Commons Sitting of 20 January 1987

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

    Primary and Secondary Schools (Books)
    Mr. Terry Davisasked the Secretary of State for Education and Science whether he will make a statement on the provision of resources for the purchasing of books in primary and secondary schools.
    Mr. Cunliffeasked the Secretary of State for Education and Science whether he will make a statement on the provision of resources for the purchasing of books in primary and secondary schools.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Dunn): The Government's plans for local authority current expenditure on education in 1987–88, published in last week's public expenditure White Paper, provide for local education authorities to increase spending on school books, so long as they budget sensibly.
    Mr. Davis: Is the Minister aware that the situation in Birmingham is so bad that fifth year students at Hodge Hill school have complained to the school governors about the lack of textbooks? Although the Secretary of State is widely quoted in Birmingham as having promised £100 for every fourth year GCSE student for books, equipment and staff training, in reality the city has received less than £60 per student and the school has so far received less than £30 per student, of which one third has come from the city's own resources. Is that yet another example of the Secretary of State's assurances being shown to be bogus when put to the test?
    Mr. Dunn: The points that the hon. Gentleman has raised are matters for the local educattion authority. Within our plans for next year we are allowing for about £100 million to be spent on non-teaching costs, including books and equipment, associated with GCSE. That includes the £10 million expenditure on books and equipment already announced by the Government, and will be supported through the education support grant.
    Mr. Cunliffe: Is the Minister aware that the amount of money spent on textbooks and library books in the Wigan education authority is 17·2 per cent. down for the current financial year on the 1979 figure? Is he further aware that at one time the cost was £5·19 per pupil, but that it is now £4·30 per pupil? Is the Minister proud of that? Is it not a standing disgrace that, in real terms, the opportunity for our pupils to advance in secondary education has been reduced because of a lack of textbooks?
    Mr. Dunn: I am proud of the fact that my hon hon. Friend the Secretary of State was able to secure additional expenditure of £2 billion for 1987–88 compared with this financial year. That represents a cash increase of 18·8 per cent. and should increase expenditure by local education authorities in several areas, including books and equipment.
    Mr. Peter Bruinvels: I recognise that all local education authorities would welcome additional funds for purchasing books. Can my hon. Friend confirm that some guidance will be given in the purchase of any sex education books, to ensure that no "go gay" policies, such as those in evidence in the boroughs of Brent, Haringey and Ealing, are encouraged, because parents are worried that their children may be corrupted by that sort of book?
    Mr. Dunn: My hon. Friend will know that we have equipped the parents and consumers of education with increased powers under our new legislation, some of which will take effect immediately, to enable them to put pressure on local education authorities and schools about the nature, type and choice of books for different syllabuses in schools.
    Mr. Robert Atkins: I congratulate my hon. Friend on the quality of the funding that both he and my right hon. Friend the Secretary of State have been able to secure for the education service and on recognising that this is very much a matter for the local education authorities. Does he appreciate, however, that there is considerable concern in Lancashire as expressed by the leader of the Conservative group on the county council and other parliamentary colleagues who wish to take up the matter with him, about the number of old schools not having minor works carried out because of a lack of resources?
    Mr. Dunn: My hon. Friend makes his point effectively and I look forward to receiving a deputation of Lancashire county councillors and Members of Parliament. These matters are for local education authorities and any statement must be judged against the background of the additional resources that we have secured for expenditure in the next financial year.
    Mr. Foot: Does the Minister appreciate that publishers who produce the books and the Publishers Association, which is capable of working out the figures, conclude that there has been a savage real cut in the sums available for school books and that that is additional to the cuts in the number of books purchased for public libraries and universities? That adds up to a fearsome total. Does he think that the miserable measures that he has announced will put that barbarous policy into reverse?
    Mr. Dunn: I have observed the trend on expenditure by individual local education authorities. Some have been successful in increasing expenditure on books, while others have not. Some authorities have been more successful in privatising non-educational services within the education system, which enables them to spend more on books and equipment.
    Mr. Sackville: Is my hon. Friend aware of the wide discrepancy between local education authorities in their spending on GCSE new books? Is he further aware that Bolton has decided to invest a small amount of its funds, thereby attracting only a fraction of the central Government funding available, and that that is causing genuine anxiety among local head teachers?
    Mr. Dunn: I am glad that my hon. Friend has chosen this opportunity to expose the actions of his local education authority. I dare say that that decision will be judged in any election that occurs in the near future.

    City Technology Colleges
    Mrs Shieldsasked the Secretary of State for Education and Science what progress he has made towards the establishment of city technology colleges.
    Mr. Freudasked the Secretary of State for Education and Science what progress he is making with the establishment of city technology colleges; and if he will make a statement.
    The Secretary of State for Education and Science (Mr. Kenneth Baker): The Department is making good progress in discussions with prospective sponsors of the first city technology colleges.
    Mrs. Shields: Given that the maintained sector is the responsibility of the Secretary of State and that the establishment of city technology colleges will involve great expenditure, will the right hon. Gentleman give assurances that other areas of education, such as primary and secondary schools, will not be financially penalised as a result?
    Mr. Baker: I readily give that assurance. The money that will be made available to the CTCs is additional, as is made clear in the public expenditure White Paper. I remind the hon. Lady that the CTCs will improve parental choice. Therefore, I hope that the Liberal and Social Democratic parties will support them.
    Mr. Freud: Does the Secretary of State have so little faith in the existing city comprehensive schools that he feels that the additional money being ploughed into the CTCs would not create centres of excellence if it were invested in the existing schools? Does he agree that it is divisive to ask local industry to fund a school which will remove the best teachers and pupils from the community?
    Mr. Baker: First, I am sorry that the hon. Gentleman is no longer the official spokesman on education for the Liberal party. I have enjoyed his contributions in that role. There was not much policy, but he made up for it with style. The hon. Gentleman's interpretation of how CTCs will work is wrong. In response to CTCs, we have received letters from a large number of former teachers saying that this is just the kind of institution that would tempt them back into the teaching profession.
    Mr. Pawsey: May I urge my right hon. Friend to reject the entirely predictable comments from Opposition Members? Will he take on board the fact that the CTCs are widely welcomed by industry and will do much to bridge the gap which exists between education and industry, and that if they provide centres of excellence they are entirely to be commended?
    Mr. Baker: There has been an overwhelming response to the CTCs from the public and from industrialists, which has been very encouraging. There is a clear recognition that the new proposals and ideas these days come from the Conservative party, and these have been very well received.
    Sir Peter Emery: Will my right hon. Friend assure the House that in pursuing his general policy to create centres
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    of excellence, of which the CTCs are a good example, he will also ensure that well-established and long-founded grammar schools are not be allowed to be swept away by the political views of Opposition parties?
    Mr. Baker: My hon. Friend's question goes rather wider than the original question. However, I assure him that in the draft circular that I published in the middle of last year I made it clear that in any proposals coming before me for the reorganisation of secondary education I would want to be satisfied that schools of proven worth were not destroyed, as so many have been in the past 20 years.
    Mr. Madden: How many sponsors have shown their willingness to fund the CTC in Bradford?
    Mr. Baker: Support has been shown in specific cities and general areas. Some sponsors have said that they are prepared to consider funding colleges in Yorkshire—in Leeds and in Bradford. Those offers are being pursued at the moment. I have received a specific proposal from one company to pay for all the computer equipment for the CTCs in Leeds and Bradford.
    Mr. Brandon-Bravo: Does my right hon. Friend not deplore what might be described as the "backwoodsman" approach of some local authorities—of which, sadly, my authority of Nottinghamshire is an example—in taking the view that the CTCs will be established only over their dead bodies?
    Mr. Baker: Some local authorities have been very welcoming, and one has offered specific premises. Others, however, have been very unhelpful. I do not believe that those authorities are reflecting the interests of the pupils or students who live in their areas. I must thank my hon. Friend for the help that he is giving in Nottingham in that regard.
    Mr. Sheerman: Is the Secretary of State aware that the CTCs are yet another gimmick in the long history of gimmicks that litter his career? Does he accept that they will be damaging to existing educational provision? Is he further aware that they will not be regarded as progressive by any of the informed opinion in educational circles? Do not the CTCs actually have more to do with the Secretary of State's public relations campaign for the leadership of the Conservative party? I am reminded today of his previous incarnation as Minister for Information Technology, when he set up the information technology centres, half of which are now in danger of collapsing.
    Mr. Baker: The hon. Gentleman has drawn my attention to the information technology centres. He is correct to say that I set up that network, and they have provided excellent training for many young people. I am proud to have set that system going. The hon. Gentleman's attitude is negative and does not respond to the technological needs of education. I assure him that the colleges will go ahead.

    Teachers (Pay and Conditions)
    Mr. Wattsasked the Secretary of State for Education and Science if he will make a further statement on the teachers' pay dispute.
    Mr. Kenneth Baker: The Government are determind to see a satisfactory pay structure for teachers within the

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    generous resources that we are prepared to make available. I am continuing to hold meetings with the teacher unions and local authorities.
    Mr. Watts: In return for the extremely generous 25 per cent. pay increase on offer, will my right hon. Friend continue to insist on a salary structure that provides for proper career progression so that we can retain and recruit teachers of the high calibre required for the education of our children?
    Mr. Baker: I agree with my hon. Friend. There are two elements in the proposals that I brought forward on 30 October. The amount of money involved is £600 million more, which allows an increase of 25 per cent. over 18 months. That is the most generous offer made to any group of public service workers. I must also emphasise the importance of a proper career structure with incentives and promotion posts, not only to recognise greater responsibility, but to recognise good classroom teaching. That is the essence of the proposals that I have put on the table. I very much regret that the unions have not moved to them in any significant or real way.
    Mr. Flannery: Does the Secretary of State not realise that by destroying the negotiating machinery through which free negotiation between the teachers' representatives and the Government could have taken place he is doing something that occurs only in areas of tyranny where there are no trade unions? Is it not a fact that the dispute will lapse only temporarily and will then continue, and that every union in this country is now looking closely at the situation because if the Secretary of State has his way unions will be no use at all except as advisory bodies to the Government?
    Mr. Baker: The hon. Gentleman persists in deliberately misinterpreting the Teachers' Pay and Conditions Bill that is currently before the other place. The Government introduced that Bill because we recognised that the Burnham negotiating procedure had utterly broken down.
    Mr. Flannery: The right hon. Gentleman broke it down.
    Mr. Baker: No. With the greatest respect that is not the case. In July there was the Coventry agreement signed by five unions, then there was the Nottingham agreement signed by four unions and just after Christmas only two unions signed up. The problem of trying to deal with teachers' pay and conditions is that agreements have not stood up as agreements, and union support has not stood up as union support. There is a sad background of historic agreements that have turned out to be neither historic nor agreed. That is why the Government have had to act.
    Mr. Greenway: Will my right hon. Friend confirm that in any future machinery he will have talks with unions currently represented on Burnham as a matter of course? Will he confirm that there must be some room for compromise, if it is possible? Will he continue to talk towards that end, provided that the conditions that he has enunciated so clearly and rightly are met?
    Mr. Baker: I re-emphasise what I have said before. My door is open. I have seen various unions. I am seeing the National Union of Teachers tomorrow and I am waiting for further proposals to come forward. My hon. Friend's first point about the representations of certain unions relates not only to teachers' unions but to further education unions. I can give him my assurance in both areas.
    Mr. Ashdown: Notwithstanding the Secretary of State's answer to the hon. Member for Sheffield, Hillsborough (Mr. Flannery), does the right hon. Gentleman realise that for many teachers the issue of pay is now less important than the maintenance of their civil rights? Does he appreciate that no group of workers could countenance or submit to the removal of their rights to negotiate on pay and conditions, and that many of us regard his attempt to remove those rights as a civil liberties issue no less grave than the removal of trade union rights at GCHQ?
    Mr. Baker: I welcome the hon. Gentleman to his position as spokesman for the Liberal party, and, I believe, for the Social Democratic party—I would not want to do him down. I made some inquiries as to whether the hon. Gentleman had ever spoken on education before, but I have not yet been able to turn up anything. Therefore, we could say that he approaches education with a mind that is open, if not blank.
    We are not doing away with entrenched union rights. That is not the position. The unions will be free to make representations to the interim advisory committee. After the interim advisory committee has reported, I will be obliged to consult its members either individually or collectively, as I am with the local authority employers.
    Mr. Patrick Thompson: Bearing in mind that in matters of education which involve our children it is more important to talk about responsibilities than about rights, and bearing in mind also the importance of reaching a satisfactory solution to the pay dispute as soon as possible, with a good pay structure for our classroom teachers, does my right hon. Friend share my concern that the National Association of Head Teachers should choose this time, of all times, to start talking about extra money on the table for possible extra new responsibilities? Surely this is not the right moment for talk of that sort.
    Mr. Baker: I agree with my hon. Friend. It is not the right time to bring that up, because in the pay structure that I recommended deputy heads and heads are quite rightly recognised as people bearing considerable responsibility. I have been glad of their support for my proposals.
    Mr. Radice: By his complete rejection of the reasonable compromise put forward to him by employer leaders last week the Secretary of State has shown that, all along, he has been intent on imposing his own package, but can he assure parents that ministerial diktat will bring long-term peace to our classrooms?
    Mr. Baker: Before Christmas, when I saw Councillor Pearman, I was led to believe that there would be a considerable shift in the employers' and unions' positions. I was glad to hear that. In the event, there was a microscopic shift, which Councillor Pearman confirmed to me only last week. I regret that very much. I thought that it would be a much more significant shift. For various reasons, Councillor Pearman decided not to make any significant change at all. I regret that. However, I have said that I am still willing to talk to him should he wish to speak again on this matter.
    Mr. Radice: He offered the right hon. Gentleman a compromise.
    Mr. Baker: He did, but the compromise was microscopic. It was so minor that there was no significant change at all. He recognised that it was so small that he did not want to put it forward.

    Student Grants
    Mr. Dubsasked the Secretary of State for Education and Science when he last met the National Union of Students to discuss the level of student financial support.
    Mr. Tony Lloydasked the Secretary of State for Education and Science when he last met the National Union of Students to discuss student financial support.
    Mr. Kenneth Baker: I met representatives of the National Union of Students on 30 September 1986, when we discussed a range of issues, including financial support for students. In addition, my officials met representatives of the National Union of Students on 21 November 1986 to discuss the subject.
    Mr. Dubs: Would the Secretary of State care to comment on the recent report by the Select Committee on Education, Science and Arts, which concluded that there was appreciable hardship for many students and that there was an urgent need to increase the level of student awards? Does he agree that many students find life extremely difficult and financially hard and that there is an urgent need to implement the Select Committee's recommendations?
    Mr. Baker: I recognise that there has been a cut in the real value of student awards of about 11 per cent. since the Government came to office. First, I set up the review of student support under the Under-Secretary of State, my hon. Friend the Member for Buckingham (Mr. Walden). He is in America today, looking at various methods of student support. That will be taken into account. Secondly, the reduction in the real value of student grants has not prevented a record increase of 140,000 students since we have been in office.
    Mr. Lloyd: The Secretary of State seems to ignore the fact that the Select Committee's report unanimously condemned the hardship caused to students by the Government. Surely the right hon. Gentleman should tell the House what he intends to do about that. In reality, we already have the introduction of student loans by stealth. There is a good chance that, in any case, that is what the Secretary of State wants for his election manifesto. If that is so, let him tell the House and the students today.
    Mr. Baker: One of the matters that the review of student support will examine is the possibility of loans as top-ups to grants. I refer the hon. Gentleman to an article in The Observer last week, which stated:
    "If grants were topped up with loans we could afford more students, and if repayments were to begin only when someone was earning the national minimum wage, no one need be deterred. While the present ramshackle structure remains in place we are blighting the prospects of a generation of young people and endangering the country's economic future."
    Mr. Sims: Whatever my right hon. Friend the Secretary of State decides should be the relative proportion paid towards student maintenance by the state and by parents in the coming academic year, will he ensure that the total figure accurately represents student costs? At the moment it does not do that, as a result of which some students receive the full parental contribution, but it is still insufficient to cover their expenditure.
    Mr. Baker: I appreciate my hon. Friend's work on the Select Committee. In any change in the system of student support we must ensure that students from families who are less well off are not deterred from going into higher education. I look upon that as one of the major considerations.
    Mr. Forman: When my right hon. Friend met the NUS representatives, did they give him any reliable estimate of the number of students who are already dependent on personal loans and overdrafts to help finance their time in higher education? Will my right hon. Friend bear that factor carefully in mind in considering any conclusions at the end of the Walden committee's investigations, because it seems to me that he would be wise to proceed cautiously in the direction of full-blooded loans?
    Mr. Baker: I emphasise that the review of student support is examining loans as a possible top up. We start from the proposition that it would be better, if we could, to remove students from the social security system. In the early days of Beveridge it was never considered that students would be part of that whole system. A very careful review is required, and that is taking place.
    It is exceedingly difficult to obtain figures of the number of students involved and the size of their overdrafts. I have seen various estimates and I do not give much credence to any of them. The NUS representatives did not tell me the cost of their full proposals. The NUS proposals would cost some £300 million more for straight student grant support, and if extended to all students another £1 billion. I do not know whether that has been accepted by the official Opposition.
    Mr. Fatchett: Did the Secretary of State note the paragraph in the Select Committee's report which said that worries about insecurity of finance were undermining the academic work of various students? How does the right hon. Gentleman reconcile that possible drop in standards with his supposed commitment to higher standards?
    Mr. Baker: There is no record that there has been a drop in standards in higher education. I have said to the House, and I say again, that there has been a tremendous increase in the number of first-class degrees awarded by polyechnics during the past five years. We can all—not just one party—be proud of that. I do not accept that there has been any drop in quality.
    Mr. Bill Walker: Is my right hon. Friend aware that many Scottish students believe that loans are the way forward? [Interruption.] I am president of the Scottish Conservative Students Association. Many Scottish students also recognise that they can earn money during the long holidays, and they receive substantial assistance with housing support.
    Mr. Baker: I think that many students who have overdrafts may welcome a form of formal loans, the payment of which is deferred until they are earning at the average wage or above. That point has been put to me by many students in England and, I am glad to say, in Scotland.
    Mr. Andrew F. Bennett: Will the Secretary of State confirm that, normally, the Government make an announcement about next year's student grant some time in November and that, on two or three occasions, he has kept putting off an announcement? Has this anything to do with the fact that the Government are not absolutely

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    certain whether there will be a June or an October election and are therefore not quite sure whether the student vote will be crucial in many marginal seats?
    Will the right hon. Gentleman confirm that he cannot be waiting for his hon. Friend's inquiry into loans, because its recommendations cannot be implemented in time for this year's grant? Is it not therefore important that the right hon. Gentleman makes an early statement that he will increase student grants by more than the cost of living this year to make up some of the ground lost since the Government came into office in 1979?
    Mr. Baker: Decisions on education policy, which I am making and will continue to make, must have a much larger time scale than the date of the next election. I hope to make an announcement shortly on the level of grants for the next academic year.
    Mr. Ashdown: In view of the fact as the Secretary of State well knows, that the recommendations of the review of long-term support for students cannot be implemented until 1988–89 and that his officials admitted in evidence to the Select Committee that the maintenance level of the current mandatory award does not meet the full needs of students, will he undertake to correct this situation when considering the mandatory awards for the forthcoming academic year?
    Mr. Baker: I replied to that point in answering the hon. Member for Denton and Reddish (Mr. Bennett). I shall be making the statement on the level of student grants very shortly, probably at the beginning of next week.
    Mr. Porter: Does my right hon. Friend agree that it would appear to be common ground that there has been a reduction in the real value of student support in recent years? Although I appreciate that there must be careful consideration of the type of student support in the future, it seems to me—perhaps my right hon. Friend agrees—that it would be proper, pending the decision, to review and bring up to date the real value of students awards. Would it not be proper also for the electorate to have a decided view before the next election of what the Conservative party means by its support for students?
    Mr. Baker: With regard to the latter part of my hon. Friend's question, I hope that the review of student support will be completed this year. I take his initial comments very much to heart and ask him to await my statement next week.

    Schools (Toilet Facilities)
    Mr. Jannerasked the Secretary of State for Education and Science what is his policy on the provision of toilet facilities in schools.
    Mr. Dunn: The requirements for the provision of toilet facilities in maintained schools are set out in the Education (School Premises) Regulations 1981. They prescribe the minimum number of toilet fittings according to the number of registered pupils. Separate toilet facilities are required for male and female staff. The duty of securing compliance with these regulations rests with the local education authorities.
    Mr. Janner: Is the Minister aware that toilet facilities in many schools throughout the country are disgusting, inadequate and intolerable? Does he know that local education authorities, including that in Leicestershire,
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    simply do not have the necessary funds to put this matter right? As a result, many schools in my constituency have toilet facilities which would not be tolerated if they were in other parts of the country. What steps does the Minister propose to take to provide the resources to remedy this inadequacy?
    Mr. Dunn: I am indebted to the hon. and learned Gentleman for his interest in school lavatories. I should like to point out that the total net provision in our current capital spending plans for education is some 18 per cent. higher than it was in the plans for 1986–87. This reflects the increased spending power from capital receipts by which authorities may supplement their allocations. How local authorities choose to spend their capital resources is, as ever, a matter for them to decide.
    Mr. Maclean: Does my hon. Friend agree that the lack of so-called adequate toilet facilities in some small rural schools is not of itself a good reason for accepting the closure of those schools, particularly when such schools have good academic standards and are otherwise catering very well for all the children, as they did for preceding generations?
    Mr. Dunn: I have never recommended a school for closure because of a lack of toilet facilities, and I shall never do so.

    Tertiary Education
    Mr. Flanneryasked the Secretary of State for Education and Science how many representations he has received from local education authorities wishing to introduce a tertiary level of education.
    Mr. Dunn: My right hon. Friend is currently considering four proposals under section 12 of the Education Act 1980 which involve the introduction of tertiary education.
    Mr. Flannery: Does the Minister realise that all over the country there will be demands for tertiary education, which is a natural follow-on, indeed a national follow-on, from comprehensive education?—[Interruption.] For the benefit of those shouting, the Minister told me the other day, on the delegation, that the demand for tertiary education was begun by a group of Tories.
    When Sheffield submitted a plan for the provision of tertiary education quite a long time ago why, if not for electoral reasons, was permission given for that provision in only five constituencies out of six and the sixth constituency—which was Tory controlled—was excluded? In heaven's name, why stop those children in the Hallam constituency from having the benefits of tertiary education?
    Mr. Dunn: That is a wicked and unfair accusation. The schools in south-west Sheffield were excluded from the Secretary of State's approval of the proposals for the rest of Sheffield because that area contained a number of schools which had good and successful sixth forms and because there were substantial opposition to those proposals in the south-west area.
    Dr. Hampson: Will my hon. Friend reassure parents in Leeds, where a dogmatic councillor has assumed the role of chief education officer, that he does not expect them to submit to a tertiary scheme universally applied across the

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    city and that there is worth in maintaining a mixed system which retains schools that have sixth forms of proven worth?
    Mr. Dunn: Whatever comes out of the city of Leeds, I can assure my hon. Friend that the proposals will be considered fairly and squarely, and on their merits. In the light of the answer that I have just given in respect of the city of Sheffield, any school of proven worth must make the strongest representations to us under the law.
    Mr. Merlyn Rees: Will the Minister confirm that his Department approves of tertiary education in principle and that circulars have said that this form of education is one way of dealing with a very real problem, namely, the surplus of school places? In this respect, is it not disturbing that in the case of the borough of Harrow, which is Conservative controlled and had very good grammar schools, when the Prime Minister was Secretary of State for Education and Science schools of excellence were shut down without a murmur and turned into sixth form colleges and are now becoming tertiary colleges, yet in the city of Leeds, when the same scheme is put forward, people say that it is politically motivated? It means that we are not getting the right discussion of real problems. It is not right to dimish these.
    Mr. Dunn: Proposals come to us under section 12 of the 1980 Act for a variety of reasons, including the elimination of surplus places. I assure the right hon. Member for Morley and Leeds, South (Mr. Rees) that when the proposals come to us each set is considered on their merits and in the context of the educational provision for the area that they serve.
    Sir John Page: Is my hon. Friend aware that the right hon. Member for Morley and Leeds, South (Mr. Rees), who was my most distinguished constituent at one time, is only emphasising the valuable point that decisions on matters such as these should be left to the properly elected local authority?
    Mr. Dunn: I should like to point out that we on this side of the House are totally opposed to a commitment that would enforce tertiary provision on all local education authorities. How local education authorities make proposals, and why they make them, is a matter for them. We have a duty under the law to consider each set of proposals on their individual merits.

    Teachers (Pay and Conditions)
    Mr. Roy Hughesasked the Secretary of State for Education and Science when next he intends to meet representatives of the teachers unions to discuss future negotiating procedures.
    Mr. Baker: I am meeting representatives of the National Union of Teachers tomorrow. I am sure the issue of future negotiating procedures will be raised.
    Mr. Hughes: In view of the difficulties in recent times, in his quieter moments does the Secretary of State really believe that to impose a solution and, in the process, to take away the negotiating rights of the trade unions, is the best way to secure peace in the classroom?
    Mr. Baker: It has not been possible to secure, through negotiations, an agreed proposal. The proposal that came to me from Burnham was conditional upon my providing
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    more money than I said the Government were prepared to make available and also upon a structure which the Government find unacceptable. A regrettable feature is that the whole of the Burnham procedure—a sort of joint negotiating committee without my being represented—has led to confusion and indecision. That cannot go on. We must resolve this dispute.
    Mr. Galley: Is my right hon. Friend aware that one of the teaching unions has threatened to concentrate its campaign about future negotiating procedures on marginal Conservative seats such as mine? It has told me that I am on its hit list. Whatever disruption that union may cause, I assure my right hon. Friend that I shall not bow to such scurillous tactics. Will my right hon. Friend assure the House that he will continue resolutely to put first the interests of children, parents and that responsible and professional majority of teachers who simply want to get on with their important job?
    Mr. Baker: I do not know which union made that threat, but I am sure that if it fulfils it and carries out its threat it will succeed only in increasing my hon. Friend's majority.
    Mr. Radice: Is the Secretary of State aware that the proposals put forward by the employers and teachers for new negotiating machinery meet all the Secretary of State's objections to the old Burnham committee? Therefore, will the Government allow the proposals to work by amending the Teachers' Pay and Conditions Bill in another place?
    Mr. Baker: The proposal that has been put to me by the NAS, and now by the TUC, simply says that they would like a joint negotiating council. They do not say what my position should be in such a negotiating council, what representation I would have or whether I would have an initiating or a responsive role. I am still waiting for specific proposals. Some may still emerge.

  PRIME MINISTER

    Engagements
    Mr. Parkasked the Prime Minister if she will list her official engagements for Tuesday 20 January.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings later today.
    Mr. Park: In 1987, will the Prime Minister begin to speak and act on behalf of the whole nation?
    The Prime Minister: With the increased standard of living of the whole nation, including those on benefit, I believe that we speak and act on behalf of the whole nation.
    Mr. Dickens: Has the Prime Minister read reports today of the American diplomat's husband who has allegedly sexually assaulted a young English girl and who was prevented from being prosecuted by diplomatic immunity? Does the Prime Minister consider that the Vienna convention is outdated, bearing in mind all the parking fees that are left unpaid, the driving offences that have gone unchallenged, the death of WPC Fletcher and today's sordid episode?
    The Prime Minister: I read the report, and inquiries were made. An incident did take place involving the

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    husband of a member of a foreign embassy in late 1985. Contrary to press reports, the case was not one of rape or assault, but of indecent exposure. Fortunately, there was no physical injury. None the less, of course, this was a serious matter. We immediately asked the embassy to waive the immunity of the person concerned so that action could be taken against him. The embassy declined, but withdrew the person concerned the next day.
    Mr. Kinnock: Will the Prime Minister join me, and I am sure Members on both sides of the House, in warmly welcoming the reports that BTR has called off its bid to take over Pilkington? However, is she aware that the case has highlighted the need for a radical revision of the Government's decision to confine references to the Monopolies and Mergers Commission to strict questions of competition? Does she agree that at a time of so many conglomerate takeover bids such narrow terms of reference cannot properly safeguard the wider industrial and technological interests of the nation?
    The Prime Minister: As the right hon. Gentleman has noted, the market took its own decision much more quickly than would have happened had the matter been referred. With regard to the specific question that he mentioned, as he knows, there is a review under way. The issues need to be looked at carefully and thoroughly. The guidelines published by the then Secretary of State in 1984 were designed to meet companies' wishes for stability and predictability. It would be quite wrong to be panicked into ill-considered changes, and for some time further review has been under way.
    Mr. Kinnock: That review was decided upon last June, which was very welcome, and the advice and subscriptions of comment closed at the end of July. Why has it taken so long for us to obtain a report at a time when the value of conglomerate bids has gone up from under £1 billion in 1979 to an annual rate of £9 billion now, so distorting the whole possibility of the future of so many productive and innovative industries in this country?
    The Prime Minister: Some mergers go through and are of great benefit and lead to the very much better use of assets. Some are fought off by the market and some go through with the market. We must consider carefully why matters should be referred to the Monopolies and Mergers Commission. If they cause a monopoly and reduce competition the matter is easy to decide, but the decisions must not be arbitrary. If we are to define new rules, we must be quite certain that they are such that the market can clearly understand them and they do not lead to arbitrary decisions.
    Mr. Hind: Will my right hon. Friend join me and many of my hon. Friends in congratulating Pilkington's work force on producing a highly successful conglomerate in the north of England? Does my right hon. Friend agree that, despite many of the comments to the contrary, this is a model of industry in the north of England, which proves that in the north there is industry that is alive and well and prospering?
    The Prime Minister: I have visited some of Pilkington's factories, and, as my hon. Friend says, I have been very impressed with the work that they do.
    Mr. Woodallasked the Prime Minister if she will list her official engagements for Tuesday 20 January.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Woodall: With regard to the north-south divide, which the Prime Minister seems to suggest does not exist, is she aware that, despite her reply to the previous question, unemployment in my constituency is over 30 per cent. and 5,500 people are signing the register, out of which 278 are young people under the age of 18 seeking their first job and are already beginning to think that they are on the scrap heap? What does the Prime Minister intend to do about the situation in my part of the world?
    The Prime Minister: With regard to what the hon. Gentleman calls the north-south divide, the difference in income has not changed much since 1975 and travel and housing in particular cost more in the south. Employment has grown since 1983 in every region, save Wales. Unemployment in the past few months has been falling fastest in the north, north-west and Wales.
    With regard to specific help for the north, since 1979 the north, including the north-west, Yorkshire and Humberside, has received over £2 billion of regional assistance, compared with less than £200 million for the rest of England. As the hon. Gentleman knows, each year the rate support grant system redistributes about £1 billion in grant from London and the south-east to the north. As he will also be aware, the Manpower Services Commission money for youth training and community schemes goes far more to the north than to the south.
    Mr. Hirstasked the Prime Minister if she will list her official engagements for Tuesday 20 January.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Hirst: Without in any way prejudging the outcome of the Department of Trade and Industry's investigation into Guinness, does my right hon. Friend welcome the resolute action taken by its new chairman Sir Norman Macfarlane? Does she agree that if the City and business are to command confidence nationally and internationally they require people like Sir Norman to enforce unimpeachable standards of probity and integrity?
    The Prime Minister: Yes, Sir. I agree with my hon. Friend and his comments about Sir Norman Macfarlane. As he knows, the City is very important to the economy of the whole of the United Kingdom. It in fact contributes to the economy net earnings from overseas of over £7 billion, which is as much as, if not more than, North sea oil at its peak. I agree with my hon. Friend that it is vital that probity and honesty be seen to be maintained and we are anxious that if there are cases to the contrary they should be rooted out, and so, indeed, is the City.
    I point out that the Government have done more than any other Government to root out such cases. Insider dealing was made an offence in 1980, for the first time. There was a Companies Act—[Interruption.]
    Mr. Speaker: Order.
    The Prime Minister: —and a Financial Services Act 1986. A fraud investigation group has been set up, and a Banking Bill and a Criminal Justice Bill are in progress. Some of the measures that we have taken are now being implemented, and still more are in the pipeline.
    Mr. Steel: When will the Prime Minister tell the House her conclusions following last year's review of takeover

    733
    and merger policy? Will those conclusions include the need to consult employees, as well as shareholders, in what ought to constitute a wider definition of the public interest?
    The Prime Minister: The right hon. Gentleman heard what I said earlier. Guidelines were issued in 1984. A review is under way. He also heard me say that any fresh guidelines must be quite clear and specific. There must be no question of an arbitrary reference of these matters, because if there is we shall suffer and not get inward investment. My conclusions will be made known when they are ready.
    Mr. Roger King: With labour costs falling and export opportunities rising, does my right hon. Friend agree that Britain is about to enter an era of unparalleled manufacturing output which will bring prosperity and jobs to all areas?
    The Prime Minister: My hon. Friend is correct. Manufacturing productivity has gone up very rapidly and it is therefore thought that labour costs are staying level. This gives us a tremendous opportunity further to increase the volume of exports. Manufacturing industry is doing very well and its export orders are almost at record levels. Good times are very much in prospect.
    Mr. Evans: What words of comfort does the Prime Minister have for the Pilkington work force and the people of St. Helen's for having seen off BTR? Will the Department's review of merger policy ensure that Pilkington will not be in danger of being swallowed up by some other financial conglomerate in future?
    The Prime Minister: As I said earlier to the right hon. Gentleman the Leader of the Opposition, the companies concerned and the market decided the future. If we had followed the advice of the Opposition it would have taken months more to decide it; months more of uncertainty.
    Mr. Stokes: Is my right hon. Friend aware that her recent visit to the west midlands was extremely well received? Is she further aware that many of the stouthearted people in that region are determined to play their part in Britain's industrial recovery and do not believe, like the Opposition, in a divided nation?
    The Prime Minister: I am glad to see my hon. Friend back in his usual place and showing his customary vigour. I very much enjoyed the visit to Birmingham and the west midlands. I was well received and found the area confident. Immediately on my arrival I was presented with a copy of the Birmingham Evening Mail, which had a record number of situations vacant in 29 pages.
    Mr. Allen Adamsasked the Prime Minister if she will list her official engagements for Tuesday 20 January.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Adams: I am sorry that the Prime Minister did not manage to hear the entire question I put to her several weeks ago about the power industry. This was entirely due to the noisy and unruly behaviour of Conservative
    734
    Members. Is she aware that Babcock Power, one of our major builders of power stations, has announced that 26 per cent. of its work force throughout Britain is to be made redundant? Will she consider bringing forward orders for the power stations that Britain needs so that we can keep together a highly skilled and specialised work force?
    The Prime Minister: I am aware of the hon. Gentleman's point. As he knows, the decisions will have to wait a little longer, until after the Sizewell report has been published, considered, debated in the House and decisions made upon it.
    Mr. Michael Forsyth: Will my right hon. Friend find time today to reassure our farmers that she understands the plight that they face, and will she repudiate yesterday's policy announcement from the Opposition that they will introduce rating of agricultural land and buildings?
    The Prime Minister: My hon. Friend makes a vital point. He knows our policy towards the farming industry, which is vital to Britain's future. Although it has to make changes, we are trying to see that those changes are made at a rate which the industry can absorb. We totally and utterly condemn any suggestion that farming should be rated.
    Mr. Jack Thompsonasked the Prime Minister if she will list her official engagements for Tuesday 20 January.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Thompson: In view of the reply that the Prime Minister gave a few moments ago and her support for the one-nation policy, will she consider sending a task force of the appropriate Ministers to the north of England to find out what the situation is there, because I am sure that the Government are totally ignorant of the situation in that part of the country?
    The Prime Minister: The hon. Gentleman is quite wrong in trying to give any impression that the north of England is down and out, when many parts of it are very prosperous. The road systems are excellent, the buses are excellent and the hospitals are excellent. In many cases the airports are excellent, the railways are running, and when I was recently in Manchester, and previously in Newcastle and also in Scotland, I made the point that if one wants extra investment and jobs one boosts the advantages of a region, which are many.
    Mr. Mallon: On a point of order, Mr. Speaker. The Prime Minister said that, apart from Wales, there was job growth in every region.
    Mr. Speaker: Order. Initially, I cannot see that there is any point of order. It must be a matter in which I can rule.
    Mr. Mallon: It is a point of order, because the growth rate of unemployment in the north of Ireland was 9·8 per cent. and I would not like to be——
    Mr. Speaker: Order. I shall try to call the hon. Gentleman on another day. Statement by the Home Secretary.

Bombing (Court Cases)
3.32 pm
The Secretary of State for the Home Department (Mr. Douglas Hurd): With permission, Mr. Speaker, I should like to make a statement on my review of the cases of the Birmingham pub bombings, the Guildford and Woolwich pub bombings and Mrs. Anne Maguire and her co-defendents. Although there were, of course, connections between the Guildford bombings case and that of the Maguires, these were three separate cases, treated entirely spearately in the courts. It follows that I have considered each one separately. I apologise to the House for the length of the statement.
All 17 people concerned were found guilty of very serious offences by a jury following lengthy trials. The verdicts in each case were later upheld on appeal after further long hearings. In short, the question of guilt was in each case properly determined by due process of law.
A Home Secretary must consider very carefully in what circumstances if any he would be justified in interfering with a verdict reached by the courts. Over the years, all kinds of changes may come to alter the view which some people may take of a particular case. The enormity of the crime committed may cease to dominate the scene; those convicted may continue to protest their innocence; police procedures may be improved; new scientific tests may be developed; individuals may write books or produce television programmes which summarise days or weeks of evidence in a way which reflects their genuine conviction that the verdict was wrong or open to considerable doubt: as a result, a body of distinguished opinion may grow up to the same effect. All that has happened here.
In responding to these pressures, a Home Secretary must never allow himself to forget that he is an elected politician and that, under our system, the process of justice must be kept separate from the political process. It is open to others to say: "If I were trying that case as a judge, I would have given a different summing up," or, "If I had been on that jury, I would have reached a different verdict." But it is not open to a Home Secretary simply to substitute his own view of a case for that of the courts. It would be an abuse of his powers if he were to act as though he or those who might advise him constituted some higher court of law.
A different situation arises, of course, if new evidence or some new consideration of substance is produced which was not available at the trial or before the Court of Appeal. In any civilised system of justice, there must be a means whereby a case can be reopened so that new matters can be assessed alongside the old evidence by due process of law. This distinction between new evidence and differences of opinion about old evidence has governed the way in which my predecessors have used the power under section 17 of the 1968 Criminal Appeal Act to refer cases to the Court of Appeal.
Mr. Robert Kee, in his book "Trial and Error", implies that this distinction is a technicality. I disagree. In my view, it is fundamental. It is hard to see how the Court of Appeal could fail to dismiss any reference to it based simply on the proposition, argued without fresh evidence, that its predecessors and the jury had got it wrong. More important, perhaps, this House and the public would rightly become deeply suspicious of a convention which enabled politicians to throw a verdict into doubt simply
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because they had developed, without any fresh evidence, a view that the verdict may have been mistaken. Once such a convention had become established, the door would be wide open to interference in any case in which a Home Secretary thought it convenient to bow to pressure to have a case reopened.
Thus I believe that my predecessors were right to take a principled view of the circumstances in which it is proper to exercise the power of reference to the Court of Appeal, and after much thought I mean to follow them.
I turn to the cases. Mrs. Maguire, her husband Patrick, two of her sons, Vincent and Patrick, her brother-in-law Patrick "Guiseppe" Conlon, Patrick O'Neill and Sean Smyth, were convicted in March 1976 of unlawfully handling explosives. The prosecution case rested almost entirely on the results of TLC on thin layer chromatography tests which indicated that all seven defendants had handled nitroglycerine. After a trial lasting six and a half weeks, during which the scientific evidence was examined at great length, all seven were found guilty. In July 1977 the full court, after a hearing lasting 10 days, refused their applications for leave to appeal.
The defendants had protested their innocence throughout and have continued to do so. The case has been reviewed previously, most notably in the period 1980 to 1983 and following a debate in another place in May 1985, by which time Mrs. Maguire the last to complete her sentence, had been released from prison.
I have examined with the greatest care the arguments which have been advanced in particular by Mr. Kee in his book published last October. I am clear that there is no new evidence or consideration of substance which I can regard as casting doubt on the safety of the convictions. I am placing in the Libraries of both Houses a memorandum which sets out in greater detail the reasons why I have reached this conclusion. None of the arguments now presented succeeds, in my view, in challenging the scientific evidence. The scientific validity of the TLC test—which is not the same test as that used in the Birmingham case—has not been undermined. The main argument which Mr. Kee advances—that the samples must have been accidentally or deliberately contaminated—is not supported by any evidence. In these circumstances I can see no grounds on which it would be right for me, following the principle I have stated, to refer the case to the Court of Appeal.
I turn next to the Guildford and Woolwich pub bombings. In October 1975, after a trial lasting over a month, Patrick Armstrong, Gerard Conlon, Paul Hill and Carole Richardson were found guilty of carrying out the bombing of two pubs in Guildford in October 1974 in which five people died. At the same trial, Armstrong and Hill were convicted of two murders arising from the bombing of a public house in Woolwich in November 1974. All were found guilty by unanimous verdicts. In October 1977, after a hearing lasting 11 days, the full court refused applications for leave to appeal.
These convictions were based wholly on confessions made by the four to the police. It is common ground, and was fully before the court of trial and the Court of Appeal, that there were a number of inconsistencies and contradictions in the statements made. All four alleged at trial that those statements were untrue and that they had been improperly obtained. All four put forward alibis, which were plainly not accepted by the jury. Later, between the trial and the appeal, members of the

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Balcombe street gang and Brendan Dowd claimed that they, and not the four, were responsible for the Guildford and Woolwich bombings, and these claims formed the main plank of the four's grounds of appeal.
However, the Court of Appeal concluded that there had been
"a cunning and skilful attempt to deceive the Court by putting foward false evidence".
The Court of Appeal also specifically considered Carole Richardson's alibi evidence, and concluded that it was concocted.
Again, I have carried out a detailed examination of the points which have been raised about these convictions. However, it is clear to me that no new substantive points have been raised. The arguments that have been put forward simply repeat or rework those that were aired at trial or on appeal. Indeed, Mr. Kee acknowledges that there is no new evidence. I have had to conclude that there are no grounds that would justify my referring the case to the Court of Appeal. Again, I am placing in the Libraries of both Houses a memorandum which sets out in greater detail the reasons for my decision.
Finally, I turn to the case of the six men who were convicted in respct of the Birmingham pub bombings. In August 1975, after a two-month trial, Hugh Callaghan, Patrick Hill, Robert Hunter, Noel McIlkenny, William Power and John Walker were convicted and sentenced to life imprisonment in respect of the bombing of two public houses in Birmingham in November 1974 in which 21 people were killed and 162 injured. Applications by the six men for leave to appeal were refused by the full court on 30 March 1976. The men later pursued a civil action that was eventually dismissed by the House of Lords in 1981.
The prosecution case rested principally on admissions made by the six men in police custody, together with scientific evidence that indicated that two of the men had handled nitroglycerine. The six men maintained at trial that the admissions had been secured by means of police brutality and intimidation. The defence also disputed the scientific evidence, alleging that the results obtained on the Griess test were due to contact with a harmless substance called nitrocellulose.
As the House will be aware, the safety of these convictions had since been challenged, notably in two "World in Action' programmes and in a book published by Mr. Chris Mullin in June last year.
I have examined all the material with great care. I am satisfied that there is new evidence that would justify my referring this case to the Court of Appeal, and I have now done so. The effect of my action is that the case will now be treated as an appeal by the six men and is sub judice. The House will therefore understand why I cannot comment in detail. I can say, however, that the grounds relate to the scientific evidence given at the trial and the recent allegations by ex-PC Clarke that he witnessed intimidation of five of the six men in police custody and saw signs of injury on them.
I am placing in the Libraries of both Houses a copy of a letter which I have today sent to my hon. Friend the Member for Harborough (Sir J. Farr) and the report of a reappraisal of the Griess test that was conducted at my request by the Aldermaston forensic science laboratory.
Following consultation between the chief constables of the West Midlands and the Devon and Cornwall forces,
738
the latter force has been asked to undertake further inquiries into the allegations made by Mr. Clarke. The results of that investigation will be made available to the Director of Public Prosecutions and the appellants.
I should add, for the avoidance of doubt, that the Court of Appeal is not confined to considering those matters which form the grounds of reference by me and that it is open to the appellants to seek to place before the court any matters which they wish to raise on their behalf.
As the House will recognise, these have not been easy decisions to take. I have thought it right to maintain the principle that I should interfere with the verdict of a court only where there is some new evidence or new consideration of substance which casts doubt on the safety of the convictions. The second necessary principle is that, where such material is to hand, no consideration of amour propre or possible embarrassment should prevent a referral of the case. I believe that by following these principles a Home Secretary can best serve the interests of justice.
Mr. Gerald Kaufman: The House will wish to thank the Home Secretary for that properly lengthy statement. His decision to refer the Birmingham case to the Court of Appeal under his section 17 powers is wholly right. He will recall that I recently led a delegation to him about this case. I know that he will agree that his decision is due to the pressure of many people and organisations, including many of my hon. Friends, and I pay tribute to all who have campaigned on this issue.
Could the Home Secretary tell the House a little more about the procedure to be followed and the likely time scale of the proceedings that he has announced today? While I welcome what he said about the Birmingham case, I am disappointed by his faiilure to take similar action on the other cases with which his statement deals.
The scientific evidence in the Maguire case is not as secure as the Home Secretary implies, since it has emerged that the test which the prosecution contended was uniquely applicable was not. That is particularly troubling in a case where many believe that there has never been incontrovertible proof that a crime was committed by anyone, let along by the Maguires.
In the case of the Guildford bombings, testing of the police refutation of the alibi of Carole Richardson shows strongly that it would have been well-nigh impossible for her to get to her concert within the necessary time scale after her alleged role in the Guildford crime. Furthermore, as the Home Secretary has just pointed out, the Balcombe street confessions, although considered by the Court of Appeal, were not available to the jury which delivered its verdict on that case. In those circumstances the Home Secretary should also have bitten the bullet on those two cases and acted under his section 17 powers.
For those reasons, will the Home Secretary consider this proposal? After the conclusion of the Birmingham appeal, whatever the outcome, will he consider setting up an inquiry, under a senior judge with lay assessors, to consider the general question of confession evidence and how it should be handled in future? All three of the cases to which he has referred today, as well as the Bridgewater case which, some time ago, he rightly decided should be reinvestigated, depended heavily on confession evidence which has since been called into question.

739
We should consider carefully whether uncorroborated confessions should be admissable as evidence unless they have been at least audio-recorded and, most desirably, video-recorded. If the Home Secretary agrees to consider setting up such an inquiry, and I hope he will, will he request the inquiry as part of its remit to consider the confession evidence in the cases that he has dealt with in his statement today, together with the Bridgewater case?
The bombing crimes with which the Home Secretary has dealt today are some of the most serious and savage ever committed in Britain. Everyone would want to see the perpetrators punished with the utmost stringency. If the wrong people have been convicted, it is not only an unacceptable injustice to those who have been convicted, but means that the real and vile culprits of the crimes may still be at large and free to commit further atrocities.
Finally, if capital punishment for murder in general, or terrorist murder in particular, had been in operation in 1974, the Home Secretary's action today would have been academic, since the victims of any ascertained injustice would not be alive to receive a remedy or even the prospect of one. Therefore, is not his statement about Birmingham today the conclusive answer to those who still campaign for capital punishment?
Mr. Hurd: My decision on the Birmingham case was the result of careful consideration which has taken some time—longer than some hon. Members would want—because of the often fresh suggestions and allegations being made. The suggestions recently made by Mr. Clarke were recent and had to be taken into account. I cannot say how quickly the Court of Appeal will move, but the timing is now in its hands and I am sure that it will wish to avoid any avoidable delay.
On the Maguire and Guildford cases, the Maguires were found guilty on a charge of possessing explosives—a fairly narrow charge—and the evidence based on the TLC test was addressed to that charge, not to anything wider. I have taken considerable trouble to establish that there is no serious scientific questioning on the validity of that test.
Carole Richardson's alibi was tested repeatedly at great length during the court proceedings. The Balcombe street and Dowd confessions were similarly tested with great thoroughness by the Court of Appeal, which reached a very clear conclusion about them. There is no connection between the Birmingham case on the one hand and the Guildford and Maguire cases on the other. I do not entirely follow the right hon. Gentleman's point.
We have often discussed the point of principle about uncorroborated evidence. I remember that the right hon. Gentleman and I discussed that point frequently during the passage of the Police and Criminal Evidence Act 1984. Most people would agree that in each case it is for the court to decide whether evidence that comes forward without corroboration is to be believed. I do not think that this is ground which should be tilled all over again.
Mr. David Howell: Is my right hon. Friend aware that he has taken firm, clear and courageous decisions which must be supported in the interests of justice? In connection with the horrific bombings in my constituency of Guildford and those who were convicted as a result, will he reassure us categorically that, in reaching his decision in that case, he found not the slightest trace of new evidence or evidence in the case before the
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Appeal Court which could in any way be subsequently questioned or discredited before finally reaching the conclusion that he announced today? If he can give that assurance, that will at least reassure those who have been pressing for that case to be reopened.
Mr. Hurd: I am grateful to my right hon. Friend. I examined the Guildford case with great care. Against the tests that I have described, I am satisfied that in the Guildford case there was no new evidence or new matters of substance—I did not stick on the definition of evidence—not before the original court or the Court of Appeal.
Mr. Roy Jenkins: Will the Home Secretary accept that those of us who have been concerned with these matters will agree with his statement that these are not easy decisions to make and also accept that he reiterated many sensible principles during his statement? Will he also accept that while I, as the Home Secretary at the time, am glad that he has taken action with regard to the Birmingham case, he would have been better advised to take all three cases together—Guildford, Maguire and Birmingham—and to have set up a special inquiry under a very senior judicial chairman to consider whether there was something in the climate of the time conducive to an unsafe verdict?
Clearly, all three cases are not exactly the same. However, they have sufficient features in common that I think that he will find it difficult if the Birmingham verdict was overturned—perhaps if not—to hold the line on the other cases. Will he not accept that, in the interests of the authority of the law, apart from anything else, it would be better if the cases were considered together rather than have it dragged from him piecemeal?
Mr. Hurd: I am grateful to the right hon. Gentleman. He is clearly on record as Home Secretary in making a strict definition to the House of the way in which a Home Secretary should refer cases to the Court of Appeal. He is now making not that proposition but a wider one which I understand. I am a little surprised that he should link all the cases together. There is a link between the Guildford and Maguire cases, but there is no link between those and the Birmingham case. I am a little surprised that with his experience he should take that line.
I am not sure where the special inquiry which the right hon. Gentleman has proposed would lead. It would not really be fair to ask a distinguished judge and lay assessors to assess something so vague as the climate of opinion. If we followed that practice on these matters, I am not certain what the outcome would be. Clearly, it would be open to anyone after the passage of years to claim that the climate of opinion had changed and therefore the verdicts were unsafe. In these cases, the judges concerned in the summing up went to considerable pains to ensure that the juries were aware of the danger of allowing the emotions of the moment to dominate their judgment. I am sure that that was correct and that that was the right way to handle matters. I do not see how a special inquiry of the sort suggested by the right hon. Gentleman would do anything but leave matters in the air.
Sir John Farr rose——
Hon. Members: Hear, hear.
Sir John Farr: May I congratulate my right hon. Friend on the correct and courageous decision he has taken in

741
respect of the Birmingham six? Will he give an undertaking to the House that, when the matter is considered by the Court of Appeal, as continued imprisonment or otherwise will rest so much upon the new evidence that has already been submitted to him, he will do the best he can to ensue that the new evidence is considered by a jury?
Mr. Hurd: I am grateful to my hon. Friend. On my hon. Friend's last point, it is not in my power to order a retrial. One of the choices open to the Court of Appeal is to quash the verdict and order a retrial, but that is something for the Court.
Ms. Clare Short: Obviously, all of us who have become convinced that the conviction of the Birmingham six was unsafe will welcome the Home Secretary's announcement. However, does the Home Secretary remember the case of Cooper and McMahon that was referred to the Court of Appeal four times and was turned down four times, until eventually the Home Office released the men from prison? Is he convinced that the Court of Appeal has the open-minded and fair approach to the cases that it needs to have? Many of us are worried that history might repeat itself and that justice might still not be done?
Mr. Hurd: I am aware of the case of Cooper and McMahon and I have discussed it with my noble Friend Lord Whitelaw who was Home Secretary at the time. We are clear that there is no comparison between that and that Birmingham case. The hon. Lady is obliquely suggesting that in some way it would be right in this case for that Home Secretary to use the Prerogative to advise Her Majesty to pardon those concerned. In order to do that, a Home Secretary has to be convinced of innocence. I do not see how, in this case, any Home Secretary could go down that path.
Sir Edward Gardner: Is my right hon. Friend aware that there will be much sympathy for the difficulties he has had to face in reaching the decision that there is new evidence to justify the reopening of the Birmingham pub bombing case? Will he further accept that his decision in those circumstances to refer the case again to the Court o Appeal will be welcomed as a wise and satisfactory way of dealing not only with the case itself and any uncertainty that may surround it, but with the public disquiet that has been raised by the case?
Mr. Hurd: I am grateful to my hon. and learned Friend There is a temptation in these matters to take what, in purely immediate and political terms, would be the easier course, which is to refer more widely or to set up an inquiry. However, for the reasons I have given, it seemed that that temptation could lead to great difficulties for myself, my successors or the criminal justice system as whole. I am glad to have my hon. and learned Friend's support.
Mr. Merlyn Rees: Is the Home Secretary aware that I am glad that he has affirmed today his own personal responsibility for the decision he has announced? There are some decisions that a Home Secretary has to take that cannot be put in commission to the Cabinet.
On the Birmingham case and the procedures of the Court of Appeal, in view of a press reportߞI was not
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quite sure what the Home Secretary said today—is he saying that the Appeal Court judges, if they wish, could have a jury subpoenaed? Will people other than the appellants be allowed to send written evidence or ask to appear or is it only in the control of the appellants he has named today?
In view of the allegations made by Mr. Mullin that he has spoken to people in the Republic who claimed that they had carried out that crime, is there any way in which the right hon. Gentleman can ask the West Midlands police to start investigations into the allegations at this stage and not wait for the outcome of the Court of Appeal procedures?
On the Guildford case, I accept that there is no new evidence and that the hon. Gentleman is absolutely right. If only because the confessions were the only grounds on which the accused were sentenced, I shall continue to support those who feel strongly about this case. Deep down, there is something wrong with the Guildford decisions.
Mr. Hurd: The right hon. Gentleman says that, but it runs against his own statements as Home Secretary when, in a letter of 9 March 1979 about a case, he wrote:
"I cannot substitute my judgment for that of the courts on the facts before them. I can intervene only if some significant new evidence or consideration comes to light that the courts have not previously considered".
Mr. Rees: Absolutely.
Mr. Hurd: I followed exactly the line that the right hon. Gentleman then outlined. I repeat that it is for the Court of Appeal to decide. One of the options before it is to quash the previous verdict and order a new trial by jury.
As I understand it, the position as regards matter before the court is exactly the same as in any other case in which someone appeals against a conviction. It will be for the appellants—obviously, they will have access to lawyers to prepare their case—to decide what matters to bring before the court. Of course, among the matters that they may wish to bring before the Court are the points raised by Mr. Mullin about certain things that he believes have been said to him. I cannot safely go into those matters. It will be for the appellants to prepare and mobilise their case.
Mr. John Wheeler: Does my right hon. Friend recall that, as the constituency Member for the Maguire family, I have made representations to him about the concern arising over the validity of the forensic evidence? Although I respect and fully understand what my right hon. Friend has said to the House today, that concern will persist. If some additional fact or new evidence is produced, will my right hon. Friend reconsider the matter in the light of that evidence?
Mr. Hurd: I pay tribute to the fair and even-handed way in which my hon. Friend has sustained this case on behalf of his constituents. The Maguire verdict rested overwhelmingly on the thin layer chromatography test. Obviously, it is not enough to say that there are now new tests that did not exist before. The question is whether, in any way, the TLC test has been undermined or discredited. I am satisfied that it has not been. Obviously, if evidence came forward—I think it is unlikely—that discredits this test, as opposed to showing that it should have been corroborated or that other tests are now available, it will have to be examined.
Mr. Tony Benn: As the Home Secretary, by his answer today, has made it clear that it is possible that innocent people have been convicted—that is the basis of his reference of the Birmingham case to the Appeal Court—will he not recognise also that, since the conviction was by a jury, and he himself has said that new evidence has arisen, this measure should again go to a jury, as other hon. Members have said? Even though the Home Secretary may not have the power to direct that the case go to a jury, will he not state that, having been satisfied that new evidence is available, he himself is also of the view that that new evidence should go to a jury for that body to assess it and not be left solely in the hands of the Appeal Court?
Mr. Hurd: No, I cannot do that. Under the law, it is for the Court of Appeal to decide that matter. That is right. In answer to the right hon. Gentleman's first comment, I must make it clear that, although I have taken this action in the Birmingham case, I do not express any view about the verdict one way or the other. I simply say that, in my judgment, there is new and substantial matter that justifies a reference to the Court of Appeal.
Sir John Biggs-Davison: Is my right hon. Friend the Home Secretary aware that some of us will find his full confidence in the TLC test in the Guildford case rather surprising? Is my right hon. Friend aware also that I first raised in the House the case of the late Giuseppe Conlon and, therefore, the Maguires in 1980? The efforts that are being made by many hon. Members, and indeed by other people of different opinions outside, will not cease now.
Mr. Hurd: Over many years, my hon. Friend has been tireless in pursuing this case. I entirely accept that he is one of those whom I mentioned who have formed the view that, if he had been a judge in that case, he would have handled it differently, and if he had been a member of the jury, he would have reached a different conclusion on the evidence. That is an absolutely honourable position to take. I have not been able to find after a careful study of his representations over the years, or of Mr. Kee's book, any other matter—that is, new matter or new evidence—that casts doubt on the TLC test, which, as I have said, was the basis of the prosecution and the basis of the conviction of the Maguires and their co-defendants on this charge, which was, I repeat, a charge of possessing explosives.
Mr. Seamus Mallon: The Secretary of State has stated his principal view on procedure. However, will he not agree that the essential principal view is that the innocent should never be found guilty and be caused to suffer as a result? In the light of the Northern Ireland experience of uncorroborated confession evidence, will he not reconsider his position and examine the possibility of a special inquiry into the other cases so that we can be absolutely sure that everything has been done to prevent the possibility of an innocent person being made to serve long periods in prison?
Mr. Hurd: The question, in the interests of justice, is what is the most secure way of establishing the difference between guilt and innocence. I have set out my approach to that at some length. In previous incarnations, the hon. Gentleman and I have argued about uncorroborated evidence in Northern Ireland. One may have a certain
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point of view, but the argument that in no circumstances should uncorroborated evidence be accepted by a court, whatever the view of the court, would not find favour in most jurisdictions. It should be for the court to decide in each case.
Mr. Nicholas Fairbairn: As one who has been involved in obtaining two royal pardons for wrongly convicted persons, I congratulate the Home Secretary on his extremely difficult and responsible decision. In general, I draw his attention to the Evidence Act 1895 that the law of England imposed on all her dependent colonies. Under sections 25 and 26 of that Act, no confession made by a person to a police officer while in custody is admissible in evidence, and no confession to any other person except a magistrate while a person is in police custody is admissible as evidence. That is still the law of most of our now independent colonies. Might it not be a good idea, if the law of England thought it fit to impose those provisions on dependent colonies in 1895, to reintroduce them in England in 1987?
Mr. Hurd: I do not agree with my hon. and learned Friend who, through no fault of his own, was not on the Committee that examined the Police and Criminal Evidence Bill. We examined the matter of uncorroborated evidence while we were elaborating the safeguards for interviewing persons in policy custody—safeguards that, clearly, are important. I repeat the view which I formed then and in which I have been reinforced since—that it is for the court to decide, having listened to the evidence and having noted the fact—if it is a fact—that it is not corroborated, whether it is safe evidence.
Mr. Jack Ashley: Is there not a basic flaw in our judicial system when it takes a sustained campaign by hon. Members and distinguished journalists to persuade the Home Secretary to refer the Birmingham case to the Court of Appeal 11 years after conviction? If the Home Secretary rejects the suggestion by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) to set up a special inquiry, will he consider setting up a special monitoring committee that could constantly review cases of fresh evidence and confessional evidence and make public recommendations to him?
Mr. Hurd: Not long ago, the Select Committee on Home Affairs went into that suggestion carefully and there was an exchange with the Government, under my predecessor, on that point. I believe that the section 17 procedure, which is basically what we are discussing, is a useful and valid way of performing that task. It puts the emphasis not on the politicians—whether hon. Members or Ministers—or on an inquiry by persons of whose status one cannot be quite sure but back where it ought to belong, on the courts of law. I believe that that is the right answer if we are to sustain confidence in those courts.
Mr. Jeff Rooker: As one of the few non-lawyers in the House at the moment, may I ask the Home Secretary about a point of procedure which has not been cleared up so far during questions? Will the appellants have the right to address the Court of Appeal? The right hon. Gentleman has referred constantly to the giving of evidence and admissions. Will the men have the right to speak and to be heard? Can the Court of Appeal allow that? I ask those questions for one reason: I know

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from personal experience that the men have not felt fully confident to talk to those who have visited them from time to time in prison.
Mr. Hurd: They will be in the same position as anyone else who makes an appeal. It will be for the Court of Appeal to establish the procedure; it will be for the appellants to prepare their case. Although they will remain in prison, they will have access to legal advisers and therefore will be able to prepare their case. I understand that normally they would receive legal aid in preparing their case.
Mr. Derek Spencer: Will my right hon. Friend confirm that he refers cases to the Court of Appeal only when they raise a justiciable issue, and that media and political hue and cry are not enough, nor are vague and sentimental misgivings about decisions that have already been upheld in the Court of Appeal?
Mr. Hurd: I do not in any way criticise those people in any part of the House or outside who have devoted a great deal of time to seeking to persuade my predecessor and me that one or more of these convictions were unsafe. That is a perfectly honourable course to take. It has generated a good deal of genuine feeling. I have been trying to say—this is my hon. and learned Friend's point—that I do not think that it is the job of a Home Secretary to allow those considerations to deflect him from what I believe is the principal course of cueing back to the Court of Appeal when he thinks that there are grounds for doing so.
Mr. David Alton: If the Home Secretary feels unable to support the view which is expressed on both sides of the House, and which I share, that there should be a new jury trial, will he at least consider appointing a Queen's counsel to oversee the referral? Will he ensure that the defence has access to all the information that has been available to the prosecution before and since the original trial?
Mr. Hurd: I do not see the purpose of arranging for a QC to supervise the referral. The referral has been made in the proper form to the court, and I have confidence in the way in which the court will handle it. I should not like to answer the hon. Gentleman's second point off the cuff, but I shall certainly let him know the answer.
Several Hon. Members rose——
Mr. Speaker: Order. I have to have regard to the fact that another statement and a ten-minute Bill application are to follow, and that no fewer than 50 right hon. and hon. Members are seeking to take part in the later debate. Therefore, I shall allow two more questions from each side of the House.
Mr. John Stokes: Is my right hon. Friend aware that most fair-minded people will regard his difficult decisions as entirely right? Those decisions demonstrate once again that the system of justice in England in among the best in the world.
Mr. Hurd: I am very grateful to my hon. Friend.
Mr. Terry Davis: In view of the time it has already taken the Home Secretary to reach
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his welcome decision on the Birmingham case, when will the police begin their inquiry into what happened to these people in police custody?
Mr. Hurd: That has been gone into over and over again. As I said in my statement, the Devon and Cornwall constabulary will investigate further one of the new facts to which I drew attention—the allegations of ex-Police Constable Clarke. Thereafter, it is for the Court of Appeal to weigh the different considerations. That further investigation by the police is under way.
Mr. Patrick Nicholls: Will my right hon. Friend accept that he was entirely right to reject the idea that there is no distinction to be made between hard new evidence and mere speculation about different interpretations? Does he agree that, if he had not been prepared to draw that distinction, although his task might have been easier today, it would have been extremely hard for other holders of his office in due course to resist any reinterpretation by well-minded people of cases many years after they were first heard?
Mr. Hurd: I agree with my hon. Friend. One must take a long view. I am glad that the House of Commons has, on the whole, upheld that.
Mr. Michael McGuire: We welcome the Home Secretary's decision on the Birmingham pub case, but we are disappointed by his action on other cases, especially the Guildford and Maguire cases. The right hon. Gentleman mentioned that one reason why he decided to refer the Birmingham pub case to the Court of Appeal was the new evidence presented by a police officer. Would it not be a great irony if the uncorroborated testimony, which the right hon. Gentleman has said that he cannot overrule, in the Guildford and Maguire cases was put in jeopardy—as the Birmingham case has been put in jeopardy—because a police officer subsequently came forward to say, "I can support the allegations of these people. The confession resulted from duress"?
Is the right hon. Gentleman aware that the House of Lords——
Mr. Speaker: Order. Briefly.
Mr. McGuire: I shall be as brief as I can, Sir.
Is the right hon. Gentleman aware that the House of Lords threw out the Birmingham appeal on the basis that no police officer could ever have been guilty of what those concerned with the Birmingham pub bombing said happened? Now we are told that a policeman has come forward and that the case will be re-examined. Is that not enough evidence to get all three cases referred and put out of the way rather than to consider them bit by bit?
Mr. Hurd: The difficulty with the hon. Gentleman's argument is that Mr. Clarke has come forward in respect of the Birmingham case and no one has come forward in respect of the Guildford or Maguire cases. I am not saying whether Mr. Clarke's allegations are correct. I am simply saying that they are part of the pattern which has persuaded me to agree to a reference. There has been no similar coming forward in the other cases.
Several Hon. Members rose——
Mr. Speaker: Order. I shall have regard on a subsequent occasion to those hon. Members whom I have not been able to call on this statement.

Severe Weather Payments
4.17 pm
The Minister for Social Security and the Disabled (Mr. John Major): With permission, Mr. Speaker, I wish to make a statement about supplementary benefit payments for exceptionally cold weather.
Last Tuesday, I informed the House that for that week payments of £5 would be made available to everyone in the qualifying groups to help them heat their homes during the current extremely cold spell. This announcement was made in the expectation that the trigger point of minus 1·5 deg C in the regulations would be reached. In the event, that judgment has proved to be correct and the trigger point has been reached widely throughout the country. In many areas it was dramatically exceeded with average temperatures as low as minus 5 deg C. In two thirds of the weather stations, average temperatures for last week of minus 2 deg C and below were recorded. In these extremely rare circumstances, I believe the decision that we took to announce the payment early last week has been amply vindicated.
The Government have considered carefully the position both for this week and future weeks. As I told the House last week, our primary concern is to ensure that vulnerable groups should not be discouraged from heating their homes. It is clear that many people are still experiencing difficulties and are looking for assurance that they will get extra help to keep warm this winter.
In these circumstances, I wish to make it clear, therefore, that a further payment of £5 will be available, for this week only, to all those in the qualifying groups. This entitlement will be widely advertised and existing claimants who have already made a claim will be paid automatically if eligible. Others eligible may claim immediately.
The Government believe that our initiative in introducing a statutory entitlement to extra help in very cold weather was right. The rules are clear and can be operated speedily, fairly and effectively. But we recognise the anxieties felt by vulnerable groups that the temperature trigger point may not be reached even in prolonged periods of cold weather. Since the whole purpose of this cold weather payment is to give people the confidence to keep warm, we have decided to amend the trigger point from minus 1·5 deg C, to 0 deg C—freezing point. I have today laid amending regulations before the House to this effect. Our intention is that they will come into operation from next Monday, 26 January. In all other respects, the scheme will continue to operate as presently designed.
The amending regulations also provide for the further payment of £5 in respect of this week. The additional cost is within the normal margin of adjustment to the social security programme and will be met from the reserve.
I believe that the Government have acknowledged anxieties that have been expressed. Today, we have responded to them quickly, flexibly and with great concern. I hope that the House will welcome this statement.
Mr. Michael Meacher: Is the Minister aware that the further £5 payment for this week is certainly welcome? It is the frankest possible admission of the utter inadequacy of this scheme. Even last week, under the
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scheme, 15 areas throughout the country did not trigger payment. Does he accept that the Government's climbdown in establishing the slightly higher trigger temperature is more because of their concern to avoid a weekly political row than an attempt to establish a principle of guaranteed warmth for the elderly—something that the scheme will still not achieve?
Why does not the Minister announce that not only were the Government wrong, but that he will put matters right and pay all pensioners on supplementary benefit and low-income families with babies a regular £5 for every week throughout this winter? That is what the Labour party has repeatedly proposed.
Is the Minister aware that, while the Government have spent three weeks dithering about how to save their political face, at least 50 pensioners have been dying each week of hypothermia? They will continue to die in those numbers despite the introduction of the latest proposals.
Is the Minister further aware that clinging to the extremely low temperature threshold as a condition for claiming payment remains arbitrary and uncertain, which is still a major stumbling block to the old and cold struggling to keep their homes warm? As the Prime Minister denounced this scheme as "strict bureaucratic procedures", why are the Government hell-bent on reverting to it at the first opportunity?
I want to ask the Minister a number of specific questions about the delivery of this payment. When will all pensioners get it, considering the huge backlog at social security offices? How will the housebound elderly be paid? Will the DHSS accept bulk claims on behalf of sick and disabled pensioners from voluntary or charitable organisations? Under what powers is the Minister proposing, for the second week running, retrospectively to validate claims that fall outside the regulations passed in December?
Will the Minister, in co-operation with the Secretary of State for Energy, write to the electricity and gas boards instructing them immediately to cease disconnections of supplies to pensioners and low-income families with babies as long as the bitter cold lasts? Should not the boards review all existing disconnections of supplies when pensioners or families with babies are at risk?
As the Minister has now acknowledged—I am glad to say—his mistake in not adopting a somewhat higher temperature threshold in the first place, will he also undertake to make retrospective payments, where appropriate, at the new trigger point?
Lastly, is the Minister aware that his reference to "only" 643 deaths from hypothermia has been received with dismay and disgust? Will he now retract that innuendo and apologise and acknowledge that pensioners are not just dismissable statistics—[Interruption.]—but people who deserve and have the right to the same care as anyone else? Would not the best demonstration of his good intent be an undertaking to adopt our scheme for a special fuel premium to be paid throughout the winter? [Interruption.]
Mr. Speaker: Order.
Mr. Major: The hon. Gentleman's remarks, particularly the latter, are more than usually distasteful, and with your permission, Mr. Speaker, I shall respond to them in detail.
The remark attributed to me, to which the hon. Gentleman referred, is not in context and is set against the

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figure of 16,000 hypothermia deaths that has been claimed by some people. My reference was to the fact that only 643 medical certificates included mention of the word "hypothermia". The advice of the vast majority of medical experts is that hypothermia is the cause of death only when there is a substantive prior cause, to which hypothermia is then added. I was seeking not to disregard the importance of a single death from hypothermia, but to place the matter in a proper context. The report from which the hon. Gentleman quoted was sloppy, un-professional and, in my judgment, out of context.
I am not surprised—although I am saddened—that the hon. Gentleman should be so typically churlish in relation to the Government measures.
The claims we receive in our local offices will be dealt with as a priority, and instructions to that effect were given last week. Payments will be made by giro, as is the normal fashion, to avoid people having to leave home. Claims should be submitted in the fashion that I outlined last week, which was shown in newspaper advertisements and other media.
I dealt with validation in my original statement. With regard to disconnections, we have a long-standing arrangement for people in vulnerable groups that disconnections do not arbitrarily take place. It is odd that the hon. Gentleman raised his point on retrospection, in view of his remarks about validation. I think that he might care to reflect and withdraw his earlier remarks and the distasteful and inaccurate references that he made last night on the subject of winter deaths.
Mr. Ray Whitney: Does not my hon. Friend agree that the reaction to the succession of Government measures, including those announced this afternoon, to alleviate the problems of the elderly, which are in stark and striking contrast with the appalling record of both the Labour Government and of those members of the SDP when they were formerly in government, suggests that the real answer to the long-standing national problem of deaths from hypothermia in this country requires a careful and dispassionate national approach, free of political hysteria whipped up by the Opposition parties and by certain political pressure groups?
Mr. Major: I entirely agree with the observations of my hon. Friend. There is no doubt that the primary problem is not so much that of hypothermia deaths as the larger problem of excess winter deaths, and that is a matter of considerable complexity.
Mr. Charles Kennedy: I welcome the Minister's statement, so far as it goes. It is a sensible change—[Interruption.] Yes, so far as it goes—[AN HON. MEMBER: "What more do you want?"] If hon. Members will allow me, I shall continue. We want further improvements to the scheme—for example, on the eligibility of claimants. Not all people are within the net of eligibility. For instance, women on supplementary pension aged over 60 but under 65 do not fall within its remit.
Secondly, the monitoring stations that the Minister selected—which, to take the Scottish example, are coastal—do not give accurate readings of the general temperature. Thirdly, on the criterion that the average temperature must, as now amended, reach 0 deg, or must
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fall to 0 deg over a period between Monday and the following Sunday, will he consider altering that to an average temperature of 0 deg over any given period of seven days? Will the Minister look at these three specific areas, where he could make further improvements?
Mr. Major: I shall study carefully what the hon. Gentleman said, but it is most unlikely that I shall be able to undertake to make the changes that he proposes.
Dame Jill Knight: Is my hon. Friend aware that there will be very great appreciation outside the House that the Minister has proved so flexible in an area where flexibility is very definitely needed? Has he noted that the words of the Opposition would positively encourage people not to pay their fuel bills? Furthermore, in the case of severe weather payments, will he always pay out on the smallest of incomes rather than on calendar age and also on freezing temperatures rather than on calendar dates? Such rules, I believe, would be helpful.
Mr. Major: I am grateful to my hon. Friend. Our underlying concern throughout the passage of these regulations has been to ensure that vulnerable groups have the confidence to keep warm. My concern, in view of the last few days, is that that confidence, rather than the regulations, might have been in danger. That is the primary reason why I have sought to bring forward the change that I have announced today.
Mr. D. N. Campbell-Savours: Was the Government's inflexibility really worth all the embarrassment?
Mr. Major: It is a curiosity that the Government are being accused by the Opposition Front Bench of changing the scheme almost daily and by Opposition Back Benchers of being inflexible. They cannot both be right.
Mr. John Browne: Does my right hon. Friend accept that the new measures that he has announced, which will be in addition to those that already exist, will be widely welcomed? None the less, will he accept that many old people in particular have very real concern over the payment of their heating bills and are often tempted to turn down the heating at critical times when they should be keeping it up? In order to allay these fears about when the money will come, and how, will my hon. Friend consider the possibility of the Government issuing vouchers at the outset of each winter that could be encashed on Government order, thereby making older people and those on low incomes more certain that the money will come immediately?
Mr. Major: I am afraid that I cannot promise my hon. Friend that we shall follow that route. It is precisely to ensure that vulnerable groups had the confidence to keep warm that we have made the change that I have announced this afternoon. It is, I believe, well understood on our side of the House, and I hope that it is understood throughout the country, that in the three tiers of assistance with heating—supplementary benefit, heating additions and the exceptionally cold weather payments—we now have the most generous system of assistance with heating that we have ever had in this country. I deeply regret that the Opposition are more concerned with making political points than with acknowledging that reality.
Mr. Kevin Barron: Although I welcome today's announcement and the other announcement—

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two announcements within eight days seem to say more about the inadequacy of the Government's regulations than any benefits that they are providing—will the Minister consider reintroducing the electricity discount scheme that was introduced by the last Labour Government? It helped to cover the cost of the electricity used by 4·5 million people in Britain, not the 1·5 million people whom these regulations will cover.
Mr. Major: I have no intention of reintroducing one of the most shambolic schemes of recent years.
Mr. Roy Galley: My hon. Friend is to be congratulated on acting promptly and flexibly for the second week running. He has shown by action that this Government care. That is preferable to the whirlwind of meaningless words from the Opposition Benches. However, does my hon. Friend accept that many people still do not understand that a standard heating addition is paid to those on supplementary benefit, amounting to £2·20 for those over 65 and £5·50 for those over 85? Therefore, will he continue to emphasise that fact?
Mr. Major: I am grateful to my hon. Friend. He shares my concern that it is important to keep people warm during the winter months. He is absolutely right that the level of heating addition now paid weekly, with benefit, and extended substantially during the period of this Government, now amounts to about £400 million a year. That amount is substantially larger than anything that was envisaged under any previous Government.
Mr. Gareth Wardell: May I welcome the rate of progress that the Minister is making? I hope very much that from minus 1·5 degC, and now 0 deg, by this time next week he will have gone as far as plus 1·5 degC. If he continues at that rate, I am sure that all Opposition Members will be delighted. However, will not all these good things come to an end when, from April 1988, the Government introduce the social fund? All grants will be ended and recoverable loans will be introduced instead. This is a plain charade and electioneering.
Mr. Major: I offer the hon. Gentleman the assurance that he can anticipate no more weekly statements. [HON. MEMBERS: "Oh."] As for the situation that will apply after 1 April 1988, we have repeatedly made it clear throughout the last few months that we shall monitor carefully the working of the scheme. No decision has yet been taken about precisely what the situation will be after 1 April 1988, but a statement will be made in very good time.
Mr. Jerry Hayes: May I congratulate my hon. Friend on his sensitive, sensible and compassionate approach to this very difficult problem? Many elderly and vulnerable people will be grateful to him today. He will have lifted a great burden from their shoulders. However, they are not being helped by the Opposition's cynical exploitation of other people's tragedies.
Mr. Major: I am grateful to my hon. Friend. Nor were those people helped last week by those who claimed that the trigger point had been rigged and would not be reached. For that reason, many people may not have had the confidence to turn up their heating.
Mr. George Foulkes: Will the Minister confirm that, as well as being restricted to the artificial Monday to Sunday week, the scheme is also restricted to supplementary pensioners and
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that anyone who may have saved over £500 for a funeral, for example, is excluded from the scheme? Will he therefore tell us precisely how many of Britain's 10,000,000 pensioners have applied, how many have already received the £5 in their hands and when he expects the rest of them to get the £5?
Mr. Major: The eligibility is wider than the hon. Gentleman has in mind. It extends also to supplementary benefit families with chronically sick or disabled members, or those with very young children. As for the claims, they are still coming in.
Mr. Foulkes: How many have been paid?
Mr. Major: They are still coming in.
Mr. Foulkes: But how many have been paid?
Mr. Major: I reiterate that they are still coming in. Those who have already claimed may expect that we shall deal with this week's claim with last week's claim and that we shall pay it speedily. We will deal with the claims as a matter of priority. No one who is eligible has been turned down.
Mr. David Heathcoat-Amory: Will my hon. Friend stick to the sensible system of having a week-long assessment period for these heating supplements and then, on occasion, anticipating that a certain week will qualify and making an early announcement? Will he rest assured that old people would much rather have £5 from him, whenever he announces it, than a lot of empty promises from the Opposition, who did nothing when they were in a position to do so?
Mr. Major: My hon. Friend's last point is sharply and very well made. I can certainly confirm that we propose to stick to the assessment on a weekly basis, although I cannot promise that, other than in the most extreme weather circumstances, we shall be in a position to make an early announcement of a payment.
Several Hon. Members rose——
Mr. Speaker: Order. I will allow three more questions from either side. Then we must move on, for the reasons I have already stated.
Mr. Gordon Wilson: May I congratulate the Minister on changing the regulations, even at this late time, in the sure expectation of many more cold weeks this winter in the run-up to the general election?
The hon. Gentleman has, wittingly or unwittingly, stumbled on a benefit that could be made available to pensioners and others in the future; that is that the money should be promised in advance of the cold weather, as he did last week and is doing now. Is it not time that he found a proper, fair system of heating allowances, rather than stumble from expedient to expedient as he has done over the past two or three weeks?
Mr. Major: The Government have such a system; that is what I have announced.
Mr. Robert Atkins: Will my hon. Friend recognise—and emphasise again in the face of the humbug and cant from the Opposition—that this is the most generous scheme that there has ever been? Will he also confirm that, during the debate that we had on this matter, we were unable to extract from the hon. Member for Oldham, West (Mr. Meacher) that within the

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Opposition's poverty programme any money is allocated for severe weather payments, because the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has forbidden it?
Mr. Major: My hon. Friend is right both in his reference to the generosity of the three tiers of assistance, and also to the fact that the hon. Member for Oldham, West (Mr. Meacher) is keen to make promises about benefits but rather slower to determine how they will be paid for.
Mr. Dennis Skinner: Now that the Minister has changed the formula from minus 1·5 deg C to 0 deg C in order to qualify for the £5 payment—in other words, introduced a sliding scale—would it not make sense that when the temperature falls to minus 5 deg C pensioners should receive about £15 a week? Will he also take into account the fact that almost every constituent to whom I spoke over the weekend on this issue said that the £500 barrier for supplementary benefit recipients should be removed? Most of them argued that they had saved that money to pay for their burial. If the Minister is to be flexible, he should take that point into account, and we should like him to tell us next week that that is exactly what he will do.
Mr. Major: First, we have not introduced a sliding scale, but a fixed point—freezing point—which will be generally understood by people in the House and beyond. Regarding the £500 disqualification for single payments, I remind the hon. Gentleman that the figure under the previous Labour Government—whom he supported from time to time—was £200 and only latterly in that Government £300.
Mr. Richard Hickmet: My hon. Friend's announcement will be widely welcomed in my constituency where many hundreds, if not thousands, of people will benefit from his announcement today. Is this not a much more sensible use of Government resources than introducing indiscriminate benefits such as free television licences for all old age pensioners? Heating additions and exceptional cold weather payments will be more appreciated by those in need than the sort of indiscriminate benefits promised by the Opposition.
Mr. Major: My hon. Friend is entirely correct. We have made it a statutory entitlement so that people may be
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certain that it is there in the prescribed circumstances. I believe that it will be widely welcomed throughout the country.
Mr. Robert Hughes: Since the issue has been canvassed over many winters, why has the Minister now decided that the figure of minus 1·5 deg C should be changed to 0 deg C? What fresh evidence has he had? The Minister claims that his main concern is to make sure that people have the confidence to keep their heating on. Would not the best confidence of all be to pay that money automatically to those who qualify, rather than rely on them having to reply?
Mr. Major: The money is paid automatically. The automatic heating additions are paid weekly for 52 weeks a year. Apparently, that has escaped the hon. Gentleman. Those payments amount to £400 million a year. What has changed my mind is my concern that pensioners might feel that the minus 1·5 deg C trigger point would not be reached. Raising that trigger point will enable them to accept that it will be reached in very cold weather, and they will then turn their heating on and keep warm, which is our prime concern, as we have repeatedly stated from the outset.
Mr. Patrick McLoughlin: I accept my hon. Friend's announcement today, but will he please accept that a number of elderly people are extremely concerned about the £500 limit? Will he also accept that no hon. Member would want to encourage people to keep their savings in their homes with all the dangers that that would have? I accept the great increase that has taken place under the Government, but will he please reconsider that qualifying figure?
Mr. Major: I fully appreciate my hon. Friend's concern. I cannot offer him an undertaking that I will be able to change that figure in the near future. We have substantially increased the figure and it is not an innovation for single payments.
Several Hon. Members rose——
Mr. Speaker: I remind the House that there will be a debate on this matter.
Mr. Michael Meadowcroft: On a point of order, Mr. Speaker.
Mr. Max Madden: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I will take the Standing Order No. 20 application first.

Tobacco Industry (Sports Sponsorship)
4.46 pm
Mr. Clement Freud: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the agreement on sponsorship of sport by the tobacco industry."
This was published yesterday as a reply to a written question with a copy placed in the Library. It was discussed by every national newspaper today, although we in the House are denied the opportunity of debate unless you, Mr. Speaker, allow the application.
It is an important matter because the Royal College of Physicians estimates that tobacco-related diseases kill 100,000 people a year in this country and 112 people have lung cancer diagnosed every single day. In the United States the Surgeon General has ruled that there is a definite danger to passive smokers' health—that is, to those people who inhale the fumes of other people's tobacco. That is especially important, when one compares those figures with the expected death rate of AIDS—4,000 people by the end of the decade. The Government give lavish time in both Houses for the debates on that disease.
The matter is specific in that the new agreement that was published yesterday afternoon, without granting an opportunity for debate, is seen as a victory for the tobacco companies by the media. It is only the good sense and decency of the BBC and ITV that is denying them even greater opportunity for spreading their fatal message. It is specific also in that the agreement is to be monitored by the Lazarus committee, which—if ours and other people's reading of the statement is correct—cannot override the Advertising Standards Authority. It is plumb wrong that such deals are made without reference to the House.
The matter is urgent because the country is denied the voice of Parliament in a matter dealing with our duty to care for our fellow citizens, especially those who are young and impressionable. Any association or encouragement to smoke with sport is repugnant. To make no real move to end this relationship is wrong, just as many of us feel that it is improper to make important statements in the form of a reply to a planted question.
Therefore, I ask you, Mr. Speaker, to give your consent to this application for a short debate.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the agreement on sponsorship of sport by the tobacco industry."
As the hon. Member knows, my sole consideration when considering these applications is whether to give them precedence over the orders set down for today or tomorrow. I regret that I do not consider that the matter he has moved is appropriate for discussion under Standing Order No. 20. Therefore, I cannot submit his application to the House.

Local Government Finance Bill
4.50 pm
Mr. Michael Meadowcroft: May I raise a point of order under Standing Order No. 69, Mr. Speaker, which relates to the procedure of a Bill that moves from Committee of the whole House directly into Report? You will be aware that yesterday we began the process of considering the Local Government Finance Bill. A certain amount of progress was made last night until about quarter to midnight. It will be accepted on both sides of the House that there was no excessive attempt to delay. As we approach the home straight there will be a sudden acceleration into the last batch of the amendments. Tomorrow, the Bill is due to have all its remaining stages considered. In total there are about 200 amendments and new clauses, including some highly complex Government amendments and one long, complicated schedule.
It is difficult, if not well-nigh impossible, to go directly from a long Committee stage of the whole House, where lengthy amendments have been debated, and, presumably, disposed of in one way or another, to Report stage because we shall not be able to consider in detail what amendments to table on Report.
What is more, not only shall we not be able to consider the terms of any amendments satisfactorily, but the line numbers to which they relate in the Bill will not be available to us. Therefore, manuscript amendments will, presumably, be passed around, which are not properly related to the Bill or the amendments as passed, and the whole thing will be a mess. Moreover, you, Mr. Speaker, will have the problem of selecting the amendments, and that, again, will be extremely difficult.
The motion to proceed directly to the Report stage is a matter for the House, and as such is debatable. I should very much regret it if we wasted time tomorrow debating procedure rather than getting on with the Bill itself. Would it not be better, Mr. Speaker, for you to use your good offices to see whether it is possible to delay the Report stage so that we can have a satisfactory debate on the Bill as it will then stand?
Mr. Speaker: I thank the hon. Gentleman for giving me notice of that point. The hon. Gentleman has correctly quoted Standing Order No. 69. It is not a matter for me, but I am sure that what he has said will have been heard by the Leader of the House who is present and by others on the Front Bench.
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen)indicated assent.

Questions to Ministers
4.52 pm
Mr. Max Madden: On a point of order, Mr. Speaker. I should be grateful for your advice as to which Department we should table questions on the distribution of some of the Common Market food mountains which the Ministry of Agriculture, Fisheries and Food has today said will be distributed to some groups within the country. It would seem that the matter is essentially one for the Department of Health and Social Security. My concern is that if it takes the Government as long to distribute the food as it has taken them to sort out their scheme to give some people £5 a week, most of the food will perish long before it is distributed.
Mr. Speaker: I suggest that the hon. Gentleman consults the Table Office on that.

Public Accounts Commission (Parliamentary Questions)
4.53 pm
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. Yesterday in reply to a question from my hon. Friend the Member for Linlithgow (Mr. Dalyell) the Chairman of the Public Accounts Commission, the right hon. Member for Taunton (Sir E. du Cann), said:
"I am told that the matter"—
that is, the matter of the communications project which was referred to in the press at the weekend—
"is still at a preliminary stage and that nothing like the sums that were referred to have been incurred."
He then went on to say:
"I am told that the project is at an experimental stage"——
[AN HON. MEMBER: "What is the point of order?"] Do not worry, it will become clear.
"That is the reason why no large expenditures, or no expenditures on the scale of those mentioned in the newspapers, have yet been incurred."—[Official Report, 19 January 1987; Vol. 108, c. 594.]
May I ask you, Mr. Speaker, to rule that the right hon. Member for Taunton, with the best will in the world, was out of order in answering that question because his function, as Chairman of the Public Accounts Commission, not the Public Accounts Committee, requires only that he answers questions on the expenditure of the National Audit Office and questions concerning scrutiny of the role and the working of the National Audit Office.
This is important because yesterday a precedent was set for the Chairman of the Public Accounts Commission to make statements which, in the normal way, have to be made by the Chairman of the Public Accounts Committee or in the form of statements in the reports of the Public Accounts Committee. If it is the will of the House to change the present situation whereby the reports of the Public Accounts Committee are debated, into a right for the Chairman of the Public Accounts Commission to address the House of Commons and be questioned, let it be by resolution of the House and not by default by giving this new power to the Chairman of the Public Accounts Commission.
Mr. Speaker: I confirm that the right hon. Member for Taunton (Sir E. du Cann) is the Chairman of the Public Accounts Commission and, as such, he should answer for the Public Accounts Commission and not refer to matters which are properly in the purview of the Public Accounts Committee. I suggest that the hon. Gentleman, who is a member of that Committee, should raise the matter with its Chairman.
Mr. Tam Dalyell: Further to that point of order, Mr. Speaker. I owe it to the right hon. Member for Taunton (Sir E. du Cann) to say that I believe that in answering my question he was being as utterly helpful as he could be. I gave him notice of the first part of the question back in December and of the electronic surveillance data issue yesterday. However, to be fair to him, I believe that he was trying to treat the House of Commons properly by giving as full an answer as possible.
Sir Edward du Cann: Further to that point of order, Mr. Speaker. If I have offended in some way

759
against the conventions of the House, I would be the first to apologise. On the other hand, I have never believed it wrong for any hon. Member to seek information in the House, nor for another hon. Member, should he have the honour of the opportunity to provide it, to perform that duty. If, from the Back Benchers, we have been competent in giving information, that is a precedent that Ministers might well follow on many occasions.

Statutory Instruments &c.
Mr. Speaker: I understand that it is not the intention to move Statutory Instruments Nos. 3 and 4. Therefore, with the leave of the House, I shall put Statutory Instruments Nos. 1 and 2 together.
Ordered,
That the draft Local Elections (Northern Ireland) (Amendment) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Agriculture and Fisheries (Financial Assistance) (Northern Ireland) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Lightbown.]

Schools Self-Management
4.55 pm
Mr. Robert B. Jones: I beg to move,
That leave be given to bring in a Bill to reform the system of school financing in England and Wales by re-allocating funds to schools on a per capita basis.
At present, as all hon. Members will know, the governors and heads of schools are responsible only for the management of such school funds as are allocated to them by the local education authority. That money is generally known as capitation and it is supposed to cover such items as books and writing materials. While practice varies from local education authority to local education authority, the overwhelming piciture is that capitation is the small change of the system.
Typically, in my constituency a school whose running costs would be about £500,000 would have discretion over only £3,000—less than 1 per cent. of the total budget. Even in Cambridgeshire, which has certainly set the way for and pioneered the delegation of greater responsibility for financial management to individual schools, the actual sums represent well under 10 per cent. of the total and few authorities are even moving in that direction.
Any hon. Member who has been a school governor or senior teacher will be familiar with the problem. I was chairman of the governors of a comprehensive school in Hertfordshire for four years and have been a member of the governing bodies of several primary and secondary schools. We have all come across situations where relatively minor maintenance tasks have to be referred to divisional education offices or even to county hall officials. That causes problems due to both delay and costs.
Such requests have to be accompanied by paperwork and receive proper authorisation from the duly appointed official. If he has a lot of requests at any one time, or is absent or ill, delay occurs. Hon. Members can speculate how many burst pipes in a county might have been reported last week and the delays that might have occurred. Therefore, how very much better it would be if the head, perhaps together with the chairman of the governors, were able to get such jobs carried out properly, paid for out of school funds and with work commissioned from local tradesmen.
I am not suggesting that education is about more efficient plumbing maintenance, but what is true of maintenance is also true of equipment and pay. Presently,
762
schools have to abide by national and countywide arrangements, yet heads and governors have a much better idea of which teachers are worthy of pay increases and promotion and which are not. Therefore, the Bill proposes a new system, based on the following principles.
First, the management of all current funds should be by the head teacher under the policy direction of an accountable board of governors. Secondly, there should be an election on a three-yearly rotating basis of a school board by parents by means of a postal ballot. Thirdly, there should be an allocation of current funds on the basis of the number of pupils on each school roll at the beginning of each year. Fourthly, school funds should be paid directly by the Department of Education and Science. Fifthly, power should be delegated to school boards to fix on an individual basis the remuneration of teachers and their terms and conditions of employment. Sixthly, a national capital fund for development should be created with powers to make long-term loans to schools. Seventhly, the terms of reference of the schools inspectorate should be revised for it to take over the role of specialist advisers as well as to ensure the maintenance of appropriate minimum standards.
The consequence of the introduction of this new system will be, firstly, to introduce more efficient financial management of schools, but, far more importantly, because schools will have to attract pupils in order to fund their activities, they will strive to improve their reputations by delivering better education than their rivals.
Such a system would be more responsive to parental aspirations and would enshrine parental choice. It would lead to higher standards, not just in the few schools but in the many, and I commend it to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Robert B. Jones, Mr. Michael Forsyth, Mr. Allan Stewart, Mr. Michael Brown, Mr. Michael Fallon, Mr. Gerald Howarth, Mr. Neil Hamilton, Mr. Edward Leigh, Dr. Ian Twinn, Mr. Tony Favell, Mr. Alan Howarth and Mr. John Watts.

Schools Self-Management
  SCHOOLS SELF-MANAGEMENT
  Mr. Robert B. Jones accordingly presented a Bill to reform the system of school financing in England and Wales by re-allocating funds to schools on a per capita basis. And the same was read the First time; and ordered to be read a Second time upon 6 February and to be printed. [Bill 46.]
Opposition Day
[5TH ALLOTTED DAY]
Opposition Day

  Government Economic Policies
  Mr. Deputy Speaker (Sir Paul Dean): May I repeat Mr. Speaker's appeal for brevity? No fewer than 50 hon. Members hope to speak in this debate. At present the Chair does not have the power to impose a 10-minute limit on speeches because it has not yet been renewed. Hon. Members should restrain themselves and be as brief as possible. Mr. Speaker has selected the amendment in the name of the Prime Minister.
  Mr. Roy Hattersley: I beg to move,
  That this House condemns Government economic policies, which have divided the nation, induced a collapse in the manufacturing base, created mass unemployment, led to a serious loss in world trade and an impending balance of payments crisis, and permitted a destructive merger mania to imperil British manufacturing industry, as typified by the lamentable decision of the Secretary of State for Trade and Industry not to refer the BTR bid for Pilkingtons to the Monopolies and Mergers Commission; and demands that the Government now use all available resources on investment in the people of the United Kingdom, in jobs, in public services, in manufacturing and in training, so that the nation can once more compete effectively and pay its way in the world.
  The Government are now embarked on a campaign of calculated deception. It is a campaign of deception about the state of the economy, about the impending crisis and about their own responsibility for bringing it about. The Government's friends in Fleet street are accessories to that fraud. This week The Daily Telegraph, the Daily Express and the Daily Mail all paraded sets of phoney figures, clearly taken down at dictation speed from the Chancellor's spokesman. I propose to give three examples of what those newspapers said and to look at the examples in some detail, leaving aside for a moment their repetition of the old deceits about job creation and reduction in unemployment. The Daily Express said:
  "The latest retail figures confirm the strength of the consumer boom. In the fourth quarter of 1986 retail sales were 2·5 per cent. up on the previous three months and 7 per cent. up on the previous year."
  It did not go on to say that while consumer spending rose by 7 per cent. the production of consumer goods in Britain rose by only 2 per cent. To have added that would have demonstrated not the strength but the weakness of an economy about to slump into a £7·5 billion balance of trade deficit. [AN HON. MEMBER: "Rubbish."] It is not rubbish, because the figure of £7·5 billion is the Chancellor's and not mine. [Interruption.] I thought he read the statistics about this. The Daily Telegraph tells us that manufacturing output was at its highest level since 1980, but did not add that manufacturing output is still 4 per cent. below its 1979 level. Even on the Chancellor's own statistics and estimate, manufacturing output will not be at 1979 general election level by the time of the next general election. To have added such figures would have demonstrated not industry's success but the Government's abject failure.
  My third example is from the Daily Mail, which tells us that the outlook for exports is bright. It cited motor cars
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  as an example but did not give any figures. It did not add that motor vehicle output fell by 5·1 per cent. in the last recorded year, and that it is now 29 per cent. lower than it was in 1979. If those figures had been given, they would have revealed the damage done to the motor industry by the medium-term financial strategy and by the total absence of any Government industrial strategy.
  Mr. Eric Forth: Will the right hon. Gentleman give way?
  Mr. Hattersley: No.
  The campaign of deceit is as damaging as it is dishonest. In an attempt to create the illusion of success, the Government behave in a way which makes the crisis more certain and brings it nearer. The campaign of deceit is as callous as it is cynical, because in order to pretend in some parts of Britain that Government policies are succeeding, other parts have to suffer, and are suffering, wilful neglect.
  No Government this century have so ignored the needs and so damaged the interests of the people whose votes they have already lost. Hence the occasional whine that we hear from Tory Back Benchers in marginal constituencies such as the hon. Members for Langbaurgh (Mr. Holt) and for Bury, North (Mr. Burt) who know that they, like the areas that they represent, have been written off by the Government.
  Mr. Richard Holt: Would the right hon. Gentleman care to comment on a BBC statement last weekend to the effect that since I was elected unemployment in my constituency has fallen by nearly 20 per cent?
  Mr. Hattersley: I am almost as pleased to hear that as I am sceptical about the figure. It must be something about the hon. Gentleman's character and personality that makes his constituency a haven of success in a wilderness of Tory failure in the north-east.
  Mr. Holt: Will the right hon. Gentleman give way?
  Mr. Hattersley: I shall not give the hon. Gentleman a chance to say something else because I can tell him——
  Mr. Holt rose——
  Mr. Deputy Speaker: Order. The hon. Gentleman must not persist if the right hon. Gentleman does not give way.
  Mr. Holt: On a point of order. Is it not the convention that when an hon. Member is attacked he is given a right of reply?
  Mr. Deputy Speaker: That is a matter for the right hon. Gentleman who has the Floor.
  Mr. Hattersley: I hope that we shall hear from the hon. Gentleman and I shall give way to him again just as I did a moment ago. I wonder whether he will want to say anything after he has heard the Government and the Chancellor boast in this debate—having ignored the jobs that have been lost since 1979—about the jobs that have been created since 1983. Perhaps the hon. Gentleman has information about the jobs that have been created in Langbaurgh. I can tell the House only about jobs that have been created in the area of which his constituency is a part. Even on the Government's own figures, the north has been scandalously neglected since 1983 in the business of job creation. On the Government's own figures there are 446,000 new jobs in the south-east, but only 135,000 new jobs in Scotland, the north-west, the north, and Yorkshire and Humberside all added together.
  Mr. Ian Wrigglesworth: The hon. Member for Langbaurgh (Mr. Holt) has mentioned the unemployment figures for his constituency. I have just received for this debate the figures for Cleveland county. In the county as a whole the unemployment figure is 20·8 per cent. and in Langbaurgh it is 16·5 per cent. That is considerably higher than in 1983 when the hon. Member for Langbaurgh was elected.
  Mr. Hattersley: Since the hon. Member for Langbaurgh has become the fulcrum and the focal point of this debate, I have little doubt that you, Mr. Deputy Speaker, will wish to call him. If he is fortunate enough to catch your eye, he had better make his peace with his constituents and the statistics.
  Mr. Holt rose——
  Mr. Hattersley: The hon. Member for Langbaurgh must know, as the House knows, that outside the magic triangle of the south-east Britain is short of jobs, public services, and amenities. Even within the south-east, areas which once relied on manufacturing industry—the decaying hearts of old cities in particular—are similarly and savagely affected.
  At the same time, 9 million people, or 17 per cent. of the population, now live on or below the poverty line. That is an increase of families living below the poverty line of 47 per cent. since 1979. Against that background the Chancellor has set out his own priorities. I want to quote them to the House. On 5 January he told the Financial Times that his aim was to bring our top rate of tax down further. The following day the Daily Express, with typical eloquence and originality, copied the story. It described the same facts as "Lawson's dream" and said that his dream was a promised reduction in income tax for big earners. The Daily Express went on coyly to reveal that cutting income tax for big earners is part of the Chancellor's election strategy.
  Let me tell the Chancellor now that if he wants to fight the next election on tax cuts, he can begin this afternoon by answering some direct questions on the subject, initially concerning his social priorities and the reason he wants to bring about those tax cuts. I ask him directly: why are tax cuts—let us say 2p off the standard rate at a cost of about £3 billion—more important than reopening hospital wards which have been closed because of cuts in the Health Service budget? Why are tax cuts more important than providing nursery school places, textbooks and the 16-plus maintenance allowance? Why are tax cuts more important than revising the housing investment programme, building houses for rent, and reducing the number of homeless families, the number of which has doubled under this Government to 100,000?
  Why are tax cuts more important than restoring the link between the pension and average earnings and paying the pensioners the increase of which they have been cheated? Why are tax cuts more important than increasing child benefit and bringing the most effective form of help to the hard-pressed low-income families? Putting aside those social questions, which I know the Chancellor will not even attempt to answer, I ask him about unemployment.
  Mr. Patrick Nicholls rose——
  Mr. Phillip Oppenheim rose——
  Mr. Nigel Forman rose——
  Mr. Hattersley: I want an answer from the Chancellor, not from insignificant Members on the Back Benches.
  Mr. Nicholls: On a point of order, Mr. Deputy Speaker. Is it in order for the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) to address me directly and then not give me a chance of intervening?
  Mr. Deputy Speaker: I remind the House that this is a short debate and many hon. Members wish to speak.
  Mr. Hattersley: Having asked the Chancellor questions about his social priorities, which I know he will not dare to answer, I want to ask him about unemployment. If he has £3 billion to spare in the next Budget, and if putting Britain back to work is honestly one of the things that he regards as important, why does he not use that £3 billion in the most effective way to secure that objective of lower unemployment? The Treasury's own model confirms that if job creation is to be the objective, public sector capital investment is twice as effective and public sector revenue spending is four times more effective than tax cuts, not least because it does not suck in the imports, about which the Chancellor ought to know something. If there is £3 billion to spare, why do the Government not use it to tackle or improve what their own National Economic Development Council called dilapidated Britain? We need to rebuild our old hospitals, replace decrepit schools, repair and extend our housing stock, extend our road systems and modernise our railways.
  Why are not all those objectives, the urgent necessities of jobs, schools, pensions, hospitals and houses, more important than cutting 2p off the standard rate? The answer lies in the Government's well-known belief—indeed as far as the next election is concerned their well-known hope—that nobody with a conscience ever votes Conservative. Tax cuts are the wrong social choice. Nor are they the choice of a nation which wants to see a reduction in unemployment and improved social services. Nor are they the right economic option. Britain now faces a growing balance of payments difficulty. We are simply not paying our way in the world. I doubt whether even the Chancellor, with his well-known record of statistical integrity, will deny the facts on our balance of payments position.
  The right hon. Gentleman now admits that the balance of payments will be in deficit by £1·5 billion this year, compared with the £3·6 billion surplus in 1985. Independent forecasters believe that even that admission is over-optimistic. The London Business School says the deficit will be £2·5 billion; Phillips and Drew says it will be £3 billion; the OECD says £3·2 billion, rising to £5·7 billion in two years' time; James Capel says £3·4 billion; the National Institute says £5·8 billion. The Treasury's own forecasts for 1986 have deteriorated from a surplus of £4 billion, which the Chancellor promised us in the autumn statement of 1985, to a surplus of £3·5 billion promised in the Budget debate, to a breakeven promised in the autumn statement of 1986. In March the Chancellor made the silly boast that, thanks to his policies, Britain had survived the reduction in oil prices "unscathed".
  The price we have paid is a balance of payments which is now sliding into chronic deficit. The price we have paid

  767
  is a sterling which is already in crisis. The pound is being held on a life support system of the highest real interest rates in our history.
  Sir William Clark rose——
  Mr. Hattersley: I shall give way to the hon. Member for Croydon, South (Sir W. Clark) in a moment. If he is not telling me that sterling is kept at acceptable figures only because we have the most damaging and debilitating highest real interest rate in our history and in the industrialised world, perhaps he will tell me why that is so.
  Sir William Clark: I am grateful to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). Would he not agree that between 1974 and 1979, when his party was in government, each year there was a balance of payments deficit which totalled something like £4 billion over the four years? If one takes the balance of payments, the deficits and the surpluses over the past seven years, it can be seen that in the whole history of this Tory Government there has been a surplus of £23 billion.
  Mr. Hattersley: I give the hon. Member for Croydon, South credit for knowing the answer to his own question. Oil is the answer to his question. This Government were washed to power on the prospects of a prosperity greater than anything this country could have anticipated without the oil. But the oil has been squandered. We ran a surplus on our manufacturing balance. Does the hon. Gentleman suggest that in the general election of 1979, when he and other members of his party were promising that if they were elected they would put everything right, he would have conceived for a second that, with the oil revenue now being enjoyed, the balance of payments would be back in deficit this year? Of course he does not believe that. It is back in deficit for the reasons I propose to describe.
  Because of the deficit, sterling is being held up at acceptable levels only by a real interest rate which is deeply damaging to the economy. That is not simply the view of the Labour party. It is the view expressed yesterday by the CBI—not especially noted, certainly not this year, for supporting the views on the economy espoused from these Benches. But what it says about manufacturing industry, real interest rates and now what it actually said about tax cuts is a condemnation of the Chancellor's position.
  Mr. Alan Howarth rose——
  Mr. Hattersley: I will put the hon. Gentleman out of his misery.
  Mr. Howarth: If the right hon. Gentleman even sets off down the road of embarking on his party's programme of increasing spending by £28 billion, what will happen to real interest rates?
  Mr. Hattersley: Even the Chief Secretary is not hawking the £28 billion figure round any longer. He has had a rush of integrity to the head and has abandoned that figure.
  The Chief Secretary to the Treasury (Mr. John MacGregor): Withdraw.
  Mr. Hattersley: It is clearly my duty to withdraw what I said about the rush of integrity.
  Mr. MacGregor: The right hon. Gentleman might consider the integrity of his own figures. I have persistently urged him to make clear what he would withdraw from the £28 billion. He will know perfectly well that, although
  768
  some figures have been withdrawn, others have been added, which certainly make the £28 billion accurate and, if anything, an underestimate. It is up to the right hon. Gentleman to make his figures clear. I am not withdrawing that total until he does so.
  Mr. Hattersley: The Chief Secretary asked for an independent assessment. He got one from the Institute for Fiscal Studies. The only problem was that it did not give the same answer as he gave. I am prepared to rely on the independent assessment. I do not believe that the Conservative party does itself any good in wanting to run away from the real issues by inventing figures which are now generally accepted outside the 1922 Committee as being wholly spurious and wholly unworthy of examination.
  The reason we shall avoid the balance of payments crisis that I have just described is——
  Mr. Holt: That the Labour party will not come to office.
  Mr. Hattersley: —that we shall concentrate on the real needs and the real economy. The Government have scandalously neglected those areas of the economy for which they do not have an emotional sympathy and a deep political interest. That is why the Government have concentrated so much in their economic management and fiscal strategy on the interests of the City of London and on those who work within it. That is why the Government are so reluctant to act against City fraud. That is why the Government are unwilling to operate an effective system of supervision over the financial institutions. That is why the Government are operating a monopolies and mergers policy which encourages merger mania, with all its waste of efficiency.
  Mr. Bill Walker rose——
  Mr. Hattersley: Some surprise has been expressed in the House and outside that the Secretary of State for Trade and Industry, who has now come amongst us, is not speaking in the debate, particularly since the motion specifically criticises him for failure to act over the recent proposed merger, abandoned today, but abandoned only after a great deal of time and effort had been wasted in both companies and, most important, after Pilkingtons had been forced to take a number of decisions to protect itself against the merger which are deeply damaging to the long-term interests of that company.
  The Prime Minister announced today that the failure to refer the Pilkington bid was a victory for the swift resolution of the matter because, she said, had there been reference, the matter would have dragged on for weeks or possibly months. I give the Prime Minister credit for having said that by mistake, because she must know that the purpose of a tough monopolies and merger policy is to prevent unreasonable predators from making their strike in the first place. The Secretary of State for Trade and Industry must know, as I suspect, that a predator went into the Department to find out whether reference was likely. If he had been told that reference was likely, the proposal would have been abandoned two weeks, three weeks or a month ago and the damage that has been clone to Pilkingtons would not have arisen.
  That being said, and surprised as I am that the Secretary of State for Trade and Industry should prefer to defend himself to a Back-Bench committee rather than

  769
  here, I do not believe that the personalities in this matter are the most important issue. Support for the City, for its greed, for its obsession with short-term speculation and for its sleazy undercurrent of corruption is the inevitable extension of Tory economic philosophy.
  Mr. Michael Heseltine: As the right hon. Gentleman knows, I have some sympathy with his worries about the uncertainties that the takeover process injects into the management of companies. However, can he explain how a manifesto behind which he will campaign, which threatens the whole of British industry with the spectre of the nationalisation proposals of his party, will improve that position?
  Mr. Hattersley: I hope and believe that we shall write into our next manifesto the monopolies and merger policy which the last Labour Government put to the House a few months before their defeat—a tougher monopolies and merger policy than existed at the time, a tougher policy than exists now, and one which the Cabinet of which the right hon. Gentleman was a member scuppered because it was too tough for their friends in the City.
  Mr. Stephen Dorrell rose——
  Mr. Hattersley: I have given way a good deal. Mr. Deputy Speaker has asked us to make progress; I still have a great deal to say, so I propose to say it without further interruption.
  Clearly, as is demonstrated by the behaviour on the Conservative Benches, there is a great deal of panic within the Government about the monster that the big bang has created. Naturally, the panic about the reputation of the City rubbing off on them has been increased by the news from Morgan Grenfell today. Hence the off-record briefings about seven-year sentences and about Home Office crime squads. Hence the tough talk off the record about how the Government will behave in future.
  The truth is that the Tory party cannot act against the City because the City reflects Tory values. As Tory values have deteriorated over the past 20 years the City has reflected that decline. Inevitably, support for the City has been matched by wanton neglect of manufacturing industry. That in its turn has done savage harm to Britain outside London as the interests of the regions and the interests of manufacturing industry are synonymous. We shall not get jobs outside London or in the decaying central areas by increasing the number of currency speculators, stockbrokers, or merchant bankers. We shall not solve any of our problems by changing Britain from the workshop of the world into the home of insider dealing.
  What is more, the interests of the regions, of manufacturing and of the balance of trade are all identical. I know very well that the financial sector contributes £7·5 billion a year to our balance of payments but its policies and the policies which support it and which make that possible make it difficult for other sectors of the economy to operate efficiently. Indeed, the City is like an opening batsman, so obsessed with his own average that he does enormous damage to the team in which he plays and prevents the team from winning.
  Those policies and the Chancellor's policies have done massive damage to manufacturing industry.
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  Manufacturing trade has moved from a £4·5 billion surplus in 1981 to a Government-estimated deficit of £7·5 billion this year. Manufacturing industry can no longer keep pace with demand for manufactured goods at home. Motor imports increased by 15·5 Per cent. between the third quarter of 1985 and the third quarter of 1986, and the import of other consumer goods rose by 19·5 per cent.
  Our share of world trade had fallen since 1979 and our share of world manufactured trade has fallen massively by over 24 per cent. Indeed, manufactured output is still 4 per cent. less than in 1979. To be fair and honest, I must admit—[Interruption]—that four other countries have a worse record than ours for manufactured output since 1979. Those countries are Fiji, Argentina, Senegal and Barbados. I have nothing to tell the House about the capital expenditure of manufacturing of those four countries. However, even when leasing is included in the calculations, in Britain that figure is 18 per cent. less than in 1979.
  The Chancellor will rise in a moment—[HON. MEMBERS: "Hear, hear."] I am not surprised that Conservative Members do not like the truth about the economy. However, they should rest assured that they will get the unremitting truth from Opposition Benches, day after day between now and the general election.
  We know that there was a bit of an economic spurt a few months ago because we read of it yesterday in the Daily Mail. So it must be true. I find it pathetic that there should be so much rejoicing when a brief improvement does nothing more than increase output to 4 per cent. below its 1979 level, especially when it will soon be impossible to sustain even the illusion of economic strength. It cannot be sustained because, as well as facing a collapse in manufacturing and a deterioration in our balance of payments, we are now caught in the biggest credit explosion in our history.
  Mr. David Heathcoat-Amory rose——
  Mr. Hattersley: I hope that the Chancellor will not deny the facts because they were given by the Governor of the Bank of England; they are not mine. Those facts reveal that Britain is being run like a pawnshop. Personal indebtedness increases at the rate of 20 per cent. per year. Personal credit now stands at almost twice the level to which it rose during the ill-fated Barber boom—a part of history that I thought had been removed from Conservative archives. Indeed, we may have the rehabilitation of the right hon. Member for Old Bexley and Sidcup (Mr. Heath), if we are to emulate the policies that preceded the 1974 general election, which in no small part resulted in the defeat of the Conservative Government, because it was realised then, as it will be realised now, that a consumer boom is a spurious indication of a nation's success. The present consumer boom is almost twice as high as the Barber boom of 1974.
  In such a situation it would be criminally stupid to encourage increases in credit, suck in more imports and worsen the balance of payments by tax cuts. Therefore, as I know that the Chancellor will not explain his social reasons for cutting taxes, I ask him to explain the economic justification for making the tax cuts that I have no doubt will come about.
  I hope that we shall be spared the hypocritical nonsense about lower tax rates yielding higher tax revenues. The increased revenues collected from the higher tax bracket

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  are not the result of harder work encouraged by lower marginal rates. They are the product of the widening divergence between the primary earnings of the rich and the primary earnings of the rest. It was not lower marginal tax rates that encouraged the chairmen of recently privatised industries to double their salaries the moment that they left the public sector. It was not tax cuts that produced those City salaries which the Chancellor described as looking like telephone numbers. To justify tax cuts as a way of making the rich pay more is greed dressed up to look like benevolence.
  If the Chancellor disputes that judgment—I have no doubt that he will——
  The Chancellor of the Exchequer (Mr. Nigel Lawson): I shall certainly dispute it.
  Mr. Hattersley: The right hon. Gentleman has said that he will certainly dispute it, so I offer him the chance to prove me wrong. He has in his possession the Brown report on tax rates and their incentive effect. He has suppressed that report because it is not convenient to his case and it proves him wrong.
  Mr. Lawson: I advise the right hon. Gentleman that that document, which originates from a commission during the period of office of the Labour Government and which he alleges that I have suppressed, has been in the Library of the House of Commons for over a month.
  Mr. Hattersley: The right hon. Gentleman knows that it is not in its full and complete form and that in its full and complete form it will prove me right and him wrong.
  Mr. Lawson: What is wrong with it?
  Mr. Hattersley: What is wrong with it not being in its full and complete form is that, in its full form, it proves me right and him wrong. [HON. MEMBERS: "Withdraw."]
  The Government do not have to act on unemployment because it is now beginning a genuine decline. The excuse given is that the Government have created jobs at such a rate that no change of policy is necessary. However, the truth is that we have lost a million jobs in this country since the Tory Government were elected. Recent claims about reductions in the number of people unemployed are largely the result of increases in the so-called schemes and measures.
  There are 46,000 young people on youth training schemes and 55,000 people on unemployment schemes. None of those people is doing the real job that the Prime Minister promised in 1979. Few of them are doing real training to improve the skills of our work force which are desperately needed. Some of them, as illustrated last Thursday on the "This Week" programme on television that examined youth training schemes that were nominated for such examination by the Government, are carrying out tasks that are so inappropriate to modern industrial needs that they humiliate the participants and shame the Government who descend to such deceit to reduce unemployment.
  Mr. James Couchman rose——
  Mr. Hattersley: We no longer have a thread of coherent and consistent policy from the Government. Instead we have cosmetics. We do not have a constant thread of industrial or fiscal policy from the Government. We have cosmetics. That is why, after seven years of boasting about public expenditure cuts—admittedly calculating the
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  numbers in different ways according to the Chancellor's convenience—we now have a year of public expenditure increases.
  I should like to ask the Chancellor another question, still vainly believing that he might attempt some sensible answers. If the public expenditure increases are right this year, why were they wrong last year and why will they be wrong again next year? What is so special about this year apart from the fact that there will be a general election? That is why we shall have tax cuts, which are socially and economically wrong and unsustainable.
  I must advise the Chancellor of something that he already knows: whichever party wins the general election, the tax cuts that he makes in this Budget will be reversed. I make it absolutely clear that we shall vote against tax cuts and that when we are elected we shall restore the level of taxation to approximately what it is now.
  Mr. Forman rose——
  Mr. Hattersley: That is the truth about both parties.
  However, as well as making tax cuts, the Tory party will make deep cuts in public expenditure. It is planning them now. The White Paper that was published two weeks ago reveals that the Government plan to cut public expenditure on the capital account. The difference between the parties on tax cuts and what follows is the Labour party's willingness to face the facts and the Conservative party's refusal to tell the truth.
  Mr. Forman rose——
  Mr. Hattersley: The Tory slogan for the next election is, "Vote now, pay later". We know how the Chancellor will react to this sudden exposure to the truth. In a moment there will be long passages of bogus statistics, rather like those that I quoted at the beginning of my speech. [Laughter.] There will be passages of ritual abuse and the insistence that everything is for the best in the best of all free enterprise worlds. The Chancellor will ask the people to believe him when he says that, if he cuts taxes, he will not increase them again. Every Conservative Government in the recent past have been prepared to deceive the people over taxation.
  The Government came to power in 1979 committed to cutting overall taxes and they repeated that promise four years later. Our total annual tax bill is now £29 billion higher than it was on the day when the Labour party left office. In 1955, a Conservative Government, who were in much the same position as the present Government, cut taxes within a few weeks of a general election and reimposed them a few weeks after the election.
  If the House wants a more up-to-date example I shall gladly give it one. During the general election campaign in 1979 Labour Members warned that, once elected, the Conservative Government would double VAT. "Double VAT" was exactly the phrase that I used at a press conference at Transport house. The present Foreign Secretary could not have been more explicit in his denial. At Conservative Central Office on 21 April 1979 he said:
  "We have absolutely no intention of doubling VAT."
  The Daily Mail, which tomorrow will undoubtedly dismiss any chants of crisis, listed the allegation that the Tory party would double VAT as a Labour lie. Within three weeks of the election, VAT was increased from 8 per cent. to 15 per cent.
  The truth is that the Tory party has never been trusted over its taxation proposals when a general election has

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  been in the air. Conservatives cheated the country in 1979 and I have no doubt that given the chance they will do so again. Fortunately, that chance will be denied them.
  5.42 pm
  The Chancellor of the Exchequer (Mr. Nigel Lawson): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  "congratulates Her Majesty's Government on the success of its economic policies which have led to six years of healthy, balanced economic growth, have brought inflation down to its lowest levels for nearly two decades, have enabled industry to become more profitable than at any time since 1964, have brought the fastest productivity growth among major European countries since 1979 and have fostered the conditions in which a million new jobs have been created throughout the country since 1983.".
  This is not only the first economic debate of 1987; it is also the first since the tragically premature death of the Liberal party's economic spokesman, David Penhaligon. His breezy, good humoured, but always thoughtful contributions to our debates will be greatly missed. [HON. MEMBERS: "Hear, hear."] No hon. Member was more widely liked.
  I turn now to the speech of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). The fact that he has to resort to predictions of bad times just around the corner—I shall examine that proposition in a moment—is eloquent testimony that even the right hon. Gentleman in his heart of hearts at last recognises how well the economy is doing now.
  We are now in our sixth successive year of steady growth, and still going strong. Year in, year out, we have been averaging getting on for 3 per cent. growth a year. Indeed, since the last election, ours has been the fastest growing major economy in the European Community; in sharp contrast to the 1960s and 1970s, when we were falling ever further behind.
  We have achieved this while getting inflation down and keeping it down—a combination unknown for a generation. Inflation last year, at 3½ per cent., was the lowest for almost 20 years, and although this year it will be slightly higher than that, it will still be far lower than anything the last Labour Government even so much as aspired to, let alone attained.
  Moreover, the growth that we have seen and that we shall continue to see has been balanced between consumption and investment. Indeed, for the whole of the period since the upswing began—[Interruption.] Opposition Members should listen to the truth. During the whole of the period since the upswing began, while consumer spending has risen at an average of 3 per cent. per year, investment has risen at 4 per cent. a yea—twice as fast as the European Community average. By contrast, under the Labour Government's brief upswing from 1975 to 1979, consumer spending grew twice as fast as investment. So much for the right hon. Gentleman's strictures about the balance between consumption and investment under this Government.
  When we first took office in 1979, inflation was in double figures and accelerating fast. Not only have we brought it down dramatically, but our relative performance, although still not good enough, has markedly improved. Under Labour, the United Kingdom's inflation averaged seven percentage points more than in the world's
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  seven major industrialised nations as a whole. During the whole of our term of office so far, the inflation gap has been reduced to two percentage points.
  Mr. Hattersley: Could we now have the proper comparison—the percentage difference between Labour and Europe and the percentage difference between this Government's inflation record and the European record?
  Mr. Lawson: The comparison that I gave is the correct comparison, accepted by all the international economic bodies.
  Or look at that other perennial British weakness of the past—our persistently low growth of productivity, which compared so badly with that of our major competitors. Here, too, the picture has been transformed, with productivity since 1979 growing faster in Britain than in any of our major competitors with the solitary exception of Japan.
  Inevitably, in the short term, this sharp improvement in productivity, although badly needed—this was recognised on all sides of the political divide at the time—meant fewer jobs. But that phase is now behind us. During the present Parliament, the number of jobs has risen steadily, quarter by quarter, without a break—the best performance for almost 30 years. Altogether the number of jobs has grown since 1983 by more than a million—a bigger increase than in the whole of the rest of the European Community put together. [HON. MEMBERS: "Where?"] It is now clear from the latest figures that unemployment—I hope that Opposition Members will listen to this because they profess to care about unemployment—is now on a steady downward trend—[HON. MEMBERS: "Where?"]—something which the whole House will welcome.
  What of exports and the external position of the British economy? Since the upswing began, while most of Europe has seen its share of the world markets decline, ours has held steady and exports continue to rise fast. As for the external position as a whole, this is now the strongest that we have known at any time since the war. Our net overseas assets are second only to those of Japan—a far cry from the relative pittance the present Government inherited in 1979.
  It is against that background that we have to assess the fact, which assumed such momentous proportions in the speech that we have just heard from the right hon. Member for Sparkbrook, that our balance of payments is now in deficit on current account. Once again, the contrast with the Labour years is instructive. During the whole of Labour's period of office there was a cumulative deficit on current account which is now put at some £5 billion. During the first seven years of the present Conservative Government, we were continuously in surplus, to a cumulative total of £21 billion. [Interruption.] Those are the facts.
  Since then, the collapse of the oil price has for the time being pushed us into deficit, but that was only to be expected. It is clearly arithmetically impossible for every economy in the world to be in surplus every year, even though it is not necessary to be in deficit four years out of five, as the Labour party was when it was in office.
  What matters is that we should keep control of our domestic costs, so that the exchange rate adjustment which has followed the oil price collapse and which is now completed will lead in time to a compensating

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  improvement on our non-oil account, both visible and invisible. In this context, the most recent figures for the growth in the United Kingdom's unit labour costs are most encouraging.
  Of course, good news for the British economy is clearly bad news for Labour. The right hon. Member for Sparkbrook is determined that there is a disaster in the offing. The trouble is that we have heard his predictions before.
  In May 1983, he confidently predicted that inflation would rocket after the election and within a year would be in double figures. That is what he said. The outcome was that a year later inflation was 5 per cent. Of course, it has since fallen further still. That was Old Roy's prediction for 1983.
  He was at it again at the end of 1984, warning that over the next 12 months we faced what he described as a "slump"—I quote his very word, that is what he forecast. The outcome was that in 1985 we grew faster than any other country in Europe.
  He was at it again in 1985, confidently predicting lower living standards. That is what he was predicting then. The outcome was that living standards rose to record levels and they are still rising. Indeed, the right hon. Gentleman is complaining that they are rising too fast.
  Now, of course, the right hon. Gentleman is predicting an economic crisis. No wonder share prices have risen sharply since the latest gipsy's warning first hit the Reuter screens. The markets have learned from long experience the precise value of the right hon. Gentleman's predictions of gloom and doom.
  Ms. Clare Short: Will the Chancellor give way?
  Mr. Lawson: The plain fact is that, leaving aside the risk of a world economic crisis, which did not appear to be what the right hon. Gentleman had in mind, the only thing that could precipitate an economic crisis in Britain would be the election of the right hon. Gentleman and his colleagues to office.
  Ms. Clare Short: I am grateful to the Chancellor for giving way. He has put his finger on the spot and he has shown the division between the view on Conservative Benches and that on Opposition Benches about what is a healthy economy. The Chancellor's view of a healthy economy is governed by share prices, ours by jobs for people and long-term wealth for the economy.
  Mr. Lawson: I have already mentioned jobs. That is something which this side of the House attaches great importance to. I am sure that the hon. Lady will welcome the fact that there are now over 1 million more people in work in this country than there were at the time of the last general election.
  Of course, economic crisis is what we always associate with the Labour party. That is what occurred when the Labour party was last in office. It is instructive, as we have just published our public expenditure White Paper which my right hon. Friend the Chief Secretary to the Treasury will be opening a debate about in due course in the House, to look back at Labour's public expenditure White Paper of 1977, published exactly 10 years ago this month.
  The conduct of economic policy, as the House will recall, had by then been handed over to the International Monetary Fund to which the Labour Government had
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  had to go, cap in hand, the previous September, as they became engulfed in the worst economic crisis since the war. The balance of payments 10 years ago this month was in deficit. Inflation stood at 16½ per cent. Productivity growth, according to the White Paper, was barely two thirds of the average for the major OECD countries. Strikes were rife. The public sector borrowing requirement had been allowed to rise to the equivalent, in today's terms, of £35 billion. To recover from this, the White Paper announced plans to cut public expenditure by the equivalent, in today's terms, of £4 billion. Not only were the cuts savage, but they were concentrated heavily, if not exclusively, on capital spending.
  From its inception in 1974 to the IMF crisis of 1976, the Labour Government had boosted current public expenditure by a staggering 17 per cent. in real terms. When they were forced to cut, the Labour Government found themselves unable to undo the current spending spree they had unleashed, and savaged capital spending instead.
  As a result, during the whole of their time in office, public sector capital spending fell by 25 per cent., with capital spending on the Health Service slashed by more than 30 per cent. and on major roads by almost 35 per cent. That was the inheritance of devastation that we had to make good—as we have been, with spending on major roads up 30 per cent. and on hospitals up by 31 per cent. in real terms since 1979.
  Mr. Neil Kinnock: What about housing?
  Mr. Lawson: Since the Leader of the Opposition mentions housing, I will add that spending on housing renovation is up by over 50 per cent.
  So much for the right hon. Member for Sparkbrook's cant about the public sector capital stock which his Government ran down and which we have been seeking to rebuild.
  However, I have to concede that the right hon. Member for Sparkbrook was on stronger ground when he spoke about the differences in prosperity in different parts of the country. For there are undoubtedly regional and local variations, just as there always have been and just as there are in other industrial countries. One clear reason for this is the pattern of industry that history has left us. It is not a simple matter of north versus south. There are prosperous parts of the north just as there are areas of dereliction in the south—and I speak as a midlands Member which, according to the Labour party definition, places me in the north.
  Mr. D. N. Campbell-Savours: Will the Chancellor give way?
  Mr. Lawson: But, in general, jobs have been hardest hit wherever the local or regional economy was most heavily dependent on traditional manufacturing industry—not because all such industry is in decline, although some is.
  Mr. Campbell-Savours: Will the Chancellor give way now?
  Mr. Lawson: In a moment. But even those manufacturing industries not in decline have expanded their output while reducing the number of workers employed. In general, traditional manufacturing industry tended to locate itself in the midlands and the north. If the problem has been more acute in Britain than in most other

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  countries, that is only because, thanks to Labour policies, our manufacturing industry was the most heavily overmanned to start with.
  Mr. Kinnock: Does the shift in the industrial pattern of development which the Chancellor has described with some accuracy explain the fact that since 1979 our trade in high-tech products has moved from a surplus of £1 billion to a deficit of £2 billion under this Government?
  Mr. Lawson: The matter that I am talking about has nothing to do with our trade in high tech. Our exports of high tech have been increasing very substantially.
  Mr. Campbell-Savours: Give way.
  Mr. Lawson: I have given way once. I will give way again but not now.
  The difference to which I have alluded is also an inner-city problem and once again most of the big industrial cities are in the north. This Government have taken a whole battery of measures to help those parts of the country that have suffered from the highest levels of unemployment.
  Mr. Campbell-Savours: Give way now.
  Mr. Lawson: I will finish this passage first.
  Regional assistance, although reduced in overall size, has been much more closely targeted on jobs. We have multiplied spending on top of that on specific employment and training measures tenfold and this massive expenditure has in practice been heavily skewed towards the north. We have also greatly expanded urban developmnt grant spending, where each £1 of public money has levered in £4 of private sector financing. My right hon. and learned Friend the Paymaster General, when he winds up, will mention some of the other initiatives that we have taken.
  Mr. Campbell-Savours: Is the Chancellor aware that, in the words of the Confederation of British Industry, one of the biggest impediments to regional growth is the two-month moratorium that has been introduced on the payment of regional development grants? Is he further aware that people in industry all over the country are complaining, and that that moratorium is having a devastating effect on regions such as mine in Cumbria? Will he get together with the Secretary of State for Trade and Industry and reconsider the matter, rescind it and ensure that development takes place and that the grants are paid when they should be paid?
  Mr. Lawson: If the hon. Gentleman had looked at the White Paper published earlier this month, he would have seen that provision for regional expenditure had been increased. There is an obstacle that we have come up against time after time. That has been the behaviour of hard Left Labour local authorities.
  Mr. Robert C. Brown rose——
  Mr. Lawson: I have just given way.
  As Robert Kilroy-Silk—a name known to Opposition Members—said in his latest book:
  "The Militants and their ilk in Liverpool are the biggest deterrents to job creation on Merseyside that there have ever been."
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  The same goes for other anti-business Socialist local authorities up and down the country. Time after time that is the problem.
  Mr. Robert N. Wareing rose——
  Mr. Lawson: Although manufacturing output overall is rising strongly, the decline in employment in the traditional manufacturing industries is unlikely to reverse itself fully, and to the extent that it does, there is likely to be a constant drift from the cities to the outlying areas. How, then, to attract new firms and industries—manufacturing as well as service industries—to fill the gap? Certainly not with councils such as that of Liverpool. Nor is that the only one.
  Mr. Hattersley: The right hon. Gentleman must have misheard my hon. Friend the Member for Workington (Mr. Campbell-Savours). He asked the specific question, why a moratorium and how can he justify it? Will he answer that now?
  Mr. Lawson: It is not a moratorium. It is a delay in payment that allows a significant increase in regional assistance over what was previously planned. That is clearly stated in the White Paper.
  I say this in all sincerity to the right hon. Member for Sparkbrook and Opposition Members: it does not help to imply, as the Opposition all too often do, that the whole of the north is a disaster area, a picture of industrial devastation. That is just the sort of image that does the most damage to the north and, of course, it is not true either. The revival of the hard-hit regions of our country will come about only on the basis of enterprise, whether local or coming in from outside. The Government's task is to create, so far as local government allows us to, the climate for enterprise of that kind.
  Mr. Wareing: Is the right hon. Gentleman aware of a survey that was recently carried out for the Institute of Directors? The members of the institute were asked which of 11 different factors they thought were the cause of lack of investment and whether they were relevant to business locational decisions. Local authority rates appeared to be the eighth factor among the 11. Most of the problems were related to locational factors, having no bearing whatsoever on the activities of local authorities. That includes Liverpool, where some people, including the Government, think the rates have been kept too low. That is why councils are currently facing the law.
  Mr. Lawson: I regret having given way, because that was more of a speech than an intervention. If the hon. Gentleman thinks that business men, particularly small business men, are indifferent to the level of local authority rates, he is not living in the real world. He is even more living in cloud cuckoo land if he thinks that the only anti-business practice of some Labour local authorities—not all—is high rates. There are many other impediments that they put in the way of business, including the refusal of planning permission and so on.
  Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. You will have heard the Chancellor make a statement about the controls on regional development grant not being a moratorium. May I refer you to page 93 of the White Paper, which the Chancellor said that I had not seen? That page refers specifically to moratoria—
  Mr. Deputy Speaker: Order. The hon. Gentleman knows perfectly well that that is a matter for debate, not a point of order.
  Mr. Lawson: I am well aware of what is in volume II of the White Paper and I stand entirely by what I said.
  Fortunately, all the signs are that employment prospects have improved considerably in the north as well as in the south, as the economy surges forward.
  Mr. Tony Marlow: My right hon. Friend said that there were other habits and actions of Socialists that caused problems with employment. Has my right hon. Friend seen the document from the Library that sets out the level of unemployment by constituency? Is he aware that there is a close correlation between high levels of unemployment and Socialism? For example, in London the 11 constituencies with the highest levels of unemployment all have Labour Members of Parliament and they all have Socialist local authorities. Is it not the case that the main creative force behind unemployment is Socialism?
  Mr. Lawson: As usual, my hon. Friend makes a telling point.
  My own local paper, the Leicester Mercury, which I was looking at on Thursday, carried 17 pages of job advertisements. That is substantially up on a year ago. I had some inquiries made——
  Mr. Campbell-Savours: Get back to the moratorium.
  Mr. Lawson: I am talking about jobs, which the hon. Gentleman professes to be concerned about—[Interruption.] The hon. Gentleman clearly does not care about jobs.
  I had inquiries made of some other leading provincial newspapers. Job advertising in the Manchester Evening News last week was 11 per cent. up on a year ago. For the Newcastle Evening Chronicle the increase was around 30 per cent. For the Birmingham Evening Mail, there was a rise of 40 per cent. in jobs advertised, and from the Sheffield Star, an estimated 50 per cent. increase in the number of jobs advertised compared with a year ago.
  Lastly, in this context, given the terms of the Opposition's motion, let me add that there is no evidence whatever that industrial mergers have any responsibility for regional and local differences in employment. The right hon. Member for Spark brook referred briefly to the BTR bid for Pilkington. I understand that it must be galling for him to find that his fox has been shot. The plain fact is that my right hon. Friend the Secretary of State for Trade and Industry correctly accepted the clear advice of the Director General of Fair Trading that the proposed merger did not raise significant competition issues. BTR's withdrawal from the bid this afternoon in the light of Pilkington's dramatically improved profit forecast is equally clear vindication of the Government's view that other issues are generally best left to the verdict of the market.
  As for "merger mania"—I quote from the motion tabled by the Opposition—I pause merely to observe that in the 1960s that was precisely the declared industrial policy of the Labour Government through the agency of the so-called Industrial Reorganisation Corporation.
  Mr. Robert C. Brown rose——
  Mr. Lawson: I must get on with my speech.
  I turn now to the City, because the right hon. Member for Sparkbrook referred to the City at some length in his
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  speech. While employment in manufacturing has been declining, in the service industries it has been steadily growing, and nowhere more so than in the financial services industry. Over the past five years, the numbers employed in the financial services industry have been growing at the rate of 5 per cent. a year, to reach 2½ million at the latest count. The contribution of the financial sector to Britain's invisible trade surplus is now running at some £7½ billion a year.
  By no means all of that is concentrated in London. Edinburgh, for example, is a major financial centre in its own right, and Scotland now employs more people in the financial services industry than in steel, coal mining and shipbuilding put together. But there is no doubt that it is London that is the pre-eminent financial centre, not merely of the United Kingdom but of Europe and, arguably, of the world.
  To maintain that position, it is essential that London zealously preserves its worldwide reputation for integrity and probity, and we have taken effective steps to that end. Soon after taking office, we legislated to make insider trading illegal, which it never was under Labour, and we are now giving urgent consideration to making it an arrestable offence.
  Mr. John Smith: Will the right hon. Gentleman give way?
  Mr. Lawson: I shall give way in a moment.
  Following the report of the Roskill committee, we are strengthening our armoury against financial fraud, with the setting up of a new serious fraud office, changes in court procedures to make it easier to bring charges and to present evidence, and increases in the penalties for fraud and corruption, all with precious little help, I have to say, from the Opposition.
  Mr. John Smith: Before the Chancellor's imperfect recollection leads him into greater error, let me remind him that in 1978, as Secretary of State for Trade, I introduced a Companies Bill that made insider trading a criminal offence. If we had had co-operation from the Conservative Opposition at the time, the Bill would have been on the statute book before the 1979 general election. The Companies Act 1980 followed the provisions that the Labour Bill introduced to the House of Commons. Will the Chancellor now withdraw what he said?
  Mr. Lawson: I shall withdraw nothing. As the right hon. and learned Member has owned up, the last Labour Government had a deathbed repentance. Right at the end of their term of office, they suddenly got around to the question of insider trading. They were never able to get it on the statute book during their period in office—[Interruption.]
  Of course, we have also put on the statute book the new Financial Services Act to ensure the effective regulation of the securities industry. How this will work out in practice it is still too soon to give a final verdict. Many aspects of the Act are not yet in operation. However, let no one be under any illusion that there is anything soft about the regime that it introduces. Although built on the foundation of the City's traditional pattern of self-regulation, it is a fully statutory system, and one which, incidentally, gives inspectors appointed by the Department of Trade and Industry far more power than is possessed by the SEC in America. That is a fact.
  Mr. Allan Rogers: Will the Chancellor give way?
  Mr. Lawson: If the hon. Gentleman is an expert on this subject, certainly.
  Mr. Rogers: Before the Chancellor concludes his remarks, will he give the House details of the number of inspectors who look for or follow up allegations of fraud in the City of London, compared with the number of inspectors who look for social security fraud?
  Mr. Lawson: If the hon. Gentleman has any evidence or suspicion of fraud, will he please give it either to me or to my right hon. Friend the Secretary of State for Trade and Industry, and appropriate action will be taken. If the hon. Gentleman has no such evidence, he should not pretend that there is anything going on there.
  Mr. Bill Walker rose——
  Mr. Lawson: I shall not give way.
  I give the House this assurance: the Government are determined to act promptly and effectively whenever such action is warranted, and this has been amply demonstrated by the decision to put DTI inspectors into Guinness, and by the developments that have already occurred as a result. I give the House a further assurance: should the Guinness inspectors at any time uncover any evidence that would warrant a criminal prosecution, that evidence will be passed on to the appropriate authorities, irrespective of whether the inspectors have completed their own inquiries.
  Attention has also, inevitably, been directed to Morgan Grenfell, Guinness's financial advisers. As a bank, Morgan Grenfell is subject to the supervisory authority of the Bank of England and to the terms of the Banking Act.
  The Bank of England was closely involved in setting up and determining the terms of reference of the high-level internal inquiry into the management of Morgan Grenfell, which was announced last week and, at the governor's suggestion, the inquiry team is now to be strengthened by the addition of a senior independent auditor. The group chief executive of Morgan Grenfell and the director at the head of its corporate finance division have today announced their resignations, and an executive committee of the board will manage the group pending the appointment of replacements. Meanwhile, the governor of the Bank of England has asked for an interim report by the end of this month, in the light of which the Bank of England will decide whether further action is required.
  Any information suggesting criminal activity will, of course, be passed promptly to the appropriate authorities. In particular, the Bank of England is keeping both me and the Department of Trade and Industry fully informed.
  Ours is the party of law and order, and this Government are determined to do all in their power to prevent, to detect and to punish wrongdoing, wherever it may occur.
  Mr. David Clelland: Will the Chancellor care to tell the House when was the last time, before the Government came to office, riots occurred in the inner-city streets?
  Mr. Lawson: I regret that there are many occasions of riots in our long history, but I am glad to say that none is taking place at present.
  But it is important that, serious though the matter of City wrongdoing is, we keep it in perspective. As the hon. Member for Dagenham (Mr. Gould) at least has
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  conceded, the guilty are a tiny minority. The overwhelming majority of those who work in the City are honest and are as eager to root out the wrongdoers and their practices as anyone in this House.
  The attempt by the right hon. Member for Sparkbrook to smear the entire City with guilt by association, describing it as "sleazy", "seedy", "an alien force" and
  "the least reputable sector of the economy"
  is wholly false and insofar as anyone believes him—which may not be many—highly damaging to this country, for which the City's reputation is a priceless national asset. Indeed, if the truth be told, it is the very success of the City in the world market that the Labour party cannot abide. For Labour is comfortable only with failure. Indeed, Labour Members understand nothing else. They knew nothing else but failure when they were last in office, and would condemn our country to even greater failure were they ever to return to office.
  Mr. Robert Sheldon: Of course we are pleased with the successes in the City of London. Is the right hon. Gentleman aware that, without the Ivan Boesky affair, and without the SEC in the United States, it is doubtful whether any of these allegations would have been made, let alone the facts discovered?
  Mr. Lawson: The right hon. Gentleman should have the courage to concede—he knows more than his colleagues on the Labour Front Bench—that we have acted promptly and effectively in each of these cases and in every case that has come to light.
  What is the Opposition's economic prescription? The right hon. Member for Sparkbrook has, I concede, by his standards been relatively honest and open about it. It is higher Government spending, higher borrowing and higher taxes. He has made that plain.
  Let me take each of them in turn—first, spending. How much higher spending, and how is it to be financed? As my right hon. Friend the Chief Secretary has once again today pointed out, Labour's spending pledges add up to at least an extra £28 billion a year. How on earth do they imagine that they are going to finance that? I know that the right hon. Member for Sparkbrook tries to slide away from the £28 billion, by talking as he did today—or he has on previous occasions at any rate—of Labour's £3½ billion poverty package and £6 billion jobs package. Does that then mean that he is resiling from Labour's repeated promises to spend more on education, more on the Health Service, and more on overseas aid, to name but three? Will he answer? I will gladly give way to the right hon. Gentleman. The right hon. Gentleman is struck dumb. He is not able to answer. Hon. Members will draw their own conclusion that the £28 billion still stands.
  Let us give the right hon. Gentleman the benefit of the doubt. Let us suppose that he is resiling from all these pledges on health, education, overseas aid and the rest because they do not come in either the jobs package or the poverty package. Let us suppose that he is resiling from them and many others. I remind the House that to pay for the £28 billion of additional public spending——
  Mr. Hattersley rose——
  Mr. Lawson: I am not surprised that the right hon. Gentleman does not like this. It would mean a basic rate of income tax of 53p in the pound.

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  Let us suppose that the right hon. Gentleman has won his desperate battles with his pledge-happy colleagues. How is the £9½ billion to be financed?
  Mr. Hattersley rose——
  Mr. Lawson: In a moment. Some £3½ billion of it, we are told, will be financed by reversing the reductions that the Government have allegedly made in the taxation of the higher paid and the rest by an extra £6 billion of Government borrowing. It beggars belief. The right hon. Member for Spark brook claims that the economy is overheating, that interest rates are too high and that there is a crisis round the corner, and he blithely proposes to borrow an extra £6 billion.
  Mr. Hattersley: On this exact question, I spent, I think, the first quarter of an hour of my speech telling the Chancellor that we believed that if he had £3 billion to spend it would be better spent on education, health, pensions and housing than on tax cuts. I ask him to tell the House why he thought that tax cuts were a better choice than health, education, pensions and housing. That is the issue. Will the right hon. Gentleman explain the answer now?
  Mr. Lawson: The point is the one I put to the right hon. Gentleman.
  It is not even as if the so-called poverty and jobs packages consisted exclusively of capital spending. At least three quarters of the proposed total would be on current spending. So why does not the right hon. Gentleman take the honest course and admit that every penny of it would have to be raised by higher taxation on ordinary working people? Why does he not admit that? Is not the whole of the Opposition's case, which we heard again today, that public expenditure is in every way preferable to private expenditure and that the burden of taxation is of no consequence? Is that not their proposition? Why not at least have the virtue of consistency and promise to restore the basic rate of income tax from the present level of 29p to the 33p which we inherited from Labour? I wonder why the right hon. Gentleman does not promise that.
  Apparently, as far as the right hon. Gentleman is prepared to go, at least until now, to promise, in the spirit, he says, of Mr. Walter Mondale, to undo any tax reduction that there may be in this year's Budget. I do not know whether there will he any tax reductions in this year's Budget. All I shall say is that the Budget this year will be on St. Patrick's day. [Interruption.] That is informing the House of the date of the Budget.
  But the whole country must now be clear about the difference both in policy and in philosophy between the Government and the Opposition. The Government believe in reducing the burden of income tax on ordinary working people and the Opposition believe in increasing it.
  As for Mr. Mondale, I can do no better than quote from the leading article in The Guardian—not a newspaper that supports the Conservative party. The article states:
  "Mr. Walter Mondale, with energy and some honesty, based his entire 1984 American Presidential strategy on playing the spectre at the economic feast. He won only Minnesota. His candidature was a fiasco. The voters did not want to hear about the bad times that might follow the good times. They did not want to vote themselves immediate tax increases. Nor, if times were indeed going to turn sour, did they think that big spending Democrats were the natural first port of call. Mr. Mondale may have made a sincere pitch. But it was not, when the campaign actually got going, an effective or resonant pitch. It was a disaster."
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  The Labour party is, indeed, a disaster. The only bigger disaster would be a Labour Government.
  I welcome this debate. It has been rather a long time coming. The Opposition emerged from their Bishop's Stortford conclave claiming, to quote the right hon. Member for Islwyn (Mr. Kinnock):
  "The Election will be about the economy. Our campaign from now until election day will therefore be about this central issue."
  Excellent—but what happened? They fell at the first fence last Wednesday, not because of cold weather but because of cold feet. Since then, all we have had are further figures showing that the economy is in excellent shape The prospects for 1987 are very good and I invite the House to reject the Opposition's absurd motion with the contempt that it deserves.
  6.25 pm
  Mr. Ian Wrigglesworth: The Conservative party has been in office since 1979. We are entitled to judge its record on the basis of what has happened not since 1981 or 1983 but since 1979. Just as the Chancellor is happy to fight the general election on the Government's economic record, so, too, is the alliance. The central feature of economic policy and the central failure of the Government's policies is unemployment.
  Since 1979, the number of long-term unemployed has increased fourfold from 300,000 to 1·36 million. I hope that during this debate we will not become too embroiled in percentages and big figures but will consider the implications of those figures. That is why I chose to start with the figure for long-term unemployment of about 1·3 million. In my constituency and in the rest of the north that means a very large number of families who have been suffering considerable deprivation, hardship and misery for a very long time. If the Chancellor is proud of his economic record and of recent economic events, he should spend a little more time not only in the northern region but in other parts of the country that have been hit by the scourge of unemployment in an unprecedented way since the Conservative party came to office.
  On the basis of the way in which unemployment was calculated previously, there are at present some 3·7 million people unemployed. The Chancellor should remember that any comparisons that he wishes to draw to the attention of the House should be on that basis, unless he is prepared to reduce the old figures to compensate for the changes made by his Administration.
  The long-term unemployed figures are higher than during the 1930s depression. There were some 483,000 long-term unemployed in 1933. By 1939 the number had been halved. It is an appalling fact that the Government have not merely matched the levels of unemployment in the 1930s but have beaten those levels time and time again.
  We have heard much from Conservative Members about the number of new jobs created. The Chancellor, along with many of his supporters, has been preaching about the million new jobs which are supposed to have been created in recent years, but let us consider the actual record. There are now 1·6 million fewer jobs than in 1979 when the Conservative party came to office. Let us consider a different figure from the Government propaganda claim that about a million new jobs have been created in the past three years. According to the Bank of England, the number of full-time equivalent new jobs created in the past three years is only about 239,000. That

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  contrasts vividly with the constant stream of propaganda—that is what it is—that we get from the Chancellor, the Prime Minister and other Ministers. For the benefit of the Chancellor, I repeat the Bank of England figure—239,000 full-time equivalent new jobs in the past three years. That is merely scratching the surface of the problem.—[Interruption.] I do not care if that figure has been revised by a minor amount, the fact remains that the figure given by the Chancellor and his colleagues is deliberately and grossly misleading. There are now 1·6 million fewer jobs in Britain than when the Conservative party took office.
  Mr. Jim Craigen: Does the hon. Gentleman agree that the steep rise in part-time employment considerably masks the failure of the Government's employment policies?
  Mr. Wrigglesworth: I entirely agree with the hon. Gentleman. When the Government boast about all those new jobs they are really talking about a whole range of part-time jobs. For the unemployed and the long-term unemployed such jobs are meaningless. That is why I have referred to the Bank of England figure of 239,000 full-time equivalent jobs. That is the true record of the Government's job creation programme since they came to office.
  Mr. Edward Leigh: This is all very interesting but the House would be interested to know whether the hon. Gentleman is still committed to what he told fellow alliance Members—that that they should spend £10 billion. Surely that would mean an income tax rate of 38p in the pound and a VAT rate of 26 per cent. How would that help job creation?
  Mr. Wrigglesworth: I will come to our proposals shortly, but the hon. Gentleman must get his facts right. The sum of £10 billion would be spent over our period in government, not in one year as the hon. Gentleman seeks to imply.
  Let us consider manufacturing output——
  Mr. Tim Smith rose——
  Mr. Wrigglesworth: No, I cannot give way. Mr. Speaker has implored us to be brief because other hon. Members wish to speak.
  We have heard the Government's boasts about the growth of the economy in recent years. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) referred to the fact that the Chancellor had trumpeted about levels of production getting back to 1980 levels. What an incredible thing to boast about—getting production levels back to the figure reached the year after they came to office. What an achievement!
  The decline in manufacturing output is the cause of our economic problems. Production levels are still 6 per cent. below 1979 levels. We have made absolutely no progress—we have gone backwards. In the eight years since the Conservatives took office we have still not reached the levels of production in the manufacturing industries that existed in 1979. We are still struggling to get back to the 1979 levels. Goodness me—even with the three-day week the manufacturing sector did better than it has done since the Government took office.
  786
  We have heard a great deal about the reason for the decline. We are told that the international economic situation has led to Britain and other countries to be hit in exactly the same way—what poppycock! It is simply not true that manufacturing employment in other countries has been so hard hit. Since the Conservative Government took office we have lost 28 per cent. of the work force in manufacturing industry.
  Mr. Oppenheim rose——
  Mr. Wrigglesworth: No, I will not give way. Almost 30 per cent. of the work force in manufacturing industry has gone.
  Mr. John Browne rose——
  Mr. Wrigglesworth: No, I will not give way.
  Let us consider comparisons with other countries. In Japan there has been a 4·9 per cent. increase in manufacturing employment. In the United States there has been a drop of 2 per cent., in Canada 1·4 per cent., in West Germany 8·5 per cent. and in Italy 9·4 per cent. Incidentally, Italy has now overtaken Britain in terms of wealth per head of population, so in comparison with the original Common Market countries we are last in the league table. Our manufacturing employment is down by 28 per cent. and the worst comparison that we can draw is the 9·4 per cent. drop experienced in Italy. Britain's declining manufacturing industry is a direct consequence of the Government's policies.
  It is no good the Chancellor trying to tell the House that the decline is due to our industries not performing as well as those of other countries. [HON. MEMBERS: "What about steel?"] In 1979 Britain produced 21·5 million tonnes of steel. Now, after seven years, the magnificient achievement of that industry is a total tonnage of 15 million. That is an illustration of the state of the economy and of our manufacturing industries. We are producing six million tonnes less than we did in 1979.
  Mr. John Browne rose——
  Mr. Holt rose——
  Mr. Speaker: Order.
  Mr. Holt: I am glad that the hon. Gentleman is discussing steel because this morning I went to Steel House to discuss this matter with some senior executives. In my constituency in the north-east and in the constituency of the hon. Member for Redcar (Mr. Tinn) there are 50 per cent. fewer employees than six years ago but the steel industry there is producing 120 per cent. more steel than in the past.
  Mr. Wrigglesworth: We have heard all the boasts from the Chancellor and other Ministers about how the economy has picked up, but if we consider the production of bricks, steel and raw materials that go to make up the true economy we find that we are well behind the production figures that prevailed in 1979.
  Mr. John Browne rose——
  Mr. Wrigglesworth: No, I will not give way.
  Such a decline in production has implications for my region and the whole question of the north-side divide. This row has been hovering about for a number of years, but it really began with the publication of the Department of Employment census showing that 94 per cent. of total job losses had occurred in Scotland, the north, the

  787
  midlands, Wales and Northern Ireland. It would be nonsense to suggest that unemployment is a problem only in the north and not in the south. Some areas in the south have been equally hard hit, just as some areas in the north, even in my constituency, are as prosperous in terms of income and housing as some areas in the south.
  Nevertheless, overwhelmingly more people are unemployed in the north because the economy of the north has been dominated by old manufacturing industries which have been slipping into decline over a long period. That decline has been accelerated dramatically by Government policies. An inevitable consequence of Government policies and of the decline in our manufacturing base has been that the major manufacturing areas of Britain have been the hardest hit and have paid the price for the Government's policies.
  If Conservative Members do not accept that that situation is a consequence of their policies, I refer them to the period when the right hon. Member for Leeds, North-East (Sir K. Joseph) became Secretary of State for Trade and Industry. It is remarkable how short their memories are. Some Opposition Members remember with amusement but also with dismay the reading list—Adam Smith and various other authorities—that the right hon. Member circulated to his civil servants about how manufacturing industry was not really important to the country and how the service sector would pull the economy, industry and the country up by the boot straps so we did not need to worry about manufacturing industry. That was the philosophy that the Conservative party introduced in 1979 when they took over the reins of power. The consequences of dismantling previous policies, many of which had been put on to the statute book under the Industry Act 1972 by the then Prime Minister and his colleagues, are there for all to see.
  During this Government's period of office, employment in the south-east, East Anglia and the south-west has grown by 367,000, if the self-employed are included in the figure, but in the rest of Britain 1,047,000 jobs have been lost. As a percentage of the work force, registered unemployment has risen far more in the north than in the south. The figures and the census to which I referred earlier show that. One need only look at the Government's submission to the European Community's regional development fund showing that the regional disparity has widened in the past 20 years and that the worst hit regions in the United Kingdom are over-represented among the worst hit regions in Europe. We have five of the 12 highest unemployment regions in the European Community—Northern Ireland, Merseyside, Dumfries and Galloway, Strathclyde, Northumberland, Tyne and Wear and Cleveland. The only parallels are southern Italy, Sicily, Sardinia, Corsica and Ireland. Of the worst 30 regions, the United Kingdom has 10. We are far and away the worst hit area in the European Community. We have the worst regional pockets of unemployment in the whole European Community.
  Mr. Piers Merchant: Will the hon. Gentleman give way?
  Mr. Wrigglesworth: No, I really must not give way again.
  The situation that I have described is not surprising. The manufacturing sector has been predominantly in the regions and it is from that sector that we have lost the most jobs.
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  There is an overwhelming case for devolving far more power, authority and resources to the regions. The City plays a very important role, but it could make a much greater contribution to the regions than it does today. The malaise in the City is debilitating the financial institutions and our economy. It is also debilitating industry and commerce. An honest and open City would be a national asset, but a corrupt City is a national liability. Alliance Members have said before that the Government have not given enough independence to the newly established Securities and Investments Board to enable it to carry out its role as the City watchdog. We should like it to have more independent members and I moved an amendment to the Financial Services Bill to that end. We should also like it to be financed and supported not by the City but by Government funds. It should be seen as a body that is independent of the City and not as one that belongs to and is dominated by the City.
  In the light of recent events, the City is undoubtedly on trial. There have been too many scandals. I accept that a minority of people in the City are causing those scandals and behaving in an unacceptable way, but many people who have known the City for many years are becoming worried that that minority is too large and that too many people and institutions in the City have been infected by this sort of corruption. It is to be hoped that the Chancellor of the Exchequer and the Secretary of State for Trade and Industry will bring their investigations to a speedy conclusion so that this boil can be lanced and the good name of the City restored.
  It is also important that the Civil Service should be above any reproach or doubt. I was disturbed by a report in The Times this morning that the investigation into insider trading and into the role of some civil servants had not led to the suspension of the civil servants involved. In my experience, that would have been the normal procedure in a case of this kind. I should be grateful if the Minister would clarify what is happening about the Government's investigation of their own staff.
  What should be done to overcome the problems which I have outlined and which have been exacerbated by the Government's policies? The Government began their monetarist experiment when they came to office in 1979. That experiment, and the Government's attitude to industry, have led to the present levels of unemployment and to the decline in manufacturing industry. The only way the Government can get us out of this mess is by expanding the economy and investing any surplus cash that the Chancellor of the Exchequer may have under the fiscal adjustment in the forthcoming Budget so as to ensure that the industrial base of the country is strengthened.
  That does not mean providing help only for research and development and for design and high technology, which the Government are now doing but were not doing when they first came to office. It means investing more money in education and training. The Secretary of State for Employment will doubtless tell us how much he is spending now on the youth training scheme, but that scheme has been spatchcocked together without any predetermined plan so it does not dovetail into the comprehensive training system that this country so desperately needs.
  We need to bring together the remaining industrial training boards, the work being done in further education and with apprenticeship schemes as well as the youth

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  training scheme so that they all fit into a comprehensive system to provide proper training opportunities and qualifications for young people. Young people in Germany and Japan are being provided with training opportunities and qualifications of that kind. We need investment not only in industry but in people. The Government should embark upon that investment in the forthcoming Budget rather than cutting taxes to help those already in work rather than the millions still out of work.
  If we are to increase the output of manufacturing industry and the performance of the economy generally, the Government must do something about the uncompetitive nature of unit labour costs, which increased from 4·6 per cent. to 5·75 per cent. last year. They are not the lowest in Europe by any means and the forecast is that in 1987 they will increase by 5·25 per cent. If that happens, we shall lose out to our German, French and other competitors. That will simply make worse the looming balance of payments crisis due to what has happened to the price of oil.
  There is only one way to reduce unit labour costs—by the Government having a clear incomes strategy and working with the Confederation of British Industry and the Trades Union Congress to ensure that pay settlements are brought down and are in line with productivity. For some years the Chancellor of the Exchequer has exhorted industry to bring pay settlements down to a reasonable level so that they are more in line with inflation and productivity, but he has invoked no policy to bring that about. Such a policy is absolutely essential if we are to get the expansion of the economy in the real world and not go into consumption in the way that the Government are presently engineering.
  Present forecasts suggest that the Chancellor will make a fiscal adjustment of between £2·5 billion and £3 billion. It would be scandalous if he used that to generate more consumer expenditure in the economy, which will merely create jobs in Japan, in America and in France and other EEC countries rather than in Britain. It is scandalous that the Government have allowed pay increases to go way ahead of the levels of inflation and allowed consumer credit to increase beyond all imagination. They are now to compound that by giving further tax cuts which will further boost consumer spending and create jobs overseas but not in Britain.
  We urge the Chancellor to adopt the approach that I have suggested so as to ensure a rapid decline in the levels of unemployment to which we have been subjected by the Government over the past seven years. For the people in the regions and in the north, it is urgent that the change in economic policy should take place. Without it there will be no hope of getting the unemployment figure below 3 million and keeping it there and manufacturing industry will continue in the decline that has been taking place throughout the Government's period of office to the detriment of the regions and of the country as a whole.
  6.51 pm
  Mr. Edward Heath: I intervene to make, as briefly as I can, four practical points. The first is on the question of the north-south divide, with which I understood the debate to be largely concerned. My right hon. Friend the Chancellor of the Exchequer is right that for a long time there has been a north-south divide. What
  790
  is characteristic of these past few years is that the dividing line has moved further and further south. My right hon. Friend is also right that that is largely due to historical and geographical reasons—the placing of our industry and our ports and the changes in trade patterns that have occurred since.
  Since 1945, in cyclical variations, Scotland, the north and Wales suffered first and came out of the cyclical arrangement last. With the development policies that were pursued by successive Governments, that was gradually changed. The first change came about in Wales, then later on in Scotland and the north-east.
  In this decade the line has come south of Birmingham, and the midlands, for the first time, has found itself affected by a post-war cyclical change from which it has never suffered before. The consequence of that is that, whereas the midlands has often complained about action which was being taken in development policies for the rest of the country, now the midlands is asking that it should be treated equally at least with the other parts of the country which are benefiting from regional policy.
  The point that I would like to make to my right hon. Friend the Chancellor is that the Government are investing more in those areas outside the south, but they are not getting the benefit of what they are doing publicly because they are still emphasising—as he did in his speech, and as the Prime Minister has done—that there are rich areas in the north. That implies, "Why are you making a fuss?" They then say, "Everything must be left to competition." Neither of those things is helpful with regard to the regions.
  Some spots in Scotland, Wales and the north are richer than others, but they are limited compared with the south. The people who live in those areas know that perfectly well, and they know the appalling problems with which they are confronted from the point of view of jobs and certain other accessories of life. Therefore, as long as that attitude is adopted we cannot make the appeal to them that we ought to be making.
  Then we have the claim that everything must be left to competition. It is quite plain that competition does not have an answer to these problems. There has been criticism of development policies—it used to come particularly from the midlands—that they had achieved nothing. That is a completely fallacious argument. The development policies achieved the changes that I have mentioned. When my right hon. Friend the Prime Minister says that it is wrong to treat those areas as if they were down and out, she is in part correct. The north-east has the finest infrastructure of any part of the country. Parts of Scotland have a magnificent infrastructure. When my right hon. Friend the Prime Minister says that there are high-tech areas in Scotland that are successful and profitable, she is right—but why? It is because we put the money into building Livingston and gave industry the inducements to go to Livingston. Therefore, Livingston has concentrated on high tech and it is successful. None of that would have happened had it been left to competition and the market.
  Mr. Lawson: I know that my right hon. Friend is trying to make the most objective assessment that he can of regional policy in the past, but will he concede that the problem in the west midlands—it is the west midlands, not the east midlands; I represent an east midlands constituency and the east midlands is not a hard hit part of the country at all—arises in large measure because,

  791
  under past regional policies, business men wanted to place their investment in the west midlands but were prevented from doing so.
  Mr. Heath: With great respect to my right hon. Friend, that is a repetition of the fallacy. West midlands business men wanted to expand at a time when the area was already understaffed from the point of view of working population and overcrowded from the point of view of plant. That was the plain fact. But they wanted to follow their own interests and they said that they wanted to expand and go out in the countryside. They said, "Don't worry about the environment; let us go there." We asked about the shortage of people, but they said that that did not matter because they would bribe them to go there, and that was part of the wage spiral. That is the fallacy that lies at the root of the argument that all must be left to the market and competition.
  Mr. William Cash: Will my right hon. Friend give way?
  Mr. Heath: No, I am sorry, I shall not give way. I am going to be brief.
  Looking at the successes, various parts of Scotland and the north-east have been very successful as a result of development policy. When my right hon. Friend the Chancellor says that his area is not greatly concerned about unemployment, all I can say is that the line has moved so far south that the most delectable area of Sidcup has unemployment of 9·5 per cent. I do not regard that as satisfactory or bearable; it is deplorable. That is the way in which the north-south line has moved.
  My conclusion is that, as the Government are investing in the regions, there are parts in which they should invest more. If they have available money, rather than reducing taxes they should go for investment. Then they should have a constructive, co-ordinated development policy for the country as a whole.
  Scotland has the best policy, because it is a combination of Government money and private enterprise money and that is due largely to my right hon. Friend the Secretary of State for Defence, because he brought that about while he was Secretary of State for Scotland. That is the attitude that the Government should be fostering.
  With great respect to my right hon. Friend the Chancellor—I have never paid so much respect to him before—mergers and amalgamations are associated with regional problems. One of the overall problems from which we are suffering as a result of development since we reached the height of the industrial revolution in this country has been the movement of headquarters out of Merseyside or Newcastle-upon-Tyne down to London. When cyclical difficulties appeared, it was the places outside the headquarters that suffered. They were the bits that were closed down and where the jobs were lost. In the event of an amalgamation or merger by one of these hydra-headed concerns the chances are that the headquarters—in this case, on Merseyside—would have been closed, and later on, when things became difficult again, it would be that area that suffered. That is why there is a direct link between people's fears and amalgamations, mergers and absorptions, for which there is undoubtedly a mania at the moment. It is no concern to me whether that is the responsibility of the Labour Government in 1964 or 1970; it is past history. What does concern me is the present and the future.
  Sir Peter Hordern: In this particular case I think that my right hon. Friend will agree that there is no reason at all to suppose that investment at St. Helens would have been reduced by BTR. One has only to look at the way in which it managed to turn round Dunlop and the extra investment in that company, the extra employment and the extra profits that that company has continued to produce.
  Mr. Heath: I greatly respect my hon. Friend's experience, but not everybody would agree with his assessment of what happened to Dunlop. I was reading today an account in the financial press which says that Dunlop is but a pale shadow of what it was as one of our major tyre producers. I do not trust any such organisations, because their purpose is to gain the money which is in an existing firm.
  That brings me to the second aspect of this, which is that it is the short-term view which is being taken, not the long-term view. People want to get their hands on a firm, above all, a family firm, which takes a long-term view and sets aside money for investment. They do not want it for further investment, but so that later on they can, if they get the opportunity, sell it off and use the money for profit dispersal. That is what they want and that is what they do. One has seen that in the United States to an extent to which it has damaged United States industry, and one sees the frailties of United States industry. I have great anxieties that the same thing is happening here, and there is every reason to be anxious about it.
  I come now to the decision of my right hon. Friend the Secretary of State for Trade and Industry. I have the utmost sympathy for my right hon. Friend, and I understand his position. It was difficult for him. He is not in any way at fault because he is governed, apparently, at the moment, by the Tebbit guidelines of 1984. Those cannot take the place of the Fair Trading Act 1973 which insists on the public interest. The Tebbit guidelines say that competition is almost the only thing that matters. No Secretary of State has a right to change the law in that way. I suggest to my right hon. Friend the Secretary of State for Trade and Industry that his first task should be to change the guidelines to enable him to get back to the public interest.
  Now we are told that we have competition because it is competition which considers the public interest. That is obviously not the case and never has been. That is not what competition is about. Nor is it the business of shareholders to decide the public interest on a merger. Shareholders are not in a position to decide the public interest. Can we blame a shareholder if he seizes a sum that he is being offered which it appears unlikely he will be offered again? There may well be a completely different attitude in a family business because the family will want to continue the business and will resist the short-term view and take the long-term view for the sons and grandsons. But that is not the case in a competitive firm such as we saw trying to take over Pilkington.
  However, I must say that BTR has shown far more sensitivity, common sense and understanding of the political situation in Britain than General Motors did. If General Motors had done that, we would have been spared much of the agony and harassment which went on over that case. BTR should be given credit for having recognised the political climate on both sides of the House and for having acted accordingly.

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  Here I suggest that we immediately get back to the public interest. It can be referred and then come forward. But the Government of the day are the only body which can consider the public interest. It is the Government of the day who are responsible for doing that. The Government must not abdicate that responsibility by saying that they will leave it all to competition or to the market. I hope that, now that this incident has occurred and public opinion on Merseyside and in the House has made itself so clear, my right hon. Friend the Secretary of State for Trade and Industry will move back to the official terms of the Act and get away from the Tebbit guidelines. Then he will be able to make a judgment in the public interest as a whole, which is the Government's responsibility.
  My third point relates to the City. Because of the internationalisation of monetary institutions and the position of the City, official regulation is inescapable. I do not believe that the City is any longer capable of self-regulation. It is not an interest to declare, but I was brought up in the City in merchant banking. At that time, it was possible for the City to regulate itself. There was no legislation on insider dealing because nobody imagined for a moment that there would be an orgy of insider dealing. [HON. MEMBERS: "Come on".] With great respect, I was there before my hon. Friends and I know the philosophy and ethic of the City at that time. The City did not reckon to involve itself in that. I see the faces of all my younger hon. Friends. That is not something that they can ever visualise, but I am sorry it happened.
  If something was believed to be irregular or was likely to cause trouble, the Governor of the Bank of England just sent for the senior partner. When that happened we waited to see what the Governor had said. If he said, "I think that you are getting a bit low. You are under your 12 per cent.," one knew that that was the end of the matter and one had to get back quickly. If one did not, there was trouble. That is no longer possible today. Therefore, instead of trying to find a halfway house, we must face reality and recognise that there must be official regulation of the City.
  The Securities and Exchange Commission has great powers. Under the Reagan Administration those powers have not been used because appointments to the SEC have been along the lines of President Reagan's own thoughts about capitalism and its operation. But now the SEC is coming back into its own. It is having to do so because of the present scandal. I think that my hon. Friend the Member for Tayside, North (Mr. Walker) takes the view that he brought the scandal to the Government's notice, whereas most of us thought that it was because the SEC dealt with it. However, I am prepared to give credit to both.
  The SEC dealt with the matter in three or four months [HON. MEMBERS: "Four years".] With great respect, it dealt with it in three to four months. A slight financial penalty of $100 million was imposed and there was the knowledge that all the other scandals would be revealed.
  The problem that we have always had to face—I hope that when my right hon. and learned Friend the Paymaster General replies he will deal with this—is, and I think that this is the truth of the inquiry being made at the moment, that the inquiry has no powers to enable it
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  to follow with a prosecution. Therefore, everything which is done must be duplicated by those who can then make the prosecution.
  In my experience, which is some time ago when we had the Rolls Razor case and Mr. Bloom, we set up an inquiry immediately. That is all right, but it is not the real point. The real point is how quickly action will be taken on an inquiry. If one is trying to give the City a lesson on how it should behave, it is no use that happening many years hence. That lesson must be taken with prosecution in the immediate future. In the particular case that I am mentioning, the inquiry took two and a half years, and then, in order to have a criminal prosecution, there had to be a replica of the inquiry by those with powers to take evidence in a form which could then be used in a criminal prosecution.
  The question is whether this inquiry has the power to bring about a criminal prosecution or whether it will wait and then refer the matter to the Director of Public Prosecutions who will then have to get the evidence for the criminal prosecution. That means that there will have to be a replica of the hearings which have been held. That is an important point. If the situation involves duplication, then as a practical point I suggest to my right hon. Friend the Chancellor that the new body that he is setting up to inquire into fraud should have that power and should start at the beginning and not duplicate something that is already being done. That is my third practical point.
  My fourth point is that constantly we seem quite incapable of getting Government and both sides of industry to work together on a problem. For a long time I have found that the most disturbing aspect of our national life. One sees it constantly. We saw it in the case of Nimrod and we see it in the Government's use of new technology imported from other countries. We have heard about the increase in imports. What is it in our national character that prevents us from doing what the Germans, the Japanese and the Americans can do? As a result, Germany and Japan have a much more successful industrial base than we have.
  Only the Government can give a lead and the people who can follow are the Confederation of British Industry, the Institute of Directors, the trade unions and finance. Finance ought to be the servant of national life, industry, agriculture and production. As we have seen in the last few months, more and more it is becoming the master of national life. Finance takes the short-term view and allows three months only. If the results after that time do not seem satisfactory, the management is changed and somebody takes over the firm. There is no interest whatever in the long-term point of view.
  For those who are working the markets, it is not even a three-month view, it is three seconds, and if the answer is not up on the screen in front of them in three seconds they must do something about it. We cannot have a successful industry or a successful national life on the basis of a purely short-term view, yet that sort of view is becoming more and more common and the City is giving a lead. Those are my four practical points.
  There must be an overall development policy and in the public interest the Government must take the ultimate responsibility for amalgamations and mergers. Competition is not in the ultimate public interest. In terms of the City, we have moved into an entirely new sphere of financial operations and financial life, in the same way as

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  New York and Tokyo have moved. We must face that and it is much better to take clear and firm action now than to have it dragged out of us later.
  Lastly, we need much closer working co-operation between Government and industry if we are to move forward and recreate the industrial base which is so badly needed to provide the employment that our people need. I hope that the Government will advance that view and say that they want to see these problems worked out jointly. We need to help one another if we are to solve the problems that exist.
  7.13 pm
  Miss Betty Boothroyd: We are debating crucial and fundamental issues about the quality of life for millions of families. My chief concern is with the west midlands and I emphasise that the problems plaguing that area are related not only to jobs and industry. They are also to do with public services, housing, and inadequate resources for health care and training. The problems are all-consuming and have come about because of long-term problems associated with old industrial areas. That was mentioned by the right hon. Member for Old Bexley and Sidcup (Mr. Heath).
  The problems have been compounded because policies pursued by the Government have made every problem worse. In consequence, the entire economy of the west midlands region is collapsing upon itself. As one job is lost and as one firm and one industry has folded, each has sucked into that collapse other jobs, other firms and other industries which they previously sustained.
  When she was Leader of the Opposition the Prime Minister visited Birmingham. She told the people of the west midlands at that time that unemployment was not inevitable. She insisted that job losses could be halted, that there was a cure for unemployment and that she had the medicine. That was in the election campaign of 1979. Since then whole industries have been destroyed and firms that were household names have gone out of existence. Yet there is a skill shortage, especially in engineering. A recent joint report by the CBI and MSC revealed that one in seven firms in the region has to restrict its production because it cannot recruit key workers. Some 71 per cent. of firms surveyed said that they had been short of engineers for over a year.
  We are suffering from policies which have led to a reduction from 28,000 to 9,000 in the intake of apprentices into general engineering since 1979. That is a massive loss and I look forward to the Minister telling us how it can be made good. In the manufacturing sector alone more than 280,000 jobs have disappeared in the region and over 24,000 people in my borough of Sandwell have lost their livelihoods under this Administration.
  Mr. David Winnick: Will my hon. Friend give way?
  Miss Boothroyd: I ought to make it clear that I do not intend to give way to any hon. Member. Too much time has already been taken up in this debate by interventions.
  The Prime Minister's medicine is killing the patient.
  Along with the dereliction of industry, we have also suffered an attack by the Government on public services such as transport, social services and housing—an attack on every essential of the life of the community. At a time when the demands on all those agencies is increasing
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  because of job loss and industrial decay, money and resources for renewal to sustain the social structure have not been forthcoming.
  The National Economic Development Council has warned that the infrastructure in the older industrial areas has been allowed to deteriorate so badly that there is a critical need for repair and renewal. That report argued for major increases in expenditure on roads, sewers, housing, schools and hospitals. That is not news to the Opposition because we have been arguing that case for a long time. I should like to give a couple of examples from my area because nowhere are jobs and houses more crucially needed than in the west midlands.
  We have 288,000 privately owned houses in need of urgent improvement. We have some 165,000 council houses with serious defects and 110,000 families on council waiting lists. Despite the fact that some 6,000 people are on the council waiting list for homes in my borough, the housing investment programme allocation for Sandwell has been massively reduced in the last seven years from £35 million to £12 million. Since the Prime Minister came to office, my borough has lost in real terms a massive £163 million in rate support grant. That loss is equivalent to £535 for every man, woman and child in the borough.
  A letter from the Builders Merchants Federation expresses concern over the condition of the nation's housing stock. Perhaps other hon. Members have received the same letter. The federation says:
  "We feel it important to remind the Government of the difference between spending money for the sake of A and spending on investment".
  The letter goes on to say that around £2 billion a year is needed for refurbishment and renewal and that a long-term political and financial commitment to construction would have a minimal effect on imports and a beneficial effect on unemployment. Such a commitment would undoubtedly benefit the west midlands but it does not seem to be forthcoming.
  If we turn to the water industry in that region and the infrastructure there, the Severn-Trent water authority has 22,000 miles of sewer tunnels, all of them over 60 years old and much of it over 100 years old. The authority estimates that it will cost something like £10 million annually over 10 years to cope with urgent work to repair that infrastructure. This represents huge assets which are essential to support the industrial and social structure of that area. The number of complaints to the water authority about dirty water is evidence of the need to refurbish the water mains at an estimated cost of around £40 million. Yet the work is just not getting done because we are allowed to spend only half the money that we had 10 years ago for this type of renewal.
  Anybody with common sense knows that the longer we delay tackling these jobs, the more it will cost disproportionately in financial and human terms. It does not seem to me that this Government understand about putting jobs and people together. That very revealing document submitted to the European Commission by the Government clearly showed that there are no plans to make any reduction in unemployment between now and 1990. For the west midlands the Government predict an increase in the working population and a fall in the number of jobs available. The document says:
  "Continuing restraints on public expenditure…curtail the resources which central, local and public sector authorities have available to undertake development programmes or lake

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  advantage of significant infrastructure development opportunities. This in turn limits employment arising from construction programmes and major capital projects".
  What an appalling admission that is. The Government know that the most effective way of getting people back to work is through public works programmes but the people of the west midlands can expect no such commitment from the Tory party.
  Midlanders are decent people. They are men and women with families who seek the same comforts and opportunities as all of us. They want to work, but when a job vacancy occurs 50 people chase after it. That is the reality of the great divide.
  Of course the west midlands, like the rest of our devastated regions, has pockets of prosperity. The Minister, winding up, will no doubt refer to them. I tell him simply—if anything grows in the west midlands it grows not because of this Government, but despite them. In the west midlands, as throughout the country, there are pockets where business, organisations, communities and people work to make things grow through the dustbowl of Thatcherism. Soon they will have a Labour Government working with them instead of a Government working against them.
  In 1945 Clement Attlee described the mission of the Labour party as
  "proving that socialism and common sense coincide more than our critics understand".
  That definition has an irresistible appeal today.
  We know that it is common sense to put homes into good repair and not wait until they collapse. The Prime Minister prides herself on being a prudent housewife. No prudent housewife keeps her money under the bed when the roof is leaking. We know it is common sense to invest Britain's money in British manufacturing. The Prime Minister believes it more sensible to invest overseas to help foreign manufacturers compete against us. We know it is common sense to train a highly skilled labour force to compete with our overseas competitors. The Prime Minister believes it sensible to run down apprenticeships and starve industry of skilled labour.
  We know it is common sense to make sure that mergers and takeovers are judged against the nation's interests. The Prime Minister seeks to let vital firms be tossed about like chips in a casino. We know it is common sense to provide health care for our people, to act against the causes of ill-health and disease. The Prime Minister thinks it more prudent not to meet urgent need and to keep people waiting for treatment. We know that it is common sense to use money to put people back to work. The Prime Minister believes it more sensible to borrow money to keep people out of work.
  In every area of our national life policies of common sense can be applied. They are policies which work and will unite our country. They will heal the nation's wounds and bring the family of Britain together again.
  7.25 pm
  Mr. Michael Heseltine: As I listened to the Chancellor describing the achievements of this Government in gaining control over the economy, the one overwhelming thought that occurred to me was that it would have been very surprising if the record of a Tory Administration did not greatly exceed that of the preceding Labour Government. The debate in a sense,
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  from their point of view, has an artificial ring about it because we are not dealing with problems that have emerged under this Government; we are not dealing with a change in the emphasis of our society or in our attitudes towards our industries that have suddenly sprung up. The problems we are dealing with—major shifts between one sector of the economy and another and one part of our country and another—are deep-seated and long-term.
  I have no doubt whatsoever that my right hon. Friend the Chancellor of the Exchequer and his predecessor, the present Foreign Secretary, are owed an immense debt by the party to which they belong and by the country for the fact that they have fought valiantly to bring about a reduction in inflation, a recreation of incentives, and to inject into British industry a quality of productivity that has long since escaped us.
  That is not the issue of the debate. The issue of this debate is what are we going to do with the growth which the Government have achieved and how is it to be spread through one region of this country as opposed to another. As the issues become more acute, as the problems which will face our economy increase, as gradually the benefits of North sea oil diminish, as gradually the ability of the Government to realise assets reduces, and as the trade balance becomes more acute, then these issues and the balance within society will become that much more acute.
  The shorthand of the "north-south divide" in a sense glosses over the realities of the situation. If one looks at the very large parts of the north of this country, one sees areas of extreme environmental attractiveness and companies which are winning in the world arena. It is by no means irrelevant to this debate that one of the background judgments which the country has had to exercise is whether a quite excellent company called Pilkington should be merged with a midland-based company. The fact is that both of them are situated in the midlands or the north. Nobody denies that both BTR and Pilkington, each in its own way, are excellent. So to suggest that there is no excellence in the north or the midlands, when two of the companies at the heart of our debate are both excellent, is grossly to miss the point.
  There is a substantial area of quality, both environmental and industrial, in the midlands and the north. If one wants to see the most significant area of urban reclamation it is not to be seen in the east end of London but in the east end of Glasgow. Glasgow is rebuilding itself on a mixture of public enthusiasm and the ingenuity of a capitalist system in a way that 10 years ago would have seemed inconceivable to those who knew Glasgow well.
  Mr. John Smith: It is a public sector initiative.
  Mr. Heseltine: I said public enthusiasm. Let me in no way try to run from the fact that a Labour-controlled local authority has had the vision to see the opportunities of partnership with capitalism,. Before the right hon. and learned Gentleman makes capital out of that, let him consider the alternatives. What has been done by Labour local authorities, which reject capitalism as though it was a plague? The very point that the right hon. and learned Gentleman makes is the essence of the case. If only the Labour party in its totality of the north would recognise the need to embrace capitalism, we would not have the problems there that we have today.
  Mr. John Smith rose——
  Mr. Heseltine: The right hon. and learned Gentleman will have the last word when he replies to the debate.
  Mr. Smith rose——
  Mr. Heseltine: All right, if the right hon. and learned Gentleman insists.
  Mr. Smith: Yes, I do insist. The right hon. Gentleman knows perfectly well, if he has studied the GEAR project, that by far the greatest amount of expenditure has come from the public sector. It can far better be described as a public venture than some form of capitalism. Will he also take the opportunity to criticise a Government who prevent so many local authorities from taking initiatives like that in their areas?
  Mr. Heseltine: As the Minister at the time responsible for imposing upon east end of London boroughs the need to recognise capitalism, I shall take no lesson from the right hon. and learned Gentleman in how to co-operate with Labour authorities. Let me say it if the right hon. and learned Member wants it; if Labour in local government would recognise the constitutional position of local government and co-operate with central Government, who have a superior mandate, we would have a far healthier climate in the regions.
  On the other side of the equation which points to the dilemmas of the north has to be weighed the equal dilemmas to be seen in the most acute areas of poverty close to central London and, of course, the long-seated structural disability to be found in the far south-west. So we are talking not about a north-south divide but about a balance where relative prosperity in many parts of the south and south-eastern areas is to be starkly contrasted with increasingly relatively under-privileged areas, particularly in the urban and more remote parts of the country.
  The explanations for these things are complex. There have been without doubt long-term changes to which many right hon. and hon. Members have referred. It is obvious that if there is a broad concentration of manufacturing industry in the older towns and cities, a shift to service industry will upset the patterns of employment and prosperity. Equally, if the transport revolution, the house and property-owning democracy revolution and the destruction of the grammar schools all impose upon urban areas a lack of choice and a lack of quality, then those who have the strength to move will move. They will move to the suburbs and many of them will move to the south. If, over 30 or 40 years, there is a climate in which the tax system is orientated towards the destruction of family businesses and to the enhancement of institutional wealth, it is no surprise that increasing proportions of the power of the country become centralised in the City of London.
  So great market forces and great changes, many of them beyond the control of the country, there have been, but the problem is that Governments of all parties have reinforced those market forces to a scale that I believe has been little perceived. I want to give just three examples. Mortgage tax relief has fuelled, rightly, the property-owning democracy. But a consequence of the incentives to the property-owning democracy has been to give to the insurance companies, which cover the mortgages encouraged by the incentives, a vast flow of the savings of
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  the nation. Those savings were invested broadly from a southern-orientated position. That is a £5 billion subsidy within the gift of the Chancellor of the Exchequer.
  Pension funds pay no tax on their income. The revenue forgone by the nation is £3·5 billion a year. The consequence is to take the savings of the companies that generate the wealth out of those companies and to institutionalise them remotely at a cost of £3·5 billion a year.
  If someone has a small or a medium-sized family business there is hanging over him, and has been for most of the half century, the knowledge that it is a one-generation business. He cannot pass it on. If he wants to sell it locally, the local community will almost certainly pay cash as opposed to the tax deferred shares which he can get from the publicly owned companies. The publicly owned companies are again subjected to the disciplines of the institutional wealth of the City of London. My right hon. Friend has made a significant shift in the prospects for family owned businesses. I admire and praise that, but he has not gone all the way to remove the disincentives to the local transfer of power. He still permits the concentration of power which comes when a family business has to judge whether to take cash, most likely local, or to take shares with tax deferral.
  All those incentives add up to almost £10,000 million a year, driving the market as opposed simply to reacting to the market. Over a period of decades under all Governments, that has been the centralising process that has led to the point where people criticise the accumulation of wealth in the City of London.
  Against that annual incentive there is a total regional policy of £600 million, most of which is concentrated at the extremes of the regions. Basically, there is perhaps under £200 million of what could effectively be called regional policy in England as opposed to the best part of £10 billion which is drawing the forces south. Those are the issues underlying the north-south divide.
  All other capitalist economies with which we have to compete have similar problems—the drift to the south, the institutionalisation, the scale of modern money markets. But all of them in some way, though different in every way, have dispersed power and perpetuated the dispersal of power within their political system. The Americans and the Germans have federal systems of powerful elected governors, state banks and major corporations based in local economies. Those are all there to fight the corner of the particular area.
  In Germany, as everyone knows, they have far less institutional wealth. The banks stay much closer to the companies. The lander have a basis of strength for the local politicians who lead them and who are national figures in their own right. The two-tier boards make it difficult for any multinational or remote company to exert an overbearing influence.
  In France, as everyone knows, there is a much closer relationship between the provinces and central Government simply because many Cabinet Ministers are mayors of the local communities that they represent.
  In Japan there is the central thrust of the MITI organisation, co-ordinating the strength of the ruthlessly efficient capitalist economy.
  So there is in all other capitalist economies much the same problem but also an identification of it and a determination to try to counter and balance it. What do we in this country face by way of alternatives? There are

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  things that the Government can and should do, and which a Tory Government ought to do because only a Tory Government effectively recognise the need and could do them.
  We should recognise the strength of the Secretaries of State for Northern Ireland, for Wales and for Scotland, who have a regional responsibility as opposed to a narrow functional responsibility. There is a relatively simple way of doing that. Instead of each Minister who has a responsibility for a functional part of Government representing only that aspect of Government, there would be little difficulty in associating each of those Ministers with a different part of the country, so that instead of having to go to an area to explain whether the transport, local government, housing or Home Office policies were right or wrong, the Minister would have to explain the totality of Government policy and would, therefore, be more aware of it.
  Civil servants should be moved across the framework of Whitehall because at present they are orientated towards their departmental ethos. They are employed to brief Ministers to win for that Department, rather than to extend a Government policy more coherently.
  I believe that it is necessary to neutralise those incentives that are having a significant effect in moving the forces of wealth creation to a central and remote control. In almost every policy, the Government's thrust, and the success of their thrust, is to push power further from the centre, for example, the sale of council houses and the start of the small industrial start-up schemes with all the incentives that they involve. When the education system has problems, we talk about giving teachers, head teachers and parents much more influence in the schools. However, we are still encouraging, with vast subsidies, the concentration of the major influences on wealth creation in the City of London. The incentives that are doing that should, at least, be neutralised.
  I have no doubt that we must recognise the CBI's demands for an industrial strategy. Competition is of fundamental importance if one is to survive in a capitalist world. However, the nations with which we must compete do not rely wholly on a policy of competition. They are much more interested in balancing the excellence of competition with the strength of a coherent national endeavour to win.
  One of the problems that we have inherited is the overbearing attitude of the Treasury, which dominates the climate of decision making. The public expenditure round sets the tone for policy-making in Whitehall and all else flows from that. That is not compatible with an industrial climate in which companies are trying to take long-term decisions about complex markets and investment for perhaps 10 years, as opposed to a relatively short period.
  Therefore, it is necessary that a far more powerful Department of Trade and Industry should balance and counter the influence of the Treasury. The Pilkington case, which happily has now been resolved, would not have happened if this country had a clear understanding of the requirements of a long-term industrial strategy. The best solution would be for the institutional owners of wealth to organise themselves so that they could have a dialogue with the management of their companies and so that the managers who were committing themselves to long-term programmes knew that they had a certain degree of
  802
  security from their owners. If managers do not get that security, they will invest for the short term, maximise the cash content of their companies and take attitudes towards training, research and development which will minimise their contributions in those areas. No other capitalist economy with which we compete behaves in that way. One way or another, all those economies are mobilising the resources of Government to back their capitalist systems and to give a degree of confidence to their managers to make them feel better able to make long-term investments.
  The Government's record of innovation in city reclamation and the rebuilding of our cities is unlike that of any other Government in recent times. We have proved that we know how to bring back life to the city centres. It has been done most conspicuously in the east end of Glasgow, but the Government have also pioneered various inner-city initiatives in the east end of London. The money that we are putting into that is trivial in the context of the needs and priorities of those areas which are relatively less prosperous.
  There is no case for Scotland and Wales to have Scottish and Welsh development authorities when there is not exactly the same determination and co-ordination in England. It should be a first priority for the Government to establish an English development agency to co-ordinate the administration of the urban policies of the Department of the Environment, and to do so in a climate that fuses together the strength of the public and the private sectors. The instrument of that agency should be an urban development corporation for large-scale activity. Where the quality of local government is inimical to partnership with the capitalist system a range of other instruments have been pioneered, for example, the private sector trusts, such as those in Thamesmead or Stockbridge which deal with smaller areas of activity. However, the Government have proved that it can be done and I can see no reason why we should not build on that on a huge scale.
  It is of paramount importance that that should be done by this Government because anybody who has looked at the alternative policies confronting the country will realise that those policies can bring about only a deterioration, not an improvement. When one listens to Opposition Members talking about a climate in which they will tax until the pips squeak, they are really talking about the destruction of individual entrepreneurial activity and the break-up of family businesses—the very things that they now come here to discuss and to which they would return, if they were returned to power.
  When Opposition Members discuss repealing the Employment Acts introduced by the Government, they are talking about returning to the trade unions—that unique combination of anarchy and restrictive practices—precisely the power to undermine the country which they used so successfully for so long. Hon. Members talk about more power for local government, but anyone who has perceived what local government in the hands of the Labour party has done to alienate anyone who has the choice to leave our cities will realise what the future offers. All this pushes on to the Conservative party an added responsibility not to innovate in a way that we have refused to do, or to go back on anything that we have previously said, but simply to do on a bigger scale and with greater conviction the things that we have already proved work.
  7.45 pm
  Mr. Robert Parry: Mr. Deputy Speaker, I am glad to have caught your eye in this important debate on the Government's economic policy and its effect on the regions and on the division of wealth between the north and the south. Bearing in mind Mr. Speaker's request, I shall do my best to be brief so that my hon. Friends, particularly those from the north, can participate and make their contributions.
  I support the general thrust of the Opposition motion and the arguments put forward by my right hon. and hon. Friends on the Front Bench in their attack about our divided nation. That divide has been caused by the Government's deliberate policies since 1979.
  I shall speak mainly on the effects on the city of Liverpool. The widening gap between north and south is made clear by irrefutable statistics which show the poverty and deprivation that are causing increasing difficulties in the inner urban areas of our major cities and regions. The city planning officer of the city of Liverpool has recently reported on the budget options to be considered by the city council which faces a £40 million shortfall. I am grateful to Mr. Hayes for the information that he has provided. Since 1979 more than 100,000 jobs have disappeared on Merseyside. That figure represents the population of a small town.
  Liverpool has felt the brunt of the job losses. Between 1979 and 1984 Liverpool lost 65,000 jobs, which is a decline of 22 per cent., and that is still increasing. About 40 per cent. of those jobs were in the manufacturing industries, where employment is down by 46 per cent. About 19 per cent. of all blue collar service jobs have been lost as a result of major closures by multi-national companies in Liverpool, for example, the sugar company Tate and Lyle, the brewing company of Whitbread, the tobacco industry at British American Tobacco, and the confectionery industries of United Biscuits and Lyons Maid, and the sweets and chocolate firms of Barker and Dobson and Tavener Rutledge. The Government would not intervene to save one of the thousands of jobs that were lost.
  The public sector has become increasingly important in the local economy. Despite a reduction in public jobs between 1978 and 1984, those jobs increased as a proportion of all jobs from 31 per cent. to 35 per cent. The city council is the largest employer in the city with 32,000 employees. or 14 per cent. of all jobs in 1984.
  In spite of the importance of the public sector and the city council in maintaining jobs, and the battle between the council and the Government to provide jobs and services, the councillors are now facing disqualification and bankruptcy and they are appealing to the House of Lords next week. I hope that they will get more sympathy and justice in the other place than they have received from the Government in this House.
  My constituency has the highest level of unemployment on the British mainland—more than 35 per cent. right across the board. In some areas the figure is 55 per cent. to 60 per cent. Those figures are morally indefensible. Long-term unemployment is a curse and we need positive Government action to put it right.
  It is a fact that urban decline is more severe in Liverpool than in any other British or European city. Population decline with the loss of rate support grant is another major factor in the economic decline of our cities. In common
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  with other cities, Liverpool continued to lose population heavily between the 1970s and 1981. Since 1981 the rate of loss has fallen from 9,000 a year to 6,500 a year, but that rate remains significantly higher than that in other conurbation core cities.
  The selective loss of younger more skilled workers is continuing. Many youngsters who are in despair of ever finding a job have taken the advice of the chairman of the Tory party, got on their bikes and left their families to find work and regain their pride. With the loss of traditional jobs in port cities, such as in shipbuilding, ship repairs and heavy engineering, skilled and semi-skilled workers have left, leaving an ageing unskilled labour force looking for the few jobs that remain to be found.
  The number of households has not declined, so an increasing number of one person and pensioner households have been left. The social characteristics of the population must also be considered. The proportion of the employed population in Liverpool decreased from 42 per cent. to 34 per cent. between the 1970s and 1985, leading to a more dependent population on those fortunate enough still to have work. The unemployed, the sick and pensioners accounted for 33 per cent. of the population in 1985, compared with 19·3 per cent. in the 1970s.
  The EEC survey puts Riverside as having the highest unemployment in Europe. Given that low incomes are the main cause of deprivation, several groups are at risk, including the unemployed. More than 30 per cent. of the male unemployed and 25 per cent. of the total work force are on the scrap heap. The highest rates of unemployment are among the young with a rate of 44·5 per cent. for 16 to 19-year-olds. That is an appalling waste of our youth resources.
  I shall now turn to those dependent on state benefits. In 1985, 76,000 people in Liverpool received supplementary benefit and 94,850 received housing benefit. Both figures have increased since then. Particularly vulnerable groups, such as the over 75s and the sick and disabled, are increasing. It is estimated that a third of all full-time and three quarters of all part-time workers on Merseyside earn low wages. That is why my trade union, the Transport and General Workers' Union, has campaigned for a minimum living wage.
  The position of children in low income households is illustrated by the fact that more than 50 per cent. of all school children now receive free school meals. That is a disgraceful figure and I hope that the Secretary of State will take note of it. The lowest income households are concentrated in inner-city areas and the highest income households in the owner-occupied, plush areas of south Liverpool. People living in inner-city areas have low levels of skills and car ownership and the areas receive a high education award. But there is a high level of unemployment, with children receiving free school meals and sickness. Following bus deregulation the poor have greater trouble in visiting relatives and hospitals than previously.
  I shall deal briefly with the Newcastle upon Tyne social audit which was carried out in 1985. Newcastle has many problems similar to those of Liverpool. The audit examined the impact of Government policies on the city's residents within the national context of unemployment increasing two and a half times, a 10 per cent. overspending in public expenditure, half of which was due

  805
  to increased social security benefits, and increases in essentials, such as fuel and rent by twice the level of inflation.
  It was estimated that in Newcastle Government policies between 1979 and 1984 led to a reduction of £70 million in disposable income—that is, £700 for every household. That figure can be multiplied to show the total reduction for all our major cities. The audit concluded that the quality of life declined significantly and it examined two particular factors—the reduction in the provision of public services and the quality of public sector housing.
  Liverpool city councillors have been trying to improve our housing stock by the demolition of pre-war slums and rat-infested multi-storey blocks of flats and by replacing them with new houses with gardens back and front. They are being crucified for doing so.
  Finally, the audit identified the impact of unemployment. That was particularly marked in certain areas and groups, such as young people. The audit concluded that unemployment had serious effects on health, family life and crime. In Liverpool I know of the breakdown of marriages, of people having physical and mental breakdowns and of the increase in hard drug taking and petty crime, particularly among long-term, unemployed youth. One of the gravest problems of inner-city areas is the horrendous level of unemployment among young black people, but the Government continue to ignore that.
  When the Paymaster General replies, I hope that he will not play us the same old record of how much the Government have already given in grants to the regions. I hope that he will address himself to the effect of long-term unemployment, deprivation and poverty in our regions and cities which is an affront to the pride and dignity of the poorest in our society. Since 1979, the Government have never made unemployment a serious issue. Can we hope for a change of direction? The right hon. Member for Chingford (Mr. Tebbit) is alleged to have stated that nobody with a conscience could vote Tory. Given the Government's disastrous record and their attitude to the poor, for once I am completely in agreement with him.
  7.55 pm
  Sir William Clark: The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) seemed full of bluster but short on policy when he opened the debate. I would have thought that it would have been better if the Labour party had not selected the economy for debate. Labour Members postponed it last week, probably because they had cold feet as my right hon. Friend the Chancellor of the Exchequer suggested. I suppose that they attack the economy in order to play down their lack of a defence policy.
  The Opposition have a cool cheek to attack the economy, considering their record. It is irresponsible for any Opposition Front Bench spokesman to talk down the British economy. I shall return to the gloom and doom of a balance of payments crisis around the corner, of which the right hon. Gentleman spoke. Their remedy is to tax initiative—we saw them do that when they were in office—and to borrow more. I remind Opposition Members that it is easy to borrow and spend, but difficult to repay. Considering that it costs between £17 billion and
  806
  £18 billion to pay the interest on the national debt, it would be gross folly to increase it by any more than it is being increased at present.
  Another plank of Labour policy is centralisation. Labour Members want to centralise control in local authorities and to tell local authorities to employ more people. They do not tell us what productivity figure we shall achieve from that. Any Government can cure unemployment by employing people in non-jobs and that is no doubt precisely what local authorities will do under a Labour Government. As my right hon. Friend the Member for Henley (Mr. Heseltine) said, that will return more authority to the trade union movement—we all saw what happened there—and centralise power in Whitehall. We have been through all that before and seen the folly of it, yet the Labour party tells us the same old story.
  We have heard a great deal about the divided nation. We should bear in mind that the trade union movement has a certain responsibility for some of our industries in the north. I remind hon. Members—they will probably remember—of the month-long strike in the shipbuilding industry caused by a demarcation dispute whether a wood or metal worker should put a rivet through a piece of metal and wood. It is small wonder that we lost orders.
  Mr. Eric S. Heffer: Will the hon. Gentleman give way?
  Sir William Clark: No, I will not give way. We do not have much time and I have promised to be brief.
  Mr. Heffer: All that happened 35 years ago.
  Sir William Clark: The demarcation disputes caused us to lose orders. Indeed, it is small wonder that we lost orders. How could we possibly retain our competitive position if we were arguing over such stupid frivolities?
  The right hon. Member for Sparkbrook made much play about manufacturing industries. I am sure that the hon. Member for Liverpool, Walton, (Mr. Heffer) will have considered the figures with avid interest. If we consider the record on visible trade—not invisibles—which includes manufacturing, for the last four years of the previous Labour Government, we discover that there was an overall deficit on the balance of payments of almost £4,000 million compared with what has happened since 1979.
  Since 1979, visible trade has shown a deficit for four years and a surplus for three, with an overall deficit of almost £4 billion. However, if we take invisibles into account, the overall surplus is about £20 billion to £21 billion. Consequently, to some extent, when the right hon. Member for Sparkbrook says that there will be a crisis in balance of payments this year he is correct. There will be a deficit of about £1 billion to £1·5 billion. However, that is no reason to claim that the economy is bust and that it is all gloom and doom.
  Consumer credit has been criticised. What would the Opposition do with consumer credit? The Government are not spending the money; the public are. Do the Opposition mean that the public must not spend money? Should we increase interest rates? If the hon. Member for Stockton, South (Mr. Wrigglesworth) wants to criticise consumer spending, he should consider the bad debt record on the so-called plastic money. That record is extremely low—

  807
  about 1 per cent. If the hon. Gentleman compares that with the debt in America, he will see that our spending nowhere approaches that in America.
  Perhaps we will hear later how the Opposition would control consumer spending. Would they increase interest rates? Or would they tell the banks not to lend money and stop people spending their own money?
  Great play has been made of taxes. I believe the late Iain Macleod once said that Labour increases taxes and the Conservatives reduce taxes. That is as true today as it was then. As my right hon. Friend the Chancellor of the Exchequer reminded us, the Government have reduced the standard rate of tax from 33p in the pound to 29p. There may be a further reduction on 17 March—who knows? The Government's record with regard to the lower paid is very good. The starting rate of tax threshold has been increased by about 22 per cent. in real terms.
  If my right hon. Friend the Chancellor has any adjustment or alleviation of tax in view, I hope that he will concentrate on thresholds in preference to the standard rate. We must remember that a married man starts to pay tax at the standard rate when he earns £70 a week and a single person after he has earned £45 a week. When we consider that the national average wage is about £190 a week, the priority should be on thresholds. If my right hon. Friend can accommodate both, all well and good, but I am convinced that he should concentrate on thresholds.
  The Opposition have referred to reductions in taxation and claim that the money should be spent on investment. Opposition Members must remember that some £25 billion is allocated for capital expenditure this year. Therefore, it is wrong of the Opposition to give the impression that the Government are not spending money on capital investment. It is also wrong for the Opposition to claim that the Government are trying to bribe the electorate because this is an election year. If that is the case, we have been bribing the electorate since 1979, as we have reduced taxes in successive Budgets since then.
  Mr. Rogers: Will the hon. Gentleman give way?
  Sir William Clark: I will not give way. However, I believe that I know what the hon. Gentleman wants to ask. The threshold has been increased 22 per cent. above inflation each year that we have reduced taxation.
  The Labour party is threatening the taxpayer with increased taxation. If my right hon. Friend the Chancellor reduces the standard rate of tax by 2p or increases thresholds by 10 per cent. or whatever, will a Labour Government—if by mischance a Labour Government were elected—make a cancellation or reduction retrospective? The taxpayer is entitled to know the answer to that.
  We have also heard an accusation about oil. When I tackled the right hon. Member for Sparkbrook about the difference in the balance of payments deficits that existed when the previous Labour Government were in power and that under this Conservative Government, he claimed that the difference was due to oil. However, he did not say that the total revenue that this Government have had from oil over the past six or seven years is about £60 billion. Our overseas assets have increased from £20 billion in 1979, to £95 billion today. That will obviously help our invisibles and our export potential.
  As my right hon. Friend the Chancellor reminded the House, 1 million new jobs have been created since 1983.
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  I know that that good news does not please the Labour Opposition and they always try to play that fact down, but having weathered a recession, that should be welcomed on both sides of the House.
  The Labour party plans to let local authorities have more say in employment. The recent National Audit Commission report about local government expenditure was very interesting. The voter need only consider Brent and Haringey to discover what the Labour party will do if it comes to office.
  It is impertinent of the Opposition to criticise the economic performance of this Government. Since 1979, we have come through a recession that was much deeper than most people had thought. Output and exports are up. Investments are up. Unemployment is on the way down. Our borrowing is down and that is extremely important. Taxes and inflation are down and the standard of living for every man, woman and child is higher today than it has ever been. In addition, we must remember that the Government have repaid half of the debt that the Labour Government incurred from the IMF.
  The Conservative Government have created not only 62 per cent. owner-occupation but, following on from the point made by my right hon. Friend the Member for Henley (Mr. Heseltine) about institutions, they have reversed the trend in the increase of wider share ownership. When the Government came to power, it was thought that there were about 3 million small shareholders. Today, with British Gas and British Telecom, there are more than 7 million small shareholders. That gives the shareholder, the voter, the ordinary man in the street, far more independence. I believe that it is much better to give the citizen more independence by allowing him to buy his council house and to encourage him to buy shares. I am convinced that that can only be achieved under a Conservative Government. It would be a disaster for the small man if there were ever to be a Chancellor of the Exchequer in a Labour Government.
  8.8 pm
  Mr. Jim Craigen: The Treasury Bench must always find comfort in the contributions from the hon. Member for Croydon, South (Sir W. Clark). If the north-south divide is the subject of today's debate, the Chancellor of the Exchequer certainly gave it a by-pass operation in his remarks.
  Economic policy is now geared more to the election than to the longer term considerations of the country's economy. Frankly, I wonder what the past eight years of economic and fiscal policy have been about. The Chancellor can chide my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) as much as he likes, but the Chancellor's November statement gave relaxation to the brakes that he was so insistent should be placed on public expenditure.
  I listened to the right hon. Member for Henley (Mr. Heseltine) talk about regional policy. It was interesting that he mentioned the success of the Glasgow Eastern Area Renewal Project. The Government have pulled the plug on that project, as my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) angrily had to point out when the decision was made to end it.
  There is no doubt that the points made earlier by the right hon. Member for Old Bexley and Sidcup (Mr. Heath) reflected the difficulties that have operated over the post-war years in respect of regional policy. However, the tide

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  is now running out for the north of Britain in the operation of regional policy. So many of the in-built advantages of post-war regional policy have been eroded or dismantled. Apart from the pushes that the Macmillan and Heath Administrations gave, the great impetus for regional policy since the war has always come from a Labour Government.
  I was interested to hear the right hon. Member for Henley extol the virtues of the Scottish Development Agency. It was the previous Labour Government who introduced that agency and the Welsh Development Agency. The Scottish economic picture would be infinitely worse had it not been for the contribution that the agency has made, in spite of the fact that there has been a curtailment in its resources and on the impetus that it has been able to bring.
  I have never ceased to be surprised by the number of businessmen who come to me as a constituency Member looking for support from public funds. I take the simplistic view that if it means jobs for my area then I am for it. I do not think that many building firms would willingly ignore the possibility of public contracts any more than a civil engineering company would not want to bid for any public project. Retailers will say that they want to see more people in employment so that there is greater purchasing power which will assist the economy and business.
  If we are talking about the drift that has taken place from the north to the south, the sooner the Government get their act together the better. The real need is for the removal vans to be busier in the London area and for more Government offices to be dispersed to other parts of the United Kingdom so that the people involved in the decision-making will be working in different parts of the country. The United Kingdom seems to have a far greater percentage of corporate headquarters located in its capital than almost any other country. Therefore, there is a need to persuade many of the companies that they should be located in Manchester, Newcastle, Birmingham, Glasgow, Edinburgh, Dundee, Aberdeen or Cardiff. There is no reason for the concentration in the metropolis. That would have a beneficial effect. It would force an increase in the standard of living in many of those parts of the country. If some of the top civil servants and company directors were living and working in those areas they would make sure that the housing, environment, schools, shopping facilities and the arts were all much better and much richer.
  It used to be said that the Tories represented industry and commerce. Nowadays I think that they are far more influenced by the financiers who are concerned only with getting rich quick and flattered by some Right-wing academics who have never done a hand's turn on the shop floor but can write a book about how British industry should be operated.
  There is no point quoting unemployment figures, because the only quotations that the Treasury Ministers are concerned with are those from the stock exchange. It might have more effect if I were to quote such figures. In any case, we have had some 19 changes in the method by which the unemployment is calculated so that nobody really needs take it as seriously as they once did. However, the proportion of people in the hopeless position of being long-term unemployed is the most significant and worrying aspect of the unemployment problem.
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  We have heard today about the withdrawal of the BTR bid for Pilkingtons. Last week we seemed to be facing a worrying situation with the Barr and Stroud company in Glasgow which employs over 2,500 people. There was a concentration of research and development that would have easily been dispersed in favour of short-term profit. Eating the seed corn of tomorrow's investment for today's profit is seen in many other parts of the United Kingdom. A blood bath has taken place in Scotland in terms of Bell's Whisky and Distillers, and Guinness has not come up to Scotland to locate its headquarters as promised. I speculate that perhaps the next merger will be Argyll and Guinness in order to avoid hefty legal suits.
  The Chancellor talked about Edinburgh as an important financial centre, second only to London. It is a small second fiddle when it comes to some of the key decisions that have to be taken. Some of the people who are doing best in our society at present are advertisers, stockbrokers and company lawyers. They are all doing well out of the boom in mergers. We should not kid ourselves that it is all about improving competition and increasing the flow of benefits for the consumer because some of us are long enough in the tooth to know that it is nothing of the kind.
  This new year Scotland has had a cruel Ne'er-day. There was the announcement about Caterpillar. We know that United States investment has been a sizeable segment of investment in manufacturing jobs in post-war Scotland. It is all too easy to write off the significance of manufacturing and to overplay the importance of the service sector. They are both important and the sooner we recognise the interplay of the two the better. Any advanced economy needs a good and strong manufacturing sector as well as a buoyant service sector.
  The only growth industry we seem to have at Westminster is nostalgia. Even the Prime Minister keeps referring to the previous Labour Government. That was eight years ago. There are millions of young people who will vote for the first time in the next election. There are many young people who voted in the previous election but who did not remember too much about a Labour Government. I just make the political point that we are living too much in terms of past considerations. [Interruption.] I digress, but if I were to take a walk down memory lane I could be every hit as selective as the Prime Minister.
  In my area, unemployment has doubled and almost trebled. Many old age pensioners find that, in real terms, their pensions are worth less. Prospects for young people are infinitely more depressing in terms of real jobs, as the Prime Minister would say. Youth training schemes have not had the long-term success that some employment Ministers seem to have envisaged. Many training professionals realise that, in many ways, when one tries to generalise training, one loses out on the specific skills—high skills. Already there are signs of skill shortages. There is little evidence that the Government are doing a great deal to combat these shortages.
  Benjamin Disraeli might be amused at the frequency with which his words, "Two nations", have entered the currency of today's language. Of course, he was talking about rich and poor rather than about north and south. The singular point that he made was that one set of people did not understand, far less comprehend, the values of the other set of people. It was evident, listening to the right hon. Gentleman, that the Chancellor, whatever he

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  comprehends south of Blaby, certainly does not know much about what is going on in the northern parts or even the western parts of the kingdom.
  The problem facing the country is not entirely an economic one. It is bound up with our political and social attitudes. It is evident that, with the loss of common identity that we have experienced during the period of this Conservative Government, there is no willingness to look beyond the immediate returns of the ballot box. The Government say, "If they do not vote for us, we are not interested in them." We require a new political willingness on the part of Government to accept their responsibilities. They have manifestly failed to do that.
  8.22 pm
  Mr. Leon Brittan: I do not for one moment accept the criticisms made by the hon. Member for Glasgow, Maryhill (Mr. Craigen) about the attitudes of Conservative Members.
  As one who has always represented a constituency in the north of England, I shall focus on the regional aspects of the debate. Indeed, as Secretary of State for Trade and Industry, I said to the Conservative party conference in 1985 that I regarded the vast gulf between the different parts of the country as being the greatest social and economic problem that faced us as a nation. I went on to say that, because regional industrial policy was one of the crucial instruments to bridge that gulf, we should never allow regional policy to become the Cinderella of industrial policy. I shall suggest some further important steps in regional policy that can and should now be taken.
  Having said that, the picture presented by the Opposition has been an absolute travesty of reality. What is worse, the Opposition's policy proposals, if implemented, would make the disease far more severe. To inflate the economy by borrowing or to increase taxation on the scale that would be necessary to give effect to the Opposition's proposals would bring to a rapid halt the economic recovery and the expansion that are now taking place. As for the proposals by the alliance, although they may be wrapped up a hit more, they perhaps involve slightly less inflation in drag.
  As some hon. Members have said, the divisions in the country are not only between the north and the south. That is a crude over-simplification. The divisions are between the older industrial areas and the rest. The west midlands is a good example of a part of the country that cannot be described as the north, even by shifting the map southwards, as my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) would have us do. It is important to understand what has happened and is happening in older industrial areas and not to accept a distorted view if we are to be able to take steps to put things right. Of course the recession involved an extremely sharp contraction in manufacturing activity and a tragically large number of job losses. Of course the assisted regions were hit worse. They were the areas in which, on the whole, old manufacturing industries existed.
  Since 1981, there has been a significant increase in manufacturing output and investment. It is important that that increase has taken place in the regions as well as in the south-east. The economic growth currently taking place is substantial, impressive and soundly based. It will not collapse in an inflationary bubble, as happened with previous expansion. If regional disparities are more conspicuous now than in the past, it is not because the
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  regions are still in decline but because the growth of development and prosperity in the rest of the country is proceeding at an even faster rate. That is the real nature of the problem that we face today, and a correct perception of it affects what we should do about it Vital as industrial and regional policies are, in any country that does not have a Communist regime, or something approaching a Communist regime, economic rather than industrial policies most affect business men. What happens to interest rates? Where does the exchange rate stand? What are the levels and structure of taxation? What progress is made in fighting inflation? These factors most affect industrial prospects.
  God help industry if those factors were to be determined by the kind of policies put forward by the Opposition. A sharp change in the exchange rate or a dramatic alteration in interest rates is likely to have far more effect on most companies than the introduction or withdrawal of some assistance scheme would have. The follies of the Opposition do not absolve us from the duty to do everything in our power to reduce the present gulf between different parts of the country. If hon. Members consider the congestion on the M25 before it was hardly open and examine the escalation of house prices in the south-east they will realise that it is quite apparent that progress towards the solution of the problem is just as important for the south-east as it is for other parts of the country. The solution is not to lure away vast numbers from the regions to swell the ranks of the south-east, even if we could find a way to do it. It would inevitably mean luring away a disproportionate number of the brightest and the best, leaving behind an increasingly pauperised population and an infrastructure that would become steadily more difficult and expensive to service.
  They would be making a grave mistake if the Government thought that they could solve the problem by trying to decide which industries should thrive and which should fall, and deciding where that should take place, and then intervene on a massive scale to make it all happen. George Brown tried to do that. The ink was hardly dry on the national plan before it was hopelessly out of date. Cosmetic involvement by industrial institutions would not make such a plan likely to succeed today, as I heard hinted during the course of the debate.
  My experience of politicians and civil servants does not lead me to believe that they are better able to pick the winners than those who put their own money at stake. Sometimes politicians and civil servants must make commercial judgments, but that is different from the Government seeking to design and put into place the future pattern of industry. Rather than doing that across the board, we should specifically tackle the problems of the regions both by action on the supply side and by direct regional assistance.
  I do not accept the view of those who say that regional policy in the classic sense has failed. The latest study commissioned by the Department of Trade and Industry from the Cambridge department of land economy concluded that 630,000 jobs have been created over the years in assisted areas by regional policy. If we do not like the picture today—nor should we—the truth is that it would be far worse without such a policy. But it is obviously not enough.
  I do not see any need for an ideological divide between those who wish to proceed along the route of regional

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  policy in the classic sense and those who believe in supply-side action. Both are necessary. If we are candid, we must accept that we do not know with sufficient certainty what works, so it would not be wise to reject either approach. The problem is of sufficient magnitude for it to be necessary for us to accept both.
  Turning to the so-called supply side, I welcome the increased interest and discussion about regional pay bargaining. I do not think that it is too much to ask those who are fortunate enough to have jobs in the assisted areas to take a lower increase in pay to let more people on the dole get jobs. The problem in the north-east, for example, is not that those in work are too poor. It is that too many people do not have a job at all.
  There is much to be said on that side of the equation for urgently examining whether income tax or national insurance rates can be regionally slanted to encourage employment in the regions. In addition, I would go further with the direct assistance to the regions; here I join the hon. Member for Maryhill. I think that we should give serious consideration to a fresh programme for the dispersal of Government Departments and agencies. There has already been substantial dispersal. If we are honest, it has brought problems as well as employment. If only people up to a certain grade move, the regional headquarters—they may be "headquarters" in name only—face the risk of becoming a backwater and problems of morale may be very great.
  With totally new systems of communications developing rapidly, the need for top policy makers to stay in London is much less great than it was. We might well find on a fresh look that a whole new tranche of Government agencies could move out of London without any loss of efficiency. Although this step has not yet been taken, the Government have taken direct constructive action. I think that it is right to put on record the way in which regional policy has been evolving under the present Government. In recent months, there has been an announcement of new powerful urban development corporations—Trafford Park, Black Country, Tyne and Wear, Teesside and Cardiff Bay. That is a major new change.
  It would be wrong to have a debate on this subject without referring to the city technology colleges. In the north-east, employers are saying that, with the upturn which has taken place, they have some jobs to give to youngsters. They regard it as a tragedy when people arrive hotfoot from school without the minimal skills of reading, writing and arithmetic which would enable them to be given the available jobs. Those colleges are part of regional policy and a major new development by the Government, but they are not the whole answer.
  In many parts of the country, the problems of the regions are not just the problems of the inner cities. It would be a mistake to think that that is the case. There are parts of the regions—for example, the coalfields and the steel areas—where the problems are not in the cities but in the outlying areas. That is why I have become persuaded that a further necessary step is the creation of development agencies in some of the regions of England with a role comparable to that of the Scottish Development Agency and the Welsh Development Agency.
  Mr. Peter Thurnham: Is my right hon. and learned Friend aware of the support of northwest Members for a north-west development agency along the lines that he recommended in his excellent pamphlet "To Spur, Not to Mould"? Does my right hon. and learned Friend agree that the budget of £600,000 for the north-west's existing agency Inward is meagre compared with the £90 million a year for the Scottish Development Agency?
  Mr. Brittan: I am grateful to my hon. Friend for the support that he and many other colleagues from assisted regions have given to the ideas which I developed in that pamphlet. The argument against setting up development agencies in the regions has always been not that we do not like what such development agencies do but that there is nothing that they can do that cannot be provided by some other public body in England—the Department of Trade and Industry, English Estates, new towns, the Manpower Services Commission, and so on. To a large extent, that is true but, as so often, it is not the whole truth. The proliferation of public bodies and departments, each with different powers and functions, is a real turn-off for industry. However much co-operation there is between them, the attractions of a one-stop shop are immense.
  For all its remaining and substantial problems, Scotland has leapt ahead of several English regions. There are many reasons for that, but it is difficult to avoid concluding that the distinctively Scottish system of encouraging industrial development has played an important part. The key feature has been the SDA. Apart from the advantage of it being a one-stop shop, it has greater flexibility than the combination of institutions south of the border and east of Offa's dyke. By being able to shift in a particular case as well as to deploy all forms of assistance, that flexibility is of great advantage to industry.
  I make no apology for the fact that the Conservative party was extremely anxious about the SDA and the WDA when they were created. It had reason to be so, because at that time the tide of state ownership was rising. That is no longer so. My right hon. Friends the Secretaries of State for Scotland and for Wales, by changing the guidelines and the personnel running those institutions, have been able to allay the anxieties felt by the Scottish and Welsh Conservative parties.
  In the case for development agencies in the English regions, one factor that is even more important than flexibility is the need to do something that will capture the imagination of people in the regions, not for political purposes but to stimulate growth and investment. The problems in the regions do not arise because of a lack of infrastructure, bad industrial relations or even lack of capital. Often they are caused by lack of confidence, an inherent pessimism which is the product of decades of decline. For that reason, I believe that a gesture of confidence, the creation of a regional focus in the setting up of development agencies, would stimulate industrial activity far more than the actual powers or levels of investment involved might lead one to expect. Let us not treat that as a panacea. It is one of many actions that must be taken on the supply side in relation to pay bargaining—a matter on which I have heard less enthusiasm from the Opposition for what I have said—and elsewhere.
  It is just one further step along the road of progress. That is one road along which no one will be able to go far

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  unless—quite apart from the specific measures that we take to deal with regional matters—it is paved with the fiscally sound anti-inflationary policies which are the unique hallmarks of the Government's conduct of affairs.
  8.38 pm
  Mr. Donald Stewart: I regret the fact that time does not permit me to deal in detail with the speech of the right hon. and learned Member for Richmond, Yorks (Mr. Brittan). The parts when he dealt with Scotland showed that he knew little about the subject. His comments—he is not alone in this—revealed the problems that we suffer in Scotland. He was talking about the problems of the north-east. I have always been lectured that this is a unitary state and criticised for threatening the break-up of the United Kingdom. When some hon. Members talk about the north-east, they are talking about the north-east of England. The hon. Member for Bolton, North-East (Mr. Thurnham) talked about the north-west. He did not mean my constituency, although it is in Britain; he meant the north-west of England. I knew long before I became a Member that Britain equalled England and that Scotland, Wales and Ireland were periphery colonies which did not matter all that much.
  I want to comment on the terms of the motion. In the business of the House for the week, it was said that the motion for the debate would be:
  "The Divided Nation—Failure of the Government's Economic Policies".
  It is clear from today's Order Paper that we are discussing the Government's economic policies. Why the fudge by the Labour party? What has happened to the divided nation? I think that the official Opposition are just as keen as the Conservative Government to hide the facts about the divisions between the north and south. There is no word either in the motion about regional policies. Is it the intention of the Labour Opposition to soft-pedal in order to keep the south happy for votes?
  What is certain is that there is a north-south divide. Everyone is aware that Scotland, Wales, Ireland the north-east and north-west of England and just recently the midlands are suffering. Certainly problems occur in a line from the Wash to the Severn. I know that there are areas of deprivation in the London area. I am also aware that there are areas of affluence in what is called the north. However, that does not alter the main argument, and any fair-minded observer would agred with the view of the editorial in The Guardian which stated:
  "Britain is becoming two distinct economic nations—a prosperous south and a north in terminal decline."
  It is not an answer simply to say that it is the old smokestack industries that are in decline. It is the duty of Government to assist in replacing those industries and they should do that with regional policies. I agree with the right hon. and learned Member for Richmond, Yorks that regional policy should not be the Cinderella of policies and he should draw that fact to the attention of the Government Front Bench.
  It is not an answer to say that lower wages would attract new industries. The Low Pay Unit has demonstrated that the poorest paid areas are invariably those with the highest unemployment. An even more ominous factor for the Government is contained in the conclusion of The Guardian editorial:
  "That economic divisions almost coincide with political allegiance. Nearly all of the heavy job losses have been in Labour voting areas (Scotland, Wales, the broad north) while
  816
  job creations have been in the Tory-held prosperous south. Put cynically, the Government does not need to do much about this other Britain to stay in office."
  That may rejoice the hearts of Tories in the short-term, but there are hidden time bombs.
  At Question Time today the Prime Minister was still rejecting any talk of a north-south divide. However, there is now the available evidence of the census of unemployment. That evidence showed that 94 per cent. of jobs lost in Britain since June 1979 were north of a line from the Wash to the Bristol channel and only 6 per cent. in the relatively prosperous southern regions. Despite the caveats that have been put in about the north-south divide, can anybody deny that it exists? Job losses have proved that divide in the United Kingdom.
  In the period from June 1979 to June 1986, Scotland lost 216,000 jobs. That conflicts with what the right hon. and learned Member for Richmond, Yorks said about Scotland prospering. Since June 1986 the gap between Scotland and England has widened still further, with unemployment falling in England by 23,000 while it is still rising in Scotland where an extra 9,000 people have been put on the dole.
  All this exposes the promises made, from time to time, by the previous Secretary of State for Scotland, who has now gone to the Ministry of Defence. He used to promise every year that Scotland's economy was on the turn. It also exposes the claim of the present Secretary of State that Scotland is leading the United Kingdom out of the depression. By God, if we are doing that the rest of the United Kingdom must be a poor soul.
  The forecasts are not much better. The Mackay Consultants economic commentary forecasts that
  "Scotland will suffer substantially from the fall in world oil prices. Obviously some firms and sectors will benefit from lower costs but these will be outweighed by the negative effects on the oil companies and the service companies directly involved in the North Sea."
  The Scottish Business Insider magazine has found that the continuing erosion of control of enterprises within Scotland has occurred as a result of recent mergers and takeovers. That will have a serious effect on the country. It states that 53 per cent. of the total capital employed in the big manufacturing and industrial sectors has been lost through takeovers of Scottish-owned companies. The divide is only too real.
  The answer for Scotland, as my hon. Friend the Member for Dundee, East (Mr. Wilson) and myself have pointed out, is independence. A Scottish Assembly would find the pull of London too powerful. Norway, Sweden, Austria and Switzerland have the lowest rates of unemployment in the world. It is that league, not as a deprived region of the United Kingdom, that Scotland's survival obliges us to join.
  Several Hon. Members rose——
  Mr. Speaker: May I remind the House that the Opposition Front-Bench spokesman will seek to catch my eye at 9.20 pm.
  8.45 pm
  Mr. Piers Merchant: I represent a constituency with acute social problems of high unemployment and chronic economic difficulties of structural imbalance. I hope that the House will understand why I will concentrate on the region's economic issues and the so-called north-south divide.

  817
  Let me join with others, especially my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), in dispelling two myths. The first myth, which is the most dangerous, is that there is no regional problem. Anyone can prove anything if they select their facts sufficiently ruthlessly, but that can have no credibility in the north and should have no credibility in the south.
  The second myth is that of the north-south divide. It dramatically appeals to the newspaper headline writers who are keen to sell second rate newspapers and to Opposition politicians who are keen to sell second rate policies. It is a simplistic and sweeping interpretation of the regional problems and does no service to the people who are suffering from those problems. Indeed, this simplistic portrayal is distortive and insulting. Its innuendo is that anyone north of the Wash is second best, downtrodden, helpless and hopeless. That is a travesty and a typical piece of patronising Socialism.
  How on earth can the hon. Member for Stockton, South (Mr. Wrigglesworth) ever hope that the industry and investment which are seriously needed in the north-east can be attracted to that region if he pursues the tactics that he used when he talked about the north-east as if it was in the blackest possible situation, coming out with the whole issue of statistics and trying to prove that the situation was irredeemably hopeless? Frankly, his motive defeats me. It was a studied insult to those people who are trying to attract jobs and investment to the region by portraying the positive benefits, but the hon. Gentleman did not touch on those benefits. Let us talk about the positive side.
  Unemployment in the north-east is now clearly and consistently falling, thanks to the Government's policies. In my constituency—a typical example—unemployment is now lower than it was in 1983. The old industries are being replaced and urban dereliction reversed. There are now new industries and investments which are being attracted to the area. The hon. Member for Stockton, South is obviously aware of the many good companies that have invested in the north-east in the past few years. Wealth is being created and as high a quality of life can be enjoyed there as anywhere else.
  The region has an unparalleled number of attractions. Housing is of high quality but low price compared with elsewhere. Land is readily available for industrial development and there is a skilled work force ready to take the jobs. There are also many environmental attractions. Specific examples include 10,000 jobs that have been created by the Newcastle and Gateshead Enterprise zone. The massive Metro retail development—the biggest in Europe—has brought over 5,000 jobs. There is the great success of the Nissan plant that is already ahead of schedule with promises that 100,000 vehicles a year will roll off its production line in four years' time. Komatsu at Birtley has brought another 270 jobs; Barbour at Hebburn has created 100 jobs; Brown and Root at Jarrow, 117 jobs; and British Rail at Heaton has brought 180 jobs. Those jobs are connected with the east coast rail electrification, and that should win the support of the Opposition who are always talking about infrastructure development.
  Mr. Jack Thompson: Will the hon. Gentleman give way?
  Mr. Merchant: I shall give way in a minute.
  818
  These are all examples from the last few months of jobs that have been created in the north-east. Two or three years ago, the Port of Tyne Authority made a regular loss of £750,000. It has now made a profit of £3 million. That is an important indicator of economic activity on the Tyne and in the north-east generally. It is not all gloom and doom.
  Mr. Thompson: Does the hon. Gentleman realise that one third of the 83,000 young people in the north of England who are unemployed have not had a job in the last 12 months? They will not find any comfort in the hon. Gentleman's comments.
  Mr. Merchant: I should have thought that there was much comfort in the north-east for those youngsters who, unfortunately, have not had jobs made readily available to them in the last few years. The Government have done a great deal for them. They have provided training opportunities and MSC schemes. I accept that only real and lasting jobs will result in real benefit, but the statistics demonstrate that real jobs are now coming to the north-east.
  There is now great hope, but there are real problems. First, there is the social problem of unemployment, caused by the collapse of many traditional smokestack industries, the lack of competitiveness 10 or 20 years ago, caused by poor management and adverse labour attitudes, and the past lack of enterprise and investment and poor education and training.
  Secondly, there has been structural inadequacy and a historic over-dependence on old, heavy industries. That has not yet been properly corrected. Thirdly, there is the problem of two-way labour immobility. Barriers have prevented managers and investors from moving to the north with their companies. Other hurdles have prevented employees from exercising their choice to move south to take up jobs. I shall deal with the latter point first, because it threatens to be the most serious problem. Certainly it is the most recent problem, and the Government must take urgent steps to tackle it.
  Ironically, it is a function of the Government's success in economic terms that fast recovery and growth has taken place in the south-east. High and fast rising property prices in the south attract people both ways and inhibit the free operation of the market mechanism in regional and labour terms. These high prices are exacerbated by Government subsidies, hidden and otherwise, to housing and transport in the south-east. The north desperately needs the excess jobs of the south. It needs the companies and the investment that are locked near London. Northerners need the freedom to find homes in London, if they wish to move.
  Mr. Michael Fallon: Is my hon. Friend aware that there are 120,000 empty council houses in all parts of the country and that thousands more council properties are hard to let or are impossible to let? Would he favour a national, computerised system so that any job seeker could go to any housing department in the country, tap into a terminal and see what is available in the region to which he wishes to move?
  Mr. Merchant: That is an excellent suggestion. It would unfreeze the current rigid system of council house allocations.
  We must free the housing transfer process by encouraging more low paid housing in the south, thus

  819
  reducing the speed of the price rise, while encouraging a high quality of environment and lower living costs—items like domestic rates—in the north. The advantages of the regions must be sold far more effectively.
  Mr. Clelland: Will the hon. Gentleman give way?
  Mr. Merchant: No, I shall not allow any other hon. Member to intervene, because time is short and I want other hon. Members to have the opportunity to speak.
  In overcoming the historic image of the north, we must take firmer steps to diversify and modernise the industrial base of regions like the north-east. The Government deserve credit for what they have done. There have been some outstanding successes, but more incentives are needed. Grant aid is a great advantage, but that alone is not sufficient. Tax breaks, too, are essential. A uniform business rate must be introduced swiftly, as high rates in the north-east, particularly in the north, which includes the highest rated authority in England, have strangled local industry.
  Next, basic income tax rates must continue downwards. The lower the rate the better. A 20 per cent. basic rate would do wonders for the north. Every example throughout the world illustrates that. The Government must continue to concentrate on simple tax reduction, or must enable depressed areas to benefit from a differential advantage—as, in a sense, the enterprise zone philosophy pursues.
  Planning constraints, too, must be lifted, especially in depressed areas. How often we hear of companies that are keen to invest but then have to wait weeks or months as planners pontificate and councillors interfere before they all say no. That is why I welcome the creation of the new Tyneside urban development corporation. It will have the power and the drive to overcome the inertia within some local government organisations.
  When it comes to direct Government employment and procurement, a lead must be given. There must be an appreciation of regional aspects. I agree with my right hon. and learned Friend the Member for Richmond, Yorks, who drew attention to the importance of having two approaches to regional policy, not just the classic one and not just the supply side approach, either. I do not believe that the Government have done enough to devolve Departments and state industries and to direct employment to the north. Therefore, the people who make the decisions remain in London, with a myopic metropolitan view of matters.
  Furthermore, when it comes to Government orders, the Government must appreciate that, whether they like it or not, their purchasing power is so great that they cannot ignore the regional aspect. I am not making a case for subsidy, or unwanted orders for old industries. Indeed, attempts to prop them up are bound to be counterproductive and a cruel deception. However, there are industries that desperately need orders. To place those orders could dramatically alter their position and that of the local economy.
  As an example, let me take NEI Parsons, a large and highly successful turbine generator manufacturer. NEI, in Newcastle, is modern, forward-looking and vibrant. It is a growth company. It has an excellent management team, forward-looking and positive union leadership and a fully committed record of high investment and productivity, yet within the last fortnight it has declared 800 redundancies,
  820
  partly because of the delay in domestic power station orders. This company does not ask for subsidies or for preferential orders. It is quite happy to stand by fair competition in the market place. It prefers fair competition. However, it needs orders to be available. There is a need for orders and I hope that my right hon. Friend the Chancellor of the Exchequer will take this point to his right hon. Friend the Member for Worcester (Mr. Walker), who on this matter has, I believe, been inert and complacent and who seems to be more worried about cranky rural pressure groups than about industrial jobs in northern Britain.
  Mr. Bernard Conlan: Will the hon. Gentleman give way?
  Mr. Merchant: I fear that, because of time, I cannot give way. I hope that I have addressed the points that are of concern to the hon. Gentleman.
  However, nothing can compare with the sheer incapacity and the staggering incapability of the Labour bosses who have controlled the destiny of the north-east for more than half a century. Over this period, a Neanderthal attitude to economics, a Stalin-like obsession with central control and a fossilised self-view have catapulted this region backwards at a time when a pragmatic grasp of the opportunities available could have heralded a new era.
  Mr. Conlan rose——
  Mr. Merchant: Faced with the NEI redundancies, all that the Labour city council in Newcastle could do—and I fear that it reveals Labour's industrial policies nationally, too—was to waste yet further resources upon producing a boringly tedious and second-rate report and then to prepare a leaflet drop to every house in Newcastle, telling them what they knew already. However, it did not remind them of the NEI's rates bill of £2·1 million a year, which the city council levied, and the burden that that placed on the company. It is time that the Labour party faced reality and acknowledged that it has prolonged and wallowed in the concept of the north-south divide. When it had its chance, it did nothing to allay it. That is the reality that this House ought to be aware of, and it is the reality that people in the north of England know only too well.
  8.59 pm
  Mr. Allan Rogers: Other hon. Members have dealt with the broader aspects of this issue, but time demands that I should concentrate on regional and constituency issues. But some of the matters that have come up during the course of this debate have to be dealt with before I move on to talk about my region and constituency.
  I agree with many Members that we are not necessarily talking about a north-south divide in the debate this evening. What we are talking about is a divide in this country between those who have and those who have not. Since the Government have been in power, that divide has grown even wider. In the majority of cases it is a north-south divide—although there is a substantial area to the west—but it would be wrong of us to polarise the issue into those geographical areas when there are high pockets of unemployment in areas such as Margate and Ramsgate in the south-east of England. There are areas of poverty in the south-west and other parts of the southern half of

  821
  this country. The argument is not about the north versus the south. It is about the rich versus the poor and the haves versus the have-nots.
  No one can argue that there are not difficulties in the regions, because manifestly there are big differences whatever parameter or socio-economic indicator is used. These are problems of the past, as the right hon. Member for Henley (Mr. Heseltine) said, but they are not only the problems of the past, or the decline of the smokestack industries. If we look quickly at one statistic in regard to Wales, for example, the coal industry has had a job loss of about 13,000 people since 1979. But the number of unemployed in Wales has risen by over 100,000. One cannot blame the decline of the coal industry for the enormous increase in unemployment in Wales. Unemployment is a difficult problem that will not be solved by one simple action. It will take all the resources of Government, private industry and the public sector working together in an effective partnership to solve the problem. But it can be solved and I shall not get involved with the prophets of despair who are writing off areas such as the area that I represent.
  The right hon. and learned Member for Richmond, Yorks (Mr. Brittan) talked about these regional differences. In one part of his speech he seemed to accept that they existed, but in the other part he did not want to accept them. Part of his panacea for the problems that are arising—I think I quote him rightly—was that "there should be regional pay bargaining." I should like to point out to the right hon. and learned Membe—at least, I would if he were present—that those regional pay differences presently exist. We do not need regional pay bargaining, and it is wrong of Conservative Members to say that workers price themselves out of jobs; that is manifestly not so. The difference in average wages between areas such as Wales and the south-east at the present time is £42·32. One can hardly accuse the Welsh of pricing themselves out of jobs.
  I represent an area that is one of the most socially and economically deprived areas in the United Kingdom. My hon. Friend the Member for Caerphilly (Mr. Davies) helped me by providing some statistics, and I shall catalogue them in the hope that the Chancellor of the Exchequer and the Paymaster General will pay attention to the problems within my constituency. In my area we have the highest number of houses without indoor toilet facilities; the highest number of houses without a bath or shower; the highest number of pensioners lacking the same facilities; a perinatal mortality rate that is the highest in Wales; an unemployment rate of over 20 per cent.; an extraordinarily high level of youth unemployment; more likelihood of children suffering from measles and whooping cough; and, not surprisingly, the highest percentage of permanently sick people in the United Kingdom. That is a catalogue of deprivation.
  But the statistics do not adequately demonstrate the misery and poverty in which some individuals live in my constituency and in areas in the north and in the south that are suffering from unemployment. They do not illustrate the struggles and difficulties of pensioners to achieve a reasonable quality of life. They do not adequately demonstrate the tragedy and disappointment of the young mother who loses a baby in the early days of the baby's life because of a lack of facilities. They do not demonstrate
  822
  the despair and disillusionment of a young man who has never had a job and has no likelihood of getting one in the foreseeable future. [Interruption.] I wish that hon. Members who have just come into the Chamber would listen quietly.
  The Government amendment talks about the success of their economic policies and of healthy, balanced economic growth. We are entitled to ask the Paymaster General to tell us when he replies where that growth and success is and when we in Wales will have some share of it. We would certainly like to have some of it in my county and in my constituency.
  The Chancellor, the Paymaster General, the Secretary of State for Wales and the Prime Minister constantly reiterate their excuses for unemployment. As I said earlier, they blame the decline of the coal industry for the problems that we face in south Wales, but our problems are much deeper seated than a simple decline in one industry. If we look across the job spectrum, we see that in manufacturing we have lost 113,000 jobs. In metal goods engineering and vehicles 52,000 jobs have been lost. Across the whole spectrum of industry we see that jobs have been lost. It is not simply the coal industry that is in decline; it is a region in decline and that region badly needs help. We are not pricing ourselves out of work. If the Government attach any importance at all to jobs in the engineering sector, they should help areas such as south Wales.
  Earlier, I spoke about the statistics of my constituency which reflect the position in Mid-Glamorgan and Wales as a whole. I described what they meant for the pensioner, the young mother and the unemployed youngster. They mean despair, disappointment, disillusion, struggle, difficulty, and, in many cases, tragedy. That is mirrored elsewhere in the United Kingdom. That is the true meaning of Thatcherism. That is the true reality of Thatcher's Britain today. It is a divided Britain, governed by an uncaring Government.
  9.8 pm
  Mr. David Howell: Not the least interesting aspect of the debate which is now coming to a close has been the distinct switch of emphasis that we have seen in the attempted assault of the Opposition Front Bench on my right hon. Friend the Chancellor and on the Government's record. Obviously, they have a major concern with unemployment, as we all do, and that has been reflected in many of the speeches. But they seem to be sensing that, now that my right hon. Friends are beginning to grapple effectively with unemployment and we are seeing the figures behave in a far more encouraging way, they must have a new theme. The theme that they have found is reflected in their motion on the Order Paper. It is the theory of the impending balance of payments crisis.
  The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has gone into the economic forecasting business. It is only fair to warn him before the debate is out that that is a hazardous business. It is all the more hazardous when he and his right hon. and hon. Friends appear to depend so heavily on independent forecasters in the much criticised City, as they do. They seem to refer again and again to what independent forecasters are saying about trade deficits, interest rates and sterling in the

  823
  coming year and what that will do to our employment performance and the social problems that we face in the inner cities that we have been discussing this afternoon.
  The difficulty is that at least half the independent forecasters have so far been spectacularly wrong. Perhaps the right hon. Gentleman should keep that in mind. They were quite wrong about interest rates in the autumn which they confidently forecast would go up by 4 percentage points but did not. There was then a forecast that there would be a huge sterling crisis this month, but, of course, there has been nothing of the kind. I do not know whether the Labour party associated itself with that forecast. There have been other problems which I shall deal with in a moment, but there certainly has not been the collapse or the further slide in sterling that was predicted.
  There was equal puzzlement and a failure to appreciate what would happen about labour unit costs. If I may say so, that error was apparent on both Front Benches and there was a cry that we would all be ruined by an enormous rise in labour unit costs that would offset the devaluation of sterling against the deutschmark. It was said that that would mean we would not restore competition or create new jobs, but the opposite has happened and once again the forecasters have got it wrong. Labour unit costs are coming under increasingly effective control and the original statistics about output and recorded labour costs were probably grossly inaccurate and are becoming increasingly so. Even if they were accurate, those same figures are developing in a far more favourable way.
  We could be seeing something that over the last 20 years many of us doubted could happen, a devaluation or depreciation taking place without consequent inflation and without the inflation of wage costs which wipes it out. I have never supported the proposition that we can devalue our way into competition and more jobs and by that means can restore jobs and opportunities to the north and to our cities. In America one hears people say, "If only we could get the dollar down, everything would be all right." I say to such people that we have tried that in Britain and quite often it did not work. It worked briefly in 1966, perhaps, but on the whole it is a path to perdition and always inflation takes away the advantage.
  It may just be that as a result of supply side changes taking place in our economy this time the depreciation will stick and, because labour unit costs are not going up, it may be that we have reached the point—an important turning point—when we are able to take advantage of a lower and more competitive currency and fairly pour our efforts into competition and export and provide the new jobs that we need, especially in the areas about which hon. Members feel strongly. The economists were wrong when they thought that labour unit costs were going through the ceiling. Hon. Members in the centre parties were muttering about incomes policies of bizarre kinds which would control this problem. Suddenly we see once again that analysis was wrong.
  The second major area in which the independent forecasters upon which the Labour party has relied so heavily have been wrong has been the staggering growth in invisible earnings. If one looks back to the forecasts one finds that none of these independent forecasters or Opposition critics at all foresaw what was happening. There was a widespread myth, shared by many commentators, that North sea oil had been wasted. That was an easy thing to say and an easy myth to peddle.
  824
  People had not noticed, as my hon. Friend the Member for Croydon South, (Sir W. Clark) said earlier, that North sea oil proceeds were not being wasted.
  Oil proceeds were being invested on a gigantic scale, largely, I concede, overseas, but as a result they are producing the most enormous annuity for Britain which can be invested in the competitive and high technology industries of tomorrow. As a result, Britain has become not a debtor nation like the United States but the world's second largest creditor nation after Japan and is in a position of immense potential power which will enable us to use those resources to solve our social problems and to underpin the new and more dynamic industries that we need for tomorrow.
  That is another area where the economists got it all wrong. The independent forecasters did not forecast any of that. Instead, they looked at the current physical trade balance and saw ahead disaster, to which they eagerly assented. What we will see is a considerable offset in annuity which will flow in on a gigantic scale, possibly rising to £14 billion a year by 1990. That means that the trade problems which will inevitably arise when the oil runs down and when we have a slightly weaker oil price can be handled and are being handled.
  The third thing that economists and critics of the Government did not foresee was the enormous rise in non-oil revenues which are now benefiting my right hon. Friend the Chancellor and enabling him now to talk about the possibility of an undershoot for public sector borrowing this year and, in my view, a possible undershoot next year as well. That will give a leeway in our budgetary practice without imprudence, which we have not known for a generation. My own strong view is that in a sense an undershoot is not a good thing, but without a doubt the leeway should be used. It is not good budgetary practice to achieve an undershoot, not least because in Whitehall the word goes out that pressure is off public spending and we can now put aside all those troublesome efficiency drives and all the rest. I hope that there will not be an undershoot and that the space will be used up by a judicious use of resources.
  In my book, and I have never disguised this, we should concentrate, for social and economic and job reasons, on tax cuts. I cannot understand the view of the Opposition. I can understand the view of the more blinkered members of the Opposition but not the more sensible members when they are against tax cuts on low incomes. What are they talking about? Do they not listen to their own constituents or understand the enormous disincentives working on those on low incomes who have to pay some of the highest taxes and national insurance in the Western world? Have they not read the stories around the world of those nations and states where low taxes have produced fantastic growth in jobs? Have they not noticed that in California, a state with half the population of Britain, 2 million new jobs have been produced while taxes have been cut by 23 per cent.? The tax cut opportunity must be seized, not least because our competitors, the United States, Japan, Germany and France, are all going for major tax cuts and tax reform and changes in their structure.
  If we do not follow that route, we will be disastrously left behind in terms of creating jobs in the inner cities and the areas in the north where we must get them back. If hon. Members say that we should not have tax cuts now because it will increase consumption and suck in imports—and I do not believe it will—if that is the fear, let us

  825
  go for the sort of tax cuts that encourage personal ownership and investment and savings. Let us copy the ideas of the Loi Monory in France and have front end relief for saving and transfer from State saving, which has on the whole been disastrously inefficient to personal ownership and personal saving which can be mobilised for the new industries and new jobs which we need. There is plenty for my right hon. Friends to do in that area on capital taxes and on all levels, basic rate tax and higher rate tax as well. Taking the example of capital transfer tax, in real terms, in the form of its inheritance tax, that is now higher than in 1974 when it came in. I hope that my right hon. Friend will bring that back to the level it was at when the Labour party introduced it.
  Finally, as it has come into the debate in the motion on BTR, although that matter has been resolved, and I am glad it has been, I believe the Secretary of State was totally and utterly right in the line he took. I congratulate him on keeping his head and on keeping calm when those about him were losing theirs. I was glad to see that he stuck to the competition definition in his ruling. I was dismayed to see reports that some of the junior Ministers in the Department of Industry seemed to be putting distance between themselves and him. I hope that is not correct, that the newspaper reports were misleading and that the Ministers concerned will explain themselves. I believe that my right hon. Friend is entirely right. I did not like the ominous suggestion of some hon. Members that we should redefine a new idea of public interest for controlling mergers. We know where that idea goes, towards more bureaucratic vetting of mergers, back to the world of the IRC and all the monopolies and mergers which were put together in a spirit of rationalisation in this country with catastrophic results. We are living with them today.
  The British Motor Corporation merger with Leyland was a classic example of alleged public interest prevailing over competitive forces. We do not want to go back to that kind of thing. I believe that we may be looking at the wrong end of the problem altogether. In America, they are terrified of mergers and I think that there is a merger mania as well. The answer probably is to look at the excessive ease with which people can raise capital to conduct these takeover raids, the world of jump bonds, leverage buy-outs and the rest. It may be that the view should be focused at the capital raising end to see if there is not an excessive ease for people, often of not the highest repute, to raise capital and raid much larger concerns. Policy should be concentrated on that end of the process rather than on worrying about the consequences at the other end. If the capital access side is cured and the financing of takeovers is better managed, the consequences will be much more satisfactory and we will not be left with the sort of rows that we have had over BTR and Pilkington.
  I said at the beginning that the impending crisis thesis was put forward by the right hon. Member for Sparkbrook. In one sense the right hon. Gentleman might be right; there might be an impending crisis, not in this country—we are in a stronger position than we have been for a generation to meet the rough seas of the world—but in America. We may see there a real disaster—a crash landing for the dollar, a huge hike in interest rates and vast currency instabilities. All that could produce a
  826
  crisis, but my right hon. Friend has built for us an economy that is stronger to face world difficulties than for many years past.
  9.20 pm
  Mr. Seamus Mallon: Mr. Speaker, you have given me exactly one minute. I should like to say thanks; had I more time I would say, thank you very much.
  That the only representative from the North of Ireland—the region with the highest rate of unemployment, the highest cost of electricity, gas, coal and food, and the lowest rate of wages—is allowed a one-minute contribution to the debate convinces me that the motion, which says that the economic situation has led to a divided nation, is right. Indeed, I might conclude that it is an ill-divided nation.
  9.21 pm
  Mr. John Smith: It is sometimes said that the difficulty with the Government is not so much their policy as the way in which they present it. Time without number, speakers, particularly at Conservative party conferences, tell us that. I am afraid that in the case of the Chancellor of the Exchequer it appears to be both. Today he was asked in an intervention by my hon. Friend the Member for Workington (Mr. Campbell-Savours) about what some people regard as a minor point but what many people in the regions, particularly industrialists, regard as important—the moratorium which has been imposed upon the payment of regional development grants. The Chancellor replied that there was not a moratorium, merely a delay in payment.
  To check the matter, I looked at volume II of the public expenditure White Paper. On the front it says:
  "Presented to Parliament by the Chancellor of the Exchequer".
  What did I find? At page 93 it says:
  "In order to spread this expenditure"—
  that is, RDG expenditure—
  "further moratoria have been imposed on payments of RDG, to cover new RDG as well as old."
  If that is not a moratorium——
  Mr. Lawson: It is a delay in payment.
  Mr. Smith: Ah, it is a delay in payment. I have obviously got it wrong again. I must try harder. Try as I must to say that this is not a moratorium, when I go back to consider the figures I find that the Chancellor unfortunately told Parliament in the document that was presented to us last week:
  "further moratoria have been imposed".
  That seems to be a classic case of failing to present the case properly.
  When we think about it, what is the difference between a moratorium and a delay in payment? Is not a moratorium no more and no less than a delay in payment? What is the Chancellor of the Exchequer trying to tell us when he says that it is not a moratorium but merely a delay in payment? I should be delighted to give way to the Chancellor if he would like to get to his feet and tell us the significant difference between a moratorium and a delay in payment. If there is a significant difference, significant enough for him to make such a point about it, it is time we knew what the difference is. If there is no difference, what on earth was he saying to my hon. Friend the

  827
  Member for Workington? I do not see the Chancellor dashing forward to elucidate that point, but I think he should try a little harder. That is not a minor point——
  Mr. Lawson: I was anxious, for the sake of the House and also for the sake of business and industry and, indeed, the areas, that they should not have thought that there was a period during which applications would not be accepted—[Interruption.] That was what I was making quite clear to the House.
  Mr. Smith: That would be a moratorium on applications. Unfortunately, the White Paper says:
  "further moratoria have been imposed on payments".
  Therefore, the Chancellor's explanation will not do. It is disgraceful if the Chancellor does not know that it applies to people who have applied for and properly been given grants. Those people have already qualified, been told that they will get the grant and conducted their business on that basis. However, suddenly out of the blue comes a moratorium, a loss of or delay in payment, and they are told that they cannot get the grant.
  I refer to an article in the Glasgow Herald on 15 January 1987 on the reaction of one industrialist, Mr. Bill Miller, the managing director of an electronics company and the vice-chairman of the CBI in Scotland. He said that the additional delay would mean an overdraft for him of £200,000, and that it would stop the recruit:ment for three jobs in his company. He said that that would be repeated all round the country. Perhaps the next time that the Chancellor considers regional development grants, he will think a little more carefully about them.
  While I am on the subject——
  Mr. Lawson: I was absolutely accurate.
  Mr. Smith: The Chancellor has indicated that he is not going to think any more about the matter because he says that he was absolutely accurate. However, I am not sure about that.
  Mr. Brittan: If the right hon. and learned Gentleman wishes to be accurate and fair, will he point out that that is because expenditure on regional development grant has increased—[Interruption.]—as my right hon. Friend the Chancellor made absolutely clear, in the sense that it is greater than that set out in the plans? The right hon. and learned Gentleman should welcome that.
  Mr. Smith: I must not blame the Chancellor for his right hon. and learned Friend's intervention, because I am determined to be fair.
  The notion that there has been an increase in regional development grants and that that has caused the problem can be assessed in the light of the following information. In 1982, regional development grants amounted to £812 billion. By 1986, that had been almost halved, to £396 billion. It has been projected to go down to £187 billion.
  Mr. Brittan: That is entirely unworthy of the right hon. and learned Gentleman because he knows perfectly well that I was talking about the planned expenditure for the relevant year, which has been increased. He will get nowhere with tricks and twisting of that kind.
  Mr. Smith: The right hon. and learned Gentleman did not allow me to finish what I was about to say before he interrupted me again. I am anxious that the House gets all the facts and not just the facts that he wishes the House to hear.
  828
  I should make it clear that regional development grants were halved between 1982 and 1986 and that they will be halved again. The Government should not say that they are surprised at the job losses in the regions and that manufacturing industry is failing when money is being pulled out on such a scale.
  Mr. Philip Oppenheim rose——
  Mr. Smith: No, I shall not give way because I can handle only one intervention at a time.
  The right hon. and learned Gentleman said that there is a problem because there is an old scheme and a new scheme and that there is a slight increase in expenditure because the old scheme overlaps the new scheme. If that is not what he said, it is what the Treasury told me when I asked, and that is probably as good a source as any. If this slight bulge is to be the reason for imposing a moratorium, one would have thought that the sensible thing would be just to pay the money to which people are entitled.
  I shall leave the Chancellor of the Exchequer shortly. However, in the debate he told my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) that he should have read the Brown report on the influence on income tax because it was in the Library. Taking the Chancellor at his word, I went to the Library and was told that not only is it not there, but that there is no record of it having been deposited there.
  Hon. Members: Apologise.
  Mr. Lawson: I have nothing to apologise for. The Library and I regret that it made a slight error which I shall come to in a moment. [Laughter.] The document was sent by hand to the Library on 18 December. When I heard that the right hon. and learned Gentleman had been unable to find it, I inquired of the Deputy Librarian what had happened. I have a letter from him, apologising to me for the fact that the Library had put it in the statistical section of the Library.
  Mr. Smith: I am glad—[HON. MEMBERS: "Withdraw."] Faced with such overwhelming evidence, I have to withdraw the statement. However, the fact remains that when I went to the Library I could not get the document, so I am not gaining from this. Perhaps the solution is that the person who sent it to the Library said that there should be a moratorium on its being made available to the House.
  At the heart of the Government's case has been an increase in productivity. They cannot say that there has been an increase in jobs in manufacturing industry, because we have lost 2 million jobs there, nor that there has been an increase in output, because it is still 4 per cent. below the 1979 level.
  Mr. Lawson: It is not.
  Mr. Smith: It is.
  Mr. Lawson: Manufacturing output is.
  Mr. Smith: Manufacturing output, then: we have got that right. The Chancellor agrees that manufacturing output is still 4 per cent. below what it was in 1979. We are told that that is all right because of an increase in productivity, but let us get one matter absolutely clear: anyone can achieve an increase in nominal labour productivity, if in a declining industrial economy job losses over the same period are even greater than the fall in

  829
  output. Therefore, the Government have merely managed to ensure that output has not fallen so calamitously as jobs. For that reason there is an underlying growth in productivity. Productivity in a declining industrial economy such as ours is not what we want. We want increased productivity in an expanding industrial economy, and that we certainly have not had.
  The proper indices in this matter are employment, output, investment and trade balance. They are far more important than this bogus productivity figure. The employment figure has decreased by 2 million, manufacturing jobs have decreased by 28 per cent., manufacturing output has decreased by 4 per cent., manufacturing investment has decreased 17 per cent. since 1979, the manufacturing trade balance was in surplus to the tune of £5 billion in 1980 and the figure for 1986 is estimated to be £7·5 billion. It is not merely a matter of a deficit of £7·5 billion, but of problems with the new industries.
  If the Chancellor considers the figures, he will discover that between 1979 and 1986, 211,000 jobs were lost in the electronic and electrical engineering industries. Well over 200,000 jobs have been lost in the new industries as well as in the old. As the Secretary of State for Trade and Industry should know, if he pays attention to these matters, there is a serious balance of trade deficit in the high-tech industries as well as in others.
  The Secretary of State for Trade and Industry should have been replying to the debate. When we have a debate on regional policy and manufacturing industry, his place is at the Dispatch Box. We understand that he cannot involve himself with one half of his Department because of an interest through his family connections. However, he should not disable himself from the other half of his Department through non-interest in the House. It is his duty to answer such debates. I hope that on the next occasion that we debate manufacturing industry and regional policy, he will be present—[HON. MEMBERS: "He is here now."] He may be present now, and it might be helpful if we could have a contribution from him as he is responsible to Parliament.
  Some hon. Members have queried whether the north-south divide, which has taken hold of the public imagination in recent weeks, exists. People will argue for ever about that. I want to consider a Government document—the submission to the regional development fund. That document can be found in the Library if one asks for it. However, the Government will not publish it. The only way to get anything from the document is to make a photocopy of the copy in the Library. I would not say that that was a symptom of the open society or a way of disseminating information, but if one is industrious enough and prepared to waste public money on the photocopiers information can be obtained.
  The most important fact in the document is that unemployment in 1990, on the projection made to the European development fund, will be 3,117,000. What is all this nonsense about unemployment falling when in 1990, according to the Government document, unemployment will be above 3 million? That is only three years from now. Either the figure is wrong, in which case the Government are telling lies to the European Community, or it is correct. It is a forbidding prospect that in 1990 there will be more than 3 million unemployed on the basis of the Government's figures.
  830
  To support the Government's submission, the document recounts details of the various regions. It states about the west midlands:
  "There is little prospect of an improvement in the region's basic unemployment problems between now and 1990."
  About Scotland it says:
  "Little possibility of sufficient expansion."
  About Yorkshire and Humberside it states:
  "Employment levels are unlikely to rise in the short or the medium term."
  With regard to Wales it states:
  "Overall economic activity lower than any other region of Great Britain and expected to remain so during the period to 1990."
  With regard to the north-west, it states:
  "Prospects for reducing unemployment are frighteningly bleak."
  Mr. Philip Oppenheim: Will the right hon. and learned Gentleman give way?
  Mr. Smith: I simply do not have time to give way.
  That is the Government's assessment of the north-south divide. Faced with that, the Minister must not tell us that there is no north-south divide. Let him not tell us that there have not been significant job losses in each of those areas.
  Since 1979, in manufacturing industry 281,000 jobs have been lost in the west midlands; 109,000 have been lost in the east midlands; 248,000 in Yorkshire and Humberside; 337,000 in the north-west; 140,000 in the north; 115,000 in Wales; and 132,000 in Scotland. That is a total of 1·5 million in those regions.
  Mr. Philip Oppenheim rose——
  Mr. Smith: It is not simply a north-south problem. Opposition Members who represent inner-city areas of London know perfectly well the serious problems that exist in the south. It ill becomes Conservative Members to remind us of that. Hon. Members who represent Luton and Swindon know perfectly well the serious problems that exist in manufacturing industry.
  Some 476,000 jobs have been lost in manufacturing industry in the south. There is a north-south problem. However, overlying that there is the desperate problem of the decline of our manufacturing industry. That has been accentuated, because the Government have simultaneously withdrawn regional support and regions intertwined with industry have borne the brunt of the damage. However, all Britain has suffered. We are all diminished by the north-south divide and we are all impoverished by our industrial society.
  That is why one of the greatest sins of the Government is to have turned their back on manufacturing industry. Where did they turn to? They turned to cast their favours on the City. I understand that the Chancellor of the Duchy of Lancaster said in a television programme today that the Labour party did not even contemplate legislating about insider dealing. That suggestion has certainly been made on a number of occasions—[Interruption.] I hope that the right hon. Member for Chingford (Mr. Tebbit) will forgive me if I put the matter straight. I have to remind the House that the Labour party produced provisions for insider dealing in the Companies Bill 1978. The Bill did not reach the statute book because a general election intervened and the Conservative party would not agree to let the Bill go through—[Interruption.] The proof is

  831
  that the same provisions appeared in the Companies Act 1980 initiated by the Conservative Government, and are now law.
  Mr. Tim Smith rose——
  Mr. Smith: In the short time I have available, I can say merely that the City is racked by many scandals. We heard today from the Chancellor that there is activity by Morgan Grenfell and that the Bank of England is taking a close supervisory role. It is clear that the management of Morgan Grenfell will have to change substantially and that it will have to change its courses and priorities. I suggest that it stops paying £20,000 to the Conservative party. That would be a good start to its change of policy and direction.
  In the debate on the Companies Bill in 1974 the Secretary of State for the Environment said:
  "I wonder whether insider dealing…is such an abuse as is supposed by many right hon. and hon. Gentlemen. It could have some beneficial effects. If a company were to continue to conceal some catastrophe…or some great turn-up for the books made it a great deal of money, and this news was suddenly released, the change in the share price would be dramatic. But if there is some half knowledge of this event and buying and selling takes place, the change in the value of the shares will be moderate, with possibly beneficial consequences."—[Official Report, 17 January, 1974; Vol. 867, c. 983.]
  I do not put that forward as a strong argument but it could be used for saying that a little knowledge of the affairs of companies leaking out is a good thing. That was the prevailing view of the Conservative party until recently. The Government are acting on the City because they have to. The Government need to take much tougher action and I hope that they will not resist doing so.
  Above all, we condemn the Government for dividing us, for impoverishing us and for not showing the responsibility which a former Prime Minister called for today but which I do not think the Government will be ever able to show.
  9.43 pm
  The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): The right hon. and learned Member for Monklands, East (Mr. Smith) has just replied to what was billed as—[Interruption.] With his usual skill and wit, he took the first 10 minutes of his speech in this major debate arguing about a footnote in the White Paper about a delay on payments on regional policy. He then had a discussion about where in the Library it was possible to find a copy of a particularly readable report that was commissioned by the previous Labour Government. He then moved briefly through a discussion on a long-published document about regional development grants and wound up with his great defence about how in 1979 the Labour party had actually introduced a Bill dealing with insider trading, which was not a criminal offence during their period of office. I remind the right hon. and learned Gentleman that the Companies Bill 1973, which sought to make insider trading a criminal offence was dropped because of the 1974 election. The Labour party did absolutely nothing about it until, as a death bed conversion, it produced a Bill in 1979 which fell at the election, so we promptly introduced the legislation upon which we are now relying. With that last, totally fallacious piece of City bashing, we saw the end of the Opposition's
  832
  case, which as my hon. Friends will have noticed, did not include one word of policy on the north-south divide, the City, or anything else. That was the Opposition's case.
  The right hon. and learned Member for Monklands, East overran the time that was allocated to him in dealing with all that stuff. It is obvious that, having to put off this debate last week, having tried to turn it into a debate on Pilkington—which is why the Opposition said that my right hon. Friend should reply to it, and bearing in mind that the Pilkington issue is finished—Opposition Members are trying to talk it out. They actually asked for it. I remind them that, when it was first envisaged, the debate—I am as puzzled as the right hon. Member for Western Isles (Mr. Stewart) as to why it was asked for—followed the great Shadow Cabinet meeting that was meant to presage the pre-election attack on the economy and unemployment. Out of that Shadow Cabinet meeting we were supposed to hear the Opposition's economic policies. There was not a word. Only one word of Labour policy has emerged from the debate, and that was the most astonishing commitment by the man who wants to be the next Chancellor of the Exchequer. He will put up taxation if we reduce it. That is the only statement that we have heard today on what is meant to be a serious economic and employment issue.
  I propose to deal, as my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), my hon. Friend the Member for Newcastle on Tyne, Central (Mr. Merchant) and others wanted to deal, with the alleged north-south divide that was trailed before the debate actually started. Of course we all accept that there is a marked difference between the economic and industrial life of the north and the south of England. There always has been—it is nothing new—and there always will be—[Interruption.]—a difference in the way of life. Of course we all believe in some regional distinctions.
  During the debate we have been concerned, first, with arriving at a more sensible definition of the problem. Hon. Members, apart from Opposition Front Bench Members, have accepted that there is a far more complicated pattern of pockets of relative deprivation and problems alongside pockets of great prosperity. Parts of the north are exceedingly prosperous, and so are parts of the south. But we cannot walk around the streets of Peckham and tell people that the problems of employment are confined entirely to the northern industrial cities. They are quite large areas. Their economic activities differ. Unemployment in Clitheroe in Lancashire stands at 5·2 per cent. Unemployment in Thanet in Kent stands at 20 per cent. Obviously, we must tackle those differences, and those are the things that we are tackling.
  Where there is a regional difference, and undoubtedly there is, it arises because, as most hon. Members who seriously addressed themselves to the problem have conceded, there has been a change following the reduction in employment in traditional heavy industries. Opposition Members have sought to express the view that the decline in employment occurred, for the most part, in those areas which, in the past, depended most on heavy traditional industry.
  Mr. Allan Rogers: Will the right hon. and learned Gentleman give way?
  Mr. Clarke: I shall not give way. I have used almost all my time.

  833
  That decline has taken place most heavily in places that were most dependent on heavy traditional industry. This fall in employment in manufacturing industry has been taking place in the Western world. The loss of jobs in manufacturing industry was faster in the late 1960s and early 1970s than it is now. The reason why it was so severe in 1979, 1980 and 1981 was that we inherited over-manned and uncompetitive heavy traditional industry, so the fall became most marked.
  Out of that, the Opposition tried to construct the north-south divide. As Opposition Members often do, they turned to the hon. Member for Dunfermline, East (Mr. Brown) to produce an analysis of an article in the Department of Employment Gazette to try to reveal new facts to support their case. No hon. Member could explain how the hon. Member for Dunfermline, East arrived at his conclusion that 94 per cent. of jobs lost were in the north of England figure. I shall explain it at length afterwards. I know how he did it. It was a clever analysis of a document that he got three days ahead of publication. In fact, manufacturing jobs have been lost in the manufacturing areas, but 28 per cent. of the manufacturing jobs lost have been in the south of England. According to the Labour party's definition, 40 per cent. have been lost. But that loss of jobs is not the problem that we are facing. We should be facing the situation of rising total employment. If there is a problem, it is that the additional jobs are increasing more rapidly in parts of the south than in parts of the north. But that is not the analysis put forward by the Opposition.
  Over the past three years, a net growth in jobs has been taking place in each region in England—3 per cent. in the northern region, 1 per cent. in the north-west and 4 per cent. in Yorkshire and Humberside. Unemployment is falling steadily—that is the Opposition's problem. Over the past year, the fastest fall in unemployment has been in Wales, the north, the north-west and the west midlands. Youth unemployment is falling everywhere and is falling faster in the northern regions. Since 1983, 6 per cent. more jobs have been created in the south-east and in the south-west. In East Anglia there has been a 13 per cent. net additional growth in jobs. Now that we have growth, better economic performance and competitive industry, the growth in output and employment is occurring faster in some parts of the country than in others.
  Like my right hon. Friend the Chancellor and some of my hon. Friends who have spoken in the debate, I am a northern Member. We must tackle the problem. Our approach when we see that the recovery and the growth of new jobs is occurring faster in the south than in the north is to address ourselves to the problems of making the north as attractive a place for new investment and new business as the south and of ensuring that it widens its economic base and attracts those types of industry that give rise to growth in the south.
  We are looking forward to a new northern economy. We are bringing in new ideas to stimulate growth. We are encouraging enterprise and entrepreneurship there. Nevertheless, the Labour party takes a different view. it looks back to the heavy traditional industrial base of the north, talks about the old policies that it followed and tends in its pronouncements, especially simplified ones, to
  834
  feed southern prejudices and images of the north which it has created with cloth-cap poverty and deprivation—the picture that Labour Members like to paint.
  Labour Members have not addressed themselves throughout the debate to all the policies that are beginning to attract new industries to the north—what we are doing to put money in to clear up the derelict land; the urban development corporations which we have have set up on Tyneside and Teesside and at Trafford Park to speed up development; the enterprise zones, which we have set up in the middle of the industrial cities there; the enterprise agency network, which we have set up across the country; and the work of the city action teams and inner city teams in Leeds and Middlesbrough, which are bringing new training and new employment opportunities to people in those places.
  Labour Members have not addressed themselves to the way in which we are developing a public-private sector partnership, working beside groups such as Business in the Community and putting money into the Prince of Wales' youth business trust to get young people trained for a more modern economy. It is by giving people in the north more training, not just in skills, but in entrepreneurship, and by making the area more attractive to new investment that we have enabled people to take advantage of the lower costs in the north and build on that growth in new jobs, which, I repeat, is already taking place there.
  Unemployment is falling faster in the north, than in the south. It will be helped by better industrial relations in the north, by the fact that Nissan is attracted to Washington new town and by the ability to have a single union deal with the union that will promote flexible working practices—the type of things that the TUC and half the Labour movement spend their time resisting. Even when we look at regional pay differentials, as my right hon. and learned Friend the Member for Richmond, Yorks did, horror is aroused in the minds of most Opposition Members.
  The Opposition emphasise a totally different approach to regional policy, one based on arguments about grants. It is about time that we acted as we have to make the grants more selective, to stop the waste that occurred under the old system and to concentrate grants, as we do, more on jobs and specific areas and to target them better. Just to defend regional policy in its traditional form, as my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) sought to do, is to ignore the failures of regional policy in the 1970s.
  There are those who say that the west midlands is now an example of the north-south divide. It is no good going back to the west midlands and saying that the regional policies of the 1970s, which barred new development in that region, did not contribute to its problems. It narrowed its economic base and that economy collapsed when the vehicle industry failed. It was a victim and not a beneficiary of the Labour party's regional policy. That is the opinion in the region.
  Mr. Robin Corbett: What do you know about it?
  Mr. Clarke: I know the midlands better than the hon. Gentleman.
  We have also been treated to a little bit of City bashing. That was rather forlorn, because I was delighted to hear, as were, I am sure, many Members, that the Pilkington bid is now a dead issue.—[Interruption.] It is thanks to the

  835
  fact that Pilkington was able to produce good profit forecasts. The bid has collapsed and the market has resolved the problem. We did not have the delay of a reference. It is no good Labour Members claiming that it was their lobbying that produced that result. That matter was satisfactorily resolved by the market.
  My right hon. Friend the Member for Old Bexley and Sidcup and other hon. Friends have said that we should examine the rules in the light of the Pilkington reference. They believe that we have narrowed the rules too much by concentrating on competition. We have not changed the rules and it is still possible for Ministers to take a wider view of the public interest. I invite Members to consider the reference of the Gulf Resources' bid for IC Gas. [Interruption.]
  Mr. Speaker: Order.
  Mr. Clarke: It is simply not true that it is right to move in, ad hoc, in response to political pressures and make up the rules—as some hon. Members seem to imply—one by one as we go along. It is not right to apply political judgment to the way in which one makes efficient use of assets. That is the danger of the approach that is suddenly advocated by the Labour party. It has given up any attempt to woo those in the City and has opted for crude City bashing to arouse prejudice against the City across the country.
  The idea that Labour Ministers will take a closer political role in making such decisions does not fill me with joy in regard to employment or any other matter. If Labour Members were in a position to take decisions on mergers, such decisions would be taken in response to lobbies from within unions, interest groups inside the Labour party and with an eye on marginal seats. Any assertion that jobs and companies in the north would be safe in the hands of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and his right hon. Friends should send a shiver down the spines of those not only in board rooms but in the workplace of most companies likely to be affected.[Interruption.]
  Mr. Speaker: Order.
  Mr. Clarke: I was asked about controls within the City. The fact is that my right hon. Friend the Secretary of State and my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) have introduced a great legislative change that has greatly strengthened the powers of the inspectors and greatly improved the policing of the City.
  Some have asserted that one can already demonstrate that self-control and self-regulation have failed. It is far too premature to do so considering that self-regulation has rapidly applied itself to the current problems in the City. That is thanks to the efforts of my right hon. Friend the Secretary of State and the Minister.
  My right hon. Friend the Member for Old Bexley and Sidcup asked how fast the new machinery can work and he questioned whether there is a risk that prosecutions will be delayed as the case goes from the inspectors to the Director of Public Prosecutions. I remind hon. Members that allegations of insider dealing at Morgan Grenfell were immediately referred by my right hon. Friend the Secretary of State, and one member of that institution, Mr. Collier. has been charged as a result of the actions taken.
  I have specified our position on employment, the economy and the City. Throughout the debate we have
  836
  heard nothing from the Labour party about its proposals. We have had distortion of the figures in an attempt to try to construct a crude north-south divide. The vision that the Labour party offers the north is absolutely depressing. When it first tried to raise this issue, it organised a Jarrow march—not like the one that the Labour movement boycotted in the 1930s. This one was financed with all the media hype that the Labour party could manage—the brass bands, the trade union banners, the look back to the old image of the north that it was trying to revive. There is genuine unemployment in the north, which we are tackling. All the brass bands, all the banners and all the rubbish that we have heard in this debate from the Opposition offer no hope to the north.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 206, Noes 355.

  Division No. 61]

  [10 pm

  AYES

  Abse, Leo

  Davies, Rt Hon Denzil (L'lli)

  Adams, Allen (Paisley N)

  Davies, Ronald (Caerphilly)

  Alton, David

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

  Anderson, Donald

  Deakins, Eric

  Archer, Rt Hon Peter

  Dewar, Donald

  Ashdown, Paddy

  Dobson, Frank

  Ashley, Rt Hon Jack

  Dormand, Jack

  Ashton, Joe

  Douglas, Dick

  Atkinson, N. (Tottenham)

  Dubs, Alfred

  Bagier, Gordon A. T.

  Dunwoody, Hon Mrs G.

  Banks, Tony (Newham NW)

  Eadie, Alex

  Barron, Kevin

  Eastham, Ken

  Beckett, Mrs Margaret

  Evans, John (St. Helens N)

  Bell, Stuart

  Fatchett, Derek

  Benn, Rt Hon Tony

  Field, Frank (Birkenhead)

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

  Fields, T. (L'pool Broad Gn)

  Bermingham, Gerald

  Fisher, Mark

  Bidwell, Sydney

  Flannery, Martin

  Blair, Anthony

  Foot, Rt Hon Michael

  Boothroyd, Miss Betty

  Forrester, John

  Boyes, Roland

  Foster, Derek

  Bray, Dr Jeremy

  Foulkes, George

  Brown, Gordon (D'f'mline E)

  Fraser, J. (Norwood)

  Brown, Hugh D. (Provan)

  Freeson, Rt Hon Reginald

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

  Freud, Clement

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

  Garrett, W. E.

  Brown, Ron (E'burgh, Leith)

  George, Bruce

  Bruce, Malcolm

  Gilbert, Rt Hon Dr John

  Buchan, Norman

  Godman, Dr Norman

  Caborn, Richard

  Golding, Mrs Llin

  Callaghan, Rt Hon J.

  Gould, Bryan

  Callaghan, Jim (Heyw'd & M)

  Gourlay, Harry

  Campbell, Ian

  Hamilton, James (M'well N)

  Campbell-Savours, Dale

  Hancock, Michael

  Canavan, Dennis

  Hardy, Peter

  Carlile, Alexander (Montg'y)

  Harrison, Rt Hon Walter

  Carter-Jones, Lewis

  Hart, Rt Hon Dame Judith

  Cartwright, John

  Hattersley, Rt Hon Roy

  Clark, Dr David (S Shields)

  Healey, Rt Hon Denis

  Clarke, Thomas

  Heffer, Eric S.

  Clay, Robert

  Hogg, N. (C'nauld & Kilsyth)

  Clelland, David Gordon

  Holland, Stuart (Vauxhall)

  Clwyd, Mrs Ann

  Home Robertson, John

  Cocks, Rt Hon M. (Bristol S)

  Howell, Rt Hon D. (S'heath)

  Cohen, Harry

  Howells, Geraint

  Coleman, Donald

  Hoyle, Douglas

  Conlan, Bernard

  Hughes, Robert (Aberdeen N)

  Cook, Frank (Stockton North)

  Hughes, Roy (Newport East)

  Cook, Robin F. (Livingston)

  Hughes, Sean (Knowsley S)

  Corbett, Robin

  Hughes, Simon (Southwark)

  Cox, Thomas (Tooting)

  Janner, Hon Greville

  Craigen, J. M.

  John, Brynmor

  Crowther, Stan

  Jones, Barry (Alyn & Deeside)

  Cunliffe, Lawrence

  Kaufman, Rt Hon Gerald

  Cunningham, Dr John

  Kennedy, Charles

  Dalyell, Tam

  Kinnock, Rt Hon Neil

  837

  Kirkwood, Archy

  Robertson, George

  Lambie, David

  Robinson, G. (Coventry NW)

  Lamond, James

  Rogers, Allan

  Leadbitter, Ted

  Rooker, J. W.

  Leighton, Ronald

  Ross, Ernest (Dundee W)

  Lewis, Terence (Worsley)

  Ross, Stephen (Isle of Wight)

  Litherland, Robert

  Rowlands, Ted

  Livsey, Richard

  Sedgemore, Brian

  Lloyd, Tony (Stretford)

  Sheerman, Barry

  Lofthouse, Geoffrey

  Sheldon, Rt Hon R.

  McCartney, Hugh

  Shields, Mrs Elizabeth

  McDonald, Dr Oonagh

  Shore, Rt Hon Peter

  McGuire, Michael

  Short, Ms Clare (Ladywood)

  McKay, Allen (Penistone)

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

  McNamara, Kevin

  Silkin, Rt Hon J.

  McTaggart, Robert

  Skinner, Dennis

  McWilliam, John

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

  Madden, Max

  Smith, Cyril (Rochdale)

  Mallon, Seamus

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

  Marek, Dr John

  Snape, Peter

  Marshall, David (Shettleston)

  Soley, Clive

  Martin, Michael

  Spearing, Nigel

  Mason, Rt Hon Roy

  Steel, Rt Hon David

  Maxton, John

  Stewart, Rt Hon D. (W Isles)

  Maynard, Miss Joan

  Stott, Roger

  Meacher, Michael

  Strang, Gavin

  Meadowcroft, Michael

  Straw, Jack

  Michie, William

  Thomas, Dafydd (Merioneth)

  Millan, Rt Hon Bruce

  Thomas, Dr R. (Carmarthen)

  Mitchell, Austin (G't Grimsby)

  Thompson, J. (Wansbeck)

  Morris, Rt Hon A. (W'shawe)

  Thorne, Stan (Preston)

  Morris, Rt Hon J. (Aberavon)

  Torney, Tom

  Oakes, Rt Hon Gordon

  Wainwright, R.

  O'Brien, William

  Wardell, Gareth (Gower)

  O'Neill, Martin

  Wareing, Robert

  Park, George

  Weetch, Ken

  Parry, Robert

  Welsh, Michael

  Patchett, Terry

  White, James

  Pavitt, Laurie

  Wigley, Dafydd

  Pendry, Tom

  Williams, Rt Hon A.

  Pike, Peter

  Wilson, Gordon

  Powell, Raymond (Ogmore)

  Winnick, David

  Radice, Giles

  Woodall, Alec

  Randall, Stuart

  Wrigglesworth, Ian

  Raynsford, Nick

  Young, David (Bolton SE)

  Redmond, Martin

  Rees, Rt Hon M. (Leeds S)

  Tellers for the Ayes:

  Richardson, Ms Jo

  Mr. Frank Haynes and

  Roberts, Ernest (Hackney N)

  Mr. Don Dixon.

  NOES

  Adley, Robert

  Bottomley, Mrs Virginia

  Aitken, Jonathan

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

  Alexander, Richard

  Bowden, Gerald (Dulwich)

  Alison, Rt Hon Michael

  Boyson, Dr Rhodes

  Amess, David

  Braine, Rt Hon Sir Bernard

  Ancram, Michael

  Brandon-Bravo, Martin

  Arnold, Tom

  Bright, Graham

  Ashby, David

  Brinton, Tim

  Aspinwall, Jack

  Brittan, Rt Hon Leon

  Atkins, Rt Hon Sir H.

  Brooke, Hon Peter

  Atkins, Robert (South Ribble)

  Brown, M. (Brigg & Cl'thpes)

  Atkinson, David (B'm'th E)

  Browne, John

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

  Bruinvels, Peter

  Baker, Nicholas (Dorset N)

  Bryan, Sir Paul

  Baldry, Tony

  Buchanan-Smith, Rt Hon A.

  Banks, Robert (Harrogate)

  Buck, Sir Antony

  Batiste, Spencer

  Budgen, Nick

  Beaumont-Dark, Anthony

  Bulmer, Esmond

  Bellingham, Henry

  Burt, Alistair

  Bendall, Vivian

  Butcher, John

  Benyon, William

  Butler, Rt Hon Sir Adam

  Best, Keith

  Butterfill, John

  Bevan, David Gilroy

  Carlisle, John (Luton N)

  Biffen, Rt Hon John

  Carlisle, Kenneth (Lincoln)

  Biggs-Davison, Sir John

  Cash, William

  Blackburn, John

  Chalker, Mrs Lynda

  Blaker, Rt Hon Sir Peter

  Channon, Rt Hon Paul

  Bonsor, Sir Nicholas

  Chapman, Sydney

  Bottomley, Peter

  Chope, Christopher

  838

  Churchill, W. S.

  Heathcoat-Amory, David

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

  Heddle, John

  Clark, Dr Michael (Rochford)

  Henderson, Barry

  Clark, Sir W. (Croydon S)

  Heseltine, Rt Hon Michael

  Clarke, Rt Hon K. (Rushcliffe)

  Hickmet, Richard

  Cockeram, Eric

  Hicks, Robert

  Colvin, Michael

  Higgins, Rt Hon Terence L.

  Conway, Derek

  Hill, James

  Coombs, Simon

  Hind, Kenneth

  Cope, John

  Hirst, Michael

  Cormack, Patrick

  Hogg, Hon Douglas (Gr'th'm)

  Corrie, John

  Holland, Sir Philip (Gedling)

  Couchman, James

  Holt, Richard

  Critchley, Julian

  Hordern, Sir Peter

  Crouch, David

  Howard, Michael

  Currie, Mrs Edwina

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

  Dickens, Geoffrey

  Howarth, Gerald (Cannock)

  Dicks, Terry

  Howell, Rt Hon D. (G'ldford)

  Dorrell, Stephen

  Howell, Ralph (Norfolk, N)

  Douglas-Hamilton, Lord J.

  Hubbard-Miles, Peter

  Dover, Den

  Hunt, David (Wirral W)

  du Cann, Rt Hon Sir Edward

  Hunt, John (Ravensbourne)

  Dunn, Robert

  Hunter, Andrew

  Durant, Tony

  Irving, Charles

  Edwards, Rt Hon N. (P'broke)

  Jackson, Robert

  Eggar, Tim

  Jessel, Toby

  Emery, Sir Peter

  Johnson Smith, Sir Geoffrey

  Evennett, David

  Jones, Gwilym (Cardiff N)

  Eyre, Sir Reginald

  Jones, Robert (Harts W)

  Fairbairn, Nicholas

  Joseph, Rt Hon Sir Keith

  Fallon, Michael

  Kershaw, Sir Anthony

  Farr, Sir John

  Key, Robert

  Favell, Anthony

  King, Roger (B'ham N'field)

  Fenner, Dame Peggy

  Knight, Greg (Derby N)

  Finsberg, Sir Geoffrey

  Knight, Dame Jill (Edgbaston)

  Fletcher, Sir Alexander

  Knowles, Michael

  Fookes, Miss Janet

  Knox, David

  Forman, Nigel

  Lamont, Rt Hon Norman

  Forsyth, Michael (Stirling)

  Lang, Ian

  Forth, Eric

  Lawler, Geoffrey

  Fox, Sir Marcus

  Lawrence, Ivan

  Franks, Cecil

  Lawson, Rt Hon Nigel

  Fraser, Peter (Angus East)

  Lee, John (Pendle)

  Freeman, Roger

  Leigh, Edward (Gainsbor'gh)

  Fry, Peter

  Lennox-Boyd, Hon Mark

  Gale, Roger

  Lester, Jim

  Galley, Roy

  Lewis, Sir Kenneth (Stamf'd)

  Gardiner, George (Reigate)

  Lightbown, David

  Gardner, Sir Edward (Fylde)

  Lilley, Peter

  Gilmour, Rt Hon Sir Ian

  Lloyd, Sir Ian (Havant)

  Glyn, Dr Alan

  Lloyd, Peter (Fareham)

  Goodhart, Sir Philip

  Luce, Rt Hon Richard

  Goodlad, Alastair

  Lyell, Nicholas

  Gorst, John

  McCrindle, Robert

  Gow, Ian

  McCurley, Mrs Anna

  Gower, Sir Raymond

  Macfarlane, Neil

  Grant, Sir Anthony

  MacGregor, Rt Hon John

  Greenway, Harry

  MacKay, Andrew (Berkshire)

  Gregory, Conal

  MacKay, John (Argyll & Bute)

  Griffiths, Sir Eldon

  Maclean, David John

  Grist, Ian

  McLoughlin, Patrick

  Ground, Patrick

  McNair-Wilson, M. (N'bury)

  Grylls, Michael

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

  Gummer, Rt Hon John S

  McQuarrie, Albert

  Hamilton, Hon A. (Epsom)

  Madel, David

  Hamilton, Neil (Tatton)

  Major, John

  Hampson, Dr Keith

  Malins, Humfrey

  Hanley, Jeremy

  Malone, Gerald

  Hannam, John

  Maples, John

  Hargreaves, Kenneth

  Marland, Paul

  Harris, David

  Marlow, Antony

  Harvey, Robert

  Marshall, Michael (Arundel)

  Haselhurst, Alan

  Mates, Michael

  Havers, Rt Hon Sir Michael

  Mather, Sir Carol

  Hawkins, C. (High Peak)

  Maude, Hon Francis

  Hawkins, Sir Paul (N'folk SW)

  Mawhinney, Dr Brian

  Hayes, J.

  Maxwell-Hyslop, Robin

  Hayhoe, Rt Hon Sir Barney

  Mayhew, Sir Patrick

  Hayward, Robert

  Mellor, David

  Heath, Rt Hon Edward

  Merchant, Piers

  839

  Meyer, Sir Anthony

  Renton, Tim

  Miller, Hal (B'grove)

  Rhodes James, Robert

  Mills, Iain (Meriden)

  Rhys Williams, Sir Brandon

  Mills, Sir Peter (West Devon)

  Ridley, Rt Hon Nicholas

  Miscampbell, Norman

  Ridsdale, Sir Julian

  Mitchell, David (Hants NW)

  Rifkind, Rt Hon Malcolm

  Moate, Roger

  Rippon, Rt Hon Geoffrey

  Monro, Sir Hector

  Roberts, Wyn (Conwy)

  Montgomery, Sir Fergus

  Robinson, Mark (N'port W)

  Moore, Rt Hon John

  Roe, Mrs Marion

  Morris, M. (N'hampton S)

  Rossi, Sir Hugh

  Morrison, Hon C. (Devizes)

  Rost, Peter

  Morrison, Hon P. (Chester)

  Rowe, Andrew

  Moynihan, Hon C.

  Ryder, Richard

  Mudd, David

  Sackville, Hon Thomas

  Neale, Gerrard

  Sainsbury, Hon Timothy

  Nelson, Anthony

  St. John-Stevas, Rt Hon N.

  Neubert, Michael

  Sayeed, Jonathan

  Newton, Tony

  Shaw, Giles (Pudsey)

  Nicholls, Patrick

  Shaw, Sir Michael (Scarb')

  Norris, Steven

  Shelton, William (Streatham)

  Onslow, Cranley

  Shepherd, Richard (Aldridge)

  Oppenheim, Phillip

  Shersby, Michael

  Ottaway, Richard

  Silvester, Fred

  Page, Sir John (Harrow W)

  Sims, Roger

  Page, Richard (Herts SW)

  Skeet, Sir Trevor

  Parkinson, Rt Hon Cecil

  Smith, Sir Dudley (Warwick)

  Patten, J. (Oxf W & Abgdn)

  Smith, Tim (Beaconsfield)

  Pattie, Rt Hon Geoffrey

  Soames, Hon Nicholas

  Pawsey, James

  Speed, Keith

  Peacock, Mrs Elizabeth

  Speller, Tony

  Pollock, Alexander

  Spencer, Derek

  Porter, Barry

  Spicer, Jim (Dorset W)

  Portillo, Michael

  Spicer, Michael (S Worcs)

  Powell, William (Corby)

  Squire, Robin

  Powley, John

  Stanbrook, Ivor

  Prentice, Rt Hon Reg

  Stanley, Rt Hon John

  Price, Sir David

  Steen, Anthony

  Prior, Rt Hon James

  Stern, Michael

  Proctor, K. Harvey

  Stevens, Lewis (Nuneaton)

  Pym, Rt Hon Francis

  Stewart, Allan (Eastwood)

  Raffan, Keith

  Stewart, Andrew (Sherwood)

  Raison, Rt Hon Timothy

  Stewart, Ian (Hertf'dshire N)

  Rathbone, Tim

  Stokes, John

  Rees, Rt Hon Peter (Dover)

  Stradling Thomas, Sir John

  840

  Sumberg, David

  Walker, Rt Hon P. (W'cester)

  Tapsell, Sir Peter

  Waller, Gary

  Taylor, John (Solihull)

  Walters, Dennis

  Tebbit, Rt Hon Norman

  Ward, John

  Temple-Morris, Peter

  Wardle, C. (Bexhill)

  Terlezki, Stefan

  Warren, Kenneth

  Thatcher, Rt Hon Mrs M.

  Watson, John

  Thomas, Rt Hon Peter

  Watts, John

  Thompson, Donald (Calder V)

  Wells, Bowen (Hertford)

  Thompson, Patrick (N'ich N)

  Wells, Sir John (Maidstone)

  Thorne, Neil (Ilford S)

  Wheeler, John

  Thornton, Malcolm

  Whitfield, John

  Thurnham, Peter

  Whitney, Raymond

  Townend, John (Bridlington)

  Wiggin, Jerry

  Townsend, Cyril D. (B'heath)

  Wilkinson, John

  Tracey, Richard

  Wolfson, Mark

  Trippier, David

  Wood, Timothy

  Trotter, Neville

  Woodcock, Michael

  Twinn, Dr Ian

  Yeo, Tim

  van Straubenzee, Sir W.

  Young, Sir George (Acton)

  Vaughan, Sir Gerard

  Younger, Rt Hon George

  Viggers, Peter

  Waddington, Rt Hon David

  Tellers for the Noes:

  Wakeham, Rt Hon John

  Mr. Robert Boscawen and

  Waldegrave, Hon William

  Mr. Tristan Garel-Jones.

  Walker, Bill (T'side N)

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
  MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House congratulates Her Majesty's Government on the success of its economic policies which have led to six years of healthy, balanced economic growth, have brought inflation down to its lowest levels for nearly two decades, have enabled industry to become more profitable than at any time since 1964, have brought the fastest productivity growth among major European countries since 1979 and have fostered the conditions in which a million new jobs have been created throughout the country since 1983.

  Broadcasting
  10.15 pm
  The Minister of State, Home Office (Mr. David Mellor): I beg to move,
  That this House takes note of European Community Documents Nos. 8227/84 on the establishment of the common market for broadcasting, and 6739/86 on the co-ordination of certain provisions in Member States concerning the pursuit of broadcasting activities; and supports the Government's view that the proposed Council of Europe Convention on broadcasting provides the most appropriate means of ensuring the flow of television programmes across frontiers in Europe.
  Mr. Speaker: I have selected the amendment in the name of the right hon. Member for Taunton (Sir E. du Cann). I am prepared to allow a joint debate on the motion and on the amendment.
  Mr. Mellor: I am pleased that today we have the opportunity to discuss this important Community initiative on the regulation of transfrontier broadcasting. I shall be brief in my introductory remarks since the Government's view on these issues is well known and the purpose of this short debate is to elicit the views of the House.
  The Commission produced its Green Paper on broadcasting in June 1984, partly in response to earlier resolutions on international broadcasting that had been passed in the European Parliament. The Green Paper before us is a weighty document running to some 367 pages. It attempts at very great length to argue a case for Community competence in broadcasting matters and more specifically proposes a limited harmonisation of member states' law on broadcast advertising, on programmes that might be seen by children, and on copyright. There followed a lengthy period of discussion of the document in which the Commission proposals received a generally critical reaction. Certainly in this country the broadcasters, most of the advertisers, and the copyright interests were united in their opposition. Many other countries in Europe were highly sceptical.
  In May last year the Commission brought forward the fruits of the debate on the Green Paper in the form of the draft directive which is also before us. Some adjustments had been made in response to the earlier criticisms. The Commission has dropped its proposals on the right of reply and limits those on the protection of children to one very small section. The advertising section has been improved and now falls more closely in line with the sort of formulations we are used to in our IBA code.
  Mr. Robin Corbett: I apologise to the Minister for interrupting him so early in his speech, but my intervention may have some beneficial side effects. Is he aware that the Select Committee on European Legislation recommended in its fourth report of 12 December 1984 that this matter was so important that it called for an early debate? Does he accept that the Government have been a bit tardy in providing time for us to debate it? If we had had time to debate it, there could have been some input before the directive was drawn up.
  Mr. Mellor: I can assure the hon. Gentleman that in no sense do we want to exclude the House from these considerations. We took a highly sceptical view about this in line with the sentiments in the House. We pressed the
  842
  matter and as a result it is now before us in a considerably modified form, although I suspect that it will still be subject to scepticism in the House. I do not need to be inspired because I see that my hon. Friend the Member for Northampton—is it North or South?
  Mr. Tony Marlow: North.
  Mr. Mellor: I knew that I had a 50 per cent. chance of being right. My hon. Friend leans ominously forward, but I can assure him that this is one of those rare occasions on European matters when the Government Front Bench will, I suspect, be wholly ad idem with the amount of scepticism that he wants to bring to bear. We thought that this was the appropriate time to deal with the matter, and I can assure hon. Members that we want the House to make known its view.
  Sir Dudley Smith: I am interested in what my hon. Friend says. Can he say how it gells with the proposed Council of Europe convention on broadcasting and television in which he played such an important and prominent part in Vienna just a couple of months ago?
  Mr. Mellor: I am grateful to my hon. Friend, and I know the assiduousness with which he pursues his interests in the Council of Europe. The welcome agreement to which I shall come later in my speech and which was reached around a table in the Council of Europe obviates the need for Community action in almost all of the matters dilated upon in this extensive document.
  I very much welcome the consensus around the table in Vienna that the more appropriate way to deal with these matters is with the lighter hand of regulation of a Council of Europe convention rather than that of a commission which—perhaps not winning myself too many friends in Brussels—was bringing to bear on sensitive issues like broadcasting the same skills used in the manufacture of pork sausages. The copyright proposals had undergone a slight change with the introduction of a delaying mechanism for triggering the operation of the statutory licence, but otherwise the basic principles of the Green Paper remained unchanged. In addition to these changes, however, the Commission had introduced a wholly new proposal for quotas on Community programming and on works by independent producers.
  The broad object of these proposals is to harmonise member states' laws to overcome any current obstacles to transfrontier broadcasting. We, of course, wholeheartedly support the principle of free movement of radio and television programmes across frontiers. We place no obstacles in the way either of the reception in the United Kingdom or services from abroad or the transmission from the United Kingdom of services to other countries. We have practical evidence of the successful operation of that policy in the foreign television services that can now be viewed on our cable systems and in the growth of United Kingdom programme providers, such as Superchannel which starts its new service at the end of this month, and Sky-channel, which has been going for some considerable time.
  I am sure the hon. Gentleman thinks that his former employers, by whom he might with advantage continue to be employed, perhaps should have a plug from time to time, and I am sure if I do not give him a plug he will manage it himself. While we believe that some system is

  843
  needed to regulate frontier broadcasting, we do not believe that a case has been made out for the Community to provide that system in terms of draft legislation of this kind.
  Mr. Marlow: Is it my hon. Friend's view, and the view of the Government, that the Community should have competence in this issue?
  Mr. Mellor: No. I think it is our view that the Community's competence in this issue is extremely limited and should remain so.
  Mr. Michael Morris: Does that mean that my hon. Friend rejects that competence under article 155 of the treaty?
  Mr. Mellor: What my hon. Friend the Member for Northampton, North (Mr. Marlow) has begun, my hon. Friend the Member for Northampton, South (Mr. Morris) is bound to follow. The fact of the matter is that Community competence exists—I shall mention later, if at some point permitted, matters that pertain to economic and industrial aspects—but it does not relate to the broader aspects of cultural and other matters in broadcasting, which are more properly left, we believe, to other hands to regulate. It is certainly our case that transfrontier broadcasting requires some regulation of a kind akin to that in our own broadcasting Act. As I said in answer to an intervention by my hon. Friend the Member for Warwick and Leamington (Sir D. Smith), it is our firm belief that that is better provided through a Council of Europe convention which applies a somewhat lighter and even more sensitive hand to these difficult issues.
  Having, I hope, satisfied all the representatives of the town of Northampton, I turn to Crewe and Nantwich.
  Mrs. Gwyneth Dunwoody: Surely the point is that the hon. Gentleman now has no power of veto. If that is so, may we take it that, if the rest of the European Ministers decide that they are willing to go along with the content of the existing letter, people will be forced to acquiesce?
  Mr. Mellor: That brings us to a very important question: using the words so beloved of Foreign Office advisers, are we to isolate this issue? I am happy to say that we are not isolated on this issue. Indeed, the very comforting fact that emerged from the Council of Europe meeting last month in Vienna was the considerable scepticism expressed all round the table that the EC directive was not the appropriate way of dealing with the matter. I still remember clearly the speech of Herr Zimmerman, the Interior Minister for West Germany, on that point. Indeed, a commitment that we introduced into the conclusions of that meeting, calling for urgent action to be taken on a Council of Europe convention, was supported unanimously by all countries present in clear recognition that the consequence, as widely commented on in the broadcasting press, was to place much less emphasis on the EC draft. I believe that everyone around the table in Vienna, including all the members of the EC who were represented, took that decision in the clear knowledge of its implications.
  Mr. Toby Jessel: If my hon. Friend thinks that It is not appropriate to deal with the matter by means of the draft directive, would it not make sense for us to vote against it?
  Mr. Mellor: It has not come to that, but I assure my hon. Friend that we should not shrink from that. [HON. MEMBERS: "Tonight."] I should have thought that the best thing was to let matters take their course. I hope that I am making clear to the House that we are doing battle, I believe successfully, for the principle which my hon. Friend holds, that is, that the directive in its present form is not acceptable. That is very much the view of the Government. I assure my hon. Friend that we need no further encouragement in arguing that case.
  Mr. Marlow: I am trying to help my hon. Friend, as always. In view of what he has said thus far, would it not be helpful to him if the House expressed its view according to the amendment that has been put down by my right hon. Friend the Member for Taunton (Sir E. du Cann)? Would not that be power to my hon. Friend's elbow?
  Mr. Mellor: I am also, believe it or not, trying to be helpful to my hon. Friend. I think that he is so inured to unhelpful answers from the Dispatch Box on European matters that he cannot recognise a helpful answer when he gets one. I am greatly encouraged by the interest in the debate; I am even shocked as one who is much more accustomed to addressing an empty Chamber at this time of night. I am glad that my reputation has not emptied the Chamber, as it usually does.
  I am sure that the placing on the record in this debate of firm views supportive of the Government's strong line against this is the appropriate step. It would be unfortunate if the impression were given that there were differences between us on the issue when there are not. If my hon. Friend were to use those powers of analysis for which he is so famed, I should have thought that he would have seen that there was barely room to slip someone as sylphlike as the hon. Member for Bolsover (Mr. Skinner) between my hon. Friend's position and mine.
  Mr. Edward Leigh rose——
  Mr. Mellor: At some point I shall have to get on with the rest of my speech, which has been very kindly prepared for me.
  Mr. Leigh: Perhaps my hon. Friend will take the opportunity to inform the House what objection he has to the amendment.
  Mr. Mellor: We would prefer the House to take cognisance of the Government's position which is in line with the sceptical view of the House on the matter. That would be a better way of proceeding than, as it were, trying to rub the matter in further when there is no need for that. If matters were to proceed beyond that, and if it appeared that our position was less popular than we believe it to be within the wider Community, there would be ample opportunity for the House to give its opinion further. I do not know why my hon. Friend feels the need to impress a case that is already accepted by the Government.
  Mr. Austin Mitchell: Will the Minister give way?
  Mr. Mellor: Yes, if the hon. Gentleman promises not to be a pest for the rest of the evening. I am sure that that is a promise he would not lightly undertake, given it is one he would find impossible to keep.
  Mr. Mitchell: I note the Minister's expression of confidence. My question is simply whether we have a treaty veto on this matter or whether a decision can be taken by qualified majority decision.
  Mr. Mellor: It may be able to be taken in that way.
  Mr. Mitchell: In what way?
  Mr. Mellor: By a qualified majority. I pointed out in answer to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) that we have no reason to feel that our case is not compelling in the eyes of other than ourselves. We must not start from the basis of believing that we are alone in this matter. We are not. If the hon. Member for Great Grimsby (Mr. Mitchell) had been present in Vienna—that is not an invitation for him to be so on future occasions—he would have found no lack of enthusiasm for the case that we were putting.
  Indeed, we proposed an amendment to toughen up the terms of the Council of Europe conference decision to ensure that that opinion, which was much more in favour of a Council of Europe convention than a draft EC directive had the opportunity of focusing sharply on the need for such a convention, and that is what happened. That was done unanimously by the 20 countries represented around the table.
  My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) will agree that I have made it clear beyond doubt that I have every sympathy with the amendment tabled by my right hon. Friend the Member for Taunton (Sir E. du Cann). Like those who support it, we are opposed to the imposition from Brussels of quotas on European programmes and we do not believe that the treaty base proposed by the Commission is relevant to the proposals that it has made. The Council itself will finally decide the appropriate treaty base, and I believe that there is a general recognition among most member states that controversial proposals of this kind merit unanimous decisions.
  I made it clear to the hon. Member for Great Grimsby that even if one envisaged the alternative, which would be a majority view, I do not believe we are in a minority on this issue. But even assuming that, we have every reason to be confident. We shall certainly seek a treaty base on this matter which requires unanimity. That is a key part of our negotiating position. I hope that, with that firm assurance, my right hon. Friend the Member for Taunton will support the motion and will not feel compelled to press the amendment. There cannot have been many occasions when a Minister has expressed as much scepticism about an EC document as I am doing tonight.
  Having laboured that mightily in the vineyard, it would be scant reward for such pains if my right hon. Friend, who may occasionally show more perspicacity than my helpful hon. Friend the Member for Northampton, North or my hon. Friend the Member for Gainsborough and Horncastle—helpfulness is not confined to Northampton, as I have discovered—did not consider it appropriate, having registered the point, not to press it.
  I will explore a little further the reasons why we are sceptical of what the EC is saying. We believe, as I made clear to my hon. Friend the Member for Northampton, North, that some system is needed to regulate transfrontier broadcasting, but we do not believe that a case has been made out for the Community to provide that system in terms of draft legislation of this kind. There is, to begin
  846
  with, the question of Community competence on specific areas, such as the protection of children; we have serious doubts whether the Community can claim competence. That has nothing to do with our believing that children require protection. The question is whether the man in Brussels should be the knight in shining armour to purport to do that. Even on the general issue, we believe that the matter will need to be discussed in Brussels in more detail than it has been discussed so far.
  The Commission, naturally enough, approaches these issues from the point of view of a Community which is concerned primarily with economic regulation. Industrial issues are paramount in some areas of broadcasting, and community involvement is therefore, appropriate. I hope that a good broadcasting example is the recently adopted directive on transmission standards for direct broadcasting by satellite.
  However, broadcasting services in general serve cultural, social and political goals as much as economic ones. We have evidence of that in the presence on the Opposition Front bench of the hon. Member for Stoke-on-Trent, Central (Mr. Fisher) who is, at least in the opinion of the Leader of the Opposition, cultural values personified. However, it remains to be seen whether that illusion will be more widely shared once the hon. Gentleman has had a chance to settle in to his responsibilities.
  In the Government's view, the concentration in both the Green Paper and the draft directive on economic objectives presented in a narrow legalistic way fails to give proper weight to the wider cultural considerations. We fear that the draft directive in its current form will put national systems of broadcasting in a straightjacket which will ultimately create more obstacles to the free flow of television programmes than it eliminates.
  Therefore, our views on the specific proposals in the draft directive can be given in a very few words. We have serious reservations about the Commission's approach on copyright and we shall continue to press for the maintenance of the existing system of voluntary agreements freely negoiated, rather than a system which depends ultimately upon the imposition of a statutory licence. We do not believe that the proposals on programming quotas are relevant to the free flow of television programmes across frontiers, and in that respect they seem to be in the wrong directive, to put it at its kindest.
  While we recognise that there should be a special place for European programmes and for independent production in our television schedules, we see those as essentially domestic questions for each country to decide according to the prevailing circumstances within its borders. There is certainly no case for fixed quotas imposed on everyone from Brussels. The section on the protection of children, while, as I have already said, being thoroughly praiseworthy in its general motivation, raises important questions of competence which I have already mentioned and which we are not prepared to lay on one side.
  The proposals on advertising and sponsorship come closer to the system we operate in this country, but they are still too restrictive in their outlook—for example, the over-complicated article on sponsorhip. In many respects, they are far more detailed than is necessary in a framework directive of this kind. As I have said, we are back in the sausagemeat regime that I have already regretted.

  847
  Some system of common regulation is needed between states to underpin the free flow of television programmes across frontiers, but this need be little more than the establishment of general principles in relation to such matters as programe standards and advertisements that we take for granted in our domestic broadcasting set-up. It is important that any transfrontier regulation in this area is sufficiently flexible to meet the domestic needs of individual countries, and does not contain too fine a level of detail which may lead to more restriction rather than less. We believe that the Council of Europe is the most appropriate forum for regulating these matters, because its traditional approach on cultural matters is more flexible than that shown in this draft directive, and because it provides a much larger grouping of European states than is represented by the Community. Above all, it is important that we do not split Europe on these matters between EC and non-EC countries, all of which traditionally broadcast to one another.
  As my hon. Friend the Member for Warwick and Leamington reminded the House—him for his kind words—that is why, when I attended in Vienna last month the first conference that has been held of European broadcasting Ministers, I strongly supported the firm declaration, to which all the Ministers subscribed, that the Council of Europe is the most suitable institution in Europe for the eleboration and further development of a framework for transfrontier broadcasting.
  Mr. Norman Buchan: I agree with the Minister that the Council of Europe has moved forward. The problem is that the Common Market would not allow sufficient flexibility, but would impose a straitjacket. However, that is not the problem. Professor Peacock has said that satellite broadcasting cannot be controlled by regulation, so we should proceed to a free market. In other words, not even the Council of Europe can control or regulate in that sense. How is the Minister applying his mind to that crucial cultural question?
  Mr. Mellor: I am coming to my account of Vienna. If we were to establish a Council of Europe convention which reproduced in European commonly agreed law through a convention the arrangements that we have in our domestic broadcasting legislation, that would provide a control over satellite operators. In effect, they would not be operating from outside that regime, particularly if, as we would hope, that convention would be open for signature to non-EC countries, such as the United States, as it could be and, I hope, would be.
  Mr. Buchan: The trouble is that, if we were to apply all the regulatory methods of all countries involved, no television would be broadcast. Is not the problem, for example, Murdoch and Maxwell buying into satellites going up from France or Luxembourg under the control of the regulations of the transmitting country? Is not that a problem with which an overall convention could not cope?
  Mr. Mellor: With respect to the hon. Gentleman, whose interest in this matter I respect, I do not take such a pessimistic view. I certainly take the view, which was widely held around the table in Vienna, that it is no good regretting the problems that satellite broadcasting will pose. We must not be Canute-like. Satellite broadcasting will come about. The question is, under what sort of
  848
  regime? We must believe—I believe this and I hope that I am not being over-optimistic—that a regime can be established by agreement between civilised states which will regulate satellite broadcasting. I am most grateful to the hon. Gentleman and glad to have an opportunity to deal with a crucial forward planning point with which any British Government must deal in relation to inevitable developments. The question is how that inevitable development takes place.
  To return to what happened in Vienna, the council of Europe is experienced in this area and has already adopted over the past few years several recommendations which provide an appropritate measure of transfrontier regulation. I am grateful to all colleagues on both sides of the Chamber who spend a great deal of time in the Council of Europe for having broken so much ground and for establishing a common understanding of these difficulties which has made the task of Ministers easier because they can point to a large body of agreed principles which exist as a result of those efforts. I strongly commend them.
  The only matter lacking in the recommendations is binding legal force. That is why I tabled in Vienna a proposal which was adopted unanimously by the conference—that the Council of Europe should proceed rapidly to draw up a binding convention on the most crucial aspects of transfrontier broadcasting for which the existing instrument provides a useful base.
  The work of drafting the convention has already begun at official level. It is significant that the conference took place in December. The need for urgency was met by the arrangement that written submissions for the basis of the convention should be submitted by February—in other words, within two months—and officials should meet in March to try to break the ground. I hope that by the summer we shall be well advanced. As Mr. Ray Snoddy, the distinguished commentator on these matters, made clear in a recent article in "Media Week", if the EC Commission did not recognise what a coach and horses that was driving through its ambitions in this area, it was indeed blind to the significance of the decision taken in Vienna. I am not blind to the significance of that, and I hope that the House will not be either.
  Mr. Richard Ottaway: Will my hon. Friend say whether the convention deals with the question or principle of quotas which seems to have been rejected?
  Mr. Mellor: We have not yet reached that point. No one has any objection to the idea that there should be considerable European input into what will be a European service. None of us wants to be part of some sort of cultural colonialism from across the Atlantic or elsewhere. But we cannot agree to quotas being established directly by officials, for example, in the Commission who believe that this is just an extension of the regulations on the contents of some agricultural product. Matters are more complex than that. That is what we mean by the idea of the lighter hand. None of us wants to resist the development of European co-operation to protect the European heritage by ensuring that there is a large amount of European programming available on every broadcasting medium.
  I should be happy to send my hon. Friend the Member for Nottingham, North (Mr. Ottaway) a full text of the conclusions of the Vienna conference in which that form of principle was written very large.
  Mr. Corbett: All 500 pages.
  Mr. Mellor: Not quite as long as that. We did not have the resources of the Commission to produce a document that would be an effective doorstop in many hon. Members' homes for many years to come.
  If the member states of the Council of Europe can reach agreement on the content of such a convention—and the record is good in that area; we need think only of the fundamental and important conventions such as that on human rights that have become central parts of thinking in all member countries—I am confident that the Council will be able to meet all the objectives of the draft directive in securing the free flow of television programmes across frontiers without any unnecessary restrictions that a directive, if adopted, might bring in its wake.
  For that reason, the motion states the Government's view that a Council of Europe convention is the right way forward. I hope that my remarks have ensured that my right hon. Friend and his associates will accept that I need no more matches applied to fire my belly on the issue and nor do my colleagues.
  Mr. Marlow: My hon. Friend knows the details well and he will know that section 17 of the explanatory memorandum to the draft directive states:
  "For its part, the European Council approves the report's proposals"—
  I believe that that refers to the "A People's Europe" report proposal—
  "mentioning expressly those on culture including television, and instructed the Commission and the Member States `to take the necessary implementing measures'".
  To what did the Council agree? If the Council has agreed,
  has not the pass been sold already?
  Mr. Mellor: No. "A People's Europe" was a broad statement of principle which is now being used in evidence against us by a Commission bent on establishing competence in that area. That is part of the argumentation put forward, but we are not falling for it. I suggest that my hon. Friend follows that good example and does not fall for it himself. However, that in no way undermines our conviction that I have stated so often. I do not think that I make my point any stronger by repetition.
  I hope that my comments tonight will bind all of us together in the conviction that this is not the proper way forward, that an alternative and better way has been established and that the Government are working towards that with all vigour. I hope to have the support of Members on both sides of the House tonight for the Government's actions on this issue.
  10.47 pm
  Mr. Robin Corbett: I am certain that it will be understood in Brussels that the invitation that we have tonight from the Government to take note of the Community documents is a mark of understated British disdain and not of welcome. The Minister's comments underline that point. The Minister's right hon. and hon. Friends must be perplexed and astonished at the fact that the Government will not accept the amendments, although I do not want to make heavy weather of that.
  We must be clear about what we are asked to take note of tonight. The Commission is seeking to achieve, via our television screens, what politicians within the Community have not achieved and what the people of the 12 member
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  states have never been consulted about—Europeanisation. That is a horrible word. The intention seems to be that at the flick of a switch, through a system that interferes grossly with our editorial freedom, harmonisation will come about. Those parts of Europe included in the Common Market are rich and varied in their national cultural backgrounds. Television without frontiers should not mean television without national flavour. Programmes should properly respect and reflect the different and diverse cultural backgrounds and experiences of the nations within the Community. I believe that diversity, shared and different, is a strength not a weakness. The noble Lord speaking for the Home Office in the other place said:
  "what most broadcasters in this country fear—and the Government agree with them—is that the Green Paper will be the first step on a road towards centralisation of control over broadcasting which will culminate in each country's broadcasting legislation and programming policies being made from a central point in Brussels rather than in each member state."
  He went on to say that the issue was
  "whether we want our broadcasting arrangements and our broadcasting legislation in the longer term to be made in Brussels rather than in London."—[Official Report, House of Lords, 3 March 1986; Vol. 472, c. 71, 72.]
  The Independent Broadcasting Authority put the point another way when it said:
  "European co-operation in broadcasting matters, as in other cultural matters, is not bounded by the limits of the Community."
  The International Federation of Journalists, which links journalists and broadcasters in the non-Communist world, said at its conference in Elsinore that the Commission wants to
  "regulate and influence the cultural wealth of member states".
  It added that it is
  "stripping away national boundaries and imposing a cordon of the Community's own boundaries."
  The real merit of the objection of the International Federation of Journalists came when it said:
  "this cordon can be breached by outside multinational interests with no time or interest in national cultural heritages."
  In essence, the documents propose that we volunteer to an invasion of Eurosoaps, what Jeremy Isaacs, the chief executive of Channel 4, has described as "Euro-puddings". First came the wine lakes followed quickly by the beef and butter mountains, then ideas about Euro-water, Euro-bread and Euro-beaches. We are now offered the prospect of documentary mountains and soap opera lakes simply to meet some daft and rigid quota system. There is even the prospect of the French giving up the hijacking of British lorries carrying sheep and waylaying instead those stuffed with the tapes of Eastenders or Crossroads. That is what is meant by the proposal of one-third of screen time for each channel for made in EEC programmes, rising to two thirds after three years. It has nothing to do with quality or merit but simply to do with width. Show any old rubbish as long as it is made in the EEC.
  The BBC and the IBA and, to be fair, the Minister, have objected to the proposals. I share the BBC and IBA's objections on the grounds of editorial freedom. The BBC says—we should listen to it:
  "For as long as the BBC has existed the allocation of its resources have been determined according to its own priorities. Governments of all complexions have recognised that any interference would amount to editorial interference."
  The Commission proposals would mean a degree of control over what is broadcast that goes well beyond

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  anything attempted or imposed by any Government. That point was made by Sir Curtis Keeble, a BBC governor, on 15 January.
  Mr. Ottaway: Rubbish.
  Mr. Corbett: The hon. Gentleman may say rubbish. The Green Paper never even raised the question of quotas. When the broadcasting authorities and others were invited to comment that was not even on the horizon. It is the same with the idea of 5 per cent. of television budgets having to be spent with independent producers, rising to 10 per cent. after three years. That interferes with editorial freedom. That apart, there is no guarantee—perhaps no chance—that it would create any new employment outside of the existing broadcasting organisations. It will not automatically enhance the quality of broadcasting. Who are the independent producers likely to be? They will be the Murdochs, owners of vast media empires who have demonstrated their determination to milk the international airwaves for private gain. It will be an up-dated version of the late Lord Thomson's licence to print money.
  Mr. Tim Brinton: Does the hon. Gentleman agree that he is being a little unfair by quoting Murdoch as the only potential independent producer when there are many others in this country and the rest of Europe?
  Mr. Corbett: The hon. Gentleman has made a fair point, but I have a particular loathing for that media proprietor. That is my bias.
  We then come to the important matter of copyright. I welcome what the Minister had to say about the Government's serious reservations on the proposals of the Commission. I remind the Minister that, when this matter was debated in another place, Lord Glenarthur said:
  "The…purpose of…the…copyright proposals"—
  he appeared to defend them; I shall be glad if the Government have changed their position—
  "is to ensure that copyright should not be used as a means to prevent the retransmission in one member state, normally by cable, of a broadcast made from another member state." [Official Report, House of Lords, 3 March 1986; Vol. 472, c.70.]
  In other words, it was said that copyright can be breached and ignored until after a programme has been broadcast, and then the copyright owner will have to try to negotiate a fee. If that fee were not agreeable, he will then have to go to arbitration. This measure is no more or less than sheer robbery. It must be the right of every copyright holder to protect his or her own intellectual property. The International Federation of Journalists put it this way:
  "The proposal—
  that is the one concerning copyright—
  "is nothing short of blackmail. It holds a pistol to the head of a copyright holder and prevents him or her from truly free negotiations or fair terms and conditions."
  That view is backed by the BBC the IBA, and the European TUC, and it has been criticised by the European Broadcasting Union. The Association of Cinematograph Television and Allied Technicians makes the point that
  "compulsory licensing after 2 years would mean that rights holders would ultimately lose any control or ability to veto the further use of their work".
  It adds:
  "the 2-year negotiating period would of course be totally prejudiced by the certain knowledge that compulsory licensing would apply at the end of the period. The negotiating position of the copyright holder would be rendered extremely weak."
  852
  Nobody can argue with that view. The British Copyright Council has said that no evidence has been produced by the Commission to show that the present copyright rules have impeded the distribution of programmes by cable. Those rules enable the holders freely to negotiate for a fair return and to take such advantages as they can from competing applications for the use of programmes.
  Any arbitration system, however it sets off, is bound, in my view, to take the "going rate" view on the basis of the lowest common denominator. At the end of the day, it must be right that the copyright holder should retain the right to say, "No, thank you," otherwise it is akin to theft. The British Copyright Council proposes an agency akin to the Performing Right Society as a possible alternative, although I much prefer to allow the copyright holder freely to negotiate the contract.
  I agree that the Council of Europe route is the more promising, especially because a wider Europe is involved, and also because, through that body, thoughts, on which the documents are based, of "completing the internal market" and treating broadcasting as an economic activity akin to the making of cans of peas or motorcars can properly be left on one side.
  Television without frontiers is happening. We should welcome the breaking down of barriers right across the whole of Europe. Although, as we are the heaviest television watchers among 15 European nations, I wonder where people are expected to get the extra time to watch the additional channels. We must also understand that the choice of more programmes does not necessarily mean more choice. It can simply mean more of the same—more chat shows and more inane game shows. We should seek to protect quality. If anyone has any doubts about that matter, he should spend a night in a hotel room, watching the seven channels and the constant output of pap and porn. We need regulations—minimum regulations, in my view—on cross-frontier broadcasting. We need to protect against offences to taste and the rest of it as well as properly to control advertising. We need also to try to expand access to this media to those who are denied it.
  The latest satellite venture starts on 2 February, when, via cable, ITN will start to broadcast news bulletins in English to six million people in 14 countries. That should give the Minister's right hon. Friend an even bigger monitoring job to do. Others will follow. A new world of' information, entertainment and culture opens up to us. An extremely important point was made by the BBC:
  "The way to ensure the broadcasting culture of Europe is to ensure that there are strong national services able to compete for viewers with the cross-frontier services."
  If the Council of Europe document can help to ensure that as part of its regulatory proposals, we shall give the proposals, a welcome which we feel amply justified in refusing to give these EEC documents.
  11 pm
  Sir Edward du Cann: I beg to move, to leave out from "activities" to the end of the Question and o add instead thereof:
  "fully supports the views of the British Broadcasting Corporation and Independent Broadcasting Authority as being wholly opposed to the introduction of quotas of programmes based on national origin, which would be an unprecedented interference with broadcasting freedom: and insists, notwithstanding the provisions of the Single European

  853
  Act, that the issue should be determined within the European Economic Community by unanimity and not by majority vote."
  The purpose of the amendment is to endeavour to bring out more clearly the issues that a number of us regard as of substantial importance. There are two in particular. The first is maintenance of freedom of choice for British people and for people generally who live in the European Community and the second is enhancement of the principle of self-regulation, which I have learnt in other contexts is very much the in phrase today.
  I should like to express my gratitude to my hon. Friend the Minister of State for the realism that was plainly evidenced in his excellent speech. A strong note of common sense ran through it, which I am sure will be of great assistance to the House in coming to a conclusion. I have one important reservation, however, about his remarks to which I shall come later.
  A fine note was set by the hon. Member for Birmingham, Erdington (Mr. Corbett). I hope that the debate will enable my hon. Friend the Minister to note clearly the mood of the House, which I believe is typical of the country's mood, so that, when he makes our view clear in the Community, he need be in no doubt that he has full backing for the views that he expressed this evening. I would go further and say that the House has an important duty in effect to give him an instruction.
  Irrespective of one's views about the treaty of Rome, I believe that hon. Members, broadcasting authorities and the many independent commentators who have given their views on these subjects will always be right to view radical proposals for new controls and influences of any kind on broadcasting with extreme caution.
  The point at issue in the debate is whether each country's broadcasting legislation and programming policies should come from one central location—Brussels—rather than each member state. It may well be right in the long term to aim for the harmonisation of advertising practices, and so on—standardisation in matters of manufacturing practice, as the hon. Member for Erdington might say. Perhaps we would agree on that. But central control of programme content is another matter entirely. I beg to disagree with that, as, I think, would all of us.
  I shall consider these proposals seriatim. The House may applaud the proposals for the protection of children, to which my hon. Friend the Minister referred. We are all against sin in the House of Commons, more or less. The House may be indifferent to harsher controls on tobacco advertising or sponsorship, although I feel that the proposal goes a good deal further than is necessary or desirable.
  I loathe the fussiness and nannying attitude of some of those who would rule our lives. I view with horror the prospect of restrictions on liquor advertising. One should be able to make-up one's mind about whether or not one smokes or drinks. I do not wish to be told by some official in Brussels what I may or may not do.
  The House should strongly oppose the unwelcome provision on copyright. The hon. Member for Erdington referred to that in a telling passage. It is an absurd proposal and an insult to practical people in Britain.
  854
  Programmes produced in Britain are a great export success and it would be folly, if not wickedness, to put that success in jeopardy.
  The House must reject the obligation that broadcasting networks should be obliged to show 30 per cent. of European television, which would later rise to 60 per cent. This is the worst proposal of all and would be an absurd imposition. It would represent an unprecedented interference in the freedom of the BBC, the IBA and the networks to decide on programme content solely on the basis of quality. The Minister has admitted that that provision would bar us from wider exchanges; that was confirmed by the hon. Member for Erdington.
  Mr. Ottaway: The proposal by the European Commission to introduce a quota is nothing more than an attempt to conserve the European culture and to keep out American soaps. It is not an attempt to impose a restriction on the operation of the BBC or the IBA.
  Sir Edward du Cann: No, I do not accept that. I have great sympathy with the view expressed by my hon. Friend the Member for Gravesham (Mr. Brinton)—unfortunately, he has a bad throat, or he would make the analogy himself. My hon. Friend said that he was reminded of the medieval monks who preferred to go on writing and copying, and rendering the new printing presses illegal. We are faced with precisely the same situation.
  The idea that one can cherish a culture by legislation is absurd. If a culture has any strength it will speak for itself and live and thrive. To impose quotas on us and oblige us to watch second-class material is not acceptable.
  Transfrontier broadcasting is an admirable objective. However, it should take place naturally and not under central direction. The Minister was absolutely right when he said that the case for Community legislation on the subject had not been made out.
  Over the years, since the 2LO days, we have established adequate domestic controls and standards. We have introduced amended and improved practices that are generally acceptable to British people. Many countries envy our standards and our system of controls. It is wrong that any attempt should be made to jettison those controls overnight.
  Freedom of expression, freedom of choice, quality, and the satisfaction of local tastes are fragile flowers. They should be nurtured, not sacrificed to some arrogant cause of standardisation. How do we protect ourselves? Here I come to the substance of my reservations about the Minister's speech.
  The truth is that all this has become much more difficult since the passage into law of the Single European Act 1986. The House is aware that that Act provides:
  "qualified majority voting will replace unanimity in the major areas concerned with the completion of the internal market, including policies on the right to provide services in another member state."
  Those are not my words but those of the Home Secretary.
  If that is the case, it is not good enough that this House should be asked merely to take note of the position. The House has a duty to disapprove of these documents. That is why I am afraid that I am unable to accept my hon. Friend's suggestion that we should meekly and tamely connive at the Government's motion. That is why I think that it would be right to maintain our position on the amendment.
  Mr. Marlow: Would it be fair to say that the difference between my right hon. Friend and the Minister is that the Minister is saying, "We are suggesting, as a Government, a different proposal from that which is being suggested by the Community", whereas in his amendment my right hon. Friend is saying that by using the word "insists" it would be done by unanimity? If the issue were decided within the Community by majority voting but the House had decided that it must be done by unanimity, that would be a requirement on Her Majesty's Government to veto whatever had been decided by majority voting.
  Sir Edward du Cann: I am grateful to my hon. Friend. The truth is that we have been placed in an impossible position, following the passage into law of the Single European Act. The only way in which the motion on the Order Paper would be acceptable to many of us would be if we had an irrevocable undertaking from my hon. Friend tonight that under no circumstances would majority voting be allowed to rule. As I understand it, that is not what he said to us in his speech.
  Mr. Mellor rose——
  Sir Edward du Cann: If my hon. Friend wishes to intervene, that is fine.
  Mr. Mellor: I am following with great care what my right hon. Friend is saying. I should be very sorry if, with all the agreement that there is, there should appear to be any dissension between us.
  The point about the voting is that a directive has been proposed under article 57(2) and article 66. Article 57(2) provides for some degree of majority voting. However, other articles require unanimity—for example, articles 100 and 235. We think that those articles may be more appropriate for consideration of these matters. I cannot say categorically that there will not be majority voting, because I cannot say categorically what view—[Interruption.] May I deal with my right hon. Friend's point? It is late at night and it is difficult to make a coherent point with my hon. Friend the Member for Northampton, North (Mr. Marlow) sniping at me from a sedentary position.
  The point I am putting to my right hon. Friend is that we shall argue with might and main that this is such a contentious matter that it should be dealt with only by way of unanimity. I cannot wholly guarantee that the Council of Europe will accept that view. However, if my right hon. Friend and others had been present, as were my hon. Friend the Member for Warwick and Leamington (Sir D. Smith) and I, and seen the mood of those same countries and the Ministers who sit around the table at the Council of Europe in Vienna, they would have been left in no doubt that nobody wanted it, and that if the way to prevent it is to change the treaty base for it, as a way of voting it down with more enthusiasm, that should be done.
  I hope that my intervention has helped my right hon. Friend. I should be sad if there had to be a Division. I hope that my right hon. Friend, with whom I agree in everthing that he said, will not feel that he needs to divide the House just on that basis.
  Sir Edward du Cann: Obviously one wants to take extremely seriously what my hon. Friend has said. The trouble is that after a number of years in this House I have become increasingly convinced that good intentions by themselves are not enough. My hon. Friend speaks with
  856
  great sincerity—I understand precisely what he is saying and I know that he will do his very best—but the difficulty is that he is not in a position to guarantee results. That is not his fault: we are all the prisoners of the situation in which we find ourselves. I assure my hon. Friend that I do not have the least wish to make any difficulty for him of any kind. All that I and my hon. Friends want to do is to reinforce his position, so that when he goes into the negotiating chamber he will feel that he has a very strong expression of opinion behind him, which I believe is typical not only of the House but also of the country.
  Mr. Mellor: Of course I accept my right hon. Friend's sincerity and I understand the point that he is making. The difficulty over accepting his amendment is that it knocks out of the Government's motion the one positive point that is most likely to ensure that a clear majority of people, if not everybody around the table, reject the European Commission's ambitions. It knocks out the reference to the Council of Europe convention as being the proper way forward, and simply substitutes for that one objection of many to the draft directive—which may be a very objectionable one, but it is not the only objectionable feature of this—which is quotas and states that the issue should be determined by unanimity. That is something that I can assure my right hon. Friend we shall push for. But the mere fact that that was said—if the House accepted the amendment—would not necessarily strengthen our negotiating position one whit. We shall fight with all the resources at our disposal to ensure that the treaty base is one that requires unanimity.
  I should hate the House to be forced to take the reference to the Council of Europe convention out of the motion, because that is the most appropriate, positive way of ensuring that we keep on side all those whom we need to keep on side on an issue where we all agree. Some regulation is needed, but the Council of Europe has the lighter hand.
  Sir Edward du Cann: The more that my hon. Friend addresses the House the clearer his intentions become and the more we are reassured. My hon. Friends and I will consider carefully what he has said, and I renew my good wishes to him in his task.
  What is clear is that we are all agreed about objectives, and that is satisfactory. How we achieve them is another matter. I regret that the passage of the Single European Act makes life more difficult than it might otherwise have been.
  I hope that my hon. Friend and his colleagues in the Government will be successful—in alliance with our partners, or some of them, in Europe—in persuading the Commission to draw back from the perilous course that is evidenced by the documents. I hope that he will be successful in working for evolution, not uniformity by some diktat. That is the ideal prescription for making more certain hostility and lack of co-operation to the European ideal. There are alternatives. My hon. Friend has mentioned one; multinational agreements on an ad hoc basis are another, and bilateral agreements between Governments and practical people are a third. There are many ways in which we can advance.
  What the House must insist upon tonight is that the traditional independence of political control which Britain's broadcasters have always had must be

  857
  maintained. That we shall never surrender, and I am glad that my hon. Friend and the Government, supported by the Opposition, are faithful to that point.
  11.17 pm
  Mr. Clement Freud: I share the sentiment expressed by the right hon. Member for Taunton (Sir E. du Cann) in his last sentence, which reflects the views of all Members of the House.
  It is better to take note of an EEC document than to be told what to do by Brussels. We would have opposed an EEC directive for a common market for broadcasting, rather as, with respect to the Minister, we continue to be opposed to the control of broadcasting by a Ministry of the Interior. I wonder what other countries control their broadcasting via the Department of the Interior or the Home Office.
  Agreement and consensus are the only ways in which anything effective will be achieved. It is important that moves in this direction are made quickly, because technology will not wait for decisions to be made. We know to our cost what happens if we are dilatory about pursuing effective, modern technology. From 1987, 10 new channels will be broadcasting directly by satellite, which will be available to people with their own aerials. Cable and direct satellite broadcasting are inevitable, so there must be some regulatory regime for control. For that to be effective, we need the widest possible agreement, and hence the proposed Council of Europe convention, which includes 21 nations, seems an ideal forum for discussion.
  Members in all parts of the House support the view that any agreement reached should be determined within the EEC by unanimity and not by a majority vote. That must be opposed. The difficulty of achieving a unanimous vote in the EEC is well known, and too often a good initiative is thwarted by one country pursuing its own interest to the detriment of all. Since the Government have not shown themselves to be very committed to the idea of consensus—I remember the Leader of the House saying:
  "consensus, thank Heaven, will never reign here."—[Official Report, 18 July, 1985; Vol. 83, c. 480.]
  —concern must be expressed as to the possibility of agreement being reached, particularly when it is Members of the Minister's party who support the demand for unanimity.
  Some particular problems arise in trying to create a common market for broadcasting. Since the idea is to break down the barriers between countries, all of which have different laws relating to the air waves, there will have to be extensive discussions, especially in relation to copyright.
  Mrs. Gwyneth Dunwoody: Will the hon. Gentleman give way?
  Mr. Freud: No, I shall not give way. I shall be as quick as I can be so that the hon. Lady may make her own speech.
  A system of statutory licensing has been proposed under which cable operators in one member state would be able to retransmit the broadcasts made from another without prior consent from rights owners, providing that the retransmission was simultaneous and unaltered. Copyright owners would be entitled to equitable
  858
  remuneration. That proposal runs contrary to present law under which all cable retransmission of broadcasts is prohibited unless agreed by the rights owners.
  The intention to continue those arrangements was recently confirmed in the White Paper "Intellectual Property and Innovation". It appears that some compromise will have to be reached, but, more importantly, whatever is decided must be enforceable, which brings us back to the point that any decision made must be achieved by agreement rather than by directive.
  The only way truly to protect the programme makers is to ensure that copyright regulations can be effectively enforced. The Association of Independent Radio Contractors considers that the present system of royalty payments represents a disadvantage for United Kingdom independent local radio and it welcomes the European harmonisation of national legislation which would enable a fairer balance to be struck between the interests of commercial broadcasters and copyright owners.
  Consensus decisions will also be required with regard to advertising. Basically, the law of the United Kingdom at present conforms to what is being suggested in the EEC Green Paper "Television without frontiers". One notable exception is in relation to the advertising of tobacco products. The Independent Broadcasting Authority's code permits the advertising of cigar and pipe tobacco, whereas the paper provides a ban on all tobacco products.
  The right hon. Member for Taunton (Sir E. du Cann) said that he is against over-nannying. I realise that "nannying" is the popular term at the moment, but I cannot see any other way in which children of 10, 11 or 12 who are encouraged to watch television can be protected. If there is no regulation of commercials and the advertising of liquor and tobacco, infinite harm could be done and it is our duty to protect.
  It is also suggested that member states should be obliged to admit advertising-based services from other countries so long as the amount of advertising does not exceed 15 per cent. of the time. That is just one of quotas which has been put forward. Quotas interfere with broadcasting freedom. It is for that reason that the BBC and the IBA oppose them and we on these Benches also believe in freedom of the air.
  It cannot be denied that every country in the world has information and documents of which it does not want other countries to be aware, and because of the major opportunities for programme transmission across frontiers, which satellites and cable will bring, some time must be given to the consideration of a Bill of Rights aimed at freedom of information, or, perhaps more accurately, a limitation on concealments.
  We have considered some of the issues which will arise when cable and satellites come to be used, but we should also consider which types of communication network is likely to be followed. For example, direct broadcasting by satellite has immediate attraction for broadcasting supported by advertising since there are so many potential viewers. However, cable television can cater for very limited audiences with highly specialised interests. The decision rests with the Government as to which direction cable television will take and how it will be financed. What is clear is that we need a forum of broadcasters and broadcasting companies to discuss the changes. However, the bottom line must not be forgotten—the people who

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  have a television set and will not pay for a dish, a cable, a subscription or even for a licence if it becomes legal not to have one. They, too, deserve consideration.
  11.24 pm
  Sir Dudley Smith: Time is short and I shall be brief.
  I start by declaring a double interest. I am connected with the advertising industry, but, far more importantly, I am one of Parliament's delegates to the council of Europe and, as my hon. Friend the Minister has been good enough to mention, I was fortunate enough to be there during the proceedings of the Council of Ministers in Vienna just over a month ago when these matters were thrashed out.
  I do not seek to embarass the Minister, but I should say that he was one of the younger Ministers present and that he showed a maturity far in advance of his years. It was through his guidance, cajoling and persuading that the Ministers got together in a sensible way and presented us with a convention which is almost ready and which—I accept totally what the Minister says—will lead us along the right path to a solution of this difficult problem.
  I am sure that at the end of the day we will be convinced that we are taking the right course in backing the Council of Europe convention and in rejecting the EEC directive about which my right hon. Friend the Member for Taunton (Sir E. du Cann) has spoken. My right hon. Friend exhibited his usual persuasion in saying that we should vote for the amendment, but an exanimation of the resolution shows that it would be far more sensible for the House to support the Minister's resolution which merely takes note in the usual way but specifically says that we should back the Council of Europe convention, knowing that we have serious reservations about the EEC propositions.
  Like many other hon. Members, I went to the Vote Office yesterday and asked for the EEC papers on this subject. They are almost as long as Gibbon's "The Decline and Fall of the Roman Empire". I do not say that the EEC is dishonest about these matters, because I think it is trying to be helpful. The explanatory memorandum talks about advertising, about protection of children and about the other issues. Therefore, the EEC is trying to present a system which will be helpful and useful to Europe, but the beginning of the preamble to one of these documents talks about
  "the establishment of a common market in broadcasting".
  As my right hon. Friend the Member for Taunton knows, when we started out on the European course we were talking about a common market in industrial products and in materials and food and other things. We were not talking about a consensus on the regulation of broadcasting and television. There is a lot of good in this EEC directive, but, to use a colloquial expression, it is musclebound compared to the suggestions in the Council of Europe convention, and the Minister was right to say that it has a much lighter touch than the EEC proposal.
  I accept what the Minister says, that there is no guarantee that he will be able to get a convincing unanimous vote on this and may have to be satisfied with a majority vote. Having heard and observed the Ministers from the other nations in the Council of Europe, I cannot believe that those hon. Members who are closely connected with the EEC will blithely discard the Council of Europe convention and agree with the EEC one.
  860
  We need some sort of system to protect the public from pornography and bad taste. We need proper advertising standards and the right limitation on the amount of advertising that is used. I agree with my right hon. Friend the Member for Taunton that we do not want any stupid provision to the effect that every country must have its quota of programmes. If we did that, there would be a great turn off all over the world. As the hon. Member for Birmingham, Erdington (Mr. Corbett) said, we may be going into an era of hundreds or even thousands of channels and if there is a sufficiency of the right kind of programmes people will not be taken in by inferior programmes.
  We have, as a Parliament and a nation, to face the fact that television is exploding in a number of ways through satellite and cable. In America people can now pick up several hundred channels if they subscribe to cable television. Programmisation of the television media is totally different compared to two or three years ago, let alone 10 years ago. In the circumstances, we have to regulate it in the right way. We have to be prepared to tackle situations which will develop.
  I cannot see the British Parliament not reacting when things go wrong. We will react violently, and properly so. In this situation, how much better it would be to have the kind of system which my hon. Friend the Minister has proposed tonight. We should now, through our various representatives, say to the EEC, "Up with this we will not put. Please go away and rely on the Council of Europe convention". If we do that, we shall be on the right track.
  11.32 pm
  Mr. Norman Buchan: I am grateful for the opportunity to speak briefly on this subject and to follow up the points made about the amendment.
  One problem is the curious concept in the Common Market that all things can be reduced to being a service. For example, a resolution from the Committee of Culture in the Common Market said:
  "We agree with the Commission and the Court of Justice that broadcasts of any type are also services within the meaning of the EEC treaty and freedom of movement of services therefore applies."
  This curious application of economic industrial merchandising somehow equates to matters of culture and civilisation and expression in this way. It goes on:
  "Viewers and listeners in the member states are entitled to receive all broadcasts from other member states that are technically and physically receivable without restrictions on the part of domestic authorities in the form in which they are transmitted in accordance with the law of the transmitting state."
  Therefore, the regulation which we seek to apply to broadcasting receivers in this country from satellite cannot be controlled since the freedom is that of the transmitting state. If they are a bunch of rogues or hooligans, or whatever——
  Mr. Austin Mitchell: Or Murdoch.
  Mr. Buchan: Or Murdoch. Whoever they are, there is no restriction as long as it is within the law of the transmitting state. This is the problem we are facing.
  The second thing that exacerbates the situation is this curious pan-Europeanism they develop, as if somehow culture can be reduced to a pan-Europeanism, that a play can somehow express a pan-Europeanism. A play expresses a single factor of a situation, of two concrete

  861
  people in a concrete situation in a concrete mentality. Indeed, the more localised it is, the more national it is, the more regional or personalised it is, the more international or European it becomes. Tolstoy's "War and Peace" appeals to us across the borders precisely because of its Russianism, not because of its pan-Europeanism. This is the kind of culture error which we are making which is bedevilling the situation.
  This kind of unrestricted broadcasting does not become a question of freedom. The right hon. Member for Taunton (Sir E. du Cann) was quite right when he said that culture cannot be preserved by a kind of diktat, but it certainly can be destroyed by a lack of enabling power which allows that culture to be expressed and to be seen. If there is no choice, there cannot be any preservation. If we have competing channels, all of undifferentiated pattern, transatlantic, no matter whether it be beamed up from Luxembourg or France by Maxwell or Murdoch, then of course local cultures will atrophy.
  Those of us who have suffered an experimental period of watching this kind of broadcasting will know. I recommend that people watch the hours of the Sky Channel programmes on Murdoch's satellite, for example, and see what is offered—control by broadcasting. Or take American cable programming. If one watches American football, where every part is continuously interspersed with advertising, one will understand the nature of that which cannot be prevented if all is opened up in that form by the future of satellite control in this country.
  We are afraid of two things. One is that this Thatcherite monetarist Government will accept the Peacock recommendation which says that one cannot in any case control new technologies, that there is no means of controlling satellites and that the whole thing should be opened up to the highest bidder, as it were, or to those who can afford it, allied to Peter Jay, who is arguing for do-it-yourself broadcasting. That would lead to a tiny monopoly of producers in broadcasting. That would happen on the one hand and on the other there would be inability to control the law of the transmitting country.
  There has been a step forward in relation to the Council of Europe in line with a resolution that I managed to get through in Europe two or three months ago with the Federation of Socialist Parties. Those with whom I put forward the resolution were taking it to the Council of Europe and I am delighted at what happened. Otherwise, we would be open to the cultural monopoly that I have described.
  The amendment is unfortunate in some ways. I would prefer the reference to the Council of Europe to remain in the motion. The crucial point is that we must defeat the enemy that is at our gates. Therefore, we must assert to Europe a view along the lines proposed by the right hon. Member for Taunton. We must insist on unanimity and say that we will not be dicated to by the operation of the Single European Act.
  If we state that boldly tonight, there is nothing to prevent us from following up the alternative which still remains—to use the Council of Europe as far as we can rather than the Common Market. We will have asserted our position as regards the one and we can follow it up as regards the other.
  862
  I have two questions for my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett). Does he think that regulatory powers matter? He said that the regulatory powers of the Council of Europe could achieve things. I should like him to answer yes or no to that question. Secondly, can he tell me whether in any other country, either in the Common Market or the Council of Europe, broadcasting is supervised and run by the Ministry of the Interior? I await his reply.
  11.38 pm
  Mr. Tim Rathbone: My hon. Friend the Minister is right to have reservations about the draft directive. Those reservations are well founded. We should be grateful to him for that and for the leadership which he gave to the conference in Vienna on the matter.
  I underline what my hon. Friend said in his opening speech about many member states and industry bodies being against proposals for any form of directive governing broadcast advertising control. The generally accepted understanding is that those reservations remain, so it seems that there is no consensus in support of the directive. The conclusions of the member states were against a directive. The House of Lords Select Committee on the European Communities also came out against such a directive. There seems to be a built-in body of opinion against the need for such a directive.
  The major reason is that the Commission sustained its drive for harmonisation involving restrictions. If the Commission had instead stuck to its proclaimed objective of liberalisation and had gone for a directive without restrictions, those bodies of opinion might have reacted differently.
  It may prove to be outside the competence of the Commission to take the direction that it has taken, because articles 59 and 62 of the treaty prohibit all restrictions on freedom to broadcast across the frontiers of member states. Even more fundamental, perhaps, is the binding obligation of article 10 of the European Convention on Human Rights that the onus to prove the need for a directive must rest with the Commission. In that instance the Commission has to show that there is indeed a pressing social need for such a restriction. It is not enough for the Commission to have done what it has done and to have made so little advance in that direction.
  At the end of the day the bare essentials of any directive or direction should be based on three broad principles: that the reception of broadcasts from other member states must be allowed; that the law and regulation of the originating member state must be observed; and that the material must not offend against good taste, morality, decency and religious and political beliefs. Those principles—and others could be added along the lines of the Council of Europe recommendations—represent the way in which we should be moving forward in this matter.
  Radio, to which reference has been made, has been broadcast across frontiers for a long time. It does not seem to need any interference from this directive or indeed in any other direction.
  Had time permitted, I would have made other points. Time is passing and I appreciate that other hon. Members wish to speak.
  11.41 pm
  Mrs. Gwyneth Dunwoody: The Minister said that I would like this contentious measure

  863
  dealt with under Article 100. I have been long enough in this House and in the European Parliament to know that what individual Ministers and Members would like to see happen is not important. What matters is what is finally decided by the representative bodies concerned.
  I have great faith in the Minister and I believe he is sincere when he tells us, in effect, "We accept your views, but we urge you not to press this amendment because we do not want it recorded that we were not prepared to accept the recommendation in relation to the Council of Europe."
  Ministers leave their posts and even change their views. Governments can find themselves under enormous pressure when deals are stitched together between member states. Moves can come about which form part of a package concerning totally different aspects of legislation.
  We are debating a typically Commission document. On the one hand, it is detailed and contains many facts relating to member states. On the other, it represents a collection of bizarre half-thought-out, partly prejudiced views which cannot be defended and which represent a series of non sequiturs. It is a pathetic attempt to deal with the important matter of satellite broadcasting, a subject which in due course will pose this House with some difficult political and moral questions. We have not yet decided how we shall deal with those issues.
  I fear that, if the House tonight simply notes the existence of this document, we shall be told before long, "The Commons simply accepted the existence of the document. It did not express a negative view." Let us remember that we do not have the power of veto. The view of, say, the Home Office will not, in the final analysis, make all the difference. That decision will rest with the Council of Ministers.
  I hope that hon. Members will not just accept the document The right hon. Member for Taunton (Sir E. du Cann) should press the amendment, even though it contains inadequacies. I want this House to say tonight, "We are tired of accepting documents which are not intelligently thought out and which are not acceptable to
  864
  the British people." We should reject this document in a determined manner because its standard is not up to what the Commission should produce.
  11.44 pm
  Mr. Michael Morris: I support the remarks of my hon. Friends the Members for Warwick and Leamington (Sir D. Smith) and for Lewes (Mr. Rathbone). The relevant point at issue in the draft directive is that there is not free and open competition in Europe for manufacturing industry and advertising. One cannot advertise in Belgium, and there are restrictions in Holland, Germany and France. I hope that a Council of Europe convention will address that problem.
  Another important element is that of independent producers. If according to Peacock it is right to insist on 25 per cent. independent producers, we shall have to resolve the problem of how to produce European works for television.
  Finally, I advise my hon. Friend the Minister that Article 10 of the European Convention on Human Rights maintains freedom of speech and that that is a key element. When my hon. Friend addresses the European convention, I hope that he will not look upon that as being the lowest common denominator, but as something upon which we can build to ensure——
  It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 (Exempted Business).
  Question, That the amendment be made, put accordingly and negatived.
  Main Question put and agreed to.
  Resolved,
  That this House takes note of European Community Documents Nos. 8227/84 on the establishment of the common market for broadcasting, and 6739/86 on the co-ordination of certain provisions in Member States concerning the pursuit of broadcasting activities; and supports the Government's view that the proposed Council of Europe Convention on broadcasting provides the most appropriate means of ensuring the flow of television programmes across frontiers in Europe.

  Cummins Component Plant, Darlington
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
  11.47 pm
  Mr. Michael Fallon: I am grateful for the opportunity to debate the closure of the Cummins component plant at Darlington and for the interest shown in this short debate by colleagues on both sides of the House, especially by my neighbours, my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), and the hon. Member for Sedgefield (Mr. Blair) who, I hope, will be able to catch your eye, Mr. Deputy Speaker.
  The interest shown by hon. Members from both sides of the House is a reflection, partly of the importance of Cummins as a major engineering employer, not only in Darlington but on Teeside, and partly of the strength and vigour of the campaign that has been organised to try to save the plant and the skills that are associated with it. I am happy to pay tribute to the leaders of the campaign, Gerry Hunter, Ron Manning and their friends in the Amalgamated Union of Engineering Workers and the Association of Scientific, Technical and Managerial Staffs.
  The campaign began with a march and a rally in Darlington and continued with a lobby at Westminster and now, as we pledged, we have brought the campaign right to the heart of Government and Parliament in the House of Commons. It has been a united, non-political, campaign, but it has also been a campaign which has grown in strength and confidence as it has proceeded since the original decision was taken. The case against the closure of the plant has also grown in strength as we have proceeded and the House should consider the reasons for that.
  Cummins came to Darlington as part of the commitment made by the Government of the day and by the town, that the skills involved in engineering should not be lost when the North road shops in Darlington closed, but should be retained, enhanced, developed and passed on. After 20 years we should be failing the next generation, and our children, if we set that commitment aside lightly and allowed the plant to close. If we do not fight to retain the skills of that plant, we shall betray the trust that was placed in us 20 years ago.
  The Cummins company is an integral part of Darlington and is involved, not simply in traditional engineering skills, but in the evolution of those skills and their adaption to meet the challenge of new technology, and in youth training. I know of no other Darlington employer which has made such as significant and important contribution to the youth training scheme than Cummins.
  That commitment is recognised by everyone. The trade unions have consistently over the years, much against their will, accepted a huge number of redundancies, restructuring and the introduction of new technology. Management, too, has accepted the challenge of modernisation and faced up to the introduction of new engines. The Government have recognised that commitment and since 1979 invested in the two plants on behalf of taxpayers some £2,931,000 in regional development grant and selective assistance.
  Since the decision to close the component plant was announced, the same degree of support and commitment has been shown by the trade unions, not simply in
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  organising the campaign that has led to this debate or in playing a leading role in the fight to save the plant on both sides of the Atlantic but by being ready at any time to discuss with management ways in which the redundancies threatened by the closure may be avoided.
  That commitment has been shown, too, by management. Since its initial decision, which we still do not accept, management has put together a team to find alternative uses for the skills and to explore the possibilities of attracting further fresh investment into that plant. Darlington borough council has shown commitment by appointing immediately a consultant to help in that work and by its readiness immediately to open discussions with the company. Everybody has shown commitment in the fight to save this particular plant. Therefore, it is only fair to ask my hon. Friend the Minister: what are the Government doing to assist in this campaign?
  The Minister agreed immediately last month to receive a delegation at short notice, and I am grateful to him for that. As a result, he has taken up both with Leyland Trucks and with the Ministry of Defence the possibility of further orders that lie within the power of those two bodies. He has also made clear the willingness of the Department to assist in marketing the site, should the closure go ahead.
  However, I must say to my hon. Friend that the first two commitments will not be recognised, except in the medium term. We are grateful for the assistance from Leyland Trucks and the Ministry of Defence, but that will help the company only in the medium term. As for the final commitment to help market the site, I do not accept, and I am sure that the trade unions and council do not accept, that we are anywhere near ready to say, "Yes, this plant will close."
  What am I asking my hon. Friend tonight? I am suggesting three ways in which his Department could assist our campaign. First, the Department could use its good offices to become involved in the work of finding alternative uses for this major, modern and prestigious plant. The Department has a trucks and components division and a north-east regional office. If the company could put together a team to find alternative work, if the borough council could install a consultant, and if the trade unions were willing to help in the process, could not the Department second a man into the team to decide whether alternative uses can be found for the investment to which the taxpayer has already contributed heavily?
  Secondly, will my hon. Friend consider an initiative from his Department on the question of component sourcing? It seems that too many United Kingdom manufacturers too easily rely on bases for components traditionally or historically sourced elsewhere in Europe or overseas. Parts of Astra cars come from Australia, Japan, Germany, Denmark and elsewhere.
  Many manufacturers have pledged to reduce their overseas content. My hon. Friend's Department, perhaps acting through some of the indirect agencies that the Department use to promote British quality and design, could play a leading role in encouraging a United Kingdom initiative in reducing the amount of components that motor and truck manufacturers have to import from overseas and the rest of Europe.
  Finally, I want my hon. Friend to consider whether there should be more flexibility in the regional aid package available in Darlington. I know that the regional director has been in contact with Darlington borough council and

  867
  assured it that aid is available under section 7 of the Industry Act 1972 for an intermediate area. Far too often the type of project that section 7 aid might attract has been steered by the regional office to other parts of the northeast, to the development areas with their higher rates of unemployment further north or east and not to Darlington which has only slightly lower unemployment and where the traditional skills that the projects require are located and liable to be redundant.
  I do not expect an immediate reply from my hon. Friend on those three points. However, I expect the Department to play as positive and as constructive a role as it can in the important campaign.
  Mr. Deputy Speaker (Mr. Harold Walker): I believe that the hon. Member for Sedgefield (Mr. Blair) and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) have the consent of both the hon. Member for Darlington (Mr. Fallon) and the Minister to speak.
  11.57 pm
  Mr. Tony Blair: I welcome the opportunity to participate briefly in the debate. I thank the hon. Member for Darlington (Mr. Fallon) for allowing me to take part.
  Earlier we debated the importance of manufacturing industry and, although the remedies from each side of the house might have differed widely, we all recognise the necessity and importance of manufacturing. Cummins is perhaps one of the best examples of manufacturing in the north-east of England. I do not think that any one would dispute the excellence of the plant or the product that Cummins produces. Indeed, I have been told that injectors produced by the Cummins component plant cost $90 less to produce than in the United States and a fuel pump costs $120 less. That is a good record on any basis.
  Two factors have stood out in the Cummins campaign. First, it has had the support not just of the work force but of the town of Darlington, the local authority and the Members of Parliament with interests in the Cummins plant. Many of my constituents work at the plant and many of my neighbouring colleagues have constituents who work there. That cross-party support has been one of the most prominent features of the campaign.
  The work force has been as assiduous in trying to save its jobs as it was in attempting to build the success of the company that it still serves. If anything showed the force with which the trade union side put its case in this matter, it was the offer that it made when it visited the United States to see the Cummins management. It took the trouble to go to the United States and what was put to management was a pretty impressive list of offers or inducements. The union side offered to end any demarcation problems that were causing difficulties for management, it offered to negotiate a wage freeze over a period of time giving up the productivity and annual increases to which the work force would otherwise be entitled, and it said that it would assist in any way the management wanted, either in diversification or in the introduction of new technology. That was an impressive performance by the Cummins work force, but it was representative of its attitude throughout the entire matter.
  The company has said that it would put forward a team consisting of unions, management and consultants to see whether there is any way in which the company can diversify in order to save jobs. The company has also said
  868
  that it would be prepared to go into any joint venture at the components plant in Darlington with any company that wishes to use the plant and introduce its own machinery or products.
  That is not everything that we or the Cummins work force want, but there is that opportunity. There are two specific ways in which the Government can help. First—I hope that the Minister can give us some assurance—the Government must not stand in the way of any package or diversification or new products for the Cummins plant. Indeed, I hope that they will actively assist any such package, either through section 7 of the Industry Act 1972 or in any other way. Secondly, the Goverment should take a hands on, not a hands off, approach to intervention and put themselves in the position of assisting the team that will be set up. I hope that the Government will become involved in the process. There is nothing that smacks of ideology in that; it is simply a common sense approach. In a sense, I ask the Government to do what myself, the hon. Member for Darlington and other hon. Members are doing to protect the rights and interests of our constituents. I ask the Government to do that to protect not just our constituents but the country, because it is the country and our manufacturing industry that will suffer if the proposals go through in their present form.
  I hope that the Government can respond in a positive way. They will have the support of both sides of the House if they do so.
  12.3 am
  Mr. Leon Brittan: As about 100 of my constituents work at Cummins, I welcome the opportunity of speaking in the debate. I should like to pay tribute to the campaign that has been waged by the Cummins work force and to the leadership given by my hon. Friend the Member for Darlington (Mr. Fallon), who has been resourceful, imaginative and energetic, along with hon. Members of different political persuasions, in doing everything possible to deal with a difficult problem. I pay tribute to the work force for its flexibility, determination and readiness to make the changes that may be necessary to save jobs at Cummins.
  The points that have been made by my hon. Friend the Member for Darlington and the hon. Member for Sedgefield (Mr. Blair) should be given serious and sympathetic consideration. I realise that when rationalisation appears to be necessary and desirable for a company, the role of a Government and the possibilities before them are not infinite. The Government cannot just wave a wand. However, that does not mean that they are totally without power, influence or, more particularly, the ability to assist in coming up with a package that others are more than ready to work on.
  My hon. Friend the Member for Darlington requested that serious consideration be given to using the good offices of the Department of Trade and Industry to work out alternative uses and as flexible as possible an approach to a regional aid package. That is a reasonable request. I know from my own period in the Department that that request will not fall on deaf ears.
  I had occasion to deal with sourcing when I was at the Department. By persuasion, I was able to achieve a measure of success in the motor industry. The suggestion made by my hon. Friend the Member for Darlington that that effort should be mobilised and organised in a more formal but just as flexible way is worth considering. I hope

  869
  that, in the various ways, the Department will show its readiness to help those who are more than ready to help themselves and who, I hope, will be considered to have been fully and admirably assisted by their Members of Parliament.
  12.5 am
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I congratulate my hon. Friend the Member for Darlington (Mr. Fallon) on securing this Adjournment debate to discuss a matter that, obviously, is of the highest importance to his constituents. I also thank my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) and the hon. Member for Sedgefield (Mr. Blair) for their contributions to the debate.
  All hon. Members will agree that manufacturing is of the highest importance as the key wealth creator within our economy. I appreciate, as I was reminded by the hon. Member for Sedgefield, that this is not the occasion for a general debate on macro-economic policies or, indeed, on how various approaches have been put forward to champion the interests and provide a better environment for the manufacturing sector within our economy.
  I should like to record my agreement with the proposition that manufacturing is exceedingly important. It is the key wealth creator within our economy. In that context, I listened with great sympathy to the arguments deployed by the three speakers in the debate. I fully understand and appreciate the concern of my hon. Friend the Member for Darlington about the decision of the Cummins engine company to close its components plant in his constituency by the end of 1987 or early 1988. As my hon. Friend knows, my right hon. Friend the Minister of State received a delegation from Darlington on 10 November last year, and that was within a fortnight of the company announcing its decision on 28 October. I am sure that my hon. Friend will agree that this rapid response clearly demonstrates the Government's concern for his constituents who are currently employed at the components plant and for all who are affected by the company's decision. As we were reminded earlier, this issue has occupied the attention of Darlington and, indeed, many hon. Members.
  As my hon. Friend will be well aware, the various parties have brought the decision of the company to the direct attention of my right hon. Friend the Prime Minister. I can say with confidence that the Government fully appreciate the anxieties that that decision has brought to those affected by it. Therefore, I am grateful for this opportunity to make known to the House the Government's equal concern and to make clear their position on the company's decision.
  Of course, it has been the consistent policy of the Government to create a climate in which industry can prosper. I do not intend to refer in detail to the various policies, but our policies recognize the importance of manufacturing. We accept that a healthy manufacturing sector can provide the basis for an expansion of employment in a local economy and, indeed, in the economy as a whole. As a result, we now have a much more favourable climate in which industry can operate.
  The House will, of course, appreciate that it is for industry to operate in that climate and not the
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  Government. The Government cannot seek to intervene in the commercial matters of private companies and it is not for the Government to intervene in the decision of the Cummins engine company to close its component plant at Darlington. As painful as it may be, this is a decision which only the company can properly take in the light of its commercial judgment.
  Similarly, it would be quite inappropriate for the Department to intervene in such commercial matters as the marketing of Cummins engines. It is for potential customers to judge for themselves the engines they want in their vehicles, and that applies to the Ministry of Defence as much as to any other potential customers. It is the customer who makes the demand for a particular engine and not necessarily the supplier of the vehicle. Certainly, it is not a matter for the Government generally.
  My hon. Friend has correctly referred to the Government assistance which Cummins has received in respect of the components plant. I must explain that, in respect of the components factory, an offer of selective assistance under section 7 of the Industry Act 1972 was made in October 1980. That Act made no provision, for example, for the recovery of any assistance paid under it and it would not be appropriate to seek to recover that assistance should the components plant in fact close. Similarly, the plant has been the beneficiary of regional development grants, but again it would not be appropriate to seek to recover those grants.
  In announcing its decision on 28 October last year, the Cummins engine company said that it had for several years been pursuing a vigorous policy of reducing costs, enhancing quality and improving performance to ensure that the company maintained its position as a leading international diesel manufacturer. It explained that the present industry overcapacity and the additional impact of new manufacturing technology had led it to take action to reduce further its manufacturing floor space and thus its costs. This had led to the decisions to close the company's components plant and its parts distribution facilities in north America and also the components plant at Darlington by the end of 1987 or early 1988.
  These arguments by a company with substantial manufacturing capacity in this country reflect the need for industry to be internationally competitive in terms of price, quality and performance. Only in this way can companies of any sort hope to secure their long-term future. The Government are also confident that the company, which said that minimising the number of people who will be affected by the closure of the components plant at Darlington will be a prime consideration, will indeed bear in mind the concerns of those people.
  I have referred to the fact that Cummins is closing two of its facilities in north America and I would remind the House that the company is an important United Kingdom employer. It employs some 2,500 people in this country—in Darlington, Daventry and Shotts, near Glasgow—and, as I have already said, is committed to minimising the number of people who will be affected by the closure of the plant. Certainly, I am satisfied that there has been no question of targeting the redundancies on the United Kingdom. Some 1,500 people are losing their jobs with the company in America.
  I turn to future grants and to future proposals that may come from the company. Grants are available in the Darlington assisted area on a selective basis to help

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  companies undertaking manufacturing or service projects which create or safeguard employment and also have an identifiable regional and national benefit. Some projects may also qualify for assistance from European funds. The Government, in designating Darlington an assisted area, have recognised the special circumstances of the area, and the selective assistance available provides an incentive for companies to consider Darlington in preference to other non-assisted areas.
  My hon. Friend knows that my hon. Friend the Minister of State, following his meeting with the delegation from Darlington, asked the Department's north-east regional office to work with Cummins and all those concerned with the promotion of Darlington and the region generally to make sure the attractions of the modern components factory, should it close, are well known to interested parties. Subsequently, the regional director and his staff have kept in close touch with the Cummins management at Darlington and the borough council. The Department will certainly continue to offer all the help and advice it can.
  I can also inform the House that my officials have been in touch with Cummins today to discuss further the company's position. I understand that Cummins has established an internal committee that includes management and union representatives, advised by an outside consultant nominated by the Darlington borough council, with the aim of seeking alternative work for the components plant or the area, in an endeavour to minimise any redundancies which may be declared.
  I also understand that the company is not planning an immediate closure but an orderly phasing out of its work at the components plant. Of course, it must be recognised that in its need to maintain competitiveness the company must act in accordance with its commercial judgment and it would be wrong for me to suggest that the company should delay closure of the plant if its present efforts to find alternative work for it fail.
  A number of questions have been raised and I am sure that hon. Members would expect, at least, a preliminary
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  response. My hon. Friend the Member for Darlington raised three points. He asked me to consider the question of secondment, to consider an initiative on component sourcing, and to consider the flexibility of the regional aid package. I shall consider his observations most carefully and I am sure that my hon. Friend will understand why, after full consideration of his questions, I should like to respond to him in a letter. I am grateful to him for giving advance notice of those issues in this Adjournment debate. I will endeavour to give him a comprehensive response.
  The hon. Member for Sedgefield asked whether, if the Cummins position were to change, the DTI would refrain from standing in the way of any diversification plans that might be brought forward by Cummins. I trust I have stated his point correctly. I understand that he wants to know whether we would adopt a positive attitude to entertaining applications under section 7 of the 1972 Act. If the company's position were to change and it came forward with projects that complied with the guidelines, well known to the company, we would consider our position. In advance of those circumstances, there is no preliminary negative attitude from the Department.
  My right hon. and learned Friend the Member for Richmond, Yorks asked us to be vigilant in considering alternative uses for what is a magnificent site. I have not visited the plant, but on two recent visits to Teesside I have seen it and I can vouch for the fact that it is a magnificent facility.
  I have faced similar problems in my constituency, and I can understand why the hon. Member for Sedgefield, my right hon. and learned Friend the Member for Richmond, Yorks and my hon. Friend the Member for Darlington wish, beyond all else, that that magnificent facility should continue to be staffed by the existing work force. I have explained that for the Government—
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at seventeen minutes past Twelve o'clock.