Commons Sitting of 17 November 1986

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  WALES

    Bone Marrow Transplants
    Mr. Terlezkiasked the Secretary of State for Wales if he will make a statement on the service available in Wales for bone marrow transplants.
    The Parliamentary Under-Secretary of State for Wales (Mr. Mark Robinson): A new purpose-built unit for bone marrow transplant operations has been provided this year at the University Hospital of Wales, Cardiff. My right hon. Friend will perform the opening ceremony this Friday, 21 November.
    Mr. Terlezki: I am grateful to my hon. Friend for such a good and encouraging reply. How many operations will the unit be able to undertake? Will it meet the need for bone marrow transplants in the future?
    Mr. Robinson: The unit will be capable of providing 20 bone marrow transplant operations each year. Therefore, it is expected to meet the need for bone marrow transplantations in Wales for the foreseeable future.
    Dr. Roger Thomas: Is the Under-Secretary happy that so much of the initiative on bone marrow transplantation has had to be left to the initiatives arising from the dire need of the parents of those who are suffering?
    Mr. Robinson: This initiative has been taken by the Welsh Office. It is centrally funded, and we shall continue to fund its recurrent costs.
    Mr. Gwilym Jones: Is my hon. Friend satisfied with the fact that bone marrow transplants and the other excellent parts of the expanded Health Service are still submerged in an extensive committee system? Does he recognise the frustration of Health Service managers who should be free to manage resources against priorities instead of carrying out some of the difficult-to-understand decisions that come out of the committee system?
    Mr. Robinson: I understand what my hon. Friend is saying, but district health authorities are required to create their own sets of priorities and to manage their resources within them. In addition, we fund services regionally, such as the bone marrow transplant unit, and this is designed to give priority to certain projects which we feel require it and have specific importance.

    Housing Expenditure
    Mr. Wigleyasked the Secretary of State for Wales what was the total current and capital expenditure of his Department on housing during the last year for which figures are available.
    Mr. Mark Robinson: Total public expenditure on housing in Wales in 1985–86 was £206·6 million.
    Mr. Wigley: Without reservation, I condemn the recent arson attacks in my constituency. However, is not one of the problems facing rural areas such as in Gwynedd the shortage of rented accommodation, which to some extent has been impacted by the level of holiday homes? In these circumstances, will the Minister give an assurance that sufficient of the additional money announced recently by the Chancellor of the Exchequer for housing in general will come to Wales, and Gwynedd in particular, to give a guarantee that any person without a home for up to six months will get a house, either to rent or buy, within his means and within his area?
    Mr. Robinson: As the hon. Gentleman knows, my right hon. Friend the Secretary of State wrote to him on 1 November informing him that a supplementary allocation of £100,000 for the acquisition of vulnerable properties was being made available in his constituency. We have had a similar request for next year and we shall consider it in the normal way. I welcome the hon. Gentleman's response to the recent incident.
    Mr. Harvey: Will my hon. Friend welcome the enormously increased provision for housing expenditure announced in the autumn statement and will he confirm that a certain proportion of that will be going to Wales?
    Mr. Robinson: My right hon. Friend the Secretary of State still has to take his decisions as to the spending in Wales in the coming year throughout the block. However, this financial year we have increased resources or allocations to local authorities by nearly 30 per cent.
    Mr. Ron Davis: Is the Under-Secretary of State aware that the system of refurbishing PRC homes that was initially established under the 1984 Act is now in absolute chaos because of the inactivity of his Department? Is he particularly aware of the difficulties experienced, because of the inadequacies of the Act, in low-value areas—for example, in my own area of Rhymney Valley—where the local authority is faced with the wholesale repurchase of homes which had previously been sold? Will the Under-Secretary of State confirm that he has particular powers under the 1985 Act to use his discretion, and will he guarantee that he will look immediately at the problems involved in implementing this Act and take action accordingly?
    Mr. Robinson: I am not entirely sure what the hon. Gentleman means by the dalliance of my Department. In terms of the submissions made to us by local authorities, we have met in full every bid for PRC houses. The hon. Gentleman should also be aware that recently we have increased the eligible expense limits. We shall continue to keep PRC houses, including, of course, those in the hon. Gentleman's constituency, under review.
    Mr. Roy Hughes: Is not the Government's response poor recognition of the fact that Wales has such a large stock of pre-1919 homes, so many of which lack even basic

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    amenities? Many thousands of houses need repair, our waiting lists are soaring, homelessness is rife, and yet thousands of building and construction workers are standing in the dole queue. Instead of sabotaging our local authorities, is it not time that the Government told them to get on with the job of repairing these houses and building new ones?
    Mr. Robinson: I find the hon. Gentleman's use of the word "sabotage" extraordinary. When his party was in power it spent a mere £57 million on private sector renovation. To date this Government have spent £333 million on private sector renovation. In that area alone there has been an increase in spending during the current financial year. We have targeted resources on the home improvement backlog, and I am hopeful that we shall continue to do so during the coming months.
    Mr. Terlezki: I hope that when finance is made available to improve houses in Wales, capital expenditure on housing will be spread throughout Wales, including my constitency of Cardiff, West, where the houses are in just as poor repair as anywhere else in Wales. Therefore, I do not accept the Opposition's crocodile tears. They are always crying for their own benefit. Should not the cake be divided equally among all parts of Wales?
    Mr. Robinson: I assure my hon. Friend that we shall continue to provide resources right across Wales, bearing in mind the needs of individual areas.

    Labour Statistics
    Dr. Marekasked the Secretary of State for Wales what are the latest unadjusted figures for unemployment in (a) Wrexham and (b) Wales; what were the equivalent figures in May 1979; and what has been the percentage increase in each case.
    The Secretary of State for Wales (Mr. Nicholas Edwards): On 9 October 1986 the total numbers of unemployed claimants in the Wrexham travel-to-work area and Wales were 7,730 and 174,105 respectively. Unadjusted figures for 1979 are not available on a comparable basis.
    Dr. Marek: Is the Secretary of State aware that many of the new jobs that have been created in Wales are low paid, attracting a rate of pay of perhaps only £50—£70 a week? Is the Secretary of State also aware that although these jobs are welcome they are generally regarded as slave labour and in no way a substitute for the well paid, headof-household jobs that Wales has lost? What analysis has the Secretary of State made, and is he proud of what his Department is doing?
    Mr. Edwards: Faced with the fall in the number of unemployed people, I suppose that instead of welcoming that fact the hon. Gentleman is now trying to divert the issue by suggesting that these very welcome new jobs are somehow undesirable. Having looked at many of the very attractive industrial projects in his constituency, I do not believe that those who are employed in them regard their jobs as slave labour. The hon. Gentleman's suggestion is ludicrous in the extreme.
    Sir Anthony Meyer: Does my right hon. Friend accept that the proposal to privatise services, including those in the National Health Service, will not create further unemployment but that they will create more efficiency
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    and better value for money? Will he condemn unreservedly the tactics that are being used by NUPE in Clwyd to black those employers who agree with the proposal to privatise the health services?
    Mr. Edwards: Yes. It is quite disgraceful. We are seeking to concentrate the maximum possible resources on patient care and to obtain the best value for money. Any union that thinks it ought to go on strike against that objective is behaving disgracefully.
    Mr. Foot: There are some areas in Wales where unemployment and the prospects for employment are as deep and chronic as ever. Those areas make a mockery of the suggestion that we sometimes get from the Treasury Bench that there have been six years of growth. Will the right hon. Gentleman tell us whether some of those areas, which continue to face those serious problems, will have restored to them some of the cuts in regional aid which he approved? In the recent public expenditure discussions in Cabinet, did he fight for a restoration of those cuts, which have contributed to higher numbers of unemployed?
    Mr. Edwards: They did not contribute to the numbers unemployed; they contributed to the significant fall in the numbers unemployed. One of the reasons for that is that in the months to October this year there have been Government owned factory allocations in Wales of some 2,233,000 sq ft. That is an all-time record, because it is more in the period to October than in any full year before. It is an indication of the success of selective regional policy in creating jobs where they are most needed.
    Mr. Raffan: Does my right hon. Friend agree that the fall in unemployment in the borough of Delyn from 4,612 in September 1985 to 4,307 this year is a remarkable achievement in view of the massive job losses arising from the Courtaulds Greenfield closure? Does he also agree that this achievement is largely due to the Government's enterprise zone policy, a policy to which the Labour party was and is bitterly opposed?
    Mr. Edwards: I agree with my hon. Friend that Delyn has had remarkable success in replacing the jobs lost after the Courtaulds closures. I congratulate the local authority on the vigour with which it has pursued its policy to make a success of the enterprise zone.
    Mrs. Clwyd: Is the Secretary of State not aware that one in three families in Wales are now living below the poverty line? Is he further aware that 300,000 people are living on supplementary benefit? That is double the number six years ago. Is he not aware that south-east Wales, where there is very high unemployment, is the worst-off area? Has he no conscience about the suffering which he and his Government are inflicting on people in Wales?
    Mr. Edwards: I am delighted that the policies that we have been pursuing have created a fall in unemployment over the last month of over 6,000 and a fall since October last year of 8,600. The seasonally adjusted unemployment figures for Wales have fallen in six out of the last seven months, the only exception being in May, when the figure rose by exactly 100.
    Mr. Gwilym Jones: In view of last Thursday's announcement of a welcome fall in unemployment, may I urge my right hon. Friend to ignore the calls from the Opposition for higher unemployment and to continue to pursue policies for employment, which, plainly, the representatives of the Left-wing parties do not care about?
    Mr. Edwards: I agree. It is quite extraordinary that when we at last begin to see a fall in unemployment, instead of that being welcomed by the Opposition they seem to be miserable about it.
    Mr. Barry Jones: May I remind the right hon. Gentleman that in little more than a year we have lost 5,000 coal jobs in the south Wales coalfield? The proposed closure of the Cwm pit has caused great bitterness. Is the right hon. Gentleman aware that £500 million worth of coking coal was imported in the first nine months of this year? That is something like 5 million tonnes, much of it within 6 miles of the proposed new Margam mine. Does the right hon. Gentleman not agree that the new Margam mine is of strategic importance to the coalfield? In his complacent remarks to my right hon. and hon. Friends, does he forget the deteriorating social conditions in the mining communities? Is he forgetting the high rate of male unemployment, and does he not realise that there are declining prospects for school leavers? Over the last seven years he has shown disinterest in their fate.
    Mr. Edwards: In response to the hon. Gentleman's varied questions, there are three points to be made. First, against the background of those coal closures, the achievement of a reduction of more than 8,600 in the number of unemployed in the same period is even more remarkable. Secondly, I, too, entirely understand the desire to get ahead with the Margam project, if that proves possible, but we still have not had formal proposals from the NCB. Discussions on that project continue. Thirdly, in the light of what the hon. Gentleman said about the coal areas, I hope that he will particularly welcome today's news that AB Electronics, a company which now employs more than 3,000 people in Wales, is to replace its two factories in the Rhondda with a new project at Williamstown, which will create about 200 additional jobs in the area.

    Dairy Industry
    Mr. Geraint Howellsasked the Secretary of State for Wales if he is satisfied with the present state of the dairy industry in Wales; and if he will make a statement.
    Mr. Nicholas Edwards: As I told the conferences of the farmers' unions in Aberystwyth earlier this month, there is still a gross over-supply of milk and milk products in Europe, despite the measures taken in 1984. The European Commission has recently produced a package of measures designed to reduce this surplus production and these are being considered by the Council of Ministers at the present time.
    Mr. Howells: I am sure that the Secretary of State is aware that many dairy producers in Dyfed are selling their milk quotas in an attempt to solve their immediate cash flow problems. Moreover, he will be aware that many of those quotas are being sold over the border, to Cheshire and Devon. What advice can the right hon. Gentleman give the dairy farmers of Wales in the short term, and what plans has he to help them in the long term?
    Mr. Edwards: Of course I understand the concern of dairy farmers, many of whom are in my constituency, but we have no evidence at present that there is a net loss of quota out of Wales. At the time of those Aberystwyth conferences I looked at the figures, but I could not find any such evidence. The proposals are before the Council of
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    Ministers this week, so I particularly understand the concern felt. We must closely watch how the negotiations go, but I am sure that the hon. Gentleman will feel it right that the Government should oppose the changes in the formula B arrangements put by the Commission, which would be particularly damaging to our producers.
    Mr. D. E. Thomas: Will the Secretary of State tell us and the Welsh people what is his role as the Agriculture Minister for Wales? Why does he continually refuse to be involved in these essential EC negotiations himself?
    Mr. Edwards: I have often given the House the answer, but I shall repeat it. Of course I play a full and complete role in considering policy with Ministers and in putting the case for Wales. If the hon. Gentleman had been at the conferences to which I referred he would have heard that I put that case forcefully to Commissioner Andriessen. I strongly believe that negotiations in Europe are best conducted on a United Kingdom basis. Far from strengthening the Welsh case, it would weaken it if we sought to fragment the presentation of the British case.
    Sir Raymond Gower: As cheese production in 13ritain is very small compared with that in France and other parts of Europe, should we not consider considerably expanding cheese production in Britain and, indeed, in Wales, as well as the expansion of milk products generally, which are again to be found on a much larger scale in Europe?
    Mr. Edwards: I am glad to say that such expansion has been taking place and that there have been considerable successes in increasing production as my hon. Friend suggests. However, I fear that the scale of the problem of surpluses confronting us is much greater than any such increases could hope to deal with.

    Labour Statistics
    Mr. BarryJones asked the Secretary of State for Wales what is the total of unemployed in Wales, including the number of school leavers, and the number of long-term unemployed; and what increases these represent, numerically and in percentage terms over October 1979.
    Mr. Nicholas Edwards: The seasonally adjusted number of unemployed claimants in Wales was 169,000 in October 1986 and 68,300 in October 1979, an increase of 100,700 or 147–4 per cent. Figures for the long-term unemployed and school leavers are not available on a comparable basis.
    Mr. Jones: May I remind the Secretary of State that with 174,000 jobless Welsh people the cost to Britain is about £1,131 million a year, which is a weekly cost of £21 million? Does he realise that there are 45,000 people on special programmes and that work-test questions will massage downwards the unemployment figures by another 1,000? Has he taken into account as well that already in Wales 3,000 people are on supplementary benefit? Is not the statement of the Chancellor of the Exchequer an inadequate and late response to the challenge of mass unemployment in Wales, and will he accept that in reality it is an election ploy? We believe that over the past seven years the Secretary of State has shown a pitiless disinterest in our people.
    Mr. Edwards: There are about 49,400 people under special measures, not 45,000. I take pride in the success and effectiveness of the special measures as a sign of the Government's concern and effective action. The measures

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    that we have been pursuing—I speak of the past, not of measures recently announced by my right hon. Friend the Chancellor of the Exchequer—are one of the reasons why the seasonally adjusted unemployment figures, the subject of the hon. Gentleman's supplementary question, have fallen in six out of the past seven months.
    Mr. Grist: Does my right hon. Friend agree that the Government's commitment and that of Conservative Members has been shown by the great success of the job clubs scheme and the Restart programme?
    Mr. Edwards: I entirely agree with my hon. Friend. I hope that we can continue to develop those schemes.
    Mr. Foot: Would the Secretary of State like to reconsider what seemed to be a most ill-considered answer that he gave me a minute or two ago? He talked as if cutting regional aid had increased the number of jobs. Will he tell us what was the cut and what has been the increase in the number of jobs?
    Mr. Edwards: I am saying that regional aid is now much more effectively directed, and that it is working well is shown by the fact that the Welsh share of total United Kingdom unemployment continues steadily to decline. I note that from January to October this year there have been 168 applications for selective financial assistance, compared with 135 in the same period last year, and that 113 of the offers have been accepted. I note also that £33 million of assistance has been directed selectively in the right direction to create more than 4,500 new jobs.
    Mr. Wigley: Will the Secretary of State confirm that, unlike in England, the number of employees in employment in Wales is now fewer than in 1979? Does that not show the failure of Government policy for Wales?
    Mr. Edwards: No. The latest employment figures extend only to about the spring for the self-employed and we wait to have more recent figures. The available figures show the scale of the inherited problems of the decline of the old basic industries. It is encouraging that, despite the scale of these problems and the recent pit closures, the relative position of Wales to the rest of the United Kingdom is improving and unemployment is falling. Surely the hon. Gentleman welcomes that fact.
    Sir Raymond Gower: Apart from the welcome change in the unemployment figures, are we not entitled to some cautious and modest optimism, given the increase in the number of notified vacancies?
    Mr. Edwards: There has been an increase in the number of vacancies. The number of vacancies at jobcentres is 14,618, which is 4,600 up on the same month last year. That is another sign of the improvement which I have been describing to the House, which Opposition Members do not wish to hear about.

    AIDS
    Mr. Gareth Wardellasked the Secretary of State for Wales what steps he plans to take in Wales to implement Government proposals concerning acquired immune deficiency syndrome.
    Mr. Mark Robinson: In September my right hon. Friend announced support for the establishment of the Welsh AIDS campaign. In addition, we are participating
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    fully in the national advertising campaign, including the delivery of a leaflet to every home, and will be fully involved in further Government action.
    Mr. Wardell: Why have the Government dallied and dithered over what to do about this difficult problem? The debate nationally has centred on looking for scapegoats. First, the fault was seen to lie with black people in Africa, and it then moved to homosexuals. Can the Minister give the House an assurance that the Government's campaign will not be directed at young people so that they will be seen as the scapegoats? Instead, will the Government ensure that the campaign is directed at everyone and not any particular group in the community?
    Mr. Robinson: The Government's campaign will be directed specifically at those who are most vulnerable.

    Cervical Cancer Screening
    Mr Harveyasked the Secretary of State for Wales what funds he has made available for cervical cancer screening in the current financial year.
    Mr. Gristasked the Secretary of State for Wales what steps he proposes to improve the cervical cytology service in Wales.
    Mr. Mark Robinson: Some £400,000 per annum has been allocated for use by district health authorities to implement the recommendations of the joint Welsh Office—NHS working party.
    Mr. Harvey: I am sure that both sides of the House will welcome that dramatic increase in spending. Can my hon. Friend confirm that the Welsh Office funding will be sufficient for local health authorities to set up this service?
    Mr. Robinson: Yes, I can give my hon. Friend that assurance. The announcement made on 28 October enabled the Welsh Office to meet in full the capital bids of the district health authorities, and, for future years, to contribute towards the running costs of the service.
    Mr. Grist: Will the family practitioner service be able to receive funding for computer services?
    Mr. Robinson: In addition to the £400,000 per annum that has been allocated to the district health authorities, the Welsh Office is bearing the capital costs of providing computer facilities for family practitioner committees. Those facilities will handle the call and recall systems for cervical cancer screening. More than £750,000 is being provided for computerisation over the three years to 1987–88.
    Mr. Coleman: I declare an interest as parliamentary adviser to the Institute of Medical Laboratory Scientists. Will the hon. Gentlemen bear in mind that the most important factor in screening for cervical cytology is the employment of adequate numbers of scientists to examine the specimens and slides involved? Will he make sure that adequate finance is available to ensure that a sufficient number of technicians is available to do that work?
    Mr. Robinson: We believe that adequate resources are available, and we continue to keep the position under review. I can tell the hon. Gentleman that the waiting time for results is now down to an average 24 days throughout Wales.
    Mrs. Clwyd: My information is that the number of bids is equal to four times the amount of money available for

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    cervical cancer screening. Is the hon Gentleman aware that laboratory workers are having to skimp on the time that they spend studying smears? Instead of looking at a slide for 10 minutes, as they are supposed to do, they study only a small section of it in many cases because of the pressure of work. Can the hon. Gentleman assure all women who might be at risk, or who are applying for tests, that he has no fear about quality control and that there are adequate resources available?
    Mr. Robinson: The additional funding that we have announced is precisely designed to improve the existing service. I am sure that the hon. Lady will welcome that. I am not entirely sure where she gets her figures from, but I can confirm that the capital bids put forward by family practitioner committees have been met in full.
    Mr. Ron Davies: Can the Minister tell us by what date a fully computerised system of recall will be operating in Wales?
    Mr. Robinson: That depends on the family practitioner committees. Clwyd, Dyfed, Gwent, Powys and South Glamorgan are already computerised. The completion of a computerised system for Mid and West Glamorgan is expected in 1986–87, with Gwynedd shortly after that.

    A55 (Prestatyn)
    Mr. Raffanasked the Secretary of State for Wales if he has any plans to improve access from the A55 to the town of Prestatyn; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): No, Sir. This is a matter for the local highway authority.
    Mr. Raffan: Is my hon. Friend aware of the understandable concern of Rhuddlan borough council, 26 per cent. of whose rate revenue is generated by tourism, that the improvement to the A55; which is the responsibility of the Welsh Office, will encourage tourist traffic to travel further westwards? Will he impress on Clwyd county council the need for urgency in providing easier access to Prestatyn, by bringing forward the A5151 Dyserth bypass scheme?
    Mr. Roberts: I understand that the county council is discussing with the Rhuddlan borough council the issue of improved access in Rhyl and Prestatyn. At one of its recent meetings the issue of bypasses of Rhuddlan and Dyserth was discussed. I appreciate my hon. Friend's concern about the future of tourism in that area. I am sure that the county council will note what he has said.

    Labour Statistics
    Mr. Roy Hughesasked the Secretary of State for Wales what are the latest unadjusted figures for unemployment in (a) Newport, (b) Gwent and (c) Wales; what were the equivalent figures in May 1979; and what has been the percentage increase in each case.
    Mr. Nicholas Edwards: On 9 October 1986 the total numbers of unemployed claimants in the Newport travel-to-work area, Gwent and Wales were 12,833, 28,863 and 174,105 respectively. Unadjusted figures for 1979 are not available on a comparable basis.
    Mr. Hughes: Is the Secretary of State satisfied that these figures are correct, bearing in mind the acknowledged
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    errors that have taken place in recent months in respect of both Newport constituencies and, I understand, of his own constituency of Pembroke? Will he take into account, too, the observations of Gwent county council that there have been no fewer than 17 changes since 1979 in the way the jobless statistics have been compiled? Will the Government recognise at last that the fiddling of statistics does not create new jobs?
    Mr. Edwards: I understand from the Department of Employment, which produces the statistics, that the statistics for Newport as a whole were correct, but that there was some error in the distribution between the two constituencies. I know of no error concerning my own constituency. I am sure that the hon. Gentleman will particularly welcome the recent decision by KME—Kyushu Matsushita Electric—to establish a new plant to make electric typewriters and printers in the Newport area, which will initially produce about 100 jobs, rising to over 300 jobs—another example of the positive developments that are now taking place everywhere in Wales.
    Sir Raymond Gower: As Labour Members seem to think that many of the improvements in the figures are due to new forms of statistical information, will my right hon. Friend give details of new projects which may explain some of the recent demand for jobs?
    Mr. Edwards: As a result of the system of selective financial assistance, which has been derided by Labour Members, there was an announcement only this morning of a new holiday airline in my hon. Friend's constituency, Inter European Airways, which is being set up to operate from Cardiff Rhoose airport. This project will provide 145 new jobs and is a welcome development.

    Expenditure Plans
    Mr. Livseyasked the Secretary of State for Wales how much additional expenditure in 1987–88 on roads is earmarked for Wales.
    Mr. D. E. Thomasasked the Secretary of Sta.te for Wales what changes have taken place in the expenditure plans of his Department following the autumn statement of his right hon. Friend the Chancellor of the Exchequer on 6 November; and if he will make a statement.
    Mr. Nicholas Edwards: I refer the hon. Gentlemen to table 2.3 of the autumn statement 1986. Within my public expenditure block I shall be deciding the allocation of provision to particular services and projects over the next few weeks. Announcements will be made in the normal way.
    Mr. Livsey: When will the Secretary of State bring forward proposals for a major improvement in roads in north and south Wales, providing a proper link between those areas, which is most important, and improvements to the A470 at Merthyr Tydfil at Felinfach in my constituency, where the hon. Member for Meirionnydd Nant Conwy (Mr. Thomas) recently experienced how unsafe it was, and also between Builth Wells arid Newbridge on Wye on the A470?
    Mr. Edwards: The hon. Gentleman will be aware that we are improving, and have already made substantial improvements to, the north-south route. He referred to the road to Merthyr. There is obviously another major improvement to be made past Merthyr. All the details are

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    clearly set out in the paper "Roads in Wales", which we have issued and which spells out the major road construction programme that we are undertaking in the Principality.
    Mr. Thomas: Will the Secretary of State explain to the House and to Wales his role in public expenditure rounds? It is clear that he has to receive what is handed down to him from the Treasury. Does he play any role at all in putting in bids related to the needs of Wales?
    Mr. Edwards: I note that it is apparently just my role, to accept what is handed down. I am bound to say that it did not seem quite like that during the public expenditure round, when, I can assure the hon. Gentleman, I vigorously advanced the needs of Wales. If the hon. Gentleman looks at the autumn statement he will see that Wales obtained a substantial increase of 10 per cent. over the plans for 1986–87. That is a satisfactory increase.
    Mr. Barry Jones: The right hon. Gentleman gives complacent replies. The Chancellor of the Exchequer's allocation to Wales cannot repair the damage of seven savage years. Does the right hon. Gentleman agree that his own Government's report to Brussels said that massive investment was required in the social infrastructure of Wales if we were to get new industries to come to us? For example, what will he do constructively for the island of Anglesey, where unemployment increased by 5 per cent. last year and where male unemployment now exceeds 27 per cent.?
    Mr. Edwards: Our submission to Brussels referred also to massive Government assistance to replace jobs lost in the industrial areas and major attempts to restructure Welsh industry. If I had the time and you would allow me, Mr. Speaker, I should love to read the long list of projects undertaken by the Government. We have increased, and are increasing, capital expenditure in Wales, unlike the hon. Gentleman's Government, who slashed capital expenditure after having had to run cap in hand to the 1MF.

  DUCHY OF LANCASTER

    County Palatine
    Mr. Beaumont-Darkasked the Chancellor of the Duchy of Lancaster when he next expects to visit the County Palatine.
    Mr. Roger Kingasked the Chancellor of the Duchy of Lancaster if he has any plans to visit the County Palatine.
    Mr. Michael Brownasked the Chancellor of the Duchy of Lancaster when he next intends to visit the County Palatine.
    Mr. Forthasked the Chancellor of the Duchy of Lancaster when he next plans to visit the County Palatine.
    The Chancellor of the Duchy of Lancaster (Mr. Norman Tebbit): Currently, my next visit to the County Palatine is planned for the end of March, but I hope to make a further visit earlier in the new year.
    Mr. Beaumont-Dark: I thank my right hon. Friend for that interesting answer. Has he noticed that even in the selection of candidates the Labour leadership cannot trust the local party to choose its own member and that the newest Member of the House—
    Mr. Speaker: Order. Is this question to do with the visit to the County Palatine?
    Mr. Beaumont-Dark: Yes, Mr. Speaker.
    Mr. Speaker: Then the hon. Member should put the question in order.
    Mr. Beaumont-Dark: I am asking the Chancellor to notice these things in his job, as he should do. I am asking whether he has noticed what goes on in the County Palatine, which is his responsibility. Surely it is my right, Mr. Speaker, to ask him that. I should like further to ask him whether he thinks that that unacceptable face of Socialism is acceptable to people. That surely has to be his responsibility, Sir.
    Mr. Tebbit: I hope that my hon. Friend does not expect me to be in any way partisan about these matters. During my last visit to the County Palatine a number of people asked me why the Leader of the Opposition should be so upset with the local Labour party for selecting Mr. Leslie Huckfield as its condidate. After all, Mr. Huckfield was a Labour Minister at about the time the right hon. Gentleman was refusing to support the last Government. Of course, the right hon. Gentleman enthusiastically supports the membership in this House of the hon. Members for Coventry, South-East (Mr. Nellist) and for Liverpool, Broadgreen (Mr. Fields), not to mention the candidatures of Mr. Bernie Grant and Miss Dianne Abbot. I really do not know what the fuss was about.
    Mr. Brown: When my right hon. Friend nexts visits the County Palatine, will he follow up the speech that he made during his last visit and draw a parallel with what is going on in the Labour party, not only in the County Palatine, but on the other side of the Pennines in Humberside? My right hon. Friend will notice, if he makes a similar comparison with the County Palatine, that the Labour party in Humberside, especially in Hull, is the type of Labour party that one sees in the County Palatine. Will my right hon. Friend draw that point to the attention of the people in the County Palatine when he next visits it?
    Mr. Tebbit: People know those things reasonably well. On 15 November, in the Financial Times, Mr. Keith Robinson, director of Merseyside chamber of commerce and industry, said:
    "The view of much of the business community is that more damage has been done to our image by the Labour leaders of the local authority in just three years than by decades of industrial relations problems."
    I imagine that that view is understood and heard on the other side of the Pennines, too.
    Mr. Forth: During my right hon. Friend's next visit, which I am glad he has announced he will make in the near future, will he take the opporunity to emphasise to the inhabitants of the County Palatine the dangers that would lie if they were to entrust to local government in that part of the country the sort of rule that we have recently seen with its devastating effects on employment and prosperity in that area? What solution will my right hon. Friend offer in that connection to the people of the County Palatine?
    Mr. Tebbit: The people of that area are well aware of these dangers. That is why the Leader of the Opposition was unable to trust his local Labour party to select a candidate in the recent by-election. As to the advice that

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    I should give, perhaps I should consult my right hon. Friend the chairman of the Conservative party, who will no doubt offer characteristically robust partisan advice.

    Ministerial Broadcast
    Mr. Winnickasked the Chancellor of the Duchy of Lancaster when he last made a ministerial broacast; and if he will make a statement.
    Mr. Tebbit: Never and no.
    Mr. Winnick: Considering the state of the Tory party under the right hon. Gentleman's chairmanship, that is understandable. If he were to make such a broadcast, how could he explain that his bullying attacks on the BBC apparently found no support at a recent meeting of the Conservative Home Affairs Committee, and certainly not from the public at large? Why does the right hon. Gentleman not admit that his bullying attacks on the BBC were not concerned with how the Libyan raids were reported, but that he was attempting to soften up and intimidate the broadcasting authorities in the pre-election period?
    Mr. Tebbit: What the hon. Gentleman does not understand is that it was not the Chancellor of the Duchy of Lancaster who made the complaint to the BBC. It was the chairman of the Conservative party. From my reading of the letters from the chairman of the Conservative party, I understand that he was not bullying or softening up the BBC, but that he was asking it to maintain the standards which it is required to maintain under the charter, the licence and the agreement between the BBC and Her Majesty's Government.
    Mr. Beaumont-Dark: On a point of order, Mr. Speaker. Mr. Speaker: I shall take it afterwards.
    Mr. Skinner: When the Chancellor of the Duchy of Lancaster gives a ministerial broadcast, will he explain why he made charges against the BBC regarding Libya but did not make any charges against the "World in Action" programme that specifically named him and said that Abdul Shamji had used his name and the Prime Minister's name to obtain money from Johnson Matthey bank? He could not pay it back and as a result has been described as a crook by one of the judges. If he has made no complaint about the "World in Action" programme, and as he has not sued it, can we assume that everything that came out on that programme is correct?
    Mr. Tebbit: The hon. Gentleman would not be wise to make that assumption. Just because someone lays a trail of slime, in the way the hon. Gentleman normally does, a complaint to the BBC is not required.
    Mr. Nellist: On a point of order, Mr. Speaker.
    Mr. Speaker: I will take it afterwards. I always take points of order arising out of questions after questions.

  PUBLIC ACCOUNTS COMMISSION

    Work Load
    Mr. Thurnhamasked the right hon. Member for Taunton, answering in respect of the Public Accounts Commission, if he will make a statement about the Commission's current work load.
    The Chairman of the Public Accounts Commission (Sir Edward du Cann): The Commission met eight times in 1984, five times in 1985 and three times so far in the current year. In carrying out the statutory responsibilities laid upon us by the House, I do not think that we find ourselves either over or under-employed.
    Mr. Thurnham: Has there been any trend suggesting an increase in the useful inquiries relating to value for money?
    Sir Edward du Cann: My hon. Friend has raised an important point. I am happy to confirm that the third report of the Commission endorses the aim of the Comptroller and Auditor General to devote a larger proportion of the resources available to him to economy, effectiveness and efficiency, that is to say, value-for-money audits. There have been 80 such reports since 1984, which have invariably been followed up by the Public Accounts Committee under the distinguished leadership of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon).
    Mr. Tim Smith: Does my right hon. Friend agree that the Comptroller and Auditor General and his staff are doing a first-rate job in helping the House to secure value for money in public expenditure? If he does agree, does he think that it is about time the Comptroller's salary was increased to the same level as that of the Comptroller of Audit and the head of the Government Accountancy Service, in recognition of the work that he does for the House?
    Sir Edward du Cann: I am obliged to my hon. Friend for the first part of his question. I am sure that the House is deeply appreciative of the work done for us, as guardians of the public purse, by the Comptroller and Auditor General and the devoted staff of the National Audit Office. It is obviously important to ensure that the salaries paid to these people keep pace with what is available in the private sector. Otherwise, the National Audit Office cannot recruit and retain the right quality of staff. That is a matter on which the Commission has already reported to the House. I am sorry that the Government have not yet seen fit to accept the recommendations of the Commission. I hope, in the presence of the Leader of the House, that that is a matter that will be looked at again.

    National Audit Office
    Mr. Lathamasked the right hon. Member for Taunton, answering in respect of the Public Accounts Commission, whether he will make a statement on the cost to public funds of the new headquarters of the National Audit Office; and what was the budget for this expenditure appoved by the Public Accounts Commission.
    Sir Edward du Cann: The Commission has approved the sum of £24·6 million for the purchase and refurbishment of the new National Audit Office headquarters. Although some accounts have still to be settled, the Comptroller and Auditor General expects to contain final expenditure within that budget.
    Mr. Latham: I thank my right hon. Friend for that reply. Does he agree that, above all, the Comptroller and Auditor General, as Parliament's watchdog on spending, and a very good one at that, must keep to his own budget to set a good example to other Government Departments?
    Sir Edward du Cann: I agree with what my hon. Friend has said. As a member of the Public Accounts Committee

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    he will undoubtedly have observed that the proposal for a new headquarters for the National Audit Office is something about which the Commission felt strongly. In the event, we have been able to provide it at a rental significantly less than the norm for the area—only 37 per cent. of the normal rent for the area. I am satisfied that that represents good value for money. I am also satisfied, and so is the Commission, that the work of the National Audit Office henceforward is likely to be more efficient than in the past, because we have brought together no fewer than 30 offices into a single location. That must make for effectiveness.
    Mr. Nellist: In the work of the Public Accounts Commission and the National Audit Office on Government spending, is any regard given to the work load of Departments and, in particular, of the Ministers who control the Departments? For example, has an analysis been done of the hours worked each week by the Minister occupying the position of the Duchy of Lancaster, since he seems to have so much time on his hands that, instead of controlling the work of that Department, he spends the majority of his time trying to gag the BBC?
    Sir Edward du Cann: That is more a matter for the Public Accounts Committee, if not the Prime Minister, than for me. However, in general, the hon. Gentleman has made a significant point. It struck me, as it must have struck many right hon. and hon. Members over a long period of time, that we impose such a heavy burden of day-to-day work on Ministers that it is difficult for them to attend to the strategic matters to which they should give a higher proportion of their attention.

  HOUSE OF COMMONS

    Annunciator System
    Mr. Peter Bruinvelsasked the Lord Privy Seal if he will bring forward proposals for the modernisation of the annunciator system in the House of Commons; and if he will make a statement.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): The Property Services Agency is in the process of commissioning a study of the existing cabling in the Palace of Westminster. This will assess the likely future cost and reliability of the annunciator system. The results of the study should be available to the Services Committee by about Easter next year.
    Mr. Bruinvels: I thank my right hon. Friend for that reply. However, does he not agree that Easter 1987 is a long way off and that the annunciator system in question is in urgent need of modernisation? The system needs to be brought into the computer age, so that it has the ability to update. That will prevent hon. Members such as myself being caught out if we happen to be in the Library, for example. On one occasion certain amendments to the Education Bill were moving faster than the annunciator system, with the result that the annunciator was running eight minutes behind my right hon. Friend the Secretary of State for Education and Science.
    Mr. Biffen: I recollect the robust view taken by my hon. Friend on the replacement of Members' telephones and its relevance to public expenditure. I know that he will wish
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    the same standards broadly to be applied to annunciators. However, the difficulty that he encountered could be considered as part of the survey.
    Mr. Wigley: Will the right hon. Gentleman assure the House that the people doing the survey will consider the possibility of making a sound track from the Chamber available, through the annunciators, to Members' rooms, to increase our efficiency?
    Mr. Biffen: I am not clear whether that is in the terms of reference, but I shall draw the agency's attention to the suggestion, which I know the hon. Gentleman, with his customary fairness, will agree was not universally approved.

    Publications (Public Access)
    Mr. Simsasked the Lord Privy Seal if he has any plans to review the present facilities for members of the public to have access to copies of House of Commons publications.
    Mr. Biffen: The plans for the new parliamentary building include provision for a parliamentary bookshop accessible to the general public. I have no other plans to review or modify existing arrangements, which are primarily the responsibility of Her Majesty's Stationery Office.
    Mr. Sims: Does my right hon. Friend realise how frustrating it is to members of the public not to be able to obtain copies of House of Commons documents referred to in the press? Is he aware, for example, that during the recess the Select Committee on Education, Science and Arts published an important report as the outcome of its inquiry into primary education, and I received representations from teachers in various parts of the country who had the utmost difficulty in getting hold of copies of that report? Would it not be possible for bookshops and newsagents to have, on a sale or return basis, copies of documents of that sort so that members of the general public could easily have access to them?
    Mr. Biffen: Clearly, there was a misjudgment of demand in respect of the education document to which my hon. Friend referred. I shall, of course, take note of what he has said and refer it to the Stationery Office, which has primary responsibility in those matters.
    Mr. Dubs: Does the Leader of the House agree that the prices of House of Commons documents and HMSO documents are now so high that they effectively prevent many members of the public from being able to purchase them? Does not democracy demand that we make those documents available at prices that people can afford to pay?
    Mr. Biffen: Already about £4 million is spent annually in subsidising the cost of the Official Report and certain related documents. If there is a matter that gives rise to great concern, the hon. Gentleman might inquire exactly what makes for the present cost structure.

    Chancellor of the Duchy of Lancaster
    Mr. Willie W. Hamiltonasked the Lord Privy Seal if he will take steps to increase the time devoted to questions to the Chancellor of the Duchy of Lancaster.
    Mr. Biffen: No, Sir.
    Mr. Hamilton: Does the right hon. Gentleman not think that it is quite scandalous that the Chancellor of the Duchy of Lancaster should get a very substantial salary out of the taxpayers' pocket, and yet spend most of his time harrying and bullying the BBC as chairman of the Tory party? Does the right hon. Gentleman not think it absurd that, in the light of those squalid activities, we are allowed only five minutes to question the Chancellor on those activities, with considerable periods elapsing in between each Question Time?
    Mr. Biffen: Almost certainly the hon. Gentleman has a wholly mistaken idea of what arises on public funds with regard to the pay of the Chancellor of the Duchy of Lancaster. In any case, my right hon. Friend is worth every conceivable centime of it. I come to the point of greater substance, which has some relevance to myself, which is the amount of time allowed for questions to the Chancellor of the Duchy of Lancaster. That is not the consequence of a Government decision. The matter is decided through the usual channels. However, I agree that recently the Church Commissioners had their time extended and I can think of no more noble company for my right hon. Friend the Chancellor.
    Mr. Squire: May I tentatively ask my right hon. Friend to reconsider his answer, because only last Friday we read that my right hon. Friend the Chancellor of the Duchy of Lancaster visited Merseyside business men and he must on that occasion have been questioned closely about whether a levy would be introduced for training? My right hon. Friend the Chancellor of the Duchy of Lancaster would be able from the Dispatch Box to clarify whether it was the fear of business men that the shadow spokesman for employment was telling the truth, or whether it was the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) who was telling the truth. We must want to know the answer.
    Mr. Biffen: Conundrums of that character would require days rather than minutes of the Chancellor's time. Those are matters that are determined through the usual channels, and I have no doubt that if there is real and substantial anxiety on that point we shall know more about it.
    Mr. Williams: Will the Leader of the House confirm that the Chancellor of the Duchy of Lancaster in that role receives nothing, and will he therefore confirm what he said a few moments ago in his role as Leader of the House that he thinks that what the Chancellor receives is what the Chancellor is worth?
    Mr. Biffen: There is no way of putting worth on the value and activities of my right hon. Friend.

    Palace of Westminster
    Mr. Jannerasked the Lord Privy Seal when the Services Committee last discussed maintenance and restoration work on the Palace of Westminster.
    Mr. Biffen: Maintenance and restoration work on the Palace of Westminster are the responsibility of the
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    Property Services Agency. There is regular contact between the relevant Ministers and the authorities of both Houses, including representatives of the Services Committee, on the progress of the work and the allocation of the resources that are available.
    Mr. Janner: In view of that regular contact, will the Leader of the House please tell us how long it will be before the work is finished and how much it will cost? Will he please congratulate those responsible so far on the excellence of the work that has been done?
    Mr. Biffen: I shall certainly convey to those who are concerned with the work the hon. and learned Gentleman's approbation, and I am sure that the House will concur in that. The exterior of the Palace has been immensely enhanced by that work. I cannot answer the hon. and learned Gentleman's other points, but I shall certainly bear in mind his anxiety that the work should proceed as quickly as possible. However, I must tell him that all these matters are questions of priority and I have been under understandable pressure that the major concern should be the completion of phase one, of extending the accommodation of the House.
    Sir Geoffrey Finsberg: Will my right hon. Friend accept that for many years the House has allowed the fabric of this building to fall further and further into disrepair? It was not until my right hon. Friend the Member for Henley (Mr. Heseltine) became Secretary of State that proper priority was given to the work to which the hon. arid learned Member for Leicester, West (Mr. Janner) has just referred. As the junior Minister who had responsibility, I join him in saying how well that work is being done. I hope that funds will be provided to finish the work and that this will be given priority over any extension of offices, because many of us think that that may not be necessary quite so quickly.
    Mr. Biffen: I take note of what my hon. Friend has said, but once we begin assessing the comparative urgency of either fabric or offices, there will be a lively debate.
    Mr. Boyes: As many of us now face another parliamentary year in the darkness, dampness and dankness of the Cloisters, will the Leader of the House consider restoring some of the offices not used by Members of Parliament to Members of Parliament?
    Mr. Biffen: I am very happy to consider whatever detailed points the hon. Gentleman would like to make available to me.
    Mr. Nellist: On a point of order, Mr. Speaker.
    Mr. Pike: On a point of order, Mr. Speaker.
    Mr. Speaker: There are two private notice questions o come and I usually take points of order on Question Time afterwards.
    Mr. Campbell-Savours: On a point of order, Mr. Speaker, arising out of questions.
    Mr. Speaker: I shall take the private notice questions first.

Teachers (Pay and Conditions of Service)
3.34 pm
Mr. Giles Radice(by private notice) asked the Secretary of State for Education and Science if he will make a statement on the agreement reached between the employers and the teachers unions on pay and conditions on Saturday morning.
The Secretary of State for Education and Science (Mr. Kenneth Baker): Early on Saturday morning four of the teacher unions reached an agreement on teachers' pay and conditions with the employers' representatives. Two of the unions rejected the agreement. We are considering the current draft text of the agreement against the criteria which I have already outlined twice to the House and in due time I will inform the House of the Government's decision.
Mr. Radice: Is not the real reason for the Secretary of State's short and totally inadequate response that neither he, nor the Prime Minister, nor the Cabinet as a whole expected the talks to succeed? Only last Thursday the Secretary of State was deriding the talks as a fiasco. Should he not have the grace to congratulate the local authority representatives, especially Mr. John Pearman, and the teachers' leaders, on their drive, determination and common sense, which has led to this far-reaching and comprehensive agreement?
Will the right hon. Gentleman tell his Cabinet colleagues that the agreement, for the first time, provides decent pay for classroom teachers while maintaining an adequate promotion ladder; for the first time, sets out teachers' duties; for the first time, creates a system of teachers' appraisal; for the first time, draws up a plan for reducing class size; and for the first time creates bargaining machinery which links pay and conditions?
Will the Secretary of State remind his Cabinet colleagues also that agreement, backed by unions which represent two thirds of teachers, is far more likely to stick than is, a settlement which is imposed from above? For the sake of a slightly different pay structure and a relatively small extra cost— barely £50 million over the next 18 months in Government contribution—is it worth risking all the problems and potential disruption that could result from an imposed settlement? The government should put peace in the classroom and the nation's children first, and back this agreement.
Mr. Baker: The hon. Gentleman must be aware that this agreement is not complete. A full agreement does not at this stage exist. It is a draft text and some important details, such as the duties of heads and deputy heads, remain to be finalised. I understand that a further draft will emerge during this week. I must ask the hon. Gentleman to be patient—he knows that I am a patient man. I heard only just before I came into the Chamber that the ACAS negotiations are starting again at 10.30 am this Wednesday.
Mr. J. F. Pawsey: As no general agreement has emerged after 100 hours of discussions at Nottingham, and bearing in mind the disarray in teacher unions at this stage, how optimistic is my right hon. Friend that a speedy end to the dispute will be found? What advice would he give parents whose children may again be sent home from school as a result of the dispute?
Mr. Baker: Some progress has been made, but there are major points of concern — first on cost, and especially about the shape of the pay structure. There is a considerable gulf between the proposals which I put forward and the proposals which appeared in Saturday's draft text.
Mr. Clement Freud: As the Secretary of State was so keen to move in and make conditions, and bearing in mind that the employers have gone a long way towards finding a solution that is to his taste, does the right hon. Gentlemn agree that it ill becomes him now to be less than magnanimous? Will he bear in mind that the parents of the country will think that it is he who is being unreasonable?
Mr. Baker: The hon. Gentleman also must await the outcome of the negotiations. I hope that he also will be concerned with the type of pay structure that is emerging. These negotiations are not just about the pay deal for this year or next year—they concern the pay structure that will operate for the teaching profession for the rest of the century. It is important to get a pay structure which rewards the good classroom teacher and provides real incentives for the young, able and energetic teacher.
Mr. Harry Greenway: Does my right hon. Friend accept that the whole House supports his thoughtfulness over the deal that was concluded on Saturday morning and his determination to think about it before coming to rapid conclusions, bearing in mind that for two years the negotiations have got nowhere and that the Labour party has done nothing to press for a rapid conclusion? Does he accept that schools will not run smoothly unless heads and deputy heads are properly motivated and paid, and teachers are paid proper differentials for proper responsibility? Does he agree that if everything goes on the bottom of the scale the benefit will often go to those who leave the profession early, and not to the long-term stayers, whom we so urgently need?
Mr. Baker: I very much agree with my hon. Friend. My proposals provide three promotion tiers in primary schools and five in secondary schools for classroom teachers. They mean that half the profession would be above the basic grade. In the proposals in the draft agreement reached on Saturday, the comparable figure is just one third.
Mr. Ken Eastham: Bearing in mind the statement made this afternoon by the Secretary of State, is it not obvious to the House that the right hon. Gentleman is well informed of the developments to date? Will he not tell the House how, in his opinion his proposals are better than those submitted by the management?
Mr. Baker: I have just replied to that question. On the question of the pay structure, teachers who have worked hard for promotion as good classroom teachers get only limited recognition for their effort under the proposals in the draft text. They create little incentive for a career in teaching. I ask hon. Members to reflect on which other profession has a career structure where the rewards above the basic scale are as low as 5 and 14 per cent.
Mr. Reg Prentice: Is my right hon. Friend aware that those who are concerned with the future of the education service are not engaging in merely political posturing? Will he draw a contrast between the careful, thorough, study that he is giving to the proposals this

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afternoon and the hostile knee-jerk reaction of union leaders and labour leaders on the employers' side to his recent proposals?
Mr. Baker: Yes. Within five minutes of making my proposals on 30 October the NUT and Mr. Pearman said that they would ignore them. These negotiations have lasted for seven days and will be resumed later this week. It would be quite wrong of me to react quickly to what is still only a draft text.
Mr. Guy Barnett: Does the Secretary of State accept that the leaders of the unions have spent a good deal of their time restraining the anger of their membership caused by the behaviour of his predecessor? Does he also accept that union leaders and employers have worked patiently and hard to move as far as they can towards a full agreement, and that he as Secretary of State has an unique opportunity now to co-operate with the employers and the unions to settle the dispute, which has done so much damage to our children?
Mr. Baker: I am sure that hon. Members on both sides of the House would not wish to see a return to disruption in our schools, but I remind the hon. Gentleman that the only bodies which can oppose disruption are the teachers' unions.
Mr. David Madel: Will my right hon. Friend confirm that the settlement of the dispute must include salary arrangements which stop the drift of specialist teachers into industry and start to attract people from industry back into the teaching profession where they are needed?
Mr. Baker: I agree completely with my hon. Friend. The structure of the profession, the rewards available and
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the incentives that will be available are absolutely central to the present discussions. As I have said, under my proposals half the profession would be eligible for some incentive reward, whereas under the proposals reached on Saturday only one third of the profession would he eligible. It is clear that my proposals provide a better opportunity and career for young, able and dedicated teachers.
Mr. Martin Flannery: Does the Secretary of State realise that, despite his crude intervention at a delicate stage in the negotiations, the teachers have had enough sense to try to unify themselves in a difficult situation and have finally succeeded in doing so? Does he recognise that if he is as crude as he has been in the past fortnight, it will be he who will disrupt the schools, and that the entire nation will see the matter clearly for what it is?
Mr. Baker: I really cannot be acused of crude intervention when replying to a private notice question.
Mr. Malcolm Thornton: Does my right hon. Friend agree that it is vital to ensure that there are no loose ends in the negotiations and that the discontent among teachers is laid to rest once and for all? Will he assure the House that in no circumstances will there be a recurrence of the post-Houghton situation, in which an agreement on pay was made but delivery of conditions was not?
Mr. Baker: The recognition that pay and conditions must be negotiated together is an important measure of progress. The unreality of pay being negotiated by one body and conditions by another is now behind us. I believe that there is also recognition that the Burnham machinery must go, although I appreciate that there are considerable differences of opinion about what should follow it.

Insider Dealing
3.46 pm
Mr. Robin Cook(by private notice) asked the Secretary of State for Trade and Industry if he will make a statement on the introduction of his new powers on insider dealing.
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard): On 14 November my right hon. Friend the Secretary of State made a commencement order bringing into force on 15 November those sections of the Financial Services Act which confer new powers of investigation into insider dealing offences and the related provisions on disclosure of restricted information and powers of entry.
Mr. Cook: The Opposition congratulate the Government on bringing in powers which only two weeks ago the Minister said could not be introduced until next year. Will the Minister now consider earlier implementation of the rest of the Act? Does he agree that in the light of the discovery of abuse of the new structures in the City just a week after they were set up it would be intolerable if the new Securities and Investments Board did not begin enforcing the rules until almost a year from now?
Does the Minister recognise that the case of insider dealing under investigation is an exception only inasmuch as the dealer has been detected and dismissed? Is he aware that in the past year 100 takeover bids have been preceded by an average rise in share prices of 66 per cent. as insiders have cashed in on their knowledge? Is he satisfied with the fact that of the 80 cases referred to the Department since 1981 only half a dozen have resulted in prosecution? Why do the Government not pursue fraud in the City with the same vigour as they prosecute fraud at the DHSS?
Finally, did the Minister notice that the tale of seedy speculation through broken rules in the City and tax avoidance in the Cayman Islands surfaced in the same weekend as he confirmed that manufacturing investment had fallen yet again by 6 per cent. on the preceding year? Does he agree that the City will continue to lose respect until it manages to put the same ingenuity and resources into investing in British industry as at present it can muster only for gambling with its ownership?
Mr. Howard: The remainder of the Act will be brought into force as soon as practicable. The hon. Gentleman will appreciate that it is not practicable to bring all the provisions into force immediately.
As regards those provisions that have been brought into force, the House will wish to know the sequence of events. The Stock Exchange reported to the Department the initial conclusions of its investigating committee on a particular case on the evening of Thursday 13 November. My right hon. Friend the Secretary of State implemented the legislation on Friday 14 November and appointed inspectors on Saturday 15 November. That is some indication of the Department's determination to tackle the mischief and the pernicious offence of insider dealing with all the new powers made available by the Act.
As for the City's contribution to investment in British industry, in the last year for which figures are available the City raised £6·2 billion for industry—a record of which it can be proud.
Mr. Tim Smith: Is not the difference between this case of alleged insider dealing, which has led
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to this private notice question, and all previous cases, first, that Morgan Grenfell Securities dealt with it without hesitation and, secondly, that it issued a press release so that people could know what had occurred? Does this not show that self-regulation, rather than not working, is effective, following the big bang?
Mr. Howard: I agree with my hon. Friend. If, a fortnight ago, it had been suggested that a major house would ask for the resignation of one of its most senior employees for breach of an internal rule, that suggestion would no doubt have been greeted, not least by Labour Members, with considerable scepticism. The fact that Morgan Grenfell acted in such a way demonstrates that self-regulation is working, and working well.
Mr. Robert Sheldon: Does the Minister accept that as the purchase of these shares was made only half an hour before the shares were to be increased in price, nothing could have been done to protect the identity of the person concerned? It was the crudeness of the method that led to the disclosure, and we should not expect such crudeness to be common. Are there not more sophisticated ways to hide insider dealing than this, which means that the hon. and learned Gentleman's conclusion that self-regulation is working well is unwarranted?
Mr. Howard: The right hon. Gentleman will not expect me to comment on the circumstances of the particular case, and I shall not do so.
As to the extent to which these matters are likely to come to light, I ask the right hon. Gentleman to bear in mind two aspects which will play an important role in the future. The first is the fact that as vastly more information becomes available it will become easier to identify particular patterns of dealing and movements in share prices, which will prove to be the starting point for investigations in these matters.
Secondly, sweeping and draconian powers are available to the Department under the Financial Services Act. Under these powers, those suspected of offences are to be obliged to answer questions, those answers are to be admissible in evidence, and any refusal to answer questions can lead to the persons concerned being brought before the courts and punished for contempt. We shall not hesitate to use these powers, and I have no doubt that their benefit will become visible to us all.
Mr. Kenneth Carlisle: Should not the public have absolute confidence that the Government will not stand for fraud in the City and will take resolute action against it? Does not Friday's prompt action show that this is the truth? Will my hon. and learned Friend confirm that the Government will pursue fraud in the City with all the energy and resources at their command?
Mr. Howard: Yes, Sir.
Mr. Greville Janner: How far does the lack of prosecutions result from the shortage of resources for policing, investigating and enforcing the rules, and if it is considerable, as I suspect it is, what is the Minister proposing to do about it?
Mr. Howard: By far the most significant cause of the absence of successful prosecutions in the past relates to the difficulty of proving these offences and obtaining evidence that would satisfy the demanding standards of the criminal courts. That is why new powers were taken under the

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Financial Services Act and those powers will lead to a different picture in future from that which we have seen in the past.
Mr. Richard Hickmet: Do not the reputation and position of the City as a world financial centre depend on the honesty and probity of those who operate within it? How will that position be retained if barrow-boy tactics are used in dealings? I accept that the Government have acted quickly and with great determination, but demands for a Securities and Exchange Commission may become irresistible unless the City is prepared to abandon such tactics.
Mr. Howard: I have heard with interest some calls, in the context of these recent developments, for the introduction of an SEC, but no one has yet demonstrated how the introduction of an SEC would make the slightest difference to the detection, investigation or punishment of the kind of offence that has led the Secretary of State to take the powers that are under discussion.
Mr. D. N. Campbell-Savours: What confidence does the Minister now have in the effectiveness of Chinese walls? Is it not true that the only reason why this matter surfaced was not that Morgan Grenfell was particularly good spirited, but that two firms lost $15,000, were angry and threatened to report it to other authorities?
Mr. Howard: Chinese walls have nothing whatever to do with the circumstances of this matter.
Mr. Campbell-Savours: That is what this is all about.
Mr. Howard: What is under investigation is the allegation that an employee of a concern used information for his own private purposes.
Mr. Campbell-Savours: Rubbish.
Mr. Howard: The matter that is currently under investigation has nothing to do with Chinese walls. As to the fact that the matter came to light because information was made available by firms through which the dealing was alleged to have been placed, that is indeed one of the best ways in which information relating to matters of this kind can come to the attention of the authorities.
Mr. Anthony Beaumont-Dark: Does my hon. and learned Friend suggest that it is pompous and pious nonsense to suggest that all fraud, be it in the City or in other walks of life, can ever be entirely stamped out? Will he also accept that this famous case was not discovered as the hon. Member for Workington (Mr. Campbell-Savours) suggested. When it was found out internally, it was immediately dealt with. It is important that the City should deal with its own fraud and that it should become public knowledge.
Does my hon. and learned Friend further agree that for many years the City has brought thousands of millions of pounds of trade to this country and that if the City were as corrupt as some people, for political motives, suggest, it would not enjoy the high reputation that it holds among the nations of the world? It ill befits this House to talk as though the City were all corrupt, when patently it is not. It should deal with its own fraud, but does my hon. and learned Friend agree that the City as a whole is an honest, hardworking institution?
Mr. Howard: I agree with my hon. Friend. It is as well to remember that in 1985, the last year for which full
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figures are available, the financial services sector of our economy earned for this country, £7·5 billion net, of foreign exchange. I agree with my hon. Friend that those who may be guilty of dishonourable practices are a small minority. However, that make it all the more important that those practices should be rooted out and dealt with when they come to light.
Mr. George Park: Does the Minister agree that one swallow does not make a spring and that the taking of swift action in this case does not excuse the lack of action in previous cases? Does the Minister further agree that the new circumstances in the City provide many more temptations and many more opportunities for bending and breaking the rules?
Mr. Howard: As I have already said, it was precisely because inadequate powers were available in the past that new powers were taken under the Financial Services Act. As soon as they became available, the Government used them. I do not think that any reasonable person could ask the Government to do more.
Mr. Michael Fallon: Will my hon. and learned Friend accept that many people outside London find it intolerable that such huge salaries should be so easily augmented by dishonest dealing? In view of the difficulties that my hon. and learned Friend has elucidated, I hope that he will not hesitate to come back to the House and seek further legislation if that proves to be necessary.
Mr. Howard: I have no reason to suppose that further legislation will prove to be necessary. Indeed, I have every reason to suppose that the legislation which is now on the statute book and which provides the powers that are being used will be more than adequate to achieve the purposes which I am sure the whole House desires should be achieved.
Mr. Dave Nellist: The Minister talked about the billions of pounds that come through the City by way of trade and investment. Is he aware that only £1 out of every £30 traded through the City does that, and that the other £29 represent the speculation and gambling that take place? The complaint by Mr. Collier is not so much about that taking place but that he feels that he has been singled out and caught doing something that he knows many other highly paid people in the City are doing.
When will we get from the Minister and from the ranks of his City Friends behind him the same sort of early-day motion as that put down by 29 Tory Members—the very first of this Session—calling for a limit of £150 in the DHSS benefit that any family can receive? They used the general term "scroungers". When will we get an early-day motion on scroungers in the City?
Mr. Howard: I have given the timetable pursued by my right hon. Friend the Secretary of State, and I have outlined the actions that he has taken in this matter. He has acted with vigour and expedition, and no reasonable criticism can be made of the way in which he has responded.
Mr. Alan Howarth: Does my hon. and learned Friend agree that it is an important virtue of the system of self-regulation within the statutory framework that the Government have established that it should be possible to act promptly? That is in contrast to

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what would be possible under the fully statutory, though vaguely defined, system that the Opposition advocate. Does my hon. and learned Friend agree that in the recent case it was extremely useful that Morgan Grenfell was able to enforce its own rule book, rather than having to resort to the protracted processes of the law?
Mr. Howard: I agree with my hon. Friend. As I said earlier, there is not a single respect in which it could be demonstrated that a fully statutory system could be brought to bear on the circumstances presently under discussion in a way which would be more effective than the way in which the Government are presently proceeding.
Mr. Dennis Skinner: Is the Minister aware that the public outside will never believe that the Government are intent on taking action against the City crooks until they are prepared to introduce people to supervise the system in the same way as social security is supervised? Is he also aware that Collier was detected mainly by a fluke, because he was able to name the bank to which the money had gone? If some smarter fellows in the City decided, as such people are probably doing, to make sure that nominees and a Swiss bank were used, what chance would the Minister have of finding out where the money had gone? Would he use a sequestrator, as the Government did in the case of the NUM?
Mr. Howard: The hon. Gentleman spoke about people outside. They will be a good deal more ready than he is to accept the evidence of the Government's actions as showing our determination to deal with these matters. The Financial Services Act 1986 contains powers to deal with insider dealing, even if it is perpetrated through the medium of foreign banks or foreign investment houses. We have that evil in mind as well.
Several Hon. Members rose—
Mr. Speaker: Order. We must move on. I must tell the House that we are to have a statement, followed by an important debate, and that these matters will be relevant in that debate and in the debate tomorrow.

Question Time
Mr. Anthony Beaumont-Dark: On a point of order, Mr. Speaker. I am a humble seeker after knowledge—humble with a small "h", but still humble. I do not know the rules as well as you do, Mr. Speaker, but the Order Paper says:
"Questions to the Chancellor of the Duchy of Lancaster … will begin not later than 3.10 pm."
It also says that questions about
"the Public Accounts Commission will begin not later than 3.15 pm."
The Question time for the Chancellor of the Duchy started promptly at 3.10, but two hon. Members were called after 3.15 and the Question Time for the Chancellor of the Duchy of Lancaster went on until 3.18, which is 30 per cent. longer than the time that the House lays down. What is it to be? Are we to have a flexible Question Time, which would help many of us at Prime Minister's questions, or if the rule book means anything at all, does
"will begin not later than"
mean more or less? As long as we know where we stand, either will do.
Several Hon. Members rose—
Mr. Speaker: Order. The hon. Gentleman will recollect that we had reached question No. 10 on questions to the Secretary of State for Wales, and that was linked with question No. 12. We therefore overshot Welsh questions by two minutes, and I hope the House will think it reasonable, when such overshooting occurs, that I should give "injury" time for subsequent questions. That is exactly what I did today.
Mr. Dennis Skinner: Might I on this point of order—
Mr. Speaker: If the hon. Gentleman says so.
Mr. SkinnerI am attemping to assist you, Mr. Speaker, in answering the point raised by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). Many of us noticed that Welsh questions overran, but we also noticed later that the Chancellor of the Duchy of Lancaster decided to link four questions, right down to No. 31. I think you noticed that as well, Mr. Speaker, because when he came to question No. 22 which was put by my hon. Friend the Member for Walsall, North (Mr. Winnick) he did not have the guts to link it with my question No. 26. He was prepared to link questions from Tory Members, but was not prepared to link questions higher up the list from Labour Members. It could well be, Mr. Speaker, that you spotted that, because I was able to get my question in.
Mr. Speaker: Not for the first time the hon. Gentleman is quite right: I did spot it. The Chancellor of the Duchy of Lancaster had previously intimated to me that he intended to link those two questions, but I do not think that I heard him say so, and for that reason I interpreted his mind.
Mr. David Winnick: Further to that point of order, Mr. Speaker. On a previous occasion I complained that the Chancellor of the Duchy of Lancaster answers questions about four times a year and for only five minutes at a time. The situation has been aggravated today because he deliberately ensured that a number of Conservative Members who would not normally table

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questions to him did so in order to avoid questions about the BBC. Would it not be right for you, Mr. Speaker, to rule that if a Minister has only five minutes in which to answer questions—I am not sure whether the right hon. Gentleman was speaking as the Chancellor of the Duchy of Lancaster or as the chairman of the Tory party—he would not link questions but should simply answer the first question on the Order Paper?
Mr. Speaker: The linking of questions is not a matter for me. The hon. Gentleman was called on question No. 22 and was able to make his point.
Mr Alan Williams: Further to that point of order, Mr. Speaker. I realise the difficulty of your position, but we also have a problem. As my hon. Friend the Member for Walsall, North (Mr. Winnick) said, the Chancellor of the Duchy answers questions for only five minutes every sixth week. It is an abuse of the procedures of the House and something for which we need some form of protection from the Chair when the Chancellor of the Duchy, who for weeks has been skulking away from the Chamber, afraid to come and answer questions about his activities in relation to the BBC, then comes here and chooses to link question No. 21 with question No. 24, which had little or no chance of being reached in five minutes, with question No. 30 which also had absolutely no chance, and question No. 31. He took question Nos. 21, 24, 30 and 31 to himself and linked them, even though he has only five minutes every six weeks. We must have some protection from the Chair against that.
Mr. Speaker: The House will have heard the Chancellor of the Duchy of Lancaster say that these are matters for the usual channels. The length of time for ministerial questions and the linking of questions have never been matters for the Chair.
Mr. D. N. Campbell-Savours rose—
Mr. Dave Nellist rose—
Mr. Speaker: I shall hear the hon. Member for Coventry, South-East (Mr. Nellist) first.
Mr. Nellist: Further to that point of order, Mr. Speaker. You and your Department have told me in the past that at a normal Question Time of, say, 40 to 55 minutes, the linking of questions normally takes place up to question No. 15 or about No. 23, so that questions on the same topic can be dealt with at the same time to give
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some logic and coherence to Question Time. The Chancellor of the Duchy of Lancaster can be asked questions for only five minutes, and to link question No. 21 through to question No. 31 can be seen as nothing other than an attempt to gag Opposition Members, in the same way as the right hon. Gentleman attempted to gag the BBC.
Mr. Campbell-Savours Further to that point of order, Mr. Speaker.Mr. Campbell-Savours Further to that point of order, Mr. Speaker.
Mr. Speaker: Is it on the same point?
Mr. Campbell-Savours: Yes, Sir. This is quite a serious matter. A Minister has selectively taken together questions on the Order Paper while leaving out other questions. I put it to you, Mr. Speaker, that the Chair should deprecate that. You are in a position to protect our rights and I seriously ask you to deprecate the practice of Ministers linking questions in that way, thus cutting out the right of Opposition Members to ask questions.
Mr. Peter Pike: Further to that point of order, Mr. Speaker. I rarely raise points of order, but I believe that there was an abuse of the House today by the Chancellor of the Duchy of Lancaster. As the only Member of Parliament for a constituency in the shire county of Lancashire to try to ask a question on this issue, I feel somewhat annoyed about this abuse. I know that you always try, Mr. Speaker, to protect Back Benchers' interests and that you see that as an important part of your duties. However, this afternoon the Chancellor of the Duchy of Lancaster tried deliberately to prevent Opposition Members from asking questions. If the Prime Minister applied the same logic tomorrow, she could link all the questions on the Order Paper from her hon. Friends. Although you may not have the constitutional power to do anything about such linking, you could point out strongly to the Chancellor that you frown upon that practice and that it should be discontinued.
Mr. Speaker: I repeat that I have no authority over the linking of questions by Ministers. That is a time-honoured practice. However, the whole House knows that I link questions so that those hon. Members who have questions lower down on the Order Paper that are broadly the same have some chance to ask supplementary questions. That is purely a private matter for me, because I feel that it is only fair to hon. Members, who are, after all, subject to the shuffle for Question Time.

Her Majesty's Prison, Peterhead
4.11 pm
The Secretary of State for Scotland (Mr. Malcolm Rifkind): With permission, Mr. Speaker, I wish to make a statement about the hostage incident at Her Majesty's prison, Peterhead.
The prison officer who had been held hostage in A hall since Sunday 9 November was released on Thursday 13 November at 12.10 pm. The House will be relieved to know that this major incident was brought to an end without injury to the officer involved. I commend the efforts of the governor and his staff, the police, and the members of my own Department who have worked unstintingly to secure his release. Five prisoners in need of medical attention of one kind or another were released by their colleaues from A hall on 12 November and the remaining prisoners left A hall and gave themselves up early Thursday afternoon after first setting fire to the hall. I commend also the fire and other emergency services for the assistance that they rendered during the incident. The circumstances of the incident will be a matter for the police and the procurator fiscal to investigate.
I am sorry to have to tell the House that A hall itself and its contents have been very substantially damaged by those who took part in this incident. Moreover, D hall of the prison suffered some smoke and water damage and has had to be evacuated temporarily.
The recent incidents have involved relatively few inmates. I deplore the actions of a small minority who have been responsible for wholly unnecessary and counterproductive damage to recently refurbished accommodation at a time when the Government are seeking to provide more modern facilities in Scottish prisons. As a result of the incident the previous week at Saughton prison in Edinburgh and this incident at Peterhead, those who are held in these prisons will without doubt have, as a result of their own actions, to be housed in less satisfactory accommodation. I appeal to those who are in prison not to be deluded into foolish actions by those who seek to stir up trouble and make the physical conditions under which prisoners are held less rather than more acceptable.
The Government are fully aware of the concern which has been expressed with varying degrees of responsibility about conditions and treatment of prisoners in Scotland. Her Majesty's Chief Inspector of Prisons for Scotland has been charged by me with investigating the nature, extent and validity of general grievances indicated by prisoners at Her Majesty's prison Peterhead about conditions and treatment of inmates at that establishment and to report to me on these matters, with any related observations or recommendations, as quickly as practicable.
I can assure the House that when the report of Her Majesty's Chief Inspector of Prisons has been received it will be published and made available to the House. It is not his duty to investigate allegations of criminal conduct. Any complaints are for the police and procurator fiscal to investigate. Inmates who are seen by the chief inspector will be made fully aware that they may make any complaints implying criminal conduct on the part of prison staff in writing by sealed letter to the police or procurator fiscal or may request an interview with the police if they wish to make any formal complaint.
Mr. Donald Dewar: May I first express my relief and, I am sure, that of all my right hon.
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and hon. Friends that the prison officer held hostage has been released unharmed? Everyone must be grateful for the patient and skilful efforts made by the prison service, the police and fire services to defuse a dangerous and unhappy incident.
I agree with the Secretary of State that it is important that the prison system should now have a period of stability and that any recurrence of violence or disruption would be totally counter-productive and self-defeating. I note what the right hon. Gentleman says, and that the Chief Inspector of Prisons is being asked to investigate the grievances that may or may not exist in the prison system. No hon. Member would question the chief inspector's impartiality, but it is important that the inquiry should inspire confidence both inside and outside the prison system.
Is the remit wide enough to deal with the causes of tensions that undoubtedly exist in the system? Would it not be better to appoint an independent person or committee rather than a senior civil servant, who could be seen in certain quarters as being compromised by his very position? The Secretary of State will no doubt remember that, when the tragic suicide incidents occurred at Glenochil, he appointed Dr. Derek Chiswick and his colleagues to look into the circumstances. Would that not be a sensible precedent on this occasion, so that we could have in charge of the investigation someone from outside the prison system, who is independent of it?
Will the right hon. Gentleman now consider the impact on the prison system of the changes to the parole system that were introduced about two years ago? He will remember that they were introduced retrospectively in certain cases, and that they resulted in specific categories of prisoners who were serving more than five years being excluded from the parole system except in exceptional circumstances. Does that not destroy hope and remove the incentive for good behaviour among long-term prisoners, thus greatly increasing the difficulties faced by prison officers who deal with populations such as those found in Peterhead?
In the light of what has happened, is there not a case for giving even greater weight to the Parole Board's sharp, but I am certain very considered, criticisms of the changes in the parole system? I think that they underline the points that I have made. Does the Secretary of State realise that those criticisms reflect a wider concern? The second paragraph of the Parole Board's report says:
"The general impression which emerged from the Board's discussions at establishments is of a counter-productive policy producing much bitterness and cynicism, and divorced from the spirit of parole as it was originally conceived."
Will the Secretary of State consider going back to the drawing board, particularly as the changes were introduced by the fiat of the Secretary of State and have not been properly discussed or considered in the House, or by other interested bodies? Press stories have already appeared to the effect that the plans to build a new prison at Peterhead will not be affected by recent events. But the Secretary of State must be aware that Peterhead is perceived as the big house, a tough prison that deals with hard cases. Is there not a persuasive argument to be made that we should look again at the decision to rebuild on that site? It is an unpopular site and access by families is difficult. Should we not be reassessing and reviewing the case for building in the central belt and for having a policy of dispersal rather than concentration?
Mr. Albert McQuarrie: No.
Mr. Dewar: I accept that the hon. Gentleman has a strong local interest, but the issue is the wider good of the prison system and not any local interest.
Present discontents concentrate the mind on the disappointing progress made in the aftermath of the May committee report on the role and training of prison officers. Scottish Office committees seem to have been sitting interminably. Can the right hon. Gentleman say when we shall see some results for all that effort?
Mr. Rifkind: I listened carefully to the hon. Member for Glasgow, Garscadden (Mr. Dewar). I welcome his statement that he did not wish in any way to question the impartiality of the Chief Inspector of Prisons, but it sounds somewhat odd when set against the hon. Gentleman's subsequent remarks.
He asked whether the fact that the inquiry is to be carried out by the chief inspector is acceptable and whether the report will be independent enough. I must emphasise that the inspector is completely independent and does not answer through the Prison Department. He is not a member of the Prison Department and he answers directly to the Secretary of State. If we consider the various reports that he has made since his appointment, we shall be aware that he has not been reluctant to express criticism when he has thought that to be appropriate, and when he has thought that changes in the practice of the Prison Department are justified. I can give the hon. Gentleman and the House an absolute assurance that the Chief Inspector of Prisons, in carrying out this exercise, will fall exactly within the purpose of his office, will be completely independent of the Prison Department and will report directly to me. As I have said, his report will be published and will be available to the House when it is concluded.
I remind the hon Gentleman that the reasons for the nevi parole policy stem from understandable concern about especially horrific types of murder and serious crimes of violence and drug trafficking. Early release on licence is a privilege and not an entitlement. The interests of justice and those of the community at large must be given the highest priority. As the hon. Gentleman has recognised, even within the ambit of that policy, which has been in force over the past couple of years, there can be exceptional circumstances in which a different conclusion is reached on parole. It is for the Parole Board in the first instance, when making recommendations to me, to indicate whether it believes that in particular cases there are exceptional circumstances that would justify departure from the parole policy. I believe that that is the proper course of action.
I do not believe that the geographical location of Peterhead prison can be seen at this stage to be relevant in any way to the recent difficulties that have been experienced. The suggestion that a comparable prison should be built on a site in central Scotland is a matter of legitimate public debate, but I am not aware of any evidence at this stage to suggest that that would have a material effect on the progress to which the hon. Gentleman has referred.
Continuing consideration must be given to ways of improving the prison system, but at the end of the day we shall have always to deal with a significant number of very dangerous criminals who have been convicted of appalling crimes. We must consider the safety of the public and, in
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terms of our responsibilities to prison officers, the best way of dealing with prisoners of the sort and background that I have mentioned.
Mr. McQuarrie: I am grateful for the statement by my right hon. and learned Friend the Secretary of State. It is well known that Peterhead prison is in my constituency, and during the past week I spent most of my time at the prison. I pay my tribute to the governor and his staff, and to the prison officers who have spent so many long hours at the prison looking after the interests of the inmates and carrying out their responsibilities by providing them with food, and by ensuring that many other inmates have been sustained and that the normal routines of the prison have continued. I pay tribute also to the police officers who stood around and ensured that everything went smoothly. Tribute should be paid as well to the Grampian fire brigade, which had 10 appliances at the prison under the control of the chief firemaster, Mr. Morrison. Although A hall was badly damaged, the fire brigade managed to save D hall. It was an extremely successful operation.
I commend the Scottish ambulance service for standing by with ambulances in case any help from it was needed. I do not think that we should forget the wives and families of the prison officers, who obviously were under strain during the siege. We must be fair to the media, which fairly reported the incident and spent much time at the prison.
I have some sympathy with what the hon. Member for Glasgow, Garscadden (Mr. Dewar) has said about an independent committee of inquiry, but I accept my right hon. and learned Friend's reply that the Chief Inspector of Prisons in Scotland will be independent and will make a full and comprehensive report to him which will be made public. I think that that will be acceptable to those outside this place who, like myself, have been trying to ensure an independent inquiry.
With any inquiry, and whatever the inspector may decide, it is imperative that the festering sore of the continual accusations of brutality that are directed against prison officers in my constituency is cleared up once arid for all. We cannot afford to have it continuing. Even Andrew Walker, who led the recent incident, suggested that the allegations were groundless. I agree with him wholeheartedly and I hope that my right hon. and learned Friend will give the House an assurance that when the report is published and made public he will respond to the recommendations with speed.
Finally, Mr. Speaker—
Mr. Speaker: Order. I have not yet heard the hon. Gentleman ask a question.
Mr. McQuarrie: This will be a question, Mr. Speaker.
Mr. Speaker: Very well, I shall allow the hon. Gentleman to ask a final question—well, a question.
Mr. McQuarrie: My final question is to ask whether my right hon. and learned Friend will give a categorical assurance that the new prison will start to be constructed in March 1987. It is already in the programme, and the Scottish Office has assessed the starting date as March 1987.
Mr. Rifkind: I thank my hon. Friend for his constructive contribution during the difficult circumstances of last week. I know that it was made at great personal inconvenience to himself. My hon. Friend has a

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deep and detailed interest in the problems at Peterhead, and his interest as a local hon. Member is extremely well known and much appreciated.
The inquiry by the Chief Inspector of Prisons will be completely independent and my hon. Friend will have the opportunity to study the report, as will the House as a whole. I hope that recent developments will have no effect on the long-term plans for the improvement to Peterhead. If there were ever to be any change in that respect, I would let the House know, but at the moment I have no reason to believe that there would be.
Sir Russell Johnston: Is the Secretary of State aware that the Government have been responsible now for seven years for prisons in Scotland? Therefore, it was a fairly poor comment to say that the Government are aware of complaints about prisons. Does the Secretary of State feel that, if any of the recommendations that the Chief Inspector of Prisons made to him had been acted upon, they might have helped to avert any of the incidents which have been referred to? The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to location. Is the Secretary of State aware that in practice he was talking about it often taking a full day for a person to get a half-hour visit? When the hon. Gentleman was referring to location, that is what he was talking about.
Lastly, should not the Secretary of State have said something about the contribution made by the Daily Record's correspondent in helping to effect the release of the warden?
Mr. Rifkind: One pays a welcome tribute to the journalists who were involved, and who made a constructive contribution to ensuring a peaceful conclusion of this unfortunate incident. I am happy to say that.
The hon. Gentleman implies that nothing has been done to improve conditions in Peterhead over the past six or seven years, but that is not the position. Since 1979, about £1·4 million has been spent on a major refurbishing programme at Peterhead, and all the halls except D hall, but including A hall where the recent incidents occurred, have been upgraded and improved. Toilet facilities and showers have been provided and a new utility hall for recreation and a cinema have been built. Along with other improvements, these have produced a significant enhancement of the standard of facilities provided for inmates. It is sad that the fire that certain of the prisoners initiated at the end of last week's events will put back the very significant improvements that have been made in A hall, which has been only recently refurbished.
Sir Hector Monro: May I thank my right hon. and learned Friend the Secretary of State for taking such speedy action, and for his warm support for the prison officers? Does he agree that the majority of people in Scotland are most concerned about security? Is he aware that many of the prisoners in Peterhead have committed most horrendous crimes, including murder, and should be detained there as a first priority in secure conditions, and that other improvements, while most important, are secondary to that?
Mr. Rifkind: Yes, Sir. I very much agree with my hon. Friend. The supreme obligation of the Prison Department
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and of myself as Secretary of State in this respect is to ensure that those who have been convicted of serious crimes and who are a threat to the public are kept in secure conditions to ensure that for the duration of their sentence they can no longer be a threat to the public.
Mr. Michael J. Martin: Can I inform the Secretary of State that the family of the officer who was taken as a hostage lives in my constituency? I am sure that it will give the family some comfort that the Secretary of State has praised the officer concerned.
I wish to take up what my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said about training. God forbid that we should have another case of hostage-taking, but I hope that officers are trained to try to cope with such an event. It alarmed me that every press release and all the news coverage during the siege was presented with the accompaniment of a noisy generator.
I wonder whether it is wise to have such a situation. Some sections of the media suggested that it was intended to drown the prisoners' protests. Will the Secretary of State say why, with tensions running so high and with a man's life at stake, that should have happened?
Mr. Rifkind: The physical safety of the prison officer who had been taken hostage was the supreme consideration throughout the duration of the incident. At one stage the press and the media were asked to leave the vicinity of the prison because it was felt that their presence might encourage actions that would endanger the officer's life.
I wish to pay tribute to the prison officer who, I understand, had become a qualified officer only a year or so before the incident. Clearly he had to go through what for anyone would have been an appalling and distressing experience. I am sure that we all wish to pay tribute to the way in which he maintained himself during that appalling period.
Mr. Gordon Wilson: Does the Secretary of State accept that the general sympathy of the public is more inclined towards the prison service than towards the inmates? The release of the prison officer has been greeted with great relief. Does the right hon. and learned Gentleman also agree that a balance must be drawn between discipline and motivation?
In response to the question from the hon. Member for Glasgow, Garscadden (Mr. Dewar) about the parole service, the Secretary of State said that in exceptional circumstances the Parole Board may be able to take decisions that could have an effect on the release date of a prisoner and the categories under which he was interned. Would not the right hon. and learned Gentleman do better to give back to the Parole Board its previous powers over the prison service, so that the prison service could work with prisoners who realise that their behaviour may have an effect on their ultimate release date?
Mr. Rifkind: In response to the earlier part of the hon. Gentleman's question, I must say that we all owe a great debt of gratitude to prison officers who, day after day, expose themselves to substantial potential physical risk in dealing with people whose backgrounds, in many cases, show that they are very dangerous and difficult to handle.
The hon. Gentleman's latter point referred to the Parole Board. The board does not take decisions; it makes recommendations to the Secretary of State. We have said

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that if the Parole Board in the exercise of its judgment believes there to be exceptional circumstances that would justify departure from the normal rules concerning parole, it is for the board to refer to that and explain the exceptional circumstances. If the Secretary of State agrees, the existing rules on parole would not necessarily apply. In the first instance, however, it is for the Parole Board to consider whether there are circumstances that would justify such a recommendation.
Mr. Alexander Pollock: Can my right hon. and learned Friend confirm that, irrespective of any inquiry into the prison service, there will be no prejudice in respect of any proceedings that the procurator fiscal may choose to take, after a full examination of all the circumstances, in relation to any charges that might be appropriate? Can he also confirm that there are serious sanctions available to protect prison officers in these dangerous circumstances and that they will be applied rigorously if necessary?
Mr. Rifkind: Clearly, it is for the procurator fiscal to decide whether charges are appropriate. It would not be right for me to comment on that aspect. The inquiry by the inspector of prisons will not deal with the question of criminal offences. It is important that a distinction is made between the responsibility of the inspector of prisons and the responsibility of the police and the procurator fiscal.
Dr. M. S. Miller: Although one can agree with the Secretary of State and those hon. Members who have spoken in favour of the prison officers regarding the difficulties that have occurred in Saughton and Peterhead prisons, may I ask the Secretary of State to turn his attention just a little towards the accusations made by some of the prisoners? After all, they are human beings and there may well be something of substance in their points. Will he instigate an investigation into the validity of the prisoners' complaints?
Mr. Rifkind: That is exactly the purpose of the inquiry that I have announced today. The Chief Inspector of Prisons will he available to hear specific complaints from individual prisoners. In the light of the information that he is given and the conclusions that he reaches, he will make recommendations to me, which will be published. We can then consider whether any changes in prison practice are appropriate.
Mr. Barry Henderson: In view of the remarks of the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), will my right hon. and learned Friend contrast the level of capital expenditure on prison building of this Government with that of the previous Administration under the Lib-Lab pact? Does not the incident that occurred remind us that the work of prison officers is always responsible and sometimes extremely dangerous? Will my right hon. and learned Friend confirm that, while every allegation of misconduct must be followed up most rigorously, we believe that the vast majority of prison officers give wonderful and dedicated service in most difficult conditions and times, and that, whatever the outcome of the inquiry, that should not be forgotten?
Mr. Rifkind: I am glad that my hon. Friend has drawn the attention of the House to that question. Under this Government, capital expenditure on the prison system directed to improving living conditions for prisoners and working conditions for prison officer staff has increased
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from £2·9 million in 1980–81 to £11·7 million last year, and is expected to exceed £10 million in the current year. We have made a deliberate and sustained effort to ensure that the fabric of our prison system is compatible with modern requirements.
Mr. Norman Hogg: Does the Secretary of State accept that changes in the parole system are having a damaging impact on the morale of prison officers and prisoners? If he does not accept the arguments that have been advanced at least three times this afternoon from Opposition Members, will he accept the arguments advanced forcefully by the chairman of the Scottish Parole Board? Does he accept that the time has come for a comprehensive review of how we are proceeding in these matters?
Mr. Rifkind: Hon. Members refer to the policy on parole announced by my right hon. Friend the former Secretary of State, and we must put the matter in perspective. I am informed that only about 20—that is about 5 per cent.—of lifers have committed offences of murder that were specified within the new policy. A number of individual prisoners have been sentenced to a period of 20 years or more where a formal minumum recommendation was made. We are talking about a tiny fraction of the total prison population, and that fact should be taken into account.
Mr. Robert Maclennan: In acknowledging the relief felt generally about the freeing of Prison Officer Crossan, will the Secretary of State remember what he said about the importance of grievances being aired in public? Does he not recognise that, by seeking to separate from complaints those that might lead to a criminal charge being brought, he is ensuring that complaints of criminal behaviour will not be aired in public because they will be handed to the police and the procurator fiscal? Does he further recognise that the crucial consideration that we are now having to face in Scotland is that there is a pattern of disturbance in prisons under this Conservative Administration? Independent reports are being produced, but are not being acted upon —that by Dr. Chiswick, who at the weekend said that the Government had not acted upon his report; the reports on the Long Riggend disturbances; and the recommendations of the inspector about the remand prisoners at Barlinnie.
The responsibility for these matters lies with the right hon. and learned Gentleman. The general public in Scotland is becoming increasingly anxious that the Government's penal policies are leading to intolerable stress and danger for prison officers.
Mr. Rifkind: The hon. Gentleman is exaggerating somewhat. Complaints that may involve criminal behaviour will be aired in court if they lead to prosecutions being brought by the procurator fiscal—
Mr. Maclennan: If they lead to that.
Mr. Rifkind: The hon. Gentleman says "If". Unless he is trying to impugn the judgment and impartiality of the procurator fiscals—
Mr. Maclennan: I am not.
Mr. Rifkind: We are talking either about grievances that involve alleged criminal conduct—in which case there will no doubt be a charge and the matter will be aired

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in the courts—or about matters which, even if they do not involve alleged criminal conduct, are considered as likely to lead to disturbances in the prison system. The chief inspector will examine these matters. I have already said that his report will be published. After all, these matters will be aired as completely as anyone would wish.
Mr. Michael Hirst: Does my right hon. and learned Friend agree that John Crossan, the young prison officer involved in the disturbance at Peterhead, showed considerable courage during and after his ordeal and that he epitomises the professional commitment of the Scottish prison service? However, does my right hon. and learned Friend agree that long sentences may not be conducive to good conduct by prisoners? They have no incentive to behave well, in view of the length of their sentences. What sanction and encouragement can my right hon. and learned Friend introduce to encourage better conduct, given that, for some of these prisoners, an extra year or two on their sentences is no deterrent at all?
Mr. Rifkind: My hon. Friend drew attention to one of the fundamental difficulties in any modern society. If this House determines, as it regularly has, against the reintroduction of the death penalty, in practice the only inevitable consequence is very long sentences for those convicted of particularly horrific crimes. Our society must accept that it may never be safe to release some individuals because for many years they may continue to be a potential threat to the safety of the public. I pay tribute to the prison officers, who have to cope with that situation. Indeed, they have to deal with people whom the authorities may not be able for a long period to contemplate for release from a prison establishment.
Mr. Hugh Brown: I wish to try to soften up the Secretary of State by appealing to him to agree that perhaps the House and society have not paid enough attention to penal matters and penal reform. In the light of that comment, will he be more specific about parole? Does he say that inmates will not be able to raise this matter with the chief inspector? Surely it must be self-evident that one of the causes of discontent—perhaps a minor one—is the fact that families have to travel from Glasgow to Peterhead for visits. I appeal to the Secretary of State not to make a final decision about the rebuilding of a prison on the site at Peterhead.
Mr. Rifkind: I agree with the hon. Gentleman. Society as a whole does not show sufficient interest in penal matters. Indeed, it is only when an incident of the kind that occurred last week takes place that the wider public appears to show any interest in these matters. The Chief Inspector of Prisons may take evidence on any matters that prisoners at Peterhead think are relevant to the grievances that they wish to express. Whether these grievances refer to parole or other matters, they will he completely free to draw them to the attention of the chief inspector, and he will take them into account when making his recommendations to me.
Mr. Bob McTaggart: Will the Secretary of State for Scotland reassure the House that the remit of the chief inspector will be wide-ranging enough to cover all aspects of the regime at Peterhead and its place in the overall Scottish prison system, and not just the
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effects of parole on the prison service? Will advice and help from experts outside the prison service be available to the chief inspector in the same way as it is available to his counterpart in England? Mr. Hennessey is presently helping his counterpart in England.
Mr. Rifkind: Any prisoner at Peterhead is free to draw to the attention of the chief inspector any matters that he thinks appropriate. The only qualification that I have mentioned with regard to that general entitlement is that any allegations which involve a criminal offence clearly would be matters for the police and for the procurator fiscal to consider. I have said that, in order to ensure that these matters can be looked at completely independently, if any prisoner at Peterhead wants to make allegations that might involve a criminal offence, he can put them in a sealed letter, which can be handed to the chief inspector of prisons, who will transmit them to the procurator fiscal. This will ensure that these matters are fully investigated without any fear of consequence to the individual prisoner concerned.
Mr. Tam Dalyell: The sealed letter—let me get this straight—unlike any other letter, is written without supervision. Surely the fact that a prisoner is known to be writing a sealed letter will create difficulties. Could not this lead to certain ambiguities?
Mr. Rifkind: The hon. Gentleman must try to be reasonable in his comments. We are anxious to ensure that any prisoner who has a grievance is able to ensure that these matters are properly looked into. The hon. Gentleman will appreciate that prisoners constantly write letters. If they write a letter, put it in an envelope, seal it and then hand it to the Chief Inspector of Prisons, no one other than the person who is entitled to open the letter will be aware of its contents.
Mr. Martin J. O'Neill: Will the Secretary of State accept that those of us who have prisons and, therefore, prison officers in our constituencies are relieved at the outcome of the siege and abduction? Will he also take the point that those of us who, in the past two or three years, have experienced problems within the prison service are frankly not assured by the type of inquiry that the Secretary of State envisages, not because of misgivings about the quality of the report that is likely to be produced by the Chief Inspector of Prisons but because it will be conducted in secret?
Does the right hon. and learned Gentleman also agree that there is a need for public scrutiny in this area and that, above all else, public assurance can be achieved only if reports are seen? The remit of the Chiswick report was limited, but when the committee went through the gathering of information it was subject to the public gaze. When its recommendations came out, the Chiswick report was regarded, by and large, as satisfactory because the process was carried out in public. A report by the Chief Inspector of Prisons will do little to allay the fears and worries of the community in exactly the same way as his predecessors' reports on Glenochil did little to reassure the community about the running of that institution until Chiswick reported.
Mr. Rifkind: The hon. Gentleman's comments are unreasonable. He implied that prisoners have no means, other than contact with the chief inspector, of letting their views be known. He is well aware that prisoners are free

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to write to their Members of Parliament, their legal advisers and others. Indeed, if allegations that they put to the chief inspector are thought not to have been properly considered, there are numerous ways in which a prisoner can ensure that his allegations are known to the outside world. The hon. Gentleman should appreciate that, over the years, chief inspectors—both the present one and his predecessors—have shown that they are perfectly willing to make considerable criticisms of the prison service when they believe such criticisms to be justified. They are not part of the prison service in any normal sense. They answer directly to the Secretary of State and not to prison service officials. Therefore, I believe that their independence and impartiality, which was acknowledged by the shadow Secretary of State, the hon. Member for Glasgow, Garscadden (Mr. Dewar), have been recognised.

Orders of the Day
  Debate on the Address

    FOURTH DAY
    Order read for resuming adjourned debate on Question [12 November]:
    That an humble Address be presented to Her Majesty, as follows:
    Most Gracious Sovereign,
    We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Rippon]:—
    Question again proposed.

  Local Government and Scotland
  4.47 pm
  The Secretary of State for the Environment (Mr. Nicholas Ridley): I should like, first, to congratulate the hon. Member for Copeland (Dr. Cunningham) on his reelection to the shadow Cabinet. I take it as a compliment that I have to be shadowed by two environment spokesman in the shadow Cabinet — one dealing with the Department of the Environment, and the other, according to the words of the hon. Member for South Shields (Dr. Clark) on the "World at One", with "things environmental". Government Members are entirely clear about the distinction between the responsibilities of the two hon. Gentlemen. We look forward to probing the distinction. I assure the hon. Member for Copeland that we will support him to the hilt in defending his constituents at Sellafield from any sabotage that he may suffer from the shadow Minister for "things environmental".
  I should like to help the hon. Member for Copeland more. He is a rather beleagured figure in the modern Labour party. His traditions and beliefs tend to support the analysis of Norman Stone, professor of modern history at Oxford, of what local government was once all about. In his article in the Daily Telegraph last week he said:
  "Local Government was the sort of activity that Englishmen did best. It was humdrum, small scale. It involved Committees dealing with practical problems in a practical way. It deserved the crack that the genius of England was for making drains. It was representative, 'democratic':if you prefer—but it was also cheap— reasonably humane and reasonably efficient. It used volunteers where it could and it pinched pennies with such a vengeance that up to 1900 Great Britain employed only a third of public servants that were employed in France—a sixth of the number in Germany."
  Professor Stone will regret with me, I have no doubt, that that is still not the case, hence our problems today. Local government is now a big spender. This year it accounts for £38 billion, or more than 25 per cent. of all public spending. It employs 2·25 million people, or about one in 10 of the work force. The scale of spending and the recent politicisation of its attitudes have made it a subject which comes too often before the House for consideration. Indeed, the Gracious Speech refers to two Bills dealing with local authority matters.
  For next year we have provided a total increase in national public spending of £4·7 billion, as my right hon.

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  Friend the Chancellor of the Exchequer said, but, within that total, provision for local authority spending has been increased by £4—4 billion. We have made provision for an extra £2·9 billion for current expenditure alone and are providing an extra £1 billion in aggregate Exchequer grant. It is a realistic provision, even a generous one.
  The settlement assumption for most authorities is for an increase in current spending of 5·25 per cent., against an inflation expectation of 3·75 per cent. We are told, incredibly, that that is not enough, but in our view it is more than enough. It should be perfectly possible for local authorities to restrain their spending to the level of inflation, or even below. If they did that, they would gain more grant still.
  We shall have a further opportunity to discuss next year's rate support grant settlement, but I must make it clear that some authorities which are finding difficulty with it are planning huge spending increases for 1987–88 of 7 per cent., 8 per cent. or even 10 per cent., against an expected inflation rate of 3·75 per cent. This is on top of an 8·5 per cent. increase in spending this year, when inflation was 3·25 per cent. It is local authorities not the Government which are going in for a spending spree.
  The hon. Member for Copeland says that he wants to remove all controls on local authority current spending. That is ridiculous. As an example, we hear that Southwark council is pointing the way ahead. It wants to employ another 6,000 people, as we move from a nation of shopkeepers to a nation of race and sex snoopers and informers. Far from condemning such a crazy plan, the hon. Member for Kingston upon Hull, East (Mr. Prescott) described it as
  "the best thing that has happened on the employment front for a long, long time."
  He said that local authorities are to be "engines of growth".
  Any sane Government have to recognise that the spending plans of local authorities have a significant impact on the economy. Even the last Labour Government realised that. They showered local authorities with circulars about restraining their spending. The hon. Member for Blackburn (Mr. Straw) is, we fear, learning this lesson very well as he contemplates with horror the problems being built up for ratepayers by Labour authorities which, before our 22 July deadline, took out deferred and advance purchase loans running into hundreds of millions of pounds. I doubt that the hon. Gentleman now wants to remove all controls on local authority borrowing and expenditure. I look forward to his support in the Lobby for ending advance and deferred purchase schemes when the Bill comes before the House.
  The real choice, as I shall show, is between even greater constraints on spending by local authorities and getting a system where there is accountability to those who have to pay. Some of the highest spending councils have the worst services of all. The fact is that there is a vast amount of waste and misuse of resources, especially in Labour local authorities. The district auditor said of Lambeth that there was
  "considerable scope to improve value for money without reductions in standards".
  A recent report into Hackney told a tale of
  "chronic waste, an absence of administrative standards, an apparent absence of awareness of the bare essentials of public administration."
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  To be more specific, Lambeth Walk public laundry gets a ratepayers' subsidy of £350,000 a year, or £8 a wash. There is even an authority which is still paying in its bonus system to put the collar on a horse that pulls the dustcart.
  Two weeks ago the Audit Commission published its findings, which identified about £700 million of potential savings from better management of local authorities' housing repair programmes. This is on top of more than £1 billion of savings opportunities identified in earlier Audit Commission reports. The commission recently expressed concern at the
  "evidence of waste and inefficiency in inner London in particular."
  If one authority can spend £7·30 per elderly person on meals-on-wheels, why does another authority need to spend only £1·30? If one authority spends £126 per pupil on school cleaning, why can another manage on £31?
  Even the hon. Member for Copeland, in his speech three weeks ago to the Association of Metropolitan Authorities, criticised aspects of local authority management. He spoke about
  "popular disenchantment with public services — not necessarily with the principle but with the practice".
  I assure him that I am not disenchanted with the principle of public services. I want better services, but I also want better value for money.
  There is ample scope for better services within the public spending provision that we have made, if local authorities will improve the efficiency with which they provide services. They cannot blame central Government for shortage of funds and accuse us of making cuts, when we are increasing central Government grant this coming year by 9 per cent. Is it not reasonable for the Government to insist in return on value for their money? We are even prepared to help local authorities do it. We shall introduce legislation to make them go out to competitive tender for more of the services that they provide.
  Mr. Tony Banks: Does the Secretary of State accept that the decline in rate support grant—
  The Minister for Housing, Urban Affairs and Construction (Mr. John Patten): Where is the family silver?
  Mr. Banks: It is in a very safe place. Does the right hon. Gentleman accept that the decline in rate support grant from 60 to 48 per cent., which is a significant cut by anyone's standard, is the real reason for rate increases and the decline in services? It is entirely the Government's fault.
  Mr. Ridley: The hon. Gentleman would do the House a service if he told us what he has done with the family silver. I can give him a very good answer to his question. [Interruption.] I was talking about next year, 1987–88. The hon. Gentleman knows perfectly well that the percentage of local authority spending which is covered by grant remains the same at 46·4 per cent., so that is not a conceivable reason for an increase above the 5·25 per cent. increase which was allowed for.
  The Labour party always dodges the important question of the scale of savings that can be achieved. During the passage of the Transport Bill the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) kept telling us that. I am sorry that she is not in her place. Indeed, I am extremely sorry that she is not on the Opposition Front Bench any more. What has the Labour party done to her?

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  It gets a good Front-Bench spokesman and then gets rid of her. She went on and on telling us that no savings could be made. Public sector monopoly transport operators were efficient, she said. There were no savings to he made, and there would be cuts in services. This year, Lancashire, with no "cuts" in services, is saving 70 per cent. of its subsidy for bus services — nearly £6 million a year. I ask my hon. Friend the Member for Lancashire, West (Mr. Hind) whether that is right. Surrey is saving £2 million — 50 per cent. of its former subsidy. Where refuse collection contracts have been contracted out, it has been the councils' experience that they have achieved 20 to 30 per cent. savings on previous cost levels. The Opposition's determination to confuse efficiency savings and cuts has been well and truly rumbled.
  Nor is insisting on value for money by local authorities an attack upon them. Why should residents in Labour-controlled Lambeth or Southwark not enjoy the same good standards of service at a similar cost as those in Tory-controlled Wandsworth? Why should local authorities not be condemned for supporting gross inefficiency because of outrageous union restrictive practices with other people's money? The standard of local services that a local authority provides is, and will continue to be, a matter for local discretion, but do not local people have the right to expect local services to be run as well and as efficiently as possible?
  Mr. Allan Roberts: The Minister mentioned the efficient money-saving services of Wandsworth. Does he condone law-breaking by the private firm of refuse collectors employed by Wandsworth which allocates two people per refuse wagon, who leave the wagons running and unattended? Does the Minister not recognise that when Tory-controlled Sefton council examined those services when it was considering privatisation it was so horrified that, although it was a Tory authority, it deferred privatisation?
  Mr. Ridley: The hon. Gentleman is unaware that the provision of services in Wandsworth is superior to that in nearby identical Lambeth, where the cost to the ratepayers is double. Lambeth's budget is double that of Wandsworth.
  The vested interests of the public sector unions are not the same as public service. The hon. Member for Copeland knows that, but he is in hock to the unions. We seek only fair competition between the public and the private sector in the provision of services. If council staff can offer the better and cheaper service in fair competition with the private sector, they should get the contract. What is so unreasonable about that? It is no different from the choice that people make when they go to their local grocer. Is it unreasonable to choose a brand of soap powder in preference to another because it is cheaper and better value for money? Of course it is not.
  In his famous speech to the AMA the hon. Member for Copeland said:
  "I want better quality, more effectiveness, greater rigour in the use of resources and increased value for money."
  I agree, and we will expect the hon. Gentleman's support when we legislate to achieve that.
  The legislation will also outlaw the growing practice by Labour local authorities of putting into their contracts political conditions which have nothing to do with their duty to provide efficient services for ratepayers. We will restrain councils which insist that contractors should not
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  have trading links with South Africa, or have worked under contract with the Ministry of Defence, or made contributions to the Conservative party, or to the Labour party for that matter. There is nothing illegal about any of those activities. The hypocrisy of the Labour councils which practise those policies is staggering. Many of those councils are happy to borrow hundreds of millions of pounds from foreign banks under advance or deferred purchase schemes, although those banks may have arms interests and have probably far heavier dealings with South Africa than any of the: contractors who might be employed. The strictures against that sort of thing do not apply to banks, because, of course, they supply the Labour councils with the money which they need to squander week after week.
  Mr. Tony Banks: Is not the hypocrisy that of the Government? Although they say that they deplore apartheid, they will do nothing about it in tenns of sanctions, but when a local authority wishes to do something they step in with the big boot and say that the local authority should not do it. The hypocrisy is that of the Government, not of the local authorities.
  Mr. Ridley: That is very strange. Does the hon. Gentleman enthusiastically support the Russian occupation of Afghanistan? What does he intend to do about that? He believes that something that he does not like should be put into the conditions of contract. When it is something that I do not like, he does not share that view.
  Mr. Richard Holt: On the question of hypocrisy by local authorities, I should tell the House that Cleveland county council did not refuse to accept rates from Boulby mine in my constituency, which is owned by a South African company and employs 2,000 people.
  Mr. Ridley: I am interested to hear what my hon. Friend says, but I suspect, as I made clear, that the receipt of money from any possible source is more important than any principle that the Labour party might consider that it still has. The lack of efficiency is but one aspect of a wider issue—the lack of accountability.
  Mr. Jack Straw: Will the Secretary of State confirm that nothing in the proposed legislation will undermine an authority's right to take action to ensure that section 71 of the Race Relations Act 1976 is followed by contractors?
  Mr. Ridley: I give the assurance that anything that is statutorily required or arises out of a code of conduct approved by the House will not be caught by the legislation.
  Mr. Allan Roberts: Does that apply to health and safety regulations for building contractors?
  Mr. Ridley: I answered that question clearly. The legislation will not apply to anything that is in a statute or in a code of practice approved by the House.
  The hon. Member for Copeland understands our problem. During the summer he said that there was
  "a strong case for broadening the local government revenue raising base."
  He has been warned off that. Now he says that his solution is a system of rates based on capital values and "possibly" an extra local income tax on top. I hope that he has told ratepayers in London and the south-east about that. I also hope that he has told the Leader of the Opposition, whose house has increased in value, we hear, by £30,000 in the

  337
  last year. He lives in the high-spending Labour borough of Ealing, which is alleged to be planning a rate increase of 30 per cent.
  I suspect that the Leader of the Opposition falls within the category of the "super rich" as defined by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). I assure the Leader of the Opposition that we can save him from the appalling taxation planned by Opposition Front-Bench Members, not only by winning the next election, but by abolishing the rates. A system based on capital value rates and local income tax on top would be infinitely more unfair and more costly than the present system of rateable values and would be a recipe for continuing conflict with central Government, and probably even for revolution among the ratepayers.
  Mr. Simon Hughes rose—
  Mr. Ridley: No, I shall not give way. I must get on.
  True financial accountability is the only way to solve the problems with local authority expenditure. Effective accountability must be the cornerstone of effective local government. The present rating system does not provide local accountability and it is unfair. It leaves too great a gap between those who vote for and those who pay for local authority spending. Until there is a system in which it is in the voters' interests to care about the level of services and their cost, the conflict between local authorities' spending and the need for central Government to control public spending to sustain economic growth will continue. The programme announced in the Gracious Speech is necessary until that accountability is restored.
  We have proposed a new community charge. It will be much more accountable. After receiving Government grant and their share of the unified business rate, councils' extra spending will have to be paid for pound for pound by the community charge they raise. It will also be fairer. The principle behind the new system will be that, for a given level of service, people should pay the same bill. Rateable values do not reflect what people can afford to pay. I can only tell the Opposition that many of my hon. Friends are asking me to introduce a Bill for England and Wales tomorrow. Their constituents are deeply unhappy with the present system. I have to tell them that a Bill for England and Wales will be in the first Queen's Speech after the election. My right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) will talk about our proposals for Scotland later, in his speech. Alas, he will be able to bring those proposals to the people of Scotland a short while before we will be able to bring them to England and Wales.
  The hon. Member for Copeland keeps talking about an alleged attack by the Government on local government. Independent commentators seem to see the matter differently. They do not think that it is the Government who are attacking local democracy. No, the attack comes from the Labour party. Every day's papers—I assume that the hon. Gentleman reads at least those papers which his friends in local government allow him to by not banning them from the library—contain new horrors. Town halls founded on civic dignity have become an arena for aggressive political posing, disruption, wild accusations, threats and fear.
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  The agenda of the last full meeting of Lambeth council includes the following selection of items to be discussed. My hon. Friends will laugh at this until they realise how awful it is.
  Item:
  "Petition against the attendance of male councillors at meetings of the Women's Rights Committee".
  Item:
  "Address by the National Union of Eritrean Women".
  Item:
  "Disbandment of Aberdeen Women's Committee".
  Item:
  "Address by Sinn Fein Councillors".
  Item:
  "Lesbians and Policing".
  No wonder the services in Lambeth are in such a mess.
  Yes, there is an attack on local government. It is vicious, it is frightening and it is deliberate. It is an attack by the Labour party—and that includes the Labour Front Bench—on everything that local government has ever stood for. Surely nobody can fail to be aware of that fact. The activities of Brent council have been well publicised, but they are not by any means an isolated case. I tell the hon. Member for Copeland that I know that people living and working under these Labour councils live in fear. Mrs. McGoldrick may have been reinstated to her school, but other teachers are scared. The education director in Brent has resigned because he said
  "Although I'm anti-racist, I couldn't discuss issues without being misrepresented".
  They think that they are being watched by spies. They are afraid that chance remarks might lose them their jobs and their livelihood, on the ground of racism.
  I am not joking. I have some minutes of an anti-racism group which meets in Brent. I shall quote a passage from it. — [Interruption.] Labour Members should listen to this:
  "It should be up to a white worker accused of racism to disprove the allegations."
  Whatever happened to the principle that people are innocent until proved guilty? That is the Labour party in power. It is the present Labour party in power, and it stinks. The hon. Member for Copeland knows that it stinks, but he does not even have the guts to condemn it. He sits there sniggering.
  In Haringey, parents are genuinely scared by the homosexual propaganda being fed to their children. When parents protested to the Haringey gay and lesbian subcommittee at the council's plans to have a gay teacher in every school, the "chair" of the committee, we are told
  "just smiled and said it would be good for our kids."
  Mr. Straw: If those authorities are as bad as the Secretary of State alleges, why were they all re-elected in May with increased majorities by white electors as well as black?
  Mr. Ridley: The hon. Gentleman knows very well that in some of those authorities only 20 per cent. of those who have votes have to pay rates. By those remarks, is the hon. Gentleman saying that he supports what is going on? The hon. Gentleman is conniving at it. I have not had one intervention from the Opposition expressing disapproval or rejection of the events.
  Mr. Conal Gregory: It is a noticeable omission that my right hon. Friend did not mention the fact that the spider's web of Socialism is not only creeping into London but is proselytising itself throughout the land. Therefore,

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  we have ex-Camden councillors going to spread the myth of:Left-wing extremism in Nottingham, Leicester and throughout the country. One of the messages from the House tonight is that that is not confined to the madness of London, but is found throughout the country and we must expose it. I should like my right hon. Friend to consider banning the aspect of an officer also being an elected councillor. We have stopped that in one authority, but it is simply being moved to another. Is it not time for officers to become professional?
  Mr. Ridley: We will consider that in the context of the Widdicombe report. I agree with my hon. Friend. It is like dry rot spreading throughout the edifice. What is more, it has reached the top. That is what the Labour party stands for. That is what the Labour party would do if it got into power.
  I am told that people dare not speak out for fear of what might happen to them and their families. Perhaps they cannot really believe that it is happening in England in the 1980s—in a democracy. It is more like Poland or East Germany: the knock on the door in the middle of the night. It is totalitarian, it is intolerant, it is anti-democratic and it employs fear to control people.
  Mr. Holt: I can reinforce the remarks of my hon. Friend the Member for York (Mr. Gregory) by saying that in Middlesbrough this year's mayor has been deselected by the Labour party. One cannot say much more, because the matter has gone to the High Court.
  Mr. Ridley: That matter may be sub judice and I should not comment.
  I am frightened that the Labour party has got so rotten that it is no wonder that it has nothing to say about what is happening under its own nose. It likes to pretend that expelling a few Militants on Merseyside has rid it of this cancer in its own party. When is it going to expel the Labour members of Brent, Haringey, Hackney, Lambeth, Southwark, Manchester, Bristol—the list goes on and on — because they are just as bad? I am frightened because the hon. Member for Copeland knows that if a Labour Government were ever elected the majority of his hon. Friends sitting behind him would be the same sort of people as we are seeing in local government now, and he is in hock to them already.
  Look at what the hon. Gentleman has said he will do. Why, for example, would he abolish the power of surcharge, the only defence for the ratepayer against the gross abuse of power by councillors? Why would he take off all controls on current spending? Why is he telling local authorities to plan to recruit hundreds of thousands of researchers, co-ordinators, central planners, race relations advisers and the like? Why on earth would he give local authorities a general power of competence to enable them to do anything that is not illegal or expressly ruled out by law?
  The answer to those questions is that he has already given in to the sinister powers which now control the present Labour party. No amount of rose-tinted public relations can dispel the stink emanating from the Labour town halls. For us the reform of the rates and the return to accountability will achieve both financial control and an end to the stranglehold of the town hall despots. In Labour local government, as we heard in Hackney, the
  "unthinkable has become the habit".
  We intend to ensure that the unthinkable becomes the impossible.
  5.18 pm
  Dr. John Cunningham: Predictably and regrettably the Government apparently intend to complete their second term of office as they began seven years ago, by launching further attacks on local government, local freedom of judgment and local democratic accountability. We have just seen clearly demonstrated the reason why the Secretary of State was one of the few, if not the only Cabinet Minister, who failed to get an obligatory standing ovation at the Tory party conference.
  Mr. Holt: Cheap.
  Dr. Cunningham: Cheap indeed. The cheapness of the Secretary of State's remarks is matched only by the cheapness of his attitude throughout his speech and the cheapness of his thoughts. Indeed, his cheapness matches his approach to local government — cheapness for its own sake.
  The Gracious Speech envisages yet more central control of local government — further dogmatic Whitehall dominance — in Bills to impose statutory competitive tendering, a poll tax and a uniform business rate. Again, this most dogmatic of Governments are to impose their will on local democracy, not only indifferent to their own abysmal failures of the past seven years but against all the advice, evidence and arguments not just from every local government associaton in Britain but from academic studies — studies by the Chartered Institute of Public Finance and Accountancy, the Institute of Fiscal Studies and even many of their own local government supporters.
  Like his predecessors, the present Secretary of State refuses to provide Parliament with any evidence. Responses to the Green Papers on privatisation of services and the poll tax are buried in the Department of the Environment because the right hon. Gentleman is ashamed of the almost total lack of support for Government policies. Since he had a lot to say about Labour in local government, let me remind him and his hon. Friends that for the first time in history Labour controls more local authorities in Britain than the Conservative party. As a result of the debacle in local government that he and his right hon. Friends engineered for themselves, the Tories have been humiliated in successive local government elections. Since the right hon. Gentleman has chosen cheaply to attack people who are not here to defend themselves, just let me remind him and the House—[Interruption.] It is easy to attack people who are not here, but apparently it is not acceptable to have responses to the nasty attacks that the right hon. Gentleman made. That is unacceptable, apparently, to Conservatives, but it is all right to attack people who are not even present in the Chamber. That is an example of the cowardice that the Tory Government demonstrate again and again.
  The Secretary of State should recognise that Labour has over 9,000 councillors in Great Britain. He is talking about fewer than 0·1 of 1 per cent. of all of them and drawing conclusions. As he has totally misrepresented my position and that of my right hon. Friend the Leader of the Opposition and my hon. Friend the Member for Durham, North (Mr. Radice) in respect of what happened recently in Brent with Mrs. McGoldrick and earlier with remarks following the Broadwater Farm disturbances, let me remind him of the truth. In those circumstances, my right hon. Friend the Leader of the Labour party, my hon.

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  Friend the shadow Secretary of State for Education and Science and I have made our views absolutely and abundantly clear. It is a complete fabrication for the Secretary of State to suggest otherwise, and I suspect that he knows it.
  Mr. John Maples: The hon. Gentleman is right that he and the leader of the Labour party have condemned two outstandingly appalling examples, but the fact is that there are other examples, happening the whole time all over London. Will the hon. Gentleman condemn just one in Lewisham, in my constituency? It is the continued banning of The Times and other News International newspapers from public libraries in pursuit of a political dispute to which the council is not even a party. Is not that straight censorship? Will the hon. Gentleman condemn that, or does he approve of censorship by Labour local authorities?
  Dr. Cunningham: Personally, I do not approve of those decisions, but nor do I approve of people in the House condemning those responsible for local authority management and government, and the continual interference of the sort that the hon. Gentleman is encouraging his right hon. Friend the Secretary of State to pursue on those matters. They are matters between the elected councillors and the communities that they represent.
  Mr. Ridley: The hon. Gentleman said that he did not approve of the banning of those newspapers—
  Dr. Cunningham: Censorship.
  Mr. Ridley: —the censorship of those newspapers personally. Does that mean that the Labour party as a whole approves of the banning of those newspapers, but he dissents from that? If that is not so, will the hon. Gentleman say, in his official position as spokesman for the environment, that he, on behalf of the Labour party, condemns what is happening in those libraries?
  Dr. Cunningham: I have made it absolutely clear — clearly, the right hon. Gentleman was not listening or did not choose to hear—that those are matters between the local authorities and the communities that elected them. People are answerable through the ballot box. The trouble with Conservative Members is that, having been defeated consistently at the ballot box in local government elections, they now choose to seek to override the decisions of democratically elected local authorities again and again. We shall have no part in that approach to local government.
  A Tory Government of such appalling intellectual cowardice as this one have no right to criticise local government for lack of openness, especially since local government is already far more open in the conduct of its business than Whitehall. That is yet another example in a long list of reasons—
  Mr. Holt: Will the hon. Gentleman give way?
  Dr. Cunningham: —why Parliament and the country need a freedom of information Act.
  Mr. Holt: Will the hon. Gentleman give way?
  Dr. Cunningham: I shall not give way.
  Mr. Holt: What is the hon. Gentleman afraid of?
  Dr. Cunnigham: Like trade unions, unemployed and poor people, local government and councillors have become a favourite target—
  Mr. Holt: Will the hon. Gentleman give way?
  Dr. Cunningham: —for ministerial misrepresentation and abuse. Like his predecessors—
  Mr. Holt rose—
  Dr. Cunningham: No, I shall not give way.
  Like his predecessors, the present Secretary of State blames the Tory electoral debacle in local elections on poor people, the unemployed and disadvantaged in our communities. The Minister of State apparently blames it most of all on single-parent families. Tory Ministers bemoan the fact that increasingly the Tory party is beaten in local elections—driven out of office in the cities and towns, humiliated in the metropolitan and shire county council elections alike—yet the same Ministers continue to attack poor, unemployed and black people. A poll tax will further and deliberately hit hardest those very people by enforcing payment of the tax on those now in receipt of rate rebates.
  The Government have evidently learnt no lessons from the failure of local government policies over the past seven years. They demonstrate stubborn indifference to the mounting problems of the inadequacy or absence of decent local services in inner cities and rural areas alike.
  Mr. John Heddle: Will the hon. Gentleman give way?
  Dr. Cunningham: Indeed, we observed again last Wednesday the Prime Minister practising the deception that financial failures in local government policy were nothing to do with her. In the debate on the Address on 12 November, she said:
  "The present system is unfair. It is unfair on domestic ratepayers … The rate support grant system has become so complicated".—[Official Report. 12 November 1986; Vol. 105, c. 19.]
  The right hon. Lady said that with a sort of detachment, almost denying any responsibility for the circumstances. The present system results from the Government's policies over seven years. The rate support grant system was created by the right hon. Lady and her Ministers. The fact that domestic rates have trebled in that period is a direct result of the persistent reductions in rate support grant. It is all very well for the Prime Minister to try to create the impression that somehow that unfairness, that complication, is nothing to do with her, but it is everything to do with her. It results from her deliberate policies and actions.
  Mr. Barry Henderson: The hon. Gentleman will recall that the Green Paper on the reform of the rating system addresses that sort of problem and makes proposals for simpler central Government support for local government. If the Labour party opposes much of the rating reform, as we have been told by the hon. Member for Glasgow, Garscadden (Mr. Dewar), will it at least support those reforms?
  Dr. Cunningham: I shall come to that later.
  The current system, with its manifest inadequacies and failures, has been erected by the Government against the evidence and in spite of the opposition of virtually everyone in local government, regardless of party. The Government can blame no one but themselves for the prevailing circumstances and climate in local government,

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  and they know it. Now they intend to embark on further changes, again against all the overwhelming evidence and advice available to them. The present Secretary of State, the fifth incumbent in only seven years, has brought his own idiosyncratic, even whimsical, touch to those problems. In August the Secretary of State wrote to Tory councillors. I have a copy of his letter in which he said:
  "We have reached a sort of crossroads, either the electorate.A.will have to control local government, or central Government will."
  The implication is abundantly clear. If people continue to vote Labour in local elections, their decisions — their votes — will be overruled by a Tory Government at Westminster—so long as they last. Local democracy is again explicitly denied in the right hon. Gentleman's letter.
  In speaking of the rate support grant for the coming financial year, the Secretary of State implied that he had better news. However, we now know that he has not only increased penalties on local authorities but announced an end to grant recycling which could well reduce his claim of an extra El billion being available by something like 66 per cent. That decision also reverses, within one year, the announcement by the present Secretary of State for Education and Science, who made so much of grant recycling as a means of helping low-spending Tory shire counties, among the worst hit by the Government's systematic reductions of the rate support grant.
  That piece of political chicanery was apparently too much even for the right hon. Member for Wanstead and Woodford (Mr. Jenkin), the originator of the oft-repeated Government promises to help low-spending Tory councils. We now read that the right hon. Gentleman has become a most unlikely champion of the local authorities and that he is leading a campaign for more grant through recycling.
  The Secretary of State for the Environment made a plaintive appeal in his letter for
  "an end to public bickering"
  in the Tory party over local government policy. He apparently forgot to send a copy to his right hon. Friend the Member for Wanstead and Woodford. The Secretary of State, like the Chancellor, has now made a virtue of the necessity to face reality by acknowledging the level of local government expenditure. However, just as we thought he was about to resign his life membership of the Flat Earth Society, he paid his dues in a speech at the Carlton club. He said:
  "Many Tory councils and councillors feel there is no alternative but to pay the nationally negotiated wage increases for their staff. They are fearing in their heart of hearts that wage bills will push up their spending more than the rate of inflation. They will say that they didn't agree the wage offers—for local authority manuals it is 6·7%. But I must say that the Government did not agree these wage increases either. So who did? It is intollerable that both the Government and councillors should be at the mercy of some deus-ex-machina who dictates how much has to be taken from taxpayers and ratepayers to keep the services going."
  The Secretary of State suggested two answers. He said:
  "Payroll is numbers of staff times rates of pay. Local authorities control the numbers they employ. Secondly, they don't have to pay the agreed rates. It is open to local authorities to opt out of national agreements and to pay their staff what they can afford. So any local authority that wants to can take control of its payroll costs— and I strongly advise them to do so."
  I ask the Secretary of State to make it clear to the House and to the 2·3 million people employed in local government to whom he referred earlier whether he stands by that statement. Does the right hon. Gentleman still advise Tory councils to renege on national wage and salary
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  agreements? Will he say which particular agreements he has in mind? I shall give way to the Secretary of State, and perhaps he will tell the House whether he stands by his comments.
  Mr. Ridley: I stand by every word of it. However, nothing that I said and nothing that the hon. Gentleman quoted suggested that existing agreements should be broken.
  Dr. Cunningham: They are existing agreements.
  Mr. Ridley: Yes, but they can be renegotiated in the future. We are discussing 1987–88 and there is no reason whatsoever why local authorities should not gain control of their own staff costs for that year.
  Dr. Cunningham: In that case, will the right hon. Gentleman tell the House and the teachers whether he expects local education authorities to honour the teachers' agreement? [HON. MEMBERS: "Come on!"] The right hon. Gentleman seems to have had a sudden loss of voice or heart. We now know exactly how hollow those words at the Carlton club were.
  The Secretary of State has taken up his office where his predecessors left off — with contradictory changes, reneging on promises and attacking local authority freedoms. His aims apparently include keeping down rates by tearing up national wage agreements and by keeping the low paid low paid.
  Was it an oversight or a lack of courtesy that prevented the Secretary of State from keeping the promise made by his predecessor to address this year's Association of Metropolitan Authorities' annual conference? The right hon. Gentleman talked about guts earlier in his speech. Was it not just lack of guts on his part that made him the first Secretary of State in over a decade to fail to attend the AMA annual conference to defend the Government's policies?
  The Secretary of State, the architect, or should I say the engineer, of bus deregulation, the current chaos and confusion of which has already massively undermined public transport services, described Government intentions to coach operators by saying:
  "You will now be able to run your business without the constraints of a social conscience."
  The Secretary of State plans the same for local authority services by enforcing privatisation. As the right hon. Gentleman said, there are legitimate and important arguments for improving the efficiency and quality ol local government service provision, including the widening of choice for the consumers.
  However, too often the Government confuse cheapness with efficiency, wrongly equating the lowest cost with value for money. The Audit Commission has a significant role to play in this regard, as have the local authority associations and central Government. More effective use of public money, more reliable and more efficient services cannot be advanced on the basis of cheapness for its own sake.
  The extension of statutory compulsion of tendering is at best an irrelevance to these issues, and at worst, this further major extension of central control will undermine not only services but decent employment conditions arid create additional unemployment. The Labour party adamantly opposes such proposals. Enough is already known about privatisation in local government and the Health Service fully to justify that position. Privatisation

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  is anti-trade union in intent and often results in the exploitation of workers, especially women, black people and people from ethnic minorities.
  The Conservative leader of the Association of District Councils has spelled out his, and his members', total opposition to the Government's plans. The Tory-controlled ADC has surveyed its members but concluded that there is no clear evidence to support Government policy.
  Astonishingly, the Secretary of State for the Environment's own Department wrote to the ADC, saying:
  "Further research into the costs and benefits of competition was not considered a vital preliminary to legislation."
  In effect, the right hon. Gentleman is saying "Do not give us the evidence, we are going to legislate anyway." Indeed, the ADC study showed that existing legislation on tendering, the Local Government Planning and Land Act 1980, had increased costs to councils and not reduced them.
  The Hay-MSL management consultancy study concluded:
  "Whilst not all council services were well managed, there is no evidence whatsoever that the private sector can provide services at the cost and service time required better than well managed in-house local authority services."
  The very basis of the Government's position —competition as a positive and beneficial influence—is not borne out by experience to date.
  The NHS and local government market is in any event dominated by the two big groups—BET and Hawley—which control at least 20 subsidiaries between them, taking up to 62 per cent. of all contracts in the Civil Service, Health Service and local government. That is hardly competition.
  Contract failures are numerous and frequent because tenders are not won on efficiency but as loss leaders, often based on cutting jobs, pay and conditions. Complaints about poor standards are widespread — dirty schools, lack of proper hygiene in hospitals, ill-kempt offices. Fines and penalties are no substitute for the systematic week-in, week-out provision of effective, efficient local government services. Those problems directly undermine councils' accountability to their communities and are an additional and unnecessary burden on local administration.
  If significant savings are possible, Ministers should ask themselves why so few, even of their own political colleagues in local government, have not voluntarily adopted these policies, as they are free to do at any time. About 25 councils in all have adopted privatisation of refuse collection in six years. There is no evidence of any significant savings either to them or to central Government as a result.
  Like his predecessors, the Secretary of State is already blaming councils for the fact that average domestic rates bills have trebled since 1979. The systematic withdrawal of grant — a deliberate act of Government policy — is the biggest single reason for those enormous increases. The Government have consistently switched burdens from high income taxpayers to the ratepayers.
  A letter that I received about two years ago on the subject said:
  "As you know, there has also been a long and careful study of possible alternatives to domestic rates, including public
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  consultation on a detailed Green Paper. If an alternative had existed we would have found it and implemented it; but it became clear that there was no consensus for change, nor any alternative which—looked at overall—was better than the rating system. That is why we concluded that the rating system should remain for the foreseeable future the main source of local government income."
  The address on that letter is 10 Downing street; the signatory, the Prime Minister.
  In the current year domestic rates have risen on average by 15·2 per cent. and business rates by 13·3 per cent. Now, in a desperate attempt to redeem a reckless promise by the Prime Minister to abolish rates altogether, the Government propose a medieval poll tax. What a performance. Abolish rates? Rates have trebled in seven years. That is a tax unrelated to a person's ability to pay, but related to his ability to vote. Research has been unable to discover a single example of the use of such a tax by any other western industrial democracy. On the contrary, a property-based tax is the normal means of local government revenue-raising powers and we believe should remain so in Britain.
  The poll tax proposal has been greeted by a combination of almost universal condemnation and derision from politicians of all parties, administrators, academics, accountants and surveyors. It will be a nightmare to administer and enforcement will be impossible.
  Mr. Ridley: Has the hon. Gentleman yet made up his mind whether, in addition to a capital value-based rating system, he will have a local income tax? When will he be telling the electorate his decision on that?
  Dr. Cunningham: If the Government provide a day, we shall debate Labour party policy with enthusiasm. But let me say, since he has now raised the matter at least three times, at no time have I suggested that we should have a local income tax. I have said that many people in local government want such a tax considered, but there is no commitment, nor have I ever suggested one, on behalf of the Labour party.
  Mr. Ridley rose—
  Dr. Cunningham: No, I am not giving way.
  Mr. Ridley rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. The hon. Gentleman said that he is not giving way.
  Dr. Cunningham: I have a question to put to the right hon. Gentleman myself.
  Mrs. Elaine Kellett-Bowman: The hon. Gentleman is embarrassed.
  Dr. Cunningham: We shall see about embarrassment in a minute.
  I wrote to the right hon. Gentleman on 28 October about the proposals in the Green Paper and the speech of the Secretary of State for Scotland at the Conservative party conference. I have had no reply. The Green Paper, "Paying for Local Government", makes it clear that most single young adults who qualified for unemployment benefit would not qualify for rebates under the poll tax system. Speaking, in his famous way, without a script at Bournemouth—I am quoting from the published text of the Conservative party — the Secretary of State for Scotland said:

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  "we are quite clear in our own minds that no one who is unemployed … would be expected to pay l00% of the community charge."
  What is the answer? Perhaps the right hon. Gentleman will tell us. On the one hand, the Green Paper says that the unemployed will not get a rebate; on the other hand, the right hon. and learned Gentleman tells the Tory party conference that he cannot envisage the unemployed not getting a rebate. Which is right? I shall give way.
  Mr. Ridley: Let me just quote from the hon. Gentleman's speech to the AMA.
  Dr. Cunningham: Answer the question.
  Mr. Ridley: He said:
  "There is, for instance, a lot to contemplate in the succinct few paragraphs recently offered by the Society of Local Authority Chief Executives, proposing a reformed rating system"—
  that is, capital value—
  "plus local income tax as the major source of local finance, with central government grants being used only for specific purposes."
  So the hon. Gentleman was not quite frank. He did say that there was a lot to be said for that. I want to ask the hon. Gentleman whether the Labour party will have a local income tax on top of the capital value rating or not. Will he please give us his answer to that?
  Dr. Cunningham: Yes, I have already answered the question. In case the right hon. Gentleman is in any doubt, I had better point out first that the Society of Local Authority Chief Executives is not affiliated to the Labour party. I said that there was a lot to contemplate in its paper on local government's future and 1 stand by that. It is an important document. I made it clear once, and I do so again, that there is no commitment by the Labour party to a local income tax. I suspect the right hon. Gentleman knows that, but in case he is any doubt I have repeated it. Now will he answer the question that I have put to him? Which is right, the commitment in the Green Paper that unemployed people will have to pay the poll tax, or the statement of the Secretary of State for Scotland to the Tory party conference that they will not have to? Will the right lion. Gentleman answer the question?
  Mr. Ridley: My right hon. and learned Friend can look after himself, and he will make mincemeat of the hon. Gentleman.
  Mr. Straw: Which one does the right hon. Member support?
  Mr. James Wallace: I am grateful to the hon. Gentleman for clarifying the Labour party's stance on local income tax. Will he clarify whether the Labour party favours retaining the present rating system as it stands or whether it proposes some reform?
  Dr. Cunningham: I will come to that in a moment.
  Mrs. Kellett-Bowman: Why not now?
  Dr. Cunningham: Because I make my own speech in my own way.
  Even the Institute of Directors calls the proposals for a poll tax "regressive", and it highlights the biggest problem of all as "bureaucracy". The institute concludes that identity cards would be required for every adult to ensure compliance before access to local services could be allowed.
  Conservative Members talk of freedom and a reduction in bureaucracy. The Institute for Fiscal Studies confirms
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  that richer households will benefit considerably from a poll tax. It also believes that business in the south-east would pay substantially more if a uniform business rate were introduced. Inner London, the north of England, Yorkshire and Humberside would suffer a major loss of resources and local bills would rise substantially.
  Durham county council, and district councils in the county, recently published the results of an investigation into the Government's proposals in so far as they would affect ratepayers in Durham county. It said that the "horrendous effects" on ratepayers in Durham, as revealed by a detailed independent research study, would include a more than 30 per cent. increase for more than half of the households in the districts studied, and that increased payments would run from as little as a 17·5 per cent. increase in Chester-le-Street at the bottom end of the scale, through 46·6 per cent. in Easington to the highest increase of 63·7 per cent. in Wear Valley. Like other studies, this one makes it clear that the major burden would fall on low-income households and benefit already well-off households. That is the increase which this regressive, penicious proposal would have, and I suspect that when its full horrors are borne in on Conservative Members electorally they will sing a slightly different tune.
  Mr. Eric Forth: Does the hon. Gentleman agree that it would be more accurate to say that the increase is infinite in that very many people presently make no contribution to the provisions of local services, whereas they would for the first time be asked to make a contribution? The true increase would be infinite. Is that not all to the good—people contributing to the services that they consume?
  Dr. Cunningham: I am glad to have Conservative confirmation that people who qualify for rate rebates—people on low incomes, single parent families and the unemployed — will now have to pay —[Interruption.] The hon. Gentleman said that everybody would now have to pay something.
  The Government's case for change is based on a series of incoherent and intellectually dishonest assertions. The first is the "need" for the Government to control local government expenditure, money which the latter raises on its own account. There are no valid macroeconomic arguments to justify that view, nor are any advanced in the Green Paper. We do not believe that local government's current expenditure should be included in the definition of public expenditure in the first place. Our view was made known at the time of the Rates Act 1984, and that remains the Labour party's stance.
  Secondly, the Government argue that business ratepayers do not have a vote—a quite extraordinary statement in regard to a country where universal suffrage has long been established. Business people have one vote —like everybody else. That is all that they are entitled to—
  Mr. Holt: Not as business men.
  Dr. Cunningham: —and every other western democracy takes the same view.
  We are told that change is necessary because
  "only just over half of the local electorate are liable lo pay rates".
  That is what the chorus of approval was about on the Treasury Bench a few moments ago. There are, in fact, 18 million ratepayers in an electorate of 35 million people. Of

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  the same electorate, only about 21 million pay income tax. It is a curious argument to suggest that people who do not pay rates are not properly accountable when voting in a democracy, but that those who do not pay income tax are.
  It is, after all, the Government's proud boast that they want to take more people out of tax. Having assisted the highest income earners with tax reductions worth about £22 billion, the Government could accurately be accused of throwing money at that group of people. They now propose a poll tax which would put even heavier burdens on the people who are least able to pay, while further reducing the charge on people on the highest income. That is necessary, we are told, to increase accountability. Apparently, we must put more burdens on low income families to make them more responsible when voting and give more advantages to high income families to achieve the same result. That is a very curious sense of fairness, although it is typical of the Tory approach to life.
  I should now like to quote from a document which was made available, I had better say, to my office on 21 September 1986. It has this to say about the proposal:
  "The Government's dealings with local authorities so far have been arbitrary, and authoritarian in tone, and have caused confusion and ill-feeling among local authorities as well as dividing our Party more seriously than almost any other issue … The only way to achieve a useful and permanent reform is to find a replacement system which is self-evidently fair, and cannot lead to hardship for those at the lowest income levels. By these tests, the Green Paper's proposals fail spectacularly".
  The document continues in fairly strong terms. Of the poll tax, it says:
  "A poll tax is 'fair' only in the sense that the Black Death was 'fair': it is indiscriminate, striking young and old, rich and poor, employed and unemployed alike."
  The Secretary of State for Scotland (Mr. Malcolm Rifkind): That is the Labour party.
  Dr. Cunningham: The right hon. and learned Gentleman says that that sounds like the Labour party. I have news for him. This is a document produced by the Tory Reform Group which is sponsored by the Secretary of State for Energy, the Secretary of State for Employment, the Secretary of State for Education and Science and several other right hon. and hon. Members who sit on the Treasury Bench. That is what radical liberal Tories, among whom the right hon. and learned Gentleman used to list himself once upon a time, think about his proposals for a poll tax.
  There is nothing in the Government's proposals which will strengthen or enhance local democracy or increase accountability. On the contrary, more central control will diminish both. There is a complete absense of any coherent philosophy for local government and there are no principles underlying the Government's position, which is simply based on a cobbled together series of crude expedients.
  I remind the House that, following the elections of May this year, for the first time ever, the Labour party controls more local authorities in Britain than does the Conservative party. Local government in our towns, cities, districts and increasingly in rural areas is Labour, and we intend to demonstrate our continuing commitment to improving the quality and the range of services. When we win the next election—
  Mr. Wallace: When will the hon. Gentleman answer my question?
  Dr. Cunningham: I am coming to it. Just be patient.
  When we win the next election— this is to do with the hon. Gentleman's question— we shall certainly reform the rating system, but we shall keep a property-based tax like almost every other western industrial democracy as the foundation of local government's revenue-raising powers. We shall vehemently oppose enforced privatisation and the grotesque unfairness of a poll tax. We shall take our case to the people in next year's local government elections and we shall win.
  6 pm
  Mr. Reg Prentice: I found myself in profound disagreement with some parts of the speech of my right hon. Friend the Secretary of State for the Environment and in even greater disagreement with the speech of the hon. Member for Copeland (Dr. Cunningham).
  The future of local government is one of several subjects which we could debate more effectively in a somewhat less partisan atmosphere. I do not mean a noncontroversial atmosphere because, obviously, many aspects of local government are controversial, but we do not do ourselves a great service by trying to score party points as we have been doing in the debate so far. The truth of the matter is that the relationship between central and local government has been in decline for some years under Governments of both parties.
  There are a number of reasons for that and my right hon. Friend referred to two of them. One is the enormous growth in the amount of public expenditure and so, inevitably, the temptation of the Treasury to seek more control over local government than has traditionally been available. Another is the increasing politicisation of local authorities. Tied up with that is the fact that generally after a Government have been in national office for some time the Opposition party gains control of a greater number of local authorities. For that reason the degree of party conflict between national and local government has become common to our experience over the past decades.
  That is part of the background and I blame Labour Governments for their past mistakes. I am unhappy about our approach to local government in the Gracious Speech, as, indeed, I have been during the past four years. The Whips Office will confirm that I have complained more often on this subject than on any other, particularly since 1983.
  The disquiet that reaches me through my constituency is expressed not by Labour people, but by experienced Conservative councillors at district and county levels, by independent councillors — I am glad to say that in Northamptonshire we still have some independent councillors — and by experienced local government officers. They seek to do the best for their communities, but constantly feel frustrated by the policies that emanate from the centre.
  We should start from the position of wanting to restore confidence in local government which has been depicted too often in the House, in the media and elsewhere as the wicked boy. The history of local government since the middle of the last century has been a tremendous success story and a great many of the finest aspects of our social fabric are the achievement of local government. Most of

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  the time in most local authorities today local government is still a success story. Far too much of the adverse comment has consisted of generalisations from the worst examples.
  Obviously, there are some bad local authorities and I am unashamedly partisan in saying that the worst local authorities are a small minority under hard Left Socialist control. I completely agree with my right hon. Friend that Opposition Front Bench Members would help the position, and their party, if they dissociated themselves completely from some of the worst and craziest local authorities under hard Left control. It is not merely a matter of expelling a handful of Militants in Liverpool. The matter is much wider than Militant Tendency, and certainly much wider than the city of Liverpool.
  How should we, and specifically the Government, react? I put it to my right hon. Friend that it is not our job to rescue people from their own electoral folly. He is right in saying that people who live in Lambeth are entitled to have as good a deal as people in Wandsworth, but it is up to people in Lambeth to do something about it. It is up to the Lambeth Labour party to try to make changes within the party and, if they fail to do so, it is up to the voters to choose people from other parties. If we respond to the circumstances in Lambeth or Brent and impose more and more controls from the centre, we cannot confine those controls to those places. In other words, central Government take more and more control over local government, irrespective of the circumstances in each locality. We have already gone too far down that road and it is a trend that should be reversed.
  I wholly support the abolition of rates in Scotland and I hope that we shall follow it up in England and Wales as soon as possible. I wish we were doing so this Session. Indeed, I wish we had done so in earlier Sessions. I agree completely with the arguments for the community charge and, specificially, that it will provide better accountability.
  The hon. Member for Copeland is right when he says that the right to vote in local or national Government elections depends not on whether one pays rates or taxes, but on citizenship. Nevertheless — this is the practical position that we must face — if there is a greater correlation between the numbers voting and the numbers contributing financially to the work of the local authority, surely that is conducive to people taking a greater interest, being more concerned and more likely to think before they use their vote than if that is not the case.
  Dr. Cunningham: Has the right hon. Gentleman heard any of this argument in the United States of America recently where in the mid-term elections less than 40 per cent. of the population participated and voted? His arguments are not used in any other democracy. They are specious arguments to justify what the Government are doing to local government by following the authoritarian path to central control which he said a few moments ago he regretted and opposed.
  Mr. Prentice: No, Sir. The United States position is not relevant to what I am saying. One of the reasons for the situation in our local authorities and for the poor turnout in local government elections is that in many cases only a minority of the electorate are directly concerned financially with the effects of the local authority's policies. I cannot prove that, but it seems probable.
  Mr. Allan Roberts: Is the right hon. Gentleman aware that in her speech on the Queen's Speech the Prime Minister used the same argument but put it differently? She said that only one in five people in the city of Liverpool pays rates. When she was asked why only one in five pays rates, she would not answer. Is the right hon. Gentleman aware that the reason why such a percentage of people in inner city areas do not contribute to the rates is that they cannot afford to? The solution is not to force people to pay money that they cannot afford to pay for services that they need.
  Mr. Prentice: We have all been confused over the years about the best way to finance local government. We know that the rating system is unfair but we see snags in the alternatives. I believe that the unfairness of the community charge is less than the unfairness of the rating system. Moreover, if more people contribute directly from their own pockets they will have an extra incentive to take an active interest in their local authority. I hope that they will take an interest anyway, whether they pay or not, but I believe that the proposed reform will be conducive to such interest.
  One of the consequences of the delay in dealing with this problem is that the rate support grant system has got into an ever bigger mess. I believe that the provisional proposals for next year's distribution will have to be revised. The intention behind all the changes over the years—grant-related expenditure allocations, clawbacks and heaven knows what other bureaucratic devices — has been to try to create more fairness and to encourage good housekeeping by local authorities. The practical result, however, seems to have been the opposite. The result has been in recent years—and will be next year if the provisional proposals stand—that profligate authorities benefit on balance while those which practise good housekeeping are clobbered. I must admit that my attitude is influenced by the fact that Northamptonshire county council and Daventry district council are among those to be clobbered, but my hon. Friends could cite many other examples.
  My right hon. Friend the Secretary of State says that he has heard of local authorities which will have to impose rate increases of 10 per cent. or more.
  Mr. Ridley: With respect, I did not say that. I said that I hear of authorities which seem to be thinking of spending 7 per cent., 8 per cent. or 10 per cent. more. I was referring to spending, not to rate increases.
  Mr. Prentice: I accept the correction, but under my right hon. Friend's proposals many authorities will have to increase rates by those or even larger percentages as a result of the rate support grant settlement rather than as a result of extravagant spending on their own initiative. I believe, therefore, that radical changes are needed. I shall not develop that point in detail for two reasons. First, I am conscious of the time. Secondly, I do not understand the rate support grant settlement. I do not believe that anyone understands it— not even my right hon. Friend the Secretary of State. We urgently need a system which can at least be understood by those who have to operate it.
  I hope that the Government will be extremely selective in introducing any new measures which provide central initiatives and bypass local government. My right hon. Friend the Secretary of State has announced the setting up of development corporations in some inner city areas. I

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  believe that that approach was right in relation to the London docklands. As an ex-hon. Member for the Newham area, I acknowledge the failure of the local authorities in that part of London to cope adequately with the problems. A development corporation or something similar was right for the London docklands and may be right for certain other deprived areas, but such experiments should be seen merely as pace setters and catalysts for change. The vastly greater part of the work must remain with the local authorities, which must be encouraged and expected to do that work and not be bypassed.
  The same applies to education. My right hon. Friend the Secretary of State for Education and Science has announced proposals for some 20 new secondary schools with a technological bias to be set up by the Department and not owned or controlled by local education authorities. That may be a good idea in terms of establishing certain schools to act as pace setters, but it can have only a marginal effect on the enormous education problems with which local authorities have to cope.
  Press reports state that my right hon. Friend the Secretary of State intends to reduce the powers of local education authorities in two ways — partly by taking more powers to the centre and partly by insisting on more delegation to school governors. That worries me, because although improvements are needed and there is much criticism of education standards in this country, as an ex-Secretary of State for Education I should be extremely hesitant to agree that improvements are likely to be achieved by altering the structure of government in this respect. I believe that the best local education authorities should he encouraged in what they are already doing so well, and if selective initiatives are needed from central Government they should be approached very cautiously. As for delegation from education authorities to school governors, I believe that this should be decided within each education authority. Let the county councils and London borough councils responsible for education decide how much to delegate. As a general principle, I favour delegation, but Elizabeth house should not seek to produce blanket proposals to be carried out in detail everywhere. In practice, one cannot establish a relationship between a central Department in London and 25,000 schools throughout the country.
  The Government should also reconsider their proposal to make it compulsory for local authorities to put work out to competitive tender. I favour competitive tendering and there are many examples of its success, but there are also many examples, including in my constituency, in which Conservative-controlled councils have considered the possibility and decided that it is not practicable for good local reasons. The local authorities are in a position to make that judgment. Of course, the argument should go on. The Conservative party generally will argue in favour of competitive tendering in both the local and the national context and local chambers of commerce and others can join in the argument. But we should hesitate a very long time before taking an important decision away from local authorities and trying to impose it from the centre. Indeed, that is the whole trend of my advice to the Government in this debate.
  What do we want to see in the future? I want to see more good men and women prepared to go into local
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  government, to serve their communities as councillors and to make all the sacrifices of time and effort that that requires. That should be encouraged, not discouraged. I also want to see high calibre professional men and women seeking careers in local government service and remaining in that service even when they could obtain better pay outside. I also want to see more citizens taking an active interest and providing the democratic background to local government.
  Those developments will occur only if Parliament provides an encouraging framework and makes it clear that local government is truly local and truly government in the sense that people in local government will be making real decisions affecting their fellow citizens. At times, we must sit back and tolerate bad standards and accept that some local authorities may be letting their people down because the ultimate strength of local government lies in its variety. It provides varying answers to common social problems. The very fact that different authorities handle the same problems in different ways eventually provides long-term solutions through comparisons of the results. We must not destroy that variety by imposing uniformity.
  The mistake that has been made both by the present Government and by Labour Governments has been to regard local government merely as an administrative machine for the running of services because it is very much more than that. It is part of our democracy, and if our democracy is to flourish it must be a pluralistic democracy with decisions being made in many different places. The fact that Britain. is not a federal country makes it all the more important that there should be democratic strength and decision making at local government level. I hope that the Government will bear those principles in mind.
  6.19 pm
  Sir Russell Johnston: It is unsatisfactory that we have a debate that mixes local government in England with the situation in Scotland. It would have been better to have had either separate debates or one subdivided in time so that these matters could have been debated in a structured way. Presumably, the link between the two is the most controversial legislation that the Government will introduce this Session — the replacement of rates in Scotland by a poll tax. As the Secretary of State for the Environment confirmed, this is to be the precursor of comparable legislation in England and Wales. I shall not be speaking about English local government or about what may or may not happen in England and Wales. I shall be concentrating on Scotland.
  My first thought about the poll tax is that if it is so marvellous and good, why are we getting it in Scotland first?
  Mr. Barry Henderson: Why not?
  Sir Russell Johnston: Because we do not normally get such things first. Normally, we are not the people who are favoured and have gifts brought to us. The image of the lady with frankincense and myrrh in her hands fills me with the greatest scepticism.
  All the Government's points against rates are valid. It is clearly wrong to have a system of taxation in which payment is made regardless of means, and which presses most heavily at the beginning of a working person's life when he or she, or they, have bought a first house, or at

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  the end, when people are older and having to deal with a larger property which may not be quite so large as to enable them to make immediate disposal.
  All these arguments were right in 1979 when the Government were first elected, and in 1983 when, as the hon. Member for Copeland (Dr. Cunningham) pointed out, they said that they could not do anything about it because they were unable to find an appropriate alternative. What changed all this? Was it, as the hon. Member for Fife, North-East (Mr. Henderson) appeared to suggest, the normal generosity of spirit of the Conservative Government towards Scotland? Far from it—it was the revaluation in Scotland that changed this and which broke the patience of Government supporters. Weighty figures such as Sir James Gould, the chairman of the Conservative party in Scotland, and clearly the owner of substantial property somewhere, took one look at the prospective rate Bill and rushed red-faced and indignant south to Whitehall. That, on top of the fact that the burden of rates had increased because of the reduction of central Government support, made it all too much.
  It is worth remembering as we condemn rates that when they were introduced by the Victorians—
  Mr. Rifkind: Gladstone.
  Sir Russell Johnston: I am glad that the right hon. and learned Gentleman enunciated that word with the proper reverence.
  When rates were introduced by the Victorians, they were intended to be fair, and to a large extent they were because the only people capable of paying for services were those who owned properties. That is no longer true in the same way. The damnable thing about this poll tax—I hope that is an appropriate word, Mr. Deputy Speaker—is that it will be introduced in the knowledge that it will be unfair. As we heard earlier, one will pay 20 per cent., come what may.
  The Secretary of State for Scotland looks slightly sceptical, which is one of the casts of feature that he affects, but the fact that the Government are talking about a series of palliatives against their original flat proposals shows that they admit that the tax is insufficient. If one wants a scale, why not go direct to a local income tax?
  Unfortunately, the Labour party gives colour and substance to the Government's argument against rates by its continued refusal to commit itself to any reform. The statement by the hon. Member for Copeland this afternoon was more than a little Delphic. He said that the Labour party was in favour of a property tax, which would be "the foundation" of a locally based income. That depressed me, but it would not have depressed the Conservative party. It foresees in a political sense, certainly in Scotland, the capacity to bash the Labour party around the ring on something—anything at all. It is not easy to find subjects, and this is an obvious one. The Conservative party also knows that by the time the election comes the legislation would not have had time to come into effect, so that the damaging consequences would not have been observed.
  As in so many other sectors, I have no doubt that the alliance's policy on this issue is the most constructive and forward-looking.
  Mr. Allan Roberts: Having committed himself and the alliance to a local income tax, can the hon. Gentleman tell us whether it is to be raised by the district councils or by
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  some quango or board, or will it follow on alliance support for regional assemblies? Will the regions collect the income tax? How will that relate to the revenue-raising facilities of the district councils? Who will precept on whom, or has the alliance not thought about that?
  Sir Russell Johnston: The hon. Gentleman must not get excited. Local income tax operates in a great many countries in Europe, and is normally collected by a large agency. It could be collected through PAYE and the capacity exists in Scotland, because of our computers, to have central collection that allows for local and regional variations. The only substantial objection that Layfield offered to local income tax was that it was impractical to do it at the time when he was working.
  I do not understand why the Government and the Opposition reject this in respect of the domestic contribution to local government finance and in both cases adhere to systems that are self-evidently less just.
  On Friday morning, I listened to the Secretary of State for Scotland speaking to the Scottish Council (Development and Industry) international forum at Gleneagles in Perthshire. As always, it was a technically excellent performance. We had the assertive voice, the air of confidence and the absence of notes. Alas, there was also a notable absence of content. He made what I would call a "bypass speech"—whenever he saw an obstacle, he went round it. He was speaking to a sizeable group, some of whom previous experience might suggest to us would be his natural allies. I would exclude Campbell Christie, but there were many others, and the Secretary of State knows what I am talking about. Throughout the seminar, these others, not just the Campbell Christies of this world, repeatedly voiced criticisms of Government policy and called for an approach not so different across a wide area from the views long suggested by the alliance.
  First, there was strong support for devolution of power to Scotland, which would enable all economic decisions to be taken in Scotland. There is no doubt that the Government have become a great centraliser, although that was one of the things for which they always condemned the Socialists. Even in the existing administrative devolution to the Scottish Office I do not see why a different decision on teachers' pay from that in England could not be made now. The Government's rejection of a solution that could work because of £69 million difference will cost them more in the end and unnecessarily damage the education of thousands of children. That has already happened in the 19 months since the right hon. Member for Ayr (Mr. Younger) opposed the establishment of the independent review, which the alliance strongly advocated and which the present Secretary of State conceded.
  On 30 October, the Prime Minister confirmed to me at Question Time that she thought that there was no demand for home rule in Scotland. Unlike the Secretary of State, the Prime Minister has at least been consistent. Hers is the consistency of myopia and the stubbornness of blindness. The Secretary of State knows that she is wrong and that he is wrong but he must, perforce, pretend otherwise. We all know about the Secretary of State's record in these matters. He is shy and retiring, although that is not one of his notable characteristics, about his record. He has quite a good record on devolution, but suddenly he seems

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  to be trying to draw a veil across it. [HON. MEMBERS: "Like Salome."] I should be very happy to see the Secretary of State performing like Salome; he can start now.
  It is a comfort to those of us who believe in man's and, indeed, in woman's capacity for redemption to observe the evolution of the Labour party's policy on a Scottish Assembly. The Labour party is now coming quite close to the position set out in a Bill for Scottish self-government that was introduced by the Liberal party in 1966, after I had obtained permission to introduce such a Bill under the ten-minutes rule.
  However, there remains a major difference.
  Mr. Donald Dewar: PR.
  Sir Russell Johnston: The hon. Member for Glasgow, Garscadden (Mr. Dewar) is very perceptive. The Labour party has complained about a Tory Government having been imposed on Scotland where they obtained 27 per cent. of the vote, because the present electoral system gives the Tory party a huge majority in the south-east of England. However, the Labour party wishes to give Labour exactly the same advantage in Scotland because of the central belt concentration of Labour party supporters there.
  Electoral reform is central to proper devolution. It would also be of far greater significance when there are low turnouts at local government elections, because of the distorted results at those elections, than any change in the financial arrangements. All this stuff about a poll tax arousing a greater degree of interest and a greater sense of responsibility in the electorate is completely bogus.
  Mr. Simon Hughes: Does my hon. Friend agree that exactly the same applies in England and Wales: that a short Bill to provide for proportional representation in local government would save the need to condemn local authorities to minority representation at all times, even though those parties act as though they were tyrants and majority parties?
  Sir Russell Johnston: I agree with my hon. Friend.
  Secondly, at Gleneagles the Secretary of State most certainly astonished me by embarking upon a fulsome hymn of praise, which was certainly unscripted and therefore not all that easy to check, of the Scottish Development Agency and the Highlands and Islands Development Board. There are advantages in having no press statements. However, one disadvantage was that one observed the poor, downtrodden head of the Scottish Office, the amiable Mr. Kerr Fraser, becoming greyer by the minute as unscripted phrase followed unscripted phrase. Perhaps the Secretary of State, who looks cheerful at the moment although he has no particular reason to be, will tell us when he winds up why the kind of public intervention that is engaged in by the Scottish Development Agency and the Highlands and Islands Development Board is shunned by the Government elsewhere in the United Kingdom. For example, the National Enterprise Board went down the plug hole.
  Mr. Henderson: Earlier in his speech the hon. Gentleman asked why Scotland is to have rating reform before England, and he said that that cannot be good. Now he refers to the Scottish Development Agency and
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  the Highlands and Islands Development Board which he believes are good for Scotland but which are not enjoyed by England. Surely that is the answer to his question.
  Sir Russell Johnston: I know that the hon. Gentleman is fairly slow, but neither of those bodies was created by the present Government. Indeed, their creation was opposed by the Conservative party.
  Mr. Allan Roberts: They were created by a Labour Government.
  Sir Russell Johnston: Yes, that is true, but they were created with our estimable support.
  In view of the Secretary of State's enthusiasm for these bodies, perhaps he will also tell us why their budgets have been cut. The success record of the Highlands and Islands Development Board is very good—about 92 per cent. —and the cost per job compares well and is possibly cheaper than keeping people on the dole. There is a failure rate of approximately 8 per cent. — [HON. MEMBERS: "Of what?"] Of enterprises into which the HIDB puts money. I apologise for failing to make that clear. The view of many people is that the cost per job, although it is difficult to reach an exact figure because it varies from project to project, is, overall, cheaper than keeping people on the dole.
  The right hon. Member for Ayr, the Secretary of State's predecessor, said that if there were any question of money being denied to good projects, he would see that they got it. That stage has been reached. If both the SDA and the HIDB were better financed and had not suffered cuts, more people would be employed as a consequence of their work and, to use a cliché, real jobs would have been created.
  To give an example from my constituency, on the mountain of Aonach Mor, by Ben Nevis, there is an exciting proposal to create a new skiing area. It is strongly supported by the British Ski Council. Because of the height of the skiing fields, a gondola skilift is essential, but quite expensive. It would provide an all-the-year-round attraction on the flank of Britain's highest mountain. It is recognised as an expensive project, but nothing comparable has emerged to fill the gap that has been left by the closure of the pulp mill that many argue was an early victim of the Tory laissez-faire policy, particularly in respect of fuel costs. Both the SDA and the HIDB, to both of which the Secretary of State referred so warmly on Friday, and they are the Government's official regional development bodies, supported it and believe it to be viable, yet the Government are holding back. Already a season may have been lost because of the Government's negative approach. I hope very much that the right hon. and learned Gentleman will reconsider this project.
  The Government's general record in Scotland is negative. When the Secretary of State first came into office his first task was to say "no" to Gartcosh. He may remember that there was a very emotional debate on that subject in this Chamber. His last action has been to say "no, not without charge", to the Main report, which he described as indivisible. At the next general election, I think that the country will say no to the right hon. and learned Gentleman and his party.
  6.37 pm
  Mr. John Heddle: The hon. Member for Inverness, Nairn and Lochaber (Sir R.

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  Johnston) spoke principally about Scottish matters. I hope that he will forgive me if I do not dwell for long on what he said. Although he referred charmingly to Scottish matters, he spoke in solitary splendour from the Liberal Bench. The point should not be lost on the House or upon the wider public that in advocating local income tax he admitted to the hon. Member for Bootle (Mr. Roberts), who intervened, that it would be collected centrally. Then, in the true spirit of Liberal party policies, he also admitted that the only reason why the Layfield committee rejected local income tax nine or 10 years ago was that it is impractical.
  Sir Russell Johnston: Come on!
  Mr. Heddle: It goes without saying that the Layfield committee—
  Sir Russell Johnston: Surely the hon. Gentleman has heard of computers and of the great development that has taken place in computers in the last 10 years.
  Mr. Heddle: The lion. Gentleman knows that the Layfield committee said that the national computer that would be assigned to the Inland Revenue for this purpose would not be introduced until at least 1990, well after the next general election.
  If local income tax replaced the domestic rate, it would have the effect of increasing the level of taxation by between 5½ and 6p in the pound. If local income tax completely replaced domestic, commercial and industrial rates, it would have the effect of increasing the standard rate of income tax by between 13½p and 14p in the pound. What greater disincentive than that could there be to make Britain more profitable and local government more prudent?
  Mr. Henderson: I am wearing a British Computer Society tie. Does my hon. Friend accept that computerisation was not the only impracticality about a local government income tax?
  Mr. Heddle: I recognised that it was not the only impracticality. The disincentive to work harder to preserve more of the after-tax income is an even greater reason.
  I agreed with a great deal of the speech by my right hon. Friend the Member for Daventry (Mr. Prentice). I had the privilege of serving my political apprenticeship in local government on Kent county council. I was there for six or seven memorable and happy years. I was persuaded to go into local government because it gave me an opportunity to serve the community in which I was brought up and in which I then lived. I share my right hon. Friend's view and I am greatly saddened to find that, not so much in the shires, but certainly in the inner cities, that spirit of service has been hijacked by political extremists. It is only because of that hijacking of the spirit of service that it has been necessary for the Government, in successive Queen's Speeches, to introduce measures to try to outlaw and eliminate that quite blatant disregard for and abuse of the democratic process.
  I do not agree with my right hon. Friend about competitive tendering, but I shall come to that in a moment. He spoke briefly about the business man and the role of business in local government. It is a great tregedy that business men do not encourage their employees to spend time serving on their local authorities, looking after their interests as major ratepayers in the communities in which they operate. They should be persuaded to allow
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  their members to serve on the local magistrates bench so that that same spirit of service to the community applies to democratically elected local authorities.
  I endeavoured to persuade the hon. Member for Copeland (Dr. Cunningham) to allow me to intervene during his speech, but was unable to do so. Perhaps I could ask the hon. Gentleman occupying his place on the Opposition Front Bench, the hon. Member for Glasgow, Garscadden (Mr. Dewar), to answer the question that I sought to ask his hon. Friend. If a Labour Government were elected, would it be official Labour party policy to reintroduce the rating of agricultural land? The House, the agricultural community and the public have a right to know that. I shall give way to the hon. Gentleman. He is nodding his head in an east-west direction. Either he does not know the answer, or the answer is no. Perhaps the answer is yes. His silence indicates assent. The agricultural community in England, Wales and Scotland can now look forward, if a Labour Government are elected, to an increase in the burden of taxation by the introduction of agricultural rating, and every housewife in Britain can look forward to an increase in the cost of the food in her shopping basket.
  A local government Bill has become an almost permanent parliamentary fixture. The Gracious Speech makes no exception to that rule, because it says:
  "Measures will be proposed to promote further competition in order to secure greater efficiency in the provision of local authorities' services, and to improve the basis for the payment of rate support grant in England and Wales."
  The Gracious Speech does not go far enough in three specific areas of local government. It is sad, indeed tragic, that our housing waiting lists are so distorted and abused that young girls who find that they can no longer live with their parents in my constituency and in the constituencies of my hon. Friends feel that the only way that they can have some opportunity of having a roof over their heads is to become pregnant out of wedlock. This points to a need for a radical overhaul of the housing waiting list system.
  Mr. Ernie Ross(Dundee, West) rose—
  Mr. Heddle: The hon. Gentleman has only recently entered the Chamber. I shall continue my speech and give way to him when I have finished this part of my speech. We should concentrate on a greater and better use of our exising housing stock so as to enable those single people not to have to have children out of wedlock in order to get a right to have a roof over their heads.
  My right hon. Friend the Secretary of State and his predecessors have done much to encourage local authorities and their tenants to make better use of the existing housing stock by the introduction of a tenants' charter. That has not sufficiently ignited the enthusiasm of local housing authorities to prompt them to circulate their council tenants with the names and addresses of single people who want to obtain short-stay accommodation. The answer is not to build more council houses or more estates with houses that will become unlettable, but to strive for greater utilisation of our existing housing stock.
  Mr. Ernie Ross: The hon. Gentleman has repeated a statement first made by a delegate to his party's conference in October. Will he tell the House either what justification there was for that statement at the Conservative party conference during the housing debate, or what evidence he

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  has to support the statement that young women are deliberately becoming pregnant in order to jump the housing queues?
  Mr. Heddle: I cannot comment on some unattributable comment made at the Conservative party conference. The hon. Gentleman, who I am sorry I allowed to intervene, is unable to quote what was said at the conference, and his question is a non sequitur. I did not say that single ladies who were persuaded that the only way to gain accommodation was to become pregnant were jumping the waiting list. I said that they did that to obtain some priority on housing waiting lists. There is a difference.
  Mr. Dewar: The hon. Gentleman is not saying it is true, is he?
  Mr. Heddle: I am grateful to the hon. Gentleman, who has intervened from a sedentary position. It is most certainly true, and I hear it every Friday and Saturday in my constituency advice bureau. I challenge the hon. Gentleman to get to his feet and deny that in his constituency — I believe him to be an assiduous constituency Member—he has not had such examples.
  Mr. Dewar: I have never met anyone in my constituency who has said to me, "I have put myself in the family way out of wedlock in order to get priority in the housing queue." I am astonished. I do not know much about social habits in Kent, but this is a real eye opener for me.
  Mr. Heddle: The hon. Gentleman may not know much about the social habits in Kent, but perhaps he will be kind enough to brief himself about the social habits in Staffordshire. Some 27,000 houses and flats have been lying empty for over 12 months and the majority of them are owned by Labour-controlled local authorities. I am sorry that the Gracious Speech did not contain any commitment by the Government to compel those local authorities to make such properties, after they have been vacant for perhaps six months, available to people on housing waiting lists who are do-it-yourself specialists. Many of my constituents are do-it-yourself specialists and identify regularly, week after week, houses that have been vacant for four, five, six, eight, nine or 10 months and to which they would dearly love to have the keys and the right to rent. Such people should be allowed to repair such houses in exchange for a rent-free period.
  There are still 115,000 to 120,000 acres of derelict, hoarded, corregated and boarded land in our inner cities awaiting development. That land has in part been identified on the vacant land registers. Of those 115,000 acres, about 11,000 acres are in 10-acre plots. That land could be developed by a partnership between the public and private sectors, or by the voluntary housing movement. I should like the next Local Government Bill, or some future Local Government Bill, to give my right hon. Friend the Secretary of State greater powers to compel the owners of those parcels of land, who are in the main local authorities, to put plots of less than 1 acre on to the market without delay or consultation.
  Mr. Anthony Steen: I support what my hon. Friend has said, but is the problem not far greater than that? The professional sectors, which he knows well, estimate that there could be about 300,000 acres of vacant,
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  derelict and dormant land in public ownership. Instead of getting rid of that inner city or outer city land, pressure is mounting for the greenfield sites to be built on. Should the Government not address themselves to that issue at their earliest convenience?
  Mr. Heddle: My hon. Friend has made the point very eloquently. He has often spoken on this subject and has written about it too, and I am sure that the House looks forward to hearing from him tonight.
  Municipal thrift and public prudence can be extended, to the benefit of all ratepayers and constituents, by putting contracts out to private tender. However, I differ from my right hon. Friend the Member for Daventry in that I do not think that acceptance is always necessary. If contracts are put out to private tender, it may concentrate the minds of local authorities' direct labour organisations and direct works departments so that they give better value for money and do a better job at a lower cost, without any decline in service or standards. I think, for example, of refuse collection, street cleaning, building, cleansing, catering and vehicle maintenance. If the London borough of Wandsworth can show a 30 per cent. reduction in costs while providing the same, or even better, level of service than boroughs which refuse to put out contracts to private tender, other local authorities could follow that lead. It is simply blind, mongrel, political dogmatism that prevents that from happening elsewhere.
  I listened carefully to my right hon. Friend the Secretary of State, and in the absence of any contrary information I shall assume that the Queen's Speech refers to the proposed abolition of grant recycling, but not to any other specific measure. In terms of certainty I am in favour of disposing of grant recycling, but only on the basis that the spending assumption contained in any rate support grant settlement is realistic about local authority spending levels. If that is not so, arbitrary targets for local authority spending might be reintroduced. The new system, without grant recycling, would then operate just like the recently abolished and generally criticised penalty regime, whereby authorities lost grant if they exceeded the arbitrarily low spending target.
  I see my hon. Friend the Minister on the Front Bench, and I know that he takes a close interest in the inequities of the system. If the system as proposed in the Queen's Speech is pursued, many shire counties will probably be penalised by the loss of recycled block grant just for setting prudent budget levels in 1987–88. Perhaps there is a compromise to be made—the differential recycling of block grant. The grant could be recycled only to those authorities which spend below their grant-related expenditure level. Surely that would encourage the prudence and stability in local authority spending that we seek.
  Mr. John Mark Taylor: I am grateful to my hon. Friend for giving way and for emphasising the anxieties of the shire counties, which face the danger of being penalised for being prudent with their resources. Does my hon. Friend agree that one or two borough authorities have similar economic profiles to some of the shire counties and find themselves in the same position? For example, the borough of Solihull has exactly the same anxieties.
  Mr. Heddle: I entirely agree with everything that my hon. Friend has said. He has emphasised a point that

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  concerns several of my hon. Friends. We are faced with an imperfect system. Successive Local Government Acts since 1980 have done little to improve the system, but at least we are still trying.
  The proposition that I have put to the House may well meet, in part if not in whole, the criticisms that our constituents continually put to us.
  I believe that the Queen's Speech contains much that will strike a chord with people in this country, and we may see whether that is true before we debate the next Queen's Speech.
  6.58 pm
  Mr. Allan Roberts: It would seem that the hon. Member for Mid-Staffordshire (Mr. Heddle) would like to base his legislative proposals for the next Parliament on hearsay and gossip. It reminds me of the old saying, "Don't give the middle classes coal cellars—they'll only put baths in them." Apparently, people used to say of the working classes, "Give them a decent bath and they'll only use it for coal". The same sort of people are now trying to to suggest that there is not really a housing crisis, and that young women are becoming pregnant in order to jump the waiting list. That is absolute nonsense.
  The hon. Member for Mid-Staffordshire speaks with some authority about rates. As an estate agent, he is very good about knowing how to avoid paying them. He takes the roofs off factories to avoid paying empty property rates. That is how good he is at avoiding paying rates and at working the system.
  The Secretary of State for the Environment gave one of the most disgraceful performances that I have ever seen a Minister make from the Government Front Bench, which, incidentally, will be occupied by the Labour party after the next general election. He gave away the Government's tactics for the next general election. Having made nearly 4 million people unemployed, having destroyed British industry and having sustained an attack for seven years on local government democracy with 12 pieces of legislation on the rating front alone — each being avoided by ingenious local authorities—they intend to fight the next election on prejudice and fear.
  The Secretary of State could relate only prejudiced little anecdotes against some Labour local authorities that have had the courage to use public money to help the underprivileged and the minorities in our community. But I am proud that Labour local authorities accept that lesbians live in the community. The Secretary of State said that one Labour local authority wanted a gay teacher in every school. I have news for that local authority and for the right hon. Gentleman—there probably already is a gay teacher in every school. There probably is a gay teacher in every school in the Secretary of State's constituency and in Mid-Staffordshire. The only difference between those constituencies and, say, Brent or Lambeth is that teachers in Mid-Staffordshire or in Cirencester and Tewksbury dare not admit that they are gay in case they lose their jobs. Many homosexuals certainly work in the caring professions: in hospitals and old folks' homes. There are certainly many in Conservative constituency parliamentary associations. Some of them even become Members of Parliament, but then they hypocritically vote against gay rights and against legislation to improve the lot of gay people.
  I am not ashamed of Labour local authorities giving grants to gay groups. They recognise that such groups and
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  people exist in society and are not hypocritical about that, unlike Conservative Members. I am proud of the many years of pioneering activity and legislation that has been introduced by free and democratic local government.
  The Government talk about police monitoring and attack the Labour party for wanting the police to be accountable, but there would not he police forces if Labour local government and Tory local government had not pioneered them in the first place with the Peelers, Bobbies and watch committees. What was wrong with that? Police forces were created by local government so that local communities could be policed. Now that the Labour party wants the return of watch committees, the reaction of the Tory Government is shock and horror, followed by the accusation that the Labour party wants political control of the police. That is nonsense.
  I am proud of gas and water socialism. We would not have water authorities and municipal and clean water without the involvement of local government, and nor would we have clean air legislation. Members of this place opposed clean air Bills that were promoted by local government until smog hit London and killed thousands of old people. They then understood what local authorities were talking about.
  Without local government action the slums would not have been cleared, we would not have a ship canal company and there would be no municipal airports. None of this progress would have been made had it not been for local government enterprise, which we want to reinvigorate in our communities. Local authorities have been pioneers and they have acted and built on behalf of the communities that they have represented. They have not adopted the policies of greed, fear and prejudice on which the Government play. That is the basis of the Government's attitude to local government and the activities of Labour councils throughout the country, which do such "horrific" things, as Tories believe, and are re-elected throughout the country by those whom they are fighting to protect.
  The Government have introduced no fewer than 12 Acts over the past seven years to try to destroy local government democracy and finance. We have had cuts in grants. When the Conservative party came to power in 1979, 60 per cent. of local government expenditure, which was then at a much higher level, was paid for by central Government. On average, only 40 per cent. was raised through local government rates. The reverse is true now. About 48 or 46 per cent. is received from central Government and the remainder has to be raised locally. As my right hon. and hon. Friends have said, that is the main reason for the massive rate increases and the cuts in services that we have seen over the past seven years.
  The Conservative party came to power with the idea of cutting public expenditure. The Conservative Government decided to tell local government that if it did not cut public expenditure, cut services and make people unemployed —these policies were resisted by Conservative hung or balanced councils, and by Labour councils—they would reduce grants, and they introduced a system that would have that effect. I was a member of the Committee that considered the Bill which embodied that system, which was subsequently enacted. The Government said to local government, "You will cut your expenditure and reduce your services. If you don't, we will reduce your grant. If you put up your rates by more than the amount that we tell you, we shall take the moneys off you in grant. If you

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  put up your rates even more to make up for the grant that we have taken off you, we shall take even more grant off you."
  The Government pursued that policy to such an extent that some local authorities went out of grant. That happened to the Inner London education authority, Islington and one or two other authorities. That meant that it was no longer a deterrent for the Government to say, "We shall cut your grants." Local authorities managed, through their ingenuity, to raise money to maintain services and to ensure that their employees remained in employment through their own resources.
  In the light of these developments, the Government decided to introduce rate capping, but many local authorities were able even to get round that. That was achieved by many Labour authorities which wanted to resist cuts in jobs and services. Authorities used all sorts of ingenious devices to circumvent what central Government were doing, and these devices were all legal. I support only legal activity that is designed to get round central Government legislation that applies to capital and revenue expenditure.
  Mr. Tony Banks: My hon. Friend is getting soft.
  Mr. Roberts: In that respect, perhaps. I understand that there are other reasons why people break the law.
  Various devices were available to local authorities, and they used them. For example, local authorities found a way of overcoming the variations in the cost to local authorities of an extra £1 of spending in any one year, which might be £1·50 in one year and £2 in two. Therefore, it made sense under the rules that the Government introduced to spend in year one rather than year two.
  Labour local authorities, with the assistance of professional officers, were able to exploit the rate support grant rules. They used disregards, special funds and benevolent third parties such as the Greater London council, which assisted inner London boroughs which were hard pressed. Authorities changed their debt management policies and sinking fund rates to reduce the immediate impact of loan charges. They employed capitalisation, which was something that the Stonefrost report recommended Liverpool should do, and which it eventually did. Authorities used certain areas of revenue expenditure, such as repairs, and capitalised them so that they could avoid expenditure on the revenue side and loss of grant for the capital budget.
  Other methods were employed, such as advance funding and deferred purchase, off balance sheet funding and leasing, including leasing of equipment. Land and building leases do not count for capital controls. Authorities used bartering and the creation of capital receipts by the sale of mortgages and portfolios. The Government legislated to prevent anyone else doing that. Authorities used the device of capitalisation on the capital budget through methods of non-prescribed expenditure such as repairs.
  Whenever the Tory Government came along with their "Big-Brother-we-know-best" legislation to tell local government exactly what it had to do, how much it could spend, the rates that it could raise and the level of social services and education that it should provide, and whenever they tried to interfere by using all the Whitehall computers, they failed. It is impossible for central
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  Government and for civil servants to control in detail the day-by-day running and expenditure of all our local authorities. They will continue to fail to do that because it is not possible and not on in a democracy such as ours with our traditions of local government. This is recognised by the Association of Metropolitan Authorities, the Association of District Councils, which is Conservative-controlled, and the Association of County Councils. All Conservatives who are involved in the day-to-day running of local government know that as well.
  Despite all this, the Government are still blindly pursuing the same policies of cuts in services and in public expenditure. They deny the consequences of cuts in expenditure and pretend that they are not making cuts anywhere, while advocating the policy and ensuring that it is implemented. We see cuts in public expenditure, cuts in services and enforcement on local authorities. The Government force them to cut services, and now we have privatisation and abolition.
  The Government's legislation and their abolition of the metropolitan councils and the GLC is the mess that the next Labour Government will inherit. What will be the position when the next Labour Government take office following the next general election? There will be 333 shire district councils running minimum services. There will be 47 shire county councils running major services, including transport. The Government think that deregulation has not devastated transport services, but they should come to Merseyside or Greater Manchester, where the people are asking, "Where have all the buses gone and why have all the fares increased?" Do the Government think that they can tell the travelling public that deregulation is a success when the people know that buses are missing, or not turning up, and that fares have increased? Their experience is real and not hypothetical. The Government are on a loser there.
  We have 47 shire councils, as well as shire districts, running major services. There are over 10,000 parish councils. In the metropolitan areas, there are 36 metropolitan districts. We have metropolitan area services administered by joint boards, which are directly appointed bodies by ministerial power. The residuary body has five years of life to oversee the dismantling of all the metropolitan services. We have run by undemocratically appointed joint boards or quangos at sub-regional level — metropolitan level — police, transport, highways, refuse disposal, archives, art and recreation, planning, grant aid to voluntary organisations, some local job creation and enterprise boards, which to some extent are still doing a good job in saving and creating jobs, despite the Government's efforts to prevent that happening. In addition, we have enterprise funding and activities that are carried out within the GLC and metropolitan areas by the bodies that have remained in place since abolition. Fire and civil defence services are run on a metropolitan basis in a non-democratic manner.
  In addition, there is a regional structure. The Liberals advocate regional government and the Labour party is advocating it more and more. I assure my colleagues from Scotland that I shall support devolution for Scotland if they support regional government for the north-west of England and other regions. Do we need regional government? The answer is that we already have it. Unfortunately, it is democratically unaccountable. It is

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  controlled only by those who are appointed, mainly by the Secretary of State for the Environment or other Ministers who are out of touch with the realities in the regions.
  There is regional control in the Health Service through the regional health authorities and the district health authorities, and also in the water authorities, all except one of which meet in secret. The Government talk about open government, yet they established the present position. There are regional economic development councils, sports councils and art councils; the Housing Corporation has regional boards and there are regional functions in some of the nationalised industries—at least in those that still remain despite privatisation.
  Some of the regional offices of Government Departments operate regional government and resource allocation without recourse to Ministers, so they are not politically accountable. The same is true of the national parks, inland waterways and the Manpower Services Commission, all of which run regional services. I am sure that there are also regional services in London which are run in a similar way.
  That is the undemocratic and chaotic position. These joint boards are rate-capped from their inception and local government is under pressure, suffering from the oppressive financial climate that the Tory Government have created and which will be inherited by an incoming Labour Government.
  The Labour Government will approach the position with a number of principles in mind. First, we believe that any service that is and was developed as a traditional local authority service should, wherever possible, be managed and run by people directly elected and directly accountable to the electorate. We shall re-establish the traditional relationship between central Government and local government, in which central Government lay down a certain financial framework and a set of duties and local government is free beyond that to provide more than the minimum statutorily required services, provided that it accepts the revenue consequences, is prepared to raise the rates to pay for that and then to face the electorate at the ballot box. That traditional relationship has been turned on its head by the Government. Minimum standards are laid down and no one is allowed to go above them. Cuts in services have to be made and people are made redundant.
  We want local authority units to be as small as possible. There should be recognisable units to which people can relate. However, we accept that some services can only be run over a large area because of their nature—for example, water authorities, strategic planning, economic developments and so on. All personal social services and as many other services as possible now operated at a sub-regional or regional level should be given to the district councils and the London boroughs. Outside of London, I would include the police in that. We would then establish a regional tier of government to run those services that should be operated on a regional basis.
  Having set up such a structure and having reformed local government to make it democratic, after full consultation with those involved — of all political persuasions, so that we carry the public and those actively involved in the service at officer and elected member level with us, unlike the Government who have alienated everyone involved—we would get on with the financial
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  reforms necessary to free local government to be a major instrument in job creation and in revitalising the British economy under a Labour Government.
  I make no apologies for saying that local government and regional local government should be such a major instrument. Local and regional government were major instruments in clearing the slums, building the roads, creating clean air and being involved in municipal initiatives such as airports.
  A Labour Government will abolish the rate Acts; the public expenditure survey committee system will be recast to end control of local expenditure from our resources; capital receipts will be freed from Treasury control; the rights of councils to spend additional amounts from revenue on capital expenditure in excess of loan sanction limits will be restored and a general power of competence will be given to all local authorities to do whatever is not expressly forbidden or contrary to law.
  A rolling programme of rate support grant settlements and capital allocations will be introduced so that people know that they can budget and plan ahead, instead of relying on an annual book-keeping system that plays havoc with any attempt at a house building or any other capital programme. Rate support grant finance will be provided—it might be cash limited; in fact I am sure that it will be—to allow local authority expenditure to grow in line with the Labour Government's plans for economic recovery. Rates will be based on capital, not notional rents or values. Personal surcharge will be abolished. Why should people be able to form limited companies, run up massive debts, make profits for themselves, go into liquidation and face hardly any consequences when local councillors, acting in the best interests of the community, perhaps make a mistake or become involved in something in which others may think that money could have been spent more wisely elsewhere, and then face personal surcharge and bankruptcy? That position will be ended.
  There is nothing wrong in telling local government that it can borrow beyond capital allocation provided that it accepts the revenue consequences, and that it can raise money to provide better services. There is nothing wrong with a local authority borrowing money from the same source as building societies. When a building society lends borrowed money to someone to become an owner-occupier and a local authority borrows the money from the same source and lends it as a home loan or an improvement grant, the Government call one private expenditure and allows it and call the other public expenditure and ban it. Those are the economics of the madhouse and they make no sense.
  Mr. Prentice: The hon. Gentleman claimed that this Government were imposing the controls. As a member of the Labour Government in the 1960s and again in the 1970s, I can tell him that there was tight control on local government expenditure then. That was part of the PESC exercise. The Treasury tried to influence that and tried to tighten it up at the time when Tony Crosland said that the party was over. The hon. Gentleman must not assume that all central control started in 1979.
  Mr. Roberts: I was at Manchester town hall when Anthony Crosland made the speech in which he said that the party was over. We had just had a 10-course meal, Chateauneuf-du-pape and one or two other things. I

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  remember that very clearly. I wish I could return to those days of Labour Government restrictions on local authority expenditure, about which the then Opposition talked.
  When I was the chairman of housing in Manchester, my housing investment programme was £72 million. My Labour colleagues and I were building more than 2,000 low-rise traditional council houses a year. We were modernising 6,000 inter-war council houses and we declared five or six housing action areas. We had no restrictions on our home loan or improvement grant programmes.
  Those were the restrictions that I faced as chairman of housing in Manchester under a Labour Government. It was quite a good party—a party for the poor and badly housed of Manchester. I would not mind getting back to that position. If I were the right hon. Member for Daventry (Mr. Prentice), I would be proud of some of the things that I supported in the Labour Government and wonder why I left and joined the other side.
  The right hon. Member for Daventry knows that in those days things were different. I think that Manchester now has £26 million for its housing allocation. Sefton, the Tory-controlled local authority that is so Right-wing that it makes Mrs. Thatcher look like a Communist, wields the axe. As a reward, its allocations are cut, its rate support grant cut and it has a housing investment programme of £6 million. Sefton has a waiting list of 4,000. Houses are falling down around my constituents' ears. There are houses with outside toilets and no hot water. Yet, all that that Tory authority receives as housing allocation from the Government is a figure that would only count as a housing manager's pocket money. That is an absolute disgrace.
  I believe in local government and local government democracy. In the type of society in Which we live, there are many democratic institutions—not just Parliament and Government; there are other institutions such as parent-teacher associations and trade unions. Tenants' and residents' groups are coming together. All these bodies have rights and they should be respected. Not least, the local ballot box should be a power for change. There should be a justification for people going to vote. If that justification is removed, people will not be encouraged to vote. They will not be encouraged to vote if they are taxed or if the poor are made to pay for services that they need but for which they cannot afford to pay now, and will not be able to afford when the new poll tax is introduced. That is not the way for the Government to get people to vote.
  People will vote when voting through the ballot box has a result on how people's lives are determined and how their communities are run. The Government will not achieve that if they take powers away from local authorities. They will do that only by giving powers to the town halls from Whitehall, and legislate to give powers to the residents and tenants away from the town halls and Whitehall as well. That is what the next Labour Government will do.
  7.19 pm
  Mr. Timothy Raison: I am not sure whether the hon. Member for Bootle (Mr. Roberts), who set out what a Labour Government would do, spoke ex cathedra or gave his own manifesto. Either way, it does not particularly matter. The hon. Gentleman talked about regional government, as other Labour Members have
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  done. I put it to the hon. Gentleman that, in many parts of England, regional government is meaningless. There is no sense of regional identity. It would be a great error to try to build a system of government when people do not believe that they belong to the unit of government being set up.
  Mr. Allan Roberts: I do not disagree with that. That is why there needs to be consultation. There is no reason why the north-west of England, the northern region and parts of Yorkshire should not have a regional tier of government, and why people elsewhere who do not want one should have one, if consultation demonstrates that that is the case. I cannot see the point. It is about resources as well as the democratisation of services, and about giving a regional assembly to Scotland and London and not giving one to the north-west and to the north-east.
  Mr. Wallace: National.
  Mr. Roberts: All right, national. It is still about resources. The people in the north-west, the north-east and elsewhere want regional government. If people elsewhere do not want it, they need not have it. A uniform system does not need to be imposed throughout the country.
  Mr. Raison: What the hon. Gentleman said about not having to impose a uniform system throughout the country is worth thinking about carefully. It would be difficult to operate under a system of varied forms of local government across the country. It is worth thinking about that point and it should not be dismissed out of hand.
  The Gracious Speech is judicious. I give it general support, as I support, of course, the Government's policies. In the realm of local government there are a number of questions to be answered. I have a number of doubts. I confess that during my term as a Minister the points about which I found it most difficult to be inhibited by the conventions were often to do with the strategy of our local government policy. Therefore, I welcome this chance to raise some of those doubts and ask my right hon. and learned Friend the Secretary of State, who will answer this debate with his usual eloquence and without notes — or in his usual notelessness — whether he cares to answer them.
  Looking back on our experience since 1979, in a number of fundamental respects we have not got local government right. It is puzzling that it should be like that. My right hon. Friends who have held the office of Secretary of State for the Environment have all, in their different ways, been able people. My right hon. Friends the Members for Henley (Mr. Heseltine), for Bridgwater (Mr. King), for Wanstead and Woodford (Mr. Jenkin), for Mole Valley (Mr. Baker), and for Cirencester and Tewkesbury (Mr. Ridley) are people for whom I have considerable respect. It has not been a happy saga. There have been endless rows about the rate support grant, and they are rumbling on at present. There has been the growth of central control, against the background of a desire to diminish central control. There has been the vexed question of rate limitation and rate capping. There has been great difficulty in making any real progress in our aspiration towards reform of the system of local government finance.
  I do not say that everything that was done was wrong. I strongly supported the abolition of the metropolitan county councils and I believe that, in their hearts, the

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  Opposition did, too. They remember how strongly opposed they were to the creation of those councils and to the demise of the old county boroughs. We were right to abolish them.
  In certain respects we have made strategic mistakes. It was a mistake to believe that our overall economic strategy required central limitation on local spending. That point has not been proven. Of course, I accept that it is for the Government to determine the rate support grant. That is absolutely right. The Government are entitled to be as tough as they like with the rate support grant. They have been tough. I should never cavil at that. It is an entirely legitimate instrument of public expenditure control.
  Mr. Tony Banks: The right hon. Gentleman said that he supported the abolition of the metropolitan county councils. Does he include the Greater London council? He is aware that there is now no single voice to speak for London, whereas when the metropolitan county councils went the metropolitan cities still existed and, of course, had unified councils.
  Mr. Raison: The Greater London council was in need of drastic reform. To have left it as it was, given the way in which it was carrying out its duties, would have been a mistake. As I said, the Government are entitled to control the rate support grant and to determine it as they wish.
  It is right also to restrict the capital spending. I should like to think otherwise, but it seems that capital spending has a significant impact on the Government's and the country's overall economic policy. For instance, if we removed the existing limitations on the spending of receipts from council house sales—if we allowed a free-for-all, however desirable that might be in principle—it could trigger off the kind of inflation that we saw in the 1970s in building. That would be unfortunate.
  I read recently that the Labour party, if it ever got into power, would retain controls over capital spending. I am not convinced that it is necessary to apply the kind of limitation on current spending—rate capping and so on —that we have seen. As other hon. Members have said, the problem is partly one of definition— the fact that locally raised local government funds are included in the public expenditure figures. It would have been better simply to say that public expenditure figures are about Government spending and that what local authorities spend out of their own money, as it were, is different. Perhaps more important than that, it seems that as long as local authorities raise their money by taxes rather than by borrowing, the effect will not be inflationary.
  I agreed with my right hon. Friend the Secretary of State for the Environment when he attacked the kind of fiddles that have grown up — advanced borrowing schemes and so on. It is right to put an end to them, but the normal principle of current spending is that local government must raise money before it can spend it. As long as that principle is adhered to, the impact is not inflationary. That is a legitimate manifestation of local democracy.
  We all know that there is a problem with accountability in local government, and I accept the arguments of my right hon. and hon. Friends. It is a fact that, because a very high proportion of the local electorate do not pay rates, there is a temptation to adopt a kind of irresponsibility, or whatever one likes to call it, and that has a damaging
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  impact. One has to control public expenditure through some kind of direct electoral sanction, and that does not exist in local government.
  I support the idea put forward in the Green Paper on local government finance that everyone should pay something towards local taxation. As I understand it, the idea is to use the mechanism of the housing benefit scheme. Of course, this could apply to the existing system of domestic rates, or to the proposed alternative of the community charge, to which I shall refer in a minute or two. The imposition of limits on rates is not a good substitute for the basic essence of local democratic decision taking.
  Another strategic error over time has been too easily to regard local government as a kind of enemy. Everybody knows the lunacies, the incompetence and, occasionally, the corruption which exist in local government. My right hon. Friend the Secretary of State for the Environment talked eloquently and entertainingly about some examples of this. Indefensible and ridiculous things are going on. I do not need to stress that. We should not wage a kind of generalised war on local government. I worry when I see headlines in the newspapers, as I did the other day, saying,
  "Tories intend to wage war on the town hall."
  or something of that kind. That does not do us any good. Apart from anything else, in political terms, many of our friends are to be found in the town hall. There is no point in irritating or, worse, alienating our friends in local government. It is certainly true that there are things wrong with the system, but I do not think we should move towards adopting an anti-local government stance. I am sure that my right hon. and learned Friend the Secretary of State for Scotland would not do so.
  The greater centralisation taking place may seem fine when we are ruled by enlightened people such as my right hon. and learned Friend the Secretary of State for Scotland and my right hon. Friends the Secretaries of State for Education and Science and for the Environment This process may be understandable if one yearns for greater centralisation in education, but we must reckon with the dire possibility that, one day, another group of people may occupy those posts. The anxieties about centralisation that arose in the past might easily be revived.
  It does not help local government to think of it as something that one does not trust and to seek to take powers from it and move them to the centre. The centre has enough to do and cannot run every detail. I hope that as we approach what we all know will be an incredibly difficult job in the next few years we shall mean it when we say, "Our desire is not to centralise everything, but to accept that local people are capable of making sensible local decisions." It is right that, as far as possible, we should move power closer to the ground rather than further away from it.
  The Gracious Speech states:
  "Measures will be proposed … to improve the basis for the payment of rate support grant in England and Wales."
  That sentence is likely to arouse a great many "Hear, hears", statements of support, and so on, but my right hon. Friend the Secretary of State for the Environment was not particularly forthcoming about what it will mean in practice. We all have some idea about that, but we have to get it right.
  I think everyone feels that the operation of the rate support grant has been arbitrary. That is not wholly the fault of the Local Government, Planning and Land Act

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  1980, because other legislation has contained the same elements. It is not wholly true that the 1980 Act has brought about the ups and downs and pitching that we have seen in the past year or two. Wherever the blame lies, the criteria under which the 1980 Act operates have acted capriciously. In my county of Buckinghamshire rates have to rise by more than 30 per cent. in the current year. When I was asked by a large number of constituents what was going on, I did my best, as a loyal member of the Administration, to explain why those measures were necessary, but I confess that I found it difficult. I have a sneaking feeling that a good many of my constituents rumbled me and realised that I was not wholly persuaded. I do not think that it was defensible to get into a position in which a county such as mine had to push up its rates by such an amount when inflation was plummeting towards 3 per cent., which was a great Government achievement.
  I am happy to say that Buckinghamshire is not doing so badly with the next rate support grant—indeed, there has been a substantial improvement—but other counties are doing badly, and hon. Members will know which ones they are. It is hard to defend a system in which there are enormous extraordinary swings. Often those swings occur for perfectly fair reasons. The reasons which the Government put forward for the changes in the current year were by no means unrespectable. The Government wanted to look at the amount of support received by authorities which had large numbers, of old people. They wanted to take account of the cost of education in scattered rural areas. It is not that the shift in the criteria was necessarily wrong, but, in view of such drastic swings and roundabouts, the system cannot be said to be working.
  I welcome the statement in the Gracious Speech that the rate support grant issue is to be tackled. I would welcome it if my right hon. and learned Friend the Secretary of State for Scotland would tell us how that is to be done. How will my right hon. and learned Friend tackle the question of resources? I think it is accepted that one of the problems of the present system, which, although the formula is different, still tries to balance needs and resources, is the capricious way in which the resources factor operates. If I understand the Green Paper correctly, the idea is that it will be possible, in the longer term, to eliminate that factor by the introduction of a centrally determined non-domestic rate. Perhaps that is so.
  It would be helpful if my right hon. and learned Friend the Secretary of State would lift the veil a little more on how the Government see developments. I have doubts about the Green Paper scheme and want to hear more about it. Although I am sure that the system of a centrally determined non-domestic rate will be administered in a benign way by the present Government, I am alarmed to contemplate what might happen under another Government who could easily treat it as a milch cow.
  A Bill is to be introduced this Session to abolish domestic rates in Scotland. It might be thought odd or slightly sacrilegious for an English Member to refer to a Scottish Bill, and a Scottish Bill to determine local government finance might be thought to be the biggest turn off that one could imagine, and perhaps the attendance in the House reflects that, but this is an important subject. It is obviously important to Scotland but it is important also because, as has been made clear,
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  the Scottish Bill is a precursor to English legislation. [HON. MEMBERS: "The Scots are the guinea pigs."] The cry is put forward that the Scots are the guinea pigs. Sometimes there is a great advantage in being a guinea pig. For example, the Scottish legislation on Sunday trading and licensing is a great deal better than the English legislation. I should be happy to follow in the footsteps of the Scots in that respect.
  I am not so sure about the Bill on domestic rates. Its essence is the community charge. I think that, by and large, the House recognises that there is considerable unfairness in the present rating system. We are all familiar with that. It is classically exemplified by the fact that in one house an elderly widow living on a fairly exiguous retirement pension may pay the same rates as the household next door with five wage earners and a palpably greater income. That is unfair and we know that that unfairness is felt strongly by many people.
  Mr. John Maxton: Is the right hon. Gentleman prepared to tell us what percentage of householders in Scotland—the Bill refers to Scotland—are elderly widows paying high rates in houses? What percentage of Scottish ratepayers are they?
  Mr. Raison: I do not have the foggiest idea, and I do not think that the hon. Gentleman expected me to give an answer. The scheme is intended to apply, in the long run, to England as well as to Scotland. I suspect that injustice is felt in Scotland, and I know that it is felt in England. It is foolish to dismiss that injustice, but we must look at the other side of the coin.
  The community charge scheme may be seen as inequitable. To replace a scheme that is regarded as inequitable with another is not necessarily a great political or social gain. The problem is that, under the community charge, the richest will pay the same as all but the very poorest. There is no doubt that some people will have a reduction under the community charge, but those who are just above that level will pay the same amount as the richest people. That poses problems which we must face.
  The collection of the community charge will be something of a nightmare. The rating system has survived for several reasons, one of which is that it is easy to operate. It has many flaws, but it involves knowing only where a house is and its rateable value. Although it requires some investigation, it is easier to operate than a system which needs to know who is living in a house at any given moment and into which income category he falls.
  I press my right hon. and learned Friend the Secretary of State on whether income could be assessed simply by drawing up categories — by saying that a person is unemployed or a single parent, or is drawing such and such a benefit—or whether it would be necessary to know the specific income of every person living in the community. That would obviously be a mammoth task, given that the PAYE system operates, not on a geographical basis, but on a business one. I am sure that my right hon. and learned Friend recognises that the scheme would be difficult to administer. If he can shed more light on it, his chances of persuading us that it is a good scheme will be increased.
  I am not sure that the scheme will be especially popular in political terms. It is broken down in the Green Paper, where it is suggested that, in terms of household income, the poorest and the richest would gain from the scheme and that the broad spread across the middle—those who

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  are often the most articulate in demanding the reform of the rating system — will be worse off in terms of the proportion of their household income that finances local government.
  I have great respect and affection for my right hon. and learned Friend the Secretary of State for Scotland. We all know that he has unusual powers of eloquence and persuasion, and an ability to master detail. During the coming months he will he tested to the full. I wish him well, but I hope that he can provide answers to satisfy Conservative Members as well as Opposition Members.
  7.41 pm
  Mr. Michael J. Martin: Before I pass to the main subject of my speech, may I say that the statements of the Secretary of State for the Environment did a disservice to people in local government. It is easy to pick out local councils which may have come to eccentric decisions, but by attacking local government in such a way the right hon. Gentleman attacks without justification men and women throughout the country who devote much of their spare time to it.
  The Minister must know that many hon. Members, including myself, served their apprenticeships in local government. That gave us an opportunity to become better Members of Parliament and to get to know at close quarters the problems of men and women in our communities. Ministers should act more responsibly when referring to local government. They criticise local authorities who do things of which they disapprove, and of which I also disapprove. I am of Irish descent, like many people in the west of Scotland. If I were a member of a local authority I would not take part in any decision—indeed, I would record my dissent from any decision—that men of violence, such as members of Sinn Fein or any other such organisation, should come before that council. It is disgraceful, and I do not mind putting that on record.
  It is not helpful to continue highlighting those authorities at the expense of people in local authorities such as Glasgow. The local authority in Glasgow —I accept with the help of Government — has done good things for a city centre which only five or six years ago was absolutely deserted. With the help of the private sector, the work of the rehabilitation section of Glasgow district council and the decisions of councillors in local government, much has been done in my city. We should give credit for that sort of thing as well as criticise the bad actions of local authorities.
  Only last night, a young couple came to my house with their first, profoundly disabled, child. They live with their in-laws. They came to thank me because I had taken up the matter of their housing with the local authority. I told them that I was not entitled to their thanks, but that the work of the local authority had helped to improve the quality of their life and give the child a chance to live in a decent family environment. The work that went on in the background to get one home for a young couple was tremendous. The local housing department worked many long hours to try to allocate a house. Such work should be highlighted.
  My main point is that, as a result of the Gracious Speech, Back-Bench Members such as myself have the opportunity to highlight problems in their constituencies. I wish to highlight a problem in the east end of my constituency and in the east end of Glasgow in general, which includes the constituencies of my hon. Friends the
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  Members for Glasgow, Central (Mr. McTaggart), Glasgow, Shettleston (Mr. Marshall) and Glasgow, Provan (Mr. Brown). The care of the elderly needs serious attention in the east end of Glasgow. I take this opportunity to highlight the problems and I am glad that the Secretary of State is in the Chamber to hear my remarks. There is a hospital to the extreme west end of Glasgow, about five or six miles away from my constituency, where approximately 70 beds are available for geriatric care. The hospital and the care that the patients receive is excellent. But the relatives of those patients are put under great hardship as they must travel to the other end of Glasgow. In many cases, the relatives make the journey for many years, sometimes twice a day, to see their loved ones.
  It is a pity that those 70 patients could not be looked after in the community in which most of them have lived all their lives. Other patients are cared for in another part of Glasgow at Gartloch hospital. It is not as far away as Canniesburn hospital, but it is in a remote part of Glasgow, and it is difficult to travel there from my constituency.
  The main hospital for the care of the elderly in my constituency is Duke Street hospital. It was not built as a hospital to care for the elderly. Recently, I visited it and was shocked at the conditions endured by patients. Four of the eight wards in the hospital are regarded by the nursing council responsible for nursing training as unsuitable for student nurses. The same four wards are grossly overcrowded. I have been told that 12 patients should be in each ward, but when I visited the hospital there were 15 patients to a ward and little room between the beds.
  When I visited the wards' kitchens—I emphasise the wards' kitchens, not the main kitchen—the walls were not properly washed. Windows were boarded up rather than reglazed. I asked how long the window had been boarded up. Perhaps the Secretary of State can check that. I was told that it had been broken seven months before and had been boarded up immediately. I visited the hospital in July. If we had a broken window in our home, not one hon. Member would allow it to go unrepaired for seven months. Why should elderly people have to put up with that?
  It has been put to me that there is a beautiful garden in the hospital. The Secretary of State will know that I received a reply in answer to a parliamentary question only two weeks ago from his hon. Friend the Parliamentary Under-Secretary of State for Scotland. In his reply he said that the Greater Glasgow health board was going to bring the fire escape system up to "reasonable standards". That suggests that it is not at a reasonable standard at the moment. If the fire escapes are not of a reasonable standard, the staff would have difficulty taking patients down the stairways to the garden.
  I am not the only one who is critical of the hospital. There is a report — I have no doubt that the civil servants will have a copy of it — where a senior geriatrician some six or seven months ago described the hospital as a clinical slum. The day care facilities consist of huts out in the yard. If a doctor is interviewing a patient, those waiting outside for a consultation can hear the conversation going on inside. That is really not good enough. It shows the need for a new facility.
  Let me stress that when I criticised the hospital recently I was attacking the facilities. Some members of staff took

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  exception to what I said. They felt that I was attacking them. I should like to put on record that the dedication of the staff is second to none. I know that relatives and friends have nothing but praise for what the staff do. However, I feel that the environment in which they are working puts a great deal of pressure on them.
  I know that many people who go into the hospital return home and into the community after a short time because of the work done by the staff at the hospital. If the facilities were better many more people could go back to the community much quicker. It must be remembered that for many people the hospital will be their home for many years to come and their stay should be as comfortable as possible. Every step should be taken to see that we have facilities such as those at the Victoria geriatric unit, which is at the other end of Glasgow, and the facilities at Canniesburn, which I mentioned. Duke Street and the other facilities in the east end of Glasgow should come up to those standards. The type of care a person gets should not depend on what part of the city he or she lives in.
  Mr. Laurence Peterkin, the senior administrator of the Greater Glasgow health board, stated publicly that he is currently undertaking a review of geriatric facilities throughout the Greater Glasgow health board area. I put it to the Secretary of State, with the lack of facilities in the east end, I am sure that such a review will show that a new geriatric care unit is required in the east end of Glasgow. Land is available. There is land within the ownership of the health board. I appeal to the Secretary of State to give every assistance to the health board when it says that it wants to build such a facility. People who have given a great deal to our society, many of whom have never asked for anything in return, are entitled to the best help in their old age when they need it. I hope that the Secretary of State will bear my plea in mind.
  Mr. Deputy Speaker: There are obviously many right hon. and hon. Members still seeking to catch my eye. I understand that the Front Bench spokesman would like to start at about 9 o'clock. I hope that right hon. and hon. Members will make their speeches brief so that I can allow as many as possible to take part.
  7.56 pm
  Mr. Barry Henderson: The Opposition have certainly made heroic efforts today to put the comparatively respectable face of Socialism before us in the context of local government. They started the debate with the hon. Member for Copeland (Dr. Cunningham). I understand that the hon. Member for Glasgow, Garscadden (Mr. Dewar) will reply, and the hon. Member for Glasgow, Springburn (Mr. Martin) has been allowed to speak. It is a major effort by the Labour party to try to put a respectable face on the party in the context of local government. I accept that it badly needs that. I also accept that it needs that more significantly in England than in Scotland.
  I do not want to detract from the constituency related points made by the hon. Member for Springburn. However, he was moving into slightly dangerous territory when he said that he feels it is serious that some of his constituents have to travel a couple of miles or more for a maternity unit. Most of my constituents have to go 25
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  miles or more to get to a maternity unit. If we are to distribute National Health Service resources according to how many miles a person has to go for a service, there would have to be a substantial redistribution away from Glasgow.
  Mr. Martin: I was referring, not to a maternity unit, but to a geriatric unit. I accept that it is different in a rural area, but elderly people have to travel a long distance to visit their elderly relatives, yet in other parts of the city people are much nearer the facilities. That is the point that I was making.
  Mr. Henderson: As we heard from the Select Committee on Scottish Affairs, under this Government there has been a substantial increase in the number of geriatric facilities in Glasgow, mostly with small units. That is to be welcomed.
  When one hears the Labour party speak in a debate such as this, one is inclined to wonder whether Labour Members have forgotten the extent to which they cut national and local government expenditure when they were in office, not because they wanted to, but because they were forced to as a result of the disaster of their own economic policies. Those policies resulted in their cutting, for example, roads and/or hospitals by more than 30 per cent., and in Scotland, in one year, they reduced the number of local authority staff by 6,000. That was done by the Labour Government.
  It is important when starting a debate of this kind on the Loyal Address to consider the economic background. It is only fair to point out that the improvement in our economy after six continuous years of growth is not just a matter of abstract statistics. The people in work in this country have, on average, substantially higher real wages than they had when we came to office. Retail sales—what people buy in the shops — have expanded substantially. That is another way to measure how much better off people are. From the tapes only today we find out that the retail sales figures just published are 10 per cent. higher than at this time last year, and companies are making firmer profits.
  It is the better profitability of industry that provides opportunities for more investment and more jobs. With those achievements in the United Kingdom as a whole, no part of the United Kingdom has improved its relative position as much as Scotland. I do not want to exaggerate the achievements, but I think it would be fair to say that we have not had it so good for a very long time.
  At the moment, a 6 per cent. increase in wages is almost double the increase in prices. To have the same achievement — a wage increase double the rate of inflation—in 1979 would have required a 60 per cent. increase in wages. Perhaps more relevant to current times, a 16 per cent. increase in wages today must be worth about as much as or more than a 40 per cent. increase in 1979. Moreover, those who are getting those increases can look forward to a bonus in lower income tax. I sometimes wonder where the people are who want more public expenditure rather than lower taxation, because I have not heard many say that they would rather have less take-home pay, certainly not many of the professions in the public sector.
  One of the important features of the current situation in Scotland is the effect of the oil price cut on activities in the North sea. It will mean lower revenues for the

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  Exchequer and will hit jobs in oil-related industries, which will affect us more in Scotland than anywhere else. In the United Kingdom it will mean an end of the run of big balance of payments surpluses, but there are also good aspects. I am sure the House is well aware that oil is responsible for only 6 per cent. of gross domestic product. Already we are seeing signs of manufacturing industry making a strong recovery, with the growing economy, which has created 1 million new jobs—
  Mr. Tony Banks: Where?
  Mr. Henderson: Last year the total was more than in all the European Economic Community put together.
  Mr. Banks: Will the hon. Gentleman give way?
  Mr. Henderson: Local government must not spoil the trend with big rates bills. It must concentrate on better performance and ways in which to assist job creation. There is plenty of sensible scope for public and private sector co-operation.
  If I had not been attending the debate, I should have been taking part in a meeting in my constituency of the North East Fife Enterprise Trust, which flowed from an initiative that I took two years ago. Progress has been slow but sure. I hope that early in the new year there will be a public meeting to seek much wider support for the exercise. I am particularly glad that it has received constant support from North East Fife district council, despite the change of political control during that time.
  Mr. Alexander Pollock: Will my hon. Friend bear in mind the wisdom of making an approach to the Scottish Development Agency for assistance, because the experience to hand in Moray is that the SDA is well aware of the benefits of such a trust and has been generous in funding it?
  Mr. Henderson: I am grateful to my hon. Friend. Not only the district council but the SDA has been helpful. The operation of the SDA in my constituency has improved dramatically since 1979. When I was first elected there was not a single SDA advance factory in east Fife, but there are now many, and there are a great many jobs for people employed in those factories. The only body which has not contributed, or has not given any sign of being able to contribute, to the initiative of business men in the constituency is Fife regional council. It has substantially increased its planning and economic development staff, but does not feel able to assist in the enterprise trusts which, in other parts of the country, such as in the constituency of my hon. Friend the Member for Moray (Mr. Pollock), have been so successful in job creation and in stimulating the local economy.
  There are many areas in which local government can do better. The hon. Member for Blackburn (Mr. Straw) listened to the opening speeches of the debate. When my right hon. Friend the Secretary of State listed some of the awful, quite incredible and loony activities of some local authorities in England, the hon. Gentleman asked how they were elected, which was an interesting question. I would have given him two answers. First, it is proof that the system is wrong in itself, whereby those who are responsible for electing a local authority do not have to pay for the consequences of their decision. That is relevant to a part of my speech to which I shall come later. My second answer is relevant to the hon. Member for Springburn. Many Labour local authorities are elected
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  because they have a facade of nice, reasonable people like the hon. Members for Springburn and for Monklands, West (Mr. Clarke). Behind those reasonable faces there are many much less desirable people. It has happened many times before, and I have no doubt that if we do not reform local government finance substantially it will happen again.
  Among the ways in which local authorities can help to improve themselves is by taking advantage of the opportunities created, for example, by the deregulation of the buses. It is interesting that Lancashire has saved more than the whole of Fife regional council's expenditure on subsidies on buses in the region. If the sale of council houses were more enthusiastically espoused by Labour local authorities, it would bring substantial benefits to the local community.
  Mr. Tony Banks: Will the hon. Gentleman give way while he is thinking?
  Mr. Henderson: Yes.
  Mr. Banks: I shall give the hon. Gentleman a chance to read up on his notes. Does he really defend a situation in which councils are forced by Government legislation to sell council houses and then are allowed to spend only 20 per cent. of the accumulated capital receipts? Does the hon. Gentleman not feel that the £6 billion or £7 billion now in banks that has been put there by local authorities should be spent on building houses, which is what the Government said they would do?
  Mr. Henderson: I can speak only for Scotland. In my constituency we have sold more council houses than any other local authority in Scotland—a total of about 16 per cent. There has been a substantial improvement. The resources are available for doing what is needed for today's housing, with today's special needs, which are markedly different from those of 20 and 30 years ago.
  Contracting out local government services could greatly help the ratepayer. I do not have a dogmatic approach to that. All I ask is that local authorities should test, through tender, the most effective way of giving ratepayers a fair deal.
  I was interested in the speech by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), who is not here now. He found little that he could disagree with in the Labour party's management of local authorities in Scotland. I found that surprising for a party which once supported private enterprise, indeed laissez faire, in the 19th century.
  In opening the debate, the hon. Member for Copeland chivvied the Secretary of State for saying that authorities should take control of payroll costs. He could not imagine how any local authority could save on payroll costs. He cannot have heard that Fife regional council, while complaining bitterly of how short it is of money, is spending more than ever before in real terms. It is overspending substantially. The council has taken Fife ratepayers from being in the lowest rated authority in Scotland to the highest in 10 years. This year it proposes to employ 100 more social workers. That is why regional councils need to control payroll costs.
  Before concluding, I must say a word to my right hon. and learned Friend the Secretary of State for Scotland about his proposals for rates reform, as announced in the Gracious Speech. I was surprised to hear the hon. Member

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  for Inverness, Nairn and Lochaber say that the only argument that the Layfield committee had against income tax was that it was impractical. However, that did not stop him continuing to advocate that today.
  My right hon. and learned Friend's proposals will be much fairer for individuals, and much simpler to understand. They will provide a steadier economic environment within which business can operate. My right hon. Friend the Member for Aylesbury (Mr. Raison) does not believe in interfering with loony local authorities. That would be all right if those local authorities were accountable for what they spent to those who vote for them, but what about those who are not loony, and who do not believe in that kind of loony behaviour, but who have the misfortune of living in an area with a loony local authority?
  Parliament is the ultimate rectifier of grievances, and as such we have a duty to rectify grievances of that sort. The Bill which my right hon. and learned Friend has promised us will do just that, but it will also provide the accountability that will make it possible for the Government to take less interest in the detailed running of local authorities. Knowing that local authorities will be more directly accountable to the electorate, the Government will be able to allow local government considerably more independence than is practicable now.
  The question has been asked, will those provisions be good or bad for the people? They can judge that for themselves through their votes, providing that Opposition Members support the Bill. All I can say is that, on the authority of the Labour-controlled Fife regional council, I am assured that it will be better for my constituents. That seems quite a good reason for me to support my right hon. and learned Friend's Bill.
  The Labour party opposes this measure as it does all other improvements in public services. The Liberal party accepts the theory but rejects the means to give it effect, rather like its views on the sale of council houses and on the rate fund contribution to the housing revenue account.
  Mr. Wallace: Will the Minister give way?
  Mr. Henderson: Flattery will get the hon. Gentleman nowhere.
  The Government are giving us the only real chance of reform of the rating system that remains during the course of this century and I hope that we shall grasp it enthusiastically.
  Finally, I congratulate my right hon. and learned Friend the Secretary of State for Scotland on the fact that a Conservative Government will introduce reform to abolish warrant sales. The Labour party has shouted for years about the need to deal with a matter which causes so much misery and unhappiness to people. I am glad that a Conservative Government are taking action.
  8.12 pm
  Mr. Gordon Wilson: I always like to follow the hon. Member for Fife, North-East (Mr. Henderson) and it is interesting to listen to his attack on the Liberal party, from which I can only assume that it is still chasing him vigorously.
  I do not wish to address the House this evening on the subject of the community charge, the abolition of rates or the poll tax, or however we describe it, as I am sure that
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  within two or three weeks we shall see the product in the form of legislation. At that stage the attack will come from myself and others in the House who are against those proposals.
  The White Paper that we have seen contains so many inadequacies, limitations and impracticalities that I shall be interested to see how the Government and the draftsmen propose to overcome those. I do not think that they will be able to do so. The main reason for opposition will be that the Bill will be unfair. I doubt whether we shall see any equalisation of the amounts paid in rates between Scotland and England. To that extent, the Government are trying to sell their voters a pig in a poke.
  I should like to consider several issues which were part of the Gracious Speech and which relate to the economy and to education. Those matters affect Scotland. It is a very strange debate in which English local government is mixed with references to Scotland. I do not know how that mix was selected for debate today. It strikes me that the business managers in this place seem to regard the local government of England and Scotland as exactly similar subjects for debate.
  During the past week the Government have been preening themselves on lower unemployment figures, yet Scotland, I understand, is the only part of the United Kingdom mainland where the unemployment figures, on a seasonally adjusted basis, are rising. Even allowing for the adjustments that have been made, it is interesting to look back to 1985, when our figures showed that 6,000 more people were unemployed. Between 1984 and now about 16,000 more people have become unemployed. When one sets that against the information given in the press by Mr. John Henry of the Scottish Trades Union Congress, who pointed out that there were only 292 vacancies at careers offices for 19,000 school leavers, the figures are put into context.
  I was struck especially by the comments made by the Minister with responsibility for industry in Scotland, the hon. Member for Galloway and Upper Nithsdale (Mr. Lang), who has recently taken up office and who made the excuse about oil jobs. Of course, the Minister is quite right to point out what is happening in the offshore and the onshore oil industry. However, when will he or the Secretary of State for Scotland do something about it? There has been no action by the Government to help increase oil prices, to restore investment or to reinvigorate activity in exploration and development. The Minister of State, Department of Energy admitted recently that the fiscal changes will do little, except at the margins of the oil industry. If one considers the various surveys from the Scottish Development Agency, from the Fraser of Allander Institute and from the Royal Bank of Scotland, one finds that between 22,000 and 40,000 oil jobs could be lost. A newspaper report on the last survey from the Fraser of Allander Institute said:
  "Because of the sombre outlook, the study makes a strong plea to the Government to drop its resistance to talks with the Organisation of Petroleum Exporting Countries on ways of shoring up prices."
  The report states:
  "Any Government policy decisions which would stimulate North Sea activity—for example co-operation with OPEC on a pricing strategy and/or changes to the tax structure which rewarded development activity —should be unambiguously welcomed north of the border."
  Mr. Michael Hirst: The hon. Gentleman is misinformed in saying that the

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  Government has made no response to the drop in oil prices. Not only have the Government returned more than £300 million of advance petroleum revenue tax in order to help the offshore suppliers and the smaller oil companies; they have taken action on a number of other fronts. I should be interested to know whether the Scottish National party would cut oil production to boost its price. If so, would the hon. Gentleman care to estimate how many more jobs might be lost?
  Mr. Wilson: I have just mentioned the taxation incentives which the Government have made and given a quotation which regarded them as being purely marginal, compared to the price of oil. The hon. Gentleman is deceiving himself if he thinks that there will be any great resurgence of activity in the North sea until the price of oil climbs to $20 per barrel and above. The SNP is always arguing in favour of restraint in oil production. We warned that without it we would end up in a boom-to-bust situation, the latter stages of which are now occurring. Within certain limits it is possible to restrain oil production. Increasing the price of oil would be the best way to resume activity. I refer the hon. Gentleman to the quotations to which I have referred from the Fraser of Allander Institute and the Royal Bank of Scotland which suggested just that.
  The Government are to be indicted for their failure to contact the OPEC countries and try to negotiate with them. I can understand why, from the United Kingdom angle, the Government might not wish to do that. But from the Scottish point of view, that would be the best possible thing that the Government could do.
  We have lost about 9,000 jobs this year and we shall have lost 12,000 to 18,000 by the end of 1987. There will also be a multiplier effect on indirect jobs. Kestrel Marine in my constituency has a contract which should be finished by December, after which it will have no further orders. It will then have to lose 650 direct jobs and a further 450 indirect jobs will be lost. That will add to the substantial unemployment in Dundee where male unemployment is 20 per cent. and overall 16,061 folk are without work. The jobless figures rise despite all the Government's attempts to fiddle the figures. That shows that the Scottish Office is a mere cypher with no real power and little influence over the economy.
  In the past week the Scottish Office budget has been published. The Scottish National party has maintained that the Scottish share of the United Kingdom budget has been dropping since 1979 and it was particularly interesting to read this year that the press and others have homed in to a further disastrous defeat of the Secretary of State in Cabinet over Scottish spending.
  The Scottish Office budget is due to increase by 5 per cent. in 1987–88 and by under 2 per cent. in 1988–89, and that contrasts with major United Kingdom Departments, particularly with Wales, whose budget will increase by 10 per cent. and 4 per cent. respectively, double the figure coming to Scotland.
  We all know that there has been a Treasury review of territorial budgets. The Government, with their massive public relations machine, have always been good on excuses. This time I notice that the cut is partly blamed on Torness, but earlier, in relation to regional aid cuts, it was pinned on the completion of Sullom Voe. In both cases, those big projects will end and that will impinge on economic activity. That in itself will be disastrous for
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  Scotland and it is up to the Government to see that appropriate alternative investment is made available. Those excuses are an insult to our country when £50,000 million-worth of oil revenues have gone to the Treasury which would have been available to Scotland if it were an independent country.
  We have seen the cuts in the Scottish Office budget which began with the IMF, continued with the Barnett formula under the Labour Government, and now, due to the failure of the Secretary of State to carry any weight in Cabinet, Scotland will suffer more.
  The hon. Member for Glasgow, Garscadden (Mr. Dewar) said that, for the Cabinet, Scottish votes are not worth much. Why should he be surprised? The same happened under the Labour Government. Indeed, only my party has ever maximised Scottish influence in the House. The budget cut is a consequence of that drop in representation which we shall reverse substantially at the next election.
  Education is the third area in which the Scottish Office has proved to be weak and impotent. On top of the failure of Gartcosh, mentioned by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) earlier, and the budgetary weaknesses, we now find that the Secretary of State failed to obtain finance for the Main committee proposals from the Cabinet. He regarded it as an indivisible package and, although it would not have been popular with the Scottish teachers, I am sure that if the money had been available and it had gone to a ballot, the likelihood is that it would have been accepted. Now we find him threatening legislation on the Scottish teachers and he is refusing to enter into any meaningful discussion with them. Unfortunately, every time there seems to be the prospect of discussion, he moves the goalposts. It is that air of cheap trickery from the Scottish Office that is now becoming more and more noticeable.
  I suspect that one of the problems of the office of Secretary of State for Scotland is that its holder does not have the power or the budget to go with it. It is bad enough to find that such a Minister does not have the influence within Cabinet to obtain the correct finance for his area, but to find that Scotland is being treated as less important than Wales or Northern Ireland is most reprehensible.
  The Gracious Speech is a great disappointment. If one combines it with all the other actions and failures of the Government in relation to the administration of Scotland and its economy, it is time that they were gone and time that the election were here soon.
  8.25 pm
  Mr. Jerry Hayes: I am sorry that my right hon. Friend the Secretary of State for the Environment is not in his place.
  Mr. Tony Banks: He has not been in his place for ages.
  Mr. Hayes: He has been listening with a great deal of interest for over an hour.
  I am sure that he would be delighted to hear that I agree with just about everything that he said. However, it is what he did not say that sends a shudder down my spine.
  First, let me deal with the good parts. He is right to make it clear that the Government are here to protect the interests of the ratepayers. We know that the Labour party does not care about ratepayers. It is prepared to go on a spending spree with the spiralling rates and unemployment that that has been proved to cause.

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  A visitor to my constituency of Harlow will see an overspending authority with high rates and lunatic schemes. Admittedly, it is not as bad as Haringey or Brent, but the visitor will see why the Government have to act, and I support the part of the Gracious Speech that deals with that.
  My heart leapt when Her Majesty said:
  "Measures will be proposed … to improve the basis for the payment of the rate support grant".
  I thought that that was what many Conservative Members had been pressing for for so long. I asked my research assistant to contact the private office of my right hon. Friend the Secretary of State for the Environment to discover the good news. We were told that there was really nothing new and that all that my right hon. Friend would do would be to bring in legislation in accordance with a statement that he made to the House on 22 July 1986. I went straight to Hansard and picked out some choice phrases by my right hon. Friend. He said:
  "I believe, therefore, that there is every opportunity for prudent authorities to do better out of this settlement."
  He went on:
  "It will be possible for counties … to be able to maintain their present level of services in real terms by zero or very small increases in rates if they do not go in for an overspending rush."
  Finally, he said:
  "Providing authorities do not increase their spending above the rate of inflation, they should be able to manage with zero or small rate increases."—[0fficial Report, 22 July 1986; Vol. 102, c. 188–95.]
  Reading through the debate I could almost hear the dull thud of the champagne corks popping in the Conservative shires. One by one many of my right hon. and hon. Friends on the Back Benches almost fell over themselves to welcome my right hon. Friend's statement. But what does that statement mean for counties such as mine? What is the essence of the Government's policy? Rightly, it is to hit out at the over-spenders and reward the prudent. Sadly, that just has not happened in counties such as Essex, Hertfordshire, Cambridgeshire and Surrey. Those authorities have been prudent and are known to be prudent and have not been overspending over the years. I shall have a difficulty at the district council elections, when I shall go on the streets, bang on doors and support my candidates, whom I hope will do well. When I say, "You support us and we will stop your rates from rising. Support the Conservatives and we will get these loony Lefties out of Harlow town hall. You will not be paying the massive rate increases of the past few years" the electorate will say, "Just a moment, Mr. Hayes. Last year, did not Essex county council have to increase its rates by 18·8 per cent. directly because of Government rate support grant policy'?" Being an honest politician, I shall have to say, "Yes." That is the lunacy of the system.
  I have met not one Minister, and, I suspect, there is not one official, who does not accept that the rate support grant mechanism is nonsense. When I speak to my right hon. and hon. Friends, they hold their hands up in horror saying, "Look at the mess. We feed all of this information into the computer and look what happens. We are terribly sorry. We do our best."
  We are the Government. It is our duty to ensure that the ratepayer has been and will be protected in counties such as Essex, Hertfordshire and Buckinghamshire. My right hon. Friend the Member for Aylesbury (Mr. Raison)
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  said that, because of rate support grant policy, Buckinghamshire has had to increase its rates by 30 per cent. Hertfordshire has had to put its rates up by 21 per cent. To judge from the proposals emerging from the Department of the Environment, rates will go up again. This is a lunacy and it must be changed quickly.
  Delegates from my county rightly went to see my hon. Friend the Minister of State. They were told that if Essex could keep its spending within the inflation rate there would be no need for a rate rise of more than 2·5 per cent. If we analyse that statement, we see some of the nonsense and illogicality of the system.
  On the Government's own assumption of expenditure needed to keep pace with inflation in Essex, there will have to be an increase of £20 million. That means that we will lose £8 million of grant, which will mean a rate increase on that basis alone of 6·5 per cent., which completely blows a hole in the Department's argument that we shall need only a 2·5 per cent. rate increase if we stick with expenditure at the rate of inflation.
  We are also told, "Put everything out to private tender and you will get savings of 20–30 per cent." I agree with that, but we in Essex did that years ago. We do not have a direct labour organisation. We are cost effective and efficient.
  We have also to consider the wage bill. My right hon. Friend the Secretary of State said, I think at the Carlton Club, that one of the real problems in local authorities is the wage bill. I agree. Many local authorities pay far too much for far too little and their payments are increasing. We must ask in regard to Essex and other prudent shire counties, however, who negotiates the teachers' pay—local government or central Government? Who negotiates the 7·5 per cent. increase in police pay—central or local government? Who negotiates social workers' pay — central or local government? Who negotiates the fire brigades' index-linked pay — central or local government?
  Mr. Tony Banks: Tell us.
  Mr. Hayes: It is central Government.
  Mr. Banks: That is it.
  Mr. Hayes: Nobody can seriously and honestly expect local authorities to break those agreements or, to use my right hon. Friend's shorthand, to renegotiate those agreements. We have enough problems negotiating those deals nationaly, to say nothing of the chaos that would be caused in the shires if there was renegotiation.
  What of Essex's record? In 1986–87, expenditure is substantially below our grant-related assessment, but grant has been substantially reduced. In 1987–88, our expenditure will not exceed grant-related expenditure and yet, according to the Audit Commission, expenditure per head per family in Essex is well below the national average. On the Audit Commission table, Essex is third from the bottom. That shows what a prudent local authority Essex is.
  To make matters worse, in 1981, to show the then Secretary of State—my right hon. Friend the Member for Henley (Mr. Heseltine) — what we were doing, we said, "We will throw open the books to you. Send in some independent auditors." The Department did, and this is what they reported:
  "The council has conducted a series of reviews of the spending of each committee, searching for areas of potential

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  savings. Our overall impression of the result of this work is that there are few if any remaining areas where significant savings could he achieved."
  That is what we face in Essex. The same is true for Hertfordshire and many other prudent shire counties. If we spend over the 4 per cent. that my right hon. Friend the Secretary of State is talking about, each £l spent will cost ratepayers £1·76.
  Mr. Banks: The Government really screwed you up.
  Mr. Hayes: What logic is there in that policy?
  Mr. Wallace: Tory logic.
  Mr. Hayes: It is unfair for Opposition Members to gloat.
  Mr. Banks: What does the hon. Gentleman expect?
  Mr. Hayes: They will not gain electorally because the public know full well what sort of people they are. They are the sort of people who will not condemn the lesbian police. When the hon. Member for Copeland (Dr. Cunningham) was asked whether it would condemn some of these lunatic schemes and the massive overspending, he would not do it. The best that he could do was to say, "Well, personally, I do not favour local authorities banning or censoring The Sun or The Times." That is as far as he could go. The public know only too well from hitter experience that the Opposition are the overspenders. The people who will gain are — I shall not say, "the others" because there is only one of them here and he is from Scotland — the so-called alliance. We shall be giving the alliance a little Christmas gift. I would say to my right hon Friend the Secretary of State—
  Mr. Banks: If he was here.
  Mr. Hayes: —rate support grant in England and Wales has to be made more fair. We should consider the statement of 22 July and consider the terms of the legislation that the Government intend to put through. It takes away the recycled money which, after years of being ravaged, was being held out to Essex and Hertfordshire as a carrot at the end. We were told, "Do not worry, lads, you will get some recycled money."
  Mr. Banks: And?
  Mr. Hayes: And while of course my right hon. Friend is right to say that there must be some certainty, the rate support grant system, as presently constituted, is not the way forward. He cannot defend the indefensible and I am not prepared to join him in doing so.
  8.39 pm
  Mr. Tom Pendry: I hope that the hon. Member for Harlow (Mr. Hayes) will not mind if I do not follow him. First, I did not understand a word he said and, therefore, I could not get excited about it. But I followed him on recycling and one thing is certain—he will he recycled at the general election. I wish to keep in your good books, Mr. Deputy Speaker, and so I have shed most of my speech. I hope that mine will be the shortest speech from the Labour party because many of my hon. Friends wish to make valuable contributions.
  I am sorry that the right hon. Member for Aylesbury (Mr. Raison) has left the Chamber. I always find his speeches challenging and go to my bookshelves to look at "Why Conservative?", which he wrote in the sixties to see how far to the Right he has moved. Since he has gone to
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  the Back Benches, he has moved back towards his original position. I am on dodgy ground because the person who wrote "Why Labour?" was the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), followed by Mrs. Shirley Williams, and if we dig deep enough we shall find that the right hon. Member for Daventry (Mr. Prentice) probably wrote "Why Labour and Conservative?". Therefore, I shall not pursue that.
  The right hon. Member for Aylesbury asked whether my hon. Friend the Member for Bootle (Mr. Roberts) was speaking ex cathedra for the Labour party on devolved regional government. That is going a little too far. Certainly my hon. Friend believes in the dictum "vox pupuli, vox Dei" and I think that he was certainly speaking for the people when he spoke about regional government. I had intended to speak at some length on that subject also, as a former spokesman for regional affairs, but then I remembered that my hon. Friend the Member for Bootle was an attentive scholar at a Labour party weekend school at Buxton when I introduced Labour's alternative strategy. I regard him as one of my more ideal students and, although he did speak ex cathedra, he did speak for the party generally on that issue.
  I now turn to the part of the Gracious Speech which is clearly a vote loser for the Government—the proposals to privatise major local government services, such as refuse collection and the school meals service. A recent national opinion poll confirmed that view. It showed that 74 per cent. of those who were asked about the tendering of those services thought that the decision should he left to local authorities and that central Government should not be involved. Only 14 per cent. differed from that view.
  I hope that I carry my colleagues with me when I say that I have no desire to stop the Government doing a lemming-like death dive at the general election. However, on this occasion I offer them an opportunity to get off this particular hook. It makes no economic or moral sense to privatise those areas.
  Obviously, profits have been made in some of those areas, but always at the expense of the services. More often than not, local authorities which have embarked on these escapades have regretted it and wished that they had not started on them. I spoke to the chairman of a large company which had embarked on this and he said that it got out because its name was being tarnished.
  The Prime Minister and Secretary of State would do well, before proceeding to legislation, to seek the advice of local authorities which have had their fingers burnt. I shall give the House a number of illustrations. In February 1984, the firm Exclusive was awarded the refuse collection contract by South Kesteven district council. The contract was due to start at the end of April that year but Exclusive asked for more money even before it started on the job. The firm submitted a claim for an extra 2·5 per cent. on the contract fee because it had underestimated the cost.
  In Hereford and Worcester, Main Table Ltd, which has a school meals contract in 16 schools, announced that it could not pay the £17,597 concession fees owed to the council or repay the £10,000 interest-free loan which it had received. That was despite special concessions from the Tory council, such as rents and rates relief and free lighting, cutlery and crockery.
  In 1985, the district auditor for Cleveland county council uncovered a massive fiddle, involving small firms — mainly jobbing builders working under contract to the authority. He found that excess payments to those

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  companies he investigated totalled £1,940 out of a total of £18,931. On that basis, excess payments for the whole year could have amounted to as much as £60,000.
  An investigation by the London borough of Merton into the payments made to Trojan Contractors Ltd for the 1983–84 pre-paint repairs programme resulted in £3,777 being recovered. The contractor had not undercoated or glossed replacement doors, had used incorrect items in the schedule of rates and had charged twice for some of the work. The housing department has now had to increase its contract supervision from 10 per cent. to 25 per cent. of all contracts.
  Merton also had an unfortunate experience with the Sutcliffe Catering Company. As a result of monitoring complaints against Waste Management's street cleaning contract, the Wirral district company has recently had to transfer four more inspectors to monitor the contractors' work in a desperate attempt to improve standards.
  Those are but a few examples that have been monitored. I must declare an interest as chairman of the NUPE group of sponsored Members of Parliament. As a union, we have done a great deal to uncover the problems that exist in this area.
  An equally shameful part of this whole exercise is the obvious exploitation of the already low-paid workers in these areas. Clearly, the Government are exploiting the job market to force down even further the disgracefully low wage levels of workers who do essential work in these service industries. Workers are completely at the mercy of their bosses with their hire-and-fire policies. Managers can and do divide and rule, intimidate and isolate their employees.
  A recent survey carried out in Wandsworth — the jewel in the Prime Minister's crown — revealed that privatisation has resulted in a staggering 24 per cent. cut in pay and conditions of service in already low-paid work.
  Mr. Tony Banks: Conservative Members are laughing.
  Mr. Pendry: I do not know why my hon. Friend is so surprised at Tory Members for laughing. They live in a different world and do not understand.
  These proposals are not about value for money and efficiency in the provision of public services, as we hear. They are about cutting costs, corners and services and rewarding friends. The link between some private contractors who give hefty donations to Conservative party funds and contracts being awarded cannot be ignored.
  Efficiency in the public services must be defined in terms of quality and service, and that is how we in the Labour party define them. We shall forcibly resist these Government proposals. We believe that democratic accountability and control must remain to ensure that the people obtain the services that they want. We recognise that local authorities already have a statutory duty to have regard to value for money and we all know that local authorities are subjected to the closest scrutiny by the district auditor and Audit Commission.
  In conclusion, we must oppose this privatisation legislation. It is a clear denial of democracy because these suggested wide-reaching, bureaucratic powers, which will come from Whitehall, deliberately take from elected bodies their right to provide the type of services that their electors want.
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  The manifesto pledge that the Government would make local government more local may have been forgotten by the authors of those words, but I assure the House that they have not been forgotten by the British people. When the Government go to the country soon—the sooner, the better— they will receive that message loud and clear.
  8.48 pm
  Mr. David Atkinson: I shall reduce the length of my speech, as the hon. Member for Stalybridge and Hyde (Mr. Pendry) did.
  I regret one omission from the Queen's Speech — a proposal to introduce the right to buy for leaseholders of flats. This has disappointed many of my constituents, who cannot understand why they continue to be denied that right when most house leaseholders have enjoyed it for nearly 20 years. Apparently the proposals contained in the anticipated Landlord and Tenant Bill will not apply to them. They appreciate the problem of enforcements and of obligations for works and services on successive owners and for the upkeep of the common parts, but the Law Commission has suggested how that can be overcome. It has been overcome in Australia and in some Scandinavian countries. We wish to see such a commitment included in a Queen's Speech. Are the Government still committed to leasehold reform for tenants of flats and to the repeal of the Rent Act for new tenancies, which would do much to reduce the accommodation problems which plague our towns and cities?
  I shall confine my main remarks to the welcome and long overdue proposal to oblige local authorities to put their services to the test of competition. We know that when that practice is applied, by and large it works, and millions of pounds have been saved by the courageous local authorities — all Conservative-controlled — which have done so. Southend council, on which I once served, pioneered the contracting out of refuse collection and street cleaning and ratepayers there have been saved more than £500,000 per year, or nearly £3 million in five years, on a better service. Wandsworth is saving more than £4 million per year by having 14 services put out to private contractors. Merton has saved £2 million, and Hereford and Worcester £2 million. My right hon. Friend the Secretary of State for the Environment cited other examples in his opening speech.
  It is scandalous that such councils remain the minority while the majority, through ideology or weak leadership, continue to deny savings to their ratepayers and better services to their citizens. It is especially galling to find Conservative councils among that majority. There is bound to be opposition, motivated by ideology or vested interest — people never like to see their empires threatened or to be shown up for having ripped off ratepayers for years— but putting local services to the competitive test does not mean that the local council can no longer provide those services. As the legislation on local authority direct labour organisations has shown, if the existing organisation is prepared to be more efficient, it stands to retain the work.
  Why are the Government obliging local authorities to put out only some services to tender? The obligation should apply to all services for which there is a private sector equivalent. Printing, computer services, architectural services and refuse disposal are obvious examples. When one considers the services contracted out by local

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  authorities in Europe and the United States, and the services which are otherwise provided in the private sector, one realises that the scope for further savings and efficiency becomes even wider, but we know that most authorities will not explore the possibilities unless the law forces them to do so. I hope that the Government will be prepared to consider suitable amendments to the proposed Bill.
  8.52 pm
  Mr. Ernie Ross: If nothing else, the Queen's Speech shows the extent to which the Government think along sharply divisive, ideological lines. They live, not in the realm of reality, but in the elitist world of the big bang, in which not an ounce of wealth is created by mainly young men shifting money around at the flick of a computer switch, producing huge earnings for themselves, but contributing nothing in real terms to the wealth of the country. Following the big bang must surely come the big crunch when the Conservatives find the courage to face the British people in a general election. Labour Members are confident of victory because we represent the vast majority of people who live and work in this country and who were bypassed by the much heralded big bang at the stock exchange.
  I should warn the Government that not everyone believes in the success of the big bang. The March issue of the magazine Euromoney details the infiltration that will result. For instance, Japanese firms are now busily engaged in short-term lending, especially to local government bodies. More important and more worrying for Conservatives, the article concludes:
  "Very soon, we will hear a lot of squeals from western bankers for protection. Which will do about as much good as did the squealing from the car makers, the television set assemblers, and all the other complacent westerners beaten cold by Japanese planning, cunning, and blindingly hard work."
  It should be emphasised that Euromoney is an extremely respectable Establishment bankers' magazine not easily to be dismissed by Conservative Members.
  My colleagues and I and the people whom we represent looked for hope in the Queen's Speech, but there was none for the people of Scotland. Since 1979 Dundee has been caught in a great industrial storm which has wiped out much of the manufacturing industry on which the city's wealth creation is based. The number of people employed in manufacturing industry in Dundee has almost halved and now stands at 15,900. Joblessness remains alarmingly high, almost half those out of work having been without work for a year or more. More than 11,000 unemployed people in Dundee now claim supplementary benefit. Those grotesque figures are symptoms of the misery that now grips Dundee. Despite many well-intentioned initiatives designed to alleviate the shameful condition of a city stricken by unemployment, and despite the many positive features from which industry can and does benefit, the local economy faces a period of uncertain economic growth.
  I recently wrote to the Prime Minister reminding her of how Dundee has suffered in the past seven years of her Government and pointing out the comments of the European regional development fund about how regeneration of this country's infrastructure could be used to offset the cruel impact of unemployment. I reminded the right hon. Lady of the speech that she made in Birmingham in April 1979 and which my right hon. Friend
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  the Member for Blaenau Gwent (Mr. Foot) so tellingly quoted in his book, "Another Heart and Other Pulses". He quoted the right hon. Lady as saying:
  "We Conservatives hate unemployment. We hate the idea of men and women not being able to use their abilities … We deplore the waste of our natural resources and the deep affront to people's dignity from being out of work —through no fault of their own."
  She went on to say:
  "There is nothing inevitable about rising unemployment."
  My right hon. Friend commented:
  "She said that, I repeat, in April 1979 when the unemployment figure stood at 1,200,000."
  Those words will surely return to haunt the right hon. Lady when she faces the unemployed and their families at the next general election.
  The people of Dundee looked to the Queen's Speech for some sign that the Government acknowledged their responsibilities towards Scotland and its economy. The link between the Government's failure to support British and Scottish industry and the demise of that industry is well documented. A recent ACARD report detailed the way in which the Government's failure to support information technology had left us in the rearguard of that sector.
  The withdrawal of subsidy from warship yards has directly affected our shipbuilding industry. The construction industry depends largely on local authority spending, which affects the private sector. Many glass and insulation companies have gone to the wall because public contracts are not available.
  Health may seem a luxury to Conservative Members, but even they will surely recognise that poor health care will leave us as a nation unable to provide a productive work force in years to come. I had hoped that more money would be directed to the Health Service in Dundee and Tayside. Expenditure in Tayside health board, measured at constant prices since 1980–81, has had a derisory increase of less than 1 per cent. The people of Tayside have demonstrated their commitment to health by recently providing, through public subscription, the funds to buy a body scanner. It is disgraceful and disreputable when public generosity has to be used to provide vital, health-saving equipment, when the Government are cutting grants to health boards.
  I had also hoped that the Queen's Speech would contain a commitment that the Government would increase educational expenditure, which would have allowed Tayside regional council more resources to spend on education in Dundee. Until the advent of the Labour administration on Tayside regional council, education expenditure fell under a long Tory tradition of being below the Scottish average.
  The private sector depends on the young people educated in our educational establishments, our state supported schools and universities, for its work forces. Much private sector research is carried out in our universities. In October the Scottish Office Minister responsible for education confirmed to me that in the past seven years education expenditure in Tayside had not increased in real terms.
  The Queen's Speech betrays the Government's blinkered ideology. It shows a Government who have not learnt that their policies endanger the long-term economic future and, just as importantly, the social stability of our society. It shows a Government who have not learnt that society, combined with the Government, has a moral

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  imperative to achieve real justice for all and to ensure this necessity of modern life. Above all, it shows a Government who do not perceive themselves to be a partner in advancing real economic change to the advantage of the people, but rather frustrates it. This is the price of macho Maggie for the people of Dundee.
  Inevitably, the Government will be replaced by a Labour Government who will be a Government of industrial growth, job creation and expanding opportunities and a pursuer of peace, not only within our communities, but within the world. I remind the Government that, whatever date they choose for a general election, they should remember that people, not opinion polls, vote. Unless they start caring about people, it is more than likely that we shall be doing the caring after the general election.
  9.1 pm
  Mr. Michael Hirst: I congratulate my neighbour, the hon. Member for Monklands, West (Mr. Clarke), on his appointment to the shadow Front Bench. In wishing him well in his new job, I express the hope that he will stay on the Opposition side of the House.
  I particularly welcome the fact that the Government have moved with such speed to reform the law of diligence and to end the appalling stigma and humiliation of warrant sales. That indignity has lasted far too long. Household goods have been knocked down in public and ghouls move round from one house where a warrant sale is taking place to another. It is ironic that it has taken a Conservative Government to propose this worthwhile social advance, rather than the Labour party, which has long protested about the practice but never did anything about it when in government.
  I hope that there will be universal support for the Government's Criminal Justice Bill. Many people must he seriously alarmed about the epidemic of drug-taking in Scotland's towns. I instance Edinburgh, where, according to parliamentary answers, there has been a steady rise in the number of charges and convictions. Somebody is organising, and financing it and profiting from it, and I hope that all hon. Members, from every party, will welcome the Government's efforts to confiscate the proceeds of serious crime. I recognise that it will not be easy to detect those who are behind these squalid practices, but if the armoury of penalties and sanctions against such people is strengthened by the proposed measure, society rightly will be pleased.
  The set-piece of the Government's legislative programme will be rating reform, and I hope that on Second Reading it will be possible for Conservative Members to contribute rather more fully to the debate. We have long waited for the abolition of domestic rates and now we are on the threshold of obtaining it. As one who has the invidious distinction of representing those who pay the highest average rate in Scotland, or in the country outside central London, I particularly welcome the commitment in the Gracious Speech.
  I find the assumption that the ability to pay taxes is based on the size of property to be false and I hope that I shall have the opportunity of debating the matter with my right hon. Friend the Member for Aylesbury (Mr. Raison) or Labour Members who seem wedded to that
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  concept. It is characteristic in certain parts of my constituency that elderly people are struggling to pay rates on houses which for many years have been family homes. They are struggling against the costs of both maintenance and rates. Often they find that the amount of their income and savings disqualifies them from rebate. For them, as for single parents, I hope that relief will be at hand before very long. It cannot be right that the single parent or the elderly widow should pay the same rates as are paid by four income earners who are living in an identical property.
  The Opposition protest about Scotland being used as a guinea pig. There were mutterings to that effect from the hon. Member for Glasgow, Cathcart (Mr. Maxton). I am not ashamed of Scotland being used as a guinea pig. We were the first to ban alcohol from sports grounds. We have far more liberal trading and licensing hours than anywhere else in the United Kingdom. Our advances in social work have been the envy of the rest of the United Kingdom. We have an independent prosecution system. Scotland has led virtually every worthwhile social advance in Britain. I am delighted that we are leading this advance to abolish domestic rates.
  I am interested in the Opposition's reaction. The party of the hon. Member for Glasgow, Garscadden (Mr. Dewar) is firmly wedded to a corrupt system. At the next general election the electorate will certainly enjoy wreaking their vengeance on a party that is unwilling to reform the rating system. I am not surprised that those hon. Members who represent the Scottish National party have disappeared; nor am I surprised that those hon. Members who represent the Liberal party are being so uncharacteristically silent. We know that their fudge, local income tax, is impractical and that it would be impossible to implement it before the middle of the next decade. [Interruption.] The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) knows as well as I do that it is quite impractical to implement local income tax in Scotland when only 40 per cent. of Scottish taxpayers pay taxes to Centre 1. I am very surprised that the hon. Gentleman continues to overlook the fact that the major part of local government funding comes, and will continue to come, from the Exchequer, to which people will contribute, according to their ability to pay.
  I notice that the Gracious Speech contains the sweep-all sentence
  "Other measures will be laid before you."
  I hope that my right hon. and learned Friend will not find it necessary to introduce legislation that specifies the working conditions of teachers. My fervent wish is that the teachers and their employers will negotiate, within the Scottish Joint Negotiating Committee, a package of conditions of service. It cannot be right that for the last two years parents have not received reports on the education of their children, that they have been unable to attend meetings with the teachers, that curriculum development has been suspended and that all the other things that should have been happening in Scottish education have not taken place because they are outwith the ambit of the teachers' conditions of service.
  The offer that is on the table is fair and reasonable. I hope that once more this evening my right hon. and learned Friend will take the opportunity to spell out to teachers in Scotland just exactly what the rejection of the offer will mean.
  9.7 pm
  Mr. Tony Banks: I agree with the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) that Scotland leads the way at the moment, in that it shows Tories the way to defeat at the next general election. I understand that the opinion polls show that the Tories have the support of only 21 per cent. of the Scottish electorate.—[HoN. MEMBERS: "13 per cent."] I apologise. I accept that correction. Obviously I wildly exaggerated the degree of Tory support in Scotland. I should like to see Tory support of that kind mirrored across the whole of the country.
  Parliament would not be Parliament these days if we were not debating yet another Bill that provides for power to interfere in the affairs of local government. Perhaps it is because Ministers are making such an appalling mess of running the country generally that they want to reduce local government to the same kind of shambles as that into which they are getting the national economy. There is no rational, economic basis for a Bill that compels local authorities to put out their services to competitive tender.
  We have heard a great deal this evening about the savings to ratepayers in certain areas. Wandsworth, Merton and a few other local authorities have been mentioned. That is the simplistic approach. If we were to examine the cost to the economy generally of the privatisation proposals and manoeuvres of Wandsworth and Merton, we should see that overall we are much worse off. Conservative Members can take no pride in bragging that Wandsworth and Merton have been able to reduce employment in the provision of certain services by 50 per cent. Those services have suffered because of that. The money that Wandsworth ratepayers have saved in one pocket is paid out from another pocket through increased taxation due to the higher social security payments, unemployment benefits and the loss of tax to the Inland Revenue from the people who would have provided the services but are unemployed. Let us not have this simplistic approach towards privatisation.
  Mr. Michael Forsyth: Will the hon. Gentleman give way?
  Mr. Banks: No. The hon. Gentleman has been out of the Chamber for most of the time, and if he proposes to start telling me about cuts and about the organisation with which he seems to be associated, I do not want to hear about it.
  This simplistic approach is undoing the whole of the Government's febrile economic strategy because when they push down in one part of the economy expenditure goes up somewhere else.
  We know what the Bill will be about. I should like to spend more time talking about it, but my hon. Friend the Member for Bootle (Mr. Roberts) took up 23 minutes and then disappeared from the Chamber. The right hon. Member for Aylesbury (Mr. Raison) also took up 23 minutes, although he is in his place. One realises from that just how selfish hon. Members of all parties can be. I claim nothing for my own speech, but hon. Members should restrict themselves to no more than 10 minutes. If they cannot say all that they want to say in that time, they should not be here.
  The Bill will be about getting local authorities who impose political requirements on contracts. The GLC pioneered contract compliance in 1983 and it was attacked
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  by the CBI. At that time, the right hon. Member for Wanstead and Woodford (Mr. Jenkin) said that the Government would legislate against it. However, the Government will not legislate against contract compliance. They have done a U-turn and I am glad that they have. [Interruption.] I am glad that, after his 30 minute speech at the Dispatch Box, the Secretary of State is now back in the Chamber and telling us that the Government will move against contract compliance. If that is the case, it is disgraceful.
  Contract compliance was not a Red plot, something that the GLC learned in Moscow; it was based on experiences in the United States, where about 300,000 firms adhere to contract compliance regulations and employ about 41 million people, one third of the work force. The Government are out to get local authorities who say that they will have no dealings with companies that do business with South Africa. That is the hypocrisy of the Government's position. They are prepared to do nothing about South Africa, but when local authorities want to step in and do something they are told that they must not do so because in some way that would imperil competition.
  In Newham, the direct labour organisation has just been closed by the Secretary of State after a planted question by the hon. Member for Stafford (Mr. Cash). I intend to take a deep and intense interest in the affairs of Stafford, because the hon. Member appears to take a deep and intense interest in the affairs of Newham. The DLO in Newham was closed because the Secretary of State does not like the way that we have started to ask contractors whether they are members of the masonic order. We are out to get the masons in Newham because of the level of corruption that previously existed between officers, council members and companies all of whom were involved in freemasonry. There is an economic consideration for Newham in imposing that sort of contractual term in our dealings as a borough council with various private companies. Hon. Members may laugh, but in Newham the impact of freemasonry and the corruption that has flowed from it has worried not only the Labour party but the whole population.
  Once again, we see the Government stepping in with big boots, and they are doing that because they do not like opposition or the idea that some local authorities are desperately trying to retain jobs and services when Government policy is aimed at destroying both. The sooner we get rid of this shambolic, corrupt lot — a Government of cowboys, looking after cowboys — the better the country will be.
  9.14 pm
  Mr Allen McKay: shall begin, as did the Secretary of State, by referring to the deregulation of transport. He seemed to crow about it, but if he came to south Yorkshire he would hear what my constituents have to say about the increase in fares and about the buses that are no longer running in some areas. Old people find that buses no longer run past their complexes and that they sometimes have to walk for 15 minutes to reach the nearest bus stop. The people of Cawthorne have no doctor or doctor's surgery and their buses have been cut to one every two hours. Most of them have no way in which to reach a doctor. We warned the Secretary of State about what would happen in rural areas, but he brushed our warnings away and, in a flippant reply

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  to a written question from me, said that those people could take taxis. They cannot even afford to travel on the buses at those fares, let alone take taxis.
  The trouble with debating the Queen's Speech is that one does not know exactly what the Bill will look like. Two days before the Queen's Speech, the mayor of Barnsley attended a function for retired miners. He said that the Coal Industry Social Welfare Organisation was more or less going to be wound up and privatised. It does not say anything about that in the Queen's Speech, and so we shall have to wait and see what the Bill contains. But I warn the Government that if they think that they are going to get their hands on CISWO, they have another think coming. Generations of mineworkers have provided money through their pay packets for the cricket fields, football fields, bands, welfare services and grants to miners' children at university. I say to the Government, "Keep your hands off. Keep away from it."
  For a long time the Government have harped on about the unfair burden of rates, particularly on industry. Like any form of taxation, rates will always be unfair but necessary. But the Government have tried to make people think that the problems of industry stem from high wages, unreasonable trade unions and high rates. They say that industry is rated unfairly compared with the domestic ratepayer. The Government are suggesting a poll tax to redress the so-called imbalance. In paragraph 104, Layfield says:
  "Rates have been the principal sources of locally raised revenue for over three and a half centuries and have survived many crises and changes. A very strong case would need to be made to justify the loss of experience and the cost and the uncertainty which would be involved if rating were abandoned."
  The Government have failed to make that case.
  The problem of paying for local government services has always been affected by several factors. There are two main ones: first, the reduction of Government grant to local government and, secondly, particularly in my area, industrial depression. The reduction in grant from 61 per cent. to 46·4 per cent. has taken billions of pounds from local government resources. The industrial decline of base industries and more than 17,000 bankruptcies last year have meant that fewer facilities are available to carry the rate burden. More than 4 million unemployed people and millions of low-paid workers have increased those difficulties.
  In an attempt to redress the balance, the Government have reduced interest rates for industry. The CBI said that each 1 per cent. was worth £750 million. The Government also abolished the national insurance surcharge, which involved £3 billion. Corporation tax was reduced. They abolished wages councils and they now suggest a shift of the burden from industry to domestic ratepayers with every adult, as a result of the proposed poll tax, paying at least 20 per cent. That, in turn, will impose a burden on large, poor families, which by their very nature are usually the most deprived.
  For months, the Government have been saying that industry bears too high a proportion of the cost of the rates. But that turns out to be bunkum. Domestic rates stand at 47·3 per cent., commercial rates at 19·97 per cent., industrial rates at 14·32 per cent. and others at 18·41 per cent. The Government have lumped those last three together to try to make the figures look plausible, and
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  higher than 47·3 per cent., but any analysis of what is paid shows that, for example, commercial rates include garages, car parks and lock-up garages. Domestic ratepayers pay for them. Other examples are social clubs, community centres, other places of entertainment, hospitals, sewerage works, refuse works, disposal operations and municipal works.
  The Government have been trying to put over a great con for the past 18 months. Domestic ratepayers, not industry, pay the largest share of rates generally, and the Government have been trying to disguise that in an effort to try to get through the 20 per cent. proposal. They are trying to shift the burden on to the taxpayer from industry, and in so doing they are making an impossible position worse.
  9.20 pm
  Mr. Donald Dewar: It has been a reasonably diverting debate. The hon. Member for Strathkelvin and Bearsden (Mr. Hirst), has shown that he stands out in all his glory in Scotland as being proud of the Conservative Government. The hon. Member for Fife, North-East (Mr. Henderson) has told me that I am the respectable face of the Labour party, which I suppose is some sort of subtle attempt on the hon. Gentleman's part to undermine me. The hon. Member for Mid-Staffordshire (Mr. Heddle) revealed, surprisingly to me at least, that every week in his surgery young ladies come in to tell him that they have decided to become pregnant and have an illigitimate child to gain priority in the housing queue.
  The part of the debate which I found the most interesting was the speech of the Secretary of State for the Environment. I do not often have the pleasure of listening to him, and it is a habit of abstinence that, on the evidence of this evening, I am not likely to change. It is fair enough —I say this to the right hon. Gentleman seriously—to have some knock-about fun at the beginning of a speech, but a Government Front Bench speech that is given over in its entirety to abuse and attempts to poke fun at what he sees as the ridiculous is a somewhat feeble way of opening a Queen's Speech debate. It suggests a lack of coherent argument and a lack of confidence in current policy, which is a little sad for someone in the right hon. Gentleman's exalted position.
  I preferred the line which was taken by the right hon. Member for Aylesbury (Mr. Raison). He said—I think that he was entitled to do so — that there are many features of local government that he does not like. On occasions I am highly critical of various councils, but the metropolitan obsession of the Secretary of State led him to describe developments which I did not recognise in the area which I represent. I accept that there are faults in local government and that many critical comments can be made about it, but, as the right hon. Member for Aylesbury said, that should not lead one into a vendetta against the institution of local government itself and against the very existence of local government democracy.
  Judging by the performance of the Government this evening, by the Queen's Speech and by the performance of the Secretary of State over the past few years, there is a real spite of prejudice about the Government when it comes to local government. The Secretary of State said that he was not disenchanted with the principle of public services. I can only say that he would have kidded me, and I suspect that that can be said of many hon. Members.

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  We are looking forward inevitably to another Bill in this Session that will be introduced in an effort to try to force local government down the road of privatisation. I become rather depressed at the thought of having to listen to many hours of debate about what Grand Met did for Wandsworth and how Pritchard slew the dragon of rubbish. We shall hear the rather unstable mix of faith and propaganda which usually marks the Conservative case on privatisation.
  I say to the Secretaries of State for the Environment and for Scotland that I think that there is much to be said for the old Tory principle of managerial discretion. I do not see why we should not say to local government that it is for it to decide whether it contracts out services or whether it does not. It should be able to make a balanced judgment of what is in the interests of the electorate in the proper and efficient delivery of services, and that seems to be a sensible and rational position to take. A law that came from a Labour Government that stated that no service should ever be contracted out would be just as daft and indefensible as a law that said that services must be contracted out irrespective of the merits of the argument. If that stage is reached, we end up manoeuvring ourselves inevitably into a position that makes it necessary to say that the lowest tender should be accepted, and that leads to confusion between accountancy and quality of services.
  There are circumstances in which most local authorities contract out. I can think of authorities that buy in pre-packed meals. They have sensibly decided, however, that the distribution of the meals, as part of the care service, should remain in-house. I can think of councils that do not contract out refuse collection, but contract out disposal. That is reasonable. They should be allowed to make a decision and, at the end of the day, answer to their electorate. Businessmen and management in the private sector have to take such decisions. This type of decision should be left to the discretion of the local authority. I object to the way in which we are being forced down this road.
  I recognise that there are claims—and I know that there are very enthusiastic proponents of these claims—that there are substantial savings to be made in privatisation. However, there are occasions when these savings, if they occur at all — and there is confused evidence on this point — often do so at the expense of conditions of employment and the level of service. There is no doubt about that.
  For example, I have studied a survey conducted by York university, which appeared in "Public Money" in September 1985. I do not want to hide the fact that it came to the conclusion that, on balance, it did save money to contract out. That should be on the record as its balanced view. But under the heading "Where savings are made", the survey referred to modern equipment and better management organisation, but also to reduced employment, increased use of part-time staff, lower rates of pay and fewer fringe benefits for employees.
  A balance should always be struck. There is a great deal of evidence available, and I refer the Minister to another study in 1985 conducted by Menoguen O'Grady, which appeared in "Local Government Studies". That went in great depth into the saving schemes run in the private sector through contracting out. It concluded that
  "British experience suggests that the benefits of contracting out may he restricted, even ephemeral."
  The report stated:
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  "Redundancies on some scale have thus been an enduring feature of almost all present day contracted out solutions … Increasingly, at least in the refuse service, the situation is one of less pay, less jobs and longer hours."
  I do not want to close the door to contracting out, but there is a balance to be struck. The spirit in which much of the argument is conducted should be not to assume that in some way there is an essential virtue in contracting out and that local authorities should be forced down that path. Private profit is not always compatible with social need or the quality of delivery of service.
  Mr. Michael Forsyth: Is not the hon. Gentleman missing the main point, which is that competitive tendering has resulted in most of the savings being made in in-house operations? The greatest savings have been made by in-house, direct labour organisations which, when subject to the threat of competition, have made their services more efficient and have reduced costs. The vast amount of money saved has been saved by DLOs. It is not contracting out to the private sector which is the issue; it is whether we will get a better service in-house in the traditional way by exposing DLOs to competition.
  Mr. Dewar: I understand the hon. Gentleman's point, but he spoke about a threat. The same theme runs through the whole projection of the Government's case. The hon. Gentleman would be surprised if I said that a large commercial company or manufacturing industry that decided to keep its distribution in-house and run its own fleet of vehicles should by law be prevented from taking that decision until it had tested the private market by asking for tenders. That is bureaucratic nonsense. It deceives those who may tender because there may riot he a job for them at the end of the day. It would lead to a lot of delay, confusion and expense.
  The argument put forward by the hon. Member for Stirling (Mr. Forsyth) is largely specious. However, I have every sympathy with him because I know of his genuine commitment to this line of policy. As a small Scottish aside, I can tell the House that Mr. Peter Clarke has just resigned as the Tory candidate in East Lothian, which should make the hon. Member for Stirling extremely cheerful. He has been looking very miserable because he has been consistently out-flanked by that enthusiastic proponent of privatisation, who could declare game, set and match when he proclaims his devotion to the privatisation of spare part surgery — and parts of the body for that purpose.
  There is no support for this line of policy development in Scotland. It is not just a matter of local government. Councils might be seen as parti pris. They might be seen as having a vested interest. They might be seen to be—in truth, they are—largely dominated by people from the Labour party or by those who sympathise with their point of view. The Secretary of State should consider the records of the health boards in Scotland. In their own polite and, fortunately, effective way, they have consistently resisted the Government's attempts to bully them on the road to privatisation. They have done so because they believe in the delivery of service and in patient care and because they believe it is right and in the interests of the Health Service to continue to provide services from within the Health Service. I refer to them as an example because those health boards are nominated by the Secretary of State. After six or seven years of Conservative Government, they are unashamedly

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  dominated by people of the Secretary of State's political persuasion. They have come around to this position because they are at the sharp end. They have to run the Health Service. They have recognised that privatisation is not the way forward. With all those people who have had that experience, I believe that what is now proposed is daft, damaging and largely irrelevant to what local government and local democracy should be about.
  I now refer to the other main exhibit, from the Scottish point of view. I welcome the fact that we will have some useful law reform legislation in respect of the law of diligence. The Law Commission perhaps deserves more credit than the Secretary of State. The other main exhibit, undoubtedly, is the poll tax. It is a great puzzle to almost everybody in Scotland, and, no doubt, to the rest of the United Kingdom, as to why we have the poll tax. After all, this rather tired and implausible proposal was specifically rejected by the Government in a White Paper in August 1983. It has now been disinterred.
  We are entitled to look at the arguments and ask why the proposal was again put forward. Three reasons have been put forward by the Government. First, they claim that the poll tax is an equitable solution to the problems of raising local revenue. As all hon. Members know, we take the view that this tax is totally unrelated to ability to pay. The end product will be that already disadvantaged areas will bear a bigger share of the burden of raising local revenue. Everyone who has examined the figures has come to the same conclusion. Of course, there are winners and losers, and many individual variations, but the general pattern that emerges is as clear as can be.
  I am told that in Edinburgh 35 wards will pay a larger proportion of local revenue under the community charge than they would under the present rating system. That prediction is based on the Government's figures of what the community charge would have been in the last financial year. Some 27 wards will gain. Of the 35 losers, 25 are wards in which unemployment is 12 per cent. or more. Of the 27 winners, 23 are wards in which unemployment is under 12 per cent. There is a strong correlation. The higher the deprivation, the higher the unemployment, and the more wards will be disadvantaged by the introduction of the community charge. We can find exactly the same correlation in the socio-economic classifications of those who live in those areas.
  To give the Secretary of State one concrete example, I am told that, using the Government's figures, the average payment of community charge in the West Granton area of Pilton will be £105·70 more than the average rates payment per household. In the Colinton and Spylaw park area, which is a prosperous part of the world, as I understand it there will be not an increase but a decrease of £1,052 a year.
  I shall explain to the House briefly and, I hope, clearly that the average rates bill of an owner-occupied household in my own city of Glasgow is £621. The average rates bill per household in the council house sector is £462. If we accept the Government's estimate that the community charge in the last financial year would be £262, we can see, of course that in a household of two adults—no one else, only those involved in the new community charge — the switch to a community charge will give a substantial profit to the owner-occupation sector and a substantial additional charge to the public housing sector.
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  There are many variations around those generalisations but I do not think that they can be challenged or that the general picture is anything but accurate. It is cruel mockery for any Government to say that they are introducing this reform in the name of equity.
  The second main argument is that in some way this measure is being undertaken on the basis of the principle of accountability. It is odd that the Government are working on an assumption based on the average family, which is that only the householder is interested in the payment of domestic rates. That is an extraordinary idea for a Government who preach the doctrine of the family grouping. That view is totally undermined by the fact that, in the provisions for the community charge, the Government will make husband and wife jointly and severally liable for each other's payments.
  The Government talk about contributing to and strengthening local democracy, but is it a contribution to introduce a system which will mean that about 80 per cent. of all local government spending will be compiled by central Government? If we have a buoyancy element and have to raise additional money, because rate support grant has been cut by central Government—whether Labour or Conservative, it does not matter—the burden must be placed on the community charge and, therefore, on a small taxable base. The Convention of Scottish Local Authorities has pointed out something with which, I am sure, the Secretary of State is familiar—that, taking the common assumption of an increase in local government spending of, say, 6 per cent., which has been funded through rate support grant settlement by only 3 per cent., leaving 3 per cent. to be raised, the burden will always fall on the domestic contributor, who will pay the community charge, and the increased payment will be 18 per cent. That is a very dangerous inhibition. It is certainly nothing to do with accountability or democracy as I understand those terms.
  My third grievance, which may be more prosaic but is still important, concerns how one makes the system work. I predict—I am not alone in this—that we shall be faced with chaos and confusion. The register will be compiled when turnover is likely to be 25 per cent. or more. The evidence of the Scottish Assessors Association provides us with a catalogue of doubts and difficulties. Even if compilation takes place, there will be people who will not pay, and the money will have to be recovered from them. The Society of Messengers-at-Arms and Sheriff-Officers, in its hostile evidence on the community charge, says that at the moment about 25,000 warrants are issued for nonpayment of rates. Its guess is that at a minimum this figure will "quadruple" under the new system.
  The society goes on to talk about the fiendishly complicated difficulties in trying to recover from a young single man living in his parents' home. When it comes to distraining and pinding his effects, how does one establish what are his and what are those of the rest of the household? That sounds like an unromantic point. It is. But it shows the type of difficulty that stands in the way of this programme being introduced in a practical and smooth transition.
  There are problems also of multiple occupancy, student accommodation and communal establishments. The latter is a jungle. The Scottish Assessors Association states:
  "These paragraphs"—
  those dealing with communal establishments—

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  "embrace a multitude of problems and in our opinion major, continuing and difficult litigation seems inevitable."
  I do not want a system of which the professionals say the inevitable outcome is "continuing and difficult litigation". As a member of the legal profession, I may have something of a vested interest in this, but I hope that I can rise above that. A little clarity is required in a matter as complicated as this.
  It is important that the Government spell out exactly how the system will work. When the community charge Bill is produced in a fortnight's time, I do not wish to be faced with a sweeping set of general principles established in statute and the news that the Secretary of State has taken to himself enormous powers to legislate by direction and statutory instrument.
  The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): That will not happen.
  Mr. Dewar: I am warning the Under-Secretary of State that the Bill will not be pleasantly received at any level. The reception will be doubly fractious if it is merely an enabling measure such as I have just described. We want to know how the housing benefits system will be adapted. The proposals that we are considering are inherently chaotic. I hope that the Secretary of State will take the opportunity, as he was challenged earlier, to say a little about, for example, the statement in the Green Paper. Paragraph J48 on page 128 states:
  "Most single young adults who qualify for unemployment benefit would not qualify for rebates because their income would he above the income support threshold."
  Will the Government seriously hold — in other legislation. I admit — to the proposition that everyone, however poor or financially disadvantaged, shall pay 20 per cent. of local taxation and, therefore, 20 per cent. of the poll tax? Those matters must be spelled out if the Bill, which is of mammoth importance, will be given the fair parliamentary scrutiny which the public rightly demands.
  No one wants the Bill. It is not wanted by the Labour party, but that is perhaps not surprising. It is not wanted by the assessors, by the Chartered Institute of Public Finance and Accountancy, by the Society of Local Authority Chief Executives, by COSLA, by the Scottish Consumer Council or the Law Society of Scotland. It is not wanted by the Scottish Council for the Single Homeless or the Scottish Council of Voluntary Organisations. I could continue for the next 10 or 15 minutes reeling off the organisations which do not want the Bill. It is wanted only by the Conservative party, which imagines —perhaps wrongly—that it will buy back votes in areas where the party is in special difficulties in middle-class Scotland.
  The Bill is a thoroughly bad measure. It has much to do with expediency and little to do with justice. We should make every effort to reject it when the time comes.
  9.41 pm
  The Secretary of State for Scotland (Mr. Malcolm Rifkind): As I listened to the hon. Member for Glasgow, Garscadden (Mr. Dewar), I could not help but be reminded of the uncanny similarity between his pledge to oppose our proposals to abolish rates and the pledge of the right hon. Member for Glasgow, Govan (Mr. Milian) to oppose the Tenants' Rights, Etc. (Scotland) Act 1980.
  The extent to which the Labour party pledged total opposition to the Bill on the grounds that it was unjust,
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  that it would hurt the poor and that it was not wanted by anyone other than the Conservative party was extraordinary. Yet since it has been in effect we have seen the slow, grudging conversion of Scottish Labour politicians and their counterparts south of the border as they have realised that such a policy is popular. We have noted that in Scotland the Labour party is the only party committed to the continuation of domestic rates. The hon. Member for Garscadden might have commented that a huge proportion of the representations that have been received have made clear their distaste and lack of support for domestic rating. Yet we heard from the hon. Member for Copeland (Dr. Cunningham), who opened the debate for the Opposition, that the Labour party remains completely thirled to domestic rating despite its unacceptability and unpopularity.
  Before I comment further on the community charge proposals, I shall comment on the other aspects that the hon. Member for Copeland and others, including the hon. Member for Newham, North-West (Mr. Banks), mentioned. On the proposals to encourage competitive tendering in local government, it is difficult to understand the depth of their opposition to what is not a proposal for compulsory privatisation but simply a proposal to ensure that when a local authority uses ratepayers' money it should be satisfied that the services required are provided at the cheapest cost to the ratepayer. That that principle should be distasteful and unacceptable to the Labour party says more about the contemporary state of the party than it does about its arguments.
  The hon. Member for Garscadden said that he did not wish to argue that there should be a total ban on competitive tendering. He wanted to he reasonable about it. He wanted to leave it to the discretion of local authorities. Again, that bears an uncanny resemblance to the Labour party's attitude on the right of council tenants to buy their homes. The Labour party said that that should be left to local discretion, in the knowledge that not a single Labour council anywhere in the United Kingdom would sell a single council house to a single council tenant if that discretion was exercised. Whatever views the acceptable face of the Labour party sitting on the Opposition Front Bench might wish to put forward, we know that the hon. Member for Newham, North-West would not be using his discretion on a case-by-case basis to decide whether there should be competitive tendering.
  Mr. Tony Banks: Not until we have rehoused everyone on the housing waiting list.
  Mr. Rifkind: That answers more eloquently than I could the sort of discretion that would he used by local authorities controlled by the Labour party if they were given half a chance.
  The basic fact is that we have already shown that when competition is required if achieves remarkable savings, as my hon. Friend the Member for Stirling (Mr. Forsyth) properly identified. The hon. Member for Garscadden represents a Glasgow constituency. He might have reminded the House how, when the direct labour organisation in Glasgow was faced with the need to be competitive, it not only managed to reduce its manpower by some 40 per cent. but, now that it is streamlined and more competitive, it is carrying out more work than it did with a bloated manpower some years ago. The hon. Member for Garscadden should confirm that it is that spur of competition that is of benefit to the ratepayer.

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  Far from the Government insisting that local services must be carried out by the private sector, we are simply saying that where it can be shown that a service that is as good or better can be obtained for the ratepayers, then on what possible grounds of logic, financial prudence or common sense should a local authority refuse to carry out such a test? The hon. Member for Garscadden, who likes to pride himself on being a moderate and fair-minded man, needs to answer that question if he is to command the respect of the House or the general public.
  Mr. Dewar: I wish to be clear about one thing because I am anxious to understand the Secretary of State's case. Is he saying that the power will be to obtain contracts but the total discretion as to deciding who gets the contract once tenders are in remains with the local authority and that there will be no interference of any kind from the Government in that process?
  Mr. Rifkind: Clearly, a local authority must not simply enter into the letter, but into the reality. If a local authority, which puts out certain services to competitive tendering, decides not to accept the cheapest one and cannot justify that course of action, clearly that would be completely absurd as the hon. Gentleman will appreciate.
  I shall now deal with the main thrust of the speeches of the hon. Member for Copeland, the hon. Member for Garscadden and others with regard to the community charge. My right hon. Friend the Member for Aylesbury (Mr. Raison) made an eloquent and thoughtful speech. He correctly commented on his concern about growing central control of local government. I ask him to accept that one of the fundamental reasons why it is necessary to abolish the domestic rating system is that, until we achieve genuine accountability where the electorate, which might want better services or less good services, funds the services it wishes, we shall not achieve a genuine local democracy and the sort of accountable system that I know he would wish to see.
  Mr. Raison: I agree with my right hon. and learned Friend. However, it does not seem to follow that one has to adopt the community charge to bring it about. As I said, I support the notion that everybody should pay some element of the cost of local government. That is entirely right. However, that can just as well be done through the rating system as through the community charge system.
  Mr. Rifkind: I accept that there is more than one way in which that can be done. I am pleased that he and I are on common ground— [Interruption.] I shall go on to deal with the other points he and others have raised. There is a fundamental point of principle which the Opposition do not share, which is that all those who benefit from local services should make some contribution towards the cost.
  The hon. Member for Copeland sought to suggest that the fact that only a minority of the local electorate paid rates was not in some way unique. He pointed out that only 60 per cent. of the adult population pays income tax to the Government. Frankly, that was a bogus point. While he may be correct that only 60 per cent. pay income tax, the fact is that the whole of the adult population pays value-added tax. Indeed, any Government policies that involve higher expenditure have to be paid for by all the adult electorate because it is they who, either through
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  income tax or through VAT, fund the costs of central Government. At local level, however, the only revenue that the local authority receives from the local electorate is, under the present system, the rating revenue—
  Mr. Dewar: They contribute to the rate support grant through general taxes.
  Mr. Rifkind: No, the hon. Gentleman is getting confused. The only revenue that the local authority that is deciding on higher expenditure obtains from the local electorate is rates. It has no other form of revenue that it raises locally. That is the point that must be acknowledged.
  The hon. Member for Garscadden and other Opposition Members commented on what they see as the regressive nature of the community charge. One might have thought that they would preface their remarks by acknowledging the regressive nature of domestic rates. The hon. Gentleman knows perfectly well that among the poorest households in our community are widows or single-parent families, women who may be bringing up young children with no husband to support them. Such women are among the poorest members of the community, yet it is they who can pay rates at a time when many single, non-householder adults who have substantial incomes make no contribution to the costs of the local authority.
  Mr. Maxton: Nonsense.
  Mr. Rifkind: I say to the hon. Member for Garscadden and his hon. Friend who protests that that is nonsense: the fact is that the Labour party, which is committed to a policy of domestic rates, is committed to a situation in which many who have good incomes pay not one penny, and others who have low incomes have to support them in terms of local services. The hon. Member for Garscadden knows that to be the case.
  I notice that great objection was taken by the hon. Member for Garscadden, and, indeed, other Opposition Members, to some of the comments by my right hon. Friend the Secretary of State for the Environment about certain local authorities in England and the practices that they are carrying out. The hon. Member for Garscadden informed the House that, while that may be true of boroughs in London, it certainly was not true of his part of the world. I think that the House may be interested to know of a recent article in the Glasgow Herald by a lifetime Socialist, Mr. Jack McLean. The article was headed:
  "Why I am going to vote Tory".
  Mr. McLean informed the readership of the Glasgow Herald that he was one of the two teacher members of Strathclyde regional council's education committee. He said.
  "The Labour group meet before every education meeting and fix up the line they will take. The line is invariably ideological in tone and it is the ideology of some kind of"
  half-baked—
  "class struggle. Of course it is not real class struggle. It is just breast-beating, get-they-snobby bastards-in-the-big-hooses, class warfare."
  Mr. McLean went on to say—this is a lifetime Socialist who will vote Tory:
  "I have heard these councillors say it in front of the ratepayers and in front of the professionals, or to their employees. 'We have got the upper hand now,' they say, 'and the only consultation you are going to get is that we will tell you and you'll do it.'"
  Mr. McLean concludes by saying:
  "it is not the Militants to be blamed for this."

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  He has some sympathy with the Militants. He says that they were attracted to local government
  "because of the corruption and venality displayed by those municipal representatives of Watchchain Labourism."
  Mr. Dewar: Is the right hon. and learned Gentleman really commending Mr. Jack McLean to us as a reliable witness when his triumphant conclusion is that he will vote Tory, for the party that he least wants to win?
  Mr. Rifkind: Precisely. That explains Mr. McLean's detestation and condemnation of the Labour party. So much does he despise the party that he has supported all his life that he is prepared to make such a political conversion. I can understand the hon. Gentleman's embarrassment.
  Let me deal now with the community charge. The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) spoke in favour of a local income tax. I appreciate that he and his hon. Friends are as opposed to domestic rates as is the Conservative party, but the option that they have chosen is, frankly, ludicrous. I hope that they appreciate that Scotland has some 56 district councils which, under their proposals, would each have a right to levy a separate income tax. Therefore, first, it is ludicrous that in a country as small as Scotland which, up to now, has had one level of income tax they should wish to contemplate the alternative of 56 different levels of income tax.
  Sir Russell Johnston indicated dissent.
  Mr. Rifkind: The hon. Gentleman shakes his head, but if local income tax means anything at all, it means the right of each local authority to determine the level of taxation. If they each decide a different level, that is what they would end up with.
  Secondly, as the hon. Gentleman knows, a good 40 per cent. of the electorate would not pay anything at all to the local authority because they do not pay income tax and would not be liable for any contribution. Therefore, one of the fundamental problems of the present system would be continued under his suggestions.
  Thirdly, my hon. Friend the Member for Fife, North-East (Mr. Henderson) said that a system of collection would either be based on the PAYE system, in which case it would be centrally controlled and would not be a matter of local administration, which would not be attractive, or, if alternatively it were left to local councils to decide and adminster such a system, we would have the most extraordinary and unpleasant situation of a local community being required to give details of their income to a local authority with such information doubtless being made available to the friends of people such as the hon. Member for Newham, North-West. That is not something that the Scottish public would greatly welcome.
  Sir Russell Johnston: It is too late to deal with every point that the right hon. and learned Gentleman is
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  making, but surely he agrees that, first, Lord Layfield did not adhere to a stupid and simplistic solution and he was favourably impressed by the local income tax. Secondly, it is surely a facile criticism to say that because only 40 per cent. pay income tax the same percentage would apply when dealing with a local income tax. Is the hon. and learned Gentleman suggesting that the other 60 per cent. who do not pay income tax should?
  Mr. Rifkind: No, I am saying that the others pay value added tax, so all contribute through taxation to the needs of central Government. We need a system of taxation that ensures that all contribute to the revenue raised by a local authority from its local electorate. The hon. Gentleman is not taking that point on board.
  There is a further fundamental problem in the hon. Gentleman's proposals. If a region such as Strathclyde, for example, with a high level of deprivation, were to levy a local income tax, the proportion of the electorate who would have to pay that tax would, in order to raise the appropriate sum, have to pay a much higher level of standard rate income tax than in other more prosperous parts of Scotland. Therefore, the burden of taxation would be that much greater on taxpayers in areas of deprivation than in the more prosperous parts.
  The only way to rectify that would be by telling the more prosperous parts of Scotland to raise more from local income tax than is raised through the present rating system in order to subsidise areas such as Strathclyde. The hon. Gentleman cannot avoid those possibilities. Both are extremely unattractive. Indeed, that may be why the Labour party has not been attracted to a local income tax. It, too, must have realised the fundamental flaws that such a system would introduce.
  The basic argument of the hon. Member for Garscadden is that a system of community charge is regressive. One of the fundamental ingredients of our reform proposals is that not all will pay the same. Those on the lowest incomes will receive a rebate towards the cost of their community charge. The details of the rebate system will be made available as soon as the details have been finalised. But it is clear that a substantial proportion of those on low incomes who are liable for the community charge will not pay the same as those with comfortable means who will pay the full amount. The hon. Gentleman should appreciate that.
  The system that we are proposing, and will introduce, is fair, equitable, ensures accountability to the electorate and takes account of the special circumstances of people on very low incomes. It thereby assures that we shall abolish domestic rates and replace them with a system which, however unpopular with the Labour party, will be extremely popular with the Scotish public.
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

PETITION

  Greenford (Pollution and Disorder)
  10.1 pm
  Mr. Harry Greenway: I beg to ask leave to present a petition on behalf of the Greenford Residential Group for the Environment in the name of M. D. Keating, DMS, MMS and C. A. Keating of 914 Greenford Road, Greenford, which sheweth that their environment is polluted considerably by aircraft noise, commuters parking, heavy lorries and other commuter traffic. It has become very unpleasant living in the area because of burglaries and Sunday trading.
  It is principally for Ealing borough council to tackle the problem of commuter parking, heavy lorries, traffic flows, burglaries and Sunday trading, but the Government have a responsibility in regard to aircraft noise, and to that effect I shall shortly hold a public meeting for the people of Greenford so that they can express their fears, anxieties and wishes. I know that I shall have the support of the House in asserting the interests of my constituents. The petition concludes:
  "Wherefore your Petitioners pray that your honourable House urge the Secretary of State for the Environment to do something about the pollution and disorder in Greenford. And your petitioners, as in duty bound, will ever pray."
  To lie upon the Table.

McDonald Wheeler Fund Management Limited
Motion made, Question proposed, That this House do now adjourn.—[Mr. Neubert.]
10.2 pm
Dr. Oonagh McDonald: Four of my constituents invested in McDonald Wheeler Fund Management Limited, a company which offered financial planning services and investment on behalf of private investors, companies and charities. It opened its investment centre in Canterbury.
My constituents, like many others, checked with banks and noted McDonald Wheeler's membership of the Financial Intermediaries Managers and Brokers Regulation Organisation and the fact that it was listed on the General Register of Commission Agents of the Stock Exchange. All this indicated to them that McDonald Wheeler was a reputable company, and they put in all of their savings, including their redundancy pay, totalling £150,000. They and about 2,000 other investors stand to lose everything. I am aware that the hon. Member for Canterbury (Mr. Crouch) and my hon. Friend the Member for East Kilbride (Dr. Miller) also have constituents who have suffered severely at the hands of McDonald Wheeler.
The matter is now in the hands of the official receiver, who expects to recover £3 million, at the most, of the £9 million invested. The funds were supposed to be invested in low-risk projects, but at least 47 per cent. was invested in share capital or unsecured loans. Investments included investments in VIP Airlines, which never took off, a college which did not attract one student, and a luxury yacht which was apparently solely for Mr. Wheeler's use.
In his initial report, which no doubt the Minister has studied in detail, the official receiver said that separate bank accounts were not operated for each of the nine in-house managed funds and that, before 1984, the only records kept were a cash book which simply mirrored the company's bank statement. Partly because FIMBRO carried out a spot check on only one in five accounts a year, that did not come to light until the company had been operating for some time.
I am concerned about McDonald Wheeler, in which my constituents invested their redundancy pay. However, it is not the only company which sought to attract investment of redundancy pay. On 7 October The Guardian republished an advertisement for a company called Siltala, which sought to take advantage of redundancies declared at Vauxhall. The advertisement read:
"Vauxhall redundancy meeting: Taking care of your money."
That type of advertisement is designed to mislead and to suggest that Siltala has the stamp of approval, not only of FIMBRA, which was made clear, but of Vauxhall. That was not the case.
I understand that the official receiver expects to send papers to the Director of Public Prosecutions by the end of December. John Wheeler is at present in Ireland. I am informed by the official receiver that he is unlikely to return to the United Kingdom. I understand that the official receiver agreed to pay his travelling expenses, but John Wheeler asked for other expenses, which the official receiver could not pay.

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One of the assurances that I seek from the Minister is that if there is any evidence of fraud against John Wheeler there will be speedy action, followed by prosecution by the DPP, and John Wheeler will be caused to return to the United Kingdom.
The other questions that arise concern FIMBRA. How did it find out about the state of the accounts and the way in which the business was conducted? The press has repeatedly claimed that the discovery was made as a result of one of FIMBRA's spot checks. Is it not the case that FIMBRA received many letters, including one from a disaffected consultant who was formerly employed by McDonald Wheeler, in the spring of this year, and that that caused FIMBRA to examine McDonald Wheeler's operations?
I am also informed by people who independently examined the company documents of McDonald Wheeler that it did not take them more than 45 minutes to discover that the auditor lived at the same address as the company secretary of three of the companies. The accountant was John Woodell and Mrs. Sylvia True, now Mrs. Sylvia Eileen, is the secretary of three of the companies. Mr. Woodell's one-room office was housed within McDonald Wheeler's investment centre. A large part of his business came from McDonald Wheeler. Apparently he not only audited its accounts, but prepared them. Surely FIMBRA should have discovered that at an early date, and surely that should have led it to ask questions.
A little about John Wheeler's past is relevant. Apparently in 1974 he accumulated personal debts of £20,000, which he was unable to pay, and he signed a deed of arrangement. I understand that under Scottish law that is more or less equivalent to being declared a bankrupt. Mr. Wheeler also had two other companies which went into liquidation. This was reported in the Glasgow Herald in 1979. Surely FIMBRA should have discovered more about John Wheeler's past before accepting him as a member of the National Association of Security Dealers and Investment Managers, as it then was?
It is clear that the Securities and Investments Board will appoint FIMBRA as a self-regulating organisation, because there is no one else to regulate the industry. FIMBRA will surely carry out only as much or as little regulation as its members want and are willing to pay for. Does the Minister agree that all the money invested in FIMBRA member companies is at risk so long as there is no compensation for investors? I have already described the type of advertising pressure that occurs.
I wish also to draw attention to FIMBRA's attitude to the problems of McDonald Wheeler and the way in which investors suffered. I shall quote from John Grant's interview on 28 September in "The Money Programme", which seems to have carried out a very thorough investigation of the matter. Asked about the significance that people attached to the use of the FIMBRA initials on the letterheads of member companies and what guarantee the logo was supposed to give, Mr. Grant replied:
"It was not supposed to give any guarantee at all. There are very few guarantees in this business, Mr. Burden."
When Mr. Burden asked,
"No guarantees at all?"
Mr. Grant replied:
"The statement is that they belong to an organisation which is setting high standards and attempting to see that their members comply with those standards, but guarantee —no, Sir."
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Mr. Burden went on to raise questions about a man who had been involved in personal insolvency.
The Securities and Investments Board has said that it is drawing up a detailed rule book and wishes to satisfy itself about the nature of the rules. I believe that a number of considerations should be involved. As I wish to give the hon. Member for Canterbury a little time in the debate, I shall write to the Minister about them rather than detailing all of them now. They should certainly include the positive vetting of all applicants, frequent checks on the operation of their businesses and a proper compensation fund. It would cost FIMBRA members — of which there are currently about 1,200 — around £5,000 each to repay these unfortunate investors. I appreciate that there is no obligation upon them, but it would surely help FIMBRA's reputation if they did so.
Finally, if the Government wish to encourage small investors they must ensure that small investors are properly protected and compensated for any losses. Unlike those who engage in insider dealing to make a bit more money on the side, small investors cannot afford to lose every penny that they possess. At present, the Government seem to take a cavalier attitude to what happens to small investors. I trust that the Government will respond as quickly to McDonald Wheeler's difficulties as they did in the Morgan Grenfell affair, because small investors should not be allowed to suffer in this way.
10.12 pm
Mr. David Crouch: I am grateful to the hon. Member for Thurrock (Dr. McDonald) for allowing me to participate in the debate, as McDonald Wheeler Fund Management Limited had its offices in my constituency. One of my constituents, a retired head teacher, put all his savings— some £70,000 —into this fund and it may all be gone. Another constituent persuaded his family to remove all their money—nearly £500,000 — from trusts with a major clearing bank to put it into the McDonald Wheeler fund.
The House can imagine how those constituents feel. Both were impressed by the businesslike look of the offices and by the people managing the company. They also felt that supporting local business was better than dealing with a remote City of London business. They felt that they could be more in touch if they dealt with a local firm. They also wished to back local enterprise. Above all, however, they were impressed by the company's membership of NASDIM — the National Association of Security Dealers and Investment Managers — now called FIMBRA. They were persuaded that the company was sound because it was a member of that trade association.
The brochure from the association said that it was a body
"recognised by the Secretary of State under Section 15 of the Prevention of Fraud (Investment) Act 1958 … In granting recognition, the Secretary of State delegated to NASDIM certain powers held by his own Department".
Over and over again my constituents found that this brochure on NASDIM was persuasive. It suggested—it almost conveyed a promise — to the reader that there was a safeguard for investors. It spoke of investor protection and said that membership was regularly vetted. it said:
"Only those firms which can demonstrate high professional standards of conduct…are admitted".
It fooled my constituents, and they are suffering bitterly. It would have fooled me. Did it fool the Department?
10.15 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard): I congratulate the hon. Member for Thurrock (Dr. McDonald) on securing the debate tonight and on the way in which she has used it to raise a matter of considerable importance to a large number of people. I acknowledge the contribution of my hon. Friend and neighbour, the Member for Canterbury (Mr. Crouch). I am only too aware from my postbag of the devastating effect of what has happened on the clients of McDonald Wheeler, some of whom are pensioners who depend on investment income to maintain their standard of living. I, too, have constituents who have suffered in this way. I sympathise greatly with them in view of the worry and distress that they are suffering.
An event of this sort naturally generates a great deal of feeling. Sympathy with the victims is merged with a sense of outrage that innocent people have suffered through no fault of their own, and there is an understandable tendency to blame the regulator, for not having prevented the losses, almost as much as the perpetrator. In this case, as has been pointed out, the regulatory body involved is FIMBRA, the self-regulating organisation to which McDonald Wheeler belonged. FIMBRA is, in terms of the present law, a
"recognised association of dealers in securities".
This means that admission to membership bestows the right to carry on the business of dealing in securities, in the same way as does a licence granted by the Secretary of State. The Secretary of State is responsible for recognising the association initially, but the regulation of its members thereafter is a matter for the association itself.
FIMBRA has rules and admission procedures intended to give at least as much protection for investors as the Secretary of State's statutory rules and procedures—for example, on keeping clients' money in a separate account and notifying clients of conflicts of interest. FIMBRA's rules are in some respects more demanding than the statutory rules. As a voluntary body which nobody has to join, the scope of its rules is not constrained by the statute. For example, FIMBRA's rules require members to have professional indemnity insurance. In the future, if FIMBRA is recognised as a self-regulating organisation under the Financial Services Act, it will be required to meet the standards laid down by the Securities and Investments Board, subject to Parliament agreeing in due course that the SIB should be the designated agency under the new legislation. FIMBRA has already taken steps to change its rules in preparation for this. For example, its rules were recently amended to restrict the ability of its members to avoid investigation by FIMBRA by resigning from the association.
I hope that the hon. Lady and my hon. Friend will understand if I do not respond in detail tonight to all the points that they have raised about the conduct of business at McDonald Wheeler. There are various reasons for this. First, section 449 of the Companies Act restricts the disclosure of information obtained in the course of investigations under section 447, which was used to investigate McDonald Wheeler. Secondly, inquiries by the police and the official receiver are still at the stage at which it would be against the public interest for me to be too forthcoming.
A number of general points arise. Apart from the personal distress suffered by clients, it is a serious setback to investor confidence generally when a firm such as
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McDonald Wheeler manages to slip through the regulatory net. FIMBRA is reviewing its procedures and controls to see what lessons should be learnt from this episode and will be seeking by all feasible means to minimise the risks of any repetition.
I use the word "minimise" advisedly. It is a fact of life that no regulatory system can eliminate fraud entirely. To pretend otherwise would be completely unrealistic. There can be no certainty that an applicant will not lie to the regulator about his past. It is, of course, possible to check some answers, but not every personal detail is recorded in central records, or at all. For example, bankruptcies can be checked fairly easily, but it is not feasible to check whether an applicant has entered into a voluntary arrangement with his creditors, as no central records exist. A system of positive vetting in which applicants' answers were all positively checked for truthfulness would not only be vastly more expensive but would also build huge delay into the authorisation of dealers in securities. I would remind the House that this is also a matter which hon. Members sometimes raise with me on behalf of constituents; and it is worth mentioning, in passing, that there are important markets where such delays are a significant barrier to British providers of financial services. I am not suggesting that the convenience of financial businesses in speedy authorisation procedures, either in this country or abroad, should take precedence over the interests of investors in having thorough checks made into applicants' competence and probity, far from it, but there is a limit to what is feasible and reasonable.
FIMBRA has inevitably been criticised for not checking more carefully before admitting Mr. Wheeler. There have been press reports, for example, that Mr. Wheeler is an ex-bankrupt. It is not for me to account for the actions of FIMBRA in this matter. As I have said, it is a self-regulating organisation and is itself responsible for regulating its members. It is, however, important not to suppose that everything now known about Mr. Wheeler could have been known, and reports of his past so-called bankruptcies have exaggerated both the significance and discoverability of episodes of his past career. Mr. Wheeler has been involved in voluntary arrangements with his creditors and in voluntary liquidations, but these are much less serious matters than bankruptcies and would not necessarily be deemed to disqualify a person from being authorised to deal in securities. Many people whose probity is beyond question have some voluntary liquidations in their background—through, for example, involvement in venture capital operations which did not succeed. Certainly these are matters which should prompt the regulator to ask questions.
The circumstances could have been such as to lead to the conclusion that the applicant was not a fit and proper person, but this conclusion will not necessarily follow and, as I said a few minutes ago, the regulator's ability to probe depends very much upon the applicant disclosing the matter in the first place, or upon there being records which can be checked. Criticisms of FIMBRA based on Mr. Wheeler having been bankrupt are thus somewhat wide of the mark. FIMBRA's procedures involve checks on financial resources and the arrangements for keeping clients' money by auditors and the taking up of references. I understand that all these checks were carried out on McDonald Wheeler, but gave no cause for concern.
In any case, entry controls are only part of the picture. It is also necessary to monitor how businesses are run after

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they are admitted. Monitoring and frequent spot checks require substantial resources and manpower. There is a limit to how much of either a self-regulating organisation can reasonably be expected to have. FIMBRA requires members to provide annual financial resources certificates from their auditors. These cover the arrangements for safeguarding clients' money. I understand that McDonald Wheeler's auditor gave the company a completely clean sheet.
This does not mean that the checks and procedures operated by regulators are ineffective. That would be a false impression. The great majority of financial businesses are honest and competent. It is the fraudsters who grab the headlines, not the 99 per cent. of honest practitioners. Undesirables are weeded out, either when they first apply or before significant harm is done. For example, since January 1985 the Department has refused or revoked, or given notice of intention to refuse or revoke, about 30 licences to deal in securities. Even in those few cases when matters go further and there are significant losses, the losses may be less as a consequence than they would otherwise have been. But the fact remains that F1MBRA did act and that its doing so was instrumental in bringing the situation to light and to the business being closed down. I would make one further point in this context. One's sympathies are, of course, entirely with the victims, but it should be remembered that any regulator is under an obligation to those regulated to act fairly and reasonably. That means that action has to be based on adequate evidence.
The Financial Services Act will help the regulatory authorities by equipping them with a variety of weapons to protect investors. For example, they will be able to restrict the type of investment business carried on by a person, seek court orders to restrain breaches of rules or restitution orders for the disgorgement of profits unjustly earned and insist on a second audit. However, as I said a few moments ago, it is unrealistic to expect fraud to be eliminated entirely. Therefore, the Financial Services Act 1986 also provides for far more widespread and effective compensation arrangements than are possible under the present law.
Section 4 of the Prevention of Fraud (Investments) Act 1958, which actually goes back to 1939, requires licensed dealers to pay a £500 deposit to the accountant general of the Supreme Court, which is payable if the licensee becomes bankrupt or is wound up by or under the supervision of the court. Clearly such an arrangement is completely inadequate today. Indeed, £500 would probably he insufficient to compensate even a single investor nowadays, but this sum is enshrined in primary legislation and could not be amended except by further primary legislation.
A comprehensive and adequate compensation scheme is a vital safety net for the smaller, non-professional investor. The Government's approach to compensation was set out in the January 1985 White Paper on financial services. This stated:
"Compensation should be available for investors in the event of loss arising from investment business' fraud, negligence, or failure to comply with requirements for the protection of clients' assets…The aim should he for the private investor to receive full compensation."
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The Financial Services Act 1986, accordingly provides for the establishment of an effective and well-funded central compensation scheme. The chairman of the SIB has welcomed the relevant provisions of the Act as
"essential in order to provide the level of protection which small investors have every right to expect".
Our objective is to provide the best protection for investors which can reasonably be made.
The SIB put forward last year its proposals for a compensation scheme which would offer compensation up to £30,000 to private clients of businesses in default. I am aware that not everyone considers this figure adequate and that some have compared it unfavourably with the existing stock exchange scheme. I am sure that the SIB will take full account of the views that have been expressed about its proposals. The chairman has already indicated that it might be possible to raise the top limit in a broadly-based scheme. This is a matter for the SIB in the first instance, but I would observe that critics of the SIB proposals should bear in mind that the notional maximum compensation payable is not the only factor to be taken into account in comparing different schemes.
Coverage is also important. Not even the stock exchange scheme covers the full range of liabilities mentioned in the January 1985 White Paper. It does not, for example, cover liabilities arising from an award of damages for negligence. In any case, there is nothing to prevent a recognised self-regulating organisation from establishing a more generous scheme of compensation. Under the new regime I might also add that a high limit on compensation in one area is scant comfort to an investor who has lost his life savings in a completely different type of investment business.
It is extremely unfortunate that the new provisions will come too late to help clients of McDonald Wheeler. The Act does not provide for the compensation arrangements to be brought into effect retrospectively. Quite apart from the natural presumption against retrospective legislation, it is difficult to see how compensation could equitably be arranged retrospectively. Furthermore, the compensation arrangements depend on other parts of the regulatory framework which are not yet in place. The Act does not provide directly for compensation, but for rules to be made regarding compensation. I have also received requests that the Government should themselves compensate clients of McDonald Wheeler. I am afraid that I cannot agree to those requests. It is central to the Act that the costs of enforcement and compensation should fall on the financial services industry and those who use those servides, not on the general taxpayer. I see no reason to depart from this principle in the present case.
Investigations into McDonald Wheeler are continuing. It would assist the police in their inquiries if clients of the firm would contact the Kent constabulary fraud squad. Meanwhile, I am afraid there is little information I can give about how much clients might recover of their investment. The winding-up is a complex process and it is not possible yet to assess exactly what dividend may be paid. The present best estimate is that the assets of the company may realise about half of the £9 million or so invested in McDonald Wheeler's in-house funds. The official receiver will continue to keep investors informed of progress.
I repeat that, in common with the hon. Member for Thurrock and my hon. Friend the Member for Canterbury, I have very considerable sympathy with those

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caught up in the McDonald Wheeler affair. I appreciate that much of what I have said tonight will be rather cold comfort for them, but I hope I have made it clear that
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investors will be much better protected against financial loss in such circumstances when the Financial Services Act comes into effect.
Question put and agreed to.
Adjourned accordingly at hall-past Ten o'clock.