Commons Sitting of 7 May 1986

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

    CHANNEL TUNNEL BILL
    Ordered,
    That the Petitions of the Dover Harbour Board and Sealink U.K. Limited against dispensing with the Standing Orders, in the case of the Channel Tunnel Bill, be referred to the Standing Orders Committee.—[The First Deputy Chairman of Ways and Means.]

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Libya
    Mr. Douglasasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the position of United Kingdom nationals in Libya.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): Our consistent advice since April 1984 has been that British citizens choosing to live and work in Libya do so on their own responsibility and that consular assistance and protection is limited. We have more recently advised the withdrawal of dependants and non-essential staff. Our consul in Tripoli is in close contact with representatives of the British community, which now numbers around 3,500.
    Mr. Douglas: I thank the Secretary of State for that reply. Does he concede that some events have taken place since the United States bombing? In view of the statement by the United States President and Vice President in the last few days about the possibility — indeed, the probability — of the United States taking action against terrorists or state-sponsored terrorism in other countries, such as Syria, what advice does the Foreign and Commonwealth Office offer to British nationals in Syria, Iran, Iraq and elsewhere?
    Sir Geoffrey Howe: That is a far-ranging question, founded on a number of far-ranging assumptions. Our advice to travellers in all the areas where tension has increased or where there is a risk of terrorist violence—for example, in certain parts of Beirut—is to make their own judgments, at their own risk, and on their own responsibility.
    Mr. Cyril D. Townsend: As my right hon. and learned Friend would not wish British citizens to be expelled from Libya solely on the ground that they are British citizens, can he confirm that no Libyan students have been or will
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    be expelled from this country solely on the ground that they are Libyans? Does he agree that the training of Arab students in Britain is very much in our long-term interests?
    Sir Geoffrey Howe: I assure my hon. Friend that action taken in respect of Libyans, whether students or otherwise, who are resident here is on the basis of evidence and because of security considerations, not on the basis of any general categorisation.
    Mr. Beith: Does the Secretary of State believe that British nationals living abroad or at home are safer from terrorism now than they were before the bombing raid, or does he share Secretary of State Shultz's assessment that Colonel Gaddafi may be more dangerous now than before?
    Sir Geoffrey Howe: I have not seen that assessment, but there is no doubt that the risk of terrorism and of injury to innocent people as a result of terrorism is more likely to increase in the face of inaction by countries such as ours.
    Mr. Andrew MacKay: Is my right hon. and learned Friend aware that some of us will be not be particularly sympathetic to British nationals who find themselves in difficulties in the future, because it has been made abundantly clear that risk is involved in going to Libya and they will be extremely foolhardy to go there at this time?
    Sir Geoffrey Howe: I take note of what my hon. Friend has said, and I understand his point. We have, of course, no legal means of preventing British citizens from visiting or remaining in Libya, but our advice is clear.
    Mr. Ernie Ross: Will the Secretary of State nevertheless make it clear that British nationals who have married and now live in Libya will have no impediment put in their way or in the way of their families if they wish to come here to visit their relatives?
    Sir Geoffrey Howe: In today's world many people are parties to cross-national marriages and Governments have to react to situations and treat them sympathetically. There is no question of any retaliation by ourselves or of any measures being taken against peopele solely because of their nationality or marital status.
    Mr. Dickens: Is it not true that, by and large. British nationals living in Libya are contributing something to that country — whether it be special skills, experience or business acumen—in return for stability and, perhaps, even their own safety? Therefore, does my right hon. and learned Friend agree that the safety of British nationals should not always cloud the judgment of our foreign policy?
    Sir Geoffrey Howe: I take the point made by my hon. Friend. Of course the safety of British nationals cannot be the only consideration in foreign policy. However, I hope that the day will never come when it can be said that Her Majesty's Government are heedless of the safety of subjects of this country.

    Debt Crisis
    Mr. Home Robertsonasked the Secretary of State for Foreign and Commonwealth Affairs what recent discussions have been held in the European Economic Community Foreign Affairs Council concerning the debt crisis; and if he will make a statement.
    The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): I attended the Foreign Affairs Council on 27 January, at which we discussed debt. We recognised the seriousness of the debt problem and endorsed the case-by-case approach as the right response.
    Mr. Home Robertson: After all the self-congratulation at Tokyo, is it not time that the Minister addressed herself to the growing problems of those countries which cannot service their overseas debts without making their impoverished people even poorer? Should there not be some action on the state-sponsored terrorism of the international banking system?
    Mrs. Chalker: The hon. Gentleman is in a slight muddle. We have already given grave consideration to the problems of the poorest countries. That is how we came to give £987 million in retrospective adjustments to 21 of the poorest countries. Only the Federal Republic of Germany has a better record.
    We have ensured that grant-aid to countries with an income of less than $790 per capita per annum is given in each and every case. In the light of the Baker initiative, on which good progress is being made, we shall consider all that we can do to help those countries which are prepared to put their own houses in order.
    Mr. Watts: Did the Foreign Affairs Council discuss the impending debt crisis within the European Community following the failure of the budgetary discipline arrangement? Will the Government exercise the United Kingdom veto on any proposal to raise the 1·4 per cent. VAT limit?
    Mrs. Chalker: It is fair to say that when we speak of the debt crisis we mean nations which are far poorer than any single nation of the collective entity of the European Community.
    There is no provision under the Fontainebleau agreement for any increase in the 1·4 per cent. ceiling before 1988. Any proposal for such an increase would require the unanimous agreement of the member states, including the United Kingdom, and approval by national Parliaments. I see no sign whatsoever of that happening.
    Mr. Foulkes: I suggest that the Government do not understand the urgency of the problem. Has the hon. Lady seen the report last month by Morgan Guarantee, which showed that the net outflow of funds from Latin American countries alone was £123 billion? Does that not make a mockery of the aid that we give them? Will the Government suggest to our European partners that there should be some sort of collective action, such as interest capping, so that this problem can be dealt with properly?
    Mrs. Chalker: I assure the hon. Gentleman that not only do we constantly consider in the margins what can best be done to help, but that we have especially been considering the oil exporting debtors who become major beneficiaries under the Baker plan.
    It is essential to keep a sense of balance and to persuade those debtors to pursue sound economic policies and to manage their internal strengths in such a way that the International Monetary Fund and the International Bank for Reconstruction and Development can help them in the best possible way. We are certainly a full party to that.
    Mr. Marlow: In view of the deliciously forthright answer that my hon. Friend gave to my hon. Friend the
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    Member for Slough (Mr. Watts), will she confirm that if the European Community were to come up with a budget that reached the 1·4 per cent. ceiling, and then asked for a supplementary budget, the Government would turn that down flat, too?
    Mrs. Chalker: Once again, my hon. Friend is dreaming dreams of things that he might like to happen, but which we intend to ensure will not happen. If, beyond the supplementary budget proposed, which is the 1·4 per cent. ceiling, a further supplementary budget were to come forward, it would depend on exactly why it had come forward. [HON. MEMBERS: "Ah."] I say that with sound advice. I must tell my hon. Friend that when there has been a 25 per cent. fall in the value of the dollar against the ecu, which could not have been foreseen, we must cope with reality, not blind theory.

    Nicaragua
    Mr. Torneyasked the Secretary of State for Foreign and Commonwealth Affairs if he will ask the European Economic Community Council to condemn any United States military aid to the Contras in Nicaragua.
    Mrs. Renée Shortasked the Secretary of State for Foreign and Commonwealth Affairs what representations he has received regarding doctors in the Contra forces in Nicaragua being involved in the torture of political prisoners; and what action he has taken.
    Mr. Parkasked the Secretary of State for Foreign and Commonwealth Affairs what representations have been made by the European Economic Community Council to the United States of America about its policy towards Nicaragua.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar): We and our European partners have repeatedly made clear our conviction that the problems of Central America can be resolved only through a negotiated settlement based on the Contadora objectives rather than by armed forces. We have ensured that our views are well known.
    As regards doctors, we have received no reports that doctors in the Contra forces have been involved in torture.
    Mr. Torney: Is the Under-Secretary of State aware that Congress is likely to approve military aid to the Contra forces? Does he agree that that is contrary to international law? What does his colleague the Foreign Secretary propose to do about it?
    Mr. Eggar: We advocate a political solution, through the Contadora process, rather than a military solution. We believe that Nicaragua should negotiate seriously on the basis of the Contadora objectives and avoid actions such as the recent incursion into Honduras.
    Mrs. Short: Will the hon. Gentleman renew his efforts to obtain more information, because of reports from Nicaragua to the effect that doctors are being used for the purpose mentioned in my question? Will he mobilise the forces of Amnesty International, and perhaps the BMA, which have been instrumental in collecting a large amount of material, not necessarily from Nicaragua, but from different parts of the world where doctors have been used in the implementation of torture?
    Mr. Eggar: We have made extensive inquiries. We have no such reports in our possession. If the hon. Lady has such information. I should be grateful is she would make it available.
    Mr. Park: Does the EEC intend to sit back and allow the Contadora process to be sabotaged by increasing United States involvement in the guerrilla war in Nicaragua?
    Mr. Eggar: As the hon. Gentleman is aware, the Community supports the Contadora process and believes that progress can be made through political dialogue and economic co-operation. The Twelve in the Community are in close touch with the Contadora group. The Community's role is to provide support for the Contadora group's efforts. The economic co-operation agreement, which was signed in Luxembourg in November, offered practical support.
    Sir Peter Blaker: What is the attitude of the Government of Nicaragua to the peace treaty which was proposed recently by the Contadora group?
    Mr. Eggar: Obviously we want Nicaragua to end its support for guerrillas in neighbouring countries and to make progress towards a genuine pluralist democracy. We believe that the suspenson of certain civil rights in Nicaragua last October was a step in the wrong direction.
    Mr. Peter Bruinvels: What advice does my hon. Friend think the European Community Foreign Affairs Council should give to local authorities, such as Leicester, which intend to twin with Nicaragua? Will that help, or hinder, the Contras?
    Mr. Eggar: I do not think that the conduct of Leicester city council is a matter of great concern.
    Mr. Heffer: Will the Government inform their colleagues in America that they should consider United States history? The United States gained power after a struggle against the British, and only later did it have democratic elections. Nicaragua is in precisely the same position. Nicaragua has a democratically elected Government. The United States of America should not support those who are trying to overthrow a democratically elected Government who are carrying out policies on behalf of the Nicaraguan people.
    Mr. Eggar: The armed forces and nearly all the national institutions in Nicaragua are under the control of the Sandinista political party. The draft constitution under discussion in Nicaragua provides for the formalisation of these powers. Does the hon. Gentleman really believe that that is a democratic system?
    Mr. Winnick: If international terrorism is to be condemned, as it should be, why did the international summit in Tokyo not condemn the way in which President Reagan and the United States Administration are arming and supporting the bandits who are carrying out terrorist acts against the elected Government in Nicaragua? Why are there double standards?
    Mr. Eggar: There was a brief discussion among the Foreign Ministers at the Tokyo summit about the position in Central America. All the Foreign Ministers supported the efforts of the small democratic nations of Central America to make democracy work in their region. Mr.
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    Shultz reiterated the United States' continuing support for the Contadora proposals for peaceful resolution of disputes in the area.
    Mr. Key: I understand the American sphere of influence argument and recognise that our influence in the area is now limited to Belize, but is my hon. Friend sure that the Americans understand that there is growing concern in the United Kingdom about the Nicaraguan situation, which appears to be deteriorating?
    Mr. Eggar: I do not entirely accept the premise on which my hon. Friend's question is based. However, we have made clear to the United States Government our views on the position in Central America.
    Mr. Healey: Did the Government remind President Reagan at the Tokyo summit that his proposals for military' aid to the Contras involved the United States in a most blatant form of state terrorism, because the Contras have engaged in horrifying atrocities, including torture and mutilation, against innocent women and children, and they are now accused in the United States of drug running and of plotting the murder of an American ambassador in Central America? Does the hon. Gentleman agree that, so long as President Reagan supports such activities, he has no right whatever to claim to be an opponent of state terrorism?
    Mr. Eggar: I think that the right hon. Gentleman is trying to draw a parallel between the United States' action in Libya and its action in Nicaragua, which simply does not stand up to any examination. Gaddafi has committed the Libyan Government to organising and directing a worldwide campaign of terrorist violence against innocent people outside Libya. In Nicaragua, the Contras and the Nicaraguans have resorted to armed struggle against their own Government. The Contras do not seek to advance their cause by terrorist acts in third countries.

    Departmental Vehicles
    Mr. Heathcoat-Amoryasked the Secretary of State for Foreign and Commonwealth Affairs whether all vehicles owned or operated by his Department are British-made; and what proportion of vehicles owned by his Department's staff and purchased with his Department's financial assistance are British made.
    Mr. Eggar: The diplomatic wing of the Foreign and Commonwealth Office owns and operates a total of 1,061 vehicles at home and abroad. Eighty-seven per cent. of these are British made. Of the 338 Diplomatic Service officers who received financial assistance towards car purchase during the last financial year, 74 per cent. bought British cars.
    Mr. Heathcoat-Amory: Does my hon. Friend agree that those who represent us overseas should promote British products and drive British cars when they are bought with public money? What steps will my hon. Friend take to increase those percentages of British-made goods?
    Mr. Eggar: As I hope I have already made clear, representational officers are expected to run British cars, wherever possible. In some areas that is not possible, because of lack of servicing capability, and so on. I should point out that if all British companies and individuals

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    owned and ran the same percentage of British cars as are run by Diplomatic Service officers, the British motor industry would not be in its present difficulties.

    Terrorism
    Mr. Sumbergasked the Secretary of State for Foreign and Commonwealth Affairs when he last discussed the question of international terrorism with the other Foreign Ministers of the European Community.
    Sir Geoffrey Howe: The most recent discussion among Foreign Ministers of the Twelve was on 21 April. Terrorism was also dealt with by Ministers of the Interior in the Trevi group framework on 23 and 24 April. I discussed it at the Tokyo summit with those European Foreign Ministers who were present. The outcome among the Twelve and at Tokyo has been agreement on specific measures for effective national and collective international action against terrorism.
    Mr. Sumberg: Will my right hon. and learned Friend take an early opportunity to tell his European colleagues that the decisions reached at Tokyo, which were reached largely through the efforts of our own Prime Minister, have widespread support in the House? Will he consider extending those measures to all countries engaged in state-sponsored terrorism, not merely Libya? In that context, will he confirm the report in The Times today that the Foreign Office has asked for the withdrawal of a Syrian diplomat who has been engaged in terrorist activity in this country?
    Sir Geoffrey Howe: I do not face any difficulty in following the first part of my hon. Friend's advice, because my European colleagues were well aware of the commitment of Her Majesty's Government to measures of this kind and to secure the endorsement of them in Europe. It is clear that the measures agreed in Europe and Tokyo are intended to be applied in suitably proven cases to other examples of state-sponsored terrorism.
    On the second point, I can only say that there are police investigations involving the custody of a man called Hindawi who is charged with conspiracy to murder and attempting to destroy an aircraft in service. Investigations are continuing. I do not want to say anything which might prejudice the judicial process, but the Syrian ambassador called at the Foreign and Commonwealth Office last week at our request, and again on 5 May this week at his request. I can confirm that we discussed the El Al bombing incident with him, but I can give no further details while the investigation is continuing.
    Mr. Merlyn Rees: Will the declared intent at Tokyo, and possibly in Europe as well, to limit the number of diplomats from certain countries require an amendment to the treaty of Vienna?
    Sir Geoffrey Howe: No, Sir. The right hon. Gentleman will understand that we took action two years ago in respect of the near total establishment of the Libyan People's Bureau. We have taken action more recently in connection with the reduction of numbers, and we remain ready to do so in suitable cases.
    Mr. Jackson: Does my right hon. and learned Friend agree that there is a real risk that all the welcome action being taken against terrorism in the middle east may be vitiated by the lack of progress in tackling one of its fundamental causes—the Palestinian problem?
    Sir Geoffrey Howe: As my hon. Friend will recall, in the debate on this subject a couple of weeks ago the point was made strongly from both sides of the House that we need to address ourselves to the search for progress on the peace process in the middle east. It must be said that at present the opportunities for such progress are not looking too hopeful, but we shall continue to look for them.
    Mr. Nellist: In the Foreign Secretary's discussions on 21 April, did he relate to the other Foreign Ministers the content of his letter to me of 17 April which defined state-sponsored terrorism as being where a state recruits, trains and finances terrorists? Over the following three weeks, in refusing to condemn the United States' military aid for the Contras in Nicaragua, was he aware of reports which appeared in The Observer on Sunday, which described the assassination of Nicaraguan people by the Contras by a method known as the tie—the victim's throat is cut and his tongue is pulled out over his breastplate to form a tie? What other description is there for assassination such as that than state-sponsored terrorism?
    Sir Geoffrey Howe: The hon. Gentleman makes a long connection with an elaborate account of some incident he has seen reported. On the substance of the hon. Gentleman's question, I have nothing to add to what my hon. Friend the Parliamentary Under-Secretary has just said.
    Sir Geoffrey Johnson Smith: In dealing with terrorism, my right hon. and learned Friend will know how vital it is to obtain agreement on extradition procedures. What further steps does he propose to take to persuade the Americans of the importance that we attach to the Senate passing the Extradition Treaty Bill?
    Sir Geoffrey Howe: I agree entirely with my hon. Friend. Extradition procedures are important. That is why improvement of those procedures was one of the points specifically agreed by the Tokyo summit. In that context, my right hon. Friend the Prime Minister and I underlined to the President and the Secretary of State the importance that we attach to ratification of that treaty. They left us in no doubt about the commitment of the American Administration to that end, and they and we are doing everything possible to secure the right answer from Congress.
    Mr. Donald Stewart: Will the Foreign Secretary exercise some caution, even in the justifiable indictment of Libya, so that he does not fall into the trap of putting all the Arab nations against us, in order to satisfy the aims of the United States-Israeli axis?
    Sir Geoffrey Howe: There is no question of the Government taking any action to satisfy the aims of that or any other axis for its own sake. I agree with the right hon. Gentleman's point that it would be wrong to allow the justified condemnation of Libyan state-directed terrorism to lead us into any general position of confrontation or disagreement with the other Arab states.
    Sir Anthony Grant: Is my right hon. and learned Friend aware that, in contrast with the European Parliament, when the 20 countries of the Council of Europe met at their Assembly recently, when the subject of Libyan terrorism was debated, many of them seemed thoroughly ashamed of their previous inaction and

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    recognised both the importance of the Atlantic Alliance in this context and the need for more robust action by all of them to combat terrorism?
    Sir Geoffrey Howe: I am delighted to hear the report given by my hon. Friend. We welcome support for our position from the European Council assembly, as from everywhere else.

    Heads of Government (Assassination)
    Mr. Tony Banksasked the Secretary of State for Foreign and Commonwealth Affairs what action Her Majesty's Government take when foreign Heads of Government are assassinated.
    Mr. Eggar: We have consistently condemned the assassination of Heads of Government. Most recently, I am sure the whole House will have had feelings of profound sympathy for the Swedish Government and people following the assassination of Mr. Palme. In that case we offered all possible assistance to the Swedish Government.
    Mr. Banks: I am grateful to the Minister for his reply. In view of the well-documented evidence of CIA involvement in assassination attempts, successful or otherwise, in Cuba, Chile, Guatemala, Iran and Nicaragua, has he made it patently clear to the Americans, on behalf of Her Majesty's Government, that we would not support any assassination attempt on Colonel Gaddafi, covertly or otherwise? While he is at it, will he also make it clear to the House that no British personnel are involved in any part of the world in attempts to destabilise countries or assassinate legitimate Heads of State, whatever we might think of them?
    Mr. Eggar: I really do think that the hon. Gentleman is being even more absurd than he normally is. I cannot go further than say what I have already said—that of course the Government consistently condemn the assassination of Heads of Government.
    Mr. Gow: Does my hon. Friend agree that it would have been no grievous loss to the civilised world if Colonel Gaddafi had died in the raid on Libya?
    Mr. Eggar: Obviously my hon. Friend has his own view of Colonel Gaddafi's contribution to Western civilisation.

    Terrorism
    Mr. Jannerasked the Secretary of State for Foreign and Commonwealth Affairs whether he will list those countries in respect of which Her Majesty's Government have evidence that they harbour or give assistance to terrorists or terrorist organisations.
    Sir Geoffrey Howe: It would be both misleading and unwise to publish a list as requested by the hon. and learned Member. Evidence frequently does not constitute proof, and much of it is, of course, of a very sensitive nature. The continuing campaign against terrorism requires careful evaluation of evidence of this kind.
    Mr. Janner: As the Foreign Secretary has frequently said that there is both evidence and proof that Libya trains, recruits, harbours and assists terrorists, is it correct that Libyan planes are still permitted to land in this country, and if so, why?
    Sir Geoffrey Howe: Because there are still continuing air services between Libya and most other countries of western Europe. There is still a substantial British community in Libya, which is dependent to some extent on those services, including those coming from this country. Taking account of all the circumstances, we have not concluded that the point has yet been reached when that situation should be changed.
    Mr. Michael Morris: While it may not be appropriate to publish a list, is my right hon. and learned Friend aware that there is growing concern about the situation in Tamil Nadu, in particular over the succouring and training of terrorists in that state within the sovereign state of India? The result has been that three British nationals died last weekend in the bombing of Colombo airport, and we hear today that there are further terrorist activities in Colombo. Is it not time that we made strong representations to the Indian Government to stop that training in Tamil Nadu?
    Sir Geoffrey Howe: I do not know that one should necessarily reach the conclusion from which my hon. Friend starts his question, but clearly we are concerned with the continuing violence resulting from terrorist incidents within Sir Lanka and have discussed the matter with the Indian Government.
    Mr. Campbell-Savours: Are not those Governments who refuse to act by banning kidnap insurance assisting terrorism? Will the Foreign Secretary meet the Irish Foreign Minister to find out what happened over the incident of the Bell shipping lines executive who was stopped at Dublin airport with £300,000 in his suitcase and who was found to be working in conjunction with Control Risks Group Ltd., a London company? Will he find out what happened during that incident and why that money was being taken to the Republic of Ireland?
    Sir Geoffrey Howe: If the facts as retailed to the House by the hon. Gentleman are correct, clearly they deserve interested attention, whether by the prosecuting authorities, by my right hon. Friend the Secretary of State for Northern Ireland, or by me. I shall draw the matter to the attention of my right hon. Friends.
    Mr. David Atkinson: When my right hon. and learned Friend meets his Irish counterpart, will he ask him when he proposes to put to an end his country's counter-trade with Libya of food for arms for the IRA?
    Sir Geoffrey Howe: I have no evidence whatsoever to suggest that the Government of the Republic of Ireland are concerned with the supply of arms to the IRA.
    Mr. John David Taylor: Is the Foreign Secretary satisfied with the progress towards the extradition of wanted Irish Republican terrorists from the United States of America?
    Sir Geoffrey Howe: That question has already been raised with my hon. Friend the Minister of State. It is an important question. I repeat that we have impressed upon the American Administration the importance attached by Her Majesty's Government to ratification of the treaty that is now before Congress and, with their help, are doing everything possible to impress that point upon Members of Congress.
    Mr. Wilkinson: As state-sponsored terrorism is a belligerent act which affects the security of all democracies, not least those in western Europe, why have

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    my right hon. and learned Friend and Her Majesty's Government, under the Brussels treaty, not responded, through the Western European Union, in a concerted way to this threat? Why have they responded so negatively to the proposal for a counter-terrorist task force, as proposed by the President of the Assembly of the WEU, Mr. Caro?
    Sir Geoffrey Howe: We discussed this matter with the President of the WEU Assembly at the WEU meeting in Venice last week and made plain to him the view of the WEU council that there is no need to establish a fresh international body such as the task force recommended by the Assembly, because there are more than enough agencies already at work that are involved in co-operation. However, at the WEU council meeting we underlined very strongly indeed the need for effective and early action by members of the WEU and the European Community along the lines already undertaken.
    Dr. Godman: Surely there should be no partiality in the condemnation of the sponsorship of terrorism? Has the Foreign Secretary in recent times brought to the attention of Mr. Shultz the deep disquiet felt by many people in this country over American-sponsored terrorism in Nicaragua?
    Sir Geoffrey Howe: That point has already been dealt with by my hon. Friend the Parliamentary Under-Secretary of State in answer to a number of questions, but I make the distinction yet again that there is a total difference between those terrorist organisations that are dedicated to the infliction of indiscriminate damage on innocent people in third countries and the context in which Nicaraguan subjects are engaged within the frontiers of Nicaragua.
    Mr. Nicholas Winterton: I accept my right hon. and learned Friend's view that there should not be a list, for the reasons that he has given to the House, but will he accept that his Department might do more to advise people in this country who are going to countries such as Sri Lanka of the dangers that they might encounter, bearing in mind the sad experience in Colombo at the end of last week? I point out to my right hon. and learned Friend that two of my constituents, Mr. and Mrs. James French, were in the plane that blew up, but, fortunately, they escaped serious injury.
    Sir Geoffrey Howe: I understand my hon. Friend's concern. We extend advice about the dangers of travel to different parts of the world. In many cases, however, we cannot give specific advice about a specific hazard that is likely to arise. In addition, we underline the need for people who are about to travel to study closely the conditions in the countries to which they are going.
    Mr. Healey: Which view does the Foreign Secretary share — that expressed yesterday by both President Reagan and Vice-President Bush, that Syria would be a suitable candidate for possible unilateral American military action, perhaps involving the use of sea-launched cruise missiles, that of Prime Minister Craxi, that further unilateral military action against a supposedly terrorist state would be in clear breach of the understanding reached in Tokyo, or that of Prime Minister Nakasone, that every country that was represented in Tokyo has the right to interpret the new communiqué as it wishes? What is left of the Prime Minister's great achievement in Tokyo after that?
    Sir Geoffrey Howe: After that confusing question, it would be extremely interesting to know just which of the
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    alternative propositions put by the right hon. Member is the one to which he attaches himself. Does he wish to see effective action against terrorism? The commitment entered into by the seven communiqué countries was a commitment on effective, collective international action, and not related to the prospect of military onslaught on any given country.
    Mr. Sayeed: As Sinn Fein is the political wing of a proscribed terrorist organisation, why do we not put our own house in order and proscribe it as the Southern Irish do?
    Sir Geoffrey Howe: That question raises different considerations, although I understand the importance of them. One important point to be taken into account in this context is that conflicts that arise in Ireland and Northern Ireland take place in the context of a society with a fully representative democratic system.
    Mr. Beith: Will the Foreign Secretary now answer the question about Syria? Does he recognise that it provides a haven for particularly ruthless terrorists, and if he does, does he advocate bombing or some other realistic and more promising means to deal with the terrorist threat from there?
    Sir Geoffrey Howe: The measures that we advocate, and to which the summit countries and Community countries are committed, are collective, effective international actions similar to those set out in detail in the communiqué from Tokyo and from the European Community. Whether those measures should be taken against any given state will depend upon whether there is plain proof of state involvement in terrorism, suitable to deserve the response suggested.

    Iran-Iraq War
    Mr. Thurnhamasked the Secretary of State for Foreign and Commonwealth Affairs what assessment his Department has made of the prospect of an end to the Iran-Iraq war.
    The Minister of State, Foreign and Commonwealth Office (Mr. Tim Renton): Regrettably, there are no signs of any early end to the Iran-Iraq conflict. We believe, however, that the international community must continue its efforts to secure full implemention of Security Council resolution 582 which calls, among other things, for an immediate ceasefire. We continue to lend full support to the efforts of the Secretary-General of the United Nations in his search for a negotiated settlement.
    Mr. Thurnham: In the light of recent allegations that European arms dealers are rushing to supply arms to Iraq, will my hon. Friend confirm that he remains opposed to British companies selling arms to either country in this tragic conflict?
    Mr. Renton: I can assure my hon. Friend that all applications to export defence-related equipment to either Iran or Iraq are subject to the granting of an export licence and we refuse such licences when we consider that the equipment could significantly enhance the capability of either side to prolong or exacerbate the situation. I wish that other Governments would follow our strict example.
    Mr. Tom Clarke: Will the Minister advise the Prime Minister, as she prepares to go to Israel later this month,

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    to condemn the flow of arms to both parties in this dispute, but especially those arms that might be sent to Iran by way of Israel?
    Mr. Renton: I have no doubt that the question of the Iran-Iraq dispute will be discussed during the forthcoming visit to Israel by my right hon. Friend the Prime Minister. I also hope to discuss it when the Secretary-General of the United Nations is here this coming weekend.
    Mr. Dickens: Is my hon. Friend aware that before the days of the Shah of Persia, Britain kept peace in the middle east for 400 years? In this case, what steps are Her Majesty's Government taking, with our vast experience in the middle east and our diplomatic skills, to effect a ceasefire?
    Mr. Renton: I am glad to be assured by my hon. Friend that in past centuries Britain had such a great influence over the Ottoman empire. Through our diplomatic missions in the Gulf, and through our membership of the Security Council, we have continual discussions with all the parties in the middle east who could bring this tragic conflict to an end. It is worth reminding the House that more than 500,000 people have been killed in the Iran-Iraq war. I hope that the Islamic conference and the Arab League will add their efforts to those of the United Nations Secretary-General and so bring the conflict to an end.
    Mr. Anderson: I should be interested to know how the Minister reconciles his declared policy on arms supply with the supply of Chieftan spare parts from an RAF airfield. What investigations have the Government made into the allegations that a building in Victoria street is the main entrepot for the procurement of arms for Iran? What counter have the Government made to American allegations that we are failing to co-operate with them over the extradition of British nationals who face indictments in the United States for illegal arms supply to Iran? What investigations have been made about allegations of the illegal use of diplomatic bags by Iran for the export of arms?
    Mr. Renton: I reassure the hon. Gentleman that recently no new applications for the export of arms that would significantly prolong the conflict on either side have been approved. If the Iranian procurement office wished to export war materials, that would have to be covered by an appropriate licence. We have not received any applications for such licences. If we obtained evidence of illegal activity in that context, we would take the appropriate steps without delay. I am unaware of any request for extradition from the United States along the lines mentioned by the hon. Gentleman, but I shall pass on his remarks to my right hon. Friend the Home Secretary for consideration.

    Middle East
    Mr. Lathamasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on recent discussions with King Hussein of Jordan or Mr. Peres, the Prime Minister of Israel, regarding the peace process in the middle east.
    Sir Geoffrey Howe: My right hon. Friend the Prime Minister had useful talks with King Hussein on 17 April. She and I had similarly useful exchanges with Mr. Peres during his visit to London in January.
    Mr. Latham: Since King Hussein has apparently lost patience with Yasser Arafat and the Palestinian Liberation Organisation, and since the Israelis will not deal with them, will the Prime Minister use her forthcoming visit to Israel to effect a revival of Mr. Murphy's diplomatic initiative to bring Jordan and Israel directly together under the appropriate international auspices?
    Sir Geoffrey Howe: My hon. Friend is right to acknowledge that we are in a period of reassessment following the suspension of the Jordanian-Palestinian joint action. It is right that we should actively consider ways of taking the peace process forward. My right hon. Friend the Prime Minister will take advantage of her visit to Israel later this month to discuss what practical steps can be taken.
    Mr. Ernie Ross: Does the Foreign Secretary know whether Yasser Arafat and King Hussein have fallen out? Unless the PLO is included in any discussion, there will be no peace in the middle east. Would it not be more useful for the Prime Minister, when she goes to Israel, to make it clear that she intends that the PLO will be involved in negotiations?
    Sir Geoffrey Howe: As the hon. Gentleman knows, we do not accept that the PLO is the sole legitimate representative of the Palestinian people, although since the Venice declaration is has been clear that it should play a part in the negotiations. The key is that the Palestinians should choose an outcome which they can willingly accept, and the most frustrating deficiency in the present position is the absence of any effective group to represent the Palestinian side of the case.
    Mr. Soames: What representations has my right hon. and learned Friend made to the Government of Israel about the outrageous abuses of human rights meted out to the Palestinians on the West Bank?
    Sir Geoffrey Howe: We have on a number of occasions engaged in frank dialogue with the Israeli Government about conditions on the West Bank, including human rights, and have made it clear to them that Israeli settlements there are illegal and an obstacle to progress.
    Mr. Heffer: Does the right hon. and learned Gentleman agree that there can be no question of the Palestinians choosing an outcome until they have the right to establish a Palestinian state? Will the Government put pressure on the Jordanians and the Israelis to try to reach an agreement as quickly as possible for the establishment of such a state, because I agree with my hon. Friend the Member for Dundee, West (Mr. Ross) that there can be no peace in the middle east until such a state is established?
    Sir Geoffrey Howe: I do not want to be misunderstood. We support the right of the Palestinian people to self-determination. That is of crucial importance. That means that they should be able to choose what attainable constitutional arrangements they can willingly accept. In those circumstances, we constantly urge, probably more actively than any other country, upon the Governments of Jordan and Israel and others the need for them to move towards a negotiating process that takes account of the rights of the Palestinian people.
    Mr. Walters: Bearing in mind that terrorism, of which we have heard a great deal this afternoon, is an ugly

    145
    symptom of the underlying problem in the middle east, will my right hon. and learned Friend do everything in his power to persuade the United States Administration to spend less time talking about the symptom and more doing something about the problem, possibly in an even-handed manner?
    Sir Geoffrey Howe: Quite apart from the connection between terrorism and the long-standing dispute in the middle east, it is obviously of the highest importance for all concerned to take every possible step to try to bring that dispute to a conclusion, and we certainly urge the importance of that in discussions with the United States as well as others. I agree with my hon. Friend.
    Mr. Anderson: When the Prime Minister makes her welcome visit to Israel, will she visit the West Bank, and if so, which Palestinians will she meet there? Will she take the opportunity of putting in clear terms to the Israeli Administration our fears that the Shamir Administration, which is likely to come into being in October, will lead to a new and intensified settlements policy?
    Sir Geoffrey Howe: It would not be in the interests of security, among other things, for me to give any insight into the programme foreshadowed for my right hon. Friend, but, regardless of the changes in Administration that may take place in Israel, whether as a result of rotation or otherwise, I am sure that she will continue to make plain to the Israeli Government the need to take account of the Palestinians and the conditions which they face on the West Bank, along the lines of my earlier answer.

    European Community Policies
    Mr. Knoxasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the development of Community policies in the European Community.
    Mrs. Chalker: We shall continue to work to make the Community competitive in the new technologies and to seek early completion of the internal market, reform of the common agricultural policy, a reduction in the burdens on business, improvements in world trade and strengthened co-operation in foreign policy.
    Mr. Knox: Will my hon. Friend impress on her colleagues at the Treasury that one of the main stumbling blocks to the development of the Community in economic terms is Britain's failure to join the exchange rate mechanism of the EMS?
    Mrs. Chalker: I think my hon. Friend knows well that we are ready to join the exchange rate mechanism when we judge the conditions to be right. However, the balance of the arguments still seems to be that it is not in our interests to do so. When it is, we shall join.
    Mr. George Robertson: Last month the Foreign Secretary described the fight for budget discipline as being a fight without end. In the light of the Treasury and Civil Service Select Committee's report of today, it seems obvious that the fight is about to end with yet another special levy on the British taxpayers in order to bail out the farm budget of the European Community. Just how long does the hon. Lady believe that this fantasy world of finance will hold up, and how long will the British rebate be safe?
    Mrs. Chalker: The British rebate will be safe. Thanks to the pressure of budget discipline in this year's price fixing, there will be a reduction of some £500 million in CAP costs in 1986–87. The hon. Gentleman knows full well that we cannot ignore the 25 per cent. drop in the value of the dollar vis à vis the ecu. We must ensure that the budget council scrutinises the supplementary budget rigorously for potential savings. The Community must stay within the 1·4 per cent. VAT ceiling in 1986–87, in accordance with the Fontainebleau agreement. Every possible effort is being made to stop surpluses at source so that they do not eat up so much of the budget.
    Sir John Biggs-Davison: Why were the terms of the Luxembourg compromise not incorporated in the Single European Act?
    Mrs. Chalker: There is no need for the terms of the Luxembourg compromise to be incorporated in the Single European Act. It is not altered in any way by the European Communities (Amendment) Bill or the Single European Act. It remains as it was and it will continue to be used if and when necessary.

    Uganda
    Mr. Wainwrightasked the Secretary of State for Foreign and Commonwealth Affairs whether, in the light of the recent change of Government in Uganda, he has any plans to increase the number of places available to Ugandan Civil Service trainees at the Civil Service college; and if he will make a statement.
    Mrs. Chalker: President Museveni's Government have asked us to resume our programme of help to the Ugandan Civil Service. An adviser on public administration is now in Kampala to discuss how best this can be done. We shall ensure that the college helps as far as possible to meet Uganda's need for assistance in public administration.
    Mr. Wainwright: Would not a really substantial offer of places for administrative training be a timely and practical support for a new Government who have inherited a terrible legacy of terrorism, violence and disorder? Would not such an offer partly compensate for the British Government's previous provision of military training to Obote's terrorists until a few weeks before he fell?
    Mrs. Chalker: The hon. Gentleman is right to say that Uganda needs help to train her civil servants. That is exactly why we have an adviser on public administration in Kampala to discuss with the Ugandan Government how help can best be provided. Whatever considerations he comes up with will be considered by the Ugandan Government and then by us. We shall help in whatever way we can.
    The second part of the hon. Gentleman's question was uncalled for. British Military Advisory Training Teamtraining was suspended in July 1985, but it was intended to make troops responsible and to act with decision. It was stopped for well-known reasons. The training that the present Ugandan Government under President Museveni have sought is similar to BMATT training, which has been greatly valued across Africa and which is constantly being asked for by nation after nation.

    Nuclear Test Ban
    Mr. George Robertsonasked the Secretary of State for Foreign and Commonwealth Affairs what is his assessment to the current obstacles, besides the question of verification, to the negotiation of a ban on nuclear tests.
    Sir Geoffrey Howe: Any negotiations would need to deal with difficult questions such as scope, duration and compliance, but the key issue is verification. A resumption of negotiations would be premature until there is progress on that.
    Mr. Robertson: The Prime Minister told my right hon. Friend the Leader of the Opposition a fortnight ago that the Government wanted a comprehensive test ban treaty established. If verification is the obstacle, is the right hon. and learned Gentleman aware that the technical problems have already been overcome, to the satisfaction of all the other countries involved in the non-proliferation treaty, and that the Russians have offered on-site inspection—an unprecedented offer, which they have resisted previously? Why are the Government continuing to drag their heels? Is it that they want to go ahead with their own nuclear testing programme and have no interest in a test ban treaty?
    Sir Geoffrey Howe: The Government want progress towards a comprehensive test ban treaty, but we do not accept that recent arguments, including those advanced by the hon. Gentleman, invalidate the conclusions about verification that are to be found in the paper that we presented at the conference on disarmament in July last year.
    Sir Anthony Kershaw: In the light of the mendacity and evasions that we have experienced regarding the Chernobyl disaster, is it any use reaching any conclusions with a power such as the Soviet Union without verification?
    Sir Geoffrey Howe: There is no doubt that the absence of candour by the Soviet Union in reporting or disclosing information about the Chernobyl disaster underlines the importance of the verification issue, which raises similar questions.
    Mr. Deakins: Does the Foreign Secretary accept the growing American view that we cannot ban nuclear testing so long as we rely on nuclear deterrence and the existence of nuclear weapons?
    Sir Geoffrey Howe: We believe that it should be possible to achieve agreement on a comprehensive test ban treaty, and we are certainly committed to seeking progress in that direction.

    Afghanistan
    Mr. Moynihanasked the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the situation in Afghanistan following his recent visit to south-west Asia.
    Sir Geoffrey Howe: I listened to representations from Afghan refugees, and discussed the matter with the Pakistan Government and with the provincial Government in Peshawar. The presence in Pakistan of 3 million refugees poses very real problems. I visited a refugee hospital and camp, and was deeply struck by the human consequences of the war. The key to peace is the immediate withdrawal of Soviet troops from Afghanistan. To that end we fully support the talks at present being held under United Nations auspices.
    Mr. Moynihan: Does my right hon. and learned Friend agree that the Mujahidin must be involved in any peacemaking process?
    Sir Geoffrey Howe: Clearly it is important that the peace-making process should produce an outcome acceptable to the Afghan people.

    Libya
    Mr. Bidwellasked the Secretary of State for Foreign and Commonwealth Affairs what further consideration is to be given by the European Economic Community Council to relations with Libya, in the light of the United States military attack on Libya.
    Sir Geoffrey Howe: The EC member states have already put in place a wide range of measures designed to combat Libyan-inspired terrorism, and have made plain their determination to resist it. That has also been the subject of close consultation with the United States, most recently at the Tokyo summit, where agreement was reached on a continuing programme of effective collective action.
    Mr. Bidwell: Is it not clear that the Foreign Secretary is the odd man out in the EEC regarding the United States' bombing attack on Libya? Has he learnt lessons from that, and will he give us an assurance that there will be no repeat performance?
    Sir Geoffrey Howe: It is far from clear that I occupy the position of odd man out. Indeed, the extent to which we could secure widespread agreement throughout the Community in support of the action programme we have suggested is remarkable.

House of Commons Crest (Circulars)
3.32 pm
Mr. Tony Marlow: On a point of order, Mr. Speaker. This is an important and somewhat urgent matter, and I am sure that the whole House, particularly in view of the urgency, will value your opinion and advice.
In the notes, "House of Commons Stationery and Post Paid Envelopes", paragraphs 4 and 5, which deal with circulars, state that such circulars, with
"Crowned Portcullis or the Royal Arms, whether or not associated with the words 'House of Commons'…must not be used…in…supporting the return of any person to public office."
I understand that there have been reports from west Derbyshire that a large number of circulars have been circulated with the name of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) on them, postulating and supporting the candidature of a certain gentleman for this House. It seems to me that that does not comply with those particular notes.
Unaccountably, no Liberal Members are present. It may well be that one could be found, and could disagree with my point and tell us that this is not the case. Were it to be the case, in view of the imminence of the by-election tomorrow, it would be a service to the House and, particularly, to the Liberal party if you could let us know, Mr. Speaker, whether that is a proper practice. If it is not a proper practice, I am sure that that party will do all in its power to withdraw the circulars.
Mr. Speaker: The hon. Gentleman correctly read from the guidance to Members about how the crowned portcullis should and should not be used. He mentioned "reports" in west Derbyshire. If he will let me have the evidence, I shall look into the matter.

Prohibition of Plastic Bullets
3.34 pm
Mr. Dennis Canavan: I beg to move,
That leave be given to bring in a Bill to prohibit the use of plastic bullets in the United Kingdom.
On Easter Monday in Portadown, Northern Ireland, Keith White was struck on the head by a plastic bullet fired by a member of the Royal Ulster Constabulary. His death a fortnight later brought to 16 the total number of people killed by plastic or rubber bullets used by the security forces in Northern Ireland. Hundreds more have suffered serious injury. A Minister from the Northern Ireland Office told me on the Floor of the House last Thursday that, since the Government started collating official statistics on these injuries, since 17 March 1981, 326 people have suffered serious injuries. There had been many more before that. The casualties include people who have been blinded, people who have been paralysed and people who have suffered brain damage.
Most disturbing of all, perhaps, is the fact that most of the victims have been children or young people, many of them completely innocent of riotous behaviour; for example, Francis Rowntree, aged 11, who died in April 1972; Stephen Geddis, aged 10, who died in August 1975; Brian Stewart, aged 10, who died in October 1976; Paul Whitters, aged 15, who died in April 1981; Julie Livingstone, aged 14, who died in May 1981; Carol Ann Kelly, aged 12, who died in the same month; and Stephen McConomy, aged 11, who died in April 1982.
Ministers, senior Army officers and senior police officers euphemistically refer to plastic bullets as "baton rounds", but this euphemism does not detract from their lethal nature. Indeed, no one should be surprised at their lethal nature. I have one here which I can show to the House. It is about 4 in. long and 1·5 in. in diameter and weighs over 4 oz. In weight and hardness, it has been likened to a cricket ball, but, of course, its cylindrical shape makes it more lethal on impact. We must also remember that the muzzle velocity is over 160 mph—more than twice as fast as the fastest of fast bowlers. The impact energy of a plastic bullet is 210 ft/lb at 5 yd and over 110 ft/lb at a distance of 50 yd.
Accurate research done by the United States army in the 1970s—research, by the way, which was done by maiming and killing poor dumb animals—indicated that impact energy of over 120 ft/lb invariably resulted in either death or severe critical injury. So the evidence that these weapons are lethal has existed for some time.
The intended range of the plastic bullet is 35 to 70 yd, but it has been known for them to be fired at point-blank range. For example, of the death of Mrs. Mora McCabe in July 1981 reliable witnesses said that Mrs. McCabe was struck by a plastic bullet that had been fired from a range of only 2 yd.
It is obvious that, if this situation is allowed to continue in Northern Ireland, it is only a matter of time until it spreads to the rest of the United Kingdom. Plastic bullets of this kind have already been issued to 13 British police forces, the members of which presumably have been or are being trained to use them.
I admit that there are different views about the best way of controlling riots or the best way of solving the complex problems underlying riots. Until recently, in Northern Ireland, it was probably true that attitudes towards the use

151
of plastic bullets depended very much on people's political or religious views, perhaps because most, if not all, of the victims came from families of Republican tradition. But the recent tragic death of Keith White, who came from a Unionist family, has brought condemnation of the use of plastic bullets from many people in the Unionist community too.
Whatever political or religious views people have, and whatever their views on the best solution to the Northern Ireland problem and on the best way to control riots, wherever and whenever they occur, surely we can all agree that the use of lethal weapons by the security forces makes things worse rather than better. It is undeniable that plastic bullets kill and maim innocent people. How many more children and young people will have to die before the House abolishes such a barbaric practice for ever from the whole of Great Britain and Northern Ireland? I ask the House to support my Bill.
3.41 pm
Sir Eldon Griffiths rose—
Mr. Speaker: Does the hon. Gentleman seek to oppose?
Sir Eldon Griffiths: Yes, Sir.
No police officer has any desire to be armed. In fact, the most distasteful duty of the police is the duty on occasion of taking arms and using them. However, the police are entitled to look to their police authorities and ultimately to the House to provide them with all necessary means of protecting themselves and the public from the attacks of violent men. It is in that sense that I shall argue against leave being given for the hon. Member for Falkirk, West (Mr. Canavan) to introduce the Bill.
Fifteen years ago there was no need for the police to have access to baton rounds, but two dangerous developments have changed the environment in which the police today must confront violent men. The first development is the increased use of guns by criminals. The police predicted this w hen the House abolished the capital sentence, but whether that be the reason or not, the fact is that today armed criminals regularly take out and use firearms.
The second development is that too many men of violence who threaten the peace, whether at demonstrations, pickets or riots, nowadays throw petrol bombs which subject the police to terrible casualties, inflicted not at close quarters but at long range, at a distance of scores of yards. One result of this use of petrol bombs is that the police tactic of facing down mobs by body contact, by means of the thin blue line, has had to be reconsidered.
Last year 15,000 police officers were injured. That figure has been provided by the Criminal Injuries Compensation Board. In these circumstances, it is asking, too much to require the police to stand there like sitting ducks while wild men throw petrol bombs at them.
It is against this background that the Association of Chief Police Officers has been examining the pros and cons of baton rounds. The association had before it, as the hon. Gentleman fairly said, the experience of the Royal Ulster Constabulary. What the RUC has discovered is that baton rounds, selectively used, can and do make riot control easier and safer. They also make it much less lethal to the police and to the rioters alike. The baton round, in fact, can and does save lives. It has done so in Northern Ireland.
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The technical advantages of the baton round can be stated simply. First, unlike horses, gas or water cannon, the baton round is selective and discriminate. Instead of dousing large numbers of people with 'gas or water, the baton round can be used with precision against a specific individual who is hurling the petrol bombs or—as has happened—firing a gun at the police. Secondly, the baton round causes less damage than the regular firearm. There can be occasions when a dangerous criminal is cornered and it might be better to tackle him with a baton round that stuns or incapacitates than to use a rifle or a ruger that kills.
The third advantage of the baton round is that it can and does create space between the police line and the mob. That makes it impossible for the stones and the petrol bombs to carry as far as the police line and so cause vastly more casualties for the police.
The rules of engagement for the RUC, and certainly for the police on this side of the water, in respect of baton rounds, are precise. Let me remind the House of the rules for the Metropolitan police.
First, no baton round or discharger may be issued without the specific personal consent of a senior officer. Secondly, only trained marksmen may be authorised to draw baton pistols. And those officers must first have completed the full training for firearms officers, and refreshers, and they must also have completed a further course in the use of baton rounds. More importantly, no order to fire a baton round may be given in the Metropolitan police until the Commissioner — Sir Kenneth Newman personally — has given his direct consent. So far, no such order has been given. I hope that it will never be.
The House, however, is confronted with the decision whether today to give consent to the introduction of a Bill that could settle the matter for ever. If we consented to the Bill, it would mean that we had decided the issue, not on the basis of mature consideration of the evidence, not on the basis of my right hon. Friend the Home Secretary's advice, which I understand is now in preparation in the Home Office, not even on the basis of any study of this complex matter by any Committee of the House. Instead, we are invited, without even seeking, let alone listening to, the views of the police service, to settle the matter on the basis of emotion and of distaste for allowing the police access to the improved technology that they need to do their job.
I shall be interested to discover how the Opposition Front Bench vote. As one who wholeheartedly welcomes the recent Shadow Cabinet conversion to the need to condemn and contain mob violence wherever it happens, and who welcomes their desire to get rid of the anti-police militants that still disfigure the fringes of the Labour party, I hope that on this occasion they will not vote to deny the police the tools that they may need for the job.
If the motion were to be carried it would mean simply that we were saying, perhaps for all time, that the police should not have access to what could become a necessary tool for fighting terrorism as well as maintaining public order.
Voting for the motion, in the eyes of the police and. I believe, the public, would indeed be to deny the forces of law and order not a desirable, not a welcome, not even a sought-after weapon, but a means which could prove

153
necessary to defeat the forces of violence and, in the process, to save the lives and limbs of many innocent people, including policemen.
Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 85, Noes 184.

Division No. 170]

[3.50 pm

AYES

Anderson, Donald

Leadbitter, Ted

Archer, Rt Hon Peter

Leighton, Ronald

Barron, Kevin

Lewis, Ron (Carlisle)

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

McDonald, Dr Oonagh

Bidwell, Sydney

McGuire, Michael

Boyes, Roland

Mallon, Seamus

Bray, Dr Jeremy

Marek, Dr John

Buchan, Norman

Meacher, Michael

Callaghan, Jim (Heyw'd & M)

Mikardo, Ian

Campbell-Savours, Dale

Mitchell, Austin (G't Grimsby)

Canavan, Dennis

Morris, Rt Hon A. (W'shawe)

Clark, Dr David (S Shields)

Nellist, David

Clay, Robert

O'Neill, Martin

Clelland, David Gordon

Park, George

Clwyd, Mrs Ann

Patchett, Terry

Cook, Frank (Stockton North)

Pavitt, Laurie

Corbett, Robin

Pike, Peter

Cox, Thomas (Tooting)

Powell, Raymond (Ogmore)

Crowther, Stan

Radice, Giles

Davies, Ronald (Caerphilly)

Randall, Stuart

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

Raynsford, Nick

Deakins, Eric

Richardson, Ms Jo

Dixon, Donald

Roberts, Allan (Bootle)

Dubs, Alfred

Roberts, Ernest (Hackney N)

Eastham, Ken

Rogers, Allan

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

Ross, Ernest (Dundee W)

Ewing, Harry

Rowlands, Ted

Fisher, Mark

Sheerman, Barry

Foster, Derek

Shore, Rt Hon Peter

Fraser, J. (Norwood)

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

Garrett, W. E.

Skinner, Dennis

Godman, Dr Norman

Stewart, Rt Hon D. (W Isles)

Gould, Bryan

Thomas, Dafydd (Merioneth)

Hamilton, James (M'well N)

Thomas, Dr R. (Carmarthen)

Hamilton, W. W. (Fife Central)

Wardell, Gareth (Gower)

Heffer, Eric S.

Wareing, Robert

Hogg, N. (C'nauld & Kilsyth)

Wigley, Dafydd

Home Robertson, John

Williams, Rt Hon A.

Hoyle, Douglas

Wilson, Gordon

Hughes, Roy (Newport East)

Young, David (Bolton SE)

Hughes, Sean (Knowsley S)

Hume, John

Tellers for the Ayes:

Jones, Barry (Alyn & Deeside)

Mr. David Winnick and Mr. Tony Banks.

Kilroy-Silk, Robert

Lamond, James

NOES

Alexander, Richard

Brinton, Tim

Arnold, Tom

Brooke, Hon Peter

Aspinwall, Jack

Brown, M. (Brigg & Cl'thpes)

Atkins, Rt Hon Sir H.

Buck, Sir Antony

Baker, Nicholas (Dorset N)

Budgen, Nick

Beaumont-Dark, Anthony

Bulmer, Esmond

Best, Keith

Butcher, John

Bevan, David Gilroy

Butterftll, John

Biffen, Rt Hon John

Carlisle, John (Luton N)

Biggs-Davison, Sir John

Carlisle, Kenneth (Lincoln)

Blackburn, John

Cash, William

Blaker, Rt Hon Sir Peter

Chalker, Mrs Lynda

Bonsor, Sir Nicholas

Channon, Rt Hon Paul

Boscawen, Hon Robert

Chapman, Sydney

Bottomley, Peter

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

Bottomley, Mrs Virginia

Clark, Sir W. (Croydon S)

Bright, Graham

Clarke, Rt Hon K. (Rushcliffe)

154

Cockeram, Eric

Monro, Sir Hector

Colvin, Michael

Morris, M. (N'hampton S)

Conway, Derek

Morrison, Hon P. (Chester)

Coombs, Simon

Murphy, Christopher

Cope, John

Nelson, Anthony

Corrie, John

Neubert, Michael

Couchman, James

Osborn, Sir John

Critchley, Julian

Ottaway, Richard

Dickens, Geoffrey

Page, Richard (Herts SW)

Douglas-Hamilton, Lord J.

Patten, Christopher (Bath)

Dunn, Robert

Patten, J. (Oxf W & Abgdn)

Durant, Tony

Pawsey, James

Edwards, Rt Hon N. (P'broke)

Penhaligon, David

Eggar, Tim

Portillo, Michael

Eyre, Sir Reginald

Powell, Rt Hon J. E.

Fallon, Michael

Powell, William (Corby)

Favell, Anthony

Powley, John

Fenner, Mrs Peggy

Prentice, Rt Hon Reg

Finsberg, Sir Geoffrey

Price, Sir David

Forth, Eric

Proctor, K. Harvey

Fox, Marcus

Renton, Tim

Fraser, Peter (Angus East)

Ridley, Rt Hon Nicholas

Fry, Peter

Ridsdale, Sir Julian

Gale, Roger

Roberts, Wyn (Conwy)

Garel-Jones, Tristan

Robinson, Mark (N'port W)

Goodhart, Sir Philip

Roe, Mrs Marion

Goodlad, Alastair

Rost, Peter

Gorst, John

Rowe, Andrew

Gow, Ian

Ryder, Richard

Gower, Sir Raymond

Sainsbury, Hon Timothy

Grant, Sir Anthony

Sayeed, Jonathan

Greenway, Harry

Shaw, Giles (Pudsey)

Grist, Ian

Shelton, William (Streatham)

Hamilton, Hon A. (Epsom)

Silvester, Fred

Hampson, Dr Keith

Sims, Roger

Harris, David

Skeet, Sir Trevor

Harrison, Rt Hon Walter

Soames, Hon Nicholas

Haselhurst, Alan

Speed, Keith

Hawkins, Sir Paul (N'folk SW)

Speller, Tony

Hayhoe, Rt Hon Barney

Spicer, Jim (Dorset W)

Heathcoat-Amory, David

Stanbrook, Ivor

Higgins, Rt Hon Terence L.

Stanley, Rt Hon John

Holland, Sir Philip (Gedling)

Stern, Michael

Hordern, Sir Peter

Stewart, Andrew (Sherwood)

Hunt, John (Ravensbourne)

Stewart, Ian (Hertf'dshire N)

Jackson, Robert

Tapsell, Sir Peter

Jessel, Toby

Taylor, Rt Hon John David

Jones, Robert (Herts W)

Taylor, John (Solihull)

Kellett-Bowman, Mrs Elaine

Temple-Morris, Peter

Kennedy, Charles

Terlezki, Stefan

Kershaw, Sir Anthony

Thomas, Rt Hon Peter

King, Roger (B'ham N'field)

Thompson, Donald (Calder V)

Knight, Dame Jill (Edgbaston)

Thorne, Neil (Ilford S)

Latham, Michael

Thurnham, Peter

Lee, John (Pendle)

Townend, John (Bridlington)

Leigh, Edward (Gainsbor'gh)

Townsend, Cyril D. (B'heath)

Lennox-Boyd, Hon Mark

Tracey, Richard

Lloyd, Peter (Fareham)

Twinn, Dr Ian

Lord, Michael

Waddington, David

Lyell, Nicholas

Wakeham, Rt Hon John

McCrindle, Robert

Waldegrave, Hon William

McCurley, Mrs Anna

Walden, George

MacGregor, Rt Hon John

Walker, Bill (T'side N)

MacKay, Andrew (Berkshire)

Ward, John

MacKay, John (Argyll & Bute)

Warren, Kenneth

McQuarrie, Albert

Watts, John

Maginnis, Ken

Wells, Sir John (Maidstone)

Malone, Gerald

Whitney, Raymond

Marlow, Antony

Winterton, Nicholas

Marshall, Michael (Arundel)

Wolfson, Mark

Mather, Carol

Wood, Timothy

Maude, Hon Francis

Wrigglesworth, Ian

Maxwell-Hyslop, Robin

Young, Sir George (Acton)

Mayhew, Sir Patrick

Meyer, Sir Anthony

Tellers for the Noes:

Miscampbell, Norman

Sir Eldon Griffiths and Mr. Jerry Hayes.

Molyneaux, Rt Hon James

Question accordingly negatived.

Orders of the Day
  Finance Bill

    (Clauses 2, 15, 26 and 80)
    Considered in Committee [Progress 6 May]
    [MR. ERNEST ARMSTRONG in the Chair]
    Motion made, and Question proposed,
    That the Order of the Committee [6th May] be amended and that Clause No. 80 be considered before Clause No. 2.—[Mr.
    Moore.]
    4 pm
    Mr. Ian Wrigglesworth: With your permission, Mr. Armstrong, I should like to press the Financial Secretary to explain the change in business. As the Committee will recall, yesterday we had before us a procedural motion which outlined the order in which the clauses would be taken on the Floor of the House. Some of us, especially those who had tabled a motion to reduce the petrol price by 2p, which was to have been considered first this afternoon, were surprised at the motion to change the order of business. It would be helpful to the Committee if the right hon. Gentleman explained why this rather unusual and rapid change of business has been proposed.
    The Financial Secretary to the Treasury (Mr. John Moore): For the convenience of the Committee, I shall explain the reason. I shall not go into the substance of the point. The proposed amendment may not lead to a reduction in the price of petrol. It may lead to an increase in vehicle excise duty. I thought that it would be for the convenience of the official Opposition if we took the clauses in a different order. That matter was considered through the usual channels. We have plenty of time, I gather, to discuss both issues. That was the sole reason for the change.
    Mr. Wrigglesworth: With your permission Mr. Armstrong, I do not think that that is a very satisfactory explanation. As the Financial Secretary and the Committee will know, the price of petrol considerably affects rural areas, not least areas such as west Derbyshire and Ryedale. I always hesitate to think badly of Ministers, or of the usual channels, which do not incorporate these Benches, but, like other hon. Members, I shall be interested to hear the attitude of the Labour party to the change of business. Last year on the Finance Bill, the Labour party opposed changes in the price of petrol and the increase in petrol duty. I had assumend that Labour Members would want to seek the full glare of publicity for the alliance motion by taking it early in the debate, so that voters in tomorrow's elections and all the people in rural areas could note that the alliance and Labour Members opposed the increase in petrol tax and—
    The First Deputy Chairman of Ways and Means (Mr. Ernest Armstrong): Order. The hon. Member must not debate his proposed amendment on petrol. He must stick to the business of the Committee.
    Mr. Wrigglesworth: Of course, Mr. Armstrong, but I think that you will agree that it is unusual for the business to be changed in this way. Although the inheritance tax
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    —it is proposed to be the first business that we consider—is important to some, it is not important to the large majority of people in the same way as petrol duty, which the Government have increased substantially. For that reason, my hon. Friends and I were anxious to have an extensive debate on the increase in petrol taxes arid an opportunity to reduce the price of petrol, especially for people in rural areas.
    Mr. William Powell: Am I not right in thinking, from the way in which the hon. Member for Stockton, South (Mr. Wrigglesworth) is advancing the argument, that the alliance's policy is that vehicle excise duty could be phased out to a nominal level—
    The First Deputy Chairman: Order. If the hon. Member goes down that road, he will clearly be out of order.
    Mr. Wrigglesworth: I should have been happy to respond to that point, but I shall bear in mind your ruling, Mr. Armstrong.
    This is an important matter, not only to those in rural areas but to all car owners and to businesses which will have to pay more than the duty because of the Government's increases in petrol tax. The Committee deserves a better explanation of the reasons why the Labour party and the Conservative party got together through the usual channels to stop the debate on the alliance motion from taking place in the early part of the evening, and to shuttle it off into the late hours when it would not receive the public attention that it deserved.
    Mr. Terry Davis: It may help the Committee if I responded—
    Dr. Keith Hampson: On a point of order, Mr. Armstrong. I trust that you will allow us to proceed, because this is clearly a blatant example of cheap electioneering by those—
    The First Deputy Chairman: Order. That is not a point of order for me.
    Mr. Davis: It may help the Committee —[Interruption.] I thought that the alliance was anxious to get on with the debate. The Labour party is certainly anxious to debate the increase in petrol tax and the abolition of capital transfer tax on gifts.
    I make it clear that there was no question of the Labour party and the Conservative party getting together. [Interruption.] I do not usually divulge what happens through the usual channels, but on this occasion I shall. It was a matter not of the Conservative party and the Labour party getting together but of the Government responding to a perfectly proper request by the Opposition about the order in which—[Interruption.] The hon. Member for Stockton, South (Mr. Wrigglesworth) claimed that he would like to understand the reasons. If he restrains himself a little, I shall give him all the reasons.
    The Labour party made a request to the Government. We appreciate the Government's courtesy and their willingness to accommodate us. When the hon. Member for Stockton, South has more experience of our proceedings in Standing Committees on Finance Bills—
    Mr. Wrigglesworth: I sat on many when the hon. Gentleman was not a Member.
    Mr. Davis: Perhaps the hon. Gentleman will study the debate more closely and attend more frequently.

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    My experience of Standing Committees on Finance Bills is that representatives of the alliance have been more noticeable by their absence than by their presence. I shall not go any further. I was going to explain why I asked the Government to change the order of business. I realise that the reason may be strange to the alliance, but my hon. Friend the Member for Thurrock (Dr. McDonald) will deal with the capital transfer tax provisions and, as a gentleman, I wanted the lady to speak first.
    Mr. K. Harvey Proctor: Like the hon. Member for Stockton, South (Mr. Wrigglesworth), I have tabled an amendment to clause 2, but, unlike the hon. Gentleman and his alliance colleagues, I feel that my amendment is so important that I am prepared to stay, no matter how late the debate goes. Alliance Members merely want to dash off home.
    Mr. Charles Kennedy: I should like to support the comments of my hon. Friend the Member for Stockton, South (Mr. Wrigglesworth). Last week, during Scottish Question Time, we had exchanges with Scottish Office Ministers about the price of petrol. Because I represent a highlands and islands constituency, the matter is obviously of considerable importance to me. I was therefore extremely pleased that my alliance colleagues took the opportunity this afternoon to table an amendment on petrol prices and so enable us to have a debate during which I could express some of the genuine concerns in that part of the United Kingdom.
    Mr. Terry Davis: Does the hon. Gentleman realise that we shall debate clause 2 when the alliance allows us to proceed with the business? We shall deal with capital transfer tax, and then petrol tax. The alliance seems to be concerned about the petrol tax, and I am delighted to note that, because last year when we debated the petrol tax I did not notice alliance Members in either Division Lobby. They did not vote for the Government, or against them. It seems that this year they have decided that this is the most important political issue of the moment. It is certainly extremely important. It was important to the Labour party last year, as it is this year. It seems that it is important to the alliance only this year. I can only conclude that there is something different about this year. Perhaps it has something to do with the fact that tomorrow there will be by-elections and there were none at this time last year.
    Mr. Kennedy: I feel that the hon. Gentleman's memory is somewhat at fault. If he looks at the Division lists of a year ago, he will find that the alliance firmly took the view that we were willing to support indexation. Perhaps the hon. Gentleman will check on that, and if my memory is wrong I shall retract what I said, with apologies. However, that is my firm recollection.
    I know that Ministers appreciate that this is an important issue for rural areas, and no more so than for the Highlands and Islands of Scotland. That is why it struck me that the opportunity for a debate at this time of the day, when considerable public attention would be focused on it, was worth while. I find it somewhat disappointing that those who are only too willing to call for debates at certain times of the day in order to focus public attention on them—quite rightly on major issues, whatever they may be
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    —are willing to turn that argument on its head when it suits them to ensure that this issue is not debated now. I echo the disappointment expressed by my hon. Friend the Member for Stockton, South.
    Dr. Hampson: There is much indignation about this matter. Will the hon. Gentleman say whether he and his colleagues and members of the Liberal party will vote on this issue? Does it matter so much? Is it the timing that matters, or are they so serious that they will vote on this issue?
    Mr. Kennedy: The hon. Gentleman should wait and see. [Interruption.] The hon. Member for Lancaster (Mrs. Kellett-Bowman) should look at my Division record.
    Mr. John David Taylor: Will the hon. Gentleman explain to me, a mere Ulster Unionist Member excluded from the main stream of British politics, why Conservative Members seem to want to avoid this issue?
    Mr. Kennedy: I am not quite sure what the issue is to which the hon. Gentleman is referring. If I assume, as I am sure the Chair would want me to, that he is referring to the issue that we are debating, I share his sense of curiosity. I am sure that his constituents, like mine, will share a sense of disappointment when it is known locally that this important matter, which deserves public debate and has been raised consistently by alliance Members and by others from both sides of the House—
    Mr. John David Taylor: And Ulster Unionists.
    Mr. Kennedy: —representing all shades of political opinion, is not to be debated at this time. Like my hon. Friends the Members for Truro (Mr. Penhaligon) and for Stockton, South, I should like to express my considerable regret that the usual channels have taken this short-sighted and damaging decision.
    Mr. Nicholas Lyell (Mid-Bedfordshire): On a point of order, Mr. Armstrong. Is it in order for the hon. Gentleman, who represents a party which has consistently voted with the Labour party to raise rates, to introduce a populist tax-cutting measure on the eve of a by-election without explaining how the alliance will pay for its high-spending policies?
    Mr. David Penhaligon: I am inherently far less suspicious of my hon. Friends. I have no doubt that Conservative Members are rather disappointed that we will not have an opportunity to discuss petrol tax first. My complaint is not that the change has taken place. It is conceivable that the reasons and arguments put forward for the change through the official channels are such that if one were familiar with them one would accept them. My complaint is that, although somebody might have been inconvenienced by the original prescribed order of business, that is what was announced, and that is what we all react to and try to deal with.
    Changes have been made, and I might approve of them if I knew the reasons. The fact is that alliance Members are excluded from discussions on proposed changes and therefore we cannot make a value judgment on the reasons for the changes. It may be that the reasons are overwhelming and that we would be more than willing to go along with them, but we were excluded from the discussions. Having been a member of the House for a while, although I would regard my level of suspicion as very low, I cannot help but wonder whether putting the

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    petrol debate off has something to do with polling day tomorrow. I could not say that with confidence, but one wonders whether behind the scenes the request was subject to other considerations. That is the point that we are making.
    If there is to be an official change in business—I accept that without them the House could not operate—more than just the official Opposition should be involved in those channels. In an odd way it does the Government no good, because it looks as though they are operating a Lab-Con pact—which many of us suspect they operate, to their mutual benefit — and to limit the alliance's opportunity to argue its case. That is my moderate case compared with the more strident views expressed by my hon. Friends the Members for Stockton, South (Mr. Wrigglesworth) and for Ross, Cromarty and Skye (Mr. Kennedy). I believe that the way in which the business has been changed is unsatisfactory.
    4.15 pm
    Mr. William Powell: I know that the House is keen to come to a decision on this matter as quickly as possible, and the arguments have been canvassed. However, there can be no doubt that in the context of this year's budget the decisions which the Government have made on the abolition of capital transfer tax and its replacement by inheritance tax are of fundamental importance.
    The House listened with respect, as it always does, to the hon. Member for Birmingham, Hodge Hill (Mr. Davis) telling us why the official Opposition wish to deal with this issue as a matter of priority. The hon. Gentleman's reasons are cogent enough for the Committee to follow and to support the motion which my hon. Friend the Financial Secretary has proposed.
    The Liberal party and the alliance are always making great play of the fact that they support small businesses. The future of small businesses, especially in Ryedale and West Derbyshire, to which the hon. Member for Stockton, South (Mr. Wrigglesworth) referred, are of fundamental importance. I do not have the slightest doubt that all those in those constituencies who can see that their businesses are threatened by the continuation of capital transfer tax will be conscious of the fact that the alliance parties are postponing the decision while the rest of the Committee, including the official Opposition, wish to get on with it.
    Mr. Moore: I am sure that we wish to proceed to the real business of the day. I have some sympathy with the comments of the hon. Member for Truro (Mr. Penhaligon). I understand his sense of being excluded, and his concern. However, I remember the awkwardness of the poor alliance parties last night. Between the Second Reading of the Bill and last night they decided not to vote, having voted on one key issue—income tax.
    They obviously want to move on with the business as rapidly as possible, because they might change their mind between now and when the issue is raised in the next hour or two.
    Having said that, I am looking forward with enormous pleasure, especially remembering the Public Accounts Committee and the contributions of the hon. Member for Truro (Mr. Penhaligon), let alone the Liberal party's policy document of 22 April on the environment and vehicle excise duty, to the debate on the motorist, because the Government have an outstanding record on that issue.
    Question put and agreed to.
    Resolved,
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    That the Order of the Committee [6th May] be amended and that Clause No. 80 be considered before Clause No. 2.

    Clause 80

      LIFETIME TRANSFERS POTENTIALLY EXEMPT ETC.
      Question proposed, That the clause stand part of the Bill.
      Dr. Oonagh McDonald: I am glad that we are debating clause 80 first because, as has already been said in the earlier exchanges, this is a fundamental change in our tax system. That will be the burden of my argument.
      Clause 80 removes tax from lifetime gifts and leaves only what is called the inheritance tax, which applies to bequests and lifetime gifts into discretionary trusts. This change was greeted immediately it was announced in the Budget by the press and the accountancy profession as a return to the former estate duty tax. That was a voluntary tax, which was once described as a tax paid only by the mean, the ignorant, the unsophisticated, the patriotic or the peculiarly unfortunate. I doubt whether the Government can expect much revenue from that source in future.
      It was interesting to see that some of the press comment roundly condemned those changes. In an article in The Guardian on 1 April 1986, Victor Keegan said:
      "One budget day estimate…reckoned that if the Duke of Westminster's estate was—probably conservatively—estimated at £2 billion then Mr. Lawson, at the stroke of a pen, has made him wealthier by at least £600 million.
      Obviously that won't happen immediately, but it is nevertheless real money, resources that could be used over time to build schools, houses and all the other things that are desperately needed."
      That is all part of the Government's policy, and the article describes the Government's main achievement as
      "the most extensive redistribution of wealth from poorer to richer people…in living memory."
      Clause 80 is part of that pattern. That is why, unlike the Social Democratic party and the Liberals, we cannot regard it as an issue that concerns only a few. It is a fundamental change. It is an important step in the process on which the Government embarked in 1979, of redistributing wealth from the poorer to the richer.
      Mr. Nicholas Baker: I am interested in what the hon. Lady has said, but it seems to me to be a question not so much of redistribution as of how the burden of taxation is felt. Does the hon. Lady think it fair that we should move towards a situation in which institutions and companies are in the same position as individuals, with regard to capital taxation?
      Dr. McDonald: We must have a fairer distribution of the burden of taxation between individuals' earned income and the unearned income that may derive from investments through an institution or the individual's personal ownership of wealth. The Government have altered that distribution of the burden of taxation in favour of the better off, without any proper justification. That is what my argument is about.
      The Chancellor suggested that CTT was an anti-enterprise tax. Few other countries view it in that way. Twenty countries out of the membership of the Organisation for Economic Co-operation and Development have both an inheritance tax and some sort of gift tax to supplement it. America has had a gift tax to supplement its estate duty since 1932, and nobody would describe America as running an anti-enterprise tax system.

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      The Government were utterly determined finally to kill off tax on lifetime gifts. That tax has been eroded throughout the lifetime of the Government, and now it is finally to be polished off altogether.
      I talked earlier about the need to distribute better the burden of taxation between individuals' earned income and income deriving from the capital that people own. It is worth reminding ourselves how wealthy some people in our community are. The most wealthy 1 per cent.—that is, about 420,000 adults—own among them £150 billion, according to the 1983 estimate. I refer only to marketable wealth. That is enormous wealth, which is concentrated in very few hands.
      Let us look at the next most wealthy group—4 per cent. of adults, about 1·7 million people, also own among them about £150 billion. That is an enormous concentration of wealth. It will not be redistributed in any way by removing the tax on lifetime gifts and leaving only an inheritance tax. That will do nothing to achieve that. It will do nothing for the economy as a whole. It has no economic or social justification whatsoever.
      Tax on lifetime transfers has been reduced so much during the lifetime of the Tory Government, first in 1979 and then from 1983 onwards, that it already constitutes less than 1 per cent. of total Inland Revenue receipts. That is a very small proportion, yet the Government think that it is too much to place on the richest members of our community, so even it is to be abolished altogether, leaving only the inheritance tax, which has been described as a voluntary tax. No wonder the Chancellor's proposals are well described as a step back into the future.
      Let us look at what has happened with the remaining inheritance tax. Accountants and other tax advisers have been quick to point out that it can be avoided altogether. One has to take a chance on it. One gives away one's assets, and one has to live another seven years after that gift has been made. The only strength in the Chancellor's proposals is that one has to give away one's assets altogether. One does not retain any interest in or control over them. At least that is something, although I doubt whether it will be enough to prevent the tax planning that is already going on.
      The inheritance tax will fall on what some people describe as the middling rich—those with estates of up to £250,000, who probably do not wish to take the risk of parting with their assets during their own lifetime. The tax will not fall on the super-rich, because they will be able to make disposals of their assets during their own lifetime. They can afford to do so. Therefore, the tax is in no way directed towards the richest members of our community, who are more able to bear a greater burden of taxation. This is a tax which, at best, will fall on the not-so-rich members of our community, but even there the tax avoidance business is already under way.
      I should like to refer to some of the suggestions that have been canvassed in the financial press. I shall take a selection of examples and then seek the Minister's assurances. My first example is the activities of the insurance industry, which the Government thought they had killed off in clause 80. It is at it again. According to the Financial Times of 26 April, Equitable Life, Britain's oldest mutual life assurance company, has issued four
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      types of temporary protection contracts to enable people to avoid the inheritance tax. That is one proposal that is already under way.
      In another article in the Financial Times of Saturday 22 March, Stuart Chapell of the accountancy firm Neville Russell suggests a further possibility:
      "You could provide for the trust to be wound up"—
      one's children could be the beneficiaries of that trust—
      "and the trust property handed back to you if some contingent event occurred."
      That means an event altering one's financial status.
      Another suggestion is the possibility of setting up a particular sort of trust. Accountancy Age of 25 March 1986 says that the Finance Bill
      "has not moved to attack interest-free loans, the heart of the old inheritance trusts."
      In the article, an expert is quoted as saying:
      "The trusts could return on the basis of a specific settlor exclusion. And anyone who had a flexible trust set up before the Budget can still make large loans repayable over 15 or 20 years."
      That is another example of a possible form of evasion. There are a number of examples of work under way by accountancy firms and insurance companies to see how inheritance tax can be avoided, not necessarily by the super-rich — they will not necessarily be hit by inheritance tax—but by the middling rich.
      4.30 pm
      I want an assurance from the Minister that schedule 18 to the Bill will be carefully examined before its Committee stage. I hope that the Government will look at the work that is already under way by the tax planning industry and that they will ensure that amendments are tabled for consideration in Committee, to take effect during this financial year, to plug any loopholes. In Committee on the Finance Bill, it is usual to examine proposals to plug gaps in the legislation one year, or perhaps two years, later. I want the Minister's assurance that the proposals that were canvassed in the financial press barely a month after the Budget, to enable the better-off to avoid tax, wherever possible, will be looked at carefully.
      Another implication of clause 80 relates to accumulation and maintenance trusts. Gifts into such trusts are completely free of tax. The Minister knows that such trusts benefit those under 25 years of age. In particular, they are designed to pay school fees. Peter Leach of Stoy Hayward was reported in The Times of 19 March 1986 as saying:
      "The abolition of the tax introduces a whole new area of estate planning for family companies, and possibilities for the creation of trusts to assist in the payment of school fees."
      That report appeared the day after the Budget.
      Work has gone ahead straight away to find out how clause 80 will advantage the better-off. Money can be paid free of tax by grandparents or parents to cover school fees. Those who are already privileged will pay for the education of their children at private schools free of tax. Wealthy people who set up trusts to pay for the private education of their children forgo tax at the expense of other taxpayers who cannot afford to send ther children to private or public schools. They have to send their children to state schools, a system of education that the Government persistently have undermined since 1979.
      Although in previous years grandparents could pay only £3,000 a year into a trust fund—if they paid more it had to be deducated from the £67,000 inheritance tax exemption — the sum is not now to be limited. Any amount can be paid into trusts of this kind to provide privileged education for the children of the better-off, at

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      the expense of other taxpayers. Expenditure on state education has fallen from 5·5 per cent. of gross domestic product in 1978–79 to a planned 4·6 per cent. of GDP in 1986–87. In other words, support money has been removed from the state system. A very important consequence of this clause is that the children of the better-off will be sent to private schools, at the taxpayers' expense. The clause is designed to reduce the burden of tax on the rich and the very rich in our society. It increases the burden of taxation on those with average and below average incomes, a process that has continued since 1979. As a proportion of income, if one adds together tax and national insurance insurance, their burden has increased.
      As The Guardian rightly pointed out, the Government have jigged and rejigged the tax system so that the poor pay proportionately more and the rich pay proportionately less. At the same time, money is being taken from the public services upon which the great mass of the people depend: the National Health Service, education, and other services. In the most cynical and blatant way, the Government favour the better-off. That is why this is a fundamental issue for discussion. The Liberal and Social Democratic alliance are completely wrong to dismiss it. When a Labour Government are returned to power they will ensure a fairer distribution of the burden between those whose income is derived from capital and those who work day by day for every single penny that they earn. We reject entirely this clause and the whole philosophy behind it.
      Mr. Nicholas Baker: I take this opportunity to declare my views about clause 80. They are directly contrary to those of the hon. Member for Thurrock (Dr. McDonald). The burden of capital taxation has constituted a major disincentive to those starting, creating and developing businesses. It has also been a disincentive to people to save for their families. I have had direct experience of working with people who are in both of these positions, and I can tell the hon. Lady that that is the case. Any reduction in this tax is therefore to be welcomed.
      Dr. McDonald: The hon. Gentleman ought to come clean about the levels of capital transfer tax that were imposed upon small businesses. The maximum rate of tax, at death, was 60 per cent. Business assets relief of 50 per cent. was available. The true rate of tax was 30 per cent. which could be paid over 10 years, with no additional interest being charged. The true maximum liability was only 3 per cent. a year for 10 years. I do not believe that that can be regarded as a disincentive to small businesses. However, the Government's economic policies have served as a disincentive to small businesses. The hon. Gentleman knows perfectly well that that is why, throughout this Government's period of office, there has been a record number of liquidations and insolvencies.
      Mr. Baker: The hon. Lady has a good grasp of the rates of taxation but she has a much less firm grasp of the real world. Business men want to be able to contemplate the sale of part of their businesses and to be in a position to create wealth before they retire, but the rates of capital taxation have been a considerable disincentive to them. Therefore, the hon. Lady has a considerable amount of homework to do.
      The purpose of my intervention is to point out an anomaly in clause 80, which deals with lifetime transfers. The unstarred amendment that stands in my name would
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      have put right that anomaly, although I understand why you were unable to select it for debate, Mr. Deputy Speaker. In one or two respects — the hon. Lady mentioned a few of them — clause 80 restores the position on lifetime gifts to what it used to be before the days of capital transfer tax, but it goes further than that.
      As the clause stands, an outright gift attracts no inheritance tax, provided that the donor survives for seven years. If, therefore, I wanted to give you, Mr. Deputy Speaker, a section of my business or estate, if I had one, and I survived for seven years, there would be no capital taxation. On the other hand, if I had a life interest in the estate, or in a valuable property, and I gave it to you, Mr. Deputy Speaker, as the remainder man who was entitled to pick up the end of the trust when my life interest disappeared—an enchanting and encouraging prospect—there would be an immediate charge to tax under the clause. That is clearly anomalous. The two gifts are very much the same. There is a slight technical difference because one is a gift of settled property. I can see no reason in equity why these two gifts should be treated differently.
      I understand that the Treasury's policy is to try to treat trusts differently from assets held absolutely—property that is not settled — but some trusts have been singled out for special treatment. The hon. Member for Thurrock referred to accumulation and maintenance trusts, but did not refer to the welcome special treatment of trusts for the disabled. I point that out to show my hon. Friend the Minister that there are ways in which he is going rather further than restoring the position to what it was before CTT. I hope that he will seriously consider putting these two gifts on the same level so that the position is not as anomalous as it is under clause 80.
      Mr. Penhaligon: I used an opportunity made available during one of our previous debates on the Bill to show some fundamental opposition on principle to the idea that, henceforth, it is possible for someone to leave as much as £10 million to a son, daughter or whoever and not incur one farthing of tax. I stand by my judgment — I still believe that to be wrong. The decision is unjustified, and the Government are reflecting their political roots too much by trying to argue that it can be justified.
      It is said by some much wiser than I that the Duke of Westminster is worth £2 billion. I do not question that —it may be plus or minus the odd £1 million, but let us take it as £2 billion and see how the Bill will affect such a sum. It would be possible for him to leave his son or daughter half that sum—that is £1 billion—tax-free. He would have to fulfil other clauses requiring his complete separation from the money that he has given away and the business of which it was part, which would still leave him with £1 billion.
      I suspect that most hon. Members could live out their lives very satisfactorily with assets of £1 billion. A few of us, more accustomed to modest living standards than others, could probably reduce that figure by half or even 75 per cent. and still survive quite comfortably. In the case of the ultra-rich, substantial wealth can be transferred to another person, and the person giving the money will still have control of the remaining part of his wealth, which is capable of providing a living standard beyond the comprehension of most hon. Members, and certainly all our constituents.
      Besides that, there is a whole industry based on trying to avoid taxation on the £1 billion that is left. I have no

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      wish to go into details, but an industry has been built up around what is called estate management, which means avoiding tax. That is not outside the law.
      That is background, and we come now to the details of the case. The best argument against the vicious imposition of capital transfer tax or death duties, call it whatever, is the effect that it can have on a moderate or small business—a farm, a shop or a small factory. There is no doubt that the imposition of substantial CTT on a business worth, let us say, a third of a million pounds can have a substantial effect on that enterprise.
      My concern regarding this clause is partly that it exempts the ultra-rich from making a real transfer of wealth to the well-being of the state. It is also that I believe that the category for which I suspect the Government will claim that the measure will have the most benefit will, in an odd and peculiar way, not have such benefit in the final analysis.
      My experience of small businesses has made me only too well aware that many a small business man looks prosperous and has a farm or a shop or whatever. However, the person involved has not one farthing of spare cash. If he wants to buy a car he has to borrow the money against the basis of wealth in his enterprise. However, the idea that many small businesses in our constituencies have enormous volumes of cash kicking around does not stand a great deal of examination.
      4.45 pm
      In particular, the farming community is notorious for not having cash. There are those who take the view that the farming community thinks that it is the duty of other small businesses in the community to provide them with cash flow to run their business. They are not poor—they are wealthy by the standards of many people—but they do not have easily liquefiable assets at their disposal. In future, although the owner will have the freedom to give the business to his son or daughter without incurring taxation, he can do so only if he can prove to the satisfaction of the inspector of taxes that not only did he give the business, but he separated all his interests from it.
      I am aware that there are many cases where benefit would accrue if only the old man would retire, but in many small, self-employed businesses, the idea of retirement many days before the owner is taken away because the good Lord has decided to intervene, runs so counter to established practice that it seems unlikely that any part of the Finance Bill could incorporate it. The owner of the farm, shop or business could find that he could give to his son and incur no tax, but he has no right to any income from that enterprise. The lunatic position could conceivably arise whereby somebody of 70 or 80 with a family business in which there is no cash available could find himself drawing supplementary benefit if he gave away the business.
      The sector in which to reduce CTT is the small business sector. There is sense in encouraging transfers while the new generation is of an age to use its enthusiasm, skill and entrepreneurial sense to the best advantage. There is a chance that the Bill, as compared to the law before it and taken as a whole, could discourage transfers at the time of retiring in small businesses. If that is so, the Government are making a deep and fundamental error.
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      The Bill could, on an interpretation of the advice given to me, exempt the ultra-wealthy — people who have billions of pounds at their disposal — from tax on wealth, while imposing it on the relatively small business man, farm owner or shop owner, who has not significantly suffered under previous tax ratings. That is lunatic.
      The Liberal party and the alliance believe that one can justify, and we do so, a system of taxing the wealthy on death and on the transfer of gifts during a lifetime. We would justify that not by arguing that we should transfer wealth from the individual to the state, but on the basis of distributing wealth among the people. We would like a tax system that encouraged the person making the decision to give money to spread that wealth rather than to continue its concentration in the hands of one person. We call that idea an accessions tax.
      If someone is fortunate enough to be able to give £1 million to an individual, we would so organise matters that if the person donating the money decided to give four different people £250,000 each rather than giving one person £1 million, the donating of the money to four separate people would incur less tax collectively than would the giving of £1 million in a lump sum. In that way we believe that wealth distribution would be encouraged among the people rather than a distribution of wealth from the people to the state.
      Furthermore, if one of the individuals who was fortunate enough to receive £250,000 from that £1 million was to receive another £250,000 from someone else. that individual would pay more tax on the second £250,000 than he would have paid on the first.
      That is a far more rational and sensible way of dealing with the problem. The statistics that are available which ignore pension rights—and I am always dubious about statistics that ignore pension rights — suggest that a quarter of the wealth in Britain lies in the hands of 1 per cent. of the people. That is an unacceptable concentration of wealth, and over the long term the state should use its powers to encourage the fortunate 1 per cent. to spread their wealth. The changes in the clause do not accomplish that. The Bill will encourage something that we have not seen for a long time, the concentration of real wealth in the hands of the ultra and super-rich. That may be Government policy, but it is not alliance policy.
      We support private enterprise and an entrepreneurial system. However, we believe that one of the problems of capitalism which the state has a role to control, is that capitalism, if it is left unbridled, can lead to unacceptable concentrations of wealth and power. Although we believe that a capitalist system is more likely on the whole to give the British people the goods, services and articles that they desire, we believe that if it is left unbridled, it could lead to an unacceptable concentration of wealth.
      The Minister has ample opportunity, on the schedule today, to reply to my comments in detail. I hope that the Minister will reflect on the different effects that the changes will have between the ultra-rich whom the Government seem to have exempted from effective taxation, and the small business within the definition that I gave of a business approaching two thirds of a million pounds. It is not inconceivable that in the reality of family life, as I understand, know and have experienced it, the tax load may be increased. I cannot believe that the Government want that, but some people with a greater

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      knowledge and understanding of the details of tax affairs than I, reached the conclusion that that will be the main effect of the Bill.
      Sir Brandon Rhys Williams: I had prepared some remarks which I had hoped to offer to the Committee at this point, but the hon. Member for Truro (Mr. Penhaligon) has covered those points in his usual inimitable and convincing style. I hope that the Minister will indeed respond to the hon. Gentleman's request to deal with his idea. The idea put forward by the hon. Gentleman is not new. I had the pleasure of discussing it with my hon. Friend the Minister of State's father some 25 years ago, and I believe that he was very much attracted by it then.
      In the debate on clause 15, I said:
      "the Government's objectives should be to give every individual the maximum possible incentive to create wealth and to simplify the tax system as much as possible."—[Official Report, 6 May 1986; Vol. 97. c. 121.]
      I might have added that the Government should seek as far as possible to remove the elements of uncertainty from the tax system. As a sequel to these recommendations, I suggest that the Government should abolish higher rates of tax altogether. I envisaged that income tax and national insurance contributions could be consolidated at 40 per cent., with appropriate changes to the system of allowances.
      If such reforms were adopted, they would merely consolidate the present system and give greater scope to individuals to accumulate personal fortunes. By con-solidating the existing system, I mean the marginal rate of tax, which is the real rate of tax for the majority of people.
      If the Government have the courage, as I recommend, to abolish the higher rate of tax altogether, the question will arise how to prevent very large resources being inherited and put to less than optimum use in idle or imcompetent hands. I am not convinced that the proposals in part V should he the Government's final word on the taxation of lifetime transfers and bequests.
      The Chancellor's intention is laudable and well meant, but the proposals do not remove the element of uncertainty that is inherent in the present system. They lengthen the period of insecurity and make the incalculable element in taxation so much the worse. That is not a good factor for business, although I accept that the Chancellor means to be helpful.
      Insecurity and unpredicability are inevitable inhibiting factors for business. They cannot be avoided altogether, but it is unfortunate if the tax system makes such factors worse. I believe that it is an unnecessary blunder to lengthen the time span of anxiety to seven years. I do not welcome the taxation of private capital, because I believe in a property-owning democracy. The Government are not helping the creation of wealth by withdrawing capital from individuals who know how to make good use of it.
      Would it be possible to devise a tax on capital transfers and bequests which brought in the same yield—if that is necessary—but on the lines recommended by the hon. Member for Truro? That would not make for unnecessary uncertainty in long-term business and investment planning. At the same time, such a tax could serve to further the Government's object of increasing the number of private owners of wealth and property.
      I suggest that the taxation of gifts and bequests should be based on the amount received by the recipient of the benefit above an exempt limit over his life span rather than
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      on the size of the property dispersed by the donor. If a man was prepared to disperse his property sufficiently widely, he could escape the taxation of his estate altogether; but if he preferred to concentrate his estate on one or two people only, or to follow the practice of primogeniture, he would at least be able to calculate the liability for tax with reasonable certainty at the time that he took his decision.
      I hope that my right hon. Friend the Minister will rehearse the arguments for and against the change in inheritance and bequest taxes and tell us whether the Government are prepared to consider favourably further reform of the type suggested in the clause and perhaps in a forthcoming Budget.
      Mr. D. N. Campbell-Savours: The simple proposition before us today is whether the House wishes to reduce the burden of taxation on those who transfer wealth from one generation to the next. I wish to support any measure that increases the liability to pay tax during the course of that transaction.
      It may not have been clear at all exactly what the hon. Member for Dorset, North (Mr. Baker) was saying. He said that, even after the Budget is translated into legislation, people who effect gifts or bequests will still be paying too much tax. I believe that such people are paying too little tax.
      I should like to move the debate into the real world. Those who examine our proceedings today will wonder how it is possible that the House of Commons is setting out to approve the principle of reducing taxes paid by the very wealthy in society when its Members must know of the conditions that exist outside.
      5 pm
      One month ago, following the Budget, an elderly constituent of mine came to my surgery to talk to me about poverty. During that discussion, I explained to him that I was well aware of what was going on in my constituency, that I circulated among people of all classes, with all kinds of problems, unemployed and employed, to discuss matters of mutual importance.
      My constituent asked me to visit a particular estate in my constituency in the north of England. I visited a number of houses on that estate and saw something that I have seen before, but never in such a concentrated form, which can only be described as indescribable poverty. I went into houses—we must consider these matters in this debate today—where people simply cannot afford to live. They cannot afford to decorate their homes, to clothe their children, to eat meat once a day or to heat their homes; they cannot find work, they cannot afford to travel or go on holiday and they rarely visit their relatives. They live in what can only be described in 1986 as the most unreasonable of circumstances. They simply cannot understand why we in this House carry motions such as this, which will be carried today, to reduce taxes for the better-off in society. They do not understand how people who have millions should suddenly find, after a Division in the House, that they are the beneficiaries of hundreds of thousands of pounds by way of tax cuts.
      It is monstrous for the Government to return year after year with these niggly little measures to reduce taxes in this way. This is not the first time that this has happened. Two of the three Labour spokesmen on the Front Bench today have repeatedly gone through proceedings on Finance Bills over the past few years arguing against reductions in capital transfer tax.

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      The debate in the House has become boring, but the debate outside the House is even more desperate. I say to the Government: please stop it. The people of this country believe that it is wrong, and it is not only Labour people who believe that what is happening is wrong. Many Conservatives outside also have a social conscience. When I knock on their doors and discuss such matters with them they equally object. They know that what is happening is wrong. They often feel that they have a social duty to pay the price of alleviating the suffering by which many are being subjugated. They do not understand the Conservatism which turns its back on those people. Nor do they understand the arguments about the need to reduce capital transfer tax as some part of the development of an incentive society and, in particular, the development of small businesses, because it is not true.
      The problem with this House is that far too few people in it have been in business and understand what motivates business men. Their knowledge is academic. It is too often a lawyer's understanding of the brief. It is too often an inherited money man's understanding of how the wealth mechanisms in our society work. They do not work in that way. The only incentive that the business man needs to operate is a good market and a good product. He wants people to buy what he has. The fact that he will pay 3 per cent. per annum for 10 years in the settlement of an inheritance or capital transfer tax bill in 20 or 30 years' time is of no consequence at all. He is not interested.
      Mr. Wrigglesworth: Rubbish.
      Mr. Campbell-Savours: Why does not the hon. Gentleman get to his feet and tell us his experience of running a business and how it is that he believes that people suddenly lose the incentive to go out and create wealth? I can tell him that the entrepreneurs in my constituency are not interested in this debate. All they want is good regional assistance. All they want is—
      Mr. Wrigglesworth: A good accountant.
      Mr. Campbell-Savours: The hon. Gentleman is right. All they want is a good accountant. All they want is a decent market and a good product. With a combination of all those things, they will create all the wealth necessary to secure employment within my constituency and to secure their own futures. The hon. Gentleman does not understand that simple proposition.
      For years, the Tories have tried somehow to justify reductions in capital transfer tax on the back of the argument that they are needed as part of the incentive society. Indeed, inheritance acts as a disincentive to initiative. Many people who can rely on inherited wealth do not make an effort. Often the most effective business people in our society have acquired nothing by way of birthright; they started off with nothing in the world and went out to make their fortunes. They had all the incentives before them. Inheritance destroys that very opportunity. It makes people lazy.
      Looking around our society, too often I can identify people who, having not inherited wealth, may have made a far greater contribution, whether in the professions or elsewhere in society.
      In reducing capital transfer tax and, indeed, switching to a new tax, the clause proposes something which the British public do not want. Parliament should reject it.
      Mr. Wrigglesworth: I have considerable sympathy with the views of the hon. Member for Workington (Mr. Campbell-Savours). It has never ceased to amaze me—although I suppose that I should not be surprised—that the Conservative party spends so much time and effort on the Floor of the House and in Committee upstairs in Finance Bill after Finance Bill on issues of this sort.
      Contrary to what the hon. Member for Birmingham, Hodge Hill (Mr. Davis) said, I spent many hours sitting upstairs when he was not a Member of the House on Finance Bills listening to hour after hour, day after day, of debate on capital gains tax and its finer points, on inheritance tax and capital transfer tax — on all the capital taxes. That affects a minute proportion of the British population and, indeed, a minute proportion of Conservative voters. The overwhelming majority of Conservative voters in my constituency will not be affected substantially by any of these changes. They affect a tiny minority of people.
      But the foundation upon which the Chancellor has built his case for these changes, which was referred to earlier by one of his hon. Friends, is that they have to be made to relieve the burden on small businesses. It is argued that the tax regime has crippled small businesses, but I understand that that cannot be so. The Chancellor said in his Budget statement that capital transfer tax on lifetime gifts has been
      "a thorn in the side of those owning and running family businesses, and as such has had a damaging effect on risk taking and enterprise within a particularly important sector of the economy."—[Official Report, 18 March 1986; Vol. 94, c. 175.]
      I agree with the hon. Member for Workington—such tax is irrelevant to most entrepreneurs. I do not believe that they calculate capital transfer tax or inheritance tax when establishing businesses. Other matters motivate them.
      The existing tax liability on business assets is not a serious burden if proper steps are taken to minimise it. As the hon. Member for Workington said, most such people have very good accountants. Indeed, there is a whole business that ensures that small businesses take the proper steps. If business property which qualifies for 50 per cent. business asset relief is given away more than three years before death, the rate of tax chargeable cannot exceed 15 per cent., and that will generally be payable by annual instalments over 10 years.
      Furthermore, business assets account for only a small proportion of capital transfer tax take. In 1983–84, CTT took some £601 million, but business relief was estimated to cost some £20 million. As most business property gets relief at 50 per cent., and some get relief at 30 per cent., only about £30 million is payable in CTT. In other words, 95 per cent. of the CTT take comes from non-business property. The tax is therefore not the great inhibitor of businesses, as Conservative Members claim. Even if exempting business property could be justified, exempting gifts of non-business property could not.
      Mr. Nicholas Baker: Does the hon. Gentleman agree that the take of tax has nothing to do with whether someone is inhibited from developing a business because of a fear of it? The two are separate.
      Mr. Wrigglesworth: The Chancellor built his case on the foundation of the £600 million tax take inhibiting businesses, and I have just explained that only 5 per cent. of the take comes from business property. What, then, is

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      the reason for the exemption? The Government want to hand substantial amounts of money back to wealthy people. There should be no doubt about that.
      Mr. Campbell-Savours: I bet that the hon. Member for Dorset, North (Mr. Baker) is a beneficiary. He shakes his pocket in shame.
      Mr. Wrigglesworth: Many other Conservative Members will be doing the same.
      5.15 pm
      Mr. Nicholas Baker: On a point of order, Mr. Armstrong. I shall not sit here and listen to that thoroughly unpleasant and unparliamentary slur. I ask you to afford me the protection to which I believe I am entitled and to ask the hon. Member to withdraw.
      The First Deputy Chairman: The hon. Member for Workington (Mr. Campbell-Savours) ought to withdraw those remarks if he made them.
      Mr. Campbell-Savours: If the hon. Gentleman is not a beneficiary, I withdraw.
      Mr. Baker: I am certainly not a beneficiary, but even if I was, the hon. Gentleman ought to withdraw, and I ask him to get up and have the decency to do so.
      Mr. Campbell-Savours: As I have said, if the hon. Gentleman is not a beneficiary, I withdraw.
      Mr. Wrigglesworth: Only a tiny minority of the population will benefit substantially from the tax changes. Year after year, their interests are represented on the Conservative Benches.
      There is an overwhelming case for taxing lifetime gifts and we shall certainly do that if we are given an opportunity.
      The Minister of State, Treasury (Mr. Peter Brooke): This has been an admirable and wide-ranging debate. The hon. Member for Thurrock (Dr. McDonald) gave us a trailer of what she will argue in Committee when we debate clauses 79 to 86 and schedule 18. She led off with observations about the redistribution of wealth. The effect of these measures on the redistribution of wealth is negligible. Indeed, capital transfer tax, which the Labour party introduced in its last Administration as a once-per-generation tax, could never have been an effective engine of wealth distribution. At its height, it never yielded more than about 0·1 per cent. of personal marketable wealth per annum, and changes in asset values such as houses and share prices are far more important than CTT has been to the distribution of wealth.
      I shall not repeat the notes on clauses but, if I did, I should draw the House's attention to the fact that the trust regime, which has prevailed under CTT, remains essentially' in place. That is somewhat at variance with what the hon. Lady said. Transfers that involve an interest in possession as well as discretionary trusts remain firmly part of the regime.
      The hon. Lady dwelt on temporary protection contracts and insurance, and asked me various questions. The chronology of clauses 79 to 86 and schedule 18 means that they will be considered later in the Committee stage, so there will be plenty of time to pay attention to any aspects of them which require it, and I give the hon. Lady an assurance that we shall consider the representations that are made to us.
      Mr. Campbell-Savours: Will the Minister tell us the cumulative value of MT concessions, including indexation, which the Government have made since 1979? Can we have the figures now? It is important that the House knows how much money has been given away before it makes a decision.
      Mr. Brooke: My right hon. Friend the Financial Secretary' to the Treasury dealt with that on Second Reading.
      Mr. Campbell-Savours: We are here to make a decision. There is about to be a Division. That being so, we are entitled to know how much money the Government have given away to a very small group of people since 1979. Furthermore, we ought to know how much has been given away in each year.
      Mr. Brooke: If I need to modify my answer before I finish my speech, I shall certainly do so.
      Mr. Campbell-Savours: On a point of order, Mr. Armstrong. The Minister is telling the House, in a most unparliamentay way, that he intends to guess and then allow a civil servant to correct him.
      The First Deputy Chairman: The hon. Gentleman knows that is not a point of order for me. The Minister is responsible for his own speech.
      Mr. Brooke: The figure to which my right hon. Friend the Financial Secretary alluded in the earlier part of the debate was £1·7 billion, which embraced capital gains tax, capital transfer tax and the investment income surcharge.
      Mr. Campbell-Savours: I am sorry. We are asking about capital transfer tax.
      The First Deputy Chairman: Order.
      Mr. Brooke: If I may proceed—
      Mr. Campbell-Savours: No. Let us have the figures from the Minister.
      The First Deputy Chairman: Order. The hon. Gentleman must contain himself. If he wishes to intervene, he must stand and do it properly.
      Mr. Campbell-Savours: On a point of order, Mr. Armstrong. We are debating capital transfer tax. We are entitled to hear from the Minister at the Dispatch Box today the specific figures. I have asked for a series of figures; they need not be part of an amalgam of other figures.
      The First Deputy Chairman: Order. The Minister is responsible for his speech. The hon. Gentleman knows that it is all part of the debate. If he wishes to contribute, he must do so properly.
      Mr. Brooke: An answer given to the hon. Member for Thurrock (Dr. McDonald) on 28 April explained that the yield of tax in respect of transfers in 1985–86 was estimated to be £70 million less that if the 1979–80 regime had been indexed.
      Mr. Campbell-Savours: On a point of order, Mr. Armstrong. The Minister has come to the House to answer a debate on capital transfer tax, and he has not come armed with the figures. He knows that the Government have given—
      The First Deputy Chairman: Order. As I have explained to the hon. Gentleman, that is not a matter for

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      me. The Minister is responsible for his speech and for the information that he gives to the House. Hon. Members can then debate any figures that he gives or does not give.
      Mr. Campbell-Savours: He has not done his homework.
      Dr. McDonald: In the reply to which the Minister referred, he will note that specific changes in capital transfer tax between 1979 and now are listed and were estimated as costing £70 million, but the answer did not refer to indexation. Adding indexation makes a difference to the figure. Perhaps the Minister would add indexation in his reply.
      Mr. Brooke: Quoting the answer to the hon. Lady, I said that the figure was lower than if the 1979–80 regime had been indexed. Of course, we shall return to the matter if clarification is required.
      Mr. Campbell-Savours: We are about to divide the House. This is unreasonable. The Minister has not done his homework.
      Mr. Brooke: I assure the hon. Member for Workington (Mr. Campbell-Savours) that, apart from anything else, I must respond to his speech, so it will be some time before we divide.
      The hon. Member for Thurrock mentioned accumulation and maintenance trusts. Of course, it is true that, if someone makes transfers into accumulation and maintenance trusts and dies within seven years, he will be subject to the same regime. When the hon. Member for Workington interrupted me, I was dwelling on the temporary protection contracts. I must tell the hon. Lady—this applies to all citizens in the land — that it is perfectly legitimate to take out a term insurance policy to cover the possibility of inheritance tax becoming payable if the donor of a gift dies within seven years. However, if the policy is subject to a reservation for the donor, it will be subject to the new rules on gifts with reservations.
      Mr. Campbell-Savours: Let us get on with the figures.
      The First Deputy Chairman: Order. The hon. Gentleman made a speech and was heard in silence. He must listen to what the Minister has to say. The Minister has hardly got going yet.
      Mr. Campbell-Savours: On a point of order, Mr. Armstrong. Every Minister who comes before the House knows at least one figure for the expenditure involved. This Minister, during this Finance Bill on this highly important matter, has come to the House without the figures that we need. On that basis, the sitting should be suspended—
      The First Deputy Chairman: Order. The hon. Gentleman knows that that is a matter for debate. If he wishes to make his points, he is entitled to make them, but the Minister's speech is not a matter for the Chair.
      Mr. Bob Clay: Further to that point of order, Mr. Armstrong.
      The First Deputy Chairman: The hon. Gentleman cannot raise a point of order further to a point of order that was not a point of order.
      Mr. Clay: On a point of order, Mr. Armstrong. I seek your guidance. As I understand it, if any hon. Member were to mislead the House, it would be in order for the Chair or any other hon. Member immediately afterwards or on the following day to ask that hon. Member to correct the record. That has happened many times and, inexperienced though I am, I understand that it is proper parliamentary procedure.
      In the exchange between my hon. Friend the Member for Workington (Mr. Campbell-Savours) and the Minister, my hon. Friend objected to the fact that the Minister said, "I will give some figures, but if they are wrong, I will put them right later." That is a circumvention of the tradition in the House that Ministers take responsibility, as we all do, for the facts that we put on the record. It is a serious break with tradition for Ministers to say, "I will give some figures, but if they are wrong, I will correct the record later."
      The First Deputy Chairman: Order. The hon. Gentleman should know that the Minister's speech is a matter for the Minister. If there is doubt about figures or facts that are given, that is a matter for debate—
      Mr. Campbell-Savours: Let us have the Chancellor, then.
      The First Deputy Chairman: The hon. Gentleman will have to face the consequences if he is unwilling to behave properly. All that I wanted to say was that this is a matter for legitimate debate. It is certainly not a matter of order for the Chair.
      Mr. Brooke rose—
      Mr. Campbell-Savours: Will the Minister give way?
      Mr. Brooke: I shall come to the hon. Gentleman's speech in due course.
      My hon. Friend the Member for Dorset, North (Mr. Baker) made a proposition in his speech, which was trailered in an amendment that we were unable to debate today. The purpose of the change to inheritance tax is to remove obstacles to unfettered lifetime giving while protecting the death charge. That requires the preservation as far as possible of the existing trust regime. The removal of the tax charge when an interest in possession is released to the remainder man would undermine the death charge. Property could be channelled to the intended beneficiary by way of a trust giving an interest in possession to a surviving spouse. The transfer to the trust for the spouse would be tax-free. It is right to impose a charge if the spouse subsequently surrenders the interest to the remainder man. Schedule 18 is relevant to my hon. Friend's proposition. We shall return to the matter in Committee.
      The hon. Member for Truro (Mr. Penhaligon) concluded his speech with references to what has become known as the donee tax. In the context of the earlier part of his speech, I should say that the regime relating to gifts with reservations is essentially a stronger regime under this legislation than the regime that prevailed under capital transfer tax. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) acknowledged in the Budget debate—to be fair, the hon. Member for Truro did so, too—that there were genuinely difficult problems with the previous tax. It was not perfect and was capable of

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      improvement. The hon. Gentleman's speech related primarily to the concept of the donee tax, which the Liberal party has espoused.
      Mr. Penhaligon: Is the Minister assenting to my basic proposition that, for relatively small transfers of wealth, the clauses added together could be stronger than the previous legislation? If he accepts that, does he agree that the affect is much weaker for the ultra-wealthy transferring their wealth?
      5.30 pm
      Mr. Brooke: I would be the first to acknowledge that greater freedom is conferred by the legislation, and I shall return to that subject.
      The hon. Member for Truro raised the subject of the donee tax, for which we also had a trailer on Second Reading of the Finance Bill. The hon. Member for Stockton, South (Mr. Wrigglesworth) was interrupted by the hon. Member for Come Valley (Mr. Wainwright) who asked:
      "Does the hon. Gentleman agree that the wider distribution of shares would be greatly encouraged if the Chancellor, instead of virtually abolishing capital transfer tax in this Bill, had remodelled it in such a way as to encourage wealthy people to make a multitude of relatively small gifts of shares to large numbers of people rather than passing on their inheritance to only one or two members of the family?"
      The hon. Member for Stockton, South replied:
      "Yes. I hope that we can pursue that point in Committee because it is something that we would like to see."—[Official Report, 29 April 1986; Vol. 96, c. 843.]
      That scenario raises the interesting question whether those two parties rehearse their interventions in advance, or operate on a basis of blind faith. That is a particularly interesting notion, in the light of the response of the hon. Member for Stockton, South.
      The SDP, in its working paper on tax reform published in July 1985, resiled from the question of a donee tax. The SDP always has a flavour of the ancien regime about it, but the Marie Antoinette principle of having one's cake and distributing it widely seems to be carried to an excessive degree. I do not want to intrude in any way on the private communications between the two parties, but, given the SDP's position on a donee tax, I, am not clear how the hon. Member for Stockton, South can intelligently represent the hon. Member for Truro.
      That uncertainty about the principle of a donee tax echoes the Liberal party's difficulty last night in deciding whether to vote on the 1 per cent. deduction from income tax. We had perfectly good donee legislation under the legacy duty until a Liberal Chancellor of the Exchequer, Sir William Harcourt, transferred the principle to a donor principle in 1894. This is another classic instance of the Liberal party having second thoughts about legislative principles.
      In 1972 the Conservative Government issued a Green Paper on a possible change from estate duty to this sort of inheritance tax. The consultative process resulted in a clear view against such a change. The main reasons were that the tax would be extremely expensive to administer, there would be an extra burden on executors in dealing with more beneficiaries and calculating the different amounts of tax due, there would be much work in re-arranging wills written on an estate duty basis, there would be other transitional problems, and the system would create more difficulties in dealing with trusts. The theoretical benefits
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      of such legislation which were advanced by the hon. Member for Truro are not justified by the major legislative and administrative changes that would be involved.
      My hon. Friend the Member for Kensington (Sir B. Rhys Williams) supported the hon. Member for Truro on the subject of donee taxation, dwelt on the issue of uncertainty, and wished that we could do more to avoid it. Uncertainty cannot be avoided altogether, as my hon. Friend conceded. Life is uncertain; I have no doubt that that phrase has been uttered in six different languages with much more elegance than I can manage. It is difficult for us to remove the uncertainty of life in planning the taxes of this land.
      The hon. Member for Workington made an eloquent speech to which the House listened closely. As I have cause to know, the hon. Gentleman has run a small business, although he did not allude to it today. Therefore, his remarks are apposite to the debate, with its preoccupation with this area. I join the hon. Member in having had a similar experience in that I also know what is involved in running and building a business. But the difference between the hon. Gentleman and his side of the House and our side of the House is that we believe that we need to release the resources of growth to provide solutions to the genuine problems to which he was referring. The difference between the Labour party and the Conservative party—I speak as somebody engaged in business during the Labour Administration between 1974 and 1979—is that the Labour Government overloaded the system and prevented the private sector from generating the growth to provide the resources. During the past five years, this Government have been singularly successful in ensuring the release of those resources.
      Mr. Campbell-Savours: If that is the case, will the Minister tell me how a concession of £600 million to one man in London will help my unemployed workers in Workington?
      Mr. Brooke: Both the hon. Gentleman and the hon. Member for Stockton South have intervened on the same point. The hon. Gentleman is making assumptions about the pattern of taxation, and deriving conclusions from it, when it is much more logical to draw conclusions about this taxation from the distorted effects that occur because taxation directs people into areas where they might not otherwise go.
      The hon. Gentleman's speech would have been worthy of my right hon. Friend the Secretary of State for Education and Science, and the preface to his book on Samuel Smiles, with a ringing tribute to the entrepreneur. I do not disagree in any way with the hon. Gentleman' s observations about entrepreneurs, but some businesses go wrong, perhaps also because entrepreneurs stay in control of a business too long, which is sometimes because the tax structure prevents them from handing over the responsibility for the business earlier.
      The hon. Member for Stockton, South raised a legitimate point about the effects of the taxes on the business community as a whole. If he looks at the pattern of businesses in the United Kingdom which, for example, employ more than 1,000 people, he will see that twice the proportion of our employees in the national work force work in companies employing more than 1,000 people compared with our competitors who have the smallest proportion. One must ask how far that concentration of

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      employees in larger companies, with all its implications, particularly bearing in mind that it is not mirrored by our competitors, has been impelled and driven by our tax regime.
      Mr. Wrigglesworth: No one will disagree with the Minister's disappointment at the figures which he has just quoted, but whether the cause can be ascribed to the taxation regime is a different matter. Will the Minister confirm what I said earlier, which was that only 5 per cent. of the capital transfer tax take comes from business assets?
      Mr. Brooke: One cannot draw conclusions from the tax which has been paid. The problem is the tax which has not been paid as a result of people distorting their normal pattern of behaviour because the tax exists.
      To return to the question asked by the hon. Member for Thurrock in support of the hon. Member for Workington, the rates and thresholds have not been fully indexed in line with the retail price index since 1979–80. The yield in 1985–86 is higher. Obviously, if hon. Members wish to pursue other aspects of the statistics, we can do so in future.
      I know that there are hon. Members who wish to speak about hydrocarbons before the night is much older, so let me come to a conclusion.
      The last time that I had the chance of speaking in Committee on the Finance Bill was in 1978; as a kind of mirror image, it was, I think, the last occasion on which the hon. Member for Thurrock (Dr. McDonald) was unable to speak in Committee on the Finance Bill. I recall arguing in Committee against the legislation of the last Labour Government because it distorted the behaviour of business men and caused them to act, purely for tax reasons, in a way in which they would not otherwise have acted. The legislation which we are introducing and which is encompassed by clause 80 confers on business men and on every other member of our society the freedom to order their affairs in terms of their own best interests, rather than causing them to take decisions simply because of fiscal imperatives.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 206, Noes 114.

      Division No. 171]

      [5.40 pm

      AYES

      Alexander, Richard

      Brittan, Rt Hon Leon

      Alison, Rt Hon Michael

      Brooke, Hon Peter

      Amess, David

      Brown, M. (Brigg & Cl'thpes)

      Arnold, Tom

      Bryan, Sir Paul

      Aspinwall, Jack

      Buck, Sir Antony

      Atkins, Rt Hon Sir H.

      Budgen, Nick

      Atkinson, David (B'm'th E)

      Bulmer, Esmond

      Baker, Nicholas (Dorset N)

      Burt, Alistair

      Baldry, Tony

      Butterfill, John

      Beaumont-Dark, Anthony

      Carlisle, John (Luton N)

      Bellingham, Henry

      Carlisle, Kenneth (Lincoln)

      Benyon, William

      Cash, William

      Bevan, David Gilroy

      Chapman, Sydney

      Biggs-Davison, Sir John

      Chope, Christopher

      Blackburn, John

      Churchill, W. S.

      Blaker, Rt Hon Sir Peter

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

      Boscawen, Hon Robert

      Clark, Dr Michael (Rochford)

      Bottomley, Peter

      Clark, Sir W. (Croydon S)

      Bottomley, Mrs Virginia

      Clarke, Rt Hon K. (Rushcliffe)

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

      Clegg, Sir Walter

      Bowden, Gerald (Dulwich)

      Cockeram, Eric

      Bright, Graham

      Colvin, Michael

      Brinton, Tim

      Conway, Derek

      178

      Coombs, Simon

      Merchant, Piers

      Cope, John

      Meyer, Sir Anthony

      Corrie, John

      Mills, Iain (Meriden)

      Couchman, James

      Miscampbell, Norman

      Cranborne, Viscount

      Moore, Rt Hon John

      Critchley, Julian

      Morris, M. (N'hampton S)

      Crouch, David

      Morrison, Hon P. (Chester)

      Dickens, Geoffrey

      Moynihan, Hon C.

      Dunn, Robert

      Murphy, Christopher

      Evennett, David

      Nelson, Anthony

      Eyre, Sir Reginald

      Neubert, Michael

      Fallon, Michael

      Newton, Tony

      Favell, Anthony

      Osborn, Sir John

      Finsberg, Sir Geoffrey

      Ottaway, Richard

      Fookes, Miss Janet

      Page, Richard (Herts SW)

      Forman, Nigel

      Patten, Christopher (Bath)

      Forsyth, Michael (Stirling)

      Pawsey, James

      Forth, Eric

      Peacock, Mrs Elizabeth

      Fox, Marcus

      Portillo, Michael

      Freeman, Roger

      Powell, William (Corby)

      Fry, Peter

      Powley, John

      Gale, Roger

      Prentice, Rt Hon Reg

      Gardiner, George (Reigate)

      Price, Sir David

      Gardner, Sir Edward (Fylde)

      Proctor, K. Harvey

      Gilmour, Rt Hon Sir Ian

      Pym, Rt Hon Francis

      Goodhart, Sir Philip

      Rhodes James, Robert

      Gorst, John

      Rhys Williams, Sir Brandon

      Gow, Ian

      Ridley, Rt Hon Nicholas

      Gower, Sir Raymond

      Ridsdale, Sir Julian

      Greenway, Harry

      Robinson, Mark (N'port W)

      Gregory, Conal

      Roe, Mrs Marion

      Griffiths, Sir Eldon

      Rowe, Andrew

      Grist, Ian

      Sackville, Hon Thomas

      Grylls, Michael

      Sainsbury, Hon Timothy

      Hamilton, Hon A. (Epsom)

      Sayeed, Jonathan

      Hampson, Dr Keith

      Shelton, William (Streatham)

      Hanley, Jeremy

      Shepherd, Colin (Hereford)

      Harris, David

      Sims, Roger

      Haselhurst, Alan

      Skeet, Sir Trevor

      Hawkins, Sir Paul (N'folk SW)

      Speed, Keith

      Hayes, J.

      Speller, Tony

      Hayward, Robert

      Spencer, Derek

      Hickmet, Richard

      Spicer, Jim (Dorset W)

      Hicks, Robert

      Stanbrook, Ivor

      Higgins, Rt Hon Terence L.

      Stanley, Rt Hon John

      Hogg, Hon Douglas (Gr'th'm)

      Steen, Anthony

      Holland, Sir Philip (Gedling)

      Stern, Michael

      Hordern, Sir Peter

      Stevens, Lewis (Nuneaton)

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

      Stewart, Allan (Eastwood)

      Howell, Ralph (Norfolk, N)

      Stewart, Andrew (Sherwood)

      Irving, Charles

      Stradling Thomas, Sir John

      Jessel, Toby

      Tapsell, Sir Peter

      Johnson Smith, Sir Geoffrey

      Taylor, John (Solihull)

      Jones, Robert (Herts W)

      Taylor, Teddy (S'end E)

      Kellett-Bowman, Mrs Elaine

      Temple-Morris, Peter

      Key, Robert

      Terlezki, Stefan

      King, Roger (B'ham N'field)

      Thomas, Rt Hon Peter

      Knowles, Michael

      Thompson, Donald (Calder V)

      Latham, Michael

      Thompson, Patrick (N'ich N)

      Lawrence, Ivan

      Thorne, Neil (Ilford S)

      Leigh, Edward (Gainsbor'gh)

      Thurnham, Peter

      Lennox-Boyd, Hon Mark

      Townend, John (Bridlington)

      Lloyd, Peter (Fareham)

      Tracey, Richard

      Lord, Michael

      Trotter, Neville

      Lyell, Nicholas

      Twinn, Dr Ian

      McCurley, Mrs Anna

      van Straubenzee, Sir W.

      MacGregor, Rt Hon John

      Viggers, Peter

      MacKay, Andrew (Berkshire)

      Waddington, David

      Maclean, David John

      Ward, John

      McNair-Wilson, M. (N'bury)

      Wardle, C. (Bexhill)

      Madel, David

      Watson, John

      Major, John

      Watts, John

      Malone, Gerald

      Wells, Bowen (Hertford)

      Maples, John

      Wells, Sir John (Maidstone)

      Marland, Paul

      Wheeler, John

      Marshall, Michael (Arundel)

      Wiggin, Jerry

      Mather, Carol

      Winterton, Nicholas

      Maxwell-Hyslop, Robin

      Wolfson, Mark

      Mayhew, Sir Patrick

      Wood, Timothy

      179

      Yeo, Tim

      Tellers for the Ayes:

      Young, Sir George (Acton)

      Mr. Tony Durant and Mr. Francis Maude.

      NOES

      Abse, Leo

      Kinnock, Rt Hon Neil

      Anderson, Donald

      Leighton, Ronald

      Archer, Rt Hon Peter

      Lewis, Ron (Carlisle)

      Banks, Tony (Newham NW)

      McCartney, Hugh

      Barnett, Guy

      McDonald, Dr Oonagh

      Barron, Kevin

      McGuire, Michael

      Beckett, Mrs Margaret

      Mallon, Seamus

      Benn, Rt Hon Tony

      Marek, Dr John

      Blair, Anthony

      Mason, Rt Hon Roy

      Boyes, Roland

      Meacher, Michael

      Bray, Dr Jeremy

      Mikardo, Ian

      Brown, Gordon (D'f'mline E)

      Millan, Rt Hon Bruce

      Buchan, Norman

      Mitchell, Austin (G't Grimsby)

      Callaghan, Jim (Heyw'd & M)

      Morris, Rt Hon A. (W'shawe)

      Campbell-Savours, Dale

      Morris, Rt Hon J. (Aberavon)

      Canavan, Dennis

      Nellist, David

      Clay, Robert

      Orme, Rt Hon Stanley

      Clwyd, Mrs Ann

      Owen, Rt Hon Dr David

      Cohen, Harry

      Park, George

      Coleman, Donald

      Patchett, Terry

      Cook, Frank (Stockton North)

      Pavitt, Laurie

      Cook, Robin F. (Livingston)

      Penhaligon, David

      Corbett, Robin

      Pike, Peter

      Craigen, J. M.

      Powell, Raymond (Ogmore)

      Crowther, Stan

      Prescott, John

      Cunningham, Dr John

      Radice, Giles

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

      Randall, Stuart

      Deakins, Eric

      Raynsford, Nick

      Dixon, Donald

      Rees, Rt Hon M. (Leeds S)

      Dormand, Jack

      Richardson, Ms Jo

      Douglas, Dick

      Roberts, Allan (Bootle)

      Dubs, Alfred

      Roberts, Ernest (Hackney N)

      Dunwoody, Hon Mrs G.

      Rogers, Allan

      Eastham, Ken

      Rowlands, Ted

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

      Sheldon, Rt Hon R.

      Ewing, Harry

      Shore, Rt Hon Peter

      Field, Frank (Birkenhead)

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

      Fisher, Mark

      Silkin, Rt Hon J.

      Foot, Rt Hon Michael

      Skinner, Dennis

      Foster, Derek

      Snape, Peter

      Freeson, Rt Hon Reginald

      Spearing, Nigel

      Gilbert, Rt Hon Dr John

      Steel, Rt Hon David

      Godman, Dr Norman

      Stewart, Rt Hon D. (W Isles)

      Gould, Bryan

      Taylor, Rt Hon John David

      Hamilton, W. W. (Fife Central)

      Thomas, Dafydd (Merioneth)

      Hardy, Peter

      Thomas, Dr R. (Carmarthen)

      Harrison, Rt Hon Walter

      Tinn, James

      Healey, Rt Hon Denis

      Warden, Gareth (Gower)

      Heffer, Eric S.

      Wareing, Robert

      Hogg, N. (C'nauld & Kilsyth)

      Wigley, Dafydd

      Holland, Stuart (Vauxhall)

      Williams, Rt Hon A.

      Hoyle, Douglas

      Wilson, Gordon

      Hughes, Robert (Aberdeen N)

      Winnick, David

      Jenkins, Rt Hon Roy (Hillh'd)

      Wrigglesworth, Ian

      John, Brynmor

      Young, David (Bolton SE)

      Jones, Barry (Alyn & Deeside)

      Kaufman, Rt Hon Gerald

      Tellers for the Noes:

      Kennedy, Charles

      Mr. James Hamilton and Mr. Ron Davies.

      Kilroy-Silk, Robert

      Question accordingly agreed to.
      Clause 80 ordered to stand part of the Bill.

    Clause 2

      HYDROCARBON OIL
      Mr. Wrigglesworth: I beg to move amendment No. 1, in page 2, line 19, leave out '"£0·1938" and "£0·1639"' and insert '"£0·1896" and "£0·1601"'.
      The amendment seeks to reduce the increase in duty on light oil and heavy oil to the amount that would be justified
      180
      by indexation. This would reduce the increase in duty to 5·7 per cent., compared with the 8 per cent. imposed by the Chancellor in the Budget. It would increase the rate of duty to 18·96p and 16·01p, compared with 19·38p and 16.39p, and would reduce the price of petrol by about 2p per gallon.
      In the Budget the Chancellor continued the process, which has gone on under the Government, of over-indexing taxes on petrol. Under this Government the total tax take, including VAT, has risen from 38p to £1·10. At current prices the rise has been from 74p to £1·10—roughly half as much again in real terms. Part of the increase in tax take is due to higher petrol prices and the imposition of VAT on petrol, but a substantial proportion is accounted for by an increase in duty alone, from £4·8 billion at today's prices in 1978–79 to £7·3 billion in 1986–87.
      Most important, duty as a proportion of the price has risen from just under half to 67 per cent., or just over two thirds. That is a substantial increase in the duty that customers pay at the pumps for every gallon of petrol. By contrast, the Government have kept the level of vehicle excise duty constant in real terms by increasing it from £50 to £100. They have closed the gap between duty on petrol and duty on derv, quite rightly, so that the latter is lower than the duty on petrol.
      The Chancellor's strategy is not clear. We do not know whether he is moving towards the phasing out of vehicle excise duty. It would be helpful to the House f the Minister could explain exactly what the Government's intention is on vehicle excise duty and petroleum duty. If the Chancellor's intention is not to phase out vehicle excise duty, there seems to be a much weaker case far using petrol duty simply to recoup revenue lost because of falling oil prices. That benefit should be passed on entirely to industry and to the consumer.
      The Chancellor was right to resist the siren voices which argued that he should finance the substantial tax handouts for those in work by over-indexing the duty on petrol and other goods. However, motorists, particularly in rural areas, who suffered last year from increases in the price of petrol to over £2 per gallon, should get the full benefit of falling oil prices. Of course, not only motorists in rural and urban areas but industry, too, should benefit, because increases in duty bear most heavily on it.
      Industry in countries which are not as rich in energy as we are pays much less for petrol and derv than does industry in this country. The Confederation of British Industry has made it clear that it would be of considerable assistance if the price burden of petrol and derv on industry could be reduced.
      Mr. Jonathan Sayeed: Does the hon. Gentleman believe that higher prices encourage people to be more efficient in their use of energy?
      Mr. Wrigglesworth: Yes, but we have had that with a vengeance recently. It has happened because of increases in oil prices generally, but, as I pointed out earlier, the Government have increased the duty take on petrol from some 50 per cent. to over two thirds. I do not think that one can easily justify that. That is why we tabled the amendment. It is right to increase the duty by the amount of price indexation, as the Government have done on some occasions, but on many other occasions they have

      181
      increased the duty by more than the rate of inflation. As a result, the proportion of duty has gone up as I have described.
      At a time when the Government are reducing revenue support for public transport, estimated in the 1985–86 public spending White Paper to be 10·6 per cent. below the previous year's level in real terms, together with the deregulation of local bus services outside London, they are reducing the options for those in rural communities even further. Many people in rural areas are being forced into almost total dependence on car transport. While petrol tax should not be held down artificially as an instrument of transport policy, if it is raised excessively it will result in an increasing distortion of choice between modes of transport. The amendment would provide modest help for all motorists, and crucially for industry, by reducing transport costs and helping companies to stay competitive.
      If the Government's philosophy is to let the economy reap the full benefit of lower costs from falling oil prices, they should not have increased duty by the amounts set out in the Bill. The Chancellor may claim that freezing vehicle excise duty means that the overall burden for industry remains unchanged, but the opportunity has been missed to pass on a greater direct benefit to car and lorry users by helping to stimulate economic activity directly by keeping prices lower.
      I hope that we will get a clear statement from the Minister on the Government's view of the balance between vehicle excise duty and petrol tax. We can then make a clear judgment on the direction in which the Government are going. I hope that the pleas of industry, and particularly of motorists in rural areas, will not fall on deaf ears and that we shall have the support of Conservative Members for the proposition that I have put forward.
      6 pm
      Mr. Gordon Wilson: I support the amendment. It is important that the Government try to justify what has happened. When the Chancellor of the Exchequer announced his intention to increase petrol duty, he said that he hoped that the increase would be absorbed by the oil companies and that they would pass on to the consumer the fall in the value of petrol on the world market. There has been a slight adjustment downwards in the price of petrol, but certainly not in response to the Chancellor's request. My impression is that the oil companies, on receiving advice from the Chancellor that they should sacrifice some of their profits in exchange for increased tax revenue for the Government, hardened their attitude and deliberately kept up petrol prices at the pumps to show that they were not at the beck and call of any Chancellor of the Exchequer.
      Whether that is true or not, the differential in petrol prices in the United Kingdom has remained. The companies have made no attempt to take account of the Chancellor's advice to try to pass on to certain areas of the United Kingdom some of the advantages which should have gone to the consumer following the drop in oil prices.
      I am advised that the cost of petrol per gallon in Stornoway is £1·89. That is far in excess of prices prevailing in other parts of the United Kingdom. The difference is as much as 30p a gallon. Outside Stornoway the price might be even higher, and a differential of 20p per gallon is common in different parts of the mainland.
      182
      On a recent election visit to Grangemouth, I spoke to a refinery worker who complained that the price of petrol in Grangemouth was very high and that none of the benefits of the lower oil prices was being passed on in the locality.
      There can be no argument about the cost of transport. BP's petrol pumps are just several hundred yards from the refinery, but they have the full central belt mark-up. BP is obviously benefiting at the expense of local residents and its work force.
      Scottish Television conducted an inquiry into the price of four-star petrol on 31 March. Petrol prices have now come down in response to lower oil prices, but Scottish Television said that the average price per gallon of four star petrol in Scotland was £1.79·6 whereas in England it was £1.73·7 — a difference of 5·9p per gallon. The lowest price of petrol in Scotland was 1.72 per gallon and the highest, on the mainland near Wick, was £1.95, so my right hon. Friend the Member for Western Isles (Mr. Stewart) can buy cheaper petrol than the unfortunate citizens of Wick.
      Mr. Donald Stewart: Unlike mainland constituencies, my constituency has no railway track, so all goods have to be moved by transport requiring petrol.
      Mr. Wilson: I accept that. I was about to make a further contrast which might be beneficial to Lewis but horrendous for the Isle of Tiree, because a gallon of petrol there costs £2.09—the highest price in Great Britain.
      That is a consequence of the way that the Government charge petrol duty as a flat rate and of discounting, or lack of discounting, by the oil companies. In various places a discount or subsidy applies to the price of petrol available to retailers with independent forecourts. If there are no independent forecourts, or when there are only a few, there is a quasi-monopoly and the price of petrol is correspondingly higher. The price of petrol is sometimes kept up artificially, as if there were a cartel in operation, but the Government do nothing about it. They have not asked the Director General of Fair Trading or the Monopolies and Mergers Commission to inquire into retail costs, distribution and charging for petrol in different areas. The Government have not sought through fiscal means to vary the petrol duty rate so that remote areas benefit.
      The throughput of petrol in remote areas is usually small. The petrol station proprietor probably does not have a large turnover, so he acquires for himself high profits. In some circumstances he might have to pay transport costs if his petrol is sold in island areas.
      Many arguments and complaints have come from Scotland about what has happened. Scotland is the fifth largest oil producer in the world, but it does not seem to derive benefit from that. The market, although volatile in places, does not seem to have reacted to our benefit. I have taken the matter up with the Director General of Fair Trading. I am not convinced that either at his or at Government level there is sufficient appreciation of the hardship caused in some areas by high petrol prices.
      The areas with highest prices rely on cars or vans which use petrol rather than derv to transport goods. That means that overall costs are higher in relation to the cost of living. There is a direct relationship between petrol costs and the cost of living in remote areas.
      The Government should do something about petrol prices. Each year the Chancellor puts up petrol prices, if

      183
      only to keep in line with inflation, and then he takes his rake-off for the Treasury's coffers instead of trying to work out a formula which bears some relation to equity and fairness. I hope that the Minister will take on board the representations that have been made. Throughout the length and breadth of Scotland people feel frustrated, because Scotland always seems to be the tail-end Charlie. It is time that the Government considered the interests of the people of Scotland for a change.
      Mr. Kennedy: I support the amendment. The price of petrol is fundamental to my part of the country—the Highlands and Islands of Scotland. I am not stating the obvious when I say that having a motor vehicle is no luxury there. A vehicle is a human and social necessity so the price of petrol, and of fuel generally, has a major effect on the way of life, the infrastructure and the economy. For reasons of inescapable geography, the people of the Highlands and Islands will always suffer from being distanced from the available markets and the added costs that that puts on indigenous goods sent elsewhere and on materials brought in, so petrol and fuel prices are of fundamental importance.
      I echo the broad sentiments expressed by the hon. Member for Dundee, East (Mr. Wilson). I draw the attention of the Minister and the Committee to the 1984 and 1985 reports "Rural Scotland: Price Survey" by MacKay, consultants of Inverness. Both reports make the point that, in addition to the difficulties caused by high fuel costs, there is the related problem of the availability of petrol. There is no evidence that the position is improving. Both reports state:
      "an increasing problem in Rural Scotland is in relation to the availability of petrol. The number of garages and filling stations is falling steadily and some recent closures have left large areas without a source of supply."
      This is a problem which that firm has mentioned in the past, but which it says continues to worsen in the absence of any action by the relevant public authorities.
      I appreciate that the problem is complex. The amendment seeks to reduce the increase proposed in the Budget to a more acceptable level, and if accepted by the Government would be very much welcomed. Those speaking in support of the amendment hope that it will commend itself to the Treasury.
      The same company carries out occasional surveys into the level of incomes in the Highlands and Islands. I understand that discussions are taking place between officials of the Department of Trade and Industry and that company about the last survey, which showed lower average earnings, coupled with a higher cost of living in the Highlands and Islands. The economics of that is clear—it is extremely tight for both families and businesses to survive and succeed. Anything that eases the burden would be welcome, and we believe that the amendment would do that.
      I hope that the Government will take this small but significant step towards reducing the burden on business, enterprise and the individual domestic consumer in the north of Scotland and the Highlands and Islands, and which is to the detriment of that part of the economy. It could also be argued that such burdens thwart many aspects of the Government's economic policy.
      I hope that the Government will respond positively to the amendment.
      Mr. Penhaligon: I regard the amendment as modest. A case could be made for a more substantial reduction, but I want to promote policies which are possible rather than simply to vent anger.
      I use the words "vent anger" because of the increase from 30p to 88·1p in the duty on a gallon of petrol since the Government took office in 1979. I do not know the precise rate of inflation since 1979, but it is certainly not of that scale. In addition, VAT is charged at 15 per cent., which is above the 1979 level.
      I unashamedly stand before the Committee to plead the case for the remoter parts of Britain. It is interesting to note that hon. Members who have spoken for the amendment represent those remoter parts of Britain, and so are more than aware of the impact of fuel prices on the life, economy and development of our society.
      6.15 pm
      It is not so long since petrol was a great deal cheaper than it is today. During the early large increases in oil prices it was generally believed that the use of petrol would decline because of price hikes. I accept that one benefit of the increases has been the trend towards more economical cars, which is a desirable objective. However, as I suspected at the time, the use of petrol in the remoter areas has remained constant. Despite what is thought in the metropolitan areas, in remote parts a car is by no means a luxury. Those living 10 miles from the nearest town either go by car or stay at home, because there is little public transport. Those wanting to sell goods to the major metropolitan areas have to transport them. The distance from my front door to the House of Commons car park is about 300 miles. That might not be the most common of business routes, but it is a fair guide. It is a far greater distance than most people realise. The produce of farms, mines and industry must be carried over that distance.
      I do not believe it to be any coincidence that the levels of unemployment in Britain are proportional to the distance from London. The right hon. Member for Western Isles (Mr. Stewart) represents the remotest area in Britain, and his constituency suffers from very high unemployment levels—as, of course, does my area.
      I wish to record my protest about the gradual increase in taxation on petrol in real terms. There is no justification for it. Such increases have a significant economic effect on areas such as mine. There is no justifiable case for endlessly looking to petrol to produce a larger and larger proportion of the nation's revenue.
      On 8 April 1986 the hon. Member for Stirling (Mr. Forsyth) asked the Chancellor to set out in tabular form for 1979–80, 1985–86 and 1986–87 to date the proportion of the cost of certain articles that was accounted for by tax. The answer revealed that in 1979–80, 48 per cent. of the price of a gallon of four-star petrol went to the state in taxation—almost half the cost. That is a fairly generous contribution by car users to the state's financial requirements. However, by 1985–86, the tax had risen to 60 per cent. I suspect that if the figures were worked out today the percentage would be even higher. There is no logical reason for taxation to rise by that amount.
      The amendment is modest. It proposes only that the indexation of petrol tax this year should be in accordance with inflation, which is entirely reasonable. Recent Budgets have accepted that indexation can be justified. We are arguing for no more, although I assure the Minister that my constituents would like me to do so. We are not

      185
      arguing for anything irrational, unreasonable or desperately Poujadist for the remoter parts of Britain. We are simply drawing the attention of the Committee to a major fact of economic life in rural parts.
      A motor car is a part of life. It is accepted that at the age of 17 one learns to drive a car. In most families, learning to drive a motor car is not an option. It is not discussed as something that one might do at some future time. Families earning incredibly small incomes in areas such as mine succeed in running motor cars. It is a reflection of the ingenuity of local garages that they manage to get the motor cars going to pass the MOT test. The hon. Member for Dorset, North (Mr. Baker) has seen the condition of such vehicles. Sometimes, I think that our approach to MOT testers in remote areas is a little too flexible, though I know that the vehicles are kept going, that they pass the MOT test and that they are safe.
      The tax will have a major impact on those who live in remote areas. Although the impact is of a personal and individual nature, it affects the economy. The total impost of tax on transport has increased substantially in recent years, and this has affected the ability of remote areas to trade and exchange ideas and goods with the more populous parts of Britain. I see no reason to welcome or accept the increase.
      I recognise that the amendment is relatively modest. I remember when the Financial Secretary to the Treasury accepted an Opposition amendment of petrol tax. There was some excitement in the House at that time. I hope that tonight the Minister will likewise be impressed by the arguments, although I fear that the parliamentary numbers are not as impressive as they were then.
      It is worth remembering that the petrol tax was reduced on the previous occasion because the Conservative party, which was in opposition, supported the initiatives of the Liberal and Nationalist parties. I pay due credit to those hon. Members who are present in the Chamber for their support on that occasion. Hon. Members agreed that the imposition of that tax was unfair and collectively we changed the mind of the then Labour Government.
      I look forward to hearing the Minister explain what is significantly different about our present position compared with the position that faced us on the earlier, peculiar occasion. I hope the Minister recognises that he has made a mistake. I hope also that he welcomes the initiative of the hon. Member for Dorset, North, who tabled the amendment, and will accept it. One lives in hope. I have been a Member of Parliament for 12 years and, on the whole, hope has not been one of the most reasonable of objects. I reminisce about such enthusiasm. I look forward to the Minister accepting the amendment.
      The ability of a remote area to trade, meet, and exchange ideas with some of the more metropolitan parts of the nation is greatly affected by the level of taxation on fuel. I have no doubt that such taxation is causing great damage to the economy — in my part of the world at least—as the costs prove to be the straw that breaks the camel's back.
      Mr. Terry Davis: I welcome you to the Chair, Mr. Knox. I had hoped to catch your eye at a later stage in the debate on clause stand part, but the debate has been so wide-ranging that perhaps it will suit the convenience of
      186
      the Committee and the Government if I explain the Labour party's view not only of the amendment but of the clause itself.
      Last night I described clause 15 as the centrepiece of the Finance Bill, and I think it would be fair to describe clause 2 as epitomising the approach of the Chancellor of the Exchequer to taxation. It is an excellent example of what his own colleagues described as his "ingenuity".
      In the Budget statement the Chancellor announced an increase of 8 per cent. in the tax on petrol and derv—7½p a gallon on petrol and 6½p a gallon on derv. The 8 per cent. increase compared with a 5·7 per cent. increase in the retail prices index. In effect, the Chancellor increased the tax on petrol by 2p more than it should have been increased on the basis of indexation, and he increased the tax on derv by a similar amount in excess of indexation. Last year the Labour party criticised an increase which was in line with indexation. We criticised that increase because it was made by the Chancellor of the Exchequer automatically and without thought, and we criticised it on two specific grounds.
      First, the Labour party criticised an increase based on indexation as inflationary, at a time of falling inflation. That point is as valid today as it was a year ago. An increase in the price of petrol is inflationary. The Government would argue that the price of petrol has come down. The price of petrol has not come down by as much as it would have come down if the Government had not increased the tax.
      The Labour party's second ground for criticising the Chancellor's approach to that indirect tax was that the Chancellor did not have any regard for people for whom a car is a necessity rather than a luxury. This year, in his Budget statement, the Chancellor said that the overall burden on the motorist would be "unchanged in real terms". The Chief Secretary to the Treasury repeated that statement in a later debate. I must disagree with the views of the Chancellor and the Chief Secretary. It is not correct to say that the overall burden on motorists will be unchanged. The overall burden on motorists will be unchanged, but there will be a change in the effect of the tax on the individual motorist because there are differences between motorists. The imposition of such a tax on petrol will have a selective impact. If the Government increase the tax on petrol and keep vehicle excise duty at the same level, some people win and others lose.
      There are three groups of winners and losers. The first group who will gain comprises those with smaller rather than larger motor car engines. The losers are those with cars with big engines. I have some sympathy with that as a basis for an approach to taxation. By and large, the people who drive small cars have low incomes and people who drive cars with big engines have large incomes. I do not object to a tax which places a greater burden on those with high incomes and the greatest wealth.
      The second group affected by the tax are those with cars with newer engines. They will pay slightly less than those with cars with older engines. Every motorist knows that the consumption of petrol is worse in a car with an old engine. People with low incomes tend to drive secondhand or even third-hand cars, with old engines. The increase in tax will therefore impose an unfair burden on those with low incomes who drive older cars.
      The third group of winners and losers is made up of those who have low and high mileage. An increase in the tax on petrol, as distinct from an increase in vehicle excise

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      duty, puts a higher burden on those with higher mileage. I have some attraction to that approach, because it means that the tax — the contribution to the Government's revenue—is related to the use of the roads, the motoring system and the support services. It is expensive. It is a question not only of the cost of roads but of providing the police, ambulance and other support services. An increase in petrol tax means that more is paid by someone who uses a car a lot and less is paid by someone who uses a car a little.
      However, serious problems exist in rural areas. The problems concern not only those who live, as the hon. Member for Truro (Mr. Penhaligon) described them, in remote parts of the United Kingdom. It is expensive for everyone who lives some distance from where he works. It is a great mistake to think that all the people who live outside towns and cities work on farms — that they simply roll out of bed and end up down the lane at a local farm. Many people living in rural areas work in rural factories, and they have to drive many miles to work. A burden will be placed on those people.
      The previous Chancellor of the Exchequer, the right hon. and learned Member for Surrey, East (Sir G. Howe) described a tax on petrol as a selective tax which was
      "deliberately biased against those living in rural areas"
      and
      "deliberately biased against those who had no option about the method by which they travel to work."—[Official Report, 9 May 1977; Vol. 931. c. 937.]
      It is not only people in rural areas who may have no option about the method by which they travel to work. Because of the Government's policies on the bus industry, more and more people who live in urban and suburban areas will have no choice in the method by which they travel to work.
      6.30 pm
      The Government say that competition has forced the price of petrol down. On Second Reading the Chief Secretary to the Treasury based his defence of the Government's tax increase on that ground alone. Yes, competition has forced the price of petrol down, but it cannot force that price below the level of tax. Petrol is 2p a gallon higher than the indexed level because of the Budget, and the total increase is, of course, even greater. Petrol costs 7½p a gallon more than it would have cost without the Budget. If the Government expected the oil companies to absorb the increase or were concerned about the profits of oil companies because they had failed to reduce their prices in line with the price of oil, they could have tackled the problem differently. As my right hon. Friend the Leader of the Opposition put it, the Government could have introduced a special tax on the excessive profits of oil companies—one that could be compared with the tax that the Government imposed a few years ago on the banks' excessive windfall profits. But the Government have turned their face against that alternative. They prefer to tax the motorist instead of the oil companies.
      Mr. Penhaligon: Is it not true to say that the main reason why petrol prices took a while to come down was the imposition of the 90-day rule regarding fuel stocks?
      Mr. Davis: There are many reasons why petrol prices fell more slowly, following the fall in oil prices, than they should have done. I suspect that an element of market forces was at work. In recent weeks, we have seen the effect of competition in forcing down the price of petrol; in some cases, I suspect, at the expense of the margins of
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      the retailers who sell the petrol. However, I shall not enter into discussion on the economics of the oil industry, in which I once worked.
      The point is that the Government's policies are imposing a tax on the motorist, not on the people who make profits from extracting, refining and distributing petrol. The result is that the tax as a proportion of a typical post-Budget price has increased from 48 per cent. in 1979–80 to 60 per cent. following this Budget. That answer was given a month ago in Hansard. I suspect that, following the subsequent fall in the price of a gallon of petrol, the percentage has increased; so an even larger percentage of the price of a gallon of petrol can be attributed to tax. Competition cannot force down the price of petrol as far as it would otherwise go if the Government increase the tax on a gallon of petrol.
      Last year we argued—I repeat the argument tonight — that in such a situation the Government should undertake a wide-ranging and thorough review of the balance between vehicle excise duty and petrol tax. We are still waiting for that review. Our arguments were rejected last year. At that time, we opposed and voted against an increase in line with indexation. This year, we oppose even more and we shall vote against an increase in excess of indexation.
      There is no holy writ on indexation. There is nothing in the finance legislation that says that the Government must increase the price of petrol in line with the increase in the retail prices index. That is a political decision. The alliance may wish to increase the price of petrol in line with inflation during the past 12 months. We do not think that that is or should be an automatic policy, and we reject that approach.
      Equally, we reject the Government's approach in failing to outline any policy. The Government have no philosophy or logic in their approach to the tax on motoring and motorists. We are waiting for a wide-ranging study of the type recently made of personal tax allowances with particular reference to tax arrangements for married couples. Failing that, we do not agree with the approach of the Government or of the alliance. This tax, which this year is presented as a switch from vehicle excise duty to petrol tax—the Government have not increased vehicle excise duty on cars and light vans — is simply opportunist. The Chancellor saw an opportunity to increase the tax on petrol without people realising—or so he thought—that he had increased it because the price was falling at the time. We regard the Chancellor's decision as a trick, and we will vote against it.
      At the appropriate time, we will therefore vote against the motion, That the clause stand part of the Bill.
      Mr. Moore: As you kindly said, Mr. Knox, it might be useful if, like the hon. Member for Birmingham, Hodge Hill (Mr. Davis), I look first at the amendment and then, because the debate goes wider than the amendment, go to the substance of the clause.
      One cannot look at clause 2 in isolation. Essentially, what the Government have sought to do relates, in combination, to clauses 2 and 3. We have sought to revalorise overall duties for the motorist so that, as a result of the impact of the combination of VED and petrol duty, the motorist is no better or no worse off in real terms. I think that hon. Members have recognised that.
      The Government's changes seek to alter in a modest way — I accept that it is modest — the essential

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      relationship in the burden which existed before between petrol duty and VED. The Government's changes do not change the total; they simply change the relationship. In total, VED decreases relative to its role in taxation, and petrol duty increases.
      The hon. Member for Stockton, South (Mr. Wrigglesworth) legitimately asked me to make the Government's position clear. I should have thought that, to alter somewhat the balance in VED's favour, following a substantial decrease in petrol prices, would be seen as a perfectly reasonable position. As the hon. Member for Hodge Hill legitimately said, it is extremely difficult to be absolutely certain about the alliance's policies. However, I detected in the speech of the hon. Member for Stockton, South what was essentially support for the thrust of the Government's policy. The amendment relates specifically to petrol duty. I understand that, because we are dealing only with clause 2.
      It would be helpful if the Committee could understand the bizarre nature of the alliance's amendment as seen in isolation. I try to spend my time, as do other Committee Members, reading the alliance's literature published outside the House as well as what its Members say in the House. [Interruption.] I do not know whether that will be in the Official Report. The charming references by the hon. Member for Truro (Mr. Penhaligon), which we enjoy, show that it might be a mistake for me to try to read the literature published outside the House by alliance Members, but that is what I do, because that is my duty. Occasionally the electorate thinks that certain statements might have some relevance to the alliance's aspirations to office.
      I thought that the "policy"—I put a question mark over that word because it is difficult to establish what the policy is—of the official Liberal party on the relativity between VED and petrol tax was published on 22 April in the Liberal document "An Environment for the Future". It was clear and interesting. It essentially argued that VED should be reduced to a level to cover only the administration costs of registration.
      I am sure that the hon. Member for Hodge Hill remembers that last October we discussed across the Floor the annual report of the Public Accounts Committee. We had the benefit of the statements of the current official economic spokesman for the alliance, the charming hon. Member for Truro. He made his policy clear. We assumed in our innocence that that was the policy of the Liberal party and the alliance. On 24 October, in the debate on the report, the hon. Gentleman argued for the retention of VED because he saw the problems of a 38p addition to the price of petrol. I am at a terrible loss.
      Mr. Gerald Bermingham rose—
      Mr. Moore: I shall just conclude this point.
      I had assumed that this amendment was in line with the alliance policy on vehicle excise duty, but presumably it is not. Presumably its policy has reverted to that set out by the hon. Member for Truro. If the alliance does not wish to add 38p to the price of a gallon of petrol, it would be helpful if there were a useful intervention at this point so that we can know precisely what it wishes to do. The Government's position is absolutely clear from the way in
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      which the Chancellor maintained the burden on the motorist as it was in real terms. It was the relativities that he changed.
      Mr. Penhaligon: I suspect that the Financial Secretary had this point drawn to his attention, rather than having read the document. If he would read the document he would notice that it says:
      "This booklet is published for consultation and comment: criticisms and suggestions from within the Party and from outside will be welcome."
      My party's environmental panel is not used to the Financial Secretary giving advice. However, he has given advice, and I appreciate that. I agree with what he said, and I hope that between us we can remove that proposal from that otherwise rather good document.
      Mr. Moore: Charming as the hon. Member for Truro is, he cannot get away with the illusion of telling the outside world that this is simply a policy document in which we should have no interest when it comes to the real issue. I could repeat the question, and it might be interesting to get an answer, because the question relates to the view of the alliance parties—both the alliance's economic spokesmen are present—on the relativity of duty as between VED and petrol. What is it? We know the alliance's view on the supposedly vote-winning attempt to revalorise petrol duty. If an alliance Member would like to intervene, I should be delighted to give way.
      Mr. Bermingham: Does the Financial Secretary agree that the views of the alliance are not a question of a north-south policy, but of where the next by-election is, whether it is a rural or an urban seat? Its policies seem to vary according to where the next by-election is.
      Mr. Moore: The hon. Gentleman expressed that much better than I was trying to do.
      The hon. Member for Hodge Hill went on to discuss the major part of the clause. I was disturbed by the way in which the Opposition essentially argued that the Chancellor had got it all wrong in the Budget. They seemed to suggest that there was no possibility of a free market existing after the Chancellor's budgetary decisions, and they essentially argued that prices will not go down. The arguments have changed somewhat suddenly in the past week or two as a consequence of prices actually going down. They have switched the argument vaguely in the past few weeks, and again tonight, as between the theoretically oligopolistic roles of the oil companies and the way in which we were told we were naive. My right hon. Friend the Chancellor was told that by the leader of the Opposition and by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), and I remember participating in the radio programme "Any Questions" with the representative of the alliance, Polly Toynbee, and the hon. Member for Coventry, North-West (Mr. Robinson), who represented the Opposition.
      We have not acted in a naive way. As I said, the Government's position is absolutely clear. In the Finance Bill, in the face of declining oil prices, we have sought to protect the revenue. This is not an unimportant factor, because there is £140 million of theoretical loss attached to the alliance amendment. The gross revenues in terms of the revalorisation of VED and petrol duty are about £485 million. This is not an insignificant sum in budgetary judgments. We have sought to ensure that the burden for

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      the motorist is unchanged and the revenue protected. At best, if our arguments are satisfactory, the motorist may be slightly better off, rather than the reverse.
      6.45 pm
      Hon. Members have rightly drawn attention to the difficulties in different parts of the country. I should like to remind the Committee of the facts of what has actually happened. There has been some rather bizarre debate in the press and, dare I say it, in the House, about that. I shall look at what has happened nationally, internationally and regionally.
      Nationally, we do not often look at the nature of the crude price content of a gallon at the pump. People have rightly discussed the varying pattern of tax as a percentage of a gallon over the past 16 or so years. Let me draw to the attention of the Committee what has happened nationally to crude prices since last October and November, because I think that this is germane. According to the best statistics and data that I can obtain from the Revenue and the Department of Energy, the average crude content of a £1.95 gallon in November 1985 varied between 35 and 40 per cent. There are many variables involved. Each company has different relationships with its refinery capacities, downstream activities and the nature of its business. However, that would have given a crude price content at 35 per cent. of 68p. We have seen roughly a halving in crude prices. All other things being equal — they never are, because margins change and companies' actions change but I do not want to bore the Committee with that — a halving of the crude price might have seen a reduction of 34p, half of the 68p crude content in November 1985. That would have brought the pump price—I accept that there are variations—to £1.61 now. That may not be acceptable to the hon. Member for Dundee, East (Mr. Wilson) and parts of Scotland but it is not dissimilar from what we are seeing in many parts of the country today.
      I shall now look at the relative comparisons internationally. We do not live in an isolated world. It is interesting to look at the falls in the average pump price of four-star petrol between 25 November 1985 and 21 April, excluding duty and tax. They are almost universally similar throughout the Community. The average is 30 per cent. For the United Kingdom it is 29 per cent. I could go through all the detailed statistics, but I do not want to bore the Committee. Essentially, the figures are all around 28 to 31 per cent., with one or two exceptions.
      I should mention the relative price at the pump today in international terms. We are probably a little below average within the Community, at about £1.65. I can give the hon. Member for Truro the pump prices for France or Germany. For France it is £1.98, and for Germany it is £2.43.
      Mr. Penhaligon rose—
      Mr. Moore: I shall be moving later to the relative percentage of tax in the pump price if that is the point that the hon. Member for Truro is trying to make.
      Mr. Penhaligon: I was hoping that the Minister would compare like with like. It is not relevant to compare ourselves with the rest of the European Community. The comparison should be made between ourselves and other countries which have an oil production surplus, such as the United States or Saudi Arabia and the other oil-producing
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      nations. Those figures would be more relevant to the debate. If we were to use those figures the Minister's arguments would not stand up so well to examination.
      Mr. Moore: I shall go into much greater length at some other time about the way in which some countries seek to charge a lower price relative to the market price and the tax price.
      The regional point was raised by many hon. Members, and it is relevant to the debate. I asked the Department of Energy to give me a survey of the regional figures. The hon. Member for Dundee, East was right to say that there are regional variations. We have debated that at length in the House at other times. I would draw to the hon. Gentleman's attention the fact that before the Budget, and before the fuel duty increase, the price in Stornoway, although £1.89 now, was then £1.95. I accept that that is outside the national average, but that is another debate. However, there has been a reduction.
      It is fascinating to look at the relative prices throughout the country. Last week, on Second Reading, we heard that there was a bias towards the strange thing called the south-east. However, the main area of low-price is still south Wales. The hon. Member for Dundee, East might be interested to know that the greatest differential in prices is between London and south Wales, with south Wales benefiting in the comparison. South Wales, Manchester, the Bury-Bradford region, Oxford, Abingdon and Portsmouth are being mentioned as low-price areas.
      For the record, I must say that there was a rather loud interruption during the speech of my right hon. Friend the Chief Secretary on Second Reading about the way in which those prices did not seem to impact upon the Workington area. The hon. Member for Workington (Mr. Campbell-Savours) is an assiduous attender, and I thought that he would be with us at this stage. I asked my officials to check prices in the north-west so that we could see the comparison. They did so on 1 May. I am advised that there is strong competition in and around Manchester and Bradford, where prices are among the lowest in the country, at about £1.55 per gallon for four-star.
      Mr. Merlyn Rees indicated assent.
      Mr. Moore: I see that the right hon. Gentleman recognises that.
      The Department of Energy has had no report of especially high prices in the Workington area, but, as I wanted to be thorough, I thought it wise to check. My officials checked yesterday, and I am advised that four-star petrol sold at the Greenrow service station at Silloth, in Workington, is £1.65 a gallon. I accept that that does not totally answer some of the points made by the hon. Member for Dundee, East, but I am trying to say that the variations in prices across the regions are not dissimilar.
      The essential point made in the debate by the hon. Members for Stockton, South and for Birmingham, Hodge Hill was about the Government's policies. They are embodied in clauses 2 and 3. I ask them to consider some other points in relation to the totality of taxation.
      Mr. Wilson: The Minister was generous enough to say that he was not sure whether some of his arguments related to the points that I put forward. In that respect, I probably agree with him. I should like to bring to his attention a

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      letter from the Scottish Motor Trade Association, dated 9 April, which was sent to all Scottish Members of Parliament. It said:
      "We have been made aware … that the differentials between areas in England and Wales, and Scotland can be in excess of 20p per gallon. As the margin to the retailer is 7½p give or take a penny, it is fairly obvious that the price to the retailer is abnormally high in Scotland, as opposed to England."
      The Minister will fully realise that, as Scotland is the oil-producing area of the United Kingdom, and has the highest prices on average, we feel bitter about that. How does he propose to use fiscal methods to try to even out the heavy weighting on consumers in Scotland, even at the expense of the Treasury? Alternatively, would he rather get his friends in another Department to put pressure on the oil companies to find a fairer system of zoning?
      Mr. Moore: I have known the hon. Gentleman for a long time and have enjoyed debates and discussions on that issue, but the debate on clause 2, and in particular on this amendment, is not the occasion to debate whether to use fiscal methods. However, it is a legitimate area of discussion. I would not argue for using fiscal methods in relation to the price differentials.
      Mr. Terry Davis: I think that we shall return to this subject when we discuss clause 3 in Committee upstairs. The Minister said that clauses 2 and 3 embodied the Government's policy. I assume that a policy is followed for more than one Budget—indeed, for several Budgets. Over the past six or seven years the percentage increase in the price of petrol has been greater than that of vehicle excise duty. Is it the Government's policy to transfer the motoring tax burden from VED to the price of petrol, as happened dramatically this year? That has tended to happen in previous years, too, and that is important. The Financial Secretary rightly says that to abolish VED would put up the price of petrol by 38p. I am not accusing the Government of trying to do that, but it seems to be the Government's policy that in future petrol increases will be disproportionately large.
      Mr. Moore: I thought that I had made the position clear. I was paraphrasing the remarks of my right hon. Friend the Chancellor in the Budget debate. With the substantial decline in petrol prices, it seemed reasonable to alter the balance in a modest way between VED and petrol. We have seen radical shifts in the price of that product in the past 16 years.
      This matter was raised two or three times in the early part of the debate. It might be useful to remind the Committee of the changes. The amount of duty and tax as a percentage of price is now over 60 per cent. The figure was in the high 40s when the Government came to office. The House forgets where it was in 1969 and 1970. In 1969 it was 70 per cent., and in 1970 it was 69 per cent. I am not suggesting that it is the Government's policy to reach that point, but I am saying that there has been a radical shift.
      I should like to remind the Committee of two further points. Compared with our competitors in Europe, the relative percentage of tax taken from a gallon at the pump is in the low 60s in the United Kingdom, 64 per cent. in Belgium, and 65 per cent. in Denmark—
      Mr. Penhaligon: The Minister is not comparing like with like.
      Mr. Moore: I am making a comparison with our continental competitors, which I thought was occasionally attractive to the alliance. The figure is 72 per cent. in France, 64 per cent. in Germany, 67 per cent. in Ireland, 76 per cent. in Italy and 66 per cent. in Holland.
      The opposition parties believe that there should be a radical reduction. That is what I gather from the remarks of the hon. Member for Hodge Hill. That is what they want, as opposed to a modest continuation of the pattern of revalorisation. Where does the alliance think that the £140 million net revenue loss will be made up from? I accept that it is a massive burden on the motorist. In 1986–87 petrol is expected to produce £5·7 billion for the Exchequer. VED will produce £2·4 billion. It behoves those who seek to adjust and change where the taxation is levied to suggest where it will come from.
      The amendment is a relative irrelevance because it ignors the way in which the Government have sought to maintain in real terms, successfully, the relatively modest burden on the motorist. I ask the Committee to reject the amendment. I imagine that we shall now no longer need to have a substantive debate on the Question, That the clause stand part of the Bill.
      Mr. Bermingham: As we shall not have a substantive debate on clause stand part, I should like to make a few remarks about the amendment and its application to clause 2. The Government seem to miss an important central point, which is that, in order to move a human being, goods or any other product from A to B in the United Kingdom, one uses motorised vehicles. The bulk of freight transport goes by motorised vehicles. The bulk of agricultural machinery is driven by diesel-powered vehicles. With regard to public transport, in rural areas people use cars because there are no buses left and in urban areas people use cars because the bus services are decreasing. But the bulk of public transport is moved by diesel fuel or petrol.
      All that is reflected in our cost of living. If the Government want our cost of living to go down, and if they want industry to pick up, they should take into the equation the cost of getting to work, of transporting materials and of transporting the products produced by manufacturing industry. It is easy to say that if we reduced petrol or diesel oil prices, we would have to find all that extra taxation, but if we reduced the cost of our manufactured products and our transport costs, we would make ourselves more competitive, sell more goods, generate more wealth and therefore generate more tax-bearing income, and the equation would level out.
      It is nonsense to compare the United Kingdom with non-oil-producing countries such as France and Germany. Why not equate the United Kingdom with other oil-producing countries such as Norway or America, and find out their percentages? If we managed to strike at the heart of the exorbitant fuel costs that we bear in this country, we might make ourselves more competitive and wealthier.
      Clause 3, to which I shall return in Committee, relates to the whole concept that the motorist must pay, that, no matter what happens to the cost of oil, each year the Government will impose more vehicle excise duty and more petrol duty; regardless of what happens, in real terms, to the price of crude oil, everything becomes progressively more expensive. That is not good enough. The fall in the price of oil gave us an opportunity to make ourselves enormously competitive. All that was needed

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      was to get the Government to realise that they did not need so great a slice of the cake. Perhaps the Government will accept just for once that if manufacturing industry were to be given the chance of cheap fuel, England might be given the chance to create jobs by making goods that are competitive in world markets.
      7 pm
      Mr. Wrigglesworth: I wish to reply to some of the points that have been made during the debate, in particular those made by the Minister, whose reply was disappointing. The Government's view has been made no clearer. The Minister said that this year the Government have taken advantage of the reduction in the price of oil to make a small switch from vehicle excise duty to increasing the duty on petrol. However, when he was pressed by the hon. Member for Birmingham, Hodge Hill (Mr. Davis) about whether that meant that the Government wished to move in that direction, he said that it might not happen next year. Therefore, we are not clear about the Government's intentions.
      The Minister rightly drew attention to the Liberal party's discussion document, which advocates a move in the direction of reducing vehicle excise duty and increasing the duty on petrol. The position of the two parties was made clear by my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) on the occasion to which the Minister referred. That remains the position. If the Minister had had time to read the document from cover to cover, instead of only looking at it, he would have seen that it was a green paper for internal discussion within the party and, indeed, for discussion by those outside the party.
      As my hon. Friend said, we welcome the Minister's comments, which will be taken into account during the further discussion of these matters. The Social Democratic and Liberal parties produce green papers for discussion within our ranks and we have distributed many of them widely to outside bodies in order to obtain their comments before finalising our views on difficult and complicated matters of this kind. Our view remains that there should be a switch in the balance between vehicle excise duty and the duty on petrol. That is why we have tabled this amendment.
      The alliance and the Scottish National party have made clear their view about car owners in rural areas being forced into even greater use of their cars because of the change in the public transport system imposed upon them by the Government. We are also aware that the increase in the price of petrol imposes an additional burden on users of motor cars in urban areas. My constituency covers both rural and urban areas. I should not like it to be thought that the alliance and the other Opposition parties are not equally anxious about the position of the motor car user in urban areas.
      Mr. Wilson: Will the hon. Gentleman accept that I, too, represent a city constituency? In my area the average price of petrol is higher than in many other areas. That cost has to be borne in a constituency where the unemployment rate is 17·5 per cent.
      Mr. Wrigglesworth: I sympathise entirely with the hon. Gentleman's point. That applies to other right hon. and hon. Members with constituencies in the north of Scotland whose constituents have to bear exactly the same
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      burden. There are refineries on Teesside where ICI petrol is produced, and as it is sold in the area we do not understand why petrol prices are not very much lower. My constituents have an advantage over those in the constituency of the hon. Member for Dundee, East (Mr. Wilson), but, even though we enjoy the enormous benefit of petrol being refined on our doorstep, we do not enjoy lower petrol prices. Indeed, petrol prices are lower in other parts of the country where there are no refineries The result is that companies and industries on Teesside, and also people in the rural part of my constituency, express strong feelings to me because the price of petrol imposes a substantial burden.
      I am sorry that the Government were tempted by the reduction in the price of oil to increase the duty beyond the level of indexation. That is why my colleagues and I decided to table this modest amendment, which would reduce it to the level of indexation. I hope that the Committee will realise how modest a proposal this is and will support it in the Lobby.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 9, Noes 183.

      Division No. 172]

      [7.05 pm

      AYES

      Hughes, Simon (Southwark)

      Wigley, Dafydd

      Jenkins, Rt Hon Roy (Hillh'd)

      Wilson, Gordon

      Kennedy, Charles

      Owen, Rt Hon Dr David

      Tellers for the Ayes:

      Steel, Rt Hon David

      Mr. David Penhaligon and Mr. Ian Wrigglesworth.

      Stewart, Rt Hon D. (W Isles)

      Thomas, Dafydd (Merioneth)

      NOES

      Alexander, Richard

      Cope, John

      Amess, David

      Corrie, John

      Ashby, David

      Couchman, James

      Aspinwall, Jack

      Cranborne, Viscount

      Atkins, Rt Hon Sir H.

      Critchley, Julian

      Atkins, Robert (South Ribble)

      Crouch, David

      Atkinson, David (B'm'th E)

      Evennett, David

      Baker, Nicholas (Dorset N)

      Eyre, Sir Reginald

      Beaumont-Dark, Anthony

      Fairbairn, Nicholas

      Bellingham, Henry

      Fallon, Michael

      Bendall, Vivian

      Favell, Anthony

      Benyon, William

      Fookes, Miss Janet

      Bevan, David Gilroy

      Fox, Marcus

      Blackburn, John

      Franks, Cecil

      Blaker, Rt Hon Sir Peter

      Freeman, Roger

      Boscawen, Hon Robert

      Gale, Roger

      Bottomley, Peter

      Gardner, Sir Edward (Fylde)

      Bottomley, Mrs Virginia

      Gorst, John

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

      Gower, Sir Raymond

      Bright, Graham

      Gregory, Conal

      Brinton, Tim

      Griffiths, Sir Eldon

      Brooke, Hon Peter

      Grist, Ian

      Brown, M. (Brigg & Cl'thpes)

      Grylls, Michael

      Bryan, Sir Paul

      Hamilton, Hon A. (Epsom)

      Buck, Sir Antony

      Hampson, Dr Keith

      Budgen, Nick

      Harris, David

      Bulmer, Esmond

      Harvey, Robert

      Burt, Alistair

      Hawkins, Sir Paul (N'folk SW)

      Carlisle, John (Luton N)

      Hayes, J.

      Carlisle, Kenneth (Lincoln)

      Hayward, Robert

      Chapman, Sydney

      Hickmet, Richard

      Chope, Christopher

      Hicks, Robert

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

      Higgins, Rt Hon Terence L

      Clark, Dr Michael (Rochford)

      Hogg, Hon Douglas (Gr'th'm)

      Clark, Sir W. (Croydon S)

      Holland, Sir Philip (Gedling)

      Clarke, Rt Hon K. (Rushcliffe)

      Hordern, Sir Peter

      Clegg, Sir Walter

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

      Cockeram, Eric

      Howell, Ralph (Norfolk, N)

      Colvin, Michael

      Jackson, Robert

      Conway, Derek

      Jessel, Toby

      Coombs, Simon

      Jones, Robert (Herts W)

      197

      Key, Robert

      Sainsbury, Hon Timothy

      King, Roger (B'ham N'field)

      Sayeed, Jonathan

      Knowles, Michael

      Shelton, William (Streatham)

      Lang, Ian

      Shepherd, Colin (Hereford)

      Lawrence, Ivan

      Sims, Roger

      Lennox-Boyd, Hon Mark

      Skeet, Sir Trevor

      Lilley, Peter

      Speed, Keith

      Lord, Michael

      Spencer, Derek

      McCurley, Mrs Anna

      Spicer, Jim (Dorset W)

      MacGregor, Rt Hon John

      Stanbrook, Ivor

      Maclean, David John

      Stanley, Rt Hon John

      McNair-Wilson, M. (N'bury)

      Steen, Anthony

      Madel, David

      Stern, Michael

      Major, John

      Stevens, Lewis (Nuneaton)

      Malone, Gerald

      Stewart, Allan (Eastwood)

      Maples, John

      Stewart, Andrew (Sherwood)

      Marland, Paul

      Stradling Thomas, Sir John

      Marlow, Antony

      Tapsell, Sir Peter

      Marshall, Michael (Arundel)

      Taylor, John (Solihull)

      Maude, Hon Francis

      Taylor, Teddy (S'end E)

      Maxwell-Hyslop, Robin

      Temple-Morris, Peter

      Mayhew, Sir Patrick

      Terlezki, Stefan

      Merchant, Piers

      Thomas, Rt Hon Peter

      Mills, Iain (Meriden)

      Thompson, Donald (Calder V)

      Moate, Roger

      Thompson, Patrick (N'ich N)

      Moore, Rt Hon John

      Thorne, Neil (Ilford S)

      Morris, M. (N'hampton S)

      Thurnham, Peter

      Morrison, Hon P. (Chester)

      Tracey, Richard

      Moynihan, Hon C.

      Trotter, Neville

      Murphy, Christopher

      Twinn, Dr Ian

      Nelson, Anthony

      van Straubenzee, Sir W.

      Newton, Tony

      Viggers, Peter

      Nicholls, Patrick

      Waddington, David

      Osborn, Sir John

      Wakeham, Rt Hon John

      Ottaway, Richard

      Ward, John

      Page, Richard (Herts SW)

      Wardle, C. (Bexhill)

      Parkinson, Rt Hon Cecil

      Warren, Kenneth

      Patten, Christopher (Bath)

      Watts, John

      Pawsey, James

      Wells, Sir John (Maidstone)

      Peacock, Mrs Elizabeth

      Wheeler, John

      Portillo, Michael

      Whitfield, John

      Powell, William (Corby)

      Whitney, Raymond

      Powley, John

      Wilkinson, John

      Prentice, Rt Hon Reg

      Winterton, Nicholas

      Price, Sir David

      Wolfson, Mark

      Proctor, K. Harvey

      Wood, Timothy

      Rhodes James, Robert

      Yeo, Tim

      Ridsdale, Sir Julian

      Young, Sir George (Acton)

      Rippon, Rt Hon Geoffrey

      Robinson, Mark (N'port W)

      Tellers for the Noes:

      Roe, Mrs Marion

      Mr. Michael Neubert and Mr. Peter Lloyd.

      Rowe, Andrew

      Sackville, Hon Thomas

      Question accordingly negatived
      The Temporary Chairman (Mr. David Knox): We come now to amendments Nos. 2 and 3.
      Mr. K. Harvey Proctor: It may be for the convenience of the Committee if I do not move these amendments now, but wait until Report.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 171, Noes 83.

      Division No. 173]

      [7.20 pm

      AYES

      Alexander, Richard

      Bellingham, Henry

      Alison, Rt Hon Michael

      Bendall, Vivian

      Amess, David

      Benyon, William

      Ashby, David

      Bevan, David Gilroy

      Aspinwall, Jack

      Blackburn, John

      Atkins, Rt Hon Sir H.

      Blaker, Rt Hon Sir Peter

      Atkins, Robert (South Ribble)

      Boscawen, Hon Robert

      Atkinson, David (B'm'th E)

      Bottomley, Mrs Virginia

      Baker, Nicholas (Dorset N)

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

      Beaumont-Dark, Anthony

      Bright, Graham

      198

      Brinton, Tim

      Mills, Iain (Meriden)

      Brooke, Hon Peter

      Moate, Roger

      Brown, M. (Brigg & Cl'thpes)

      Moore, Rt Hon John

      Bryan, Sir Paul

      Morris, M. (N'hampton S)

      Buck, Sir Antony

      Morrison, Hon P. (Chester)

      Budgen, Nick

      Moynihan, Hon C.

      Bulmer, Esmond

      Murphy, Christopher

      Burt, Alistair

      Nelson, Anthony

      Carlisle, John (Luton N)

      Neubert, Michael

      Carlisle, Kenneth (Lincoln)

      Newton, Tony

      Carttiss, Michael

      Nicholls, Patrick

      Chapman, Sydney

      Osborn, Sir John

      Chope, Christopher

      Page, Richard (Herts SW)

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

      Parkinson, Rt Hon Cecil

      Clark, Dr Michael (Rochford)

      Patten, Christopher (Bath)

      Clark, Sir W. (Croydon S)

      Pawsey, James

      Clarke, Rt Hon K. (Rushcliffe)

      Peacock, Mrs Elizabeth

      Clegg, Sir Walter

      Powell, William (Corby)

      Cockeram, Eric

      Powley, John

      Colvin, Michael

      Prentice, Rt Hon Reg

      Conway, Derek

      Price, Sir David

      Cope, John

      Proctor, K. Harvey

      Corrie, John

      Rhodes James, Robert

      Couchman, James

      Ridsdale, Sir Julian

      Cranborne, Viscount

      Rippon, Rt Hon Geoffrey

      Crouch, David

      Robinson, Mark (N'port W)

      Durant, Tony

      Roe, Mrs Marion

      Evennett, David

      Rowe, Andrew

      Eyre, Sir Reginald

      Sackville, Hon Thomas

      Fairbairn, Nicholas

      Sainsbury, Hon Timothy

      Favell, Anthony

      Sayeed, Jonathan

      Fookes, Miss Janet

      Shelton, William (Streatham)

      Forth, Eric

      Shepherd, Colin (Hereford)

      Freeman, Roger

      Silvester, Fred

      Gale, Roger

      Sims, Roger

      Gardner, Sir Edward (Fylde)

      Skeet, Sir Trevor

      Gorst, John

      Speed, Keith

      Gower, Sir Raymond

      Spencer, Derek

      Gregory, Conal

      Stanbrook, Ivor

      Griffiths, Sir Eldon

      Stanley, Rt Hon John

      Grist, Ian

      Steen, Anthony

      Hamilton, Hon A. (Epsom)

      Stern, Michael

      Harris, David

      Stevens, Lewis (Nuneaton)

      Hawkins, Sir Paul (N'folk SW)

      Stewart, Allan (Eastwood)

      Hayes, J.

      Stewart, Andrew (Sherwood)

      Hayward, Robert

      Stradling Thomas, Sir John

      Hickmet, Richard

      Taylor, Teddy (S'end E)

      Hicks, Robert

      Temple-Morris, Peter

      Higgins, Rt Hon Terence L.

      Terlezki, Stefan

      Hogg, Hon Douglas (Gr'th'm)

      Thomas, Rt Hon Peter

      Holland, Sir Philip (Gedling)

      Thompson, Donald (Calder V)

      Hordern, Sir Peter

      Thompson, Patrick (N'ich N)

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

      Thorne, Neil (Ilford S)

      Howell, Ralph (Norfolk, N)

      Thurnham, Peter

      Jackson, Robert

      Tracey, Richard

      Jessel, Toby

      Trotter, Neville

      Johnson Smith, Sir Geoffrey

      Twinn, Dr Ian

      Jones, Robert (Herts W)

      Viggers, Peter

      Key, Robert

      Waddington, David

      King, Roger (B'ham N'field)

      Wakeham, Rt Hon John

      Lawrence, Ivan

      Ward, John

      Lennox-Boyd, Hon Mark

      Wardle, C. (Bexhill)

      Lilley, Peter

      Warren, Kenneth

      Lord, Michael

      Watts, John

      McCurley, Mrs Anna

      Wells, Sir John (Maidstone)

      MacGregor, Rt Hon John

      Wheeler, John

      MacKay, Andrew (Berkshire)

      Whitfield, John

      Maclean, David John

      Wilkinson, John

      McNair-Wilson, M. (N'bury)

      Winterton, Mrs Ann

      Major, John

      Winterton, Nicholas

      Malone, Gerald

      Wolfson, Mark

      Maples, John

      Wood, Timothy

      Marland, Paul

      Yeo, Tim

      Marlow, Antony

      Marshall, Michael (Arundel)

      Tellers for the Ayes:

      Maxwell-Hyslop, Robin

      Mr. Francis Maude and Mr. Peter Lloyd.

      Mayhew, Sir Patrick

      Meyer, Sir Anthony

      199

      NOES

      Archer, Rt Hon Peter

      Kaufman, Rt Hon Gerald

      Atkinson, N. (Tottenham)

      Kennedy, Charles

      Barnett, Guy

      Leighton, Ronald

      Barron, Kevin

      McCartney, Hugh

      Beckett, Mrs Margaret

      McDonald, Dr Oonagh

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

      McGuire, Michael

      Bermingham, Gerald

      Marek, Dr John

      Blair, Anthony

      Mason, Rt Hon Roy

      Brown, Gordon (D'f'mline E)

      Meacher, Michael

      Buchan, Norman

      Mikardo, Ian

      Callaghan, Jim (Heyw'd & M)

      Millan, Rt Hon Bruce

      Campbell-Savours, Dale

      Morris, Rt Hon A. (W'shawe)

      Clay, Robert

      Morris, Rt Hon J. (Aberavon)

      Coleman, Donald

      Nellist, David

      Cook, Frank (Stockton North)

      Orme, Rt Hon Stanley

      Corbett, Robin

      Owen, Rt Hon Dr David

      Davies, Ronald (Caerphilly)

      Park, George

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

      Pavitt, Laurie

      Deakins, Eric

      Penhaligon, David

      Dixon, Donald

      Pike, Peter

      Dormand, Jack

      Raynsford, Nick

      Dubs, Alfred

      Rees, Rt Hon M. (Leeds S)

      Dunwoody, Hon Mrs G.

      Richardson, Ms Jo

      Eastham, Ken

      Rogers, Allan

      Edwards, Bob (Wh'mpt'n SE)

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

      Ewing, Harry

      Silkin, Rt Hon J.

      Field, Frank (Birkenhead)

      Skinner, Dennis

      Fisher, Mark

      Snape, Peter

      Foot, Rt Hon Michael

      Steel, Rt Hon David

      Foster, Derek

      Stewart, Rt Hon D. (W Isles)

      Freeson, Rt Hon Reginald

      Thomas, Dafydd (Merioneth)

      Godman, Dr Norman

      Thomas, Dr R. (Carmarthen)

      Golding, John

      Tinn, James

      Gould, Bryan

      Wareing, Robert

      Hamilton, W. W. (Fife Central)

      Wigley, Dafydd

      Hardy, Peter

      Wilson, Gordon

      Heffer, Eric S.

      Winnick, David

      Hogg, N. (C'nauld & Kilsyth)

      Wrigglesworth, Ian

      Hoyle, Douglas

      Young, David (Bolton SE)

      Hughes, Dr Mark (Durham)

      Hughes, Robert (Aberdeen N)

      Tellers for the Noes:

      Hughes, Simon (Southwark)

      Mr. Ray Powell and Mr. James Hamilton.

      Jenkins, Rt Hon Roy (Hillh'd)

      John, Brynmor

      Question accordingly agreed to.
      Clause 2 ordered to stand part of the Bill.
      Bill (Clauses 2, 15, 26 and 80), reported, without amendment; to lie upon the Table.

  House of Commons Crest (Circulars)
  7.31 pm
  Mr. Tony Marlow: On a point of order, Mr. Deputy Speaker. You are probably aware that at 3.30 I raised a point of order on the use of the House of Commons emblem on circulars. Mr. Speaker asked me to get hold of some evidence of this apparent abuse of our logo.
  As you probably know, Sir, the instruction sent out by the Serjeant at Arms says that circulars must not be used with the
  "Crowned portcullis or the Royal Arms, whether or not associated with the words 'House of Commons' … in connection with … supporting the return of any person to public office."
  I have a facsimile of what must be a circular which has been circulating in the constituency of Derbyshire, West. It is signed by the leader of the Liberal party. I understand that that is not a unique signature but a facsimile signature. It has been dispatched to Mr. Stuart and Ann Ashworth.
  One might believe that there was some method in the madness here, that it was not a circular and that certain people have been picked out, but I understand that Mr. Stuart Ashworth is the chairman of the local Conservative club.
  If that is not persuasive, I have a copy of a further circular which was signed by the leader of the Liberal party in facsimile, addressed to "Dear Resident". At the top it has "From the Right hon. David Steel MP" and there, before your very eyes, Mr. Deputy Speaker, are the words "House of Commons" and the logo.
  We have clear instructions from the Serjeant at Arms. It is possible that the right hon. Gentleman has perpetrated this dreadful deed in ignorance of the instructions and it may well be that he would wish to ensure that all the circulars are hastily withdrawn. In view of the great urgency of the matter I would appreciate it if you could give the House the benefit of your advice, and perhaps even the leader of the Liberal party the benefit of a short, sharp instruction.
  Mr. Ivan Lawrence: Further to that point of order, Mr. Deputy Speaker. It is not so much the logo that appalls one, as the text that goes with it. May I draw your attention to the words in this letter?
  Mr. Deputy Speaker (Mr. Ernest Armstrong): I was in the House when the hon. Member for Northampton, North (Mr. Marlow) raised the matter with Mr. Speaker and Mr. Speaker asked for the evidence. I shall see that the evidence is transmitted to Mr. Speaker, so that he can give his judgment.
  Mr. Lawrence rose—
  Mr. Anthony Beaumont-Dark: Further to that point of order, Mr. Speaker.
  Mr. Deputy Speaker: Mr. Lawrence.
  Mr. Lawrence: May I develop my argument so that it can be brought to the attention of Mr. Speaker when he comes to consider the matter rather more fully? The text which is associated with the logo says ridiculous things such as:
  "We have reached a crucial point in our history in Britain. Are we going to pull ourselves"—
  Mr. Deputy Speaker: Order. It was not the text of the document that was raised with me but the question whether the practices of the House had been transgressed.
  Mr. Lawrence: The point of raising this further point of order is to protect the reputation of the House. If the text with which this logo is associated is so banal, fatuous and absurd, it will bring the House of Commons into disrepute. Surely it is only right that we should appeal to the protection that you give, Mr. Deputy Speaker, and that Mr. Speaker gives to the House to stop such an absurdity. I hope that the ruling will cause the withdrawal of something which will make it much more difficult for us to face our constituents when we return to our constituencies.
  Mr. Beaumont-Dark: Further to that point of order, Mr. Deputy Speaker. I believe that the leader of the Liberal party is in the House and that he bothered to vote in the Division that has just taken place. If he is so concerned about this matter, why is he not in the Chamber now to defend himself? Are we to wait until you say that the matter has been referred? Is not the need for action now, not tomorrow or the day after? Either justice is done in the House or it is nothing at all. Let us have a ruling now, not tomorrow.
  Mr. Deputy Speaker: My ruling is that I shall send the document to Mr. Speaker for his judgment straightaway.
  Mr. Beaumont-Dark: Further to that point of order, Mr. Deputy Speaker. We have all in our time enjoyed the hospitality of Mr. Speaker, but we do not need to wait for a dinner. Let us have a ruling now, not after dinner. The urgency is now, not later. Justice is now.
  Mr. Deputy Speaker: I take note of the hon. Gentleman's comments and they will be conveyed to Mr. Speaker immediately.

  British Shipbuilders (Borrowing Powers) Bill
  Considered in Committee.
  [MR. ERNEST ARMSTRONG in the Chair]
  Clauses 1 and 2 ordered to stand part of the Bill.
  Bill to be reported, without amendment.
  Order for Third Reading read.
  7.37 pm
  The Minister of State, Department of Trade and Industry (Mr. Peter Morrison): I beg to move, That the Bill be now read the Third time.
  As the House will appreciate, we debated at length this important and serious Bill only eight or nine days ago. Rather than detain the House at this stage with a long speech, I hope that I shall be able to catch your eye, Mr. Deputy Speaker, at the end and, with the permission of the House, respond to the debate.
  7.38 pm
  Mr. Bob Clay: In his brief opening remarks the Minister said that the Bill was debated on Second Reading only eight or nine days ago. I regret that it appears that the passing of eight or nine days is neither here nor there for the Minister; but my hon. Friends are entitled to say to the Minister that even eight or nine days are crucial, certainly for Britain's merchant shipyards. We have had to explain to the Minister and his predecessors that it is no good waiting for work to be completed to take serious measures to secure further orders. Even if orders were secured immediately for yards in my constituency — Sunderland Shipbuilders and Austin and Pickersgill — there would be a problem of lay-offs because of the lead-in time to order and cut steel, even if the orders were for fairly conventional work such as has been done before.
  It is important that the Minister should tell us whether the Government are prepared to take radical and drastic measures to ensure that British Shipbuilders' additional borrowing powers are not pointless. We do not want to hear again tales of what a generous allocation this is and how the Government have given, grossed up and indexed, about £1·3 billion since 1979, which is what the Bill is really about.
  When the Minister or his colleagues talk about the level of subsidy to British shipbuilding, they might reflect on the report of the Select Committee on Agriculture. That Committee found that just storing cereal products under EEC intervention arrangements costs about £190 million a year. The Select Committee suspects that the cost is higher, and in a footnote, says:
  "we note that the Public Expenditure White Paper puts the figure at £371 million".
  Is there not something profoundly wrong with a Government who seem to take it for granted that more public money should be spent on storing cereal products, which should be going to starving people, than on supporting the shipbuilding industry in an island nation? There is nothing for the Minister to be proud of. There should be more money and it should be better directed.
  There is little accountability in the House concerning British Shipbuilders' financial arrangements. I remember my hon. Friend the Member for Birkenhead (Mr. Field)

  203
  mentioning the £37 million which appears to have found its way to Harland and Wolff without anybody knowing how. I notice that the report of the Comptroller and Auditor General and the National Audit Office, entitled "Department of Trade and Industry: Assistance to British Shipbuilders", says:
  "In carrying out this examination the NAO had access to the records of the DTI but not to those of BS."
  I am increasingly worried about British Shipbuilders' arrangements to make the best use of its funds to secure orders, especially for merchant shipyards. When we talk of intervention fund money or credit arrangements, we are talking about merchant shipbuilding. I hope that the Minister will explain what the Government are doing to persuade the EEC to take a more serious and urgent attitude towards an increase, rather than a decrease, in intervention fund money.
  I understand that the most recent written answer on the subject referred to a further meeting in July. I hope that the Minister understands that it takes so long to produce orders that any improvement then would no longer be relevant. July meetings will not help the plight of British merchant yards now.
  One thing that the Government could do immediately—I mentioned this on Second Reading — would be to clarify what they are prepared to do about soft-credit packages. There has been a continuing controversy about what the Prime Minister did or did not say to me and other shop stewards when she met us a couple of weeks ago.
  I understand from Mr. Chris Moncrieff of the Press Association — I have his permission to say this — that when he telephoned Gleneagles, where the Prime Minister had gone the night after the meeting with me and trade union colleagues in Newcastle, one of her aides was able to confirm our account of that meeting. The only dispute was that the Prime Minister claimed that the policies that she announced were not new.
  I understand from Mr. Philip Murphy of Thomson Newspapers that he spoke to a press officer at Downing street yesterday, who said:
  "She recognised we were now in a position to beat anyone other than the Japanese on credit terms. We are going to carry on being as imaginative and inventive as we possibly can to ensure that our packages are as good as possible."
  There is now clear confirmation that the Government are saying — the Prime Minister said it — that they are prepared to undercut any country on credit terms, other than Japan. I hope that, as that has been confirmed by Downing street, the Minister will withdraw his earlier statement that that would be a ridiculous thing to say. The Prime Minister is saying it, so he had better square his act with her.
  There is no reason why the Government should not pursue such a policy. It is one of the few policies that the Government could adopt immediately which would give us some chance of securing orders in merchant shipyards. I am not altogether surprised that the Government should have evolved, changed, or whatever they want to call it, to such a policy. During the debate on the Queen's Speech, the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), the former Secretary of State for Trade and Industry, said:
  "I should like to announce today important changes in the scope and scale of the aid and trade provision—an instrument effective both in providing aid to developing countries and in helping British companies with overseas contracts … First, with the full co-operation of the financial community, we are introducing a new soft loan facility. Banks will make long-term
  204
  loans at low interest rates available to recipient countries for financing sound development projects agreed intergovernmentally."—[Official Report, 12 November 1985; Vol. 86, c. 482.]
  I was never clear—the question was asked at the time—whether such a package for civil engineering and manufacturing applied to merchant shipbuilding. I take it from what is being said from Downing street, irrespective of what the Minister says. that such arrangements apply to merchant shipbuilding, and I should like the Minister to confirm it. If he says that that has always been Government policy, so be it. If he says that it has been Government policy for the past year or two, he must tell us why quite a number of orders, especially to Third-world countries, have been lost.
  Other European countries have provided better soft credit packages. I am not bothered about arguing about the past, although it is quite clear that orders have been lost. It is sufficiently on the record that the Government are saying that, from now on, we will not lose out because of credit arrangements, unless we are competing with Japan.
  The Minister should clear the matter up so that British Shipbuilders, the trade unions, the work force and hon. Members know that that is Government policy. If we feel that British shipbuilding is not making sufficient use of that policy in the desperate days that lie ahead, sufficient pressure can be exerted to ensure that it does. We do not want to hear any more about open doors on which British Shipbuilders does not knock.
  As I said in the previous debate, it is extraordinary that the Minister should say that British Shipbuilders has never come to the Department of Trade and Industry and asked for help on special arrangements through the intervention fund. British Shipbuilders is justified in having that record only if it has not lost a single order for want of trying. I want the Minister to tell us that the door is still open, that if British Shipbuilders asks for help it will get it, that there is a soft loan policy to help us to get orders, especially from developing countries, and that the Government will enthusiastically pursue that policy.
  Other than orders that are directly within the Government's gift—there are not many of those and the Government do not seem to be shifting on the most important one, the FSK — the only chance of the merchant yards surviving will he the sort of orders that I mentioned. The Government must have a far more dynamic and serious attitude than they have displayed so far.
  7.51 pm
  Dr. Norman A. Godman: The last line in the first paragraph of the explanatory memorandum is somewhat disconcerting. It states:
  "The new limit will be £1,300."
  It is obviously an error, but it was a little worrying.
  We have a campaign in Scotland with the initials SOSS—Save our Scottish Steel. Now we need another — SOSY, or Save our Scottish Yards. There are few remaining. Govan is in parlous circumstances. Ferguson-Ailsa has yards in my constituency at Port Glasgow and in the constituency of the Secretary of State for Defence at Troon. We have the last remaining marine engineering plant within British Shipbuilders — Clark-Kincaid — which still has a plant down on the Tyne. All those yards are encountering appalling problems.

  205
  With regard to the extension of the limit on borrowing, have there been recent discussions between the Minister's Department and Associated Container Line on the lengthening of several of its vessels? I understand that tenders have been sought for this work. If that shipping line chooses to lengthen its vessels in that way, would there be any possibility of financial assistance to that line or to British Shipbuilders if the contracts were awarded to British Shipbuilders' yards?
  I hope to meet Mr. Eric Parker, the chairman of Scott Lithgow, which is no longer with British Shipbuilders, to discuss what could be an important order for British shipbuilding yards. Can the Minister offer me any assurances about assistance to the last remaining British Shipbuilders' yards in Scotland? The remaining yards in the control of British Shipbuilders in the north-east of England have been brought together in one enterprise, which I believe is called North-East Shipbuilders. Have there been discussions between the Department and British Shipbuilders about a similar development on the Clyde, which would bring together Govan, Ferguson-Ailsa and Clark-Kincaid?
  May I also stress to the Minister, as I did on Second Reading, that flexibility in the intervention fund is crucial. So, too, are good credit and loan facilities for British Shipbuilders.
  7.55 pm
  Mr. Don Dixon: Obviously, we welcome any assistance that can be given to British Shipbuilders, even if it comes as a result of additional borrowing powers. However, the Bill does not create one order—
  Mr. Frank Field: Or one job.
  Mr. Dixon: Or one job, as my hon. Friend says.
  On Second Reading, the Minister talked about the money that British Shipbuilders had received since nationalisation. The Government say that British Shipbuilders should be competitive, but we should compare like with like. I worked in the industry when it was in private hands, and I remember the problems caused by lack of investment. Many companies that have been privatised since then face similar problems.
  At the age of 14, I joined Palmer's yard at Hebburn as a shipwright. I know a little about the industry, although only from underneath ships in the fo'c's'le or the double bottoms. I was working in the industry in 1962, when the Patton report was published. Later, the Geddes report suggested some rationalisation of the industry, said that it was not market-oriented enough and wanted amalgamations. The Booz-Allen report of 1972 criticised the shipbuilding industry and suggested that there had been a lack of investment while it was in private hands. The Secretary of State for Trade and Industry is in the Chamber. It is right to point out to him, because he may not appreciate it, the fact that British Shipbuilders has been operating at a disadvantage for many years.
  A survey conducted in the early 1970s showed that, for every shipbuilding worker in British yards, there were assets of £825. In Germany, the amount was more than £1,000; in Italy, it was more than £1,200; in Spain, it was more than £1,800; and in Japan, it was more than £2,600.
  Another matter that has not been pointed out during our long debates on shipbuilding is the effect that closures,
  206
  unemployment and redundancies have on communities such as that of my hon. Friend the Member for Sunderland, North (Mr. Clay). To show how close-knit shipbuilding communities are, a survey conducted at Austin and Pickersgill showed that 37 per cent. of those employed in the yard lived within one mile of the yard, and only 1·5 per cent. of employees lived more than five miles away. A survey conducted at Swan Hunter's Wallsend yard showed that 62 per cent. of the employees lived in Wallsend or the adjacent towns. That should give the Government some idea of the close-knit shipbuilding communities.
  Those communities are similar to the mining communities. We have had many debates on the mining industry. The mining communities are closely knit with the mines, as the shipbuilding communities are with shipbuilding. Redundancies and shipyard closures are catastrophes.
  A survey in the Tyneside shipbuilding area showed that shipbuilding accounts for 44 per cent. of male employment in Wallsend, and we know of the present state of shipbuilding. In South Shields, 18 per cent. of male employment relies on shipbuilding, in Jarrow it is 16 per cent., and in North Shields it is 12 per cent. That shows how we rely on shipbuilding for jobs in our areas. I hope that the Minister will make constructive suggestions, and not merely say that the shipyards can increase their borrowing.
  On Second Reading we suggested a scrap-and-build policy. We have discussed that for many years. The only way to create orders is by scrap and build — by encouraging shipowners to scrap some fairly old ships and to rebuild, placing orders in British shipyards. That is the sort of constructive suggestion that we want to make. Much of what has been said about shipbuilding has been said previously because we feel strongly about it.
  Shipbuilding, like shipping, is a national strategic industry and needs a declared maritime policy. The Trade and Industry Select Committee produced a report in 1981, one of the first recommendations of which was that we should have a national maritime policy, co-ordinated by a senior Cabinet Minister and formed in consultation with trade unions, British shipbuilders and the shipping industry. That is the sort of positive policy that we want to hear from the Minister. I know that he cannot give that sort of reply tonight, but I hope that he will take those comments on board.
  Finally, Mr. Deputy Speaker—no one knows better than you how our area relies on traditional industries such as mining and shipbuilding—I wish to quote from an article printed in the Sunderland Echo on 23 July 1985:
  "Any further contraction in shipbuilding and in engineering activities on the north east coast would do irreparable damage to the future of the nation … If the skills and knowledge invested in this area were lost through any further contraction they would never be regained … This would be a great loss to the nation as a whole as they were the skills which would be needed in the future. All good men and true the length and breadth of the north east coast should come forward to join a concerted bid to save the industry. Now is the time for all men of good standing who are interested in this country and its future to forget their political and other differences and speak out for the sake of the nation!"
  Those were the words, not of the general secretary of the General Municipal, Boilermakers and Allied Trades Union or of some shop steward from Austin and Pickersgill, but of the former chairman of British Shipbuilders, Sir Robert Atkinson. I hope that the Minister will take those words on board when he replies.
  8.2 pm
  Mr. Gordon Brown: This has been a short but important debate, and the speeches of my hon. Friends reflect their concern about the shipbuilding communities which they represent. I hope that it is a measure of the Government's concern about the matter that both the Minister and the Secretary of State are present this evening.
  We fear that, despite the permission which is granted in the Bill for the Government to raise the borrowing requirement of British Shipbuilders, no sanction is being given to increase borrowing. It is not an offer of increased borrowing. Our fear is that the merchant shipbuilding industry, which has been halved during the past seven years, will continue to decline, even with the Bill on the statute book.
  Yesterday in an answer to me the Minister confirmed the critical position of the yards that have been mentioned. He will agree that without further orders Ferguson-Ailsa has no work beyond September 1986, Smiths has none beyond December 1986, Austin and Pickers ill has none beyond December 1986, Govan, which is completing a major ferry order, has none beyond March 1987, and that Sunderland Shipbuilders has as yet no work beyond March 1987. I hope the whole House will recognise that the merchant side of the shipbuilding industry is at the point of no return, unless the Government and British Shipbuilders are able to secure the orders that are desperately needed to retain the work force and save the yards.
  As my hon. Friends the Members for Greenock and Port Glasgow (Dr. Godman) for Sunderland, North (Mr. Clay) and for Jarrow (Mr. Dixon) have pointed out, the areas already have substantial unemployment rates. The rate of unemployment in Glasgow as a whole is 18 per cent., in Greenock it is 22 per cent., in Sunderland it is more than that, and in Middlesbrough it is even higher. My hon. Friend the Member for Sunderland, North will confirm that near the shipyards he represents unemployment is as high as 45 per cent., and that many included in that figure are shipbuilding workers who have already been made redundant.
  The Minister will probably have seen British Shipbuilders' estimate of the jobs that will be lost, if no further orders are provided. Will he confirm that if no further orders are forthcoming by December 1986 or the beginning of 1987, nearly 4,000 blue-collar jobs are at risk in the British Shipbuilders group, that if white-collar jobs are included, more than 5,000 jobs are at risk, and that if we include those who are dependent on the work created within British Shipbuilders, the number is substantially higher. I hope that the Minister will describe in more detail than he did in reply to Second Reading what the Government will do to retain those jobs and to maintain the yards in being.
  Mr. Frank Field: Serious as the loss of those jobs is, do not the communities face a further danger, namely, that if shipyards close, we lose the training centres for skilled manpower? Cammell Laird has a training school which trains practically all the skilled tradesmen in Merseyside. If anything happened to that company, not only would those jobs be lost but also the chance of ever returning to a period of economic growth in the region would be severely retarded.
  Mr. Brown: I wholeheartedly agree with my hon. Friend, and the point raised by my hon. Friend the Member for Jarrow. We are talking about the future of communities. If, during the next few months, jobs are lost in the yards and the yards reach the point of no return, adult jobs will disappear and there will be no opportunities for young people, whether or not on youth training schemes. That is why I wish to put three points to the Minister.
  First, what will the Minister do to make it possible for the merchant yards to secure the maximum number of public-sector orders and, indeed, to advance them where possible so that the yards can remain in being? Yesterday, in an answer to me the Minister could only confirm that there were three orders from the public sector for which British Shipbuilders could tender during the next few months — a fisheries protection vessel, a passenger vehicle ferry and a smaller passenger ferry for the Orkney islands. While the orders are welcome—I know that at least two of them are at present being tendered for—the Minister should be consulting the Ministry of Defence and other Departments about how they can advance the public-sector orders which, particularly in the case of the Ministry of Defence, are urgently needed, and how by advancing those orders they can secure the future of the yards.
  The second question has already been raised by my hon. Friend the Member for Sunderland, North, and relates to the intervention fund. The position that the Minister put to us on Second Reading seems less than satisfactory from the point of view of British Shipbuilders' activities. The Minister said that at no point had his Department been approached to use the flexibility that is available to British Shipbuilders in securing a higher amount of funding from the intervention fund so as to get orders, so that in the case, for example, of the order that British Nuclear Fuels plc placed in Japan it appears that British Shipbuilders had not even bothered to ask the Department whether there would be greater flexibility in the resources available from the intervention fund. I hope that the Minister can satisfy us that he has made it clear to British Shipbuilders that he will look favourably at applications that would secure greater flexibility and, therefore, greater funding, so that orders could be achieved.
  Mr. Clay: Does my hon. Friend not think that another lesson could be learned from the particular example that he gave? The Prime Minister's explanation of the loss of that order was that, because the main trading nation whose waste would be carried by the ship was Japan, the Japenese Government insisted that the ship be built in Japan. In that case, it seems to have been a political decision rather than a mainly financial one. Does my hon. Friend not think that it is extraordinary that the Japanese can not only oblige their own shipowners to build in Japanese yards but can oblige foreigners to do so as well? Should the Government not take a leaf out of the Japanese Government's book?
  Mr. Brown: My hon. Friend has a point and it has not yet been answered satisfactorily by the Government, why that order, which was vital to the yard represented by my hon. Friend, was lost, and why it is that Governments who seem to have least to gain do most while we, an island, a maritime nation, whose shipbuilding industry is directly related to our defence needs, we who have the most to gain, seem to be able to do least to secure orders that are essential for the maintenance of our shipyards.

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  Also on the intervention fund, what are the Government doing in Europe to secure a proper continuation of the arrangements that would guarantee support and subvention when new orders were being competed for? When the Minister was battling in Brussels last year, he had to accept the watering down of his original demand of 35 per cent. to no more than 20 per cent. I am talking about the Under-Secretary who is not here this evening. When he started negotiations in Brussels a few weeks ago, he seemed to be talking about free market theories, suggesting that there should be an end to worldwide subsidies, suggesting that Europe might take the lead in stopping the business of buying orders and implying that Britain might be prepared to accept a lower amount of subvention as a result of the present negotiations. I hope that the Minister is in a position to confirm that the Government will fight to continue at least the existing level of support, and will not settle for less as a result of the pressure of the commissioner for competition and pressure of other member states.
  The third point that has been raised by all three of my colleagues is what packages British Shipbuilders is able to offer, and what packages are available to both British shipowners and other shipowners if they will buy British. When the Prime Minister met representatives of the trade union side of Sunderland Shipbuilders, she seemed to give an assurance—indeed a guarantee—that no orders would be lost because we could not match credit packages offered by other countries. I have the advantage of having here a minute prepared by the trade union side on these conversations, a minute that appears to have been confirmed by statements from Downing street to the Press Association.
  The Prime Minister said that no orders would be lost because another country had provided a more attractive credit arrangement. She said that the one exception to this would be Japan. She said that, with the exception of Japan, Britain could compete successfully on soft loan arrangements. Whether she was announcing a new policy or whether that was a continuation of a policy announced in October or whether that has been Government policy for some time is immaterial. Are the Government in a position to say to British Shipbuilders and to the shipyard workers that no order will be lost because of a failure to offer sufficiently attractive credit terms to compete at least with every other country except Japan?
  What the Minister's Department has said to the Committee looking at the future of the European maritime industry, what the Under-Secretary appears to have said in his negotiations with the Commission and what is stated in the National Audit Office report on British Shipbuilders does not seem to confirm what the Prime Minister has been saying. The Minister may read the evidence given by his Department to the Committee in another place, which made it absolutely clear that, in the Department's view, other countries were able to beat us because of their ability to offer better credit and better loan packages.
  In the negotiations in the Commission, the Under-Secretary appeared to be saying that France and Germany could do far better than Britain when it came to producing packages. Worse than that, from the report prepared by the National Audit Office it appears that the Government have told British Shipbuilders that they were limiting its ability to take on new subsidised work.
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  Whether that report has the position right, I do not know, but the Minister could resolve this whole question very easily tonight by telling us that he is in a position to say, on behalf of his Department, that in future no orders will be lost which could save and secure the future of the yards in British Shipbuilders, that no orders will be lost because of a failure to offer proper credit and loan packages.
  Since the Second Reading of this Bill, the Minister will have had a chance to study the recommendations of the Committee which sat in another place and which was looking at the future of the European maritime industry. Perhaps he will take on board its recommendation, that the Government should give urgent consideration to longer periods of repayment of shipbuilding loans. He might also take on board the recommendations made by the Committee and by Opposition Members that there should be adequate and appropriate assistance available to British shipowners to buy British, repair British, and sell British, because that is in the interests of the future not only of our industry but also of our defence and of the maintenance of a proper level of merchant fleet. Perhaps the Minister is in a position tonight to tell us that he will take these recommendations seriously and act on them quickly.
  The Minister gave us reassurances on the Second Reading of this Bill. He said that the Government were as interested as Opposition Members and shipyard workers in maintaining the merchant shipbuilding yards. The Government have given us reassurances for the past seven years, as the numbers employed in merchant shipbuilding have continued to fall and as they are still falling now. Perhaps when he gives us reassurances the Minister should recall what Sir Robert Atkinson, a former chairman of British Shipbuilders, said, that while reassurances were being given in public, in private at no point did Ministers ask him, as the chairman of British Shipbuilders, about the future of the industry, about research and development and about maintaining jobs, but that when he talked about redundancies and unemployment in the industry a glean came into their eyes. The Minister will have to give us more than verbal reassurances if we are to believe that the Government are committed to maintaining the present level of jobs in the industry.
  We now have a new chairman of British Shipbuilders, a new Bill extending the borrowing requirement and a new company in the north east which is charged with managing the Sunderland and Middlesbrough shipyards. Apparently we have a new system of financial control that has been dealt with in the National Audit Office report. We need from the Government new orders to retain jobs, save the yards and secure the future of an industry which is vital to our trade and industry, to our shipbuilding communities and, as my hon. Friend the Member for Jarrow has said, to our defence needs.
  8.20 pm
  The Minister of State, Department of Trade and Industry (Mr. Peter Morrison): As the hon. Member for Dunfermline, East (Mr. Brown) has said, this has been a short debate. None the less, I agree that it has been very important. I assure him that I and my right hon. Friend the Secretary of State perceive the shipbuilding industry in precisely that context.
  As the House knows, British Shipbuilders is facing a very difficult time. As the hon. Member for Dunfermline, East pointed out, in referring to a parliamentary answer

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  which I gave him recently, it is in a very critical position. The fact remains that world capacity outstrips demand. The hon. Gentleman rightly stated that the key was new orders. He referred to help that we may be able to give, but he, and I hope all hon. Gentlemen, will agree that the price of the ship, the quality of the design and the delivery date are key and important matters which any prospective purchaser of a ship will wish to take carefully into account.
  The hon. Gentleman asked me to confirm the number of jobs which may be at risk. I do not wish to dodge the question but I cannot confirm the specific numbers which he gave. Although I have stated that I am not running away from reality, I do not wish to be as pessimistic as the hon. Gentleman was.
  The hon. Member for Birkenhead (Mr. Field) referred to training which will take place in all parts of the country, including the north-east. I know personally the apprentice training school to which the hon. Gentleman referred. I take on board fully the point which he made.
  The hon. Member for Dunfermline, East asked me to co-ordinate—I think that is the right word—public sector orders. He welcomed the prospect of orders. Again, I refer to my reply to him recently. He asked me to put forward the case of the FSK 20/20. I dealt with that last week. One has to take into account the fact that, if the FSK 20/20 is ordered regardless, other ships or submarines which are currently further up the list of priorities of the Ministry of Defence may not be ordered.
  The hon. Member for Sunderland, North (Mr. Clay) asked about the intervention fund. I confirm 100 per cent. that I am prepared to consider seriously any prospective increase in flexibility in the intervention fund.
  Reference was made to the loss of the BNFL ship to a Japanese yard. All hon. Members will be aware that that was the fifth ship ordered by BNFL. The company is jointly owned by Japanese, French and British interests. The first four ships had been built in the United Kingdom. The tender for the fifth ship was so low that it was impossible for British Shipbuilders to compete. However, it is pursuing an anti-dumping case in Brussels.
  The hon. Member for Sunderland, North inquired about what we were doing on the intervention fund and what arrangements we would make after the conclusion of the fifth directive at the end of the year. I understand the point he made about having to wait too long. I hope that he will understand my point of view—that it is not a moveable feast and that the Government cannot act unilaterally. It is a matter for joint action.
  The hon. Member for Dunfermline, East referred to my hon. Friend the Under-Secretary of State being at the Council of Ministers. I do not want to repeat what I said last week but at this early stage we are seeking to ensure that we know precisely what subsidies, whether through the intervention fund or otherwise, are going to other European Governments so that when we come to the negotiations, which we have not reached yet, we will be in a position to ensure that we are trading on a like with like basis. That is precisely our objective.
  The hon. Member for Sunderland, North and the hon. Member for Dunfermline, East pressed me about our position on soft loans. I do not think that there is a great difference of opinion between the hon. Gentleman and myself. The United Kingdom stands ready to be as imaginative and competitive as any of its competitors in putting forward packages. I hope that, on reflection, the hon. Member for Sunderland, North will realise that to
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  push me on the details of any particular loan that may be under consideration might not be in the interests of British Shipbuilders and of the United Kingdom. One has to tread carefully on these matters. I do not think that it is in the interests of British Shipbuilders that everything is made known automatically to the world and his wife.
  Mr. Clay: I understand what the Minister is saying. The point has been made to me by his predecessors and by senior managers in British Shipbuilders. Can the Minister understand my frustration? Despite the argument about commercial secrecy and about it being better not to show all one's cards openly, how is it that British Shipbuilders always seems to know the precise terms offered by its competitors before the orders are placed? In other words, if the Italian Government can be open about the soft credit arrangements they are making and an Italian yard can still get an order, why must British Shipbuilders be so secretive?
  Mr. Morrison: With respect to the hon. Gentleman, he may be looking at the matter too simplistically. It is not as simple as he makes out. The negotiations and dealings are very complicated. The last thing that he would want me to do, and the last thing that I would want to do, would be, as it were, to play the poker hand right up front arid as a result not to win the order. I have stated the current position, which I hope is helpful.
  Mr. Gordon Brown: Despite what he calls the imagination of the Government and of British Shipbuilders, is the Minister not worried that new orders are not being won? Is there not a need for a more imaginative examination of the system of soft loans and credit packages? Will he agree that that at least will be done, if just to satisfy himself that what the Prime Minister told my hon. Friend is accurate?
  Mr. Morrison: The hon. Gentleman pushes me to be even more imaginative, even more flexible and even more generous. I have listened carefully to what he has said, but I shall not be pushed publicly from the position which I hold, for reasons which I hope he will readily understand.
  The hon. Member for Greenock and Port Glasgow (Dr. Godman) reasonably and understandably talked of the Scottish dimension. I would be blind and deaf if I did not realise how big the Scottish dimension was in terms of the Scottish economy. He asked whether there had been discussions between ACL and my Department. I understand that ACL is a consortium of a number of different interests, including Trafalgar House. As the hon. Gentleman will know, it has recently announced its intention to enlarge four of its recently built ships, including the Atlantic Conveyor. It has invited tenders from a number of United Kingdom, European and Japanese yards. It has not approached my Department for assistance.
  The hon. Gentleman might be disappointed, but as the tenders are currently framed, intervention fund support would not be available. However, assistance through the home credit scheme for shipbuilding could be available. I do not say that it will be available.
  The hon. Member for Greenock and Port Glasgow also asked about flexibility within the intervention fund. I have already dealt with that. He questioned whether a coming together of the Scottish yards would be sensible on the basis of the coming together of the north-east yards. That

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  is a matter for British Shipbuilders. It must make the proposals, but it has not yet done so. I heard what the hon. Gentleman said about that.
  The hon. Member for Jarrow (Mr. Dixon) told us—he knows better than any one—about the importance of the shipbuilding industry, not just to his constituency and the north-east but to the country and its history. He reminded us of the effect which redundancies and closures can have on tightly knit communities. I well understand his remarks; I am deeply concerned about redundancies and closures of any sort.
  The hon. Member asked me again to consider the idea of scrap and build. That policy was abandoned 50 years ago because it did not seem to be sensible or economic. That remains so. The hon. Gentleman also cajoled me in an effort to persuade me to adopt a national maritime policy. I can assure him that both shipbuilding and shipping are co-ordinated.
  The debate last week and the debate tonight on the Bill have been considered and serious. They have not been party political and I welcome that. They have been debates about an important and great industry which is going through a critical and difficult time.
  I commend the Bill to the House because it increases the borrowing limit of £1,200 million by £100 million now and a possible further £100 million. I commend the Bill because it will go some way towards ensuring that British shipbuilding can continue, albeit with difficult and critical decisions ahead.
  Question put and agreed to.
  Bill accordingly read the Third time, and passed.

  Stockstone Quarry, Hindhead
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Malone.]
  8.35 pm
  Mrs. Virginia Bottomley: I appreciate the opportunity provided by this debate to draw attention to a subject of grave concern and interest in my constituency. I refer to the proposal that Stockstone quarry near Hindhead should be used over a five-year period to deposit London rubbish, involving perhaps 84 movements a day of unwieldy and potentially dangerous 32-tonne lorries through our narrow, winding country lanes. This is to take place in an area of outstanding natural beauty in the heart of the green belt.
  The final insult to local opinion and sensitivity is that it may be possible to permit such an affront to our rural environment on the basis of a condition set by a planning agreement over 30 years ago to a now defunct local authority.
  I have already made a number of representations to the Minister about Stockstone quarry. I have visited the quarry and had a number of meetings and discussions with local activists and other elected representatives.
  As a general rule, planning is not directly the responsibility of a Member of Parliament—nor should it be. Only in exceptional cases such as this have I personally become involved. I am a staunch supporter of the Government's green belt policy. I have no doubt that our green belt policy is a triumph of post-war planning. With increasing pressure in the south-east, I believe that concerned. Members must be vigilant in ensuring that our rural areas are protected from the threat of erosion.
  The case of Stockstone quarry presents a potential precedent for many similar areas. Because of that, I am, exceptionally, seeking the Minister's intervention. I have little doubt that the Minister will say that the Secretary of State is sympathetic to our predicament, but that it does not meet the criteria used for decisions of this kind.
  I appreciate the enormous pressure on the Department to call in inquiries and that this power must, in the public interest, be used sparingly; otherwise local responsibility for planning decisions would be undermined. Whether or not, even in the light of my arguments, the Minister is able to intervene, I am anxious to draw to the attention of the House and the Department of the Environment the implications of such a travesty of natural justice and common sense for others throughout the country who may, in their ignorance, believe that our planning laws protect green belt areas and areas of outstanding natural beauty from such outrages.
  Are the criteria used by the Minister statutory or discretionary? If the Secretary of State argues that he is without power in this case, surely that must be a sign that the criteria are wrong and should be changed.
  Stockstone quarry is situated less than 50 miles from London. However, reaching the quarry involves a journey along winding, country lanes, whose width in places is little over 11 ft. The quarry is dug to a depth of 100 ft and a width of about 700 ft. It covers 9·6 acres.
  To appreciate the strength of feeling on the matter it is important to understand the quarry's history. The quarry started in 1929 with two men on one lever breaking out boulders with horse-drawn transport. At that time the area

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  of work comprised less than one acre. In 1938 work ceased and the quarry was abandoned until further work, recommenced in 1971.
  In 1952 the Hambledon rural district council granted permission to the absentee owner of Stockstone quarry, imposing eight conditions. One of those conditions was that the quarry should be infilled with materials suitable for plant growth. That is being used as the justification for the current proposals. Some minor work restarted in the early 1970s, but the first high level of work, with the associated intrusion, disturbance and pollution, began later in the 1970s. In 1979 the quarry changed hands and the intensity of work increased.
  In 1981 the quarry was bought by A. J. Bull, which still owns it. Initially there were difficulties over the blasting of the rock and this caused distress to residents in the immediate vicinity. By the following year local residents complained that at times they were experiencing one 32-tonne lorry every two minutes, that local lanes were frequently blocked at busy times, that the roads were dirty and dangerous and that the noise and vibrations were causing further disturbance.
  It was at that stage that the Stockstone quarry working action committee was formed to represent local opinion in the face of increasing frustration over requests that activities be curbed. It is a source of considerable worry to me that the Stockstone quarry working action committee has had to raise considerable amounts of money to pursue its reasonable and fair case. I applaud the group's persistent and painstaking work.
  The members of the group represent residents of Hindhead, Beacon Hill, Stock Farm, Churt, Frensham, Lower Bourne, Farnham, Pitch Place, Tilford, Elstead and Thursley—beautiful areas, many of them villages, in my constituency, where planning permissions are fiercely resisted and every effort is made to maintain the character and rural nature of the locality. It can be appreciated that when permission to erect an extension to a house, for example, is a matter of great local controversy, the provocative nature of the development of a quarry causes mounting local feeling and anger.
  Whatever the debate and struggles of the past, it was at the end of 1984 that a whole further generation of difficulties emerged. At that time, A. J. Bull applied initially on a planning application form for permission to fill the quarry with classes A, C and D rubbish. It proposed 1·5 million cu m volume with 360 lorry journeys a week for the next five years. It is believed that the county council returned the application advising A. J. Bull to proceed as if with a submission of details in accordance with the conditions set out in the 1952 permission. That course left the local residents with no formal powers to resist the application. It will be appreciated that the proposals under consideration will affect the daily lives of many people for many years to come. Understandably, That greatly offends my constituents' view of the way in which decisions should be taken in a democratic society.
  Since then the local elected bodies, the parishes of Frensham, Elstead, Tilford and Thursley, together with the town council of Haslemere, have all made their views abundantly clear about the proposals. Similarly, the local Waverley borough council rejected the application unanimously.
  At considerable expense, the local activists applied to the High Court for a judicial review of the matter. Had they been successful, the result might have been that the
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  county council had to treat the matter as a fresh application. In that case, it might have been referred to the Minister's Department if the county council had considered it to be in contravention of structure plan policy. They learnt recently, however, that the application for a judicial review was unsuccessful and that the county council was behaving lawfully in its decision to regard the application as a question of detail. It is as a result of that decision that I sought the Adjournment debate today.
  The position in which local residents find themselves is that it is now proposed to allow a course of action that is quite out of proportion to that envisaged in 1952. It is inconceivable that when the original permission was granted by the now defunct local authority with the infilling condition, it envisaged hundreds of 32-tonne lorries trundling down our local lanes each week over five years. The size of vehicles, the scale of the operation and the disturbance involved was in no way contemplated.
  At present, discussion and consultation is taking place between local authorities about the details of the site licence. Local residents are encouraged that efforts are being made to restrict the classes of refuse to be permitted. There had been great anxiety that household or commercial waste would be dumped in the quarry. It would be quite unacceptable in an area with houses in close proximity to risk any prospect of methane gas or contamination of the water supply. Limits are also being set on the amount of waste that can be tipped daily. Obviously that relates to the number of vehicles using our rural roads and the associated risk to travellers and pedestrians.
  I have already emphasised that the quarry lies in an area of outstanding natural beauty. It is important to point out that the quarry itself is recognised by the Nature Conservancy Council, which has notified Stockstone quarry as an area of special scientific interest. It described the site in the following terms:
  "This quarry shows the finest available exposure of the Bargate Beds which are a distinct lithological sub-unit of the Lower Greensand Sandstone Beds in the north western weald. The quarry is also of great significance in providing the best field illustration of the phenomena associated with chert formation in the Bargate Beds—showing both the calcareous and cherry sandstone lithologies."
  In short, any geologist would obtain an immense amount of information from this one site, which is the finest example of bargate in the region, with the added bonus of chertified stone.
  Suggestions are being put forward in the area that the quarry might become a nature reserve, primarily for educational purposes. The size of the reserve would he sufficient to allow local schools to have small areas for biology projects — for example, to study colonisation and ecosystem development. Not too far from the site lies the Seale quarry, which is owned by Surrey county council but managed by the Surrey Trust for Nature Conservation.
  It is widely recognised that planning decisions are sensitive and controversial, especially in areas like mine where there is potentially endless demand for development and housing, but where there is equally great demand—and, I would argue, a duty—to preserve the character of the environment for future generations. It has also become an accepted and expected principle of our lives that justice should not only be done, but be seen to be done.
  I want the Minister to realise that the present arrangements for Stockstone quarry seem to allow no formal opportunity for local voices and opinions to be

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  heard. Even if the final decision were to go against local opinion, it would be easier to bear had there been a full and public inquiry at which all the arguments could have been put formally.
  A number of proposals have been made. Perhaps there should be a time limit on planning permissions so that they would be officially reviewed once a certain period had expired. It will be recalled that we are discussing a permission granted 34 years ago. Alternatively, the restoration aspects of the permission could be subject to review.
  It is also proposed that greater weight should be given to the local borough council in the oversight of mineral and waste disposal decisions. It is the district authority that has to live with those directly affected by those decisions. In short, I believe that the decision-making process affecting Stockstone quarry is hard to reconcile with our broad green belt and conservation policies. It lies far outside the bounds of common sense and natural justice, even if it lies within the law as it stands.
  A licence issued as little more than a token gesture a generation and a half ago, to a disused village quarry that had last employed horse-and-cart technology before the 1939 war to provide building stone for the locality, has been hijacked to cover a large-scale operation of a wholly different kind, using technology unimaginable to the issuing rural district council — which itself ceased to exist 12 years ago.
  This same licence is now being used — and some would say abused—to allow the deposit of 1·5 million cu m of rubbish in an entirely unsuitable and specially protected area. I ask the Minister to give this matter his full and urgent consideration and to review his green belt, environmental and planning policies in the light of this profoundly worrying case.
  8.48 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Richard Tracey): I sincerely congratulate my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley) on raising this matter on the Adjournment, and also on the careful and concerned way in which she has presented a matter of considerable concern to her constituents. Indeed, we have come to expect such concern from her, and tonight has been no exception.
  This matter was first raised with my Department in November of last year, when the proposals were being considered by the Waverley district council. Since then, there has been a large number of letters of objection to the proposals, and my hon. Friend has taken up the matter with my right hon. Friend on three occasions since November.
  I and my right hon. Friend have every sympathy with the residents of the area for the position in which they now find themselves. However, my first concern must be to ensure that the planning system is operating properly and as laid down in the relevant legislation. My hon. Friend has given us a detailed account of the problems that have arisen at Stockstone quarry, but I need to highlight and amplify some of those to explain my Department's position.
  The first point that must be made is that quarrying at the site started many years before the introduction of town
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  and country planning legislation in 1947. As my hon. Friend has said, in those days it was a small-scale operation, perhaps involving no more than a couple of men. The size of the workings and the level of output would have been very small by modern standards. Planning control at the site really started with the 1952 permission granted by the former Hambledon rural district council. As my hon. Friend has pointed out, it was that permission which sowed the seeds of the problem which we are discussing this evening.
  It is planning condition No. 4 which deals with the filling in and restoration of the quarry. It states:
  "Excavations shall be filled in or surfaces covered with materials agreed to be suitable for plant growth by the local planning authority on consultation with the undertakers, Ministry of Agriculture and/or the Forestry Commission. The interval and stages at which the filling in or covering shall be carried out shall be agreed with the local planning authority."
  Clearly, this condition offered the operator a choice in his approach to restoring the site. There is no doubt at all that a modern planning consent would have a far more rigorous condition for restoration. Indeed, it would probably contain a separate set of such conditions, but that does not invalidate in any way the legal standing of the condition that I have just read out. Public attitudes to mineral workings have changed enormously during the past 30 to 40 years, and that is reflected in much tighter control through the conditions attached to modern planning permissions. However, there is a legacy of old permissions. As those workings became exhausted, or as new permissions for extensions are used to consolidate earlier consents, the problems are diminishing. Nevertheless, it will be some years yet before the problems have disappeared completely.
  My hon. Friend has asked whether planning permission for mineral workings should be reviewed from time to time. My Department is doing what it can to help in this regard. The Town and Country Planning Act (Commencement No. 3) Order 1986 will bring new provisions into force on 19 May. These include, under section 3, the requirement for mineral planning authorities periodically to review every site in their area where mineral working operations are being carried out. It requires them also to make such orders under section 45, 51, 51(A) or 51(B) of the Town and Country Planning Act 1971 as they consider appropriate.
  The purpose of the review is to monitor all recently active sites or sites authorised but not yet started to ensure that conditions are consistent with current minerals planning practice. Of course, it is only the duty to review which is completely new under the recent commencement order. Local planning authorities already have powers under the 1971 Act to revoke or modify planning permissions but, in such circumstances, compensation would be payable and this could be considerable. It is for the local planning authority to judge whether this would be a right and proper course of action.
  Next there is the question whether the proposals for infilling the site constitute a new application for planning permission. As my hon. Friend has told us, the case was recently the subject of a judicial review in the High Court. We have heard that the court ruled that the county council was acting correctly in treating the application as an approval of details pursuant to the 1952 planning permission. This therefore has a bearing on the powers of the Secretary of State.

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  Under section 35 of the Town and Country Planning Act 1971, my right hon. Friend is empowered to call in for his own determination applications for planning permission being considered by the local planning authority. But the important clause in this provision is "applications for planning permission". The High Court judgment has ruled against such an interpretation in the case of the infilling of Stockstone quarry. A large number of my hon. Friend's constituents have written to request the intervention of my right hon. Friend the Secretary of State. But, even if he wished to do so, he has no appropriate powers at his disposal, because, as I said, the court ruled that it was not a new application for planning permission.
  My hon. Friend referred to green belt policy. I suspect that the proposals have generated particularly strong objections because, as we have heard, the site is within both the green belt and the Surrey hills, of outstanding natural beauty. I sympathise entirely with the sentiments expressed by my hon. Friend about this. On the green belt, it would perhaps be appropriate for me to set out, briefly, our present position.
  It was a Conservative Government in 1955 who first introduced a comprehensive green belt policy. This Government have strongly reinforced that policy in the circular which we published in 1984. The overall aim is to develop and maintain a positive approach to land-use management which makes adequate provision for necessary development and ensures that the green belt serves its proper purpose. Planning is a matter of balancing the two interests—development and conservation. By ensuring that development takes place in the right place, both interests can often be served well.
  On the specific question whether mineral workings should be permitted in the green belt, our policy is influenced by three factors. First, mineral extraction is a transient use of land. Secondly, proposals to work minerals within green belts should be considered on their merits, having regard to the provisions of the development plan, the general presumption against inappropriate development within green belts and any other material considerations. Thirdly, as minerals can be worked only where they occur, the need for the mineral when balanced against other considerations may justify extraction. Our policy on minerals extraction in areas of outstanding natural beauty is that any applications for substantial new workings or extensions to existing workings should be subject to the most rigorous examination. This may well include the consideration of alternative sources of the mineral which could be obtained from less environmentally sensitive areas.
  However, it is a fact of geology that many of the mineral deposits that are of value to the extractive industry occur in some of the more beautiful parts of the countryside. The Surrey hills AONB is no exception. That is well known. I understand that the elevation of the ground in this area owes itself in part to the underlying sandstones and limestones known collectively to geologists as the lower greensand. Of course, the problem in this case is that the assessment whether quarrying and subsequent infilling should take place at this locality has already been made. Indeed, it was made prior to the designation of the Surrey green belt and the Surrey hills AONB.
  It has been suggested in correspondence to my right hon. Friend the Secretary of State that Stockstone quarry
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  is of national scientific importance. My hon. Friend has raised the matter again this evening. We have heard that the quarry face shows particular sedimentary features of interest. The Nature Conservancy Council may be seeking the designation of the quarry face as a geological site of special scientific interest. If the site does display unique features, I can well understand the NCC's intentions. But we cannot overlook the fact that a valid planning consent exists which gives the operator the option of filling in the quarry. The designation of the site as an SSSI, even if it were to go ahead, cannot therefore give the site any protection in this regard.
  I am sorry if my comments sound rather negative and unhelpful but, as I hope I have made clear, my right hon. Friend the Secretary of State has no powers to call in this matter for his determination. I should now like to consider the specific question of the infilling operation. It would be quite wrong to assume that the local authority has no powers at its disposal here.
  Any person who intends to use a site for the disposal of controlled waste under the terms of the Control of Pollution Act 1974 requires a waste disposal licence. This will be given only if a valid planning permission exists under the Town and Country Planning Act 1971. It has already been established that a valid permission is in operation. Surrey county council is the licensing authority and has a duty not to reject the application unless it is satisfied that its rejection is necessary for the purpose of preventing pollution of water or danger to public health.
  Before a licence can be issued in this case, Surrey county council must consult, among others, the appropriate water authority. It must then agree conditions which may relate to such matters as the duration of the licence, the kinds and quantities of waste which may be dealt with and the hours of operation. The consideration of the conditions would, of course, take into account also such matters as the risk of polluting the underlying water table.
  My right hon. Friend the Secretary of State does not have any powers to call in a licence application for his own determination, but if the water authority requests that the licence should not be issued or disagrees with the county council about the conditions, either of them may refer the matter to my right hon. Friend. Similarly, if the licence application is rejected or if the company were to disagree with the conditions, it can appeal. It is conceivable, therefore, that the case might come before my right hon. Friend, but I must stress that he could not reassess the validity of the condition permitting filling at the quarry. The only matters that could be considered would relate to the nature of the waste disposal licence.
  From the correspondence that my Department has received, some of my hon. Friend's constituents have particular concerns about the prospects of Stockstone quarry becoming a dump for some of London's household refuse. As I have said, the type of waste that could be disposed of at the site is a matter to be covered by the site licence, but I understand that the applicants have excluded household waste from their list of infilling materials. I have no doubt at all that the county council's officials and the water authority have been looking critically at the proposals. I am sure that my hon. Friend will understand that it would be quite wrong of me to speculate on the conditions that the county council might attach to the site licence, but the Control of Pollution Act 1974 confers quite wide powers as to what might be covered.

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  My hon. Friend has expressed understandable concern about the traffic implications. Traffic generated by quarrying and the infilling of quarries is, of course, a frequent source of local concern about which we hear regularly in many parts of the country. This is especially true when it involves the use of minor roads in rural areas. I have no specific information on the frequency of traffic movements which might arise in the case of the filling of Stockstone quarry, but I would expect the site licence to set a limit on the number of tonnes of waste which might be tipped at the site in any period and that will, of course, have the knock-on effect of limiting the traffic volume. Once again, that is a matter for the local authority to consider.
  Clearly, planning permission for the filling operation has to be judged to exist and it would therefore be quite wrong unreasonably to prevent the access of appropriate vehicles to the site. I have little doubt that the county council will endeavour to strike the best possible balance in this regard. Indeed, it would perhaps be appropriate to reflect upon the local authority's position in the case of Stockstone quarry. In their letters to my right hon. Friend the Secretary of State, some of my hon. Friend's constituents have expressed a considerable sense of frustration about Surrey county council's handling of this matter. We should not under-estimate the difficulties that this case has created for the council's members and officials. I am sure that those responsible for drafting the 1952 planning consent had no conception of the problems that were being created for their successors in title.
  Finally, let me say that I fully recognise my hon. Friend's concern in this matter and the deeply felt anxiety of her constituents. I hope that I have explained the position as far as my right hon. Friend the Secretary of State is concerned. We must hope that discussions in relation to the licence allay some of the fears that have been expressed in my hon. Friend's excellent exposition of the worries of her constituents.

  Housing (Burnley)
  9.8 pm
  Mr. Peter Pike: I welcome this rare opportunity for a second Adjournment debate because it does not happen often. I appreciate that, in view of the shortness of notice, the Minister will have some difficulty in replying to some of the specific points I raise. I shall not criticise him for that, but I hope that he will try to respond to some of my general comments and I hope that he will take on board the more specific points and come back to me with some of the answers. I think that that is the normal method for a second Adjournment debate, because they are always arranged at short notice and it puts the Minister, whoever it is, in some difficulty. I recognise that, although the Minister is from the Department of the Environment, this matter is not within his area of responsibility.
  The subject of housing, especially in Burnley, is important and it is right that I should take this opportunity to draw it to the attention of the House. This is certainly not the first occasion on which I have had an Adjournment debate on the subject and it is far from the first occasion on which I have spoken about the housing problems in my constituency of Burnley.
  I think that it is true to say that housing in Burnley is the second most serious problem after unemployment. It is a matter of grave concern to the people of the town, in both the private and public housing sectors. One of the great differences between the two main political parties is on housing policy. We believe that the Government should make available many more resources to deal with housing in places such as Burnley. Not only would that deal with the housing problem, which is a common feature in Burnley and many other areas, but it would enable people to be put back to work.
  My main criticism hinges on the provision of resources. It is apparent that the present housing investment programme allocations to local authorities are inadequate. The second aspect connected with cash and the ability of local authorities to deal with their housing problems relates to the use of capital receipts from the sale of council houses. It seems wrong to me and to many people in local government that local authorities are restricted to using 20 per cent. of capital receipts. The Government should look again at that policy. I hope that they will do so with a view to increasing the percentage that can be spent, if not making it possible to spend all the capital receipts.
  A housing crisis is rapidly dawning in the constituency that I represent. There is a problem in many areas. First, we still have a large number of pre-war council houses—864, which is about 10 per cent. of our housing stock awaiting improvement. Those houses urgently need modernisation. The council estimates that it will take about eight and a half years at the present rate of progress to modernise them. The present cost is £15,000 to £16,000 per dwelling, and there is no subsidy for the improvement of council houses in the main.
  The total cost to the council at 1986 prices is about £14 million. If the Government turned round and said tomorrow that they would give Burnley an extra allocation of £14 million, and if one assumed that the labour was available to deal with that programme, there would be implications for the housing revenue account, which would have to be met by an increase in either rent or rates.

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  That burden would be unacceptable. I have long been of the view that we should look differently at the way in which we subsidise improvements. It is time that we considered subsidising improvements to council houses in the same way as we subsidise improvements to houses in the private sector.
  As I said, at the present rate of progress we shall have completed those improvements in eight and a half years' time. If one takes the pessimistic view that that cannot be improved on, at that time the council will also be faced with the problem of having to improve houses built immediately after the war. At the stage, those houses will be 50 years old. Improvements such as central heating are missing from houses built in the immediate post-war years. We have several estates in that category. But the immediate priority is to deal with the pre-war council houses.
  Mr. Tony Marlow: Will the hon. Gentleman give way?
  Mr. Pike: In a moment.
  There are such houses on the Stoops estate in Burnley, but the council has had to divert resources to other estates in the town. In one part— Naples avenue — people are gravely concerned about the council's inability to modernise those houses. Hargher Clough is another prewar estate, as are Barden Casterton Avenue, Old Palace House and Bleak House estates. Bleak House estate is in the ward that I represented and the council was forced to sell 112 houses to Wimpey's. The council recognised that it would be unable to deal with the problems on that estate because of the Government's policies.
  Mr. Marlow: This is a very important debate not just for the hon. Gentleman but for many other right hon. and hon. Members with constituencies that face similar problems. The hon. Gentleman referred to the need for council houses to be modernised and repaired. Is he able to say to what extent the work is done by the council's work force and to what extent outsiders are brought in to deal with it? Is he able to compare the cost?
  Mr. Pike: The council puts all this work out to tender. It depends upon who wins the tender. Wimpey has done the work in a number of cases and the direct labour organisation has done the work in other cases. A number of other builders have also been involved. One builder who carried out the work on a section of the Stoops estate made a very poor job of it. On the other hand, Wimpey does as good a job as the council's direct labour organisation. There is little to choose between the two.
  I turn to another important aspect — the need to improve the older housing stock in the private sector. Burnley has a large number of pre-1914 terrace houses. They are mainly stone-built houses, of the traditional type. It will take the council 10 years to deal with the backlog of discretionary grant applications that are in the pipeline. In March 1984 the council had to stop accepting applications for improvement and repair grants. Its decision followed the Government's announcement in the autumn of 1983 of their changed policy on grants after the general election in June 1983. In order to provide the grants that are in the pipeline, the council would need to find £13 million, which is a considerable amount of money. This year the council has allocated £2 million for improvement grants.
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  The council has introduced a points system. Points are allocated according to hardship, the type of area and many other factors. Nobody argues that the points system is fair or perfect. The council tries to be as fair as possible, but it is difficult to get the points system exactly right. The council has tried to operate as fair a points system as possible, but it recognises that there are problems.
  The council has also given prior approval for immediate, urgent work to be done in individual cases. I refer to applications for work to be done to deal with dry rot and other similarly urgent work. If such work were not dealt with immediately, problems would be caused that would go beyond the point where improvement or repair work could be carried out. If prior approval is given, people receive additional points, However, some of those who received prior approval for work that may have been done as long as two years ago are now coming under increasing pressure to pay the builders who carried out the work.
  Not everybody is in a position to borrow money from a building society or a bank. One of my constituents is under considerable pressure from the building contractor and his bank arising from work that was done with prior approval. Another of my constituents served in the armed forces. He and his wife bought a house in Burnley. They have had to sell all their jewellery and virtually all of their possessions to pay for work that had been done after prior approval was granted.
  It is a matter of regret to me that money is available only to allow the council to accept new applications for intermediate grants. I hope that the Government will provide sufficient money to enable the council to deal with the backlog of applications for discretionary grants and also to accept once again new applications for improvement and repair grants. I have to stress the important factor that if one house is not repaired and is allowed to become derelict, because of the way that the houses are built in my constituency, that can mean the demolition of the whole terrace. En turn, that means new build to replace those houses, which is far more costly than repair.
  Mr. Ivan Lawrence: It sounds as though some of the housing problems in the hon. Gentleman's constituency are not dissimilar from those in other urban constituencies such as mine. Has the hon. Gentleman put any pressure on his local authority to improve housing in Burnley by selling more council houses? He will be aware that the financial benefits that accrue from the sale of council houses do much to ease some of the financial problems in housing, apart from the substantial other benefits such as giving people the satisfaction and pleasure of owning their own property. It is, as the hon. Gentleman must agree, one of the Government's achievements, which I believe now has the support of the Labour party.
  Mr. Pike: I have never been opposed to individuals being able to buy their own houses, but in the course of such a brief debate, I do not wish to embark on a discussion about the sale of council houses. I made it clear in my opening remarks that the problems to which I was referring were not by any means unique to Burnley. However, they are a result of the Government's policies and I ask the Government to consider how to solve them.
  The hon. and learned Member for Burton (Mr. Lawrence) said that the sale of council houses would assist

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  our housing problems. Burnley has sold a considerable number of its council houses, and there might be more merit in the hon. and learned Gentleman's point if the Government were to allow councils to spend more than the 20 per cent. of capital receipts that they are allowed to spend. The criticism about the sale of council houses is that councils are not allowed to spend the money as they would wish.
  Mr. Marlow: The hon. Gentleman probably knows, and if he does not it might help him, that not only is his council entitled to spend a percentage of accumulated resources from the sale of council houses but, in the year in question, it can spend a percentage of the receipts of that year. This seems to be a great incentive to Burnley to get to work and sell as many council houses as it can, given the great benefits of home ownership to the people who buy those houses, and also giving a further profit to the local authority so that it can do many of the things that he wishes it to do, and that we wish to see done as well.
  Mr. Pike: I am aware of the hon. Gentleman's point that councils are able to use receipts in that way. I am trying to point out that I believe that the Government should put no restriction on the way in which councils can use capital receipts from assets. The Government's argument that the PSBR could be affected if all capital receipts are used are wrong, and the Government would have a much stronger argument in pushing their case for the sale of council houses if they were to remove that restriction.
  In Burnley, we have sold about 1,000 council houses out of a stock of 8,000, but a large number of other people living in council houses are unable to buy them because they do not have sufficient resources, as they are unemployed, or for some other reason. It is no good advocating the sale of council houses if people cannot buy. If a person can afford to buy, it would be silly not to let them do so. I have never argued that. I lived in a council house for some time, but then bought one of my own and I believe that people have the right to own their property.
  My constituency has a high percentage of owner-occupied property. It has one of the highest percentages in the country, and many council tenants who could afford to do so have bought their homes. If more people were employed, many more would wish to buy their homes.
  The sale of council houses is not the issue that I wished to pursue tonight, but it would warrant a full debate in its own right. I was discussing private sector housing, not council housing. When I was leader of Burnley borough council, we prepared a rolling programme for housing action areas. It was the council's intention to introduce housing action areas to enable owners to preserve and restore basically sound terraced properties and extend their lives. The council has been unable to do that because of the Government's failure to make adequate moneys available. Such a programme of action is extremely important in a town where there is such a high percentage of older housing in the private sector.
  I urge the Government to reconsider the subsidy for the improvement for sale scheme. House prices are very low in the Burnley area, and that creates a problem with rents because people can buy so cheaply. The council has not sold at a profit any of the houses that it has improved under the improvement for sale scheme and is never likely to do
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  so. When the scheme was introduced, the subsidies to housing associations were the same as those to local authorities. If there was a good enough case for similar subsidies then, the case should apply now.
  Mr. Marlow: The hon. Gentleman said that it has not been possible to make a profit on improvement for sale properties because of the level of house prices in his constituency. Does that not depend on the price put on the house before improvement? If the council put the house on the open market, the price might be different from the value of the house on the council's books. I am sure that the hon. Gentleman will appreciate that the loan charges have to be paid—
  Mr. Deputy Speaker Mr. Ernest Armstrong): Briefly, please.
  Mr. Marlow: Of course, Mr. Deputy Speaker. The loan charges have to be paid, and that is water under the bridge.
  Mr. Deputy Speaker: Enough of this water under the bridge.
  Mr. Pike: I note your remarks, Mr. Deputy Speaker. I have tried to give way as little as possible.
  The hon. Member for Northampton, North (Mr. Marlow) is wrong, because the properties will have low values in the first instance. In some areas of Burnley, an improved pre-1914 terraced house will fetch between £12,000 and £14,000. Most of the council houses for sale have been valued at between £12,000 and £14,000, and with the discounts provided they have been sold for well below the asking price. The cost of bringing a pre-1914 house to a proper standard with a flush toilet, bathroom and other modern amenities in many cases exceeds the price which the house would fetch when sold. The council loses money, even allowing for the susidy.
  It is important that the council should pursue the scheme because, as I said earlier, if it does not improve those houses dereliction can spread along a terrace of houses, destroying them. At the end of the day it will cost the local authority and Government far more to deal with the problem.
  Why are the Government reviewing the slum-clearance subsidy? Perhaps the Minister will be able to enlighten me on the motive behind that.
  Sheltered housing is an important area and it is the only one in which Burnley council is pursuing a policy of new build. There is no case for new build for general use in Burnley but the demand for sheltered housing is substantial and the council is trying to meet that demand in two ways. First, it is converting existing properties, and, secondly, there is new purpose-built sheltered housing. But again, because of insufficient resources, the council is unable to meet that large and justified demand.
  Indeed, the council has now embarked on a central control system, which I welcome because it means that those in sheltered accommodation can have cover 24 hours a day, seven days a week, for 52 weeks a year, which is essential. It will also provide an opportunity at a later date to provide installations in individual homes, whether in council homes or in homes in the private sector, to give elderly people the type of back-up to which most hon. Members will believe they are entitled in their old age.
  I welcome that move, but the council needs to provide more purpose-built sheltered accommodation to deal with

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  the problem. Every year the council is faced with the difficulty of trying to balance what should be put in its programme. Should it build purpose-built sheltered accommodation? Should money go to the private sector or to the improvement of council houses? The simple fact is that, without sufficient resources in the housing investment programme allocation, without being able to use all the capital receipts, there will be insufficient money to deal with all the problems that exist.
  As I said in opening, this is a major issue; the second most important issue after unemployment in Burnley. I accept that, as other hon. Members have said, this is an important issue in many other areas. I urge the Government to think seriously about the provision of money for housing throughout Britain and in Burnley in particular to deal with that important problem to ensure that people, whether they be elderly, or whether they want private or council accommodation, have decent homes in which to live. If they were to make resources available to deal with this important problem they would, at the same time, help to reduce the present unacceptable level of unemployment.
  9.33 pm
  Mr. Robert B. Jones: This is not the first occasion on which I have taken an interest in the housing problems of Burnley. As the hon. Member for Burnley (Mr. Pike) knows, I contributed an article on housing in north-east Lancashire to Contract Journal last year. I have at least some common ground with him in identifying the problems of his area.
  I congratulate the hon. Gentleman on his good fortune in securing this debate, and. for some reason, securing the presence of the leader of the Liberal party. Perhaps the hon. Gentleman's seat has now been identified as a potential alliance target at the next general election. I notice that the leader of the Liberal party has now gone. That may relate to the falling strength of the alliance in the polls, and, therefore, the relative safety of the hon. Gentleman's seat. The distinctive features of north-east Lancashire are its high level of owner-occupation and its elderly housing stock. That creates a backlog of improvements and problems financing them.
  I hope that my hon. Friend the Minister will forgive me for saying that some of the ideas in the Green Paper on housing improvement grants do not take full account of regional variations. In my constituency in the south-east, for example, improvement grants serve simply to increase the value of the unimproved property and tend to go to people who would spend money improving them anyway. In north-east Lancashire, however, the value of an improved house might well be less than the total of the money received in improvement grant and the original value. The prospect of having to repay a grant, as the Green Paper contemplates, is therefore a disincentive, and I hope that my hon. Friend will take account of that.
  The hon. Member for Burnley may be encouraged to learn what has happened as a result of selling unimproved council houses to Wimpey. An amendment which I made to the Housing and Planning Bill will allow councils to pay improvement grants for the common parts of flats. That will encourage local authorities to seek renovation schemes involving the private sector in a difficult part of the housing market.
  The differential between house prices in north-east Lancashire and other parts of the country creates a
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  difficulty, as home owners might not be confident that they can afford to move on. The market in Burnley is not as strong as in other parts of the country, and it is difficult to encourage people to buy if they feel that they might have to move to take a job in another part of the country and that they will not be able to sell. There is, therefore, some scope for local authorities to run one of the successful in-buying schemes which are operated in some parts of the country, which enable people to sell to the local authority.
  One of north-east Lancashire's problems is its aging population and their different housing requirements. Some need sheltered housing and others want to stay in their own homes but are incapable of looking after themselves properly.
  Mr. Bowen Wells: The lion. Member for Burnley (Mr. Pike) spoke of subsidising improvements in Burnley. If that policy were carried through, the subsidies would have to be paid for by ratepayers in other parts of the country, notably those whom my hon. Friend the Member for Hertfordshire, West (Mr. Jones) and I represent. Is that not incredibly unfair on our constituents?
  Mr. Jones: A more serious problem is the fact that subsidising public sector housing will depress the price of private sector houses, as there will be less demand for them. It would therefore exacerbate the problems of first-time buyers moving to new estates.
  In my constituency, Honeywell has piloted a computer-operated scheme based on the Piper-Warden scheme, but a more sophisticated version. It provides essential monitoring of elderly people in both public sector housing and many private sector houses in places such as Burnley where elderly widows live alone. Although it is a friendly area and neighbours look in, some people who wish to remain in their homes are unable to look after themselves. I commend that scheme to the hon. Member for Burnley and his council, with which he has close contact.
  Mr. Pike: If the hon. Gentleman looks at my speech, he will see that I said that Burnley had introduced a central control system which would be extended to individual homes in private and public sector housing. Therefore, Burnley council intends to do exactly what he is suggesting.
  Mr. Jones: My recollection is that that is based on the Piper system. The computerised system is more sophisticated and will cover a wider area. The hon. Gentleman is in close touch with the council, as a former leader of it, and I hope that he will pass on that information. I should be pleased to arrange any necessary meetings with Honeywell, if that would be helpful.
  Finally, the hon. Gentleman touched on the point about the true percentage of capital receipts. I know that that subject worries hon. Members on both sides of the House. When in the recent past we have seen rising interest rates it has been difficult to justify a measure which could remove £5,500 billion from the money market overnight, or from local authority internal lending, with its concomitant pressure on interest rates. There are two sides to that issue. It is not as simple as the hon. Gentleman maintains.
  9.41 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Richard Tracey): It is only right to

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  start by paying tribute to the hon. Member for Burnley (Mr. Pike) who grasps opportunities with both hands and speaks on behalf of his constituents. I must apologise to him for the fact that housing Ministers in the Department of the Environment have unavoidable engagements tonight. He may have grasped the opportunity, but, unfortunately, they cannot be present to answer the precise details of his speech. I undertake to have the correct information supplied to him by letter after we have read his speech. I shall ensure that my hon. Friend the Minister for Housing, Urban Affairs and Construction considers the points carefully.
  I shall answer some points and take the opportunity to put forward some general details about the Government's attitude towards housing and to set out some of our housing policy once again. The Government have an excellent record on housing. It would be wrong for anybody to run away with the idea that the Government minimise the extent of housing problems, with the creation of many of which the Government had nothing to do.
  Certainly, we have set out to find out the facts about the housing stock. First, we did so through the housing stock condition inquiry last year, which was the first of its type. In the inquiry local authorities provided information about renovation needs in their housing stock. Secondly, we are doing so through the English house condition survey later this year, which will be the most comprehensive survey ever undertaken. We shall cover both private and public sector housing.
  Because of the scale of the problem, the resources and skills of the private sector as well as the public sector must be fully harnessed. Of the expenditure of £9,000 million a year on renovation in the private sector, 90 per cent. is provided by the private sector itself, but the Government have provided large-scale assistance, amounting to over £3,000 million, in home improvement grants. That £3,000 million has to be compared with a mere £90 million in the last year of the Labour Government.
  In a Green Paper last year the Government set out proposals for targeting Government assistance where it is most needed. There were numerous responses to the Green Paper, and my hon. Friend the Minister for Housing, Urban Affairs and Construction and colleagues in the Department are now considering those responses before making decisions on the future thrust of our policy.
  We have also provided extra assistance to local authorities—an increase of £200 million in their planned level of capital expenditure on housing in 1986–87. But with local authority housing, too, we believe that full use must be made of the private sector and other innovative approaches.
  The hon. Gentleman has concentrated on Burnley. I am aware that in Burnley the Bleak House estate has been successfully renovated for re-sale by the building company, Wimpey. Other private developers are interested in undertaking schemes of this kind, and the local authority, as the hon. Gentleman will know, is in touch with my Department's urban housing renewal unit. I hope that it will be successful in an application for extra housing investment programme allocation to renovate one or more of the other estates.
  Two essential elements in the UHRU approach are, firstly, decentralising the local authority's management so that it is more effective, more responsive to and in closer
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  touch with the tenants whom it sets out to serve and, secondly, involving people directly in the renovation of their own estates, especially through community refurbishment schemes, in which funds from the Manpower Services Commission and my Department enable unemployed people to be employed on improving their own environment. A number of such schemes have now been approved, and I hope that Burnley will follow suit.
  Mr. Michael McGuire: Could the Minister tell me what use his Department is making of a unit, which I think is privately sponsored, known as the land resource unit? I believe that it has carried out studies and surveys on two estates in inner London, both of them, I think, in Hackney. One estate has been renovated to the extent that everyone has his own front door and patch of garden. It means getting away from the tower block mentality. The incredible thing is that there has been not one burglary on one of those inner London council estates this year. The other estate, which has been left largely untouched, has all the problems that we have come to associate with tower blocks. That was done by this land resource unit, which is worldwide. The author of the report was speaking on the radio. That is how I happened to hear her. I thought it was so interesting that it would be appropriate to ask the Minister about it while he was on his feet.
  Mr. Speaker: Order. The debate is about Burnley.
  Mr. Tracey: As you rightly point out, Mr. Speaker, the debate relates specifically to Burnley.
  I apologise to the hon. Member for Makerfield (Mr. McGuire) for not being briefed on that point. He has raised a matter of considerable interest. Just as I undertook to write to the hon. Member for Burnley, so I shall refer the point made by the hon. Member for Makerfield to my hon. Friend the Minister for Housing, Urban Affairs and Construction, and we shall make sure that the hon. Gentleman gets an answer.
  Mr. McGuire: It was on the "Woman's Hour" programme on Tuesday afternoon.
  Mr. Tracey: I have been led to the right source.
  The Government have achieved a great deal since May 1979. In Great Britain 1·25 million new homes have been built. On a very important part of our policy, 870,000 houses and flats, although perhaps not as many flats as we would wish, have been sold by local authorities, new towns and housing associations in Britain; 800,000 of those sales were to sitting tenants. Sales are still at about 100,000 a year. Great Britain is the only country in western Europe with such an enormous public housing sector—27 per cent. of total housing. That is a legacy of many years of municipal socialism in housing.
  The right-to-buy has been successful because it has recognised the wishes of the great majority of the people to own their own homes. Nearly 1 million families have bought their flats or houses from councils, new towns and housing associations. Owner-occupation has grown by 2 million. Nearly two thirds of British families now own their homes. That is their choice and they have had the essential freedom to exercise that choice. We are also proud that mortgage famines have disappeared. Mortgage rates are coming down, with the third significant reduction in a matter of weeks.

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  The policy of the Government is more choice, more freedom and more fairness in the rented sector as well. That is the best way to avoid the mistakes of the past. Council tenants did not have much choice in the design of the tower blocks that were built in the 1960s and the 1970s. Those designs reflected what bureaucrats and architects in central and local government thought was best for tenants. Unfortunately, the people were not consulted. The result has been many of the housing problems which we have today.
  I regret that the management record of many local authorities has not made the resolution of the problems easier. There are 116,000 houses and flats standing empty—more than the total number of families accepted as homeless last year. Of those, 26,000 houses and fiats have been empty for more than 12 months. That record is not acceptable. Rent arrears now total nearly £200 million. In the worst 20 authorities, arrears amount to £94 million.
  We hear a great deal from Labour authorities about the need for more money to spend on their housing stock. We have heard about that from the hon. Member for Burnley tonight. We must ask some serious questions about it. If the housing stock is in poor repair, why did those authorities allow it to get into that state? What have they been doing for the past 40 years? The record of many councils which complain in that way is poor, but they cannot be held entirely to blame. Many council housing departments are simply too big—too much like monsters—to manage their housing properly.
  We have to find ways to break up those great empires, to achieve more diversity of management and ownership and to encourage more tenant participation in the organisation and management of estates and blocks.
  I am proud to say that the Housing and Planning Bill will promote such a change. I welcome the enlightened attitude which all the Opposition parties represented on the Committee adopted towards the Bill.
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  I am pleased that we have had a positive response from most local authorities, including Labour authorities, to the UHRU operation. Over 100 authorities have asked for visits and more than 120 schemes have already been worked out. The schemes vary greatly. Some lever in private funds and others do not, but the essential element is to persuade managers to respond to the needs of tenants, not to the needs of the bureaucratic or political machine.
  Mr. Robert B. Jones: The trouble is that many local authorities have used direct labour for housing maintenance for years and have therefore been geared to the convenience of the work force and managers in those departments instead of the convenience of customers.
  Mr. Tracey: In his usual thrusting way, my hon. Friend the Member for Hertfordshire, West (Mr. Jones) goes to the heart of the matter. I do not attempt to deny what he says. He makes an apposite point.
  The authorities recognise that they do not have all the answers. We have to examine new ways of providing rented housing. The private sector has a part to play, as do housing associations, management trusts and tenant cooperatives. Not only can such alternatives offer tenants the prospect of better management, but they offer more choice, more freedom and more fairness. That is what this Government are all about.
  Mr. Ivan Lawrence: On a point of order, Mr. Speaker. I wondered what the position was. I hope that the matter on which you are about to rule is not pre-empted because of the anxiety of my hon. Friend the Minister to sit down three minutes before 10 o'clock. If there is no problem, I shall resume my seat.
  Mr. Speaker: There never was a problem.

  Mr. Speaker's Ruling (House of Commons Crest)
  9.58 pm
  Mr. Speaker: Earlier this afternoon the hon. Member for Northampton, North (Mr. Marlow) drew attention, on a point of order, to an alleged misuse of House stationery, in that a circular letter bearing the crowned portcullis had been sent out by the Leader of the Liberal party as a contribution to the current by-election campaigns. I undertook to examine any evidence which the hon. Member could produce in support of the allegation.
  I have now looked at the letters in question and I find that they are headed not by a crowned portcullis, but by a version of the Royal Arms which was used for House of Commons stationery until recently, and associated with the words "House of Commons".
  The regulations governing the use of House of Commons stationery make it quite clear that this stationery must not be used
  "in connection with … the return of any person to public office."
  The application of these rules, which are approved by myself on the recommendations of the Services Committee, must, as the rules themselves say, rest on the good sense of individual Members. In this instance, I have to find that there has been a technical breach of the rules which no interpretation can gainsay. Does the right hon. Member, the Leader of the Liberal party, wish to say something?
  Mr. David Steel: On a point of order, Mr. Speaker. May I first express my surprise that, contrary to the well-established courtesies of this House, I was given no notice that this matter was to be raised on a point of order this afternoon, and again early this evening—[Interruption.] It is true.
  Contrary to what I understand has been asserted, no House of Commons stationery has been used for the letter circulated to electors yesterday. It has been printed and accounted for as a normal election leaflet.
  On the matter of the emblem printed in the top left-hand corner of the leaflet, I took advice before agreeing to that, as I was well aware that it was not permitted to reproduce our current portcullis letter heading. I regret the technical breach of our rules that has occurred as a result of that, and I shall ensure that it is not repeated.
  It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]
  Mr. Tony Marlow: Further to that point of order, Mr. Speaker. I regret that it was impossible to warn the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) about my point of order, as I believe that he was not present in the House at the time. I have spoken to him subsequently and he told me that he did not mind anyway, so why he raises that matter on the Floor of the House mystifies me.
  The right hon. Gentleman also said, and it is important, that there was an assertion that House of Commons stationery was being used. Nobody said that. The point of order that was raised, as the right hon. Gentleman can read
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  in Hansard tomorrow, was about the use of the logo. You have ruled on that Mr. Speaker, and we are supremely grateful.
  There is a great problem with our elections. The transatlantic habit of hyping elections is becoming increasingly prevalent in the United Kingdom. We are used to the abuse of statistics in particular canvass returns.
  We are grateful to you, Mr. Speaker, for preserving the rights and privileges of this House. Those who seek to join this House and to produce the rules of the country in which we live, should abide by the rules of this House. We are grateful.
  Mr. Nicholas Winterton: Further to that point of order, Mr. Speaker. I listened very carefully to your ruling. I was in the House earlier today when my hon. Friend the Member for Northampton, North (Mr. Marlow) raised the matter. In fact, it has been raised twice today.
  I must ask you, Mr. Speaker, whether you consider the explanation given by the Leader of the Liberal party to be adequate as an apology to the House for what is clearly a gross abuse of the House.
  Mr. Anthony Beaumont-Dark: It is a flagrant abuse of the House.
  Mr. Winterton: I say with all sincerity that I am not trying to score points off the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steele). However, there is clearly on a piece of paper the words "House of Commons", together with the old logo of the House of Commons which is still available to hon. Members—
  Mr. Speaker: Order. I have already dealt with that matter. The hon. Gentleman need not protest about the use of that.
  I can clearly answer the hon. Gentleman's initial question. I think that what was said by the right hon. Member for Tweeddale, Ettrick and Lauderdale was entirely appropriate. He has apologised for the technical breach of the rules governing stationery.
  Mr. Winterton: Further to that point of order, Mr. Speaker. May I suggest that the words that I heard from the Leader of the Liberal party constituted a grudging apology, if it can even be considered an apology?
  Will you, Mr. Speaker, give guidance to all Members of this House that in no circumstances, on any future occasion, is the logo of the House of Commons to be used in the build-up either to a general election or to a by-election, and that if it happens you will take the appropriate steps?
  I say to you, Mr. Speaker, that it might well be that, because of the political climate in this country at the present, that particular circular might have an important effect on the outcome of a by-election. If that is the case, it will be a grotesque abuse of this place and of our democratic principles.
  Several Hon. Members rose—
  Mr. Speaker: Order. Let me deal with one point of order at a time.
  Mr. Beaumont-Dark: Can I ask you a simple question, Mr. Speaker?
  Mr. Speaker: No.
  Mr. Beaumont-Dark rose—
  Mr. Speaker: Order. I am on my feet. I shall deal with one point of order at a time.
  I do not think that it will be an enormous revelation to the electors of West Derbyshire that the right hon. Member for Tweeddale, Ettrick and Lauderdale is a Member of the House of Commons. I do not think that what he has done will have any effect upon the by-election.
  Several Hon. Members rose—
  Mr. Speaker: Order.
  Mr. Beaumont-Dark: On a point of order—
  Mr. Speaker: Order. I have already ruled on the use of the stationery. I do not need to say any more about that.
  Mr. Ivan Lawrence: On a point of order—
  Mr. Bowen Wells: May I make a serious point of order, Mr. Speaker?
  Mr. Speaker: No, I shall first take the point of order of the hon. and learned Member for Burton (Mr. Lawrence).
  Mr. Lawrence: I am most grateful, Mr. Speaker. You dealt with the question of the abuse of the House by the use of the logo. Can you deal also with the question of the dignity of the House, which you are here to protect? I know that you do so with great care. The matter arises because of the text which is associated with the logo. The words are so absurd and fatuous that the effect of having the logo on the letter is to hold the House of Commons up to disrepute. May I refer you to some of the words?
  Mr. Speaker: No, I shall not allow the hon. and learned Member to do so. If he is alleging that there is anything in the letter which is a breach of privilege, he must raise the matter in the usual way. I do not think that we should deal with the contents of a letter. I am only concerned with the use of the logo. I am not concerned with what is in the letter.
  Mr. Lawrence: I am extremely grateful, Mr. Speaker. May I use this opportunity to correct what may be a profound disservice which I have done to the Leader of the Liberal party, the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel)?. It was not my fault, but when I raised the matter last I was cut off in mid-sentence by Mr. Deputy Speaker Armstrong. It is only fair to the House and to the Leader of the Liberal party to complete the sentence.
  I made the point that the text was so ridiculous as to bring the House of Commons into disrepute by the use of the logo. Hansard has recorded that the text which is associated with the logo of the House of Commons states:
  "We have reached a crucial point in our history in Britain. Are we going to pull ourselves".
  It was at that moment that I was cut off, and that is how Hansard reads. However ludicrous the letter, I am sure that it was not that ludicrous. Perhaps I can complete that sentence so that I do no disservice to the Leader of the Liberal party. The sentence was:
  "Are we going to pull ourselves together and face the future with confidence?"
  As I have said before, it was a sentence so banal as to bring the reputation of the House into disrepute. I call upon you,
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  Mr. Speaker, to make some observation about that reputation, because you are here to protect the interests of hon. Members and of Back Benchers in particular.
  Mr. Bowen Wells: I draw your attention, Mr. Speaker, to the statement by the Leader of the Liberal party that he had taken serious advice before using the House of Commons logo—admittedly, the old-fashioned logo. The right hon. Gentleman took advice and deliberately used the logo, in a calculated way, to influence the electors to whom he was writing. That is not a technical breach; it is a deliberate act by the Liberal party to use the right hon. Gentleman's position in the House to influence the electors of West Derbyshire.
  Mr. Speaker: I think that I can deal with the matter. The right hon. Member for Tweeddale, Ettrick and Lauderdale did not take advice from me, so I can only assume that the advice he took turned out to be incorrect.
  Mr. Beaumont-Dark: Mr. Speaker—
  Mr. Speaker: I do not think that we need—
  Mr. Beaumont-Dark: But, Mr. Speaker—
  Mr. Speaker: Well, if it is a serious contribution—
  Mr. Beaumont-Dark: Perish the thought that it should not be a serious point, Mr. Speaker. You gave an excellent ruling, Sir, for which we are, as ever, eternally grateful, but you did not say what the outcome should be. The letter contained the words "The right hon. David Steel MP", not "the Leader of the Liberal party". The implication was that the words "The right hon. David Steel MP" added a greater emphasis to being a distinguished Member of the House.
  What will be your ruling, Mr. Speaker? Should the letter be withdrawn so that there is never any taint on the reputation of the House? I know that the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) did not want to take unfair advantage, but the letter should be withdrawn. Will the "right honourable MP" send his people around to get the letter out of the feeble grasp of those people, or will you, Mr. Speaker, let this grave injustice go unheard and unchanged?
  Mr. David Penhaligon rose—
  Mr. Speaker: Order. Is it going to be helpful?
  Mr. Penhaligon: All hon. Members are of course aware that, the moment a Member reaches the Chair, he readhes a point of absolute political neutrality. I am sure that we would all pay due homage to you for having achieved that, Mr. Speaker. Will you draw your own conclusions from the past 15 or 20 minutes and discover whether Ladbroke or William Hill is still open and apply a pound in the right direction, because I am sure that you would make money?
  Mr. Speaker: I shall not be tempted. May I just say to the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) that the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) is a right honourable Member. He has every right to use that high and honourable title.
  Question put and agreed to.
  Adjourned accordingly at ten minutes past Ten o' clock.