into which we had put everything, and we probably suffered more than those countries which had been defeated. We accepted the burdens in a way that other countries have not. That was one of the reasons. We also lost our cheap raw materials because, whether we liked it or not, stage by stage we had to agree to various colonial parts of the empire being given the right to self government. That meant that the prices of our raw materials went up and that we did not have the same pool as we had in the past, although it continued to be fairly good because we were members of the Commonwealth.
We also faced greater competition from countries which had previously not been able to compete with us. One of the reasons for that was that they began where we left off. Many of our manufacturers believed that their methods of manufacture were the best in all possible worlds arid that they did not need to change or improve
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or have new management. They thought they did not need to do things that it was necessary to do. Suddenly they discovered that other manufacturers were using the best of our traditions and leaving us behind.
We have heard many solutions to our problems. I have been in the House quite a long time and I have heard them all. Hon. Members on both sides of the House have told us how we can solve our problems. If I remember rightly, one of the solutions was the Common Market. The EEC was the panacea. We were told that if we got into that we would become more competitive and be able to deal with the problems of our people. We were told that we would have a new market and so on. We joined the NEC— [Laughter.]—the EEC. I have been on the NEC' for quite a few years. [Interruption.]The hon. Member has not had my advantages.
What happened when we joined the EEC? Unemployment did not decrease. I am sure that hon. Members will remember the arguments at the time about jobs for the boys. My God, unemployment has increased. The EEC is no answer to our problems.
There are many other factors. There are new modern things now. We are told that we have to follow the examples of various other nations, one of which is Japan. Have hon. Members read much about Japan? I am sure that many of them have been there and seen the way that the trade union movement in Japan is organised and seen the conditions of the work force. They will also have seen the way that many people live in Japan. If anybody wants to go there, they are perfectly welcome to do so. I am not advocating Japanese policies for our people. Those are not the way to deal with this problem.
We have come to the most fundamental stage in industrial development. This applies not only to us but to all Western capitalist societies. I am not asking Britain to accept all the Eastern European concepts, but I do suggest that there is one we could accept. In Eastern Europe there is a planned economy. East European countries do not have mass unemployment. It is true that the conditions of the workers are not as good as the conditions of workers in the West, and consumer products are not as freely available as they are in parts of the West. Eastern Europe does not have free and independent trade unions. However, we ought to learn from the good things it has and reject the bad, while at the same time rejecting the bad things in Western Europe.
If we are to rebuild our manufacturing base and economy, the way to do it is certainly not to have a command economy like that in Eastern Europe, but we need Government intervention. We need planning for the resources of the economy and an extension of public enterprise in many forms in order to be able to have real planning and not just indicative planning of the sort that we had under the George Brown plan. We need real physical planning so that we can ensure that we have the training, the engineers and the industrial investment that are required. That is the only way forward for British industry. We cannot deal with the problem in any other way.
As I said, I have been here a long time and I have heard all the arguments. Those arguments skim over the surface of the real problem: that we live in a society that does not produce goods for use but purely for profit. While that situation exists we can never genuinely rebuild the economy and create the type of society that is needed to give our people full employment.

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I do not argue against those who say that the new technology has so changed society that we will have unemployment. The combination of existing systems of society and new technology are bound to give rise to unemployment. We have to use the new technology as part of a different type of society. That raises the fundamental question: what do we produce for; what is the objective? Is the objective merely to have a profit-making system benefiting a few, or production which benefits the whole of society?
Mr. Couchman: Will the hon. Gentleman give way?
Mr. Heffer: No. My speech will be short. Often in our debates we talk about the skimming effects of one problem as they connect with other problems, but the fundamental question is not often asked and it needs to be asked in a debate of this kind. We have to create a society in which people will work fewer hours. By way of alternative work we can create new opportunities in many other spheres. Perhaps we can give people the opportunity to involve themselves in the arts on a scale that they have never had before.
There is much that could be done, but little is being done. We cannot continue to have a society in which only a small section works and an increasing mass of people do not work. We have to get everyone working and recognise that that means a change in the character of society. Only a democratically controlled, planned, Socialist economy can do that.
5.58 pm
Dr. Keith Hampson: I hope that Opposition Members will forgive me if I make a party point, which they know I am unaccustomed to making too blatantly. It is that we normally see an Opposition who proudly parade on their sleeves compassion and concern for the unemployed and for manufacturing industry. With the noble exception of the hon. Member for Liverpool, Walton (Mr. Heffer) and a few of his hon. Friends, today they wear the badge of shame, because there are only four Opposition Members in the House for this important debate.
I give credit to my hon. Friend the Member for Lincoln (Mr. Carlisle) for launching the debate. My point about the Opposition is not a petty one, because most of us constantly face a barrage of innuendo, criticism and abuse from Opposition Members on these very subjects.
I have only one point to make about the speech of the hon. Member for Liverpool, Walton. After the war, this country was the victor. It captured and took markets because it had an industrial base and was provided with cheap and easy to obtain raw materials from the empire. The tragedy was that our industrial structure and trade union movement became fossilised in the 1950s. They were fossilised largely by the Labour Government and their programme for state intervention and nationalisation after the war. The Labour Government were followed by Conservative Governments who then fossilised our trade union movement, because that was the period when Churchill and all the Cabinet agreed that there must not be any trouble with the unions. Therefore, the power and privileges of the trade union movement became entrenched in our industrial system. They went far and away beyond anything that was experienced by any of our competitors.
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It is absolutely right to say that in the 1960s this country needed the white-hot heat of the technological revolution, but the tragedy is that the Prime Minister of the then Labour Government who enunciated that doctrine failed to deliver. That is what this Government have had to deliver since 1979. It is a slander for Opposition Members to talk about 13 wasted years. The 1960s were wasted by a Labour Government. Now we are having to catch up.
We faced the fact that traditional industries in our industrial cities are running down massively and quickly because of world competition. At the same time new industries, often in the service sector, do not require so much labour. Modern and many older industries find that they can make do with part-time labour or with overtime instead of having to take on large numbers of new employees. At the same time, the birth rate has been increasing, with the result that many more young people are leaving school and wanting work, on top of which there has been a long-overdue demographic change, with women entering employment in greater numbers. That has happened, in conjunction with the world recession in trade because of spiralling oil prices. Therefore, this Government have inherited something that no Government could possibly have avoided. The missed opportunity, if there was one, was during the so-called swinging sixties. At that time, this country's industry was swinging on the gallows. We have yet to recover from it.
All right hon. and hon. Members agree that Britain's manufacturing base is fundamental to wealth creation in the country, but that is not necessarily the same as saying that it is essential for job creation. As my hon. Friend the Under-Secretary of State said, every modern economy, apart from the Japanese, has seen a more rapid rate of growth in the service sector than in the manufacturing sector, simply because structural changes of the kind that I have just outlined are taking place everywhere. That means that we must use our manufacturing base as the basis for wealth creation, but many more jobs, proportionately, must be created in the modern service sector, if we are ever to escape from the shadow of unemployment.
Where does that leave the traditional industrial cities of the north and, until recent years, successful areas like the midlands? My hon. Friend the Under-Secretary of State outlined one of the problems that the Government face. They are doing things, and they believe in what they are doing, but they are not prepared to boast about it. Even today we have played around with words. My hon. Friend asked whether we are dealing with industrial policies or an industrial strategy. Is it or is it not interventionism? Of course it is interventionism. There is no way of avoiding it in a modern economy. My hon. Friend gave many examples.
What is the Government's public purchasing initiative if it is not purchasing by the Government? What is the prospect for the helicopter industry or any major defence industry if the Government are not a major customer? How can we possibly play by the rules of free competition and free trade throughout the world when others do not? How can we—this is a crucial factor that my right hon. Friend the Secretary of State for Trade and Industry must hear in mind—possibly do without the degree of state involvement and protectionism that is afforded by the multi-fibre arrangement in areas like Yorkshire and Humberside?

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We are all too well aware that my right hon. Friend's Department—or forces within it —has argued, since the publication of the Silberston report, that the MFA provides a disproportionate subsidy to the textile industry —15 per cent. on clothing—that people otherwise would be able to spend on other goods, thus stimulating the economy. That is absolute nonsense and it is about time that we said that academic studies of that kind are nonsense. It does not follow that people would spend the additional money that would be available to them on British manufactured goods rather than on imports. The degree of dependence of certain limited parts of this country on a major industry is completely ignored. The textile industry is one of this country's major industries. In terms of added value, it is far more important than the aerospace or computer industries, or many of the other essential industries that we think of as being at the heart of the British manufacturing base. Therefore, the Government's role needs to be judiciously used. There is no way out of it.
I pay full credit to my right hon. Friends the Secretaries of State for Education and Science and for Employment for their technical and vocational education initiative. At long last they are trying to change the basic balance of the school curriculum and to make it more vocational in an effort to attract more young people into the world of work and to help them to appreciate that what they learn at school has a degree of relevance to the realistic world of employment that they will enter later.
Equally, we have tried to change the balance in further and higher education in an effort to attract more people into courses that will benefit industry. However, it has taken a very long time. The Finniston committee sat for four years. It began its work in the mid-1970s. A decade later we are still talking about it. An apparatus has been established, but how much influence has the Engineering Council had in trying to tackle the problem?
We have known about the problems and the degree of decline in our industrial cities for a very long time. It was left to my right hon. Friend the Member for Henley (Mr. Heseltine), who is now doing so much to refresh those parts of the Tory party that others cannot reach, to write his report "It Takes a Riot." However, five or six years later we are still conscious that problems remain not only in Liverpool but in other major industrial cities. The lessons are there and what needs to be done is perfectly clear, but we are not acting with the speed or on the scale that is necessary.
Task forces have been launched in eight cities. I am very grateful for the fact that there is a task force in the city of Leeds. However, it has only £1 million to spend and a junior Minister has only a vague responsibility for it. We need to learn the lessons of the urban development corporations and, above all, of the Scottish Development Agency. We need to learn more the lessons of the latter than of the former, because in most of our cities there is not the scale of the problem that is to be found either in London's docklands or in Liverpool. Nevertheless, there are major problem areas.
Therefore, an agency along the lines of the SDA needs to be established and provided with many resources. It needs to have the powers of land accumulation and planning permission. Also, it needs to work in conjunction and partnership with the local authorities. It must not work against them. All right hon. and hon. Members know that the urban development corporations have
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created resentment in docklands. However, in partnership with local authorities that body could be provided with the necessary resources to rejuvenate an industrial area that is in decline. Then it could move out again and put its resources into another city in another part of the country. That is the main task that must be tackled in the industrial cities of this country.
However, the Government must have the will to do it, just as the same kind of will is needed to tackle the industrial strategy. The very term "strategy" implies comprehensiveness. Our industrial cities need to be considered in terms not just of the environment — fundamental though that is if they are to attract new industry — but of the ramifications of our industrial policy. The Department of Trade and Industry does no such thing. It has no overview of industrial strategy. It has a strategy for individual companies. Therefore, no nationwide strategy is exercised by the DTI over helicopters. The strategy relates just to one company — Westland.
As for the European fighter aircraft, the DTI's view was essentially that of British Aerospace. The Department of Defence was trying to pull in other European partners, and the Department of Trade and Industry was doing its best to frustrate those efforts.
I am sorry that my right hon. Friend the Member for Hertsmere (Mr. Parkinson) is no longer present, because he might have pursued the best line, but in his short time in office, he had the major task of trying to merge the two huge Departments of Trade and Industry. However, from the tenure of my neighbour, my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) — who simply did not believe that there should he such a thing as an intervention policy or even a Department of Industry — we have had Secretaries of State in the Department of Trade and Industry who have not had a conviction that there should be any industrial strategy.
Indirectly, an intervention policy has been pursued all other the place, but it has been piecemeal and there has been no effort to try to get a concerted and comprehensive approach. My hon. Friend the Under-Secretary of State made it clear that he had responsibility for some of the action, that other parts of the Department were responsible for others, and that there is also the Treasury. As we all know, the Treasury is far too dominant.
We have waited for the rebuilding and sustaining of our manufacturing base for a long time. It will not happen spontaneously. All our major competitor countries have Government intervention. Japan is the obvious one, but there is Germany with the purchasing power of its Government and France with its more centralised planning arrangements. Even in the United States—the most free enterprise economy in the world — it is the purchasing power, use and role of the Government that build up huge, powerful, multinational corporations, such as IBM, or the United Technologies Corporation, which bought Westland, and the rest.
In the modern world, we cannot pursue a hands-off, non-interventionist, free trade policy. It is fundamental that we have a comprehensive approach. The Department of Trade and Industry must take a stronger and more initiating lead within Government. Furthermore, we need a machinery, such as a Cabinet Committee, to look at industrial strategy in the way that we have for so long had

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an economic, but Treasury-dominated, Cabinet Sub-Committee and Committees on home affairs, overseas and defence matters.
6.11 pm
Mr. Gordon Brown: Both sides of the House will want to congratulate the hon. Member for Lincoln (Mr. Carlisle) on introducing the debate and on uniquely eliciting two Government responses. The first came from the Under-Secretary of State for Trade and Industry, whose list of industrial objectives seemed to get longer as the list of closures got longer, but whose industrial objectives seem to have one thing in common — that they would always cost the Government less money and not involve additional expenditure.
The second response came from the right hon. Member for Hertsmere (Mr. Parkinson), whose selective use of statistics, to say the least, concentrated on the silver linings and ignored the dark clouds that affect our industrial horizon. We should also congratulate the hon. Member for Lincoln on eliciting, in both interventions and speeches, with one notable exception, such a display of proposals for a change of Government policy that I almost thought I was at a reconvened meeting of the Conservative Centre Forward group.
The hon. Members for Leeds, North-West (Dr. Hampson) and for Staffordshire, Moorlands (Mr. Knox) both summed up the extent and scale of the problem that we face. The Government have presided over a decline in our manufacturing industry that is so general that we have lost 1·75 million jobs in the past seven years, 1·5 million of which were in the traditional industrial regions, many of which are now industrial no-go areas that cannot benefit from any expansion in prosperity or growth.
The decline is now so widespread and pervasive that, even on the Government's figures, the collapse of manufacturing investment between 1979 and 1986 is 20 per cent. The decline is so catastrophic that we have reached a unique position in our industrial history. Never before have we imported more manufactured goods than we export, nor sent more capital overseas to be invested in other people's industries than is invested in our manufacturing industries. Nor have we had entire areas of the country, such as the north-west, the north-east, Scotland, and Wales, where there are more people without a regular job because they are unemployed, in part-time employment or on temporary schemes than are employed in all our manufacturing industries, new and old, put together.
We have heard from the Minister, but particularly from the right hon. Member for Hertsmere, the former Secretary of State for Trade and Industry, some highly selective figures about productivity, investment and growth. He said that capital investment in manufacturing industry was at the highest ever level. He ignored the fact that, under his Government, capital investment in manufacturing industry is still markedly below that of 1979. He also said that we had the highest real level of exports last year than at any time in our history. He ignored the fact that, at the same time, we had the lowest proportionate share of world exports than at any other time.
The Government have told us, and the Minister said it again, that productivity is rising fast. It is true that
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productivity has been rising, but that is a function merely of the fact that employment has been falling faster than output and less is being produced by many fewer people. In other words, the rises in productivity for which the Government claim credit in almost every speech issued from the Department of Trade and Industry are a function, not of higher investment in the economy, because that is not the case in the manufacturing sector, but of higher manufacturing unemployment and a high level of redundancies.
If productivity was helping the economy so that it was at record levels, if investment was higher than it had ever been, if we were in the sixth year of the economic recovery that the Government have claimed, and if we had never had it so good, as the Secretary of State for Employment in the other place has been telling us, will Conservative Members answer a few simple questions? Why is it that, alone of our industrial competitors, our industrial manufacturing output is still 8 per cent. below what it was in 1979, when the Government came to power? Why is it that output in consumer goods is still 7 per cent. below 1979, in metals 26 per cent., in engineering and allied goods, which include electronics for this analysis, 5 per cent., and in other manufacturing industry 12 per cent. below? Why is it that output in these years has risen by 24 per cent. in Japan, in the United States by 14 per cent., and in all the OECD countries by 10 per cent., when in manufacturing industry in Britain it has fallen by 8 per cent.?
The Minister talked about an inevitable fall in manufacturing employment, but perhaps he should take note of the fact that during the years of this Government manufacturing employment has risen in Japan and some other countries, such as Greece, Finland and Turkey. It has fallen by about 1 per cent. a year in America and Canada and by about 2 per cent. a year in Germany, France and Italy. In this country it has fallen by 5 per cent. a year, and by about 25 per cent. during the period of this Government.
The Minister and other Conservative Members will tell us that this is a function of the shake-out, of the move from the traditional industries to the high-technology industries, and I see hon. Members nodding. They feel that the old industries are making way for the new, that the sunset is making way for the sunrise and that the sunbelt is taking over from the rustbelt. These are the things that we hear from Ministers and Conservative Members in their speeches at the weekends.
The truth is rather different. It is a case, not of the old industries making way for the new, but of the new industries making way for foreign imports. The Government have been stifling the new industries almost as quickly as they have been destroying our traditional industries. If in 1979 we had named one sector which might have been expected to do well because of the happy coincidence of oil being found in the North sea, we would have proposed petrochemicals and plastics. Yet, while in 1979 our trade deficit in plastics and synthethic goods was about £100 million, it is now nearly £200 million as a result of what has happened during the past seven years.
Mr. Butcher: The hon. Gentleman has stood at that Dispatch Box in other debates. He will be aware that we have never said that new industries would replace the old. We have often said that the so-called traditional industries become revitalised by the application of new techniques in

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making traditional products. We have not said that the reduction in employment in the manufacturing sector is inevitable. Indeed, if the hon. Gentleman checks the record, he will find that, unfashionable as it was then, I said that the continuing fall in employment in manufacturing was not inevitable and that with increased performance we could see increased employment.
Mr. Brown: I am grateful to the Minister for making the point that I have tried to make throughout the debate. If the traditional industries were being revitalised, we might expect something to be happening in steel, engineering and allied industries, consumer durables and other traditional industries to give us hope that those industries would increase output and exports, and contribute to our industrial recovery. However, there is no evidence that that is the case. Moreover, even in the new industries, where we should be leading the world, our trade deficits are such that we can look forward only to the prospect of a further erosion in manufacturing employment and further losses in competitiveness compared with the rest of the world.
Mr. Couchman: Will the hon. Gentleman concede that the United Kingdom's preoccupation with the old industries, the sunset industries as he describes them, has left us on the starting line with the sunrise industries, and with severe skill shortages? GEC Avionics is an important employer in my constituency and it wishes to take on 500 people this year. It must go to Australia and New Zealand to find people with sufficient skills for those jobs. At present it has a superb export order book.
Mr. Brown: The hon. Gentleman makes a different point, but I am happy to answer it. He talked about shortages of skills, which is mentioned in the motion tabled by the hon. Member for Lincoln. These shortages are a direct result of the neglect of training during the past seven years, when the Government should have known that skilled engineers, computer operators and manpower for information technology industries would be required. Indeed, the chairman of the Manpower Services Commission, who is an appointee of this Government, not of the Labour Government, has been extremely critical during the past few weeks of the Government's policy of abandoning industrial training boards and of other measures which hubs led to a decline in the number of manufacturing apprentices and trainees. Therefore, if the hon. Gentleman wishes to avoid a shortage of skills in future, he must persuade the Minister to change his list of industrial objectives in such a way that money will be spent on training at an advanced level.
Dr. Hampson: The hon. Gentleman must recognise that unprecedented sums are flowing through the MSC to those areas, despite what he says. The Labour Government talked about these matters but did absolutely nothing. Mrs. Williams tried to persuade the Cabinet to set up something like the youth training scheme and to get in-service teacher training in order to provide mathematics and physics teachers, whom we still desperately need.
Mr. Brown: I hope that the hon. Gentleman will agree that the Government made a grave mistake in abolishing the industrial training boards. I hope he will agree with the chairman of the MSC, who has talked about the absence of provision in the private sector and the ineffectiveness of the voluntary arrangements, in which the Government
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have placed great faith. On YTS and apprenticeships, I hope that the hon. Gentleman will note that in 1979 more than 250,000 young people were either apprentices or on training courses in manufacturing industry, whereas under this Government's policies the decline in training opportunities in manufacturing industry has been even greater than the decline in employment in manufacturing industries. Now no more than 100,000 young people are in training either in apprenticeships or on YTS in manufacturing industry. That will inevitably lead to skills shortages later, if and when our economy expands.
I hope that the Minister will say, either tonight or later, why it is, if the Government are on course and we are experiencing industrial progress and things have never been so good for 90 per cent. of the population, that we can look forward only to the prospect of ever-increasing trade deficits, even in the new industries. Does the Minister accept his figures, which show that not only in petrochemicals, where we might have expected to do well, but where we have done particularly badly, but in electronics, microelectronics and information technology our trade deficits and the surplus of imports over exports have been rising at a phenomenal rate over the past seven years? If we are to believe a survey carried out, not by Cambridge university, but by Cambridge Econometrics —a body whose calculations are usually accurate—those trade deficits will increase substantially during the next 10 years, and our manufacturing trade deficit, which is already high, could double.
In the face of those problems, surely the Minister's list of abstract objectives, which involve no specific commitments to any measure that would lead to the expenditure of money, must be reconsidered. If we are to lose the place, and if we are to be unable to compete in information technology, computers, petrochemicals and microelectronics, our future as a manufacturing nation is bleak.
We in the Labour party understand that the world of manufacturing has changed and will continue to change. We understand that a feature of that is that there is almost no manufactured item produced in the United Kingdom which is not also produced abroad, and so has a direct competitor abroad. We also understand that we should be most able to compete in precisely those new high value added, research intense, high skill and high technology industries. However, if we are to be able to compete, we cannot surrender spinelessly, talking about the supremacy of market forces, because no other country does that. We must look carefully and pragmatically at how investment in training, science and technology, research and development and plant and equipment can aid an industrial expansion in those industries which would secure the wealth that would enable us to have jobs in manufacturing industry and to see them spin off into the service industries. That is a question, not of abstracts, but of specific policies which the Government should pursue.
What will the Government do in areas such as research and development, and training, having seen it acknowledged by all the agencies, including para-Governmental organisations, that there is a crisis and steps must be taken? What can the Minister do to change the situation where only half our factories use micro-electronics and the other half have no plans to use them, and where three quarters of the firms in the modern world have no access to computers and computer equipment? How can he change the fact that in Japan robots are widespread in

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manufacturing industry, whereas in Britain not many are available? How can he change the fact that in information technology, acknowledged experts say that 7 million jobs will be created throughout Europe over the next 10 years, yet there is no guarantee that this country — through research, investment or training — will benefit in any substantial way?
How can the hon. Gentleman change the fact that we spend less on civil research and development than almost all our major competitors? In other countries, expenditure on science and technology has been rising by between 9 and 10 per cent. a year whereas here it seems to have been rising by about 1 per cent. Most of all, how can he change the fact that at present we cannot avoid skill shortages in the future and that we will not have the kind of trained and skilled work forces that will be needed if we are to have a successful manufacturing future?
I have mentioned what the chairman of the MSC—a direct appointee of the Government—has said about the abolition of the industrial training boards. He talked about the broken promises of industrialists to provide on a voluntary basis the training that was lost when the industrial training boards were compulsorily wound up. He has talked about the dearth of action by industrialists to cope with the vacuum that was left following the abolition of these industrial training boards.
An MSC study has shown that British companies are spending far less on training as a proportion of their sales turnover than are comparable companies in Japan, the United States and Germany. It has also shown that 69 per cent. of employees are at present enjoying no training and that 25 per cent. of the manufacturing establishments surveyed had no training opportunities on offer.
That is the real world of manufacturing industry, and those are the real problems. We do not need abstract lists of industrial objectives for some distant day in the future to tell us what the real problem is. It is a question of what the Government will do to ensure that the important new industries will win.
As the right hon. Member for Hertsmere should know by his selective use of them, statistics can tell us many things. Is it not astounding that the figures available show that twice as many people in South Korea are in training in higher and further education as in Britain? That is the state to which this Government have brought the country. Seven years ago we might have hoped to compete with the West Germans, but our best hope now is to try to keep up with the South Koreans. Seven years ago we might have hoped to compete with the Japenese, but now our best hope is to be able to compete with the Taiwanese.
Mr. Parkinson: The hon. Gentleman accused me of using selective statistics. I hope he is not denying that we had record exports in manufactures this year and that the decline up to 1981 has now been arrested. Those are facts. Whether we should be doing better is another matter. However, on what does the hon. Gentleman base his assertion that seven years ago we were in a position to begin competing with Japan? As I said, in 1978 Toyota was producing 65 cars per employee, whereas Leyland was producing 5·5. The hon. Gentleman says that in 1979 we were on the verge of being able to compete with Japan. In reality, we were on the verge of going under. If the hon.
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Gentleman bases the rest of his speech on the assertion that a few years ago Japan was within our grasp and that we have slipped behind, he is ignoring the real world.
Mr. Brown: The right hon. Gentleman would have heard me describe some of his selective statistics had he been present at the beginning of my speech. He again says that manufacturing exports are at a record level. He must accept that our share of world manufacturing exports is at its lowest level ever. That is surely a reflection of our ability to compete with other countries.
The right hon. Gentleman talked about the recovery that has been brought about by increasing investment, but in reality investment in manufacturing industries in the United Kingdom is still below the level of 1979. Will the right hon. Gentleman explain why, after seven years of this Government—after seven years of talk, promises and two elections—manufacturing output is still below the level it had reached when the Labour Government left office? If the right hon. Gentleman can explain that conundrum, he will be doing the House a great service.
Mr. Parkinson: When the Labour Government left office in 1979, certain industries were being maintained purely on the basis of colossal subsidies. At that time the Department of Trade and Industry was spending £2 billion merely on funding the losses of a selection of nationalised industries that were producing products that were incapable of being sold without huge subsidies. There was a substantial block of heavily subsidised production, and the hon. Gentleman's own Government had plans to reduce that capacity. It was not the Conservative Government who evolved the plan to reduce the steel industry to 15 million tonnes, it was the Labour Government, who did not have the guts to do it before the last election. Therefore, we had a lot of heavily subsidised production which the Labour Government were planning to cut out had they been re-elected, but they were not reelected.
Mr. Brown: The right hon. Gentleman has entirely missed the point that I have been making, and I wonder whether he was listening to what I said. My point was that if this Government's record was anything to write home about, we might have expected them to be doing well in the new industries. We might have expected this Government to have had record trade surpluses in areas such as information technology, computers, electronics and petrochemicals. Yet the trade deficit in these industries is worse than in many of the traditional industries which the right hon. Gentleman says must be run down because of outdated technologies.
Like the Minister, the right hon. Gentleman has not explained why under this Government manufacturing output is still below the level of 1979 and, indeed, the three-day working week of 1974. It is hardly a record about which the Minister should boast. No country has had the financial advantages that this Government had when they came to office as a result of North sea oil revenues——
Mr. Kenneth Carlisle: I apologise for interrupting the hon. Gentleman, but when I presented the motion I was hoping that every Back Bencher who wished to air his views could participate. I hope that the hon. Gentleman will bear that in mind.
Mr. Brown: I am grateful to the hon. Gentleman, but the Minister spoke at some length about the sixth point of

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his industrial objective. However, I have been deterred from completing my speech by the interventions of the right hon. Member for Hertsmere. I can assure the hon. Member for Lincoln that it is my intention to complete it now.
No Government have had the advantages that this Government have had as a result of North sea oil revenues. Those revenues should have gone into investment, training, research and development and science and technology. Instead, they have been wasted on funding ever-rising levels of unemployment, which in real terms shows no signs of falling as a result of Government policies. No Government have so systematically wasted the opportunities that have been placed before them. They have created an industrial desert. They have called it a recovery and have presented it as a triumph of monetarism.
The Opposition believe in the future of manufacturing industry. We will invest in it. We will pay attention to the needs of training, research and development, science and technology and the re-equipping of the vital industries that must win in the export markets if we are to succeed as an industrial nation. The country understands that, and it also understands that this Government have failed.
6.39 pm
Mr. Gerald Howarth: So far we have had a good debate which has perhaps been somewhat dominated by the Conservative Benches. However, we were all interested in the exchange between my right hon. Friend the Member for Hertsmere (Mr. Parkinson), a former Secretary of State, and the Opposition spokesman, the hon. Member for Dunfermline, East (Mr. Brown). Clearly my right hon. Friend scored all the points in that exchange.
Unfortunately, it appears that the Opposition have learnt nothing. We have heard only a minute's worth of their proposals although we have learned that they are now in favour of robots. It is a pity that it has taken them so long to reach that view. When our industries were under their stewardship, they were unable to invest for the future and in robotics for British Leyland. Robotics has saved British Leyland from extinction.
I join hon. Members from both sides of the House in congratulating my hon. Friend the Member for Lincoln (Mr. Carlisle) on securing this important debate and on the terms of his motion, which I entirely endorse. As an international banker, I am not paid as highly as popular rumour would have it. I believe that international bankers are paid a proper rate for the job and I should like to see higher pay in industry. I am worried at the attempts that have been made to polarise the United Kingdom economy into manufacturing and service industries and pitting the one against the other. We need both and we must, as a nation, excel at both
These days, in order to sell a power station to India or aeroplanes to Botswana, it is necessary to provide a potential purchaser with the finance. British architects earn valuable foreign exchange for services rendered to overseas clients and they enhance the opportunity for United Kingdom contractors to secure the follow-up business.
We can be justly proud of the achievements of our service industries in greasing the wheels of industry and in securing overseas business in their own right. London is the undisputed centre of the financial world with more
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than 500 foreign banks. Lloyd's is the principal insurance market, and foreign companies invariably seek to have their contracts governed by English law as they have the highest regard for our legal profession and for the administration of justice. I would like that spirit of enterprise, confidence and determination which is so evident in the service sector of industry now to pervade the industrial sector. Like my right hon. Friend the Member for Hertsmere I believe that we are approaching the new culture that we are trying to create.
Mr. Nicholas Winterton: I have been following my hon. Friend's argument, although it has been brief so far, very closely. I am one of the Conservative Members who has considerable reserve about the positive position of the City of London. Can my hon. Friend explain why the City of London finds it possible to devote hundreds of millions of pounds to takeovers which do not produce additional jobs? Will he, further, tell me why the City can find so much time and expertise to invest money in other paper money by way of foreign currency transactions rather than investing in manufacturing industry? That is the few making a lot more money for the few and ignoring the real needs of this country which lie in manufacturing industry. There is so much money in the City. Why is that money not coming out of the City and into manufacturing industry?
Mr. Howarth: As always, my hon. Friend is very vigorous in his remarks. However, he fails to understand that funds are available. There is no shortage of funding for anyone who has a good idea. To talk about the recent spate of mergers and takeovers is a complete red herring.
Mr. Winterton: No, it is not.
Mr. Howarth: It is. I must tell my hon. Friend who is becoming agitated that I support him in most things. However, he has a perverse deviation on this point.
Mr. Winterton: Perhaps I should ask my hon. Friend to withdraw that remark.
Mr. Howarth: I am unable to support my hon. Friend in that deviation. The banks are falling over themselves to lend funds for any good product or proposition. It is simply not true ——
Mr. Winterton: No, they are not.
Mr. Howarth: My hon. Friend says that they are not. If they are not, there are plenty of Government agencies which are willing to invest money. NCB (Enterprise) Ltd. in my constituency has £15 million at its disposal. It is anxious for anyone to come forward with a good idea which it can support.
Since entering the House in 1983 I have taken a close interest in manufacturing industry in my constituency and I have a special interest in the aerospace industry. Among the companies in my constituency there are Lucas Electrical, a major caterpillar dealer and a company which supplies sports boats around the world from a point which is the furthest from the sea in the United Kingdom—Fletcher International Sports Boats. The picture in my constituency and elsewhere in the west midlands does not accord with the description that I have heard from the Opposition Benches.
There is no doubt that industry has problems. However, there is, also good news and that point was most forcefully made by my hon. Friend the Member for

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Lincoln (Mr. Carlisle) who moved the motion. I have seen a textbook revolution taking place in my constituency. There was clearly overmanning on a massive scale when this Government came to office in 1979. Under previous Labour and Conservative Governments the unions had been allowed to dictate the level of manning. The result was that the unions, anxious to maintain short-run jobs, ensured that industry was overmanned to the extent that it was completely unable to compete. This 40 years of failure by previous Governments to allow management the right to manage, has been at the heart of our problems.
In seven years we have had to do what our major competitors have done over the past 40 years. That is, we have had to adjust manning levels to the requirements of industry and the needs of the market. This change has been traumatic. Every week hon. Members see the results of this traumatic change in their constituencies. However, I believe it is to the great credit of the Government that they have at long last bitten on the bullet and taken the necessary action to allow management to manage so that at last we can start to rebuild.
Those who say that our economy is now wholly dependent on North sea oil should remember that it constitutes only some 8 per cent. of gross national product. It is not the most dominant sector of our economy. I liken it to Dunkirk. Just as the British Expeditionary Force was fortunate to have calm weather when the little ships returned from Dunkirk, so I believe that the Almighty has smiled on the British economy. He has given us oil, the most valuable commodity of its time, out of the most inhospitable waters, from which we have been able to derive resources which are now providing us with the cushion of opportunity to correct the economy.
We were suffering from overmanning and that has largely been resolved. New union agreements have been made whereby the work force is more flexible in its agreements with employers. Investment has risen by 39 per cent. since 1980–81. The hon. Member for Dunfermline, East referred to robotics. No doubt he has visited Austin Rover where robotics have made a substantial contribution to the revitalisation of that company. Since Jaguar came under new management in the early 1980s, the amount of investment to which my hon. Friend the Member for Macclesfield referred, has been about £100 million. That investment is producing results. Initially that investment displaced men. The move towards the introduction of robotics which was so strongly resisted by the unions and the Labour party stood in the way of progress in manufacturing industry. It is the shackles which outdated manufacturing processes have placed on manufacturing industry which have created the problems.
These changes together with the new determination evident in the industry not to rely on captive markets as in the past but to provide the products at the right price on the right delivery date, is turning the British economy round. The managing director of Jaguar has said that he will go for a zero defect car. It is no good producing an expensive car if people have to take it back to the dealer so many times that they are put off. I salute Jaguar's work in setting an example for the rest of British industry.
I have firms in my constituency which were in difficulty but which are now quietly confident. That is most encouraging. They are taking on new labour, although they are not making a great song and dance about it
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because they do not want their competitors to know and because there is unquestionably a reluctance to believe that there is a boom ahead. We want quiet confidence—a boom would destroy the manufacturing base because it would immediately suck in imports, and our industry cannot respond to such an increase in demand overnight.
Some of the calls on the Government to take action are right. It is now time for interest rates to come down. They represent a substantial burden on industry. My right hon. Friend the Member for Hertsmere was entirely right about interest rates being unreally low. They are now unreally high. My authority for saying that is discussions with foreign exchange dealers in the City who firmly believe that falling interest rates would be regarded as a sign of strength in the British economy and would not result in sterling going through the floor, thus creating inflationary expectations.
The Government have managed to reduce energy costs to industry by 8 per cent. That achievement has gone unremarked on the Opposition Front Bench. The reduction is largely the result of the Government's action in regard to the National Coal Board — they have ensured that it has become much more commercial.
I urge my hon. Friend the Minister to re-examine the European Community directive on product liability. It is causing industry, especially manufacturing industry, great headaches. It will add to their costs and it is likely to benefit the importer rather than the domestic producer.
I urge my hon. Friend not to relax the green belt. There is plenty of available space in other parts of the country not far from the south-east where there is relatively cheap accommodation. The Government must reconsider rent decontrol, which is vital.
It is not entirely up to the Government or industry to put their houses in order. Industry can do a lot, but I put in a special plea to the fourth estate—our friends in the media. Please will they stop knocking manufacturing industry? Journalists in France and Germany, for example, do not knock their industries. There is far too much knocking of British manufacturing, and less would be greatly appreciated. My message is that industry is prospering under the Government and I hope that it will continue to prosper even more.
6.54 pm
Mr. Michael Fallon: Time is short. I make no complaint about that. I should have liked the hon. Member for Dunfermline, East (Mr. Brown) to have spoken longer as we did not hear enough about Labour's industrial policy. We heard very little, for example, of the extensive nationalisation that was promised in 1983. Has that now been jettisoned from the manifesto? We heard very little about the planning controls and agreements that were sought by the hon. Member for Liverpool, Walton (Mr. Heffer). I look forward to seeing how those discussions proceed. We also heard little about incomes policy and the present negotiations between the Labour party and the trade unions. We did not get quite the full picture of Labour's industrial policy that we expected.
Until the hon. Member for Dunfermline, East spoke, I thought that this had been a useful debate. I thought that it had finally dispelled two great myths about manufacturing industry—that it is doing badly and that the Government are not doing their best to assist it.
I cannot judge whether manufacturing is leaner or fitter than in the 1950s, 1960s or 1970s, but I know that it is a

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lot healthier than Opposition Members suggest. I know that capital investment of £6·7 billion was made in manufacturing last year — 21 per cent. higher than in 1983, when I was elected to this House. I know, too, that engineering output was up 6·5 per cent. last year, that machine tool exports have increased by 20 per cent. during the past 12 months and that there have been considerable and formidable improvements in productivity in the steel and textile industries.
In the north-east, despite high unemployment and what the hon. Member for Jarrow (Mr. Dixon) told us, scores of manufacturing companies are doing well and making good profits. If there were not, we should not be getting 25,000 people off the unemployment register every month, as happened last year in the north-east. The hon. Member for Jarrow gave two examples, both of which I want to take up. He mentioned steel. He might have seen last Sunday's edition of the Northern Echo which ran and article on the Darlington and Simpson Rolling Mills annual results under the headline:
"Huge profits add 100 jobs."
The company sells steel profiles across Europe and into the heart of America. Profits last year increased by £800,000, or 16 per cent. The profits of £6·7 million have been ploughed back into the company. At the beginning of the year for which it reports, the company employed 645 people. It now employs 737 and will employ 837 people next year.
The hon. Member for Jarrow also mentioned NEI Reynolds and its anxiety about power station work. It is far more worried about the threat to the nuclear power station programme posed by the Labour party's conference resolution at Bournemouth last year. Not many people in NEI will be voting Labour at the next election and seeing themselves put out of work as a result.
It is simply not true that the Government are not helping industry. Some 28,000 jobs have been created by the new regional policy in the north-east alone during the past two years, and a further 10,000 jobs have been preserved. The Department of Trade and Industry's spending is now much better balanced. We get more for the regional aid money that is spent, and we get better
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spread of support between the new and the old industries. We also have enterprise creation measures which we never had under previous Governments.
Radical government cannot stand still. As well as creating the right conditions of low inflation and helping with the economy, the Government should do two other things to assist manufacturing industry. First, they should target regional policy even more effectively. I understand that a mini-review is going on at the moment. There are still distortions, not simply between assisted and non-assisted areas, but between assisted areas — between development areas and intermediate areas.
The Government must also improve the efficiency of the labour market. An unemployment rate of 13 per cent. is neither tolerable nor efficient, but 23 per cent. male unemployment, as in the north-east, is simply unacceptable, especially when we consider the skills that are wanted in the south and which are wasted in the north. There are men in the north who want to work but cannot because they are trapped in the north in private houses that they cannot sell or council houses that they cannot exchange. I am aware that not all want to move, but it is much more difficult now for people to move than it was in the 1930s or the 1950s, as the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) said. If the Government do nothing else—there were signs last week that we will not do much else— they should radically improve the housing market by making it much easier, by decontrolling rents and relaxing green belt restrictions in the south, to provide opportunities for people in the north who are out of work and have skills to move to areas of the south-east where there are skill shortages.
Question put and agree to.
Resolved,
That this House agrees that manufacturing industry has a central part to play in the future prosperity of the United Kingdom, and, that, in order to succeed in a fiercely competitive world, it must use the most modern manufacturing methods, and market its products with skill; notes further, that the importance of manufacturing must be recognised by society generally and by schools and colleges in particular, so that industry can surmount the present shortage of skills; and believes finally that success in manufacturing can only be won in any enterprise through the united efforts of all the work force.

Press Gallery
6.59 pm
Mr. Eric S. Heffer: On a point of order Mr. Speaker. I have been sitting here throughout the debate. As hon. Members we are often criticised by the press for not being in our places. Throughout this important debate on the future of manufacturing industry in this country I could have counted on the fingers of one hand the number of people in the Press Gallery. Is it not possible to make some representations to the press to attend important debates of this kind?
Mr. Speaker: That is not among my many responsibilities. I think that I should confine myself to what happens on the Floor of the Chamber, not to what goes on behind me.

Tin Industry
Mr. Speaker: Before I call the Secretary of State to move the Prime Minister's motion, I must announce to the House that I have selected the amendment in the name of the Leader of the Opposition.
7 pm
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): I beg to move,
That this House endorses the Government's response (HC 457) to the Second Report from the Trade and Industry Committee on the Tin Crisis (HC 305-1); regrets the difficulties brought upon the Cornish tin industry, the International Tin Council's creditors and others as a result of the failure of the International Tin Council to reach agreement with its creditors, despite the considerable efforts made by the Government, and welcomes the Government's package of measures to help employment in Cornwall.
I invite the House to endorse the Government's reply to the Select Committee on Trade and Industry. I note that a surprisingly large number of hon. Members wish to speak in this important debate and, therefore, I shall try not to take up too much time and I shall come straight to the point.
It strikes me that there are three main issues on which I suspect that the House will wish to concentrate. As the House knows, under difficult circumstances, to which I shall refer later, the Committee has produced a report which raises a number of important questions. The three main issues are, first, the constraints under which the Government operated in giving evidence to the Committee, secondly, the conduct of the Government both before and after the collapse of the International Tin Council in October 1985 and thirdly, the effect on the Cornish tin industry. My hon. Friend the Minister of State will deal with the problems of Cornwall more fully when he replies to the debate.
I should like first to deal with the constraints which the Government faced in giving evidence to the Committee. I must, however, reject any suggestions that, in giving evidence. Ministers or officials withheld information except where required to do so by international obligations, legal considerations or established conventions relating to the disclosure of information to Select Committees. In fact, the Government made every effort to provide as much information as possible to the Committee. In the case of the papers and proceedings of the International Tin Council—to which confidentiality attaches under the international tin agreement and the ITC rules—our delegates twice requested the council to agree to disclosure. Both those approaches were emphatically rejected.
The Committee also criticised our refusal to depart from the principle that advice given to Ministers by officials may not be disclosed. I must make it clear that the instructions given by Ministers and followed by officials in the course of this inquiry were no different from the rules that are generally applicable when civil servants give evidence to Select Committees. These rules are set out in the memorandum of guidance for officials appearing before Select Committees. They make clear the categories of information which officials must not disclose to Committees including, in particular, advice to Ministers. The purpose of such a rule is clear and well understood. It is to preserve the basis of confidence between Ministers

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and their advisers. That is necessary for the effective functioning of Departments, and it underlies the basic principle that it is Ministers and not officials who are responsible to Parliament for the activities of their Department. Finally, we were constrained by the fact that the matters under investigation were the subject of legal actions in which the Crown may become involved.
Before I turn to the question of the conduct of the Government in the tin crisis, I shall tell the House the background to this debate.
In 1982, when the fifth international tin agreement expired, the Government had to decide whether to join the sixth agreement. There was considerable reluctance to do so, particularly as the two largest consumers, the United States of America and the Soviet Union, had announced that they would not join. So there was some question as to whether the consumer voice would be fully effective.
On balance, it was decided to continue as members of the ITC. I remind the right hon. Member for Swansea, West (Mr. Williams) that that was a decision the previous Government had equally come to in joining the fifth agreement. That decision was taken, first, because the Government at the time believed that it was in the interests of this country that there should be, as it was then seen, a stable international market in tin; secondly, because the majority of the Community member states wished to join; and, thirdly, it was thought that to refuse to join would have adversely affected our relations with the producing countries. There were also a number of subsidiary reasons in the Government's mind at that time, but it is fair to say that those were the three main reasons why, on balance, the difficult decision was taken to join rather than not to join.
Very early in the life of the sixth agreement the Government became concerned at the lack of information about the operations of the buffer stock manager. The Government made no secret of their concerns about the absence of proper control and accountability over the actions of the buffer stock manager. We tried hard, through the ITC, to establish proper accountability, but were not supported by other member countries. With between only 4 and 5 per cent. of the votes, our power to enforce proper accountability was limited. The nature of these efforts was explained to the Select Committee, and they are part of the published evidence.
The Select Committee was critical, in its report, of what it saw as the failure by the Government to insist on obtaining the necessary information from the ITC to enable everyone to understand what was going on. In my view the Committee was quite right to focus on the issue of accountability, which is one of the main lessons for the future to be learned from the tin crisis. However, with respect, it was wrong to lay the blame for the lack of accountability at the door of the Government. In this context I should like to refer to the Committee's assertion that either Ministers were informed about the crisis, in which case they should have acted, or were not informed, in which case they should have insisted on being so.
I believe that the view that it was within the power of Ministers to insist on having the information needed to foresee the impending collapse is based on a false assumption. It is perhaps not always fully appreciated that the ITC is governed by an international treaty between sovereign states. It therefore operates largely outside United Kingdom law. For example, the Companies Acts do not apply to the ITC. Therefore, it is not a body over
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which Her Majesty's Government could exercise control, nor even a supervisory function. International bodies of this nature are not subjected to such intervention by the Government of the host country.
The ITC made its own rules and within those rules our ability to obtain information was restricted. We tried hard to get the rules changed, but without success, and there was no way in which, unilaterally, as a member with between 4 and 5 per cent. of the votes, we could enforce our views on the council. Therefore, it was necessary to work on the basis of inadequate information. and the information which was available did not suggest impending collapse. Indeed the level of indebtedness declined between 1983 and mid-1985.
The members of the ITC did not, however, know that the buffer stock manager had been making substantial unpriced forward sales of tin. This meant that any reduction in the tin support price would have led to losses on these forward sales. It was not revealed until after the collapse of the ITC on 24 October 1985, that the buffer stock manager has contracted to sell forward 60,000 tonnes of tin on an unpriced basis.
Mr. Doug Hoyle: I find it difficult to follow the Secretary of State. Why did the Government not know about that when representatives were there and, apparently, the buffer stock manager was warning all the time of the impending crisis?
Mr. Channon: With respect to the hon. Gentleman, that is not exactly right. I have been trying to explain to the House the great difficulty that Government representatives had in obtaining adequate information from the ITC, although we made attempts to do so, in which we had little if any support from other member states.
ITC members were not informed about the buffer stock manager's unpriced forward sales contracts, nor were full details of the scale and nature of his operations revealed until alter the collapse on 24 October. Frankly, that is the crucial point. There was no way that we could discover what the exact position was. That would not have been possible unless the ITC had been prepared to release the information.
I should like to deal with some of the detailed criticisms of the Government's conduct in those affairs. I shall refer first to the warnings to the banks, brokers and United Kingdom tin producers. However, before doing so., I should like to refer to a wider issue that arose in this context.
I very much regret that the Committee thought it fit to criticise a named civil servant. However, I do not propose to discuss that issue today. It relates to questions of general principle, which are best considered in the context of the issues discussed in the seventh report from the Select Committee on Treasury and Civil Service, entitled "Civil Servants and Ministers: Duties and Responsibilities".
Mr. Robin Maxwell-Hyslop: He was useless, and proved that.
Mr. Channon: With respect to my hon. Friend, it is a little unfair for him, in the House of Commons, to attack a named civil servant who does not have the chance to reply. With respect to my hon. Friend, I feel very strongly about the matter. I resent that——
Mr. Maxwell-Hyslop: If my right hon. Friend had had the courtesy to instruct his Ministers to give full

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information to the Committee, the Committee would have been in a position to attribute blame to Ministers. As it was, he hid behind his civil servant and denied the Committee information to which it was entitled.
Mr. Channon: With respect, I do not agree with my hon. Friend's interpretation of events. I understand how strongly he feels about the issue. I have to say that, rightly or wrongly. I accept responsibility for my Department, and I continue to do so.
No warnings were given by the Government to anyone that the ITC was about to collapse. It would have been most improper to do so as we had no information to suggest, until shortly before the events of 24 October, that such a collapse was imminent. Even in September 1985 the producer countries were reported to have recommended to their Ministers the injection of additional funds in the agreement. Indeed, had the Government issued formal warnings to the banks, brokers and others, we would, by doing so, almost certainly have precipitated the collapse of the ITC. We would have been accused by all other members of sabotaging the agreement while moves to inject new funds into it were under active discussion. In such circumstances, most people would have believed that the Government had acted irresponsibly, and had brought about the collapse of the ITC deliberately.
What both the Bank of England and the Government did was, in response to concerns expressed by the London Metal Exchange, to warn that, if the ITC ran out of money, the brokers could not count on the ITC member countries stepping in to finance any shortfall. We also told the LME that we did not have adequate information about the financial position or the market activities of the buffer stock manager. In addition, in response to a question from the chairman of the London Metal Exchange in June 1985, Department of Trade and Industry officials made it clear that the United Kingdom Government would not unilaterally guarantee the LME brokers against a default by the ITC.
As I tried to explain earlier in referring to the unpriced forward sales, neither Her Majesty's Government, nor, I believe, any of the other member Governments, were aware of the potential scale of the ITC's default. For the reasons that I have given, it would have been entirely inappropriate to give warning either to the banks who were lending to the ITC—most of which were foreign owned— or to the Cornish tin producers. Indeed, Rio Tinto-Zinc has told us that it would have made no difference to its actions even had it been warned at the time when officials met the LME brokers.
I refer now to the Committee's suggestion that the Government's conditional agreement to contribute £50 million to help meet the costs of a solution to the crisis was not sufficient. I hope that the Committee will not mind me saying that I cannot accept that criticism and I find it difficult to understand the basis on which the Committee should describe the United Kingdom's offer as insufficient.
I must emphasise that the Government accept no legal liability for the debts of the ITC. We were prepared to contribute £50 million in addition to an amount proportionate to our original contribution to the buffer stock, which was about 4 per cent., in order to secure a return to orderly trading in tin. That would have been in
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the interests of all concerned, including the Cornish tin industry and the LME. We believed that, given the attitude of other ITC member Governments, a negotiated resolution to the crisis would not have been possible without a significant additional contribution by the United Kingdom. However, it would have been quite wrong to expect the taxpayer to provide a greater sum when the United Kingdom's share of the funding of the agreement was only 4 per cent. I must reject any suggestions of complacency on the Government's part. We are determined to draw what lessons we can from the failure of the ITC for other agreements of that type.
Even before the Select Committee reported, the Government had begun a study of their responsibilities to other international trading organisations and similar bodies. As a result we are reasonably satisfied that none is likely to develop problems such as those that occurred in the ITC, but they will all he kept under close review. It is not always easy to identify potential liabilities with precision in advance or to quantify the extent of the risk. which may change over time if the role or operation of the organisation changes. But our object must be to minimise those risks and avoid incurring fresh ones wherever possible. We intend to ensure that the operations of such bodies are reviewed regularly, and in considering our approach to future agreements of this nature, that will be one of the factors which will be very much to the fore in the Government's considerations.
The Committee, in its report and in its response to the Government's reply, draws attention to the importance of the tin mining industry in Cornwall. I fully understand —as I think the whole House does—the importance of tin to the Cornish economy, but the problem has to be looked at in the context of a fall in price in tin in recent weeks to well below £4,000 per tonne—less than half the price at which it was being supported under the international tin agreement. Those low price levels are the result of over-capacity and of the large tin stocks left in the market by the default of the ITC, and it may well take several years for the stocks to clear and for the price to rise to a level at which tin production capacity necessary to meet future demands can operate profitably. When considering applications for assistance, we have to make judgments about future market conditions, and we have accepted that decisions need to be taken about the future of the Cornish tin industry before the long-term price of tin is known.
Regrettably, we were forced to conclude that the proposals put to us by the Geevor mine did not offer sufficiently robust prospects of commercial viability to justify the unavoidable risks associated with any such project, particularly in view of the very large sums of public money that would have been required.
Mr. Dennis Skinner: Why do the Government seem to have adopted a different strategy to bailing out companies when they are in trouble from the strategy that they are adopting towards the tin mines? Why, for instance, in 1984 could the Government find £100 million of taxpayers' money to bail out Johnson Matthey Bankers without recourse to meetings other than the secret meeting in Threadneedle street? That was £100 million of taxpayers' money, with no guarantee of anything back in return. In the same year, the Government managed to find £250 million to bail out the bankrupt Common Market. On and on it goes. The Government

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seem to bail out the parts of the casino economy that suit them while they do not care tuppence about the few thousand miners who work in Cornwall. How do they manage to come to different conclusions? Is it because their friends in the City have to be looked after but they do not care about miners?
Mr. Channon: I hope that the House does not expect me to answer the detailed points regarding Johnson Matthey. They are wholly irrelevant to what we are trying to discuss in what is inevitably a short debate. I am trying to outline the considerations which we have had in our minds on the tin problem and the work that is going on. My Department has offered to fund a study aimed at seeing whether a commercially viable project could be identified.
The Government recognise that the further contraction or closure of the Geevor tin mine would increase the already high level of unemployment in the Penzance and St. Ives travel-to-work area. In addition to existing measures of assistance made available from 1 July in the Penzance and St. Ives TTWA, a slightly amended version of the business improvements service package of schemes of assistance to small businesses which is currently operated by my Department will be available. This will help the local economy to diversify into activities other than tin mining and tourism. As the House knows, £ 1 million will be made available for this purpose.
Mr. David Harris: Before my right hon. Friend reaches the issue that is of prime consideration to me and my constituents, I must say that we accept that the initial application was for a large sum of money, and we are grateful for the £1 million that is being made available under the business improvement scheme. However, have the Government closed their minds completely to a contribution towards care and maintenance of Geevor mine for a period of two years? I am told that it would cost £150,000. That would be £150,000 well spent to keep Geevor mine going—to keep the pumps going—so that there is at least hope for Geevor and the people of west Cornwall who depend on it. Will my right hon. Friend address himself to that issue?
Mr. Channon: My hon. Friend raises an absolutely crucial point for Geevor. I pay tribute to him for his efforts on behalf of Geevor and those employed at Geevor.
Mr. Maxwell-Hyslop: We should like the answer now.
Mr. Channon: I shall give the answer now, if my hon. Friend will allow me to do so. The proposal put forward so far, which my hon. Friend the Minister of State will deal with in more detail when he replies to the debate, does not satisfy us as to being able to provide future viability for that mine. As I said a moment ago, I have offered to fund a study aimed at seeing whether a commercially viable project could be identified. I hope that that offer will be taken up.
Mr. Maxwell-Hyslop: Before my right hon. Friend progresses to that, is he aware of a telex sent by an official of his Department which said that the Government would pay to keep the mine dewatered to the end of August? I have seen the telex. Has the Minister not seen the telex, or is he reneging on his own Department's telex? If not, will that money still be paid to keep the mine dewatered to the end of August?
Mr. Channon: My hon. Friend has not described the terms of the telex accurately. The best that I can do, on the
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whole question of Geevor, its viability and the study that I suggest should be undertaken, is to say that any detailed points which my hon. Friend or other hon. Members wish to take up will be answered by my hon. Friend the Minister of State in the course of the debate. He has been involved in the discussions.
Mr. David Penhaligon rose——
Mr. Channon: No, I shall not give way again. All I can say is that the interpretation of the telex to which my hon. Friend the Member for Tiverton referred is not one that I can accept, but let us deal with that in some detail.
Mr. Alan Williams rose——
Mr. Channon: I shall willingly continue to give way, but does the House wish me to finish or not?
Mr. Alan Williams: Does the right hon. Gentleman realise that the information for which he has been asked is central to the debate? Many Conservative Members in particular will not know what to say and will not know how to assess what the Government's position is until they have the information that we are now told is to he given in the reply. The Secretary of State should give the information now. Is he saying that he is so little briefed on that subject that he does not know the answer?
Mr. Channon: With respect, the right hon. Gentleman is lowering the tone. I have already answered the question. The telex to which my hon. Friend the Member for Tiverton referred does not bear the interpretation that has been put on it. I have described in some detail the Government's policy regarding Geevor. I have said that we have offered to fund a study aimed at seeing whether a commercially viable project can be identified. Let us hope that that study can go ahead, and let us hope that a commercially viable project can be identified. I cannot go further than that at this stage.
Mr. Penhaligon: I use this rare opportunity to ask the Secretary of State, as opposed to his deputy the Minister of State, a fundamental question which worries many people. Within hours, and certainly weeks, of the original sad collapse, the Government machine made a decision to offer up to £50 million to put the agreement hack together. I make no complaint about that. However, eight and a half' months later we still have no clear declaration from the Government that they are willing to put money into rescuing some of the tin mines. It is true that they have not said no to all of them. But even now, there is no clear declaration of the sort of money that the Secretary of State is talking about. Will he confirm at the Dispatch Box tonight whether, if the criteria are right, he is willing to give the miners of Cornwall half of what he offered the dealers?
Mr. Channon: In consultation with Geevor, Rio Tinto-Zinc and others, we must try to identify whether there are projects that would be viable. So far, no project put forward for Geevor has been proved to be commercially viable. I have said that we have offered to fund a study aimed at seeing whether a commercially viable project could be identified. The Government are also discussing with Rio Tinto-Zinc the possibility of providing financial assistance to enable its tin operations at Wheal Jane arid South Crofty, where about 1,000 people are employed, to continue. There are continuing discussions with Rio Tinto-Zinc to see whether a viable project can be identified.

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In addition, we are considering applications from smaller tin producers in Cornwall. We shall particularly take into account the employment implications and the level of financial assistance necessary in each case but, as in the case of Geevor, we shall need to be satisfied that tin operations in Cornwall would be viable.
I think that the House will agree that the events in the tin crisis have been traumatic for all those concerned—those in Cornwall, those outside Cornwall, those in the tin industry itself, and the communities concerned with tin production.
Mr. Maxwell-Hyslop: And for the Department of Trade and Industry?
Mr. Channon: I am sure that for my hon. Friend it has been. We believe it is essential that we should do everything to ensure that such a position cannot be allowed to develop again. I hope that the House will agree. This will govern our approach to all future potential commodity agreements.
I invite the House to support the Government's motion and to endorse their response to the Select Committee.
7.27 pm
Mr. Alan Williams: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"rejects as utterly inadequate the Government's response (HC 457) to the Second Report from the Trade and Industry Committee on the Tin Crisis (HC 305–1); notes that the Select Committee highlights inherent faults of the International Tin Agreement which made it 'catastrophe prone'; considers that the Government failed to monitor these faults and so contributed to the failure of the International Tin Council and thereby to the consequential collapse of tin prices, to enormous losses by Tin Council creditors, to the closure of Geevor Mine and to the severe threat to the whole Cornish tin industry; and dismisses as derisory and pathetic the Government's so-called package of measures to combat unemployment in Cornwall."
With respect to the Secretary of State, the Government's response to the damning report that has come from a Committee on which the Government have a clear majority is pathetic. I recognise that the Secretary of State is not the person largely responsible for the events that we are debating. I know that he must accept the role of head of a Department, and we shall deal with responsibilities a little later. I accept that many of the problems with which we are dealing mere inherited rather than caused by the right hon. Gentleman, but I submit that the Department has caused many of those problems.
It may be improper to make the observation, but, as I look at the number of supporting officials that the Secretary of State has had to bring along with him this evening, I realise just how worried the Department must be. If the Secretary of State carries on like that, we shall soon need a double decker Box for officials. However, that is not surprising, having read the evidence, as most hon. Members have done. There is a three-year catalogue of buck passing, incompetence, inaction, lack of perception and lack of any sense of urgency. Having studied this exercise in ineptitude, I understand how the Department of Trade and Industry blundered into the Westland fiasco and the Leyland debacle. This is in the same category.
What are the consequences of the Department's three years of bumbling and bungling? The brokers and bankers
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stand to lose sums which cannot be quantified. The minimum is £160 million, but the City claims it will be as much as £600 million. The tin price and the tin market have collapsed. Already there has been the loss of the Geevor mine and we face the possible loss of the remainder of the 2,000-year-old Cornish tin industry. There is the urgent prospect of an extra 2,000 unemployed in Cornwall. Crippling damage has been done to London's reputation as a trading centre. All those consequences arise, in part, from the actions of the Department of Trade and Industry.
Two clear features emerge from an objective reading of the report. First, there has been the refusal, on an unprecedented scale, by a Department to supply information to a Select Committee. The Secretary of State must understand that those of a less generous disposition might feel that that savours of a cover-up or of an attempt to save someone's neck at the expense of another's. Secondly, the collapse need never have taken place. Ministers bear an overriding responsibility for the fact that it happened, as I hope to prove.
The Secretary of State referred to the suppression of information. I supported the setting up of the Select Committee system. I have never seen such a barricade of excuses to justify the refusal to give information which was essential to the work of one of our Select Committees. I shall give just a few examples of the excuses. We were told that the International Tin Council was covered by diplomatic immunity and confidentiality. We were told, "We cannot reveal the advice of officials to Ministers. We cannot give any information on the legal advice given to Ministers because it is wrong to disclose the advice given to clients."
We were told that some matters could not be discussed because they were sub judice and that others could not be discussed because they might be sub judice. Junior officials told us that the questions should be put to senior officials. Senior officials told us that Ministers had told them not to answer. Ministers said they had no intention of giving answers. One is left with the impression that even the luncheon vouchers in the Department of Trade and Industry are listed as classified documents. One could only wish that the Department had shown a less cavalier attitude when dealing with the odd letter or two from the Solicitor-General's office.
The permanent secretary acknowledged the embarrassment, answering question No. 697 by saying:
"I do not believe I have ever been under quite so many constraints in giving evidence to a Select Committee."
That is extremely serious when one considers the scale of the consequences.
Mr. Maxwell-Hyslop: They were self-imposed constraints.
Mr. Williams: Exactly. I shall come to that point. That led the unanimous report of the Select Committee, in paragraph 13.1, to observe:
"As a result, we have been effectively prevented from discovering all the facts about one of the principal facets of our inquiry: the role of the Government in the crisis."
What is a Select Committee for? The Select Committee system was set up to enable the House to investigate the Executive. It was the check for the legislature on the Civil Service and on Departments. That is what the system is all about.
When a Select Committee Chairman, backed by hon. Members on both sides of the House, tells us that the

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Select Committee was not able to obtain the information to enable it to draw proper conclusions on the Government's conduct, surely the House has a right and a duty to be concerned and to probe further. The concept of Select Committees is put at risk and is open to doubt if we allow the Department of Trade and Industry to get away with the absolute contempt with which it treated the Select Committee on Trade and Industry. It was extremely modest of the Select Committee to state:
"it seems unnecessarily obstructive of Ministers".
Even on the limited information revealed—we have been allowed only partial information, the worst hits having been swept under the carpet or kept in the cupboards—the Department and the Secretary of State have every reason to he cautious. In line after line of the evidence to the Select Committee they were pleading the fifth amendment. The evidence reveals without doubt that the Government are guilty of complicity by neglect.
The most damning evidence — that Ministers were aware of the risks before they entered into the agreement —has been endorsed by the Secretary of State. The right hon. Gentleman has given some of the reasons. In question No. 603 a civil servant gave this reply to the Chairman:
"I think the position is that Ministers in the very beginning were warned."
The Chairman asked:
"What is 'the very beginning'?"
The civil servant replied:
"The agreement came into force in June 1982, so before we entered into the agreement officials made clear to Ministers the risks that might he involved in entering it. Then subsequently they told them about the problems they had been having with the operation of the agreement."
That line was developed further by the permanent secretary, the Department's accounting officer, who, in answer to question No. 742, said:
"I think it was evident in 1982 before we even joined the Agreement: if was evident that if Brazil was not a member, and it was a low-cost producer which would be encouraged by the sort of tin prices at which the Agreement was aiming and it would be subject to no constraints in expanded production, it would place great strain on the Agreement. This was amongst the disadvantages of the Agreement which were known at that time."
If those facts were known at the time and it was known that there were grave disadvantages, what would hon. Members' sense of survival dictate if they were Ministers about to encourage the signing of such a treaty? Any Minister worthy to hold the title "Minister" would want to ensure that, having been warned of the risks, he protected the country, our traders and the Government from them. Why did Ministers sign up without obtaining a proper monitoring agreement? Where were the checks? Why did Ministers not demand a system of checks before signing the agreement? They had the muscle before they signed. Where was the requirement to be given adequate information?
The Secretary of State has said that they had much trouble in obtaining the information. As one who on various occasions has had to enter into agreements, I have wanted to be sure about their terms. I doubt that the Secretary of State would have entered into the agreement on its terms. It was incredibly irresponsible to act in that way. It is beyond belief that Ministers could have signed that document with that knowledge without taking safeguards.
In answer to question No. 714, the permanent secretary described the agreement as
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"a recipe for an ever-increasing buffer stock … it was necessary for … additional reserves to be made available"
He also stated:
"This agreement has suffered from its outset from an inadequacy of resources"
Surely it was suicidal for Ministers to enter into an agreement from which three major producers— Brazil, China and Bolivia—were absent, without ensuring that they built proper safeguards into the agreement. Yet Ministers of the day were not perturbed. Perhaps they should be here today at the Dispatch Box.
The ministerial guilt at the outset is further compounded when we consider the other warnings that came during the lifetime of the agreement. If ministerial alarm bells had not been ringing at the outset, it is bewildering that they were not alerted by what followed. Let us listen to the words of the buffer stock manager in a report which the Secretary of State refused to make available to the Committee but which it obtained from American sources. The buffer stock manager said:
"As we have reported over the last three years or so, the fact that hardly any cash was contributed to the Sixth Agreement was gambling on the good fortune of Buffer Stock operations, and so far the gambling by ITC members has fortunately paid off very well. It is mainly due indeed to our good fortune in the market, ie the increase in the US dollar. One may trust that the severe decline in the US dollar over the last two months will have clearly vindicated our message that the ITC should stop gambling on its good fortune in view of what is at stake, ie the fortunes of the entire tin-mining industry."
The buffer stock manager is saying that he had warned of the same hazards as some of the civil servants had warned at the outset. In that context it is remarkable, in view of what I shall mention soon, to read the evidence by the other Minister of State in the Department, who unfortunately is not here this evening, no doubt for good reasons.
Mr. Maxwell-Hyslop: Before the right hon. Gentleman makes that point, I would much prefer him to inquire whether the United Kingdom delegate, Mr. Lunn, passed the warning from the buffer stock manager to Ministers. It is all very well for Ministers to say that they take responsibility and that civil servants should not be criticised, but if they will not tell the Committee or the House whether the civil servants gave them the necessary information on which they could have taken action, we must assume that the civil servants were even more incompetent than they appear to be.
Mr. Williams: That is an interesting point, because the absent Minister of State had no compunction about trying to pass the blame down the line to his officials, however unconventional that is in terms of normal practices between Ministers and their officials. In answer to question No. 600, the Minister of State said:
"Ministers were not informed."
In answer to question No. 601, he said:
"I am not aware of particular occasions on which Ministers were informed."
In question No. 602, he was asked:
"Do you not find it unbelievable when this sort of financial risk and financial problem was becoming evident that Ministers were not informed? Is that not nearly beyond credence?"
The Minister replied:
"It certainly has proved to be unfortunate."
The Minister has a remarkable flair for understatement. He also seems to have a remarkable flair for inaccuracy or for inadequate memory.

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It is important to remember that evidence was submitted by the permanent secretary which rebutted that claim by the Minister of State. One is bound to ask where Ministers were when that information was coming forward. Do they not read their briefs, or, if they do, can they not understand them? Rip Van Winkle is alive and well and sleeping in the Department of Trade and Industry.
Mr. Simon Hughes: Perhaps he was in his castle.
Mr. Williams: He may have been in his castle. I suspect that that is where he is tonight and that the drawbridge is up.
The permanent secretary wrote a letter to the Chairman and, through the Chairman, to the Committee in which he rebutted, not once but 15 times, the evidence given by the Minister. On 15 occasions between 1 July 1982 and 24 October 1985, reports and briefs were provided for Ministers. It is interesting to consider how they break down. Eight were provided up to March 1984. That is an important date, and I shall return to it. The other seven reports were provided between June and October 1985. So what happened during the 15 months in between? Why did Ministers not receive any reports? If they say that officials did not send them, in view of what the Secretary of State has said about the alarm before they entered into the agreement and in view of the warnings they had already received in 1983 about the inability to provide information, why on earth did no Minister have the nous to ask? As a Minister, one has only to ask and it will be provided. That is the system, but it seems that it did not occur to anyone. Not one Minister, in one of the most overstocked Departments in Whitehall in terms of Ministers— in numbers not quality—bothered to ask. Someone else will pay up to £600 million as the bill for their failure.
Mr. Stan Crowther: My right hon. Friend must not overlook the fact that, although 15 papers were sent to Ministers by civil servants, the permanent secretary would not tell the Committee whether there was anything in them. I asked him more than once.
Mr. Maxwell-Hyslop: Were they in invisible ink?
Mr. Crowther: They may have been. Whether they were in invisible ink or not probably made little difference to the content. I did not ask the permanent secretary to tell the Committee what information was in the reports because of the confidentiality rule. I did not say, "We want to know what is in them." I said, "Will you simply tell us whether there was any information in them at all?" He replied, "Oh, no. That is not a piece of information that I can give to the Committee. That is confidential."
Mr. Williams: My hon. Friend does not appreciate the fact that Ministers set the tone of a Department. As they were not reading the brief, no one else thought it was necessary. The permanent secretary was not being reticent he was just reflecting the amount of attention that was shown by his ministerial masters. In answer to question No. 627, it was categorically said that Ministers gave no instructions about reports. Yet they had been informed and warned time and again. What were the Ministers of the day doing? The present chairman of the Conservative
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party was the Secretary of State at that time. What were they doing when all that was happening, when the entire system was rotting and they should have been aware that it was rotting? The tenor of the evidence that came from Ministers was not to deal with the fundamental questions, but contemptibly and outrageously to attempt to pass the buck down the Department, in most cases to the officials. In breach of the normal practices of Ministers, they apparently have never heard of ministerial responsibility.
Mr. lain Mills: The right hon. Gentleman has spoken for 20 minutes about Select Committee procedures and ministerial responsibilities. Will he make it clear whether, had there been a Labour Government in 1982 they would have signed that agreement? If they had, how would they have monitored the subsequent events and at what price would they have supported the price of tin? In view of his strident and sarcastic remarks, does he feel that in such a commodity market the Opposition would have coped any better?
Mr. Williams: I am sorry if the hon. Gentleman thinks I am sarcastic; I thought it was just fair comment. If anything, I am being slightly kind to a Department that has been guilty of unprecedented bungling. It is easy for the Opposition to stand here and say that we would not have signed it, but there is no way in which I would have accepted it. I have served in four different Departments and had the responsibility of making and standing by my decisions. I saved Wheal Jane, which is more than the Government did. I am telling hon. Members that I would not have been party to this agreement without adequate safeguards being built in before it was signed.
Mr. Hoyle: Does my right hon. Friend agree with Sir Winston Churchill, that the person who answers a hypothetical question is a bigger fool than the person who asked it?
Mr. Williams: I am not sure, but I shall plead the fifth amendment to that question.
In his opening speech, the Minister went out of his way to say that we could do nothing because we had little support from other member states, yet everything went quiet for 15 months from March 1984. In March 1984 the eighth session of the ITC, took place. The Canadian representative, Mr. Kepper, said:
"The Council, through a series of non-decisions and unwillingness to address essential issues facing it, has in effect given up control of key provisions in the Agreement. Two of these provisions concern the size of the buffer stock and its financing. The Council has effectively allowed the Buffer Stock Manager to redefine the size of the buffer stock through the use of forward transactions."
The Secretary of State implied that the Government became aware of the use of forward transactions much later. In March 1984, not only was this being pointed out, but the Government had what they said they did not have before — an ally. However, they went back to sleep again, deciding to keep a low profile. They not only had an ally, but they had been given a warning of the malpractice — the forward purchasing — of which they suggested in their evidence, they were unaware until much later.
What representations did Department of Trade and Industry Ministers make to other Departments? Did they alert other Departments at ministerial level, never mind at official level? Did anyone from the Department of Trade

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and Industry talk to anyone at the Foreign and Commonwealth Office, the Treasury or the Bank of England?
Mr. Barry Porter: One wonders whether the Foreign and Commonwealth Office ever talks to the Department of Trade and Industry. Because of the danger of entering into this agreement, when the storm signals must have been hoisted and when no information was forthcoming, I suspect that there must have been other reasons for keeping the agreement going and for the lack of activity. One can only believe that the Foreign and Commonwealth Office was saying, "Do not rock the boat," for other, wider reasons in connection with our relationship with purchaser countries.
Mr. Williams: If the Foreign and Commonwealth Office was saying, "Do not rock the boat," that was more communication between the two Departments than was shown anywhere in the evidence given to the Select Committee. I do not think that the Department of Trade and Industry knows where the Foreign Office is or what it is about, or vice versa. Ministers did not attempt to mobilise other Departments. Did any papers go to Cabinet Committees? Was any attempt made to alert the Government as a whole to the dangers that were present? Did Ministers make any approaches at international level to their counterparts to try to mobilise support? Was it all left to one official, who is now having to carry the can, to have discussions with other officials at a very low level?
Ministers should be ashamed of their record. They are trying to hide, quivering, behind their officials when there is no doubt where the constitutional responsibility lies. Why were no warnings given to those whose money was at risk? The Government, so they thought, were in for only £8 million, in a low-budget operation, and they made it clear that they intended to keep it as low as they could. Others, if we accept the evidence from the City, were in for nearly 100 times as much, yet nothing was done to alert them.
The Department of Trade and Industry's silence and the threat of alerting the other members could have been a sanction used by Ministers against the ITC. If they had gone to the ITC and said, "Unless you come to heel and give us the correct information, we will alert those who are funding the operation" —after all, it was someone else's money — they would have had greater leverage against the ITC. Yet, again, no one asked anyone or discussed anything. Instead, the Government, far from recognising that they are responsible, have tried in their evidence to pretend that they had some form of limited liability under the agreement. Unlike other international agreements in which limited liability clauses exist, no such clause was provided in this agreement. Anyone who has read the evidence would say that there is little doubt that the Government have a moral responsibility, which they should honour.
There is even a question about whether the London Metal Exchange was warned. The Department has changed its position on this. What happened in June 1985? An official said that the Department warned the LME to advise its members. The Department would not have advised them itself, but it suggested that the LME should advise its members that the Government would not stand behind and back any financial losses that occurred.
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The chairman of the LME said that that statement was imprecise and worthless. In answer to question No. 877, the Secretary of State said:
"I do not think it was an official warning from the DTI."
Was it an aberration? It think it was the beginning of fear in the Department, the first step in trying to get out from underneath. The Department wanted to have it on record that it had said something. The warm and friendly hand on the shoulder had a blade up its sleeve. The Department was pretending to alert the LME and at the same time to protect itself if the LME later said that it had received no warnings. That is an unbelievable saga of failure and of evasion of responsibility by the Department.
The Department abandoned the bankers and brokers without any misgivings and without any show of conscience. Whether the sum was £160 million or £600 million, it was a devastating blow to the LME. It was also a devastating blow to the credibility of other commodity agreements. What is more, as the report points out, it is an astonishing example to set now, when the debtor nations could take advantage of Britain's precedent and plead that their obligations should be treated in the same way. The Government will say that there are no obligations, but Australia does not agree. The Australian Minister has said that his Government would expect to meet their obligations under the treaty.
Finally, let us come to poor Cornwall, which was ignored until the moment of catastrophe. It is the most innocent party of all in this tragic and avoidable debacle. Cornwall must consider today's debate as a non-event. On 3 June, the Minister of State said that he hoped a decision would he taken on the Rio Tinto-Zinc mine within five or six weeks. That is this week or next week. So why are we having the debate today? Why could we not have it next Monday when the Secretary of State could tell us what he is going to do? Why could we not have the debate on the Monday after that? I am sure that the right hon. Gentleman will be able to tell us then what he intends to do. If I were in Cornwall, I should regard the timing of oar debate as ominous and disturbing.
We will not accept that the House should go into recess without a full statement about what the Government intend to do for the Cornish mines.
Mr. Maxwell-Hyslop: I may be able to help the right hon. Gentleman about the timing. The Minister of State said that he could not tell the House what future price he had assumed for tin while his decision on Rio Tinto-Zinc was outstanding. Clearly, knowing what price he has assumed is crucial to our judgment of the decisions for which the Government have called. By having the debate before the decision on RTZ is made, the Minister of State thinks that he can escape telling us what price he has assumed for tin. He would not be able to escape if the debate had been held after the RTZ decision. I hope that I am wrong, in which case my hon. Friend the Minister of State will tell us what price he has assumed.
Mr. Williams: I am reluctant to intervene in these internal doubts and questioning on the Government Benches. It is remarkable what the incident has done to the confidence of Conservative Back Benchers in their Front Bench. It is clear that the Back-Bench Conservative Members do not know what to trust or whether to trust; they do not know whether they are being conned or evaded. The timing of the debate leads me to think that a massive exercise in evasion is going on.

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In the meantime, Geevor has gone, when it need never have been at risk if Ministers had been alert. The rest of Cornwall's 2,000-year-old industry is at risk, teetering on the edge of a precipice, but the Government are not even willing to tell us what they intend to do or allow us to have the debate when we could discuss their decisions.
The Government seem oblivious to the fact that another 2,500 people may be made unemployed in Cornwall, although the cost of keeping them unemployed will be lower than the cost of keeping them at work. [HON. MEMBERS: "Higher."] I am sorry. The cost of keeping them unemployed will be higher than the cost of keeping them at work.
It is a nonsensical situation. The Government do not seem to care about the import substitution or about the impact that decisions will have on a community as isolated as Cornwall if they go wrong. Instead, the Government passed a begging bowl around the Departments and it came back virtually empty. A feasibility study and £1 million is the Government's offer to Cornwall as a sop for abandoning the county's oldest and most traditional industry.
Let there be no doubt that if the Government abandon the tin industry, Cornwall's communities will be destroyed. The young will leave, the skilled will leave and the decision will be a death sentence to many of Cornwall's communities. That is why I do not understand why we are having our debate before the Government are able to announce their decision.
The Select Committee report reveals an unprecedented and unremitting succession of errors of judgment and failures to perceive the obvious. Ministers should come to the House not just in penitence, but immersed in shame for what the Department of Trade and Industry has done. In the words of the buffer stock manager, the Government gambled with the future of the entire industry. The Government lost the gamble but the industry has been left to pay the bill.
8.4 pm
Mr. David Mudd: As I shall be following the right hon. Member for Swansea, West (Mr. Williams) into the Lobby, I hope that he will forgive me for not following his remarks. I wholly concur with all of them.
About 300 years ago a former MP for Falmouth was fed up with Whitehall because of its cavalier attitude towards Cornwall and the Cornish people. He stormed out of the Chamber and announced his intention of going straight back to Cornwall, where, he said
"I doubt not I shall find a good cause".
Tonight, a vital cause has come from Cornwall to the Chamber of the House of Commons.
Sixteen years ago, in my maiden speech in the House I accused successive British Governments of having created the best developed negative attitude of any nation towards its minerals industry. Tonight I use even stronger language. Despite the smug, camouflaged red-herring language of the motion, I suggest that there is abundant evidence that the Government were initially reluctant to acknowledge the local implications of the growing crisis in world tin, incapable of appreciating the magnitude of that crisis when it broke and unwilling to act as the economic
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and human holocaust moved onwards through Cornwall. The Government have been impudent, impotent and incompetent.
As applications from Carnon Consolidated, designed to keep 1,000 miners working at South Crofty, Wheal Pendarves and Wheal Jane, are still being considered, I shall say no more about those applications but that I hope that there will be a reversal of the refusal that has already cost 350 jobs and the death of Geevor.
I hope too, that the Department of Trade and Industry is now a little more geared up than it was on the unhappy afternoon of 14 May when I visited it. At that time Geevor was within three weeks of closure and protective notices had been served at the other three mines. When I asked at the meeting on 14 May what commitment the Government would give, I was told that it was hoped
"that the uncertainty could be talked through as quickly as possible."
I was told that, although the Government would come to their own conclusions, aid would have to fall within EC criteria. Yet 48 hours earlier, a report from the Community had written off the Cornish tin industry. When I asked the Department for the figures against which the possibility of aid would be considered, I was told that at that time — seven months into the crisis — no projections existed on what bracketing of best and worst possible prices aid would be assessed against.
The tin crisis and the tin industry are unique. The crisis, although it costs jobs in Cornwall, is not locally or even nationally inspired. No blame whatsoever can be levelled against the companies or the unions, or against the management or the men. No other British industry can claim to be wholly dominated by external factors, and no other industry can claim a closer and more consistent collaboration between employers, unions and men in cutting costs and in a constant search to increase efficiency and productivity.
Carnon Consolidated has already cut its break-even cost to just under £6,500 per tonne and will reduce that by another £250 per tonne within the next three months—with the possibility of another £1,000 per tonne off that price if it can get the support that it is seeking from the Department of Trade and Industry. In simple terms, £5,250 per tonne from the Cornish mines would undercut a very significant percentage of worldwide producers. South Crofty and Wheal Jane are already listed in the top 20 world ratings for contained tin.
Is there a world need for tin? If there were not, and if it were not a strategic mineral, the United States and the Soviet Union would not be hell-bent on increasing their stockpiles at the present rate. If there were not a need for tin, a demand for tin and a future for tin, I cannot believe that the Government of Malaysia would be using its Primary Industry Ministry as the banker to provide 6 per cent. loans to cover the difference between production costs and the realisation price of tin.
However, encouraging though it may be to look to the world future of tin, let me paint the House a picture of the record in Cornwall which the Government's motion seeks to conceal. Let me remind the House that that is against a local record of unemployment that has already engulfed one person in four.
My right hon. Friend the Secretary of State talked about turning attention to "smaller producers". Let us look at the smaller producers. Cornish Tin and Engineering at Tuckingmill developed a tin flotation

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process that made it possible to extract tin oxide from low grade feed materials. At the turn of the year that enterprise and innovation meant 24 jobs. Now the plant is closed. There are no jobs.
Concord Mineral Processors at Tolgus was on the verge of creating 120 jobs, subject to winning a technical appeal on discharges well out to sea. We shall not now see those jobs.
Just before Christmas Medway Tin at Brea was worth £1 million as a company. It developed a new technology to slash processing costs to be profitable even against a low price of tin. In December 1985 it was worth £1 million and had a direct work force of 35, plus 20 subcontractors. Now there are three in that company, including the managing director. The machinery is useless. There is nothing to process. It cannot be sold because mining equipment cannot be given away these days. For two years, against a prospect of nil activity, the company will continue to have to pay rent on the ground that it operates. From December 1985 to June 1986 the value of the company has fallen from £1 million to zero. Now, day by day, it inexorably slides further into the red.
Even Camborne School of Mines, for generations one of the world's greatest centres of research, development and training in new technologies, could become a phantom centre of excellence and academic promise in a landscape of moribund mineral activity.
Against that reality, we suddenly find the incompetent Department of Trade and Industry coming forward, with a new-found boy scout enthusiasm, with its latest helpful idea—one based on ethos rather than experience. It has come up with the idea that not much would be lost if the pumps were turned off and the mines allowed to flood for possible resurrection at some future date.
Mr. Dennis Skinner: What does the hon. Gentleman expect when three Ministers in the Department of Trade and Industry are millionaires?
Mr. Mudd: I am grateful to the hon. Gentleman, but I shall not follow him that closely. I am sure that he will reserve his observations for later in the debate.
If it is the considered view of the Department of Trade and Industry that the water can be allowed to rise in the mines to he pumped out one day and that all will be well, I can only assume that Methuselah is alive and well and is now the Department's special consultant.
The fact is that no major Cornish tin mine has ever recovered after flooding. In the tiny minority where reopening was achieved, it was in the olden days when a Cornish pump stood over the shaft and could be reactivated with comparative ease from the surface. Modern electrics and technological equipment are so many fathoms underground that they would be lost for ever were the waters allowed to cover them.
We Cornish people do not cry out for charity. We are too proud, too realistic and too individualistic for that. To us, employment, often at low rates of pay, is a badge of dignity and responsibility. Tear away that badge and there will be grief, disillusionment and anger. There will be the social consequences of drink, violence and broken homes.
The words that I find most appropriate tonight come from the German protestant pastor, the late Martin Niemoller. He summed tip eloquently what I am trying to say. He said:
"First, they came for the Jews. I was not a Jew. I was silent. Then they came for the Communists. I was not a Communist.
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I was silent. Then they came for the trade unionists. I was silent. I was not a trade unionist. Then they came for me … There was no one left to speak for me."
In the House there are no Cornish quarrymen, farmers or fishermen, no Cornish shipyard workers and no practising Cornish engineers. We have been silent as their jobs have been taken away. Now "they" are coming for what is left and we in Cornwall look to the House for help and protection before it is too late.
8.14 pm
Mr. David Penhaligon: As a non-practising Cornish engineer, it is particularly appropriate that I should follow the hon. Member for Falmouth and Camborne (Mr. Mudd).
If those of us who live in Cornwall, and feel, breathe and are a part of the community, were a long way down the other end of the line listening to this debate On the radio or television, we would have found the first hour of it quite remarkable. We have discussed what has happened and the background to it and I make no complaint about that. The one spark of anger, outrage and anguish that the Secretary of State showed—he may have been justified, I do not know — was when he turned on the hon. Member for Tiverton (Mr. Maxwell-Hyslop), who attacked an innocent civil servant. I know not the background of the argument. It may well be that the hon. Member for Tiverton was outrageous, but one innocent civil servant was given that level of defence by the Secretary of State.
We are talking here about hundreds of innocent Cornish miners. They are innocent to the point of naivety. They are hundreds of miles away from the origin of the crisis. Yet they have to look to the House to resolve their dilemma because they have no one else to look to.
A great deal was made of whether there have been prophecies regarding the collapse of the international tin price. The irony is that the whole strategy of those running the mines in Cornwall over the past three years has been based on the assumption that the international tin agreement could not survive for a great deal longer. Whether it was Geevor, Crofty, Wheal Jane or Pendarves —all in their own way were spending the profits that they were at that time generating on improving their mines so that they could compete in a free market. I do not believe that any of them expected the collapse to take place as suddenly or as far as it did, but the idea that no one was aware, at least at my end of the industry — I speak positively for my end of the industry in this debate—-that a collapse was imminent is simply not so.
Well, we are where we are. Eight and a half months have rolled on and at least two Members of the House have made so many speeches here about tin that it is difficult to think of something else to say.
There is a future for hard rock mining in my county. I cannot help but remember that in 1984, in sheer tonnage, we had the largest output of tin that we have had this century. The international price at the moment, of less than £4,000 per tonne, cannot provide the world with the tin that it wants and requires. Therefore, one can with some confidence predict that the price of tin will increase.
It would be interesting to ask the Minister—clearly the Government must have studied this by now in great depth, since a number of us have been shouting at them for about eight and a half months—what percentage of the current world tin output the Department of Trade and

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Industry believes is being mined profitably at the current international price. [HON. MEMBERS: "None."] I am willing to give way to the Minister. We have some time. What percentage of the world's tin is being mined at a profit? My friends in Cornwall are more modest than those who say none. They admit that there may be one or two mines somewhere staggering on at those sort of prices, but certainly the figures that I have heard suggest that the figure is less than 5 per cent. of the world's output.
Five per cent. of the world's output is currently profitable. Therefore, the international price for tin must increase substantially. 1 cannot say to the Minister that I know how far or how quickly, but since the Department did not seem to guess that the collapse would be anything like as far or quick as it was, I cannot be blamed for that.
The present mines cannot sustain their position for that much longer and my county wants to know whether the Government are willing to give some money or to provide a building block to re-establish the industry and give it another chance. May I spell out the cost of saying no? It is 1,500 men. By Cornish standards they are well paid, and I make no secret of that. As the hon. Member for Falmouth and Camborne said, the unemployment rate in the area is about 25 per cent. That is the level all the way from the west of Truro to Land's End. That means there are no other jobs for those men. Perhaps one or two may find work, but they will do that only by dispossessing other people.
Some 1,500 men out of work will cost the Government about £6,000 each a year in loss of tax and supplementary benefits. That gives a total of £9 million a year. Next year they will want another £9 million, because the first year's £9 million will have produced absolutely nothing. I know that the arguments are being presented to the Department of Trade and Industry by the companies that keeping the mines open is considerably cheaper than the costs of the first two or three-year closure. I do not know why a little more encouragement could not be given to the local applicants. It will cost the Government £9 million a year to say no, and of course the nation will inherit nothing.
It is worth spelling out what is produced. The mines produced 5,000 tonnes of tin, 7,000 tonnes of zinc, 750 tonnes of copper and 2·5 tonnes of silver in 1984, the last real mining year. That will be lost for a long time. If a mine floods, there is no law of logic which says that it can never be dried out. One thing that I have learnt in my 12 years as a Member of Parliament is that if one wishes to survive one never says never, but we are getting as near to never as I can possibly imagine.
In an odd way, the difficulties of drying out a mine today are more complex than they were 50 years ago. Clearly we have the technology to make it easier, but when the mine floods one destroys much more valuable equipment than was destroyed some 50 years ago. It will cost Rio Tinto-Zinc, the company that owns these mines, a lot of money to shut them. The one redeeming feature for Cornwall is that we know Rio Tinto-Zinc will not go bankrupt and will not renege on the commitments that the Cornwall mines place upon it. It will cost the company a lot of money to close the Cornish mines. I have heard various figures, but £10 million or £12 million is the sort of money that it will cost. The company is saying to the Government, "Why cannot we use that £12 million as a
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contribution towards giving the mines another chance, as opposed to giving the mines no future whatever?" That is the argument put to the Minister.
It is quite probable that once again the miners in my county will be willing to make a contribution towards saving their mines. Perhaps "willing" is an adjective that slightly stretches reality, but when the crunch comes, I suspect that the miners in my county will be willing to make a contribution towards saving their mines and their future. There is a commitment from the company and the work force, against whom no criticism can possibly he levied. Are the Goverment willing to put the third leg in the stool? The stool cannot stay up unless it has three legs. Two have been provided, but the Government Neill need to supply the third.
The Cornish mining industry is not looking for charity. The biggest mining company in my constituency —English Clays, Lovering and Poching, or English China Clays, as it is called now—does not mine tin. To be candid, the English part of the title grates on me, but last year that company made a profit of £75 million. I admit that not all that profit came from the claypits in my constituency, but certainly two thirds of it came from there. Some £50 million must have been generated by mining clay in my county.
All we are asking — I suppose that one has to say that, after eight and a half months, we are begging—the Government to do is to use some of that great tax income that they have had from the mining of china clay in one part of Cornwall to make a contribution towards alleviating the difficulties of miners in another part of Cornwall. It is not inconceivable that in 20 years the argument may be the other way round, because in the long run mining is an up-and-down world.
In his 30-minute speech that opened the debate, the Minister said little that was encouraging. The Minister of State, the hon. Member for City of Chester (Mr. Morrison) will sum up the debate and I hope that he will give us a few more details upon which to make a judgment. When I look at the three Ministers on the Front Bench, I wonder which of them is the poorest and which is nearest to the real poverty that my constituents are about to experience if the final collapse takes place.
Can the Minister give us a couple of sums? What does the Department believe the tin price will he in two years? If the Minister does not have a figure for the price in two years, what about three years? I am an optimist, and if the figures do not fit, I will settle for an estimate of the price in four years' time. The Minister must have a figure in his mind. He must have had a figure before he rejected the application for the Geevor mine. Let us hope the Department did not reject it without at least having some figure in mind upon which to base the rejection of that application.
Let us have a figure of what the Government believe the international tin price will be and a clear assurance from the Minister that after eight and a half months someone will have the courage to tell the House that at least half the £50 million that they were willing to give the tin dealers will be used to save the great historic hard rock mining industry in my county. Without that sort of money, the industry will die and will never be replaced. The history of the community will be destroyed, and in the long run Britain will lose an extremely valuable part of its economy.
8.27 pm
Mr. David Harris: The hon. Member for Truro (M r. Penhaligon) has repeated an inaccuracy and I believe that he knows that it is an inaccuracy. He said that the Government were willing to give £50 million to the tin dealers, but he knows perfectly well that that is not the case. In part at least, that money was to be used to ensure an orderly disposal of this wretched stock of tin that is overhanging the market and has cast such a shadow and brought such devastation to Cornwall. I hope that the hon. Gentleman will acknowledge that that is the position.
I should like to concentrate on the Geevor mine in my constituency, because throughout this crisis it has rightly been my preoccupation. I recognise the wider issues in the debate, but Geevor is my concern and, sadly, right from the outset, it was clear that that was the most vulnerable of all the Cornish mines. It was vulnerable on two grounds: first, because of the geological and mineral nature of the mine, and, secondly, because it was owned by a company that was standing by itself and with its shareholders. It did not have the mighty resources of Rio Tinto-Zinc behind it.
When the people from the media descended in their droves and the television cameras and the newspapers wanted folksy articles, they beat a track to Geevor. We welcomed that, because at least it focused attention on the plight of that mine and the community — that small isolated community of St. Just and Pendeen, just seven miles from Land's End. Apart from Geevor, there is very little else in that area. Now Geevor is to close.
My hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) is wrong. Geevor is not dead. Geevor is closed. The pumps are still working in Geevor. My concern tonight is to try, with all the power that I can muster, to get it into the heads of my right hon. Friends on the Treasury Bench that those pumps must be kept going. That is what the argument is about. We have gone through the agony of the lay-offs. The day when the last shift came up was one fo the saddest days in Cornish history that any of us can remember. Subsequently Geevor's second application was rejected by the Government and the lay-offs were then converted into redundancies. The anguish and uncertainty of the last few months has caused untold pain.
I pay a willing and genuine tribute to the management and men of Geevor. First I pay tribute to the management, in particular to Mr. Ken Gilbert. At times he is not the easiest of characters, at least in his dealings with Ministers and civil servants. However, his only concern during the long months since 24 October when this crisis first burst upon us has been the future of the mine, the men and the community. The board has not done everything that I should have wished it to do, but it has acted from the very highest motives and from a desire to ensure that the mine survives, if it is at all possible for it to survive.
I felt that I could not criticise my hon. Friend the Minister of State when unfortunately he and the Government rejected Geevor's second application, and I should like to say why. The sum involved was very large. Although I wished that it could have been otherwise, I could not say, with hand on heart, that they were absolutely wrong in rejecting that application. However, what I desperately tried to do and what I shall continue to try to do is find a way through the crisis. I wish, as I have wished many times during the past few months, that
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the Department of Trade and Industry and Geevor could sit down around the table and that the DTI could say, "That is not on, but we might be able to try this, so let us try to do it this way." Throughout these long months that is what has been missing.
Geevor told me during the past week that if the Government will put up £150,000 — a piffling sum —Geevor, from its own resources — limited, goodness knows, as those are now—and from the activities that it will be able to generate, will keep the pumps going for two years. That is a bargain that the House and the Government should not reject. It is a very small sum, but it would keep hope alive for Geevor and for the community. Above all else, that is what the community of St. Just and Pendeen now want. Reluctantly and with a sense of resignation I believe that they have almost accepted that there will have to be redundancies, grievous though they are, as are the implications of those redundancies. I have already referred to the effect of redundancies on the community.
The vicar of St. Just has unfortunately had to carry a tremendous burden for his parishioners. That has played havoc—I hope temporarily—with his health. That is one example of the kind of stress that has been caused to the community and to the families of everybody who worked at Geevor. This House and the Government owe it to the community to ensure that every means is found to enable the pumps to be kept going for £150,000.
I pay tribute to my hon. Friend the Minister of State for his patience and for his efforts on behalf of the industry. He has come in for a great deal of unfair criticism tonight. I pay tribute to him for the many occasions upon which he has willingly seen me and everybody from Cornwall and for all the efforts that he has made. However, I am expecting something else from him tonight —£150,000 to keep the pumps going for two years. I do not care much how he does it. If he has trouble with the rules, regulations and officials, let him find another way round the problem. I am sure that if Governments have a will there is a way. I shall listen with the utmost care to my hon. Friend when he winds up the debate. Unless he can show good intentions and offer some hope to Geevor by providing that amount of money, I am afraid that I shall be unable to support the Government tonight in the Lobby.
8.35 pm
Mr. Stan Crowther: I listened with a great deal of sympathy to the speech of the hon. Member for St. Ives (Mr. Harris). I should feel the same sympathy for any hon. Member whose constituency had been so badly let down by a Government of his own party. In due course we shall see which way he votes. I feel that he may have to vote against the Government, because there is not much likelihood of any positive assurance coming out of tonight's debate. If such an assurance were to be given, I think that we should have heard about it at the beginning of this debate.
I am a sponsored member of the Transport and General Workers Union, which represents virtually the whole of the work force in the tin mining industry. I do not believe that Ministers, however much they may protest their innocence, can escape responsibility for the crisis that has now put all those jobs in jeopardy and, in the case of Geevor, has actually destroyed jobs.

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What makes the social consequences for this industry particularly serious is its geographical location, a matter to which the hon. Member for Truro (Mr. Penhaligon) drew our attention. Geography is so much against the area in which these mines are located that there seems to be little possibility of new industry being attracted to it and creating jobs on the kind of scale that would compensate for those that are now being lost. In my area of south Yorkshire, which has the geographical advantage of being in the middle of the country and at the heart of the motorway network and of having full development area status, we cannot attract new industry. The unemployment rate in the Rotherham-Mexborough travel-to-work area is 23 per cent. If my area, with all those advantages, cannot attract jobs, the future for parts of Cornwall is very bleak.
What has happened is nothing short of tragic. One of the points which came out most clearly in the Select Committee inquiry was the amazing dedication of the work force to the industry. It is proud of the industry, it is very knowledgeable about it and it is devoted to it. When representatives of the TGWU gave evidence to the Select Committee, I felt a great sense of personal pride because of the quality of that evidence. I was proud to be a member of the same union. It is wrong that the people they represent, who have made a great contribution to the country and who will do so again, if given a chance, should be placed in such appalling difficulties by the machinations of an international cartel.
After we had produced our report, I was somewhat dismayed to find that, even then, the management of both Geevor and the RTZ mines had still not submitted their proposals for Government assistance to the Department. While members of the Committee, trade unions and local authorities were working hard to try to find a way to save the industry, the management did not produce its own proposals for the consideration of Ministers. I was rather upset by what appeared to me to be their dilatoriness.
Mr. Harris: That is a serious point, but it should be said in defence of the management that its difficulty in framing its applications was the same difficulty of the Government in considering the applications, which was the uncertainty about what was likely to be the future price of tin. I have seen the Geevor applications, and I assure the hon. Gentleman that an enormous amount of work went into them. It was not simply a matter of preparing those applications, as some people think.
Mr. Crowther: I am sure that it is not a simple matter and I would not suggest that it is. However, I still think that the management took rather longer than it should have done.
As has been said, it was an extremely difficult inquiry because of the virtual refusal of the Government —Ministers and civil servants—to give us any information. We could not even discover whether they had any information to give us. We have found out many things since then. This is the first time that I have been involved in an inquiry in a Select Committee where we have discovered a lot more things since we produced the report than we did while we were holding the inquiry. For some reason, the publication of our report and the Government's response to it have stirred up something of a hornet's nest and people are now pouring in information that we did not have before.
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It is now crystal clear, as a result of information that has come to light, and that was held back from us before, that there has been a gigantic international fraud. I see no other word for it. It is a fraud in which the conspirators are not shady profiteers and speculators but representatives of supposedly responsible Governments. I find that astonishing. The tin mining industry, the brokers and the creditor banks have all been victims of a confidence trick, and one in which the British Government were either a knowing or unknowing participant. I do not know whether they knew. I find it difficult to believe that those who represented the British Government in the affairs of the International Tin Council were so ignorant that they did not know that a massive fraud was being prepared. I am saying that deliberately, and that is the inescapable conclusion from the information that has come to us.
In their observations on our report, Ministers have said things to us that they did not tell us when giving their evidence. Unfortunately, it appears that at least two of the new things that they have said are not true. For example, they say in paragraph 23 that the Bank of England
"advised the ME … that they"—
that is, the brokers—
"should not count on the ITC member governments standing behind the ITC if the Buffer Stock Manager were ever unable to meet his commitments."
The chairman of the London Metal Exchange has told us bluntly that that is not true. He has quoted information that we did not have before from confidential minutes taken at the time to prove that what Ministers have told us in their response is not true. That matter will have to be gone into again.
Supposing that it were true, and the Bank of England, on behalf of the Government, warned the brokers that they
"should not count on the ITC member governments"—
which means Her Majesty's Government, along with the others, standing behind the ITC—the ITC consists of its own members because it cannot consist of anybody else—
"if the Buffer Stock Manager were ever unable to meet his commitments."
In other words, if he went into contracts and finished up owing money that he could not pay or he was defrauding the people with whom he was doing business, they should not count on the member Governments to stand behind the ITC.
As I have said, the LME chairman says that that is not true, but if it were true why did the Government say that? The only possible conclusion is that they were already preparing for a fraudulent position to arise. What other implication can there be? They are saying that the Bank of England said to the brokers that if the buffer stock manager had signed contracts with the brokers that he could not honour, and finished up owing million of pounds, the ITC is not to be counted on to do anything about it, although it is his employer. Why should the Government say that, if such a position were not already being planned or at least forecast? We shall need to know about that.
Again, in their response to our report, Ministers claimed that the LME had access to all that was going on and had representatives with the DTI at the ITC meetings. Again, the chairman of the LME simply says that that is not true. I do not like Select Committees being told in Government statements things that are not true, and this will have to be exmined in some depth.

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My right hon. Friend the Member for Swansea, West (Mr. Williams) has already mentioned the rather remarkable statement from the Minister in answer to question 600 when he said that Ministers were not informed about what was going on. However, the civil servant referred to, Mr. Lunn, later on in the same sitting of the Committee said something different. He said that Ministers were frequently informed, especially the Secretary of State. It was difficult for us to discover the true position. It is hard to believe that Ministers did not know what they now tell us the Bank of England knew. If the Bank of England knew it, why did not Ministers know it? These mysteries remain.
When I heard about the debate, I thought that the Government would announce some assistance for RTZ. I thought that they would not have given us a debate in Government time unless they had some goodies to hand out. I now share the fear that has already been expressed that the fact that they have not announced any advantage to RTZ may mean that it will not get any assistance and it will go the same way as Geevor.
Sooner or later, the country must have a Government who will stop this endless running down of British industries, which has gone on for far too long. Sooner or later, we must have a Government who are prepared to adopt policies to stop this pattern. I fear that it will not happen before the next general election but it must happen then because it will be our last chance to be once again a great industrial nation.
8.48 pm
Mr. Kenneth Warren: What magnificent speeches we have heard from the men of Cornwall tonight. I was proud to be in the House when they made those speeches, from both sides of the House. I hope that my right hon. Friend the Secretary of State and my hon. Friend the Minister heard them not for the party politics but for the representations of how people feel about not just the tin industry but all industry and our concern for it.
The report from the Trade and Industry Select Committee was unanimous, and I ask my hon. Friend the Minister to understand that. It came after some careful hearings. When one seeks to catch your eye, Mr. Deputy Speaker, it is to make an apt speech that one wants to make. Tonight I do not want to make this speech, but I have to make it.
The Committee made the decision to investigate this matter of its own choice. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) was instrumental in making sure that we seized on the need to investigate the crisis, but it was my right hon. Friend the Prime Minister who said that the House
"recognises the competence of departmental Select Committees of the House of Commons to consider issues raised." — [Official Report, 15 January 1986; Vol. 89, c. 1090.]
So the endorsement of my right hon. Friend the Prime Minister is behind this inquiry, as it is behind every other Select Committee inquiry.
It is regrettable that we have seen the time bomb explode. The time bomb was built into the 1982 agreement which should never have been accepted by the Government. With Brazil, China, the United States outside the agreement, it was only a matter of time before it destroyed itself. Indeed, it is remarkable that in the
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Government's reply to the Select Committee report we were accused of obtaining documents from the United States Government under their freedom of information legislation. Unfortunately, that was not the reason why we got the information. It was because the United States' Government were still on the circulation list of the last tin agreement as nobody had bothered to cross them off. That which is marked confidential in the United Kingdom, is not confidential in the United States.
Difficult problems arise for me when I receive letters such as I have received today from an eminent City banker with a strong record of work and devotion to the Tory cause. He said:
"We are deeply shaken at the change in Her Majesty's Government's position from one of accepting obligations to help aggrieved parties to one of denying all issues, as has been made clear both in the Government's reply to the Select Committee and in private conversations this bank has had with the Government."
I turn to the broad problems facing the Department of Trade and Industry on the eve of the 'big bang'. I am worried that at best the Government's position appears not to be relied on to favour enterprise and a free market. At worst they tell the country that market forces rule and that if one lives to regret it, that is one's loss, whether it be one's job or savings. If that is not the case my right hon. Friend the Secretary of State must demonstrate in this one vital industry that he can rise above the mere dogma which too often appears to be behind Government policy. I cannot believe that the Governments of France, West Germany, Japan and the United States would allow one of their key industries to go to the wall as we are doing.
My right hon. Friend the Secretary of State may say that this is unkind of me, one who has loyally supported the Government for many, many years. I could not believe that they would come to this style of government regarding industry. I have had a lifetime in industry and I now believe that we are sapping the will of business and industry to succeed. This is a test case and we could easily devote limited resources to a cause which is essential to us. We must get tin from somewhere. In 18 months the buffer stock will have been used up. Where will the tin come from? What about import substitution? Are we willing to pay £25 million a year for that? Is it not better to do the sums and look across the the Departments of Health and Social Security, of Employment and of Trade and Industry to analyse how much it will cost in value terms to keel) those men in their jobs now? In 18 months we shall need every one of them to help us.
We should not believe that we cannot do anything. The Department of Trade and Industry is supposed to be a Department of enterprise. It is not acceptable that Ministers should have instructed their most senior civil servants—men of considerable ability such as Sir Brian Hayes, the permanent secretary, and Mr. Murray, both of whom have demonstrated their effectiveness—to appear before a Select Committee and not to answer questions. Mr. Murray had to remain silent while flanked by two Ministers who did not rise to defend him, and Sir Brian Hayes said:
"Whether or not I gave advice is advice itself",
and therefore would not answer the question. It was a parody of "Yes Minister" and a farce. Indeed, it was less funny than "Yes Minister".
It was not until we concluded our inquiry and people saw the standard of information that we had been given by the Government that information began to fall off the

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backs of lorries by the skipful. People said that they were fed up with confidentiality which was costing them their jobs and savings, and that they wanted to be heard. It is regrettable that the concept of the "word is my bond" of business and the City must be broken for the truth to emerge.
Indeed, warnings about the tin stock went back to 1982. The position was not new. It was not a case of the Government signing an agreement and telling everyone what the agreement was. One of the documents tells us — I am willing to place this before the Select Committee, if it chooses to reopen the inquiry, as it may do:
"We now learn from ITC documents that, because not all the countries invited to participate in the 6th ITA actually signed the treaty, the normal buffer stock was established at 19,666 tonnes … This important fact was never made public."
If it was not made public and people were invited to invest in the agreement, what were the standards to which the Government were working within that agreement? The document continues:
"you might think that the omission to publish that fact was a fraud on those who were engaged in business with the ITC."
I understand that that will be challenged in the courts.
The position was even worse than that. The statistics were manipulated and at best the member states did not understand and at worst, what they understood, they chose to ignore. Another confidential ITC document, the report dated 8 November 1985, which was prepared for the ITC by its auditors, Peat Marwick Mitchell, stated that the existing contracts of the manager were not for about 19,000 tonnes but for more than 63,000 tonnes. Unfortunately, the auditors did not know all the facts and the ITC's total risk position was 120,819 tonnes. That is ludicrous. There were 15 billet-doux or, as my hon. Friend the Member for Monmouth (Sir J. Stradling Thomas) said billet-don'ts. I am delighted that my hon. Friend is doing well after his recent accident and we look forward to welcoming him back. We shall never find out what they said.
One thing is certain—exposure of the Government is much greater than the Government appreciates. What was thought to be £100 million is probably £600 million. One wonders what happened to those billet-douxs and billet don'ts. Miss Edith Jones, an excellent lady who gave evidence to the Committee, was moved from her job. Why was she moved at a critical time when the Government were having trouble with Malaysia on international student fees? That strange country has featured in the newspapers during the past 24 hours most unfortunately. The previous Committee did a great deal to try to remedy the "Buy Britain Last" slogan of Malaysia by publishing a report on Trade in ASEAN. There has also been a battle over Concorde flying rights there. Were we listening to the Foreign and Commonwealth Office and not to the Department of Trade and Industry about the international tin agreement? Now we have neither Concorde flights nor an international tin agreement.
On 1 July the Governor of the Bank of England kindly wrote me a letter. I had written to him saying that the Government had told me, properly, that the Bank of England knew all about the matter and that I should ask it. The Governor replied:
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"we always work on the assumption that a Committee of the House of Commons will tell us if they want to see us or to receive evidence from us; indeed, we were not aware of any precedent for an organisation like us taking steps to initiate an appearance before a Committee."
I could tell him that the Kerrier district council and the TGWU in Cornwall heard the shouts of tin miners as they marched through the City and that if the Governor had had his window open, he too would have heard the shouts of those miners appealing for help. It is not at all satisfactory that the Government should place the Bank of England—and the Bank of England should seek to place the London Metal Exchange—in a position where it is all their fault but nothing to do with us.
The tin mines of Corwall are a strategic industry for this country. While all recognise that, why did not the Government tell the London Metal Exchange exactly what was going on? The Government's answer is that the LME must have known because two of its members were trotting around with the DTI into all the meetings of the International Tin Council. However, in these documents that keep coming to us in skipfuls, we discover that these two members were required to be there as advisers to the DTI and were not allowed to tell the LME what they heard. Furthermore, when money was mentioned, they were thrown out of the meetings.
Given the Government's reply, my right hon. Friend will understand the scepticism of the Select Committee through the words of hon. Members who have already spoken as well as others who will no doubt do so.
We should listen more clearly to the words of the London Metal Exchange. Mr. Jacques Lion wrote to us on 24 June in a document circulated to the Select Committee and said:
"If the DTI had fully appreciated the situation in June 1985 (and it claims to have done so even earlier) why were there not high level discussions and consultations taking place between the Government, Bank of England, LME and Banks to try to avoid or mitigate this disaster? It is absolutely incredible that the UK Government. with great influence and large resources at its command, simply issued a few delphic warnings and then sat back and waited for the time bomb to explode".
It may be argued, "Well, of course, there are no precedents." But a report on Concorde was published by the predecessor Committee of which I am now Chairman, in 1981–82. Paragraph 265 on page 68 showed that the Government accepted that it was far better to keep 3,000 Concorde workers in work than it was to put them on the dole. The sums were given, and all the arithmetic shows quite clearly that whatever the merits of Concorde, the Government of the day looked across the DHSS, the Department of Employment and the DTI and said that it was better to keep those men in work producing things that other people would need than to put them on the dole.
There were 3,000 of those workers— there are only 2,000 Cornish tin miners. The precedent exists. I hope that the Government will listen. As the hon. Member for Truro (Mr. Penhaligon) pointed out, it is cheaper to keep them at work than to throw them on the scrap heaps and slag heaps of Cornwall.
In a case such as this, one might ask what a commercially viable project is. In 18 months the world tin stock will have run out, and more will be required. I regret that tonight I doubt whether the Government will secure my support in the Lobby. But I appeal to my friends in the Government to look again and again at this sad and staggering situation. It goes far beyond the world of tin.

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I hope that they will see through the mists of silly secrecy in which this inquiry has been enveloped. They should understand that this House must have the truth from the Government at all times. Ministers must prove that civil servants are not hiding from the truth or from Ministers. The only and essential truth is that Ministers must go from the House and find for us all in Cornwall—in city and country—a method of bringing together the institutions and the people to make a success of the tin enterprise. This is a test case for the Government. They should hear those who are now crying to them, even if they do not support the Government in the Lobby.
9.3 pm
Mr. Doug Hoyle: It is a pleasure to follow the hon. Member for Hastings and Rye (Mr. Warren), who is Chairman of the Select Committee of which I am a member. On both sides of the House so far there seems to be a clear understanding that the Government have not given us all the information that they should have given. Indeed, I go further and say that if the Secretary of State's opening remarks are anything to go by, they have been very shifty. The right hon. Gentleman was either ill-briefed, or he was no more prepared to tell the truth now than he was during the Select Committee inquiry.
An important principle is involved — the work of future Select Committees. It cannot be stressed often enough that we were not after the advice given to Ministers or what they did about it. We wanted the information given to Ministers. That was refused to us, and that is the charge that we make against the Government.
If the Government are not prepared to be influenced by Opposition Members, I hope that they will be influenced by the number of Conservative Members who have said that they cannot support them. Some of them have gone even further and said that they will vote against the Government.
The reality of what we are discussing is known to us all — the crisis that has been created in the tin mining industry—and that reality comes home to us all when we talk about Cornwall. People in Cornwall are being thrown out of their jobs. As we have heard from hon. Members who represent constituencies in Cornwall, these people are suffering.
Why did this crisis happen? We have not received an adequate reply to that question. To find the answer, we must consider the level of the buffer stock. The ITC buffer stock was 30,000 tonnes and that was financed by contributions from member states. Therefore, we start with a basis of 30,000 tonnes. To that must be added 20,000 tonnes financed by the borrowing on the security of tin warrants or on Government guarantees. The total stock should therefore have been 50,000 tonnes. It is evident that that was not the position. It is also clear that nothing was done to correct that position. The council was allowed to make other arrangements to supplement these resources.
We heard in the Select Committee from the Department of Trade and Industry that the Government's contribution amounted to the cost of 19,666 tonnes. I suggest that the arithmetic is wrong. The figures do not add up. When we consider the Government's contribution of 19,666 tonnes, it is evident that 27,700 tonnes were bought from the buffer stock of the fifth international tin agreement. After that, there were only 11,900 tonnes to be
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bought. This is where the arithmetic does not add up. The buffer stock manager told the economic and public review panel that he had bought on the strength of the contribution for 19,666 tonnes. He therefore exceeded the limitation.
That is only part of the story. We now also know that it is almost certain that the buffer stock manager was not content with that. He was buying far more tin—arid this is the important point — than the ITC had funds for. Indeed, 120,000 tonnes was at risk including 50,000 tonnes sold on "unpriced sales". Obviously these stocks were not sold. In the light of that, the buffer stock manager said that the idea of buying only as much tin as there were contributions was both impractical and untenable. However, we know where this folly has led. It has led to the crisis and to some of the good people of Cornwall being put on the scrap heap.
Someone must answer for this. Someone must be responsible. The Government have said tonight that they did not know—we had no means of determining in the Select Committee whether they did or did not know—what was happening, but doubtless they knew about the shortage of subscriptions to the sixth ITA. We have heard that the Ministers did not know about the borrowing and lending activities of the buffer stock manager which I have just described. I find that difficult to believe. The facts that are available show that the possibility that the buffer stock manager was borrowing tin other than on tin warrants without authority from the council was, as the hon. Member for Hastings and Rye has said, suspected as long ago as 1982. It does not add up for the Government to claim that they had no knowledge of what was happening when it was suspected as long ago as 1982. Either the Government did not know what was happening in the Department or they did know and chose to ignore what was happening.
We know that the United Kingdom delegates were told not to press for more information as that might prove counter-productive. The hon. Member for Hastings and Rye has speculated on some of the reasons for that advice. Nevertheless, the information existed, so how can Ministers tell us that they do not know? According to Sir Brian Hayes, the Permanent Secretary to the Department of Trade and Industry, there were 15 reports to Ministers between 1982 and 1985. We do not know what was in them, but we know that they were made. I should have thought that it would have been prudent for the Government to have taken some action on the basis of those reports.
I do not believe that it is any use putting the blame on the London Metal Exchange. The Bank of England's advice was that the LME should not expect the Government to stand behind the International Tin Council if the buffer stock manager was unable to meet his commitments. A Bank of England letter said that, in the event of the buffer stock manager's funds becoming exhausted, it should not be assumed that any Government would step in with additional finance. We now have skip loads of such letters. They are adding to the rubbish that is part of the other clean-up campaign which the Prime Minister has initiated. We heard from the LME that it did not take the Bank of England's advice to mean that the Government would not stand behind the buffer stock manager's current contract. There is something gravely

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wrong there, and it should have been gone into. We now learn that the LME representatives were not representatives or party to some of the most important decisions.
This is a sorry tale. It will not do for the Government to shelter behind their civil servants, saying that they were given the wrong advice, that they knew nothing or that they should not be blamed because it is just one of those things. That is not the behaviour of a responsible Government. Somebody must accept liability. The Secretary of State did not try to provide any answers. In spite of the Select Committee's difficulties, it is clear that action should have been taken far earlier.
We cannot escape the fact that responsibility must lie with the Government. I am pleased that the Minister for Trade, who should bear responsibility for the dealing with the ITC, is on the Bench. I should like to hear his explanation. We know about the problems in his Department and that there have recently been resignations. I quite understand why it does not want any more, but he is the Minister responsible, and he should give us some explanation about his conduct. Why did he not act? Why did Ministers prevent civil servants from giving the Select Committee the information that it needed?
The Government should take on board the fact that the Select Committee report was accepted by all members of that Committee, Conservative as well as Members of the Opposition. I will go a little further than that. All the Members of the Committee felt that the special report, which was issued after the reply we received from the Department of Trade and Industry, was an inadequate response, had not been thought out and did not answer the queries we put to them. That should be worrying the Government. They should not be taking flippant regard of what the House is expressing tonight — I am not suggesting that they are—because it is serious. We are now facing a House of Commons in which it is said that nobody bears responsibility for this kind of crisis. That is not good enough. Ministers who are responsible should accept that responsibility.
I am sorry that we will not be hearing tonight from the Minister responsible for the civil servants who attended the ITC. I am sure that this is not the end of the matter. It cannot be washed away in this fashion. Sooner or later I hope that we will get the truth about what occurred and the truth as to why no action was taken sooner, why no warnings were given and especially why the tin producers of Cornwall were not warned. I am sure that if such action had been taken something could have been salvaged from the mess we find ourselves in tonight. We are facing the possibility that tin mining might be coming to an end. We cannot allow that to happen. The Government should take some action to help protect Cornish tin mines. Also, some Minister should be prepared to accept responsibility for the mess we find ourselves in.
Several hon. Members rose——
Mr. Speaker: If the four hon. Members who are now rising speak for about eight minutes each, I shall be able to call all of them and still leave adequate time for the Minister.
9.17 pm
Mr. Tim Smith: Since the buffer stock manager ceased operations seven months ago I have
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followed developments in the tin industry with growing concern. Important issues of principle are at stake. Apart from the legality of it, which is a matter for the courts, it is totally unacceptable that 22 member states should simply have abandoned the international tin agreement. As the Select Committee said:
"if prosperous countries walk away from their collective debts because of a cloak of immunity, there can be no reason for us to expect poorer nations to pay their debts."
The Government have said in reply that they would be concerned if the failure of the International Tin Council was to be taken as a precedent by any country. Of course it is a precedent. It is a precedent for every country and for every international trade agreement. It is also a thoroughly bad example to set the City of London.
Reading between the lines, I am clear enough about what happened. Before October 1985 all those concerned — the member states, the banks, the brokers and the producers — believed that the council had unlimited liability. If it ceased to trade, it would pay its debts. It was a gilt-edged agreement because sovereign Governments were parties to it. Its debts were sovereign debts.
I am sure that that was a widely held assumption. It was only after October that Governments backed away from it. If they had always taken the view that they had no liability, they should have said so earlier. In that case, the agreement would have been stillborn, for no one would have dealt with the manager. That is why it is so disingenuous of the Government to say that they warned the metal brokers via the Bank of England that they should not count on the member Governments standing behind the Council if the manager were ever unable to meet his commitments, but that they could not have given a similar warning to the banks or the Cornish tin industry because it would have precipitated a crisis and probably the collapse of the buffer stock operation. Had the brokers actually been warned—it is clear that they were not—they would have stopped dealing with the manager at once and the buffer stock operation would have collapsed.
The fact is that the operations of the manager had got completely out of control. He was in breach of the articles of agreement and he was gambling with other people's money. It was double or quits. For a remarkably long period he kept on doubling, even after his stock was exhausted. In the end he quit, leaving a trail of gambling debts behind him.
He was able to get away with it for so long because his operations were secret for good commercial reasons. There was no way in which those dealing with him could know that he was acting so recklessly. Had they known they would simply have stopped dealing with him and the crisis would have been precipitated that much earlier, but they would still have assumed that the council would pay its debts. They would have reached that conclusion after examining the public documents—the agreement itself, the headquarters agreement and the order of 1972. A study of those documents discloses that the council had legal personality, that the council enjoyed immunity from suit, and that the manager had authority to operate the buffer stock operation on behalf of the council.
The council existed under a United Nations treaty with the objective of carrying out the political, social and economic objectives of the member states, which declared their intent to support a minimum price for tin by a buffer stock operation. There was nothing in the agreement that limited the liability of the member states. It was a

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reasonable assumption that if member states, joined by international treaty, were determined to implement certain objectives, that were largely political, using a buffer stock operation, those member states would ensure that the resources and facilities of the manager were sufficient and adequate to carry out those objectives in a manner consistent with international commercial conduct and accepted international standards of sanctity of contracts.
Article 21 of the sixth agreement provided that the council was to maintain a normal buffer stock of 30,000 tonnes, funded at all times by Government contributions, and an additional buffer stock of 20,000 tonnes, maintained by borrowing. In other words, the paid-up share capital of the council was to be 30,000 tonnes of tin and the maximum borrowing permitted was to be limited to the amount required to purchase 20,000 tonnes. The gearing ratio was established at 3:2. Now we have heard from hon. Members on both sides of the House that, in fact, not only was the permitted buffer stock lower—it was 19,666 tonnes because not all the countries invited to participate in the agreement signed the treaty— but in any case the buffer stock manager easily exceeded the 50,000 tonnes of buffer stock on many occasions in the three years of the agreement.
The situation was made even worse because the member states did not proportionately reduce the borrowing power of the council to maintain the gearing of 3:2, but instead maintained the same borrowing level, which completely distorted the gearing ratios approved by the agreement. From the very outset, therefore, third parties dealing with the council had no idea that the gearing of the council was far worse that that authorised by the agreement. Notwithstanding the limitations imposed by the agreement on the total tonnage of the buffer stock, the buffer stock was allowed to exceed those limits on many occasions during the life of the agreement.
The overall picture of what actually happened discloses a lack of political will in the face of mounting evidence of financial collapse. The member states had to lower the floor price to a more realistic figure or provide the manager with additional resources, or proceed to an orderly closure. As they would do none of those things, in order to carry out the policy imposed upon him by the member states the manager had to resort to questionable trading practices and manipulation of statistics.
In a paper prepared for the European Community working group on commodities in December 1982 by the Department of Trade, there was an analysis of the obligations of the manager and the manner in which those obligations were being evaded or ignored. The paper requested the Community to instruct its spokesmen to put certain questions to the executive chairman of the council at the meeting to be held in December 1982. After describing certain operations conducted by the manager, the paper concluded:
"The manager has no powers to engage in it"—
the transaction—
"since the tin in question will not be tin forming part of the buffer stock and the operations will not constitute a buffer stock operation of a kind authorised under the agreement and he has no authority to purchase tin except for the buffer stock".
At the second meeting of the council, held in London in September 1983, the Australian delegate expressed concern about the
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"continual reports being received from the buffer stock manager indicating that the situation of buffer stock operations was very delicate and there was even a risk of total collapse".
At that same meeting the manager referred to previous reports in which he had requested the council either to give him new resources by new contributions or to provide resources in other ways. Also at that meeting, the delegate from Norway was reported as having said:
"The manager had time and again warned the council that unless … measures were taken, the very existence of the International Tin Council would be threatened."
The report of that meeting also records the fact that by September 1983 eight countries had still not paid outstanding contributions of £12·4 million. It is no wonder that the council was short of capital. That was another fact that was not disclosed to those doing business with the council.
Other examples have been recited during the debate of how, at meetings of the International Tin Council, the position was made entirely clear that the buffer stock manager was continually operating in extremely difficult circumstances. The member states knew that the manager was acting in excess of the authority given in the agreement. There was no attempt to curtail his activities. The member states knew what was happening and they allowed it to continue.
In the interests of time, I shall conclude without reciting the other examples that I had intended to recite which show clearly that the Government knew throughout, from the meetings of the International Tin Council, exactly what the position was. The council documents speak for themselves. All member states knew what the position was. They knew that the manager was exceeding his authority and that he did not have the money to pay his debts. That can mean only one of two things: either the member states knew and accepted that they would have to put up additional financing to meet the obligations of the manager as they fell due, or, alternatively, they knew that they would not or could not put up those funds, in which case the manager and the delegates had participated in fraudulent trading. There is no other answer.
When the manager ceased operations, the Government did try hard to secure agreement on refinancing. Ministers responded with commendable speed to the crisis. On I November last year my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) issued a statement in which he declared the objective of the United Kingdom Government to be
"to enable all legal commitments outstanding at 29 October 1985 to be met."
The implication was clear. The Government accepted a legal obligation to put up their share of the council's debts. I hope that they will now, once again, take the lead by accepting their responsibility in this regard and pressing other member states to do likewise. The EEC presidency offers an opportunity to take a lead. At a time when the Government are promoting higher standards in the City through the Financial Services Bill, nothing less will do. A precedent has been created and an example must now be set.
9.27 pm
Mr. Tim Brinton: I support so much of what my hon. Friend the Member for Beaconsfield (Mr. Smith) has said that I need not speak for long. My constituency is in Kent, not Cornwall. I have listened with

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admiration to the fluent advocacy of hon. Members from Cornwall making the case for the miners and the mines that are in such peril. A company in my constituency is very important to me. As an employer in my constituency, which has an unemployment rate of 18 per cent., Britannia Refined Metals Ltd., through a wholly owned subsidiary, burnt its fingers considerably. Some hon. Members may feel that those who chance their money are not in the same bracket as miners in Cornwall, but I remind hon. Members that without their money, my constituency will not have so many jobs if that firm fails.
I shall summarise what happened to the company Henry Bath and Son. On 24 October 1985 the company purchased, on behalf of the buffer stock manager, 2,000 tonnes of tin at an average price of £8,680 per tonne. At the LME "ring-out" price of £6,250 per tonne, the company is owed £4·85 million, plus loss of interest, plus costs. If the "ring-out" price is struck down in the course of next year, the debt owed by the ITC to the company will increase by a further £5·14 million, taking today's price for tin of £3,680.
If one were dealing commercially that could be accepted, but as a non-expert in such technical and highly skilled fields I have listened tonight to a story which I, as an amateur, can only describe as a story of carelessness and recklessness. Above all, it is a moral issue. The Government must bear moral responsibility, at least for their part in this disaster.
I am a free market man and I cannot for the life of me imagine why we thought of signing the sixth international tin agreement. It seemed to be outside the Government's perception, but we signed it. Information came and went. I have served on a Select Committee and know of the difficulties sometimes faced in obtaining information. It is clear from what I have heard tonight and what I have read that warnings were given and that the Government, the Department, Ministers, the Bank of England and almost everyone in the City concerned with this matter knew that something was rotten in the state of tin.
On 5 May The Times reported that the British representative at the United Nations, Sir John Thomson, said that it was not right for the United States or the Soviet Union to breach their international obligations by withdrawing part of their contribution to the United Nations budget. He said:
"It is not acceptable or right for the superpowers to set such a poor example."
Those words are appropriate tonight.
9.30 pm
Mr. Robin Maxwell-Hyslop: Three issues are before the House in only a three-hour debate—the fate of Cornish tin, the events leading up to the collapse of the international tin agreement and the Government's activity, or inactivity, and responsibility.
It is all very well for Ministers to say that critical references should not be made to civil servants but, beyond a shadow of doubt, Mr. de Koning, the buffer stock manager, was dealing fraudulently. It was evident to Government representatives that the buffer stock manager was trading outside any authority and beyond his resources. The Select Committee was entitled to know whether that was reported by the Government's representatives, Mrs. Jones and then Mr. Lunn, to
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Ministers. If Ministers want to exculpate their civil servants, instead of merely saying, "I accept responsibility" — a meaningless utterance — they must tell us whether they were aware that the buffer stock manager was trading fraudulently. Either they were or they were not —there is no third choice.
It is no good Ministers saying that they had 15 reports if those reports merely had the date at the top of the page and stated, "I attended a meeting on behalf of Her Majesty's Government," and were signed either my Mrs. Jones or Mr. Lunn. That is meaningless. The House needs to know whether the civil servants concerned reported to successive Ministers that the buffer stock manager was trading fraudulently and that he was entering into commitments which he had no resources to honour. If a company did that, its directors would go to goal. In doing that, the credit of tin producers was put at risk because they were selling metal at the London Metal Exchange price—the future price. They therefore borrowed money from their banks in the certainty, as they thought, that money for the tonnes of tin sold would be coming in at the LME price.
Mr. de Koning did not undertake his trading secretly. We received ample information, despite the Government's attempts to ensure that we did not, to show that the buffer stock manager was worried about what he was doing. He made sure that the representatives of the 22 signatory Governments, including the United Kingdom — Mrs. Jones and then Mr. Lunn — knew what he was doing. Either those civil servants reported the facts unambiguously to Ministers and ensured that they knew, so that they could take appropriate action or they did not do so. The Select Committee was entitled to be told whether they had done so. This is nothing to do with advice; this is about facts.
My right hon. Friend the Secretary of State referred to a memorandum. Hon. Members may care to look at the Procedure Committee report and compare that memorandum of guidance with civil servants to the memorandum given to the Select Committee by Sir Richard Barlas, whom many regard as an authority beyond question. Those of us who studied Sir Richard's performance right up to the time when he was Clerk of the House would have no hesitation in preferring his written evidence to that of an anonymous memorandum which does not constrain civil servants.
Moreover, Ministers have ample authority to release their civil servants from any constraints in the interests of a Select Committee, which is reporting to the House, ascertaining true facts, without which Select Committee reports can be misleading and unjust in their criticisms.
Only truth leads to justice. If truth is concealed by a Minister saying, "Only I will answer; I will not permit my civil servants to do so," and then refusing to answer, the House and the Select Committee will be frustrated in getting at the truth.
Many people know little of mineral mines. Some are apparently concentrated within the Department of Trade and Industry. They believe that mines flood with pure water. In fact, they flood with salt water—as in the case of Geevor—and they flood with highly acid water—as in the case of South Crofty, Wheal Jane and Pendarves —which will destroy the entire electrical systems of the mines and even destroy steel rails in next to no time.
There is no question of a mine filling up with water and being pumped out. Inundation renders the levels

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crumbling and unsafe. It cannot be pumped out so that men can be sent in. The men know that they have an excellent chance of being killed by collapses.
Anyone who goes to Geevor to see the model that shows the labyrinthine levels and the connections between them will appreciate that trying to block them off with concrete plugs, as the most senior placed idiot in the Department of Trade and Industry has recommended, is not a solution. To imagine that the levels can then be unplugged, having filled up with water and been rendered unstable, so that, yo ho ho, in five years' time mining operations can recommence is unrealistic. I wonder whether the people who give that advice would care to undertake such mining operations themselves.
Some mines have been reopened, but there have been hideous losses to human beings — hideous avoidable accidents, including drownings and cavings-in. We do not want that sort of future for Cornish mining.
It may be said that hon. Members on both sides of the House have agreed at various times to the closure of coal mines. Indeed we have, but we are talking now about the whole of Britain's remaining tin production, which is capable of meeting half Britain's needs for tin. We are not talking about closing peripheral areas; we are talking about heavy unemployment in areas of already heavy unemployment.
That is the position in a nut. The Government have a responsibility towards international integrity which they have not discharged. They have a responsibility towards the House which they have not discharged.
The collapse of the ITC was entirely predictable and it was a cartel where consequences were entirely predictable —that it would draw in new producers who were not members of the cartel and encourage tin users to use alternative metals such as aluminium. That is predictable of any cartel that sets out to raise and permanently support the price of whatever commodity is being dealt with above the cost of the marginal entrant or the marginal cost producer. That follows as night follows day. There is not news in that.
The ITC did not cause the collapse of Cornish tin. Cornish tin was due to be in difficulties when the world price of tin fell below the cost of mining it in Cornwall. But the Government could—as they have done with steel and British Leyland, where, incidentally, the Select Committee on Trade and Industry is due to go immediately after the Division tonight — as they are permitted to do under the EEC rules, supply refinancing to lower the cost of production so that which is not presently viable can become viable and sustain itself.
That is why we do not ask that Ministers should have a crystal ball which nobody in the world possesses. We do not ask that they should see the price of tin in three year's time when all the bankers have got rid of their tin warrants which secured the loans that they made to the London Metal Exchange while the ore which gathered at the pit heads and the other sources of production, while international trade was in disarray, is got rid of. That is the other rule of the equation.
What the price will be in three years' time we do not know and we do not expect Ministers to know either. What we do say is that the men will still be unemployed in three years' time. There is nothing else for them to do. It is a reasonable dedication of taxpayers' money to keeping the water out of the mines, including Geevor, and
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to putting them in a posture where they can move back into profitable production when the world price of tin has stabilised. That is what we ask of the Government.
The latest Geevor request is for only £175,000 to keep the water out for two years—part of the cost will come from the shareholders — and that is the absolute minimum that the Government should do. They should come to an agreement with Rio Tinto to refinance those mines which need reshafting and a considerable amount of other work so that their economic future, and the smelter at Capper pass, which depends on Cornish tin—it cannot use alluvial tin —is assured as well. That the Select Committee recommended after intensive hearings. That it still recommends to the House and it asks the House to assert that that is what the Government should adopt and execute as their policy.
9.43 pm
Mr. Iain Mills: I regret that so much of the time of the House tonight has been spent on sterile and caustic remarks about the Government's conduct during the tin crisis. Those are most unhelpful remarks, coming mainly from the Opposition. but, I regret, also from some of my hon. Friends.
What does society and the United Kingdom expect of the Government and Ministers in high-risk commodity agreements? Should the business of the House be talking about the minutiae of civil servants, minutes, Ministers and dates instead of about the valiant efforts to establish Newco and to find solutions? I hope that if Select Committees wish to be accepted as credible by hon. Members such as myself they will not get tied up in procedural matters on important occasions such as this on the eternal examination of the bones.
Let us get to the heart of the matter. Tin is a problem to my hon. Friends who represent constituencies in Cornwall, and they honourably put the case for their constituents. I back them in their efforts — [Interruption.] If Opposition Members do not wish to intervene, I wish that they would keep quiet. We are talking about an important matter that affects the life and livelihood of many people. Let us treat the subject seriously and talk not about procedures but about realities. Most people must have realised that after 1982 and the signing of the agreement this was a high-risk matter.
In an intervention I asked the right hon. Member for Swansea, West (Mr. Williams) what he would have done. He gave a slightly diffuse reply. According to my information, we signed the agreement along with Belgium, Canada, Denmark, Finland, France, West Germany, Greece, Ireland, India, Italy, Japan, the Netherlands, Norway, Poland, Sweden, Switzerland, Australia, Indonesia and many other countries. Let us not say that signing the 1982 agreement was foolish. The world had to have an agreement to control tin and what happened is now a matter of history.
Having signed the agreement, the Government made great efforts to secure reform and to make sure in discussions that those who were party to the agreement were trying to make it clearer and more communicative. There is no point in some hon. Members shaking their heads, because if they had signed the agreement along with all those countries they would have found that it is not just a simple matter of going in and blasting one's way through and making the agreement simple and easy to understand.

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This is a highly complex matter affecting consumers and producers throughout the world, and there are no easy answers. It is a shame that after the problems ensued the highly innovative solution of Newco, about which many of us were briefed in the House by the LME and by Mr. Kestenbaum and others, was not successful.
Credit is due to the Government and to our Ministers for supporting the Newco solution. Nobody has given the Government credit for that and I suggest that it is because most right hon. and hon. Members want to be negative about it. The Government tried to support Newco and had committed themselves to funds for Newco. It was not the fault of the Government that Newco failed: it was the fault of others. As a result of that failure, Cornishmen may lose jobs. I have to tell the House, because no other hon. Member has done so, that people in the City may also lose jobs. I supported Newco and did my best to lobby Ministers, as did some of my hon. Friends.
I pay tribute to hon. Members in all parts of the House who signed the letter jointly with me that we sent to Germany. At one stage, West Germany was not in favour of proceeding with Newco. The ambassador's No. 2, the Baron von Stein, sent me a letter which said that his Government would support Newco. At the end of his letter he said:
"Like most other signatories to the International Tin Agreement, the Government of the Federal Republic of Germany takes the view that the member countries are legally not liable for the ITC's obligations."
I wish to ask my hon. Friend the Minister of State a few questions. I do not expect him to answer them tonight, but I should be grateful for a memorandum that would help me to answer questions that are being put to me by those who have expressed an interest in these matters. The Federal Republic of Germany has said that it is not convinced that it has legal responsibilities. I ask my hon. Friend to let me know in writing what arc the legal obligations of members of the ITC, including her Majesty's Government, to meet in full the ITC's indebtedness.
What is Her Majesty's Government's view about the request for formal liquidation of the buffer stock, in accordance with article 26 so that the respective portions of the ITC's liabilities falling upon members may be calculated? Do her Majesty's Government distinguish between the failure of ITC members to meet the indebtedness of the ITC and its members and the failure of any other Government to meet their international loan obligations? [Interruption.] I was about to say that the crisis has led directly to the loss of 200 jobs. I am sorry that Opposition Members find that funny or amusing. Their hilarity and criticism is most suspect. I shall be grateful if my hon. Friend is able to say that the Government arc willing to consider an innovative approach in order to find a solution to this most difficult crisis.
9.51 pm
The Minister of State, Department of Trade and Industry (Mr. Peter Morrison): First may I say to the right hon. Member for Swansea, West (Mr. Williams) that there is nothing sinister about the timing of today's debate. He will recall that his right hon. Friend the Leader of the Opposition asked for a debate on several occasions during questions on the business statements. He has rightly
112
reminded me that by the time of the debate I had said that I hoped that I would be able to respond to all the applications relating to Cornish tin mines. I regret as much as he does that it has not been possible to make that response today.
I agree with the Chairman of the Select Committee, my hon. Friend the Member for Hastings and Rye (Mr. Warren) that there is nothing funny about the events of the past 12 or so months. As my hon. Friend the Member for Meriden (Mr. Mills) said, if we had not signed the 1982 agreement, many of the problems that we are discussing this evening would not have had to be discussed. However, as my right hon. Friend the Secretary of State for Trade and Industry explained in his opening speech, for reasons that he gave to the House it was decided at that time that on balance it was best to be part of the agreement. However, that decision did not affect the situation in Cornwall. Indeed, it could be strongly argued that because we were a member of the agreement we had more room for manoeuvre because of the effect of the agreement on Cornwall.
My hon. Friend the Member for Beaconsfield (Mr. Smith) said that no Government could have tried harder to resolve the crisis, once it broke. That is quite correct. My right hon. Friend the then Secretary of State for Trade and Industry sent personal messages to all other members of the agreement asking them to follow our lead. At that time we did everything that we possibly could to try to find a solution. We believed—and the House backed us—that an orderly return to trading in tin was the best way to proceed.
The hon. Member for Truro (Mr. Penhaligon) and my hon. Friends the Members for St. Ives (Mr. Harris) and for Falmouth and Camborne (Mr. Mudd) described the position in Cornwall. The hon. Member for Truro asked me why the Government did not do something immediately the tin agreement collapsed. The answer quite simply is that if we had done something, and subsequent negotiations had been successful, there would have been no need for us to do so. Therefore, we could not proceed until we had had an application and an application did not arrive in the Department until after the final collapse of the tin market.
The House knows that every effort was made to find a solution to the problem of the collapse in the price of tin and at that stage, in November and December of last year and the first two months of this, all our principal efforts were concentrated, although considerable thought was going into the likely impact on the tin mines in Cornwall, to see what we could do to ensure an orderly return to trading in tin.
I have said before that when those efforts failed, immediately our attention turned to see what can be done to help the Cornish tin mines. We have been told in vivid terms of the difficult unemployment situation in Cornwall. We are told that if the mines cannot re-open, what is a difficult situation becomes a very difficult situation, not least because of Cornwall's remoteness. I understand that alternative employment is not easy to find there, and that is why every effort was, and continues to be, made to see what can be done to assist the continuance of tin mining in Cornwall.
My hon. Friend the Member for St. Ives, in whose constituency Geevor is, will recall that it proved impossible to accept the first application. Against considerable difficulties and odds we were prepared to set aside what

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I agree is only a small amount of money, some £40,000, for care and maintenance so that the second application could be examined. As the House knows, I made a statement a few weeks ago that it was also not possible to accept that application. The reason is that a test of viability needs to be applied. One has to take into account the cost per job and the amount and proportion of taxpayers' money that is going in.
We also examined ways of giving an operating subsidy, but again it was not possible to give one. My hon. Friends the Members for Tiverton (Mr. Maxwell-Hyslop) and for St. Ives talked about care and maintenance, but this time round we were not able to give an offer for that. However, I am in close contact with my right hon. Friend the Secretary of State for Employment to see whether something can be done through a Manpower Services Commission scheme, and not on a normal basis. As my hon. Friend also knows, we are prepared to offer a sum of money for a consultant to study the future viability of the mine.
I agree with the points made by my hon. Friend the Member for Falmouth and Camborne about Carnon Consolidated and RTZ. I should like to be able to make an announcement but, as negotiations are still going on and the sums are substantial, it is not possible to do so at the moment. The right hon. Member for Swansea, West has raised his hand at me. I point out to him that the company has not yet made any point to me about delays. This is the right way to proceed. We shall want to help it as far as we can. The right hon. Gentleman will hear about these things in the normal way, and I was happy to inform the House about Geevor.
This has been a sad and sorry saga. The Government do not accept that they have a legal obligation to pay the debts of the ITC. As there are threats of writs, the House will understand that I cannot elaborate on that point now.
Question put, That the amendment be made:—
The House divided: Ayes 149, Noes 242

Division No. 244]

[10 pm

AYES

Alexander, Richard

Cohen, Harry

Alton, David

Coleman, Donald

Ashton, Joe

Cook, Frank (Stockton North)

Atkinson, N. (Tottenham)

Cook, Robin F. (Livingston)

Banks, Tony (Newham NW)

Corbyn, Jeremy

Barnett, Guy

Cox, Thomas (Tooting)

Beckett, Mrs Margaret

Craigen, J. M.

Beith, A. J.

Crowther, Stan

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

Dalyell, Tarn

Bermingham, Gerald

Davies, Rt Hon Denzil (L'lli)

Bidwell, Sydney

Davies, Ronald (Caerphilly)

Blair, Anthony

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

Boyes, Roland

Deakins, Eric

Bray, Dr Jeremy

Dixon, Donald

Brown, Gordon (D'f'mline E)

Dormand, Jack

Brown, Hugh D. (Provan)

Dunwoody, Hon Mrs G.

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

Eadie, Alex

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

Eastham, Ken

Bruce, Malcolm

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

Buchan, Norman

Evans, John (St. Helens N)

Caborn, Richard

Ewing, Harry

Callaghan, Jim (Heyw'd & M)

Faulds, Andrew

Canavan, Dennis

Field, Frank (Birkenhead)

Carlile, Alexander (Montg'y)

Fields, T. (L'pool Broad Gn)

Carter-Jones, Lewis

Fisher, Mark

Clark, Dr David (S Shields)

Foot, Rt Hon Michael

Clarke, Thomas

Forrester, John

Clay, Robert

Foster, Derek

Clelland, David Gordon

Foulkes, George

Clwyd, Mrs Ann

Garrett, W. E.

114

Gilbert, Rt Hon Dr John

Nellist, David

Godman, Dr Norman

Oakes, Rt Hon Gordon

Gould, Bryan

O'Brien, William

Gourlay, Harry

O'Neill, Martin

Hamilton, James (M'well N)

Owen, Rt Hon Dr David

Hamilton, W. W. (Fife Central)

Park, George

Hancock, Michael

Patched, Terry

Hardy, Peter

Pavitt, Laurie

Harrison, Rt Hon Walter

Pendry, Tom

Hart, Rt Hon Dame Judith

Penhaligon, David

Haynes, Frank

Powell, Raymond (Ogmore)

Heffer, Eric S.

Radice, Giles

Hogg, N. (C'nauld & Kilsyth)

Randall, Stuart

Home Robertson, John

Raynsford, Nick

Hoyle, Douglas

Redmond, Martin

Hughes, Robert (Aberdeen N)

Richardson, Ms Jo

Hughes, Roy (Newport East)

Robinson, G. (Coventry NW)

Hughes, Simon (Southwark)

Rogers, Allan

John, Brynmor

Rowlands, Ted

Jones, Barry (Alyn & Deeside)

Sedgemore, Brian

Kaufman, Rt Hon Gerald

Sheerman, Barry

Lambie, David

Sheldon, Rt Hon R.

Lamond, James

Shore, Rt Hon Peter

Leadbitter, Ted

Short, Ms Clare (Ladywood)

Leighton, Ronald

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

Lewis, Ron (Carlisle)

Silkin, Rt Hon J.

Lewis, Terence (Worsley)

Skinner, Dennis

Litherland, Robert

Snape, Peter

Lloyd, Tony (Stretford)

Soley, Clive

Lofthouse, Geoffrey

Spearing, Nigel

McCartney, Hugh

Steel, Rt Hon David

McDonald, Dr Oonagh

Strang, Gavin

McGuire, Michael

Thomas, Dr R. (Carmarthen)

McKelvey, William

Thompson, J. (Wansbeck)

MacKenzie, Rt Hon Gregor

Torney, Tom

McWilliam, John

Wainwright, R.

Madden, Max

Wardell, Gareth (Gower)

Marek, Dr John

Wareing, Robert

Mason, Rt Hon Roy

Welsh, Michael

Maxton, John

Williams, Rt Hon A.

Michie, William

Winnick, David

Mikardo, Ian

Woodall, Alec

Millan, Rt Hon Bruce

Miller, Dr M. S. (E Kilbride)

Tellers for the Ayes:

Mitchell, Austin (G't Grimsby)

Mr. Allen McKay and

Morris, Rt Hon J. (Aberavon)

Mr. Derek Fatchett.

Mudd, David

NOES

Adley, Robert

Bruinvels, Peter

Aitken, Jonathan

Bryan, Sir Paul

Alison, Rt Hon Michael

Buchanan-Smith, Rt Hon A.

Amess, David

Budgen, Nick

Ancram, Michael

Bulmer, Esmond

Arnold, Tom

Burt, Alistair

Aspinwall, Jack

Carlisle, John (Luton N)

Atkins, Rt Hon Sir H.

Carlisle, Kenneth (Lincoln)

Atkins, Robert (South Ribble)

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

Atkinson, David (B'm'th E)

Carttiss, Michael

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

Cash, William

Baker, Nicholas (Dorset N)

Chalker, Mrs Lynda

Baldry, Tony

Channon, Rt Hon Paul

Beaumont-Dark, Anthony

Chope, Christopher

Bendall, Vivian

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

Benyon, William

Clark, Dr Michael (Rochford)

Best, Keith

Clark, Sir W. (Croydon S)

Biffen, Rt Hon John

Clegg, Sir Walter

Biggs-Davison, Sir John

Cockeram, Eric

Blackburn, John

Colvin, Michael

Boscawen, Hon Robert

Conway, Derek

Bottomley, Mrs Virginia

Coombs, Simon

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

Cope, John

Bowden, Gerald (Dulwich)

Corrie, John

Boyson, Dr Rhodes

Couchman, James

Braine, Rt Hon Sir Bernard

Cranborne, Viscount

Brandon-Bravo, Martin

Crouch, David

Bright, Graham

Currie, Mrs Edwina

Brittan, Rt Hon Leon

Dorrell, Stephen

Brown, M. (Brigg & Cl'thpes)

Douglas-Hamilton, Lord J.

Browne, John

Dover, Den

115

Durant, Tony

Leigh, Edward (Gainsbor'gh)

Edwards, Rt Hon N. (P'broke)

Lennox-Boyd, Hon Mark

Eggar, Tim

Lester, Jim

Emery, Sir Peter

Lewis, Sir Kenneth (Stamf'd)

Evennett, David

Lilley, Peter

Eyre, Sir Reginald

Lloyd, Sir Ian (Havant)

Fallon, Michael

Lloyd, Peter (Fareham)

Favell, Anthony

Lord, Michael

Fenner, Mrs Peggy

Luce, Rt Hon Richard

Finsberg, Sir Geoffrey

Lyell, Nicholas

Fletcher, Alexander

McCurley, Mrs Anna

Fookes, Miss Janet

MacGregor, Rt Hon John

Forman, Nigel

MacKay, Andrew (Berkshire)

Forsyth, Michael (Stirling)

MacKay, John (Argyll & Bute)

Forth, Eric

McLoughlin, Patrick

Fox, Sir Marcus

McNair-Wilson, M. (N'bury)

Fraser, Peter (Angus East)

Major, John

Freeman, Roger

Malins, Humfrey

Gale, Roger

Malone, Gerald

Galley, Roy

Maples, John

Gardiner, George (Reigate)

Marlow, Antony

Gardner, Sir Edward (Fylde)

Mates, Michael

Garel-Jones, Tristan

Mather, Carol

Glyn, Dr Alan

Maude, Hon Francis

Goodhart, Sir Philip

Mayhew, Sir Patrick

Gow, Ian

Merchant, Piers

Gower, Sir Raymond

Mills, Iain (Meriden)

Greenway, Harry

Mitchell, David (Hants NW)

Gregory, Conal

Moate, Roger

Griffiths, Peter (Portsm'th N)

Montgomery, Sir Fergus

Ground, Patrick

Moore, Rt Hon John

Grylls, Michael

Morris, M. (N'hampton S)

Hamilton, Hon A. (Epsom)

Morrison, Hon C. (Devizes)

Hamilton, Neil (Tatton)

Morrison, Hon P. (Chester)

Hampson, Dr Keith

Moynihan, Hon C.

Hanley, Jeremy

Murphy, Christopher

Hannam, John

Neale, Gerrard

Hargreaves, Kenneth

Nelson, Anthony

Harvey, Robert

Newton, Tony

Havers, Rt Hon Sir Michael

Nicholls, Patrick

Hawkins, C. (High Peak)

Norris, Steven

Hawkins, Sir Paul (N'folk SW)

Onslow, Cranley

Hawksley, Warren

Oppenheim, Phillip

Hayes, J.

Osborn, Sir John

Hayward, Robert

Ottaway, Richard

Heathcoat-Amory, David

Page, Sir John (Harrow W)

Heddle, John

Page, Richard (Herts SW)

Henderson, Barry

Parkinson, Rt Hon Cecil

Hickmet, Richard

Patten, Christopher (Bath)

Higgins, Rt Hon Terence L.

Pattie, Geoffrey

Hill, James

Pawsey, James

Hirst, Michael

Percival, Rt Hon Sir Ian

Hogg, Hon Douglas (Gr'th'm)

Pollock, Alexander

Holland, Sir Philip (Gedling)

Portillo, Michael

Hordern, Sir Peter

Powley, John

Howard, Michael

Prentice, Rt Hon Reg

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

Proctor, K. Harvey

Howell, Ralph (Norfolk, N)

Raffan, Keith

Hunt, David (Wirral W)

Rathbone, Tim

Hunt, John (Ravensbourne)

Rees, Rt Hon Peter (Dover)

Hunter, Andrew

Renton, Tim

Hurd, Rt Hon Douglas

Rhodes James, Robert

Irving, Charles

Rhys Williams, Sir Brandon

Jessel, Toby

Ridley, Rt Hon Nicholas

Johnson Smith, Sir Geoffrey

Ridsdale, Sir Julian

Jones, Gwilym (Cardiff N)

Roe, Mrs Marion

Jones, Robert (Herts W)

Rost, Peter

Jopling, Rt Hon Michael

Rowe, Andrew

Kershaw, Sir Anthony

Sackville, Hon Thomas

Key, Robert

Shaw, Giles (Pudsey)

Knight, Greg (Derby N)

Shaw, Sir Michael (Scarb')

Knight, Dame Jill (Edgbaston)

Shersby, Michael

Knowles, Michael

Silvester, Fred

Knox, David

Skeet, Sir Trevor

Lamont, Rt Hon Norman

Smith, Sir Dudley (Warwick)

Lang, Ian

Soames, Hon Nicholas

Latham, Michael

Speed, Keith

Lawler, Geoffrey

Speller, Tony

Lawrence, Ivan

Spencer, Derek

Lee, John (Pendle)

Spicer, Jim (Dorset W)

116

Steen, Anthony

Wakeham, Rt Hon John

Stevens, Lewis (Nuneaton)

Walden, George

Stewart, Andrew (Sherwood)

Ward, John

Sumberg, David

Wells, Bowen (Hertford)

Temple-Morris, Peter

Wells, Sir John (Maidstone)

Terlezki, Stefan

Wheeler, John

Thomas, Rt Hon Peter

Wiggin, Jerry

Thompson, Donald (Calder V)

Winterton, Nicholas

Thorne, Neil (Ilford S)

Thurnham, Peter

Tellers for the Noes:

Twinn, Dr Ian

Mr. Tim Sainsbury and

Viggers, Peter

Mr. Michael Neubert.

Question accordingly negatived.
Main Question put:—
The House divided: Ayes 237, Noes 152.

Division No. 245]

[10.15 pm

AYES

Aitken, Jonathan

Dover, Den

Alison, Rt Hon Michael

Durant, Tony

Amess, David

Edwards, Rt Hon N. (P'broke)

Ancram, Michael

Eggar, Tim

Arnold, Tom

Evennett, David

Aspinwall, Jack

Eyre, Sir Reginald

Atkins, Rt Hon Sir H.

Fallon, Michael

Atkins, Robert (South Ribble)

Favell, Anthony

Atkinson, David (B'm'th E)

Fenner, Mrs Peggy

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

Finsberg, Sir Geoffrey

Baker, Nicholas (Dorset N)

Fletcher, Alexander

Baldry, Tony

Fookes, Miss Janet

Beaumont-Dark, Anthony

Forman, Nigel

Bendall, Vivian

Forsyth, Michael (Stirling)

Benyon, William

Forth, Eric

Best, Keith

Fox, Sir Marcus

Biffen, Rt Hon John

Fraser, Peter (Angus East)

Biggs-Davison, Sir John

Freeman, Roger

Blackburn, John

Gale, Roger

Boscawen, Hon Robert

Galley, Roy

Bottomley, Mrs Virginia

Gardiner, George (Reigate)

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

Gardner, Sir Edward (Fylde)

Bowden, Gerald (Dulwich)

Garel-Jones, Tristan

Boyson, Dr Rhodes

Glyn, Dr Alan

Braine, Rt Hon Sir Bernard

Goodhart, Sir Philip

Brandon-Bravo, Martin

Gow, Ian

Bright, Graham

Gower, Sir Raymond

Brittan, Rt Hon Leon

Greenway, Harry

Brown, M. (Brigg & Cl'thpes)

Gregory, Conal

Browne, John

Griffiths. Peter (Portsm'th N)

Bruinvels, Peter

Ground, Patrick

Bryan, Sir Paul

Grylls, Michael

Buchanan-Smith, Rt Hon A.

Hamilton, Hon A. (Epsom)

Budgen, Nick

Hamilton, Neil (Tatton)

Bulmer, Esmond

Hampson, Dr Keith

Burt, Alistair

Hanley, Jeremy

Carlisle, John (Luton N)

Hannam, John

Carlisle, Kenneth (Lincoln)

Hargreaves, Kenneth

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

Harvey, Robert

Carttiss, Michael

Havers, Rt Hon Sir Michael

Cash, William

Hawkins, Sir Paul (N'folk SW)

Chalker, Mrs Lynda

Hawksley, Warren

Channon, Rt Hon Paul

Hayes, J.

Chope, Christopher

Hayward, Robert

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

Heathcoat-Amory, David

Clark, Dr Michael (Rochford)

Heddle, John

Clark, Sir W. (Croydon S)

Henderson, Barry

Clegg, Sir Walter

Hickmet, Richard

Cockeram, Eric

Higgins, Rt Hon Terence L.

Colvin, Michael

Hill, James

Conway, Derek

Hirst, Michael

Coombs, Simon

Hogg, Hon Douglas (Gr'th'm)

Cope, John

Holland, Sir Philip (Gedling)

Corrie, John

Hordern, Sir Peter

Couchman, James

Howard, Michael

Cranborne, Viscount

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

Crouch, David

Howell, Ralph (Norfolk, N)

Currie, Mrs Edwina

Hunt, David (Wirral W)

Dorrell, Stephen

Hunt, John (Ravensbourne)

Douglas-Hamilton, Lord J.

Hunter, Andrew

117

Hurd, Rt Hon Douglas

Ottaway, Richard

Irving, Charles

Page, Sir John (Harrow W)

Jessel, Toby

Page, Richard (Herts SW)

Johnson Smith, Sir Geoffrey

Parkinson, Rt Hon Cecil

Jones, Gwilym (Cardiff N)

Patten, Christopher (Bath)

Jones, Robert (Herts W)

Pattie, Geoffrey

Jopling, Rt Hon Michael

Pawsey, James

Kershaw, Sir Anthony

Percival, Rt Hon Sir Ian

Key, Robert

Pollock, Alexander

Knight, Greg (Derby N)

Portillo, Michael

Knowles, Michael

Powley, John

Knox, David

Prentice, Rt Hon Reg

Lamont, Rt Hon Norman

Proctor, K. Harvey

Lang, Ian

Raffan, Keith

Latham, Michael

Rathbone, Tim

Lawler, Geoffrey

Rees, Rt Hon Peter (Dover)

Lawrence, Ivan

Renton, Tim

Lee, John (Pendle)

Rhodes James, Robert

Leigh, Edward (Gainsbor'gh)

Rhys Williams, Sir Brandon

Lennox-Boyd, Hon Mark

Ridley, Rt Hon Nicholas

Lester, Jim

Ridsdale, Sir Julian

Lewis, Sir Kenneth (Stamf'd)

Roe, Mrs Marion

Lilley, Peter

Rost, Peter

Lloyd, Sir Ian (Havant)

Rowe, Andrew

Lloyd, Peter (Fareham)

Sackville, Hon Thomas

Lord, Michael

Sainsbury, Hon Timothy

Luce, Rt Hon Richard

Shaw, Giles (Pudsey)

Lyell, Nicholas

Shaw, Sir Michael (Scarb')

McCurley, Mrs Anna

Shersby, Michael

MacGregor, Rt Hon John

Silvester, Fred

MacKay, Andrew (Berkshire)

Skeet, Sir Trevor

MacKay, John (Argyll & Bute)

Smith, Sir Dudley (Warwick)

McLoughlin, Patrick

Soames, Hon Nicholas

McNair-Wilson, M. (N'bury)

Speed, Keith

Major, John

Spicer, Jim (Dorset W)

Malins, Humfrey

Steen, Anthony

Maples, John

Stevens, Lewis (Nuneaton)

Marlow, Antony

Stewart, Andrew (Sherwood)

Mates, Michael

Sumberg, David

Mather, Carol

Temple-Morris, Peter

Mayhew, Sir Patrick

Terlezki, Stefan

Merchant, Piers

Thomas, Rt Hon Peter

Mills, Iain (Meriden)

Thompson, Donald (Calder V)

Mitchell, David (Hants NW)

Thorne, Neil (Illord S)

Moate, Roger

Thurnham, Peter

Montgomery, Sir Fergus

Trippier, David

Moore, Rt Hon John

Twinn, Dr Ian

Morris, M. (N'hampton S)

Viggers, Peter

Morrison, Hon C. (Devizes)

Wakeham, Rt Hon John

Morrison, Hon P. (Chester)

Walden, George

Moynihan, Hon C.

Ward, John

Murphy, Christopher

Wells, Bowen (Hertford)

Neale, Gerrard

Wells, Sir John (Maidstone)

Nelson, Anthony

Wheeler, John

Neubert, Michael

Wiggin, Jerry

Newton, Tony

Winterton, Nicholas

Nicholls, Patrick

Norris, Steven

Tellers for the Ayes:

Onslow, Cranley

Mr. Francis Maude and

Oppenheim, Phillip

Mr. Gerald Malone.

Osborn, Sir John

NOES

Alton, David

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

Anderson, Donald

Bruce, Malcolm

Ashton, Joe

Buchan, Norman

Atkinson, N. (Tottenham)

Caborn, Richard

Banks, Tony (Newham NW)

Callaghan, Jim (Heyw'd & M)

Barnett, Guy

Canavan, Dennis

Beckett, Mrs Margaret

Carlile, Alexander (Montg'y)

Beith, A. J.

Carter-Jones, Lewis

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

Clark, Dr David (S Shields)

Bermingham, Gerald

Clarke, Thomas

Bidwell, Sydney

Clay, Robert

Blair, Anthony

Clelland, David Gordon

Boyes, Roland

Clwyd, Mrs Ann

Bray, Dr Jeremy

Cohen, Harry

Brown, Gordon (D'f'mline E)

Coleman, Donald

Brown, Hugh D. (Provan)

Cook, Frank (Stockton North)

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

Cook, Robin F. (Livingston)

118

Corbyn, Jeremy

McKelvey, William

Cox, Thomas (Tooting)

MacKenzie, Rt Hon Gregor

Craigen, J. M.

McWilliam, John

Crowther, Stan

Madden, Max

Dalyell, Tarn

Marek, Dr John

Davies, Rt Hon Denzil (L'lli)

Mason, Rt Hon Roy

Davies, Ronald (Caerphilly)

Maxton, John

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

Maxwell-Hyslop, Robin

Deakins, Eric

Michie, William

Dixon, Donald

Mikardo, Ian

Dormand, Jack

Millan, Rt Hon Bruce

Dunwoody, Hon Mrs G.

Miller, Dr M. S. (E Kilbride)

Eadie, Alex

Mitchell, Austin (G't Grimsby)

Eastham, Ken

Morris, Rt Hon J. (Aberavon)

Evans, John (St. Helens N)

Mudd, David

Ewing, Harry

Nellist, David

Faulds, Andrew

Oakes, Rt Hon Gordon

Field, Frank (Birkenhead)

O'Brien, William

Fields, T. (L'pool Broad Gn)

O'Neill, Martin

Fisher, Mark

Owen, Rt Hon Dr David

Foot, Rt Hon Michael

Park, George

Forrester, John

Patchett, Terry

Foster, Derek

Pavitt, Laurie

Foulkes, George

Pendry, Tom

Garrett, W. E.

Penhaligon, David

Gilbert, Rt Hon Dr John

Powell, Raymond (Ogmore)

Godman, Dr Norman

Radice, Giles

Gould, Bryan

Randall, Stuart

Gourlay, Harry

Raynsford, Nick

Hamilton, James (M'well N)

Redmond, Martin

Hamilton, W. W. (Fife Central)

Richardson, Ms Jo

Hancock, Michael

Robinson, G. (Coventry NW)

Hardy, Peter

Rogers, Allan

Harris, David

Rowlands, Ted

Harrison, Rt Hon Walter

Sedgemore, Brian

Hart, Rt Hon Dame Judith

Sheerman, Barry

Haynes, Frank

Sheldon, Rt Hon R.

Heffer, Eric S.

Shore, Rt Hon Peter

Hicks, Robert

Short, Ms Clare (Ladywood)

Hogg, N. (C'nauld & Kilsyth)

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

Home Robertson, John

Silkin, Rt Hon J.

Hoyle, Douglas

Skinner, Dennis

Hughes, Robert (Aberdeen N)

Snape, Peter

Hughes, Roy (Newport East)

Soley, Clive

Hughes, Simon (Southwark)

Spearing, Nigel

John, Brynmor

Steel, Rt Hon David

Jones, Barry (Alyn & Deeside)

Strang, Gavin

Kaufman, Rt Hon Gerald

Thomas, Dr R. (Carmarthen)

Lambie, David

Thompson, J. (Wansbeck)

Lamond, James

Torney, Tom

Leadbitter, Ted

Wainwright, R.

Leighton, Ronald

Wardell, Gareth (Gower)

Lewis, Ron (Carlisle)

Wareing, Robert

Lewis, Terence (Worsley)

Welsh, Michael

Litherland, Robert

Williams, Rt Hon A.

Lloyd, Tony (Stretford)

Winnick, David

Lofthouse, Geoffrey

Woodall, Alec

McCartney, Hugh

McCrindle, Robert

Tellers for the Noes:

McDonald, Dr Oonagh

Mr. Allen McKay and

McGuire, Michael

Mr. Derek Patchett.

Question accordingly agreed to.
Resolved,
That this House endorses the Government's response (HC 457) to the Second Report from the Trade and Industry Committee on the Tin Crisis (HC 305-I); regrets the difficulties brought upon the Cornish tin industry, the International Tin Council's creditors and others as a result of the failure of the International Tin Council to reach agreement with its creditors, despite the considerable efforts made by the Government, and welcomes the Government's package of measures to help employment in Cornwall.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, the Latent Damage Bill [Lords] and the Education (No. 2) Bill may he proceeded with, though opposed, until any hour. [Mr. Lennox-Boyd.]

Orders of the Day
  Latent Damage Bill [Lords]
  Not amended (in the Standing Committee), considered.
  Latent Damage Bill [Lords]
    Clause 1

      TIME LIMITS FOR NEGLIGENCE ACTIONS IN RESPECT OF LATENT DAMAGE NOT INVOLVING PERSONAL INJURIES
      10.26 pm
      The Solicitor-General (Sir Patrick Mayhew): I beg to move amendment No. I, in page 2, line 14 leave out
      `any potential plaintiff first had'
      and insert
      'the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.
      (5A) in subsection (5) above "the knowledge required for bringing an action for damages in respect of the relevant damage"' means'.
      Mr. Speaker: With this it will be convenient to take Government amendment No. 2.
      The Solicitor-General: On 24 June, in our debates in Committee, I undertook to give further consideration to subsection (5) of new section 14A of the Limitation Act 1980 following expressions of concern raised by the hon. Member for Newcastle upon Tyne, East (Mr. Brown) and the hon. and learned Member for Montgomery (Mr. Carlile) about the references in that subsection to "any potential plantiff". That reflected concern about the drafting of the provision rather than its substance. I explained to the Committee that if the Government considered it necessary to clarify the position we would do so. The two amendments fulfil the undertaking that I gave to the Committee.
      Amendment No. 1 is the substantial amendment and the other is consequential. The purpose of subsection (5) is to define the starting date for reckoning the three-year time limit from discoverability or, to put it more strictly, from knowledge of the damage. The amendments are intended to remove the doubts expressed in Committee and in another place. They make it clear that the only person whose knowledge is relevant is any person in whom the plaintiff's cause of action was vested before it came to the plaintiff, and the plaintiff himself. I can now reassure the House that, in cases involving multiple plaintiffs, time will not start to run against any particular plaintiff only because another person has discovered separate damage to himself arising out of the same act of negligence. Thus, in the case of a negligently drawn will, for example, the knowledge of one beneficiary that he has suffered damage will not of itself cause time to start running at large against other beneficiaries. Each has his own separate cause of action against the wrongdoer.
      I am pleased to tell the House that the Law Society, whose concern about subsection (5) was reflected in speeches made during debates in another place, now considers that the amendments give exactly what is needed to remove a source of potential uncertainty in the Bill.
      120
      I am grateful to all those who have drawn attention to a certain lack of clarity, which has proved to be capable of being remedied. The amendments are purely drafting ones. I commend them to the House.
      10.30 pm
      Mr. Nicholas Brown: This issue was raised in Committee. I had the opportunity to discuss it with the Solicitor-General the day before the Committee sat. Our fear, as expressed in Committee, was about the drafting of the clause rather than about the Government's intention. I am grateful to the Solicitor-General for coming back with the amendment that he promised us in Committee. It is not a question of the Government's intention. It is a question of the ambiguity of wording. The new clause meets that to everybody's satisfaction.
      Mr. Alex Carlile: I add my thanks to the Solicitor-General. The right hon. and learned Gentleman met with alacrity and, I think, enthusiasm, the reservations which he knew were held throughout the Committee on the wording of the clause. In my view, the new clause gives the Bill a clarity which that area of the law has lacked in the past. It is most important that plantiffs should know not only where they stand but who they are. In my view, the new clause helps to achieve that.
      Question put and agreed to.
      Amendment made: No. 2, in page 2, leave out lines 19 to 23.—[The Solicitor-General.]

    Clause 2

      PROVISIONS CONSEQUENTIAL ON SECTION I
      Mr. Peter Thurnham Mr. Peter Thurnham (Bolton, North-East): I beg to move amendment No. 8, in page 4, line 19, leave out 'subsection' and insert 'subsections'.
      Mr. Deputy Speaker (Mr. Harold Walker): With this it will be convenient to consider the following amendments: No. 10, in page 4, line 20, after '(5)', insert 'Subject to subsection (6) below,'.
      No. 11, in line 25, at end insert—
      '"(6) Where, in any action to which subsection (1)(b) above applies, the deliberate commission of the breach of duty referred to in subsection (2) above was performed by a servant or agent of the defendant (or any person through whom the defendant claims or his agent), such that the defendant neither knew nor had reason to know of the breach of duty at any time prior to the expiration of the fifteen year period referred to in section 14B of this Act, then section 14B of this Act shall apply to such action, notwithstanding the provisions of subsection (5) above.'.
      Mr. Thurnham: The amendment concerns deliberate concealment, which we discussed in Committee on 24 June. Hon. Members will notice that Hansard refers to the date of the first sitting as 24 March, which can hardly be correct. As has been said on a number of occasions, the principles of the Bill are laudable. Its shortcomings lie in the proposed manner of implementation. Nowhere is that problem more acute than in the provisions regarding deliberate concealment. Regarding construction work, the provisions are such that, in the majority of cases involving latent defects, the 15-year cut-off will not apply. That is not because the defendant in a construction case has been guilty of some special misconduct; nor do those who

      121
      support the amendment believe that the Law Reform Committee deliberately set out to victimise the construction industry.
      Having studied my noble Friend the Lord Chancellor's responses in the debates in the other place, I feel less sure about his intentions. The Law Reform Committee commented on the matter in paragraph 4.20 of its report and recommended that where there had been
      "fraud, deliberate concealment or mistake"
      the defendant should not benefit by the 15-year cut-off. That lumping together was somewhat misleading, especially with the moral overtones involved, as neither fraud nor mistake is relevant to the Bill, as both would involve quite seperate causes of action.
      The only element of relevance is "deliberate concealment". In that respect, I criticise the Law Reform Committee for entering a field where specialist knowledge is required. The definition given of "deliberate concealment" in the 1980 Act is such that most latent defects in construction will, by their very nature, automatically fall into that category. The Law Reform Committee probably did not realise that it was on difficult ground, but what it needed was careful discussion jointly with an engineer, an architect and a lawyer specialising in construction law. The matter could then have been sorted out. Unfortunately, that did not happen. Consequently, we have provisions in the Bill that will render the 15-year cut-off inoperative as regards most latent defects in construction.
      Because the Law Reform Committee did not appreciate the practical problems inherent in the concept of deliberate concealment, it saw it only as a moral issue. As it said in its report, it considered that it would be wrong to allow someone to benefit from immoral behaviour that went beyond mere failure to comply with legal obligations. Expressed in those simple terms, its conclusion seems quite reasonable.
      The Bill was criticised in that respect in the other place by the noble Lords Hacking and Wilberforce, who adduced careful argument to back the criticism. As in die case of many other matters concerning the Bill, my noble friend the Lord Chancellor did not address the arguments that had been put to him, and they still lie unanswered. I find that frustrating when the arguments were put by a Law Lord of the eminence of Lord Wilberforce, who is a Cross-Bencher and was not representing any outside interests. He was simply offering useful and constructive criticism, based on his wide experience in dealing with such cases. However, reason seems to have little relevance in effecting changes to the Bill.
      In Committee in the House the arguments were presented again and were developed in more detail. In this instance, it is fair to say that my right hon. and learned Friend the Solicitor-General tried to deal with some of the points and undertook to consider them further. Had the Committee stage continued for two or three sittings, as would have been appropriate in view of the concern expressed in the House over the Bill, instead of being rushed through at great speed for no good reason, sufficient dialogue could probably have developed to enable the matter to be properly considered. Regrettably, however, with this Bill one has to do very much more than convince just my right hon. and learned Friend.
      The criticism of the Bill in this respect has two branches —one concerning the drafting and the other a matter of principle, which is related to this. I shall take the drafting point first. Clause 2(2) has the effect of ruling out the
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      15-year cut-off where there has been deliberate concealment of any fact relative to the plaintiff's right of action. On the fact of it, this seems reasonable, until one finds that the Limitation Act 1980 defines "deliberate concealment" in such a way that the majority of latent defects in construction work by their very nature fall into that category.
      In Committee, some 10 examples of latent defects in construction were given to illustrate that point and there is no need to repeat them now. When that matter was brought up on Second Reading by my hon. Friend the Member for Chipping Barnet (Mr. Chapman), my right hon. and learned Friend the Solicitor-General sought to answer him by saying that the situation would only arise where, in the wording of the 1980 Act, there had been a
      "deliberate commission of a breach of duty"
      and that most cases would not be of this category. That answer was opportune because, as I endeavoured to demonstrate in Committee, the situation will be the opposite because most cases of latent defects will arise through an employee not following his instructions. His act or omission will be deliberate and, as a consequence, by the principle of vicarious liability, his employer will be guilty of so-called deliberate concealment and the 15-year cut-off will not apply.
      This means that, despite the Lord Chancellor and my right hon. and learned Friend the Solicitor-General introducing the Bill as giving a balance between the interests of plaintiffs and defendants and providing a long stop that will bar proceedings after 15 years, it does no such thing — at least it may for solicitors and accountants, but it certainly does not for architects, engineers and contractors. It is a myth. This Bill gives with one hand and takes away with the other. One has to put the question: is this the result that the Government desire?
      I turn to the other branch—that of principle. The justification given by the Law Reform Committee for ruling out the benefit of the 15-year cut-off where there had been so-called deliberate concealment was that it would be unconscionable to allow some one to benefit from his immoral behaviour. But what further wrong has the employer done? He knew nothing of the act or omission and, if he had known of it, it is likely that he would have stopped it or had it rectified. What unconscionable thing has he done to lose the benefit of the 15-year cut-off? The answer is that he had done nothing and the Committee's argument just does not apply.
      My right hon. and learned Friend the Solicitor-General attempted to give us some comfort at the end of the Committee stage by suggesting that there would be a difficult burden of proof upon the plaintiff to show deliberate concealment. I wish that that were so, hut, with all respect to my right hon. and learned Friend, it seems to me that the wording of the 1980 Act plus the normal circumstances of construction work add up to a situation where most latent defects will automatically fall into that category. The Act is too recent for case law to help, and cases based on the earlier Act endorse our misgivings.
      It is clear that where a defendant might benefit from the 15-year cut-off, the plaintiff will go for deliberate concealment. I believe that he will have little or no difficulty in establishing this, but, if hon. Members doubt this point, they should consider the litigation that is likely to follow. There will be doubt and argument as to what "deliberate" means in the circumstances of the particular project. Many parties may have been involved, one way or

      123
      another, with one defect and "deliberate" may apply to some employees and not to others. All this will be 15 years or more after the event, when people have dispersed, records no longer exist and memories are unreliable. As with arguments about the starting date, it reads like a lawyer's benevolent fund.
      The proposed amendment was tabled in two alternative forms. The first, which was tabled as amendment No. 9, followed that of Lord Hacking in the other place and was my preferred amendment. It said simply that the provisions of the 1980 Act relating to deliberate concealment should not apply. Amendment No. 11 removes the unfairness that arises through vicarious liability and allows the defendant employer to benefit from the 15-year cut-off where he did not know of the breach of duty.
      I shall be pleased to hear what my right hon. and learned Friend can say to help us in this matter. Does he believe that sufficient notice was given to my noble Friend the Secretary of State for Employment, whose duties include the promotion of enterprise and deregulation, of the burdens on business which are implicit in the Bill? Is he familiar with the documents "Lifting the Burden" and published last year, "Building Businesses not Barriers", which was published in May? This Bill has undone much of the good proposed in those White Papers.
      Mr. Neil Thorne: My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) has expressed well the anxieties of many people about this matter. I have given much thought to the clause, and today 1 had the good fortune to discuss it with my right hon. and noble Friend the Lord Chancellor, who satisfied me on several issues. The important point that he made was that the intention of the clause relates entirely to one's own agents and that it does not affect other people's agents. Therefore, it would go a long way towards exonerating other professional advisers from responsibility for the actions and behaviour of the servants of other interested parties. That is a considerable assistance.
      I am reassured that inadvertence is not deliberate concealment, and that culpability must be beyond mere inadvertence. If that is the case, we can be reassured that engineers, architects, surveyors and others will not have problems erupting in their faces 10 or 15 years later. The problem is serious, because the contractors who are liable to be carrying out such work seem to go for company reconstruction about once every seven years. If the contractor no longer exists, the plaintiff is likely to look for other possible defendants. In those circumstances, it is natural that the professional advisers who were involved in any such scheme would be extremely worried, not only during their active lives, but during their retirement.
      At present, the professional person is insured only for the year for which he pays the insurance premium. That is common in many policies that are approved by professional institutions. In future, professional bodies should ensure, through the insurance market, that it is possible for their members', to obtain insurance to cover subsequent claims on actions that take place during the year of the insurance. If a professional person retires and has to continue to pay for an insurance policy, which
      124
      might cost about 10 per cent. of turnover, it will he a very heavy burden, particularly if, as I understand is the case after retirement, the cost could not be offset against tax.
      10.45 pm
      It would seem essential that the Government should stress to the professional bodies that they should reappraise insurance arrangements to ensure that such a burden would not descend on people at the time of life when they are least able to cope with it. I understand that even the estate of a deceased professional adviser could be affected and, if the estate had not been settled, his widow could be affected. That could lead to considerable press publicity and would not be a good advertisement for the Bill, which contains a number of definite advantages.
      I have been given assurances by the Lord Chancellor, but, bearing in mind the anxieties eloquently outlined by my hon. Friend the Member for Bolton, North-East. I hope that my right hon. and learned Friend the Solicitor-General will give us further assurances on this important matter.
      Mr. Nicholas Brown: I come to the debate without a professional axe to grind, which is something new. I cannot say that I come to it with an open mind, because I heard the arguments thoroughly trawled in Committee.
      I have to tell the hon. Member for Bolton, North-East (Mr. Thurnham) that his arguments are no more impressive now than they were in Committee and that his briefs have not improved with time either. The engineering associations that have been briefing the hon. Gentleman have had since the Committee stage to amend their briefs —it was a grievance in Committee that there had not been enough time for hon. Members to he briefed—yet their arguments have not changed.
      We must remind ourselves that we are considering how the law will affect deliberate concealment and whether a 15-year cut-off should advantage a person who is charged with deliberately concealing something that has disadvantaged someone who felt that he had a right to rely on that person's professional competence.
      The hon. Member for Bolton, North-East argued in Committee that these cases were difficult in law. That may he so, but that is no reason to say that we should not make laws to deal with difficult cases, which seems to be the broad thrust of the hon. Gentleman's case. He is asking that people standing accused of deliberate concealment should be able to take advantage of a 15-year cut-off. That seems morally unfair.
      Deliberate concealment might be difficult to prove in court, but that is what the courts are there for. That is what the case would be all about. A person who has done something that is obviously wrong should not be able to take advantage of a cut-off point. The whole Committee, with the exception of the hon. Member for Bolton, North-East, accepted that argument.
      I take exception to the hon. Gentleman's claim that we rushed through the Committee stage. He was supplied—admittedly lately—with copious briefs from all sorts of professional associations that presumably did not have enough confidence in their members to feel that the Bill would not disadvantage them.
      Mr. Neil Thorne: Is it not grossly unfair to say that professional associations cannot rely upon the competence of their members? After all, we heard from my hon. Friend the Member for Chipping Barnet (Mr. Chapman) that of

      125
      the total paid out by way of damages, about 50 per cent. went in lawyers' fees. That is a strange situation, which would suggest to the layman that there were difficult cases to consider but that, nevertheless, the legal profession was benefiting far more than the person who was harmed.
      Mr. Brown: Yes. I shall deal in a moment with whether one should resort to litigation. I am arguing at the moment that the option to go to law should be there for the party who feels injured. I shall come to whether the legal profession is the main beneficiary. My remarks about the confidence which professional associations have in their members was meant lightly and I hope that they are taken in that way. That was not a serious charge.
      However, I do take exception to the charge that the measure has been rushed through Committee. If the hon. Gentleman had wished to hold the Committee up he had only to read his briefs a little more slowly and he could have kept us there for hours. Indeed, it is not unknown to the House for Members to detain Committees for hour upon hour. The Committee stage was not rushed through; because there was a broad consensus. That is why there was only one sitting. The hon. Gentleman was the only person to object, and he could have made his arguments at length. but he did not want to. His point about rushing through the Committee stage is rhetoric which is only for the record.
      There is no more substance in that charge than in the charge that the Law Commission was composed of all lawyers and therefore has "fitted up" the report on which the Bill is closely based in order financially to advantage the legal profession. I asked in Committee how the gap between the 10-year period, wanted by the professional associations for which the hon. Gentleman is speaking, and the 15-year period, which the Law Commission recommended, could enormously advantage the legal profession.
      Are we really being asked to believe that a retired Law Lord and other senior members of the legal profession would, when trying to strike a balance between the rights of plaintiff and defendant, somehow adjust the law solely to the financial advantage of lawyers, perhaps in other branches of the profession? The argument borders on the ludicrous. I am not a lawyer, and I do not see it as my role to speak for the profession. As I made clear in Committee, I see it as my role to speak for the consumers of legal services. Yet it is utterly unacceptable, and impossible to substantiate the charge that somehow the Law Commission has deliberately recommended legislation in order to advantage the profession.
      Mr. Thurnham: The hon. Gentleman says that he speaks for consumers, but will he accept that the burden of the cost in the Bill will be imposed upon consumers in the prices that they are charged? That is why the construction industry is arguing. The cost here can only be carried by consumers.
      Mr. Brown: I accept that these cases are complex and may be expensive, but the hon. Gentleman's remedy is that they should not be heard at all and that advantage can be taken of the longstop. That seems even more unfair than having an expensive law case. I am sorry that it is expensive, but to say that the solution is to have no remedy at all cannot be just, and that is what the hon. Gentleman is advancing.
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      The hon. Member for Ilford, South (Mr. Thorne) spoke of professional people retiring and having the threat of an action hanging over their heads for 10 or 15 years. As he probably realises, the difference between 10 and 15 years is a contentious issue. The Law Commission recommended 15 years as striking a balance between 10 and 20 and the professional associations representing engineering industry said that they would prefer 10. The parliamentary Liberal party has struck a balance between 10 to 15 and has said that it would prefer something between 12 and 13.
      Mr. Alex Carlile: Twelve.
      Mr. Brown: The hon. and learned Member for Montgomery (Mr. Carlile) says 12. The alliance veers towards the employers rather than the plaintiffs.
      The House must consider seriously whether it wishes to reject a decision by the Law Commission and substitute something based on no more than splitting the difference or backing up the professional associations against the arguments put on behalf of the consumers. The consumers have rights too, and it worries me that all the arguments advanced from the Government side on Second Reading were on behalf of the professional association. Nobody said a word about the consumers, who would be the plaintiffs in such actions.
      We did hear highly dubious and contentious theory that somehow it was not in the consumers' interests that the professions be disadvantaged by this legislation. That was the thrust of the argument, but not one Government Member said that the consumers' point of view is the right one and that the special pleading from the professional associations had to be resisted. No Government Member urged the Solicitor-General to resist that pleading, although the Opposition did.
      The matter of professional insurance was raised in Committee, and the hon. Member for Ilford, South raised it in this debate. It is an important question, but why is it much more difficult to get professional insurance for 15 years than for 10 years? Nobody is saying that it is impossible to get it for 10 years. If it can be obtained for 10 years, it can surely he obtained for 15 years. I accept, based on an actuary's calculation, that it would be more expensive, but it is possible. Therefore, the argument rests solely on cost.
      Mr. Neil Thorne: The hon. Gentleman has got the situation wrong. I said that when a person retires he gets no tax relief on his premiums. For that reason, the insurance should work in a different way and should be on the basis of when the work was carried out and not on the basis of when the defect is found. I am not arguing that there should not be insurance. There should be, but it should be on a different basis, and at present the professional institutions organise insurance for their members on the basis that it must be continued into retirement. That is wrong.
      Mr. Brown: My right hon. and learned Friend the Member for Aberavon (Mr. Morris) whispers in my ear that, quite rightly, it depends on how the policy is framed. Nobody will be able to take out professional insurance after a cause of action has been discovered. I can see that and I am sure that the hon. Member for Ilford, South can see it. The professional indemnity is known to other professions and is usually arranged through professional

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      associations, or arrangements are made for it. That has to include an indemnity to cover all forms of action which might arise in the period envisaged in law.
      Actions can now be pursued in law. I find it difficult to understand that for the first time we are legislating for the concept of a longstop. This should put many retired people's minds at rest. They will know that there will come a time after they have ceased their professional activities when, unless they have done something really wrong, they are beyond the threat of actions of this sort. The Solicitor-General should be thanked for that and it should be welcomed by the profession. Instead of that, it is being resisted.
      On Second Reading and in Committee the Opposition welcomed the Bill. We asked the Solicitor-General to resist amendments of the kind that have been moved this evening and that were also moved in Committee. We are grateful to the Solicitor-General for resisting that special pleading and for his even-handedness towards both the consumers and the professions, as the Law Commission asked him to be.
      11 pm
      Mr. David Crouch: As there seems to be unanimity of thought on the two Front Benches, I wondered at one time whether the Bill was being presented by the Opposition or by the Government. My hon. Friends the Members for Bolton, North-East (Mr. Thurnham) and for Ilford, South (Mr. Thorne) have argued the case tonight very cogently. It was not very latent.
      I am distressed by the way in which the Bill is being rushed through the House, compared with what happened in the other place. I have read every word of the proceedings in the other place, and I have been immensely impressed by the legal views that were advanced there. It distresses me that the Bill is being discussed so late in the day. The Committee stage lasted for two hours and it took place after midnight. I tried to obtain a copy of the Committee proceedings, but I did not succeed. It was impossible to obtain a copy from the Vote Office. I was abroad during the Committee proceedings, otherwise I should have liked to be on the Committee.
      The Bill has been rushed through this House. The lawyers are trying to push it through, and we shall end up with bad law. [Interruption.] Oh, yes. The House is always packed with lawyers late at night, and somebody must say that the lawyers do not always make good law. The result is that we end up with bad legislation. I said this at Second Reading and I say it again now.
      Both Front Benches have said tonight, although it was resisted a little by my hon. Friends on these Back Benches, that the Bill is designed for housebuilding. It will protect house purchasers against contractors who build houses, and I commend it for that reason, but at Second Reading I put it to my right hon. Friend and learned Friend the Solicitor-General that the Bill should not apply to massive contracts for the building of chemical and process plants. That is entirely different from the building of houses.
      I must declare an interest at this point. I am a consultant, and have been for many years, to the British Chemical Engineering Contractors Association. (HON. MEMBERS: "Ah."] There is nothing "Ah" about that. It is a very interesting profession that makes a great deal of money for this country. There is a great deal at risk. If
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      things go wrong in chemical or process plants, the damages can run into millions or billions of pounds. The contractors therefore need to be protected.
      Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will address himself to the specific amendments that are before the House.
      Mr. Crouch: That is always very difficult for me, Mr. Deputy Speaker, at this hour of the night, particularly when I am seeking to make almost a Second Reading speech again, because my last Second Reading speech did not make as heavy an impact as it ought to have done.
      Perhaps I have said enough already. It must go on record that the Bill does a good job, as far as it goes, for the housing construction industry, but it should not cover the massive activities of chemical process plant builders. That is an entirely different matter. That is why I sought to catch your eye tonight, Mr. Deputy Speaker, and not to get you on your feet.
      Mr. Roger Moate: I do not know whether it can be said in truth that the Bill has been rushed through, but I think that there will be some surprise in later years when people look back at the proceedings in this House and find that it was passed after a fairly perfunctory debate. In years to come I believe that the Bill will give rise to very many complications and considerable controversy. I should have welcomed a fuller exchange and more flexibility and movement by the Government in response to many of the submissions.
      The case that has been put forward by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) merits far more consideration than has been given to it by the Government and the Opposition.
      Mr. Nicholas Brown: We have had this in Committee and other debates. It is one thing for the hon. Gentleman to say that he does not agree with what has been said by the Opposition and Government Front Benches—that is what democracy is all about. It is another thing to say that proper consideration has not been given to the points of view. That point was made in Committee against the Law Commission, and it is now being made against the Opposition Front Bench, and presumably against the Solicitor-General. That is unfair.
      Mr. Deputy Speaker: I remind the House that we are discussing specific and narrow amendments. We are not on either Second or Third Reading.
      Mr. Moate: With respect, Mr. Deputy Speaker, I was addressing the particular point about deliberate concealment, as the hon. Gentleman was in his intervention. I am not an engineer or an architect, but we have read considerable submissions from people very learned in that sector, who have studied the law in that regard, and to dismiss out of hand, as seems to have been done, their belief that a vast number of construction claims could be described as having been caused by deliberate concealment by an employee, not by the principal, merited considerable concern. For any construction organisation or professional undertaking working today, the possibility of an unlimited time during which it might be held liable presents it with insuperable insurance problems.
      On this as on all other amendments, with the exception of the technical amendments that were accepted earlier, and which I did not follow, the Government seem to have made no fundamental concession to the many professional

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      and sincere submissions that have been made to them. I hope that my right hon. and learned Friend the Solicitor-General will reply on this point at greater length.
      The hon. Member for Newcastle upon Tyne, East (Mr. Brown) has got it fundamentally wrong. Nearly every hon. Member who has spoken on this subject, throughout the debates on Second Reading and in Committee, was representing the interests of the consumer and the producer. The great test to be applied by the House and by the professionals is not the profitability of the contract or profession — that does not apply because most costs can be passed on — but the sheer practicality of legislation such as this. Many hon. Members have got this wrong. They believe that simply by extending the period, with a long stop in this case, they are helping the consumer. This is gesture politics which does not help the consumer. In practical terms it will not help, and it is delusion. We should have paid more attention and respect to those professionals whose job it is to build houses or give people advice because they are concerned with the practicalities.
      Something fundamental was missed on Second Reading, and is being missed tonight. The consumer is not the house buyer, to whom my hon. Friend the Member for Canterbury (Mr. Crouch) referred, or the small man. Over a 15-year period, it is most unlikely that the small consumer or the house buyer will be in a position to sue the original cause of that error. It is most likely that this amendment to the statute of limitation will be used mostly by the big institutions. They will he able to calculate more precisely who caused the error 15 years or more before, if they can adduce wilful concealment.
      In this case, the big buyers of products such as chemical plants, Government buildings and the like, are the Government or local government. They will most likely be able to harness the forces of law to prove their case. The big commercial organisations will be the biggest beneficiaries of the Bill if it becomes law. This is important, because if one is trying to protect the consumer who suffers through the purchase of a false product, or a house buyer, one does not look to legislation such as this to do it. One should look to more specific insurance.
      Mr. Deputy Speaker: Order. The hon. Gentleman is addressing himself to a clause in the Bill rather than to the specific amendment. I hope that he will address himself to the amendment.
      Mr. Moate: I apologise, Mr. Deputy Speaker. I was also making the mistake of responding to some points made earlier by Opposition Members.
      In conclusion, I shall deal with a fundamental point about the practicality because many hon. Members——
      Mr. Deputy Speaker: Order. The hon. Gentleman cannot do that. He must address himself to the group of amendments.
      Mr. Moate: Indeed, Mr. Deputy Speaker, and the practicality is about these amendments. Many hon. Members have said that one would simply insure against the additional exposure that occurs as a result of the amendment. The amendment seeks to extend the period during which claims can be brought if individuals can be deemed to be guilty of wilful concealment. Often it is not practical to do what those hon. Members suggest because the whole insurance world is endeavouring to move from
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      that type of coverage. In professional indemnity insurance cover is limited to policies under which claims must be made during that particular year. The insurance world is moving away from cover which can take one back over many years to the year in which the error first occurred. In the United States the old "claims occurring" basis is the basis of insurance and that has caused millions of pounds worth of claims today and has virtually caused that type of insurance to dry up.
      If we seek to protect the consumer, it is important that we should be practical. Often in this debate we have lost sight of the practicalities. Therefore, I do not think that hon. Members, no matter how sincere, will achieve the objective which they seek.
      The Solicitor-General (Sir Patrick Mayhew): My hon. Friend the Member for Bolton, North-East (Mr. Thurnham), in moving these amendments on deliberate concealment, has provided the House with the opportunity to examine clause 2(2) and its effects, following earlier discussions on Second Reading and in Committee.
      The intended effect and the effect of his amendments is to provide a defendant employer with a defence in the form of a time bar in negligence proceedings which arise from his vicarious liability for acts or omissions deliberately committed by an employee or agent so as to keep the plaintiff out of his knowledge of his right of action.
      Without transgressing your ruling, Mr. Deputy Speaker, I must say a word about the allegation that this part of the Bill has been rushed through. I hope that it was not suggested — I do not think that it was — that I responded in Committee cursorily to the points fully made by my hon. Friend. I was worried that I might have taken rather too long. Although I took a generous time in response to each debate there was still a substantial amount of morning Session to run when our business was concluded. That cannot be laid at the door of the Government.
      My hon. Friend the Member for Canterbury (Mr. Crouch) speaks of the Bill being rushed through and attributes it to the fact that lawyers always pack the Benches at this hour. I could see some force in that, were the number of lawyers so great that there was no room for anybody else, but on looking round I see that charge is not substantiated. The truth of the matter is that we have answered every point made, and if they have not been made over an extended period, it perhaps derives from the fact that the House as a whole and the Committee wished to see the recommendations of the Law Reform Committee implemented.
      Clause 2(2) has a limited objective. It gives effect to the Committee's recommendation that the long stop should not apply in cases of deliberate concealment or deliberate concealment of a breach of duty. But the long stop will come into play in those cases of latent damage where there has been negligence by inadvertent or careless acts or omissions. That is the crucial distinction between inadvertence on the one hand and the deliberate commission of breach of duty on the other.
      11.15 pm
      Every point made by my hon. Friend the Member for Bolton, North-East was by implication answered by my hon. Friend the Member for Ilford, South (Mr. Thorne). I am grateful to him for his reference to his conversation with the Lord Chancellor, which he said had satisfied him

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      on a number of matters. Those were the matters which my hon. Friend the Member for Bolton, North-East dwelt upon in moving these amendments, to which my hon. Friend the Member for Ilford, South had put his name.
      The amendments would permit a defendant to plead the long stop — in other words, 15 years have gone by, therefore the action is time barred — in cases where unbeknown to him his agent had deliberately committed a breach of duty with the intention of putting a plaintiff out of his knowledge of his right of action. Therefore, the defendant would be able to rely on the law of limitation to avoid proceedings in respect of alleged negligence for which a defendant may be held vicariously liable.
      The key to this debate lies in whether the House of Commons was or was not right when it passed section 32 of the Limitation Act 1980, because the provision in this Bill does no more than build upon section 32.
      The ordinary rule of limitation in relation to actions for negligence is that one has six years in which to bring one's action. But because that was widely perceived to lead to injustice, the House of Commons most recently in section 32(1) said that if:
      "any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant — the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake".
      That is the general rule in the 1980 Act. Parliament went on to legislate in the terms of subsection (2), which provides that:
      "deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty".
      If it was right in 1980 to make that provision—which prevents a defendant from relying upon the time bar— how can we possibly justify allowing him to rely upon the new time bar of 15 years, which for the first time is introduced into the law by this Bill? Are we to allow the defendant to take advantage of it, notwithstanding the deliberate commission of a breach of duty which amounts to deliberate concealment of the facts involved? I cannot see how that can be justified.
      The interesting thing is that when we consulted upon the recommendations of the Law Reform Committee, very few people indeed suggested that there should be any amendment to the provisions of section 32. That is the answer to this point. Of course I recognise the proper concern of my hon. Friends for the consumer who has to pay more in terms of the cost of additional insurance, but I do not agree that we have been neglectful of the interests of consumers. Time and again the Law Reform Committee and everyone who has spoken in the House has acknowledged that there is a conflict between the interests of the consumer of services, including the consumer of lawyer services—and I stress that point for the benefit of my hon. Friend the Member for Canterbury —because lawyers' opinions are caught by this as much as the constructor of some chemical plant.
      Mr. Crouch: Like the rest of the House, I am listening to my right hon. and learned Friend because no one can explain these detailed points of law better than he can. However, on the point about the statutory period of limitation as it affects contracts in the process plant industry, where such contracts ensure that the liability of both parties is well defined and that the contractor's
      132
      liability terminates absolutely — fraud apart — after a determined death defined period, usually of 12 months, after the successful conclusion of a performance test, we are considering a scientific and industrial world where that is the practice. Does my right hon. and learned Friend think that it is wrong that the statutory period is not a statutory period but and agreed period between the contractor and the purchaser or operator of only 12 months? Will that be overridden by the important Bill that we are debating tonight?
      The Solicitor-General: I am grateful to my hon. Friend for his helpful intervention. However, it is all a matter of contract. It is a matter of what the two parties to an agreement have agreed upon. It is open to parties to extrude their own liability for their own negligence provided that they do so in absolutely explicit terms. They can agree between themselves to limit their liability in terms of time, provided that they do so in the most explicit terms. Where they have not done that, the law has for centuries imposed a period of limitation — and that period has varied over the years—for liability in relation to actions based upon negligence or other breach of duty.
      That is the key to the debate. On the one hand, we must take proper care for justice and what we have called the consumer. Equally, the employer must be protected to a reasonable extent from stale claims. I hope therefore that my hon. Friend the Member for Bolton, North-East believes that I have not dealt summarily with his points. The Committee consulted extremely widely and so has my right hon. and noble Friend the Lord Chancellor. I hope that my hon. Friend the Member for Bolton, North-East does not seriously mean that reason has had little relevance to the way in which the Government have responded to various amendments to the Bill.
      My hon. Friend the Member for Ilford, South made an important point about insurance and that is a matter for the industry. I am glad that these important matters are now being considered within the industry and with those who advise the industry on insurance matters.
      My hon. Friend the Member for Faversham (Mr. Moate) felt that there had been no concessions in the Bill. I had hoped that I demonstrated that I had listened carefully to what was said about the lack of clarity in the Bill and the first two amendments that we have dealt with tonight represent my response to that. That response has been generally welcomed.
      There is a good deal more to the concept of vicarious liability than the idea that that is simply a matter of social convenience as my hon. Friend the Member for Bolton, North-East described it upstairs in Committee. That lies far beyond the law of limitation in negligence cases involving latent defects with which the Bill is concerned.
      I believe that the Bill represents a fair balance of the conflicting interests and I urge the House, although it has listened with the usual care to my hon. Friend the Member for Bolton, North-East on a matter in which he is deeply concerned and experienced, not to accept the amendment.
      Mr. Thurnham: I am grateful to my right hon. and learned Friend the Solicitor-General for his courteous and attentive replies both in Committee and on Report. I am not a lawyer and I am advised that some of the issues about which there is doubt will have to be tested in law. Time will pass before these matters are resolved; in other words, we shall have to wait and see. Accordingly, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 4

      TRANSITIONAL PROVISIONS
      Amendments made: No. 12, in page 6, line 8, after 'above', insert 'sections 1 and 2 of'.
      No. 13, in page 6, line II, at end insert—
      '(3) Section 3 of this Act shall only apply in cases where an interest in damaged property is acquired after this Act comes into force but shall so apply, subject to subsection (4) below, irrespective of whether the original cause of action accrued before or after this Act comes into force.
      (4) Where—

      (a) a person acquires an interest in damaged property in circumstances to which section 3 would apart from this subsection apply; but

      (b) the original cause of action accrued more than six years before this Act comes into force;

      a cause of action shall not accrue to that person by virtue of subsection (I) of that section unless section 32(I)(b) of the 1980 Act (postponement of limitation period in case of deliberate concealment of relevant facts) would apply to any action founded on the original cause of action.'. — [The Solicitor-General.]
      11.25 pm
      The Solicitor-General: I beg to move, That the Bill be now read the Third time.
      The Bill is a compromise — that has always been acknowledged — and we have been engaged in the difficult task of striking the right balance. The Bill came before us after having been examined carefully in another place, and it has received clear and careful scrutiny in this place from hon. Members on both sides of the House. The House will be especially grateful to my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for bearing the heat and burden of the day for those with legitimate concerns in construction and other industries. He has been assiduous in drawing our attention to a wide range of problems that is faced by industry and appreciate his concern. I hope that I have dealt sensibly and fairly with it.
      The Bill will ensure, as far as possible, that potential defendants may confidently feel that after a definite period they may regard as finally closed incidents which might have led to claims being made against them. It is understandable that in the course of our debates reference has been made to the problems of insurance. I have taken up those references in what I have said to my hon. Friend the Member for Ilford, South (Mr. Thorne). These matters are currently under review as part of a separate initiative by the Building Economic Development Committee.
      Finally, I thank the hon. Member for Newcastle upon Tyne, East (Mr. Brown) for expressing the Opposition's support for the Bill. That is based, as the hon. Gentleman has made clear, upon their support for the careful consideration and recommendations of the Law Reform Committee.
      The Bill will bring about a substantial improvement to our law on the limitation of actions and I commend it to the House.
      11.27 pm
      Mr. Nicholas Brown: The Opposition welcome the Bill and wish it a speedy passage on to the statute hook. It attempts to strike as fair a balance as can be struck
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      between the interests of plaintiffs and those of defendants. That has been achieved by our efforts and, as I have said, 1 wish the Bill a speedy passage into law.
      11.28 pm
      Mr. Thurnham: Perhaps my right hon. and learned Friend the Solicitor-General will comment on whether the burden that he kindly referred to my carrying through the heat of our proceedings in Committee might have been shared a little earlier with the Government Department which it is intended should lift the burden from business in general.
      11.29 pm
      Mr. Neil Thorne: I thank my right hon. and learned Friend the Solicitor-General for his unfailing courtesy during our consideration of the Bill, as in all matters with which he deals, and for drawing the attention of the House to the fact that every hon. Member who has contributed to our debates on the Bill has had the interests of the consumer at heart. His acknowledgement of that fact is important, because it is ultimately the consumer who pays the bill. If professional advisers are not forthcoming because they find the burdens too great or because they cannot find adequate insurance, as has happened in certain spheres in the United States over recent years, it is the consumer who suffers. Perhaps on some future occasion it will be necessary to look into whether 15 years or 10 years is the right figure, because I understand that in the European Community there is a figure of 10 years. That is a matter for the future, and I am sure that my right hon. and learned Friend and his colleagues will follow that important aspect most carefully.
      Mr. Moate: During these proceedings some of us have made specific criticisms and suggestions in relation to the Bill. However, I hope that we will not lose sight of the fact that 1 and everybody else initially warmly welcomed the Bill in principle and welcome the new precision that is brought into matters that have been somewhat confused by various judgments in past years. Whether it remains precise once the courts nave had yet further bites of the cherry remains to be seen.
      I should like to address a specific question to my right hon. and learned Friend, and I am sure that, as usual, he will give me a specific answer. Will one of the implications be that henceforth all persons in commerce and Government should keep full records for a 15-year period? If that is so, can he confirm that Government Departments will, in future, keep all records for 15 years?
      The Solicitor-General: In answer to the point raised by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham), I have already confirmed that all relevant Government Departments were apprised of the provisions of the Bill before its introduction by my noble Friend the Lord Chancellor in another place and over a substantial period of years, there has been ample opportunity to comment upon matters that were within the purview of the Law Reform Committee.
      The keeping of records is a matter of prudence. I am a humble representative of the smallest Department in Government. Therefore, it is not for me to lay down rules of practice for greater Departments of State than any for which I have responsibility. It is obviously a matter of prudence for those who are responsible for work which may be liable to latent defect.

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      I am not terribly moved by criticism of a provision which, for the first time, brings a long-stop into our law. Under the present law, in theory it is possible for anybody who is responsible for a latent defect in work done for a consumer to be liable indefinitely. The Bill provides a long-stop. After 15 years, red railway signals flash and they prevent the plaintiff's train from leaving the marshalling yard from then on, subject to the one exception concerning concealment which we have already discussed.
      This is a benefit to employers and those who are in business. Everything that has been said has tended to suggest that it is some wicked imposition upon them. It is a benefit for which I feel that the Government have had scant credit——
      Mr. Nicholas Brown: Not from me.
      The Solicitor-General: From Conservative Members then. I am grateful for what has been said and for the care with which is has been expressed. I hope that what I have been able to say in answer to my hon. Friend the Member for Faversham (Mr. Moate) will satisfy him, at least for the moment.
      Question put and agreed to.
      Bill accordingly read the Third time, and passed, with amendments.

  Education (No. 2) Bill
  As amended (in the Standing Committee), considered.
  Education (No. 2) Bill
    New Clause 1

      REGULARISATION OF POOLING ARRANGEMENTS
      '(1) The Secretary of State shall make proposals, and any necessary consequential regulations required to implement such proposals, to ensure that the ILEA receives financial compensation for the difference between the contributions it has been required to make to the costs of advanced further education on the basis:—

      (a) as prescribed by section 6 of the Block Grant (Education Adjustment) (England) Regulations 1984; and

      (b) as prescribed by the equivalent regulations for earlier years;

      and those that would have been payable for those years had the basis of calculation for those years been that provided for in section 6 of the Block Grant (Education Adjustment) (England) Regulations 1986.
      (2) Subsection (1) above has effect in relation to the year 1982–83 or any subsequent year.'. — [Mr. Andrew F. Bennett.]
      Brought up, and read the First lime.
      11.34 pm
      Mr. Andrew F. Bennett: I beg to mop c. That the clause be read a Second time.
      I was told when I started to look at the Bill that it was a simple Bill, that it was non-controversial and that it was merely there to rectify anomalies. I accept that it is non-controversial. However, I do not accept that it is all that simple. What is a little more worrying is that it does not seem to have rectified all the anomalies which exist, especially in the pooling arrangements. For example, the 1981–82 pool has not yet been closed because there is doubt as to whether the Government have the legal powers to do it. In spite of pressure from the Association of Metropolitan Authorities and the Association of County Councils, the Government are still dithering. Will the Minister tell us whether he intends to deal with that in the House of Lords? It is an example of the way in which some local education authorities have been unfairly left worse off as a result of the pooling arrangements.
      The new clause deals with the specific way in which the Inner London education authority has lost out within the pooling arrangements since April 1982. In fact, after quite a lot of pressure from the ILEA, through the various committees that deal with pooling, it finally took action in the courts in 1985 and, of course, it won. In Committee, the Minister said that ILEA had not complained before it took court action. I am sure that he realises now that that was nonsense, and that the ILEA had raised that issue much earlier. I have letters to establish that, but I do not think that I need to read them to the House. I am sure that the Minister will accept that point.
      Since then, ILEA has been pressing not only that it should have got the money, which it did get, from the courts but that it should have got money for earlier years. Apparently the Government's argument is that they are not sure about whether they have the legal powers to make those retrospective payments. I hope that the Minister will accept that ILEA has been pressing for some time, and that letters went backwards and forwards between the Department and ILEA as early as 1983. The earlier representation was referred to in the court case, when it came on. Since ILEA was pressing much earlier, it has a

      137
      strong moral case for some retrospective payment. At least the new clause is an attempt to deal with the problem. The Government do not now have the excuse that there is no legislation. There is legislation before the House now. The Government have the chance to deal with it, and I hope that they will.
      I hope that the Government will also make it clear that they will use the Bill to clear up the rest of the pooling problems, particularly the 1981–82 pool, either now by accepting the new clause, or in the House of Lords, where the Government could draft it in a different form but retain the spirit of it. Perhaps by introducing another new clause to deal with the 1981–82 pooling arrangements, they can get rid of all the nagging anomalies in pooling and make good use of the measure.
      The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden): The hon. Member for Denton and Reddish (Mr. Bennett) has ingeniously raised two points under one new clause, but as I am in a generous mood, I shall deal with both.
      The first point concerning the 1981–82 pool. As the hon. Gentleman knows, advanced further education is financed through the AFE capped pool. The Secretary of State determines in advance of each financial year the total of AFE expenditure eligible for pooling. He also decides on how much of that total should be allocated to each local education authority following advice from the National Advisory Body. Exceptionally, in 1981–82, the method used involved the recalculation of the allocations once authorities' actual expenditure on AFE was known. The relevant information is now availble. But in the meantime it has come to light — this is the point that the hon. Gentleman made—that the legislation under which the capped pool is operated may not allow the recalculation to be carried through in the way that was originally envisaged. My Department is therefore examining ways forward in consultation with representatives of the local authorities in the pooling committee.
      The hon. Gentleman's point was: why should we not clear up the matter in the Bill? The problem over the 1981–82 AFE capped pool has come to light only recently. The Department put a proposal to the most recent meeting of the pooling committee, which did not find favour with local authority representatives. My right hon. Friend the Secretary of State was asked to look again, and that consideration is now under way. It may or may not point to a need for new legislation in due course. I hope that the hon. Member will note that. Therefore, it would be premature to seek to cover the point in the Bill. We are seeking much more important changes to pooling legislation — changes that are needed urgently if the pooling system is to continue its function.
      In other words, we must decide, first, whether legislation is needed, which is not yet established, and, secondly, whether time will allow that legislation to be appended, as it were, in another place to the Bill. Thirdly, we must beware of doing anything that for the reasons that the hon. Gentleman will be aware of could delay the progress of the Bill. There is a question of urgency which we discussed in Committee.
      Mr. Andrew F. Bennett: It seems to me that it would be possible to take powers to make regulations. I am not a great enthusiast for regulations. The Minister must accept
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      that, in sorting out local government finance in the year 1981–82, there is a certain measure of urgency that we do it within five or six years of the expenditure occurring.
      Mr. Walden: The hon. Gentleman is drawing a fine distinction between retrospective urgency and the more pressing urgency today, to which we are all subjected. I hope that he will take notice that we arc having discussions on the subject. The real point of the hon. Gentleman's amendment lies elsewhere.
      Last year, ILEA obtained judicial review of the decision of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) not to change, in respect of 1985–86, the formula which apportions contributions to the AIFE pools among local education authorities. The Divisional Court ruled that that was an unlawful decision in that my right hon. Friend had had regard to an irrelevant consideration. In recognition of that judgment, my right hon. Friend amended the relevant regulations to produce a new formula with effect from 1985–86. The new formula apportioned the contributions pro rata to the number of AFE students originating from each LEA area. That change had the effect of reducing (LEA's contribution by £31 million in 1985–86, and will have continuing effect. I should note, for completeness, that the new regulations are the Block Grant (Education Adjustment) (England) Regulations 1985, not 1986 as the new clause states.
      Last August, ILEA asked the Department to incorporate in the new formula to be applied in 1985–86 an allowance to rectify the injustice which the authority claimed to have suffered over a number of years as a result of the operation of the formula which the court had held to be unlawful. I describe that request in the authority's terms, not my own. My right hon. Friend the Member for Leeds, North-East refused. It has been asserted today that he did so on grounds that he lacked the powers to meet the request. The hon. Member for Denton and Reddish has moved the new clause to provide the necessary powers. However, I tell the House that my right hon. Friend considered ILEA's request carefully at the time. He refused it not only because he lacked the power to accede to it, but because he did not think it right to accede to it.
      Let me take the issues of law first. The primary legislation governing the education pools is schedule 10 to the Local Government, Planning and Land Act 1980. The schedule empowers the Secretary of State to make regulations specifying the "appropriate contribution" of each local eduction authority to the pools. The Secretary of State does not enjoy an unfettered discretion to determine what may be appropriate. The principle which the Divisional Court decided should be used in respect of 1985–86 was that the contribution should be related to the demand for AFE which an authority met in the discharge of its statutory responsibility. It is incompatible with that principle to incorporate in the formula a notional assessment relating to earlier years. That is not within the spirit of the court judgment which ILEA prays in aid.
      A further objection in law is that schedule 10 envisages the making of regulations to deal with AFE expenditure and contributions thereto year on year. It makes no provision for re-specification of contributions paid in respect of past years. The new clause is intended to change the position, but I ask the House to consider the consequences of a change with the retrospective effect which ILEA desires. First, there would be the technical difficulty—perhaps impossibility—of collecting the data

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      necessary to re-specify contributions originally made on a different basis. Then there would be financial disruption to all other local education authorities as a result of the financial transfers stemming from the revised contributions.
      What is the justification for asking other LEAs to put up with this disruption? I doubt whether the hon. Member for Denton and Reddish really means that the Secretary of State should ask them to do so. True, the new clause would put the Secretary of State under a duty to make proposals but he is under a duty also to implement them, apparently irrespective of the views of the parties to whom they are addressed. In all events, the Government must consider the effect on other LEAs, even if the Opposition apparently do not.
      The regulations in force in the years before 1985–86 were made in good faith and were laid before Parliament. They were not subject to legal challenge at the time. I should like to clarify what I said in Committee. 1 meant that the regulations were not challenged during the year when they were in force.
      Local authorities, including ILEA, took account of the pooling adjustments due under those regulations in fixing budgets and issuing rates or precepts for the years in question.
      Mr. Andrew F. Bennett: I am sure that the hon. Gentleman will accept that he received a series of letters from ILEA about that point before the court judgment. Surely, he would not expect local authorities to go to court first in such a complicated matter. They would normally make representations first, and only if they did not succeed would they go to court.
      Mr. Walden: The hon. Gentleman has answered his own question. I am grateful to him for doing so.
      The Government consulted the associations of county councils and of metropolitan authorities on the matter at the time. They were clear that a retrospective refund for ILEA from the pools would disrupt the finances of their members. In the light of their responses, we do not think it right to ask other LEAs to bear this burden, which would amount in total to a loss of about £75 million for all other authorities.
      The hon. Member implied that there would be no need to affect other LEAs if the Government made a special payment to ILEA from the Exchequer. But pooling is a system of inter-authority payments and an Exchequer payment of the kind envisaged would be unprecedented. If, as I have argued, there is no justificaton for asking other LEAs to bear this burden, still less would there be justification for imposing such an obligation on the taxpayer.
      Clauses 2 to 4 are essentially designed to enable the pooling system to continue to operate in a way that enjoys a consensus of support among local education authorities. The Bill as a whole is uncontentious and the House has treated it as such. It is not a suitable vehicle for enacting provisions which would be highly controversial among those whom they would effect, even if there were a case in principle for doing that.
      For those reasons, I ask the House to reject the motion.
      Mr. Andrew F. Bennett: I have listened to the Under-Secretary of State with considerable interest. I am not
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      certain that he is being fair to the Inner London education authority. The authority does not get credit for the good educational provision that it makes which benefits other people through the United Kingdom. It seems to have paid an undue proportion. It would have been helpful if the Government had considered a way of compensating it. The Government seem to be more enthusiastic about criticising the ILEA for what is provides rather than about meeting its finances.
      I do not believe that it would be appropriate at this stage to press the clause. I beg to ask leave to withdraw the motion.
      Motion and clause, by leave withdrawn.
      11.49 pm
      Mr. Walden: I beg to move, That the Bill be now read the Third time.
      The Bill deals with two separate topics. In both cases, its provisions are technical and uncontentious. I am grateful for the co-operation of the House in expediting the Bill's progress, and I shall not try hon. Members' patience by reiterating the technicalities and complexities to which the hon. Member for Denton and Reddish (Mr. Bennett) referred. I commend the Bill to the House.
      11.50 pm
      Mr. Robert Rhodes-James: Although I warmly welcome the Bill, I must repeat the point I made in Committee in relation to clause 1(2), which states:
      "In making a grant under this section the Secretary of State may impose conditions for any purpose mentioned in subsection (3)"—
      which are detailed—
      "and may also impose such other conditions as he thinks fit."
      As I said in Committee, that gives a Secretary of State excessive powers.
      My hon. Friend the Minister may say that there are precedents. Many years ago, when I was a Clerk in the House, I was on the Consolidation Bill Committee, which discovered that there was a precedent for the £5 note being illegal. It had been made illegal in 1914 and Parliament had forgotten to repeal the legislation. Millions of people had been illegally trading in £5 notes. This is not a trivial point. Giving powers to any Secretary of State in such terms requires careful consideration. Of course, I shall support this fine Bill, but I ask my hon. Friend the Minister seriously to consider with his colleagues whether, in the future, such powers should be incorporated into any Bill.
      11.51 pm
      Mr. Walden: I am aware from the remarks made in Committee by my hon. Friend the Member for Cambridge (Mr. Rhodes-James) and his anxiety about this phrase. In raising this matter, he is demonstrating a characteristic and commendable vigilance in relation to the way in which such phrases are used, and I sympathise with his sensibilities, to the point where I went back to my Department and asked why that wide-ranging phrase was used.
      In Committee, I tried to explain that the conditions in question are set out in the financial memoranda mentioned in the Bill. The Department draws up those memoranda in advance of the payment of grant to which they relate in consultation with the bodies concerned and with the agreement of the Treasury. My right hon. Friend the Secretary of State needs power to vary the conditions over time, because the circumstances—financial and other—

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      of the grant recipient may change. So, too, may the administrative and financial practices applicable to the expenditure of public funds. But I assure my hon. Friend that the Government do not make arbitrary or retrospective changes in conditions, nor would we alter the financial memoranda without giving the body concerned an opportunity to make representations on the proposed change.
      I hope that, with that assurance, my hon. Friend will be content with the clause. I have before me a formidable list of precedents with which I shall not bore the House, save to mention that the Education Act 1944 states that payment by the Secretary of State may be dependent on the fulfilment,
      "of such conditions as may he determined by or 'n accordance with the regulations."
      Mr. Rhodes-James: That is different.
      Mr. Walden: My hon. Friend says that that is different. I refer him—it will be very much to the forefront of his mind—to section 45 of the Sea Fish Industry Act 1970, concerning the herring industry board, which may make grants,
      "subject to such conditions as may he determined."
      I hope that I need not continue with the three pages of precedents and that my hon. Friend will he reassured by my remarks.
      Question put and agreed to.
      Bill read the Third time, and passed.

    BUSINESS OF THE HOUSE
    Ordered,
    That, notwithstanding the practice of the House as to the intervals between stages of Bills brought in upon Ways and Means Resolutions, more than one stage of the Finance Bill may he taken at any sitting of the House. — [Mr. Peter Lloyd.]

  Horticulture (Lea Valley)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]
  11.54 pm
  Mrs. Marion Roe: I sought this debate to draw attention to a number of important matters that affect the horticulture industry and particularly the glasshouse sector in the Lea Valley in which my constituency lies.
  The fortunes of the glasshouse industry have been steadily improving since the disastrous year of 1981 when all commodities in the sector traded very badly. Despite the fact that current trading profits are marginal, significant renovation and rebuilding of glasshouse structures, improvements in the efficient use of fuel and advances in marketing initiatives and co-operation have helped the industry to face the future with increased confidence. Much of that has been the result of enterprise by growers, but I stress that Government grant aid to the industry has also played a significant part.
  However, the trading position of growers is getting worse in relation to foreign competition. The figures for penetration of imports are worrying. Between 1976 and 1985, imports of cucumbers and tomatoes nearly doubled and those of lettuces and endives became seven times as great.
  The Lea Valley produces 43 per cent. of the United Kingdom's output of cucumbers. Indeed, two thirds of growers' acreage is given over to them and such an increase in imports is bound to damage the industry. Similar figures can be given for imports of carnations, chrysanthemums, roses and other cut flowers.
  The biggest worry for growers is the accession of Spain and Portugal to the EC. Although there will be a 10-year transitional period, during which the trade harriers between Spain and the Community will be dismantled, the horticulture industry still feels that it will be at a significant disadvantage at the end of that period. The reasons are obvious. The Spanish industry is far larger, Spain enjoys substantial climatic advantages, so crop heating is riot significant, and labour costs are lower.
  Ancillary to the problems caused by the enlargement of the EC are the additional arrangements being made with Mediterranean countries outside the EC in respect of imports of horticultural produce into the Community. That adds problems to a situation in which many horticultural products in this country are often in a state of seasonal oversupply.
  Two examples illustrate the difficulty. In early April this year, the Community reference price for tomatoes was not published. A large quantity of Canary Islands and other third country tomatoes flooded our market at a time when demand was low owing to exceptionally cold weather and at precisely the time that the United Kingdom grower requires high prices to compensate him for the high energy use that winter and spring necessitate. The high countervailing duties now imposed illustrate the degree to which those imports were undercutting United Kingdom prices. Added to that problem was the fact that there were insufficient Her Majesty's inspectorate staff to ensure that the quality of tomatoes was properly maintained.
  Secondly, in the week before St. Valentine's day, such large numbers of flowers were imported from Israel that the market for United Kingdom growers was ruined and

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  it has also been regularly disrupted on other occasions. It was an extreme example of the difficulties faced by growers when imports depress prices to such an extent that those growers cannot compete and stay in business.
  The accession of Spain and Portugal to the EC is a fact. There can be no question of trade barriers within the Community. But the industry needs to know what attitude the Government have towards EEC Commission proposals to give further concessions to non-EEC Mediterranean countries. In order to give sufficient protection to Community growers, there should be quantity limits on all products which benefit from tariff concessions and there should be an effective price safeguard for those products not covered by the reference price system.
  With regard to the expansion of the EEC, it is worth examining in what ways the industry can be assisted so that when the full impact of the membership of Spain and Portugal is apparent, growers are in the best position to compete.
  There are already a number of mechanisms for the support of United Kingdom horticulture. United Kingdom growers voted substantially in favour of a Horticulture Development Council, and I welcome the setting up of the council to finance horticultural research and development. The council will have a majority of grower members—that is only right since it is growers who will pay the levy. It is heartening to see the commitment that growers have shown to the future by investing in research and development. Horticulture is setting an example to the rest of agriculture.
  The Government, too, should demonstrate their commitment to the industry's future through publicly funded research, development and advisory activities. The Lea Valley growers very much regretted that the Government did not fully consult the industry before making cuts in ADAS activities such as the recently announced closure of the plant pathology unit and a reduction in other work at the Lea Valley Research Station. They hope that in future there will be close cooperation between the public sector decision takers and the industry—as represented by the National Farmers Union and the Horticulture Development Council—over such matters.
  As I mentioned earlier, schemes for grant aid have been a crucial factor encouraging investment in the glasshouse industry over the last five years. Current schemes come to an end in 1988, and while much work has been done, the task of bringing the industry up to date will take much longer. I hope that arrangements to provide grant aid beyond 1988 can be made. I should like to raise one point for consideration within that.
  There is a trend towards rationalisation in the industry, as larger operations are more competitive and are better placed to face the future. Given this, the current investment limit, for the purposes of grant, of £136,000 is not appropriate. It is barely enough to rebuild one and a half acres of glass, which is not significant for growers with a larger acreage. I therefore urge the Government to try to persuade other Community members to adopt a more realistic grant ceiling.
  Other incentives should be given through the tax system. In the United Kingdom, the depreciation allowance for tax purposes of glasshouses is set at an
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  annual rate of 4 per cent.; for plant and equipment, it is fixed at 25 per cent. The small budget concession that on sale or destruction the remaining value of buildings can be written off is welcome for agriculture, but it is not significant for the glasshouse sector, especially when placed alongside arrangements that exist in competitor countries.
  In Holland, the Dutch may write down annually 18 per cent. on glasshouses, 23 per cent. on heating systems, irrigation and other machinery, and 30 per cent. on lighting, CO , generators, thermal screens and climate control computers. Those figures give a proper incentive to gear up and modernise, and we would do well to consider something similar. Perhaps this problem can be addressed in conjunction with the discussions between glasshouse manufacturers and the Ministry of Agriculture, Fisheries and Food relating to a new British Standard for glasshouses which will redefine both specifications and the life-span of buildings.
  A final point needs to be addressed. With the defeat of the Shops Bill recently, hopes for sensible arrangements for nursery and garden centre trading hours received a severe setback. I need not run through the arguments with which we are all too familiar. Suffice it to say that Sunday is the most important day of the week for garden centres.
  Gardening is a major leisure activity, a fundamental part of the modern family Sunday. The enterprise of growers who sell their produce and the so-called inanimate products that go with it such as peat, compost, tools, fencing and other things, should not be stifled under the weight of more contentious arguments. The expansion of the industry, the jobs of those who work in it and the satisfaction and pleasure that their produce bring, all depend upon reform. I hope that the Ministry of Agriculture will give firm backing to any proposal to achieve such reform.
  Mr. Deputy Speaker (Mr. Harold Walker): Does the hon. Gentleman have the consent of the Minister and the hon. Member for Broxbourne (Mrs. Roe)?
  12.3 am
  Sir John Wells: Yes. Mr. Deputy Speaker. I shall be brief.
  I support my hon. Friend the Member for Broxbourne (Mrs. Roe) in all that she has said. She has described her Adjournment debate as being limited to her own constituency, but everything she has touched upon affects horticulture throughout Britain.
  Although under the rules of the Adjournment debate we cannot ask for legislation, it is open to Back Benchers to bring in ten-minute Bills or behind-the-Chair Bills and such like under our own steam. I hope that my hon. Friend the Member for Broxbourne or some other hon. Member will endeavour to remedy the defects that my hon. Friend spoke about in the last few sentences of her admirable speech.
  The present Sunday trading ban is deplorable in its effect on horticulture, because horticulture is suffering from increasing competition from agriculture generally, and all our friends in horticulture are fearful of the pressures coming upon them. It behoves the House as a legislature in whatever sphere of activity it is operating to assist that sector of agriculture that gets minimal support from Government. The people in the industry are not using taxpayers' money but are doing a good job and they need our support.
  12.9 am
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I congratulate my hon. Friend the Member for Broxbourne (Mrs. Roe) on her fine speech and on the skilful way in which she brought the glasshouse industry in the Lea valley and the challenges it is facing to the attention the House.
  I am also mindful of the comments of my hon. Friend the Member for Maidstone (Sir J. Wells). He was assiduous, as was my hon. Friend the Member for Broxbourne, in defence and support of horticulture. The Government are, of course, aware of many of the points mentioned by my hon. Friends and I am glad to have this opportunity to explain the Government's attitude to them.
  I assure the House that the Government are fully aware of the value of a healthy and prosperous glasshouse industry, both nationally and particularly to the local economy of the Lea valley. Of course, the industry operates within a market economy and the prime determinant of its success is the ability and enterprise of those directly engaged in it. I congratulate the industry on its contribution to our economy, both nationally and in the Lea valley, where it is especially important. While the Government can help in particular ways, I regard our role mainly as one of ensuring that the industry is able to operate in conditions of fair competiton to meet the demands of the market place in terms of both quality and quantity.
  I should like to mention some of the specific ways in which the Government provide help to the glasshouse industry. They provide capital grants, the full repayment of excise duty on oil used for glasshouse heating and soil sterilisation, a concession not available to any other sector, a comprehensive programme of research and development and technical advice through ADAS.
  In the context of Government aid I should like to dwell a little on capital grant schemes. In our manifesto we made a particular commitment to
  "help the glasshouse industry to sell more fruit and vegetables, and to make use of the best possible arrangements for heating and insulation".
  In November 1983, my right hon. Friend announced that enhanced rates of grant would be available for a limited period to encourage the more efficient use of energy in the glasshouse sector. Such grants cover the replacement or improvement of existing heated glasshouses, including thermal insulation. Grants of up to 50 per cent. are available for this work within an investment ceiling, as my hon. Friend quoted, of up to £136,000. Although grants on machinery and plant and equipment generally were removed at that time, those for boilers and energy-saving equipment for glasshouses and facilities for the market preparation of harvested horticultural produce being sold fresh were retained. The House will be aware that last October new capital grant regulations were introduced to implement the new EC structures directives. Although the general rate is 15 per cent., with an investment ceiling of £50,000, we were very pleased to be able to continue the favourable rates and the ceiling available to horticulture.
  We introduced these grants in recognition of the special needs of the glasshouse industry to re-equip itself with modern energy-efficient glasshouses. The situation of our glasshouse industry did improve, as my hon. Friend agreed, but last year I am afraid that it suffered from the poor summer. The demand for salad crops depends very
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  much on the weather, and last year's miserable summer made one more inclined to eat hot-pot than salads. The poor demand led to low prices in 1985; and with the sharp rise in energy costs during the heating season of 1984 it was a poor year and many growers lost money on the crop. This season's growing costs have been reduced by the substantial reduction in oil prices, and with normal market conditions we would expect financial returns to be significantly better. The cool weather up to a few weeks ago gave the growers a poor start, but the great improvement in the last few weeks has made the salad crop very popular. I am sure we all hope that the summer continues to favour that crop, for the growers' sakes as well as for our own.
  My hon. Friend mentioned one particular concern of the glasshouse industry: the effect of the accession of Spain and Portugal to the European Community. We are mainly concerned here with the beginning and the end of our growers' marketing season for protected crops, when there is an overlap with production in the Iberian peninsula. As my hon. Friend is aware, various measures have been taken to ensure a smooth transition to full membership of the Community for Spain and Portugal. The main element of these measures is an extended transition period of 10 years for fruit and vegetables, as opposed to seven years for most other sectors.
  During the first four years of this transition there will be annual reductions of 10 per cent. in tariffs, but the reference price system, which is effectively a minimum import price system, will continue to apply. In the second phase of six years the reference price system will be phased out in six stages. However, I hope that my hon. Friend will draw reassurance from the fact that during this second phase there is provision for what is described as a "supplementary trade mechanism" to be introduced so as to regulate any increase in Spanish and Portuguese exports of fruit and vegetables into the Community to avoid disruption to markets.
  Those of us who know the horticulture industry are constantly impressed by the innovation and enterprise shown by our leading growers, and I feel confident that they will meet the challenges of competition from Iberia.
  I know, too that some growers are concerned about the negotiations going on in Brussels about the trade agreements with Mediterranean third countries. As the House will know, the Community has close political and economic links with non-member countries in the Mediterranean area. Last year the European Council issued a declaration that the Community would seek to negotiate revisions to the agreements aimed at maintaining traditional trade flows. The discussions going on now are to prepare a revised mandate for the Commission's second round of negotiations with Mediterranean third countries.
  I know that some concern has been expressed that these discussions are going on behind closed doors, but I am sure the House will appreciate that details of the Community's negotiating position have to be kept confidential. Nevertheless, my officials have met the NFU to show the way in which the discussions are going and to ensure that we are fully aware of its particular concerns. The point I should like to emphasise most strongly to my hon. Friends is that we have been very mindful of our growers' interests in the negotiations. My right hon. and noble Friend the Minister of State has taken a close personal interest in the progress of these negotiations—as I may say he does in all matters horticultural. At present

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  the negotiations have become bogged down by Spanish demands for special measures to help the Canary Islands. I can assure the House that on this, as on other aspects of the negotiations, we shall take all possible steps to safeguard our growers' position.
  I applaud my hon. Friend's support for what the Government regard as a major development in the horticulture industry. I refer to the establishment of the Horticultural Development Council. Less than two weeks ago the order setting up the council received support from both sides of both Houses, and I and my right hon. Friends are delighted that Mr. Frank Thomlinson has agreed to become the first chairman. We are in the process of appointing other members, and we hope that the council will be able to have its first meeting within the next two or three weeks. I wish the council well in the task of commissioning research and development work to benefit the horticultural industry, including the glasshouse sector.
  My hon. Friend mentioned the Commission's failure to set a reference price for tomatoes on 1 April. The Commission claims that, because of the Easter holiday, it was unable to have the regulations translated and published in time, and we have left it in no doubt that we are not impressed by its performance. As it happens, the Canary tomatoes that came to the United Kingdom when the reference price should have been in operation were not sold below the reference price levels.
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  My hon. Friend was concerned about the flower prices in the run-up to St. Valentine's day, and she was right to say that they were poor. The Israeli suppliers were partly to blame, and this was a misjudgement on their part. They have no interest in selling at very low prices, because they have to pay a tariff of 17 per cent.
  My hon. Friend was concerned about the changes at the Cheshunt pathology unit. I can assure her that that work will in future be provided from the regional office in Cambridge. There are good communications between these two centres, so the quality and the speed of service will not be affected. The Cheshunt office, although it loses a scientific officer, has three horticultural advisers, who will be retained, and thus the unit will continue to provide a full glasshouse advisory service to growers in the Lea valley.
  My hon. Friend referred to the Sunday trading Bill, but she will not expect me to enlarge on that, as the House has defeated the Bill, and it is not for me now to be defending it.
  I hope that what I have said goes some way to assuring the House and my hon. Friends about our concern that horticulture in the Lea valley continues and its profitability improves. The hard work and enterprise of those with businesses there certainly deserves success, and I have no hesitation in joining my hon. Friends in wishing them that success.
  Question put and agreed to.
  Adjourned accordingly at nineteen minutes past Twelve o'clock.