Commons Sitting of 16 July 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    BRITISH WATERWAYS BILL
    Read the Third time, and passed.

    FELIXSTOWE DOCK AND RAILWAY BILL (By Order)
    Order for consideration, as amended, read.
    To be considered upon Thursday 23 July at Seven o'clock.

    LONDON REGIONAL TRANSPORT BILL (By Order)
    Order for consideration, as amended, read.
    To be considered upon Thursday 23 July.

    UNIVERSITY COLLEGE LONDON BILL [Lords] (By Order)
    Orders for Second Reading read.
    To be read a Second time upon Thursday 23 July.

    WESTERN ISLES ISLANDS COUNCIL (VATERSAY CAUSEWAY) ORDER CONFIRMATION BILL
    Read the Third time, and passed.

  PRISON DISTURBANCES
  Resolved.
  That an humble Address be presented to Her Majesty, That she will he graciously pleased to give directions that there be laid before this House a Return of the Report of an Inquiry by Her Majesty's Chief Inspector of Prisons into Prison Disturbances.—[Mr. Hurd.]

Oral Answers to Questions
  HOME DEPARTMENT

    Birmingham Pub Bombings
    Mr. Mullinasked the Secretary of State for the Home Department if he will call for a report from the chief
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    constable of the west midlands as to why west midlands police officers have been taking statements regarding the case of the Birmingham pub bombings when this inquiry has been placed in the hands of the Devon and Cornwall police; and if he will make a statement.
    The Secretary of State for the Home Department (Mr. Douglas Hurd): I am assured by the chief constable of Devon and Cornwall that all inquiries and interviews carried out in the course of the investigation of the allegations by the former west midlands police officer Thomas Clarke have been conducted by officers of his force.
    I understand from the Director of Public Prosecutions that officers of the West Midlands police have conducted certain inquiries on his behalf in connection with the appeal by the six men convicted of the bombings. These inquiries have no connection with those on which the chief constable of Devon and Cornwall will be reporting to me.
    Mr. Mullin: Is the Home Secretary aware that there is grave disquiet about the way in which the inquiry is being conducted? I include in that the inquiry that is being conducted by the Devon and Cornwall police. Does he agree that the West Midlands police force is probably the force least qualified in the whole country to be involved in the investigations? Does he further agree that it is the job of the Court of Appeal, not the police, to determine whether witnesses are telling the truth?
    Mr. Hurd: I shall not enter on that ground in a case that has been referred by me to the Court of Appeal. I have seen nothing that in any way justifies the allegations and insinuations that the hon. Gentleman has made.
    Dame Jill Knight: Will my right hon. Friend bear in mind the convention of the House, that Members of Parliament mind their own constituency business and do not intervene in matters relating to other hon. Members' constituencies? Will he also recognise that the Birmingham pub bombings have a great deal more relevance to the west midlands than to Sunderland, South?
    Mr. Hurd: That is not a matter for me. However, I must say that I have been very disturbed by press reports of what the hon. Member for Sunderland, South (Mr. Mullin) is reported to have said in Dublin, where he described these people as political prisoners and cast doubts on the whole process of reference to the Court of Appeal. He misled those who were listening to him in Ireland, and brought no credit upon himself.
    Mr. Alton: In retrospect, does the Home Secretary agree that if the impartiality of the case could have been safeguarded by the Police Complaints Authority there would have been greater public confidence? Does he further agree that if the Maguire and Guildford cases had been referred to the Court of Appeal the extradition agreements would now have been agreed and implemented by the Republic of Ireland?
    Mr. Hurd: I cannot allow that sort of consideration to influence my decision whether to refer matters to the Court of Appeal. I decided in January to refer the Birmingham case to the Court of Appeal for reasons that I stated to the House at the time. At the same time, I explained why I had not decided to refer the Guildford, Woolwich and Maguire cases. Since then, there has been a suggestion of fresh matter in the case of the Guildford bombings. There was a television programme, and we are

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    trying to get hold of what Mrs. Fox, who appeared on the programme, is supposed to have said. There has been some difficulty in getting hold of her statement. That has slowed things down and made it more difficult for me to consider whether there is any new matter of substance that will justify referral of the Guildford case.

    Sentencing Policy
    Mr. Hindasked the Secretary of State for the Home Department what representations he has received seeking powers to grant jurisdiction to the Court of Appeal to increase sentences; and if he will make a statement.
    Mr. Hurd: I have not received any representations so far this Session, but, as I said during the debate on the Loyal Address, the Government are considering how to strengthen clause 38, as it now is, of the Criminal Justice Bill.
    Mr. Hind: Will my right hon. Friend bear in mind that there is a great deal of disquiet among the general public about the fact that convicted criminals receiving unnecessarily lenient sentences are benefiting from a miscarriage of justice in the courts? Will he look carefully at the advice being given by the Lord Chief Justice, Lord Lane, and also by Lord Denning? Their recommendation is to allow the prosecution to have the right of appeal and also to give the Court of Appeal the right to increase sentences that it regards as being manifestly lenient. That would settle many of the public feelings of disquiet.
    Mr. Hurd: I have read Lord Lane's speech and discussed it with him. I bear in mind the points that my hon. Friend made when the previous Bill was before the House, and the points that were made in another place. We are taking all those into account and considering, as I made clear in my speech on the Loyal Address, how to strengthen clause 38 of the present Bill.
    Mr. Andrew MacKay: Does my right hon. Friend agree that most people in Britain would say that it is eminently fair that if somebody can appeal against a sentence that appears to be harsh, the prosecution should equally be allowed to appeal against an over-lenient sentence?
    Mr. Hurd: Yes, I think that many people would regard that as fair. It is quite a revolution in what the prosecution in this country has traditionally been about. I have never regarded this as a matter of principle. I think that there have been substantial practical difficulties about putting this new responsibiity on the Crown Prosecution Service within months of its birth. We have discussed this point in the House. I ask my hon. Friend to be patient and to wait and see how we strengthen clause 38 to meet the kind of considerations and anxieties that he has expressed.
    Ms. Clare Short: Does the Home Secretary agree that as the British prison system is dreadfully overcrowded with large numbers of prisoners who have never been convicted of any offence of violence of any kind, the way to solve the problem is not overwhelmingly to increase light sentences for serious offences, but to reduce sentences for many of the most trivial offences? Will he tell the House what action he proposes to take about that?
    Mr. Hurd: I do not think that the hon. Lady is correct, because she poses one problem in dismissing another. The problem of public anxiety to which my hon. Friends have been drawing attention is very real. The actual level of
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    sentencing for crimes such as rape and robbery has been steadily increasing, but public confidence in the system is shaped by the occasional sentence that appears to be wayward in a lenient direction. I do not think that there is an enormous number of such sentences, but perhaps they attract disproportionate publicity. However, there is no doubt about the shock to confidence in the system when they occur.
    Mr. Lawrence: Will my right hon. Friend take account of the substantial strength of feeling in the legal profession against giving the Court of Appeal the right to increase sentences? That strength of feeling arises not only because of the resource implications, but because of the alterations in the principles which have traditionally always been applied in our law to stop an accused person being subjected to double jeopardy.
    Mr. Hurd: As I said earlier, and as my hon. and learned Friend's intervention again illustrates, this would amount to a considerable revolution in what the prosecution in this country has always been about. I ask my hon. and learned Friend and other hon. Members to wait a little. I hope that when we come forward with our proposal on this matter he will find it reasonable.
    Mr. Hattersley: The Home Secretary referred to sentences that were wayward in the direction of leniency. Does he regard the provisions of the Criminal Justice Bill as being appropriate for sentencing for insider dealing on the stock exchange?
    Mr. Hurd: I welcome the right hon. Gentleman back to his old pastures. I hope that our dealings across the Floor of the House will be reasonable and constructive. The right hon. Gentleman has imported a question from his last portfolio, which is a little unfair. He will be aware that it is only under this Government that insider dealing has been made an offence.

    Late Licences and Amusement Arcades
    Mrs. Mahonasked the Secretary of State for the Home Department what discussions he has had with chief constables about the effect on the maintenance of law and order of (a) the number of late licenses granted and (b) the number of amusement arcades operating.
    The Parliamentary Under-Secretary of State for the Home Department (Mr. Douglas Hogg): Discussions about amusement arcades were held with officers of the Metropolitan police in November of last year. We have recently asked the Association of Chief Police Officers for information on its experience of amusement arcades as part of our review of the adequacy of the law. The Department is working with the police and others on a number of initiatives to reduce problems associated with licensed premises generally.
    Mrs. Mahon: Does the Minister agree that there appears to be a correlation between the increased granting of late-night licences and violence on the street? Does he further agree that amusement arcades are good only for profiteers? They reflect the values of our society and lead to truancy and increased child gambling, which is a phenomenon that is to be abhorred. Will the Minister give local authorities more control over the granting of licences for amusement arcades?
    Mr. Hogg: As to amusement arcades, my right hon. Friend the Home Secretary has anticipated the concern of

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    the hon. Lady. She will recall that on 6 May my right hon. Friend announced a research programme designed to determine the extent of the use of arcades by young persons and whether that use is addictive and results in criminal or anti-social activity. When we have received the results of that research we will be in a better position to judge whether it is necessary or desirable to legislate.
    Dr. Hampson: Does my hon. Friend agree that a related temptation for the younger age group is the increasing availability of lethal weapons? I have a constituent whose 13-year-old son had posted to his school a horrendous knife with a 10-in blade. The young people who are faced with these temptations are buying these weapons at low prices. This must be a contributory factor to the increasing violence and damage that is being carried out by this age group.
    Mr. Hogg: My hon. Friend has raised a serious point, about which Ministers are extremely concerned. We should like to come to the House with proposals as soon as we reasonably can.
    Miss Lestor: Is the hon. Gentleman aware that one or two organisations, particularly the Spectrum Children's Trust, have already done some work on what is happening in amusement arcades. That shows that a growing number of children are playing truant from school in order to participate in these activities. Gambling is addictive among young people and many are in moral danger as the hours of opening increase. When the hon. Gentleman receives the results of the research, I hope that he will report quickly and look at those two aspects of the problem.
    Mr. Hogg: I am aware that that view is held by many reasonably-minded people. That is exactly why the programme of research has been commissioned. When we have received the report we will be in a better position to judge whether we should legislate. I am against the concept of a nanny state, and I do not contemplate legislation being introduced unless I consider it to be desirable.

    Crime Statistics
    Mr. Patnickasked the Secretary of State for the Home Department what figures he has available which allow a comparison to be made between the levels of serious violent crime in England and Wales, France and Germany.
    The Minister of State, Home Office (Mr. John Patten): International crime statistics are published periodically by Interpol. As my right hon. Friend said on 30 June, the latest figures show that there were fewer than two homicides per 100,000 population in England and Wales in 1984. The figures for France and West Germany were twice as high.
    Mr. Patnick: I thank my hon. Friend for that information. I do not wish to sound complacent, but it proves that it is contrary to the widely-held belief. Can my hon. Friend comment on the figures for petty crime, such as car thefts, break-ins and similar crimes, and, if so, will he elaborate?
    Mr. Patten: My hon. Friend is right to say that the vast majority of crimes that inflate crime figures in this country are eminently avoidable. For example, 25 per cent. of
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    indictable crime in this country is theft of or from cars, and about 20 per cent. of that takes place when cars are left unlocked.
    Mr. Duffy: Is the Minister aware that in Sheffield, parts of which the hon. Member for Sheffield, Hallam (Mr. Patnick) and I represent, city centre pubs have been operating a system of early warning for the past five years in an attempt to stem the increase in violence? In spite of that, pub landlords and managers now face a dramatic increase in assaults. How will the Minister respond to the call of the vice president of the local Licensed Victuallers Association for harsher penalties?
    Mr. Patten: I understand that it is a problem for inner-city pubs. I heard the vice president of the local Licensed Victuallers Association, to whom the hon. Gentleman referred, on the "Today" programme recently making that very point. It is an inner-city problem and it is best dealt with largely by prevention and warning.
    Mr. Nicholas Bennett: Has my hon. Friend any comparisons on statistics for street crimes between this country and France and Germany, especially in view of the new crime that appears to be gaining prevalence in south London, called steaming, where gangs of 30 of more attack people on buses and in shops and rob everybody in sight?
    Mr. Patten: I do not have the figures on street crime at my fingertips because the lock on my Red Box jammed and it was only with the help of the policeman behind the Chair and a screwdriver that I was able to open it for 2.30 pm. I shall write to my hon. Friend with those details. I know that one of the main aims of the Metropolitan police force is to stamp out as vigorously as possible those forms of violent crime, and the courts have available an equally vigorous range of penalties to punish those who are convicted.
    Mr. Corbett: I welcome the Minister to his new job. Will he confirm that in the matter of non-violent crime England and Wales are somewhere near the top of the international league? For example, does he know that there is a burglary every 34 seconds and an act of theft or of handling stolen goods every 16 seconds? What is he going to do about that?
    Mr. Patten: I must begin by reciprocating the welcome. I am delighted to congratulate the hon. Gentleman on his important post. I had not read about it. I hope that we have the same—[Interruption.] The hon. Gentleman is indicating that it may be only temporary.
    It is undoubtedly the case that the majority of crime in this country lends itself not to police detection hut to public prevention. Indeed, about 20 per cent. of all burglaries take place in houses which have unlocked doors or unfastened windows.
    Mr. Favell: Is it not high time that we introduced legislation to prevent the sale of knives to under 18-yearolds? Does my hon. Friend recall that at one time there was great concern about the sale and use of flick-knives? That was abolished with great success. We cannot sell cigarettes to under 16-year-olds, we cannot sell liquor to under 18-year-olds, so why should they be able to buy knives?
    Mr. Patten: I appreciate my hon. Friend's strong concern, which I know is shared on both sides of the House. It is something that my right hon. Friend the Secretary of State is considering at the moment.

    Public Places (Safety)
    Mr. Canavanasked the Secretary of State for the Home Department whether he has any plans to review the operation of existing legislation regarding safety at sports grounds and other public places; and if he will make a statement.
    Mr. Douglas Hogg: Parts II, III and IV of the Fire Safety and Safety of Places of Sport Act 1987, which received Royal Assent on 15 May, amend the existing legislation for spectator safety at sports grounds and the licensing legislation for indoor premises. There are no plans for a further review.
    Mr. Canavan: Is the Minister able to reply to the submissions that have been sent to the Home Office by myself and others about the need for a public safety information Bill in view of the considered opinion of various experienced people and organisations that tragedies such as the Bradford football fire and the Herald of Free Enterprise disaster might have been avoided if the public had a statutory right of access to information on matters of public safety or the lack of it?
    Mr. Hogg: I have not yet seen the letter written by the hon. Gentleman. The Government are committed to improving safety standards, and the Act, to which I have already referred, greatly improves the standards of safety that the public are entitled to expect at sports grounds. Under that Act, local authorities have greatly increased powers to inspect and control. As the hon. Gentleman will know, a whole range of stands have now been brought within control, whereas previously they were not.
    Mr. Marlow: Would not sports grounds and other public places be somewhat safer if the Government would consider introducing a modern version of the stocks and pillories for football hooligans and other types of vandals who make life hell in our inner cities?
    Mr. Hogg: That is the sort of humorous suggestion that I have learnt to expect from my hon. Friend.

    Crime Statistics
    Mr. Hardyasked the Secretary of State for the Home Department how many notifiable offences were committed during the last month for which figures are available; and what increase this represents compared with the position 10 years earlier.
    Mr. John Patten: There were 951,000 notifiable offences recorded by the police in the first quarter of 1987. The number in the first quarter of 1977 was 614,500. This represents an average annual increase of 4·5 per cent.
    Mr. Hardy: Does the Minister agree that those very serious figures do not represent the full picture? Does he accept that an increasing number of crimes are not reported which 10 years ago would have been reported? As the Home Office is given to establishing research programmes for a variety of activities, will the Minister institute a research inquiry into the incidence of non-reporting of offences that the police should certainly know about?
    Mr. Patten: The Home Office is doing that all the time. With respect, the hon. Gentleman is wrong. The incidence of reported crime has been rising, not falling. Through insurance, consultation with the police and better
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    prevention, we are undoubtedly helping the situation. The hon. Gentleman is held in great respect in the House and in the Labour movement. If he would talk to Labour local authorities which publish material such as "Police Watch" in Manchester and "Policing London" in the metropolitan area which do such damage to public confidence in the police, he would help a great deal more.
    Mr. Wheeler: Does my hon. Friend agree that opportunist crime has grown exactly in line with the growth in the availability of goods, money and property to steal? That is 96 per cent. of the crime problem. Does he also agree that there is, indeed, under-reporting, that crime will not be prevented by police patrols on the street, but that it will be stopped by the public working with the police, local authorities and other agencies to prevent it?
    Mr. Patten: My hon. Friend is absolutely right about the facts and figures. He is also right that so much crime is preventable, especially small-scale burglaries. As he is a London Member, I put it to him that many London local authorities, rather than having nuclear-free or anti-police zones, should try to set up crime prevention zones.
    Mr. Chris Smith: In the light of the alarmingly increased figures that the Minister has given, even for reported crime, what real commitment do the Government have to improving crime prevention and what real resources do they intend to put into local authorities to enable them to improve street lighting to make neighbourhoods and estates safer and to carry out the real work of crime prevention that the Government have so far neglected?
    Mr. Patten: Alas and alack, many London Labour-controlled authorities are the last places where we would consider putting extra resources for work of this kind. They spend the resources that they have on publishing periodicals such as "Policing London" and seek to damage police and public relations. Since the Government came to power, neighbourhood watch schemes in England and Wales have increased by 35,000. We also have crime prevention panels. The Government are committed to crime prevention.
    Sir Bernard Braine: In view of the known connection between alcohol abuse and the rising tide of crime, what steps are being taken to reduce the huge increase in illegal under-age drinking in public houses?
    Mr. Patten: With respect, there is no clear evidence of the connection that my right hon. Friend suggests. Nevertheless, there is clear evidence of problems of alcohol abuse. My Department and the Department of Health and Social Security are looking into this all the time.
    Mr. Hattersley: As the Minister is clearly anxious to make this into a political issue, and as the Government refuse to accept that the increased crime rate is the product of unemployment and deprivation, to what does he attribute the rise in crime in the past eight years, which has, been far faster than anywhere else in the Western world.
    Mr. Patten: Crime has been rising all over Western Europe for the past 30 years. The rate of growth in this country is considerably less than in France, for example, and very much less than in other countries, such as Spain. One has only to consider a couple of randomly chosen periods. Between 1974 and 1979 violent crime was about 49 per cent. Between 1979 and 1986 it was only 32 per cent.

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    The measures taken by the Government are beginning to work successfully on some elements of the increase in crime.
    Mr. Alton: Given, as the Minister has said, that burglaries and break-ins form the largest category of crime and are certainly what the public are most worried about, does he agree that what is needed is not merely the extension of neighbourhood watch schemes, but more policemen on the beat? What is being done to study the relationship between drug abuse among many young people and the number of burglaries and break-ins undertaken by people who steal to feed their addiction?
    Mr. Patten: The police are constantly looking at that connection, just as there are more and more police on the beat taking their important share of preventive work in society. The police, however many there were, could never possibly attempt to prevent all crime. It requires public cooperation and co-operation from everyone who wishes to see crime rates reduced.

    Child Abuse
    Mr. Greg Knightasked the Secretary of State for the Home Department what action has been taken by his Department to prevent child abuse and to improve the chances of the prosecution and conviction of those guilty of this crime.
    Mr. Hurd: We have been running a "Stranger Danger" campaign for several years, and await the advice of an independent working group on further publicity measures against child sex abuse. A group of experts is preparing draft guidance to the police on the investigation of these offences. The Criminal Justice Bill would permit children's evidence to be given at the Crown court by live video link. I have asked for comment on whether video recordings should be more readily admissible in evidence.
    Mr. Knight: Does my right hon. Friend agree that whenever there is an allegation of child abuse the police should be able to obtain a medical report on the child concerned so that they can decide whether to prosecute? Does he further agree that any attempt to prevent the police from so doing is to be deplored? Furthermore, is there not a clear case for substantially increasing the penalties available to the courts in cases of child neglect and for tightening the parole conditions on those convicted of child abuse?
    Mr. Hurd: My hon. Friend is right on the first point. This would clearly fall within the scope of the inquiry which my hon. Friend the Minister for Health announced last week. There was a real problem in Cleveland on this point, which I have discussed with the chief constable. I believe that the disagreement about the local guidelines there has now been sorted out. My hon. Friend is right on the second point. One of the changes that we propose to introduce in the new Criminal Justice Bill is to increase from two years to 10 the maximum term of imprisonment for neglect of a child. Many cases involve more serious charges with more serious penalties, but even where it is only a question of neglect, we believe that the maximum should be increased.
    Mr. Madden: Does the Home Secretary have any information about High Court injunctions issued against the parents of children who are alleged to be victims of
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    abuse, forbidding parents from communicating with anyone, including lawyers and doctors, about the circumstances of their case? Will he make urgent inquiries into this matter, and does he agree that if such injunctions have been issued they are wholly unacceptable?
    Mr. Hurd: I do not think that this is a matter strictly for me, but if the hon. Gentleman would like to point my inquiries in a particular direction, that is if he will give me particulars of what he has heard, I shall ensure that the matter is properly investigated.
    Sir John Biggs-Davison: While public concern is fully justified, does my right hon. Friend know whether, or have the impression that, there is more of this than there was in the past?
    Mr. Hurd: It is hard to say and any impression must be subjective. The number of reported cases has obviously increased sharply, but, equally obviously, as society becomes more receptive to these stories, the proportion of abuses reported is likely to increase. It is difficult to go beyond that.
    Ms. Clare Short: Is the Home Secretary aware that when a child who has been sexually abused in its family is then removed from the family it causes the child more distress? A better alternative would be for a power to exist which requires the abusing male to be removed from the family. In his review of child law, will he look into this possibility, which already exists in many states in the United States of America?
    Mr. Hurd: I shall certainly ensure that those who are looking into this aspect of the law take that suggestion into account.
    Mr. Dickens: Has my right hon. Friend taken on board the fact that the nation is extremely angry about the reported rise in child abuse? Does he agree that Parliament has made adequate sentencing provisions and that our judges are doing a sloppy job in some cases? May I ask him to be cautious about the advice that he receives from the Lord Chief Justice when he shapes the Criminal Justice Bill, because that man has not distinguished himself recently in some of his judgments?
    Mr. Speaker: Order. The hon. Gentleman must not criticise a judge in this manner.
    Mr. Dickens: My criticism was of his judgment, not of the man himself.
    Mr. Speaker: Order. That is not good enough.
    Mr. Dickens: Do you wish me to give the House the reason why I said what I did, Mr. Speaker?
    Mr. Speaker: Order. The hon. Gentleman should not waste time. Will he please withdraw his criticism of that judge?
    Mr. Dickens: Yes, I withdraw the statement.
    Mr. Hurd: May I deal with the less controversial part of my hon. Friend's question? I think that he is being a little too timid. I do not think that Parliament has completed its job in this regard, and that is why we propose to increase the maximum penalty for neglect.
    Mr. Kirkwood: If the Home Secretary is really seeking a framework and apparatus to prevent child sex abuse in future, will he, in the course of his continuing child care

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    review, look very carefully at the model in Scotland? The children's panel there allows all the statutory authorities to come together in casework conferences, which really do prevent problems from reaching a stage at which children are sexually abused.
    Mr. Hurd: I am sure that the inquiry will take that into account.

    Sound and Television Broadcasting
    Mr. Galeasked the Secretary of State for the Home Department what plans he has for the future financing of sound and television broadcasting, of direct broadcasting by satellite and of cable television in, or received by, the United Kingdom; and if he will make a statement.
    The Minister of State, Home Office (Mr. Tim Renton): We accept the judgment of the Peacock committee that the BBC should not be financed through advertising and that for the time being the licence fee should remain the principal source of income. Both cable and direct broadcasting by satellite are able to draw on advertising and subscription revenue. We shall consider whether subscription may have a larger part to play in the light of comments on our consultants' report published last week. We shall consider the future of sound broadcasting in the light of responses to our Green Paper.
    Mr. Gale: May I congratulate my hon. Friend on the assumption of his new responsibilities for broadcasting?
    If subscription payment for broadcast television is to be a realistic possibility, does my hon. Friend agree that that will involve modified television sets? Will his Department therefore take the necessary steps as soon as possible to ensure that all television sets sold in this country after 1990 carry an encription unit?
    Mr. Renton: I thank my hon. Friend for his kind remarks. I fully understand his enthusiasm for subscription, but I think that it would be right now for us to await the comments on the lengthy independent consultants' report, which we have just published, and which goes into the technical and economic feasibility of subscription.
    My hon. Friend will, I am sure, take comfort from the fact that British Satellite Broadcasting is this very afternoon signing contracts with the IBA for three satellite channels. I think that the whole House will want to wish the company every success in this exciting new venture. It has already announced that one of the possibilities that it will be looking into is designing home receivers to pave the way for pay-as-you-view television.
    Mr. Cryer: Will the Minister assure the House that any changes in financing will not be used for further attacks by the Government on the BBC? In considering financing, will he give the House an assurance that he will seek to remove the anomalies whereby pensioners in warden-serviced accommodation receive free television licences, but other pensioners do not? The House seeks a common low-cost television licence for all pensioners, who deserve at least that advantage from the Government, as they receive no others.
    Mr. Renton: I do not believe that there is any politician in the House who does not think at times that he is the subject of unfair attacks by one broadcasting channel or another. We have looked into the question of concessionary television licences, and we have expanded
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    them to include the mentally handicapped and the disabled. We took these steps to improve the system that was introduced by the last Labour Government. At the moment, we see no way of improving it further.

    Police and Criminal Evidence Act
    Mr. John Townendasked the Secretary of State for the Home Department if he will give an estimate of the additional man hours required to deal with the extra paperwork and administration resulting from the Police and Criminal Evidence Act; and if he will estimate the effect on the number of policemen on the beat.
    Mr. Hurd: The first estimate cannot be given because we do not know how much time the police spent on record-keeping before the Act came into force. In many cases where the Act imposes a statutory requirement the police were already keeping records in order to avoid arguments and get convictions. In other cases, new recording requirements act as necessary safeguards on the exercise of additional police powers. How many police officers are available for beat patrolling in any area at a particular time obviously depends on many factors and no one could estimate reliably the effect of any one of them.
    Mr. Townend: I thank my right hon. Friend for his reply. At a meeting with local Members of Parliament the chief constable of Humberside said that the requirement to take a verbatim record of all statements was taking up a considerable amount of additional time, that it was putting pressure on police manpower and that it was also making it more difficult to get at the truth, because the cross-questioning of suspects became slower and more tedious, those who were prone to lie had more time to think about what they were saying and therefore it was more diffcult to catch them out.
    Mr. Hurd: I know of that point, but it is also a fact that in London and Greater Manchester the police forces had already moved to the taking of something like contemporaneous notes, because they had found that, unless they did that, what went on in a police station was afterwards challenged and they were not securing convictions. That was the reasoning that lay behind that provision in the Act. Tape recording is the answer, and as we introduce it steadily throughout the country, as we are doing, it will solve that problem.
    Sir Eldon Griffiths: As my right hon. Friend's officials have been unable to provide him with any estimates, why does he not examine the report of Her Majesty's Chief Inspector of Constabulary? His estimate is that 2,400 man years and £45 million of additional expenditure were required to do the training for the introduction of the Police and Criminal Evidence Act and that there has been a significant reduction in arrests and clear-ups, which the Chief Inspector of Constabulary thinks must be connected with the Police and Criminal Evidence Act. I support the Police and Criminal Evidence Act, but when he considers police manpower I hope that my right hon. Friend will take into account the problems that this legislation has created.
    Mr. Hurd: Of course I have read the report of Her Majesty's Chief Inspector. It showed that there was a considerable once-for-all training burden on the police. In some rural areas, the need for custody sergeants produces a demand for manpower that I regard as legitimate. I do

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    not accept that record-keeping in police stations is unnecessary. My hon. Friend will have noticed with pleasure that the clear-up rate after the dip last year has begun to improve. It was 5 per cent. up in the first quarter of this year, compared with the first quarter of last year.
    Mr. Corbett: As the Home Secretary does not know how much extra work the Police and Criminal Evidence Act has produced, will he undertake to make inquiries of the police to find out? Does he not recall the Opposition warning predicting that, instead of setting out the responsibilities of the citizen and the powers of the police, the Act would turn into no more than a bureaucratic nightmare?
    Mr. Hurd: I do not know how the hon. Gentleman can say that when, day after day and night after night, we faced detailed Opposition amendments to increase the paperwork, to increase the bureaucracy and to load on to the police burdens which their representatives and we decided were quite unreasonable. The general election has given the hon. Gentleman amnesia.

    Police (Pensions)
    Mr. Sternasked the Secretary of State for the Home Department if he has any plans to improve the pensions of police widows in cases where such pensions are already in payment.
    Mr. Douglas Hogg: In common with all state and public service pensions, police widows' pensions were increased by 2·1 per cent. from 6 April; a further cost of living increase will be due next April.
    Mr. Stern: May I gently remind my hon. Friend of the police claim that reserved widows' pensions could not be met because my hon. Friend was fearful of setting a precedent by increasing a pension that was already in payment? I draw his attention to the fact that such increases are now becoming increasingly common in the commercial sector. I hope that he will look again at this matter from the point of view that the public service should not lag behind what is becoming increasingly good practice elsewhere.
    Mr. Hogg: I am afraid that I cannot encourage my hon. Friend. My right hon. Friend the Home Secretary was very sympathetic, but I am afraid that it was not possible to agree increases of the kind that were suggested. There were essentially two reasons for that. First, to do so would breach a long-standing convention that public sector pensions should not be enhanced retrospectively. Secondly, because there were other groups in comparable situations, the cost of making the concession would be very great indeed.

    Data Protection Act
    Mr. Kirkwoodasked the Secretary of State for the Home Department when he expects to produce the regulations necessary to give effect to the Data Protection Act; and if he will make a statement.
    Mr. Renton: We intend to lay the necessary orders immediately Parliament returns after the summer recess.
    Mr. Kirkwood: Does the Minister not accept that that leaves a very short time for the people who are expected to implement these regulations in November, when the
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    Data Protection Act 1984 provisions take effect? Is he aware that the chairman of the British Medical Association consultants' committee is saying that it might cost as much as £30 for an access fee for people to get access to their medical records? Will he assure the House that the fee levels set by the regulations will not prohibit people from having access to their records because of financial constraints?
    Mr. Renton: I do not agree with the hon. Gentleman's first contention. The orders will be laid around about 20 October and there will be plenty of time for them to be debated in the House before they come into force on 11 November. With regard to the hon. Gentleman's question about the fee, my right hon. Friend the Home Secretary told the hon. Member for Leyton (Mr. Cohen) in a written answer on 1 July that we would be announcing the level of the fee very shortly.

  PRIME MINISTER

    Engagements
    Mr. Franksasked the Prime Minister if she will list her official engagements for Thursday 16 July.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today, before departing for Washington this evening.
    Mr. Franks: May I draw the Prime Minister's attention to the latest unemployment figures released today. which show that for the 12th consecutive month the number of people unemployed is dropping? Is it not the case that in relation to the north-west, which shows the second largest drop, in a free and open economy at last the north is showing what it is capable of doing?
    The Prime Minister: Yes, I join my hon. Friend in welcoming that latest reduction in unemployment. which is the 12th successive reduction. The north-west is one of the areas that are reducing the level of unemployment fastest. The north-west is also doing very well under this Government's policies of faster growth, privatisation arid Trident, which is being built in my hon. Friend's constituency. It is also benefiting from an excellent new hospital in Furness. The north-west is doing very well.
    Mr. Kinnock: The Prime Minister said that she would not support any proposals to impose VAT on food, gas or electricity. Why can she not bring herself to give exactly the same precise undertaking on children's clothing and children's shoes?
    The Prime Minister: I made it very clear during the election precisely what undertakings I would give. I also made it very clear that although there were certain people in the House, particularly right hon. and hon. Members on the Opposition Benches who wish to constrain the Chancellor of the Exchequer, it is not part of my duty to constrain him in his annual Budget. That takes place only once a year, unlike what happened under the previous Labour Government, when Budgets took place frequently.
    Mr. Kinnock: I am sorry, but on the subject of children's clothing and shoes the Prime Minister was anything but clear during the general election. Why does

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    she not say now, in exactly the precise terms that she has used when referring to other items, that she would not have such a proposal coming before the House? Or would she, like the Paymaster General, suggest that such proposals would be vetoed? That is precisely what the Paymaster General said this morning.
    The Prime Minister: I have already answered the right hon. Gentleman. He will go on raising scares and we will be able to point out how, on a day when the unemployment figures were down, he tried to raise another scare. [Interruption.] Of course he did.
    With regard to the veto, I think the right hon. Gentleman is referring to proposals that have come forward through the European Commission. They are not out in detail, but, as he knows, partly due to our very vigorous fight on the Single European Act, any tax changes can be made only by a unanimous vote. Not only would this Government vote against Lord Cockfield's proposal, but a number of our European partners would do so as well.
    Mr. Kinnock: The problem is the move to impose VAT on what are currently zero rated items of considerable importance to the family budget. Does the right hon. Lady agree with the words of the Paymaster General that the Government would
    "in fact veto VAT on food, fuel, children's clothing and shoes"
    Yes or no?
    The Prime Minister: My hon. Friend the Paymaster General specifically confirmed what I said during the general election campaign, and that was his precise purpose. I am well aware of the words that he used. I am amazed that the right hon. Gentleman does not welcome the fall in unemployment.
    Sir Ian Lloyd: My right hon. Friend's chief scientific advisers will doubtless have drawn her attention to the immense significance of the facts reported recently by our embassy in Tokyo, that the Japanese are marketing a I megabit semiconductor, are about to market a 4 megabit semi conductor, are designing a 16 megabit semiconductor and are reaching out to 64. As the issue has now moved into the public domain with the publication in the United States of the defence science task force report on semiconductor dependency, will my right hon. Friend seek to place this issue on the agenda for her discussions with the President of the United States so that the joint response in the West—the Alvey programme and American efforts—can be co-ordinated?
    The Prime Minister: I must confess to my hon. Friend that I do not think that that issue will be at the top of my agenda for this visit to the United States, which will be a short one. Other matters will be at the top. My hon. Friend is well aware of the substantial research and development budget that is paid for by the taxpayer, and I know that he is anxious to encourage more research and development expenditure from the private sector.
    Mr. Cohenasked the Prime Minister if she will list her official engagements for Thursday 16 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Cohen: Will the Prime Minister reconsider the introduction of a poll tax? Is she aware that in my consituency two adults will pay £1 a week more if it is
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    introduced, that three adults will pay £8 a week more, that four adults will pay £15 a week more and that a single pensioner on supplementary benefit will have to find £1·50 a week more from his pension? For these people and millions of others is it not so much a poll tax as a pole axe?
    The Prime Minister: The majority of widows, single people and single parents will pay a good deal less under a community charge. There will be an 80 per cent. rebate and an addition to supplementary benefit to help people pay. Those who will suffer most are those who are suffering most now under the rating system in areas where there are high-spending Labour councils, or those who are living in the London area.

    York
    Mr. Gregoryasked the Prime Minister when she next intends to make an official visit to York.
    The Prime Minister: I have at present no plans to do so.
    Mr. Gregory: While the citizens of York will be disappointed that my right hon. Friend has not yet decided on a date for a return visit, may I ask her to comment on the possibility of further profit-related pay, bearing in mind that in York and the rest of the country about 21,000 companies have decided already to obtain information from the Inland Revenue on how they can implement profit-related pay?
    The Prime Minister: I believe that the innovations of my right hon. Friend the Chancellor of the Exchequer in the Finance Bill have been widely welcomed. As my hon. Friend has said, many companies are making inquiries about profit-related pay, realising that their work people could benefit substantially if they introduced the system. I hope that advantage will be taken of it.
    Mr. Nellist rose——
    Mr. Speaker: Does the supplementary question of the hon. Member for Coventry, South-East (Mr. Nellist) relate to York?
    Mr. Nellist: Yes, Mr. Speaker. Had the Prime Minister been making a trip to York, would she have taken the opportunity to explain to low-paid workers there and in other cities how it is that she has now withdrawn her opposition to a 20 per cent. rise in hon. Members' salaries that will take them from £370 a week to £450, while she maintains her opposition to the claim of hundreds of thousands of low-paid Government workers whose average take-home pay is only £3 a week more than the rise that she is prepared to accept for Members of Parliament?
    The Prime Minister: The hon. Gentleman does not seem to be getting universal support from all those who heard his question.
    Mr. David Shaw: As I returned from the United States last weekend I was wondering whether my right hon. Friend——
    Mr. Speaker: Order. Did the hon. Gentleman return via York?

    Engagements
    Mr. Andrew F. Bennettasked the Prime Minister if she will list her official engagements for Thursday 16 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Bennett: Will the Prime Minister confirm that some families on supplementary benefit will be worse off as a result of the introduction of the poll tax, which replaces rates and water charges?
    The Prime Minister: Because the amount that will be added to supplementary benefit or family income support is an average amount, some will be worse off and some will he considerably better off. That is inevitable in an average—some worse, some better.
    Sir John Farr: Will my right hon. Friend accept the congratulations of the House on the splendid unemployment figures announced today—[Interruption.]—which have already been referred to? However, will she also consult her colleagues as to the ways in which job creation can be improved in our manufacturing industries? New jobs are very important, but we also want to make a big impact in creating more new jobs in manufacturing industry.
    The Prime Minister: I am grateful for my hon. Friend's remarks. Most of the new jobs are coming from economic growth, thanks to the policies of my right hon. Friend the Chancellor of the Exchequer. They are proving extremely good. Manufacturing industry is highly competitive. Its productivity is going up and investment is good. We get more jobs in manufacturing and in small businesses only by turning out goods at prices and with designs that people will buy, and by having highly competitive and efficient industries. Our policies are producing that.
    Rev. Martin Smyth: Has the Prime Minister had time to consider the reply given by the Leader of the House to my hon. Friend the Member for Upper Bann (Mr. McCusker) last Thursday? If so, could she make a statement and, particularly, could she confirm that there is forensic evidence to suggest that the same weapon has been used, allegedly, in Loyalist and Republican paramilitary terrorism?
    The Prime Minister: I do not think that it is for me to say anything about that kind of evidence. It is not within my responsibility.
    Mr. Higgins: Does my right hon. Friend agree that the VAT structure, introduced when we abolished purchase tax and selective employment tax with a single positive rate and zero rating for essential items is better than anything else in Europe, and that if we are to harmonise at all it should he on our basis? As I steered the original legislation through the House, with some advice at official level from a Mr. Cockfield, does my right hon. Friend agree with me that the abolition of zero rating would not be acceptable to the House?
    The Prime Minister: We have made that clear. We must be able to determine our own structure of VAT. A number of other countries also take the view that they must be free
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    to determine their own structure, and they are just as much against the proposal as we are. The possibility of this going through is negligible.
    Mr. Redmondasked the Prime Minister if she will list her official engagements for Thursday 16 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Redman: Will the Prime Minister explain why families who look after elderly parents, thus saving the state money, in line with the Victorian values that the Prime Minister supports, should be penalised by the poll tax?
    The Prime Minister: As the hon. Member is aware, the poorest will be protected—[Interruption.] Oh, yes. The poorest will be protected by an 80 per cent. rebate and by an addition to supplementary benefit to enable them to pay the remaining 20 per cent. We believe that rates are levied on far too narrow a base. They are a grossly unfair tax. We believe that the services that are provided by local authorities are provided on a personal basis and that all people, save the poorest, should make a contribution to them. Most people accept that.
    Mr. Stanbrookasked the Prime Minister if she will list her official engagements for Thursday 16 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Stanbrook: Although we should retain local control over the rates of VAT and, indeed, on whether something should be VAT rated at all, does my right hon. Friend agree that the ultimate objective of the EEC Commission—the free internal market—is highly desirable and was probably the big prize that we expected to gain when we joined the Common Market?
    The Prime Minister: Yes, the completion of the internal market is extremely important. There is a great deal to do in standardising and getting safety regulations across the Common Market with things such as television, electrical goods and services, which would genuinely enable us to get a full and complete internal market. We have never accepted the view that we need approximation of taxation to complete the internal market and we do not accept it now.
    Mr. Steel: Does the Prime Minister recall the statement in the Government White Paper on the privatisation of British Airways, where the Government's objective was said to be the creation of a multi-choice system of airlines? Does that not sound a bit hollow in the light of today's takeover?
    The Prime Minister: As the right hon. Gentleman will be aware, there is a private notice question on the matter later, which will be answered by my right hon. and learned Friend the Chancellor of the Duchy of Lancaster.

British Airways/British Caledonian (Merger)
3.31 pm
Mr. Tony Blair (by private notice) asked the Chancellor of the Duchy of Lancaster what advice he has received from the Director General of Fair Trading regarding a reference to the Monopolies and Mergers Commission of the proposed merger of British Airways and British Caledonian Airways.
The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): None, Sir. The offer was announced only this morning. The Director General of Fair Trading will advise my right hon. and noble Friend the Secretary of State on the question of a reference to the Monopolies and Mergers Commission as soon as reasonably practicable.
Mr. Blair: Will the right hon. and learned Gentleman confirm that the proposed merger unquestionably satisfies the criteria for investigation by the commission and that he can impose the time limit that he wants? Is he aware that the first the unions knew of this merger was hearing about it on their car radios this morning on their way to a meeting called late last night? What guarantees will he give on job losses in this industry and the other industries that depend upon it?
Most important of all, what has happened to the Government's policy of efficiency through competition? Is it not right that, in 1984, the Civil Aviation Authority specifically called for a multi-airline industry and warned that
"otherwise this country might willy nilly find itself with one privately owned but less than efficient monolith at the end of the day"?
Is he also aware that, in their response to that, the Government specifically agreed with the CAA and said that there must be a multi-airline industry? Is he further aware that, as late as April this year, the Secretary of State for Transport said that the Government were committed
"to a sound and competitive multi-airline industry"?
Is it not a conspicuous irony that after years of public ownership, when merger was resisted and competition promoted, privatisation should within months lead to merger embraced and competition stifled? What will be the protection for consumers in this private monopoly? Is it not the case that, as with British Telecom, faced with a choice between private profit and the public's rights as consumers, the Government choose private profit every time?
Mr. Clarke: None of that follows from the present position or from my answer to the hon. Gentleman's question. The legal position is that the Director General of Fair Trading has a duty to advise my right hon. and noble Friend the Secretary of State whether this matter should be referred to the Monopolies and Mergers Commission. That is the strict position and we must wait for that advice. It would be improper for me at this stage, before we have that advice, to give my opinion as to whether it satisfies the criteria for a reference. We must wait and see.
I am sure that the unions, in common with the rest of the public, heard about this proposed offer this morning. The correct steps for the trade unions or anyone else
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interested is to make representations to the director general as quickly as possible, who will, as quickly as possible, give his reaction to them. He will then give his opinion and advice to my right hon. and noble Friend the Secretary of State for Trade and Industry. Something to which the director general will obviously address himself is the effect of this proposed merger upon the competitive position in the airline industry. That is one of the matters upon which we now await his opinion. As the law provides, we must wait for that opinion.
I believe that the hon. Member is getting very hot under the collar and jumping the gun. We will have the advice of the director general as soon as he can reasonably provide it. Then my right hon. and noble Friend will decide whether to refer this offer to the Monopolies and Mergers Commission.
Mr. Nicholas Soames: Will my right hon. and learned Friend take it from me that I believe that a decision to refer this offer would be a mistake and against the interests of British aviation? However, will he assure me that, whatever decisions are taken, they are taken speedily so that the many thousands of my constituents who work not only for British Caledonian but for British Airways may take advantage of the splendid opportunity that this merger represents?
Mr. Clarke: No decisions will be taken by the Government until we have the advice of the Director General of Fair Trading. My hon. Friend's submission is the type of submission that should now be made to the director general so that he can give his advice to the Secretary of State as quickly as possible and as quickly as practicable in this rather complex case.
Mr. David Steel: How on earth can the Minister square what he has said with the 1984 Government White Paper? The hon. Member for Sedgefield (Mr. Blair) quoted part of that White Paper, but the full quotation reads that the Government's objective was
"to encourage a sound and competitive multi-airline industry with a variety of airlines of different characteristics"
Surely the proposed merger is inconsistent with that statement. Indeed, that statement was repeated in the prospectus for the British Airways privatisation.
Mr. Clarke: It was a sound policy in 1984 and it may be that—[Interruption]—and it may be a sound policy now. The fact is that an offer has been made by British Airways upon which we have taken no decisions and have given no reaction. It is being assumed that a decision has been taken about whether or not to refer this merger. That is not so. That decision cannot be taken by the Secretary of State until he has the advice of the Director General of Fair Trading. Therefore, all that is happening is that hon. Members are beginning to ask hypothetical questions about events which may or may not arise when my right hon. and noble Friend is in a position to make a decision.
Mr. Michael Grylls: If the Government have to consider this case later on, will my right hon. and learned Friend bear in mind that British Airways is not all that large in international terms? It has to compete with sizeable airlines overseas, many of which are much bigger than British Airways. Although we want to see as much competition as possible in Britain, probably on the domestic routes, an airline must be large to compete

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overseas. Perhaps British Caledonian is not big enough to compete on the international routes and that may be a very good reason for allowing this merger to go ahead. Presumably those factors will be taken into account.
Mr. Clarke: My hon. Friend's arguments are extremely relevant. It is obvious that there will be a variety of opinions and submissions on this matter. Those opinions and submissions are best made, at this stage, to the Director General of Fair Trading. He will give his advice upon a bid by one private company to suggest a merger with another private company. My right hon. Friend the Secretary of State will take his decision about whether to refer this proposed merger to the Monopolies and Mergers Commission when he has had a chance to reflect upon the advice of the director general, who will listen to all the competing arguments. That is the only stage we have reached to date.
Mr. Doug Hoyle: Does the Minister agree that the chaotic and anarchic situation in the industry is entirely due to the Government and the United States Government pressing for deregulation? That has led to the formation of mega airlines in the United States, six of which are bigger than British Airways. Does the Minister also agree that it is very bad industrial relations practice to announce this proposal on the same day that the unions got to know about it at 9.30 am? Surely the Minister cannot dodge his responsibilities by trying to skirt around that. Does the Minister also agree that, whatever happens, if the merger is referred, an early decision should be made because many jobs in the industry are at stake?
Mr. Clarke: It sounds as though the director general will hear some conflicting opinions from Opposition as well as Conservative Members. The hon. Member for Sedgefield (Mr. Blair) sounded fairly passionate on the subject of competition. It is my opinion that deregulation and increased competition on the transatlantic routes in particular have been of great benefit to the industry, especially its passengers. This exchange is already revealing that this is a complex issue which ought to be dealt with, as it has to be dealt with by law, by the proper process of waiting for the advice of the Director General of Fair Trading. I suggest that hon. Members make their representations to the director general, stop getting so excited on the first day we have heard that the bid has been made and wait in due course for a considered decision by my right hon. and noble Friend the Secretary of State when he has the director general's advice on the public interest involved in this matter.
Mr. Anthony Steen: Can my right hon. and learned Friend say whether the Government were also caught by surprise this morning or whether discussions were going on behind the scenes? Will he say one other thing to the director general when the time comes? Will he say that, if this merger goes ahead, some 90 per cent. of
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all airline licences will be in the hands of one company, that it will have further licences which belong to airlines in which it has an interest and that, therefore, the death knell will soon be heard for the future of independent airlines?
Mr. Clarke: We have known within the Government about the possibility of this hid for about a week, but obviously we could not reveal that fact until the merger was announced at 8 o'clock this morning. That has enabled all these representations, including my hon. Friend's, to be made to the director general. He will weigh up all the competing considerations which have already been tumbling out within a few hours of the news going public. It will take perhaps a few weeks before he comes back with his advice to my right hon. and noble Friend the Secretary of State.
Mr. Alex Salmond: I am interested in the right hon. and learned Gentleman's concept of the Government having no policy. Can he tell us exactly when the Government started to have no policy on competition in the airline industry and, when they last had a policy, what it was?
Mr. Clarke: I said nothing of the kind—[HON. MEMBERS: "Answer."] If I got up at the Dispatch Box and began, on the Government's behalf, to give instructions to the director general about what his opinion should be on this hid which he is now considering, the whole House would rightly be outraged. It is now the statutory duty of the director general to consider this bid. My right hon. and noble Friend the Secretary of State has no power to decide whether to refer this matter to the Monopolies and Mergers Commission until he has the director general's opinion. Certain sections of the House have reacted to what has been said in this moring's newspapers or on the radio and are already sounding off about a complex takeover bid which we have to consider in the correct way, which is the way laid down by statute. It would be improper for me to anticipate what my right hon. and noble Friend's decision might be.
Mr. John Wilkinson (Ruislip-Northwood): Does my right hon. and learned Friend agree that this worrying episode makes it absolutely clear that there is a need for harmonised company law within Europe and deregulation in air transport to allow the emergence of transnational airlines? As that is not the case, will my right hon. and learned Friend make it clear that a policy will be instituted which will permit genuine competition, at least on the domestic side, or the scheduled domestic carriers will soon be gobbled up?
Mr. Clarke: My hon. Friend raises interesting points about transport and airline policy on which I am tempted to comment, but I suggest that he take the first suitable opportunity to raise them in the House with my right hon. Friend the Secretary of State for Transport, who takes a proper interest in this matter and, I think, shares many of my hon. Friend's views.

Business of the House
3.43 pm
Mr. Neil Kinnock: May I ask the Leader of the House to state the business for next week?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Wakeham): The business for next week will be as follows:

MONDAY 20 JULY—Remaining stages of the Finance
Bill.

Motion on the Rate Support Grant (Scotland) (No. 2) Order.

Motions on the Rate Reduction (Lothian Region) 1987–88 Report and the Rate Reduction (City of Edinburgh District) 1987–88 Report.

TUESDAY 2I JULY—Motion on the Channel Tunnel Bill (Procedure).

Consideration of Lords amendments to the Channel Tunnel Bill.

Motions on Ministerial salaries and Members' pay and allowance.

WEDNESDAY 22 JULY—Motions on the Pensioners' Lump Sum Payments Order and the Supplementary Benefit (Requirements and Resources) Amendment Regulations.

Afterwards motion on the Hovercraft (Civil Liability) (Amendment) Order.

Followed by Motion on EC documents relating to research and development in telecommunications. Details of the EC documents concerned will be given in the Official Report.

THURSDAY 23 JULY—Motions on Northern Ireland orders relating to water fluoridation, charities, latent damage and enduring powers of attorney. Details will be given in the Official Report.

The Chairman of Ways and Means has named opposed private business for consideration at seven o'clock.

FRIDAY 24 Jun'—Debates on the motion for the Adjournment.

[Debate on Wednesday 22 July
Relevant European documents:
(a) 5876/85 +ADD 1

Research and Development in Advanced Communications Technologies for Europe ("RACE")

(b) 10277/86
Relevant reports of European Legislation Committee:

(a) HC 5-xxi (1984–85) para 6 and HC 5-xxx (1984–85) para 6

(b) HC 21-xxix (1985–86) para 3

Thursday 23 July:

Water (Fluoridation) (Northern Ireland) Order 1987

Charities (Northern Ireland) Order 1987

Limitation (Amendment) (Northern Ireland) Order 1987 Enduring Powers of Attorney ( Northern Ireland) Order 1987

Enduring Powers of Attorney (Northern Ireland Consequential Amendment) Order 1987]

Mr. Kinnock: I thank the right hon. Gentleman for his statement.
Before we rise for the recess may we have a debate on the Government's non-interventionist economic policy, with particular reference to the complete absence of
1284
Government responsibility for change when unemployment goes up by millions and the claim that credit is due to them when unemployment goes down by thousands?
In view of the fact that we shall probably rise before the Government have reached a decision on references with regard to the merger between British Airways and British Caledonian Airways, could we also have a further statement next week about the Government's attitude to references relating to the merger, so that we do not go into recess without a more precise definition of the Government's attitude than we have been able to obtain this afternoon?
Could we have a statement next week on the future of the European collaborative programme on advanced communications technologies? Will the Leader of the House ensure that, in such a statement, the Secretary of State for Trade and Industry explains the Government's reasons for delaying the announcement of funding for information technology—the Alvey programme?
Before the House rises could the Leader of the House make arrangements for statements to be made by the Secretaries of State for Scotland and for the Environment, which will give the former an opportunity to explain why the Government took the phasing-in of poll tax out of their legislation for Scotland earlier this year, and give the Secretary of State for the Environment the opportunity to explain why the Government want to put phasing into the English and Welsh legislation, whenever that appears? I am certain that that slight lack of consistency will have occurred already to the Leader of the House, if not to the Prime Minister.
Given that the Government's own advisers, the Social Security Advisory Committee, and many other bodies, cannot support the Government's proposals for the social fund under the social security legislation, will the Leader of the House also arrange next week for a statement, before we rise for the recess, from the Secretary of State for Social Services, to tell the House how he intends to modify his proposals in the light of the criticisms from the Government's own advisory body and many other professional and involved bodies?
May I repeat my request of last week that reports of Her Majesty's inspectors of schools be published before the House rises? Will the Leader of the House give us an assurance, in view of the possibility of those reports being published, that time will be allowed next week for the Secretary of State for Education and Science to make a statement on the findings of those reports?
Finally, will the Leader of the House confirm that the Government have now agreed that there should be a Scottish Minister on the Standing Committee considering the Local Government Bill, in recognition of the considerable significance that that Bill has for Scotland and the people of Scotland?
Mr. Wakeham: The right hon. Gentleman has raised eight points. He wanted a debate on economic policy. I cannot promise a specific debate next week, but I would have thought that, with a certain amount of ingenuity, some of the points that he raised could well be dealt with on Third Reading of the Finance Bill on Monday.
I shall refer the matter of whether it would be appropriate to make a further statement on British Airways to my right hon. and noble Friend the Secretary of State for Trade and Industry. I shall also refer the right hon. Gentleman's point about advance technology to my

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right hon. and noble Friend. It seems to me that the debate on Wednesday night might well cover some of the aspects of that.
The right hon. Gentleman asked me whether I could arrange for a statement on what he sees as a difference in policy between the community charge as enacted for Scotland in the last Parliament and what he believes to be the view of the Department of the Environment now. All that I would say to the right hon. Gentleman is that I would not necessarily believe everything that I read in the newspapers. I shall refer his points to my right hon. Friends. The right hon. Gentleman asked about the DHSS and the social fund. I shall refer those matters to my right hon. Friend the Secretary of State for Social Services. The right hon. Gentleman asked me about the reports on schools by Her Majesty's Inspectorate. I can give him the undertaking that they will be published before the House rises next week. I shall refer the question about what statements should be made to my right hon. Friend the Secretary of State for Education and Science.
The right hon. Gentleman asked about Scottish Ministers. Following the points of order that were raised last week, I undertook to have the question of a Scottish Minister being appointed to this Local Government Bill Committee discussed through the usual channels. In the light of these discussions, I have agreed that my hon. Friend the Parliamentary Under-Secretary of State for Scotland, my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton), should be a Member of the Committee to deal specifically with Scottish aspects of the legislation. As I told the House last week, there are of course, ample precedents for Committees on Bills relating to Scotland not having a Scottish Minister as a member. While I have acceded to the Opposition's request in this case, my agreement is without prejudice to the composition of any other Standing Committee that may be set up in future.
Mr. Michael Latham: Will my right hon. Friend take this parliamentary opportunity to deny categorically on behalf of the Government the report in The Independent this morning that a nuclear weapons test took place at North Luffenham in 1974 using radioactive material with a half-life of 25 years? Will he confirm that any such test would have involved a low-level material with a life of three to four months as described yesterday by the Under-Secretary of State for the Armed Forces?
Mr. Wakeham: I have been in touch with my hon. Friend the Under-Secretary of State for the Armed Forces and I can confirm that no such material was used and that the allegations in the article in The Independent to which my hon. Friend refers are completely untrue.
Mr. Bob Cryer: As a matter of urgency, will the Minister arrange for a statement, and preferably a debate, next week about the European Commission's decision to harmonise value added tax? The Leader of the House will be aware that the Prime Minister appointed Lord Cockfield, a former Secretary of State for Trade and Industry in her Cabinet, for the prime purpose of harmonising the internal market, of which harmonising VAT and excise duties is a vital part. The Prime Minister has not given any assurance about using the veto against VAT increases on clothing, books and newspapers. A debate or at the very least a statement is important so that
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we can pinpoint the areas in which the Government will use the veto. A deal should not be stitched up after the House rises on Friday of next week so that when we come back the whole thing has been shuffled off between the Prime Minister and Lord Cockfield.
Mr. Wakeham: I cannot add anything to what my right hon. Friend the Prime Minister said on the substance of the matter. I regret that I cannot find time next week for a debate on the matter.
Sir David Price: Is it my right hon. Friend's intention that the departmental Select Committees should be re-established before the House rises for the summer recess; and if not, why not?
Mr. Wakeham: I recognise that my hon. Friend and other hon. Members, including my right hon. Friend the Member for Worthing (Mr. Higgins), are anxious that these Committees should be set up promptly. However. necessary preliminaries, including membership, have to be agreed first. The House appreciate that Select Committees proceed best with all-party agreement, and we should not lightly depart from that basis. We hope to make progress on further Select Committees later today.
Mr. David Alton: Does the Leader of the House agree that the four Northern Ireland orders which are unamendable and which the House will consider on Thursday are exactly the sort of orders that ought to be referred to the Northern Ireland Committee under Standing Order No. 99? Has he been able to find time to consider the representations I made to him about this matter? Does he accept that the decision not to reestablish the Select Committees before the summer recess is entirely that of the Government?
Mr. Wakeham: As to the second part of the hon. Gentleman's question, the decision was made by the Government, but it was done to seek all-party support for the Select Committees, which is the best way to proceed. I know that the hon. Gentleman is interested in making further use of the Northern Ireland Committee under our Standing Orders, as are other hon. Members, and I am willing to consider that.
Mr. Ian Gow: Will my right hon. Friend reconsider his last answer? Does he think that the present procedures for dealing with proposed Northern Ireland legislation are satisfactory? Does he think it right that we should not be able to amend the greater part of the Northern Ireland legislation that comes before the House? Will he give further consideration to that point?
Mr. Wakeham: I am happy to confirm that I did not say that I would do other than consider those matters.
Mr. James Molyneaux: As to Thursday's business, is it not an affront that the House should be expected virtually to rubber stamp Orders in Council for Northern Ireland without any opportunity to amend? Is the Leader of the House prepared to give an assurance that he will seek to remedy that position before we return after the recess?
Mr. Wakeham: I appreciate the right hon. Gentleman's concern about the inadequacy, as he sees it, of the manner in which Northern Ireland business is dealt with in the House. I am happy to talk to him about that to see what can be done, but I cannot give him an undertaking that an agreement can be reached.
Sir Peter Hordern: Will my right hon. Friend accept that the Director General of Fair Trading will be severely handicapped by being unable to study the wise advice that would have come his way about the British Caledonian bid had questions been allowed to continue? Therefore, will he say when he expects to see the director general's report, and will he undertake that in the next Session we shall have a debate on aviation and competition policy in general?
Mr. Wakeham: The length of questions is not a matter for me. The report of the Director General of Fair Trading is made not to me but directly to my right hon. and noble Friend the Secretary of State for Trade and Industry. I have taken note of what my hon. Friend said, and I shall consider it.
Mr. Michael Foot: Does the right hon. Gentleman think that the latest developments concerning the Peter Wright memoirs intensify the dangers of an infringement of the freedom of the press in this country? It would be monstrous for the House to adjourn and leave the matter unresolved. Therefore, if the right hon. Gentleman cannot provide an opportunity for a debate, will he ensure that the Attorney-General makes a statement to the House next week?
Mr. Wakeham: I appreciate that these are important matters, in which the Government have an important interest. The Government are upholding what they consider to be an important principle. I shall refer the right hon. Gentleman's point to my right hon. and learned Friend the Attorney-General.
Mr. Jonathan Aitken: Does my hon. Friend's announcement of yet another procedure motion on the Channel Tunnel Bill mean that the Government intend to ask their supporters to overthrow this morning's important ruling by the impartial Standing Orders Committee that progress on the Bill should be halted because of the violations of fair play and petitioners' rights? If that is the Government's intention, is this not the most shameful episode in a long history of dubious practices and downright cheating on the Bill with regard to individual petitioners, and does my right hon. Friend understand that there will be ferocious opposition to this alteration of Parliament's will?
Mr. Wakeham: I appreciate that my hon. Friend feels very strongly about this issue, as do a number of right hon. and hon. Gentlemen. I understand that the Standing Orders Committee met this morning and recommended that Standing Orders should not be dispensed with in relation to amendments made to the Bill in another place. In the view of the Government, it is essential that the Bill reaches the statute book before the House rises for the summer recess. Therefore, I propose to invite the House to reconsider the matter.
Mr. Seamus Mallon: The Leader of the House will be aware that, arising out of the Sampson report, Her Majesty's Inspectorate of Constabulary has this week ordered an inquiry into police procedure and organisation in Northern Ireland. In view of that, and as inquests have not yet been held on six people who were shot dead by that same police service in County Armagh in 1982, will the Leader of the House arrange for a debate on this important matter, which some of us may feel is more important than the debate on the fluoridation of
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water in Northern Ireland, which is scheduled to take place next week? Will he try to ensure that the Sampson-Stalker report is laid before the House for detailed debate and scrutiny because that is the only thing that will dispel the suspicion in relation to this whole sorry incident?
Mr. Wakeham: I am sorry to disappoint the hon. Gentleman, but I cannot promise him a debate next week. However, I will certainly refer the points he has raised to my right hon. Friend the Secretary of State for Northern Ireland.
Mr. John Marshall: It is now 13 years since Turkish troops invaded Cyprus. In view of the hardship that that has caused, and in view of the interest of the United Kingdom in seeing an early solution to the problem, may we have an early debate on the report of the Select Committee on Foreign Affairs dealing with Cyprus.?
Mr. Wakeham: I realise that it is an important matter and I will refer my hon. Friend's comments to my right hon. and learned Friend the Foreign Secretary. However. I cannot promise a debate next week.
Mr. Dick Douglas: Will the Leader of the House give further consideration to the reply he gave to my right hon. Friend the Leader of the Opposition in relation to the poll tax? He suggested that we should not believe what we read in the newspapers, but the fact is that we know that Scotland is to be a guinea pig for this tax. Will he bring his right hon. and hon. Friends together to ensure that we are treated equitably in relation to the whole of the United Kingdom? Is it true that the formation of the Select Committee on Scottish Affairs is being held up because of the Government's difficulty in finding sufficient Back Benchers for it?
Mr. Wakeham: I do not have anything to add to what I said to the Leader of the Opposition. It is not true that the only thing holding up the formation of the Select Committee is an insufficient number of Back Benchers.
Mr. Michael Colvin: My right hon. Friend has received two requests today for further information with regard to the British Caledonian and British Airways proposed merger. He received one from the Leader of the Opposition for a full statement before the House rises for the summer recess, and one from my hon. Friend the Member for Horsham (Sir P. Hordern) for a full debate when the House returns. I do not think that the first suggestion is adequate, and I think that the second suggestion will be too late.
Surely the House requires an adequate opportunity for hon. Members who did not get an opportunity to express a view today, to express it fully before the Secretary of State for Trade and Industry reaches a decision on whether to refer the matter to the Monopolies and Mergers Commission. Will he give consideration to a short debate, even though it may be for only one and a half hours, before the summer recess so that we can make clear to the Secretary of State for Trade and Industry that we do not want the matter to be referred to the Monopolies and Mergers Commission?
Mr. Wakeham: I recognise my hon. Friend's strong views on this matter, but I cannot add anything to what I have already said.
Mrs. Maria Fyfe: Will the Leader of the House enlighten us about the conduct of the

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Standing Committee on the Local Government Bill that met for the first time this morning? The Parliamentary Under-Secretary of State for Scotland did attend, but he did not respond to any points made by no fewer than four Scottish Members. We were given an assurance by the Minister for Local Government that Scottish questions would be replied to from time to time as was seen fit, or words to that effect. Does the right hon. Gentleman feel that that is an adequate response to the Scottish aspect of the Bill?
Mr. Wakeham: I do not think that during business questions I should answer detailed questions about proceedings on Standing Committees upstairs. However, I am certain that my right hon. and hon. Friends who represent the Government on that Committee will give adequate and excellent answers to the points raised.
Sir Ian Lloyd: In the context of my right hon. Friend's reply to my hon. Friend the Member for Eastleigh (Sir D. Price), he will be aware that the Secretary of State for Energy has announced within the past fortnight that he proposes to have major legislation on the denationalisation of the electricity supply industry on the statute book in November. If the Select Committee on Energy is not reappointed, and since it is virtually the major vehicle of inquiry into such matters on behalf of Parliament, we will have a vehicle that is sitting without wheels and tyres until November and the opportunity of examining this major piece of legislation will not exist. Is this not a case of constitutional sack cloth and ashes?
Mr. Wakeham: My hon. Friend courteously wrote to me about these points and I appreciate that. I want to proceed as fast as I can, but I do not believe that I should proceed other than with all-party agreement as to the way we should proceed.
Mr. Terry Davis: Has the Leader of the House noticed the publication of the report by the Select Committee on Trade and Industry about the United Kingdom motor components industry? Will he arrange for an urgent debate on the report in view of the apparent decision by Lucas Electrical to sell its automotive division to Fiat Motor company and other Italian companies on a piecemeal basis with a risk of further redundancies in Birmingham and the rest of the west midlands?
Mr. Wakeham: I cannot arrange a debate next week. In any event, it would he better to proceed when the Government have had a chance to study the report and make their response.
Mr. Peter Rost: May I press my right hon. Friend further on re-establishing the Select Committees before the summer recess? Will he accept that it is an urgent House of Commons matter since the Select Committees have an obligation to report and work on behalf of the House? Some of them are anxious to get on with some urgent work, particularly the Select Committee on Energy in view of the pending legislation.
Mr. Wakeham: I agree with my hon. Friend. It is a House of Commons matter and that is why I am seeking to proceed as fast as I can, but obtaining agreement from both sides of the House.
Mr. Alistair Darling: Has the Leader of the House noticed early-day motion 111 which was tabled yesterday and signed by myself and 18 other hon. Members?
[That this House expresses its concern at the announcement that 9,000 staff are to be made redundant by British Rail over the next three years; recognises that British Rail receives a lower level of support both per head of population and as a percentage of gross national product compared with other European railways; in addition, believes that the Government does not sufficiently acknowledge the benefits offered by rail as a national asset; calls on the Government to ensure additional and adequate funding for British Rail; and further calls on British Rail to look carefully at its staffing policies in the light of possible revenue generation.]
Does he recognise that there is concern on both sides of the House that British Rail may be forced, because of the reduction in the amount of grant coming from central Government, to concentrate only on its profit-making services, leaving many thousands, if not millions, of people without a rail service that they can afford either in terms of availability or of the price charged? Does the Leader of the House consider that, given the status of British Rail as a national asset, the House ought to have an opportunity to discuss its future, especially in view of the recently published report of the Select Committee on Transport? We ought to have an opportunity to discuss this before the recess, and I ask that time be made available to debate this important matter next week.
Mr. Wakeham: I should like to be helpful to the hon. Gentleman, but I am afraid that I cannot offer him time next week. I understand that job reductions will affect managerial and clerical support and not jobs giving direct service to rail users. British Rail aims to make the reductions through natural wasteage and internal transfers. Nevertheless, I recognise that it is an important matter, and I shall refer it to my right hon. Friend the Secretary of State for Transport.
Sir Eldon Griffiths: In view of the obvious importance of the subject that she will be discussing and of the admirable leadership that she is giving, will the Leader of the House make it possible for the Prime Minister to make a statement to the House next week on her return from Washington?
Mr. Wakeham: I shall refer that matter to my right hon. Friend the Prime Minister. I have no doubt that, if she wants to make a statement, I will make it possible.
Mr. Peter Snape: May I support my hon. Friend the Member for Edinburgh, Central (Mr. Darling) and ask the Leader of the House when he will find time to debate the latest report from the Select Committee on Transport into the Alice-in-Wonderland situation within British Rail? Trains that arrive 10 minutes late are deemed to be on time, fare increases at six monthly intervals are deemed to be adjustments, reductions in PSO grant to the most under-funded railway network in Europe are described as tough but achievable, and the latest round of job losses will apparently include many grades except those of the chairman and members of the British Railways Board, which, together with incompetent Ministers, are responsible for this tragic and absurd situation.
Mr. Wakeham: I regret that I cannot offer the hon. Gentleman time for a debate next week. However, I know that he will use the opportunity on Monday to question the Secretary of State for Transport during transport questions.
Mr. Bowen Wells: May I press my right hon. Friend the Leader of the House further on the question of the establishment of the Select Committees? He said that he is endeavouring to proceed with the agreement of both sides of the House, which I understand he has. The Chief Whip on the Liberal Benches is indicating his assent, and I understand that the Labour party also wishes to move ahead. May I remind my right hon. Friend that, without the establishment of the Select Committee before we leave this place for the summer, the Clerk's Department will be idle and will be spending a great deal of money? I am sure that that would offend my right hon. Friend's natural inclination to save money or use it effectively.
Mr. Wakeham: I am glad that my hon. Friend accepts that I am doing all that I can to set up the Select Committees. I shall continue to do so as best I can.
Mr. Paul Flynn: When will the House have time to discuss the serious and important evidence presented yesterday by the Committee of Public Accounts, condemning in remarkably candid language mismanagement and financial anarchy involving millions of pounds of taxpayers' money? Is the right hon. Gentleman aware that the Welsh Office is condemned for showing no serious concern about the breakdown of management and control at the National Museum of Wales which has been going on year after year? How can we consider the possibility of giving the Welsh Office greater powers over efficient local authorities in Wales when it has been condemned in that document as being grossly inefficient?
Mr. Wakeham: I am sure that the hon. Gentleman will agree that a debate on these important matters will be the more useful when the Government have had a chance to study the report and to make a response.
Mr. John Townend: As the Member representing the eastern suburbs of the once great port of Hull, may I tell my right hon. Friend that the priority given by the Government to the regeneration of cities such as Hull has been warmly welcomed? Is he aware, however, that the biggest boost to the economy of areas such as Liverpool, Hull and Goole would be provided by abolition of the national dock labour scheme, which has played a significant part in the decline of Hull as a port? Is he aware that abolition would enable Hull and other northern ports to compete with Felixstowe and other non-scheme ports and private ports? Will he discuss legislation on those lines with his colleagues and at least provide time for a debate on a subject on which there is great feeling in the north of England?
Mr. Wakeham: These are very important matters and I will certainly refer them to my right hon. Friend the Secretary of State for Transport.
Dr. Jeremy Bray: Will the Leader of the House arrange for the Chancellor of the Duchy to make a statement in the House about the future of information technology research in this country? The right hon. Gentleman is right in saying that it will be possible next Wednesday to discuss research and development in
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the European Community, but is he aware that the remarks of the Chancellor of the Duchy in Manchester this week mean that there will be no matching programme of United Kingdom research and that we shall lose control of the United Kingdom element in any European programme?
Mr. Wakeham: I will certainly refer the matter to my right hon. and learned Friend the Chancellor of the Duchy. As I understand it, one of the most important aspects is to encourage the amount of private sector resources going into research as the Government are already putting in very substantial sums.
Mr. Michael Fallon: Will my right hon. Friend confirm that, whether or not it is decided to phase in the community charge, the introduction of the national non-domestic rate will proceed on schedule as the north stands to gain substantially from rate reductions for business?
Mr. Wakeham: I recognise the validity of my hon. Friend's comments, but I cannot anticipate details of the Bill before it is published.
Mr. Graham Allen: Given the difficulty experienced by the usual channels in setting up the departmental Select Committees, will the right hon. Gentleman consider removing any further embarrassment by allowing Back-Bench Members on both sides to elect Members of Select Committees directly, enabling them to be far more independent of Government and shadow Government and thus to carry out their role of scrutiny better than at present?
Mr. Wakeham: The Select Committees are appointed by the Committee of Selection. So far as I know, there are no Ministers or Opposition Front Bench spokesmen on that Committee.
Mr. Spencer Batiste: Is my right hon. Friend aware of the concern in industry that the British space plans should be published as early as possible so that the many important projects that are under way can continue with some measure of certainty? Can he make any statement as to when the publication date will be announced?
Mr. Wakeham: I am not in a position to make any announcement, but I will see that my right hon. and noble Friend the Secretary of State for Trade and Industry lets my hon. Friend know as soon as possible.
Mr. Peter Pike: In view of the wide public concern about the Government's plans to privatise the water authorities, will the Leader of the House give an assurance that the Select Committee report on pollution of rivers and estuaries will be discussed by the Government and debated by the House before there is any further move towards privatisation?
Mr. Wakeham: I recognise the importance of the report. I cannot undertake here and now to give the hon. Gentleman the assurance that he seeks, but I will look into the matter.
Mr. Eric Forth: May I echo the request for an early debate on the membership of Select Committees? In view of the privileged position in which Scotland finds itself in terms of very high public expenditure and of greater per capita expenditure on the

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Health Service, does my right hon. Friend agree that there should always be English representation on Committees dealing with Scotland so as to keep an eye on the amount of taxpayers' money going to Scotland from the general Exchequer?
Mr. Wakeham: My hon. Friend makes his point and tempts me to try to organise a debate, but I regret that I must give him the same answer as I gave earlier.
Mr. Dennis Skinner: Is the Leader of the House aware that in the past couple of weeks there have been calls from Tory Members such as those from Bournemouth for a six-day week for miners? Will he arrange a debate on that subject between 24 July and 21 October? I am sure that people in the mining industry will be pleased to fill the public gallery if Members of Parliament are prepared to return to work during their three-month recess. Will the Government also accept a paper to read from Mr. Christopher Benson, chairman of the London Docklands Development Corporation—a man who is supposed to be super-efficient and receives £27,096 per year for working a two-day week—as it may help Tory Members who think that miners should work six days a week while some of those Members are moonlighting all the time?
Mr. Wakeham: If I organised such a debate during that period, I should certainly be here and I imagine that the hon. Member for Bolsover (Mr. Skinner) would be here, but I wonder how many of the hon. Gentleman's hon. Friends would come along. I do not believe that the hon. Gentleman's comments about Mr. Christopher Benson are in any way justified.
Mr. Skinner: It is in Hansard.
Mr. Wakeham: That gentleman has done a great deal to turn around the situation in the London docklands and snide remarks of the kind made by the hon. Member for Bolsover are not appreciated.
Mr. Skinner: On a point of order, Mr. Speaker.
Mr. Speaker: No. We often receive answers that we do not like.
Mr. Skinner: The Minister did not give any answer. One of his friends——
Mr. Speaker: Order. I order the hon. Member for Bolsover (Mr. Skinner) to resume his seat.
Mr. William Cash: In view of my right hon. Friend the Prime Minister's visit to Washington tomorrow, will my right hon. Friend the Leader of the House consider arranging a debate in the immediate or near future on the dangers of a trade war between this country and the European Community, on the one hand, and Japan and the United States, on the other, as the matter is becoming of ever grave concern?
Mr. Wakeham: Trade matters are very important and we shall have to find opportunities to debate them before too long, but I cannot go any further than that today.
Mr. Bill Michie: The Leader of the House has announced that on Tuesday we shall have the opportunity to debate the ludicrously high salary increases proposed for Members of Parliament.Will he give an assurance that in dealing with allowances we can discuss
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the allowances paid for secretarial and research staff, and so on, as that is far more important than whether Members of Parliament get a rise?
Mr. Wakeham: The hon. Gentleman is absolutely right. Allowances are paid so that Members of Parliament cart carry out their work efficiently. Those matters can, of course, be raised in the debate on Tuesday.
Mr. John Wilkinson (Ruislip-Northwood): May I remind my right hon. Friend that the Easter recess came and went and the general election intervened and that if the statement requested by my hon. Friend the Member for Elmet (Mr. Batiste) on the national space plan is not made before the summer recess it will be a grave dereliction of duty on the part of the Government? Does my right hon. Friend agree that the Select Committee on Trade and Industry, whenever it is established, should consider as a matter of urgency the decision-making process in relation to the United Kingdom space plans as there are clear signs that the Government either do not care or do not attach to these matters the priority that they deserve?
Mr. Wakeham: I do not accept what my hon. Friend says. I believe that this is an important matter and I shall certainly refer it to my right hon. Friend the Secretary of State for Trade and Industry.
Mr. Greville Janner: Is there any prospect of an urgent statement by the Parliamentary Under-Secretary of State for Corporate and Consumer Affairs regarding the measures necessary to protect tourists against blatant exploitation because the law appears to be inadequate? If the Leader of the House would agree to walk through Parliament square, he would find that a vehicle is habitually abusing the law by selling goods at extortionate prices. Both the police and the local authority claim that they have no power to prevent this from happening. Surely the law should be strengthened and measures taken to protect tourists who are so welcome in this city and in this area of it.
Mr. Wakeham: Obviously, I shall refer that to my right hon. Friend, but, as he is answering questions on Tuesday, that seems to be an opportunity for the hon. and learned Gentleman to raise the matter with him directly.
Mr. Alex Salmond: Before the House rises for the recess, will the Leader of the House allow time for a debate and division on the question of the Government's lack of a democratic mandate in the nations of Scotland and Wales? Will he comment on rumours circulating in the House that both Front Benches are united in wanting to avoid a debate and division on this important topic facing the Scottish and Welsh peoples?
Mr. Wakeham: As far as I am aware, this is not a matter on which there is any agreement between the two Front Benches. It seems that the matter has arisen several times since we have returned from the general election and that the hon. Gentleman is most concerned that his view is not finding a great deal of favour.
Mr. Richard Holt: Will my right hon. Friend find time for a debate on the coal industry in the light of the comment of the Leader of the Opposition that he is now in favour of a six-day working week for the mining industry?
Mr. Wakeham: I note my hon. Friend's request, but I cannot promise a debate next week.

Business of the House
  Summer Adjournment
  Mr. Speaker: I remind the House that on the motion for the Adjournment on Friday 24 July up to eight hon. Members may raise with Ministers the subject of their choice. Applications should reach my office by 10 pm on Monday next; a ballot will be held on Tuesday morning and the result made known as soon as possible thereafter.

Prisons
4.22 pm
The Secretary of State for the Home Department (Mr. Douglas Hurd): With permission, Mr. Speaker, I should like to make a statement.
The House has from time to time been warned of the dramatic rise in the prison population. Last Friday that population stood at 51,029, nearly 4,000 more than a year ago and over 9,300 above the certified normal accommodation, which is the uncrowded capacity of the prison system. Six hundred and forty-eight of those prisoners were being held in wholly unsuitable conditions in police cells, so diverting police officers from operational duties.
The main reason for the latest growth in the population is the substantial increase in the number of offenders being dealt with by the Crown court and an increase in the average length of custodial sentences passed by the Crown court. Moreover, despite our efforts to reduce court delays, the number of prisoners held on remand has increased by about a further 1,000 over the last year to 11,000.
Those who commit serious offences should receive severe sentences. The Government have legislated to increase the sentencing powers of the courts where necessary, and the courts in their decisions have reflected public concern by passing longer sentences, for example. for rape and armed robbery. At the same time, we have made clear, most recently in our election manifesto, the need to strike a balance between tough sentences for those who pose a threat to society and lesser sentences for those who pose no such threat. Hence the emphasis which we have placed on tough and challenging alternatives to custody, to which the courts have responded with a substantial increase in the proportionate use of community service orders.
Sentencing decisions are for the courts, and the responsibility of the Government is to make sure that the decisions of the courts are not frustrated by a lack of prison accommodation. Prisons have to be places with the right levels of security in which prisoners can live, and prison staff can work, in tolerable conditions. The problem of overcrowding, and what it means in practice, is well known to any hon. Member who has visited one of our local prisons. We have 5,000 prisoners crammed three to a cell designed for one. A further 14,000 are doubled up. Virtually all these people are in their cells for most of the day, relying on pots and periodic slopping out for sanitation. Such overcrowded prisons are hard to control and, I would argue, more likely to result in re-offending.
This Government have invested record sums in the prison service. Expenditure on the service has increased by 34 per cent. in real terms since 1979 and the capital budget has more than doubled. The building programme already known to the House involves the opening of 20 new prisons as well as the refurbishment of existing prisons, and this will have delivered a total of 17,500 more prison places by 1995. The programme has been expanded in each of the last two public expenditure rounds. Immediately, the programme will produce some 3,000 new places in the 12 months from September. We are making every effort to maximise the use of the existing prison estate and I should like to pay tribute to the efforts of the prison service in doing so. They are hard pressed and they deserve our

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thanks. However, in recent months the rise in the population has outstripped the supply of new places, as I warned in the debate on the Loyal Address and the gap between supply and demand looks set to grow wider still. The report by Sir James Hennessy on last year's prison disturbances, which I am publishing today, reminds us all of the delicate balance between order and disorder in our prisons.
Further action now is essential. That action must be enough to deal with the immediate problem and to prevent it from recurring. We must also preserve the momentum of our restructuring of working practices under the fresh start initiative.
I have therefore taken the following decisions. First, immediate steps are being authorised to secure the opening on a temporary basis of a camp for prisoners—Rollestone in Wiltshire—which will hold 360 inmates. This will be managed and staffed by prison service personnel. I shall keep the need for further camps or other additional temporary accommodation under close review.
Secondly, we shall also need a substantial expansion and acceleration of our plans to provide more prison places in the long term. We propose to set this in hand and I shall make a further announcement in due course.
Thirdly. I am sure that the skills and knowledge of the private sector have a bigger part to play in ensuring the speedy delivery of this accelerated programme. It takes too long to build a prison. I am, therefore, setting up a new prison buildings board within the Home Office, but with a strong outsider element to supervise the building programme and to exploit to the full private-sector techniques in bringing new prisons on stream. My noble Friend Lord Caithness will report immediately to me on further possibilities for using the private sector, following his forthcoming visit to the United States, in the light of the Select Committee's recent report.
Fourthly. I have considered, but rejected, using the power of executive release to ease the pressure of the prison population. Rather, I propose to lay amendments to the rules for prison department establishments, increasing the amount of remission dependent on good behaviour by those serving sentences of up to and including 12 months from one third to one half of sentence length. This is an interim measure, applying only to less serious offenders serving short custodial sentences and the period of remission is, of course, dependent on good conduct. It will remove the anomaly, criticised by the courts, that those on sentences too short to qualify for parole serve a higher proportion of their sentences than more serious offenders who are selected for parole. As it takes effect over the coming weeks it will help the present problem of overcrowding, to the extent of about 3,500 places, by relieving pressure, particularly on local prisons, and it will enable prisoners to be removed from police cells, thereby returning police officers to their proper duties of dealing with crime and preserving public order on the streets.
Fifthly, this measure is an interim one, pending a wide-ranging review of parole and remission arrangements. The operation of the parole scheme in relation to shorter sentences has, as I have said, been criticised, not least by members of the judiciary. In our manifesto we untertook to set up a thorough review of the workings of the parole system and of the arrangements for post-custodial supervision. I can announce today the setting up of that review, which will also look at remission, under the
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chairmanship of a distinguished former Member of the House, Mr. Mark Carlisle QC, with terms of reference which I shall publish in full in the Official Report.
The Government have consistently shown in deeds over the last eight years their commitment to the prison service and to resolving the long neglected problems of the prison system, including the lack of capital investment and the reform of working practices. The immediate pressure of the rise in the prison population means that we must amplify and extend that strategy. The measures that I have announced today on prison building, parole and remission, and the opening of Rollestone, are designed to achieve that.
Following are the terms of reference for parole review:
To examine the operation of the parole scheme in England and Wales, its relationship with the current arrangements for remission, time spent in custody on remand, and partly and fully suspended sentences and their effect on the time which offenders sentenced to imprisonment spend in custody after sentence; and to make recommendations on—

(a) whether a parole scheme should be retained as a feature of the penal system;
and, if so,

(b) its objectives

(c) any changes which should be made in law or practice affecting either eligibility or criteria;
or, alternatively,

(d) any different scheme which might be introduced to provide for release befor expiry of sentence, either generally or for particular categories of prisoners;
and, in any case,

(e) the possibility of prisoners released before expiry of sentence being required to perform work of value to the community, having regard to the relative cost and effectiveness of custodial and non-custodial disposals;
having regard to the need for—

(i) fairness and consistency in the treatment of prisoners;

(ii) a clear understanding of the relationship between determination of the original sentence by judicial decision and the proper limits of executive discretion in giving effect to it;

(iii) public and judicial confidence in any new arrangements that might be proposed;

(iv) the resource implications of any changes proposed

Mr. Roy Hattersley: First., let me thank the Home Secretary for the courteous welcome that he gave me earlier today and say how much I look forward to working with and sometimes against him in the years to come.
I should make it clear at once that the Opposition support the central proposal in the right hon. Gentleman's statement, namely, to increase remission for prisoners of good behaviour serving short sentences for minor offences. The right hon. Gentleman will recall that a month ago several of my hon. Friends warned him that some such action would have to be taken after the law and order rhetoric of the general election campaign was over.
Can the right hon. Gentleman give an estimate of how many police officers are today being used, or I might say misused, in the supervision of prisoners, and how many of those officers will be released to go about their proper duties as a result of his statement? On a more fundamental note, does he agree that it would have been far better if, instead of being forced to take action now to avoid a summer prison explosion, he and, more important, his two predecessors had taken more considered action to reduce the prison population in the past?
The right hon. Gentleman will recall—although, apparently, some of his hon. Friends do not—that the

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Opposition supported Government proposals both for Executive and for supervised release. Does he not now regret that Lord Whitelaw's unhappy experiences at the 1981 Conservative party conference made him back-pedal so desperately on at least one of those sensible proposals? I assure the Home Secretary that we very much welcome the inquiry into the parole scheme and hope that it will examine supervised, Executive and conditional release. We wish him well in implementing what may and, I hope, will be sensible conclusions arising from the report.
We know from the Home Secretary's speech at Grantham that he, too, believes that we send too many people to prison and keep too many trivial offenders in prison for too long, and we wish him well in his attempts to educate his colleagues to the same enlightened and practical view.
Mr. Hurd: The right hon. Gentleman's technique is very different from that of his predecessor. He is trying to kiss me into oblivion, whereas his predecessor never made such an attempt.
In answer to the right hon. Gentleman's first question, the Metropolitan police tell me that about 625 London police officers are being deployed on day-to-day duties connected with accommodating London prisoners, and that over 200 provincial officers are engaged in similar duties. Some other provincial officers, particularly in the north, are engaged in looking after provincial prisons. When my right hon. and hon. Friends consider the present strain on the police and on police manpower, they will understand that we cannot go on expecting the police to carry that extra burden.
The right hon. Gentleman, albeit courteously, displayed a good deal of cheek in the latter part of his intervention. What my noble Friend Lord Whitelaw and my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) had to do was to take courageous action to remedy the neglect that they had inherited. The Government in which the right hon. Gentleman served presided over a system under which crime was rising fast and the overcrowding of the prisons was already evident, but they did nothing about it. If a prison building programme of some substance had been started in the mid-1970s, when signs of the need for it were clear, we would not be facing the problems that we face today.
What my right hon. and learned Friend and his predecessor Lord Whitelaw did was courageously to set about remedying that neglect. My right hon. and learned Friend actually accelerated the programme that he had inherited, and thank heavens he did, because we are now beginning to get some relief from the problem. We now have to accelerate the programme again, as well as expanding it.
It is not my job to say whether, in general, too many people are in prison in this country; that is a matter for the courts. What I do say—what we said in our manifesto, and have constantly said—is that the courts, taking account of the realities of the position, need to pay attention to a distinction which I am sure the public perceive very clearly. This is the distinction between those who deserve long sentences because of the severity of their offences or the danger that they represent to the public,
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and those who the courts may decide, in accordance with the circumstances of the case, could be properly punished by tough and challenging alternatives to custody.
Mr. Menzies Campbell: Does the Home Secretary feel any concern about the number of prisoners on remand, who represent more than 20 per cent. of the total in prison? Is that not unacceptable in the light of the presumption of innocence, and is it not time that we in England adopted the 110-day rule, which has served Scotland so effectively for 100 years?
Mr. Hurd: One should always be a bit sceptical when the Scots urge us to accept all their institutions. There is usually a link between one Scottish arrangement and another, and one cannot he accepted without the other.
The hon. and learned Gentleman will know from the discussions on what is now the Police and Criminal Evidence Act 1984 that the Home Secretary has power by order to introduce provisions for time limits in England and Wales comparable to those in Scotland. He will also know that, after a period of trial, I have begun to operate different time limits in different parts of the country. I believe that that can contribute, although there will be no magic results, to accelerating the speed of the flow of justice, and so bring down the number of people held in our prisons unconvicted, which I agree is too high—about one-fifth.
Mr. Leon Brittan: I fully recognise the serious problem that my right hon. Friend faces, and warmly welcome the opening of Rollestone Camp to house prisoners. However, does he not agree that it is wrong in principle, and quite contrary to the rule of law and to everything that we stand for, to release convicted criminals prematurely—by whatever procedural means—not on the basis of an individual consideration of their cases, or because of the application of some new and more liberal penal policy, but simply because there is no room to house them? Does he accept that there will be considerable public disquiet at the prospect of some 3,500 prisoners being released prematurely, 630 of whom have been convicted of offences of violence or of sexual offences? Would it not be better to open more camps now than to hold out the prospect of doing so, as my right hon. Friend has done? Would it not also be preferable to make it clear now that what has been done is a one-off crisis measure,, which will not be repeated?
Mr. Hurd: The part of the package that deals with remission is certainly interim, as I said, and for the reason that I gave. May I take up the two specific issues raised by my right hon. and learned Friend, with which he obviously wrestled in his time as well? First, as he correctly observed, I did not rule out the use of additional camps or other temporary accommodation. In considering whether there should be further camps, I had to take into account a number of matters. First, as my statement and one of the exchanges that followed it showed, much of the problem is a result of the growth in the remand population. Camps are not a great deal of use in most circumstances, because unconvicted prisoners need to be held reasonably close to the courts where they are likely to have to be produced.
Secondly, I have to take into account the fact that camps are not a great deal of use, or can only be used, at great risk, for prisoners who could be a danger to the public. My right hon. and learned Friend will have read

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Sir James Hennessy's report on the disturbances last year, and he will have seen the dangers that were encountered at Northeye when people were in dormitory or similar accommodation and the situation got out of hand. I do not want to replicate that by opening camps and putting into them people who are unsuitable for camps.
Thirdly, I have to consider staffing. The prison service is stretched to its utmost. The facilities for recruitment and training are at full stretch. I believe that the House and the public expect the job of guarding prisoners in Her Majesty's prisons to be done by prison service officers. Therefore staffing, as well as the choice of sites, is a consideration.
Those are three factors that I, like any other Home Secretary, have to weigh up when deciding on the further use of camps.
I understand entirely my right hon. and learned Friend's point about remission, but it already exists. Unlike Executive release, we are not introducing a new principle. We are altering a principle that already exists in different forms in different parts of this kingdom. Remission is awarded only on the strength of good conduct. The fact is that 82 per cent. of those who might qualify for early remission under the proposal that I have announced are in prison for non-violent offences. As for the remainder, whatever the offence—for example, the pub fight or the street brawl—the courts thought that they did not deserve long sentences.
My right hon. and learned Friend will immediately have grasped that the greatest possible difference in the length of an individual sentence as a result of my announcement will be two months—no more.
Mr. John Wheeler: I support and understand the reason for my right hon. Friend's statement, but may I ask him to assist me over two points? First, will he confirm that the 630 prisoners whom he anticipates will be released sooner are offenders who committed very minor offences? I hope that we are not talking about rapists or serious offenders. Secondly, my right hon. Friend mentioned the improvement in and the expansion of the prison building programme and referred to the involvement of the private sector. Is he able to say how he thinks that will be carried forward?
Mr. Hurd: The relief that I expect as a result of the remission element in the package is 3,500. One cannot give an exact figure, because it depends on good conduct. I said earlier that 82 per cent. of those who might qualify for early remission have been found guilty of non-violent offences, and that the courts did not think that the remainder deserved a long sentence.
As for the introduction of new private techniques into prison building, I have announced the organisational change. We have already been in touch with a number of private companies which we think might be able to help. We are in touch with American experience, which has been triggered to some extent by the report of the Select Committee to which my hon. Friend contributed. After identifying a design, I hope that we shall stick with it and not nibble away at it in an effort to improve it. That is what I mean by acceleration of the programme. There is plenty of scope for acceleration, while preserving the required standards
Mr. Clive Soley: Does the Home Secretary accept that confession is good for the soul, that
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now is the time to say that everything that the Opposition told him was right and that the only reason why the Government did not sanction the release of large numbers of prisoners before the election was that they knew that it would be the final nail in the coffin of the most disastrous law and order policy that has ever been imposed on this country by any Government?
Why does the right hon. Gentleman not follow through his own logic, ignore the more rabid voices behind him and introduce a conditional release scheme that is fairer and contains an element of control, which the increased use of remission does not contain? Why does the right hon. Gentleman continue to peddle the fiction that he will not interfere with the sentencing policy of the courts when he, the Home Secretary, has a Bill before the House that gives power to hon. Members to refer lenient sentences? That means Members of this House, in response to public demand, will call for tougher sentences. Why does the Home Secretary not follow his logic home and abolish that proposal too?
Mr. Hurd: The hon. Gentleman is referring to our proposal for lenient sentences, which, so far from removing, we are proposing to strengthen. There was an exchange about that this afternoon at Question Time. I said to his hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) that the general election seems to have brought about a loss of memory. That is perfectly true in his case, too.
The policy that the right hon. Member for Manchester, Gorton (Mr. Kaufman) revealed in March to The Independent is entirely different from anything that could possibly find favour on this side of the House. He proposed the stopping of the present building programme. I cannot imagine anything more destructive or irresponsible. He also said that, as a matter of policy, a Labour Government would bring about a reduction of the prison population by 20,000 in the lifetime of a Parliament. That seems to be a wholly unreal and destructive approach.
Mr. Ivan Lawrence: Is my right hon. Friend aware that Conservative Members consider that his proposals are both necessary and timely, but they will mean the early release of people to whom judges have given appropriate sentences for crimes of violence? Will he explain to the House why he cannot exempt from his proposals all offenders who fall within this category, but who have been sentenced for crimes of violence?
Mr. Hurd: I have considered that question, because my hon. and learned Friend was kind enough to put that point to me privately early today. I am not inventing remission. My hon. and learned Friend accepts that, and I think that the public would accept it, too. The law gives me no discretion to distinguish between different types of offender on the basis of the offence. Remission exists on the basis of good conduct and on the basis of the sentence passed, not on the nature of the offence. Therefore, I do not have the discretion to discriminate as my hon. and learned Friend wishes. In practice, even if I had the power, to do so would be very difficult. I repeat that a small minority of people who have been sentenced for offences of violence to 12 months or under might qualify for earlier remission. These are cases which the courts thought did not deserve longer sentences. I gave the example of the pub

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fight or the street brawl. The greatest possible difference in the length of individual sentences would be two months, no more.
Mr. Bob Cryer: Does the Home Secretary not see a link between the economic policies that have produced so much unemployment and the greedy, atavistic policies espoused by his Government for this prison crisis? Will he elaborate on the private sector proposal, about which he has been very vague? He says that he has been in contact with some American area of activity. Does that mean that he will hand over the prisons to private contractors, or does it mean that he will use the industrialised building techniques that were recommended by his friend Geoffrey Rippon, which produced Ronan Point and all the other magnificent examples of private enterprise techniques?
Mr. Hurd: The hon. Gentleman's first point was the platitude of the previous Parliament. He did not serve in that Parliament, so he does not know how platitudinous and often rejected that was. However, he did fight the election and he knows that the awful "crimeometer" was one of the flops and duds of the election. Therefore, I am surprised that he should rehearse that idea again today.
The hon. Gentleman has got it wrong about privatisation. We are faced with a dangerous situation, which my right hon. Friends and I have been trying to remedy after a period of disastrous neglect, using the conventional methods of design, arguing with hon. Members in the House where a prison should be, taking into account the planning and the comings and goings, getting on with the design, renewing a design and interfering with a design. We have continued to improve as best we can all the conventional ways of proceeding. As I said in my statement, the procedure is too slow.
I do not think that there is a case, and I do not believe that the House would accept a case, for auctioning or privatising the prisons or handing over the business of keeping prisoners safe to anyone other than Government servants. However, I do not think that we can afford to sit back and say that the way in which we have been doing things in the prison building programme is absolute and cannot be improved.
I was impressed by the Select Committee report. The accounts cited about the United States vary, and I do not say that we should be slavish followers of what happens there. However, it is our clear job in this dangerous situation to look around the world to see whether in this area, as in others, bringing private sector techniques to bear earlier and more vigorously can improve a very serious public sector situation.
Mr. Robert Key: With regard to the establishment of a prison camp at Rollestone in my constituency, will my right hon. Friend confirm that it will be staffed by prison officers and that there will be no predictable effect on the requirements of the Wiltshire constabulary? What category of prisoners will be housed there?
Mr. Hurd: Rollestone will be equipped and designed as a category C prison, and that bears on the reply that I gave to my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan). Obviously there will have
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to be discussions with the chief constable of Wiltshire as a matter of practical arrangements. However, I do not envisage asking the Wiltshire police to contribute to the manning of the camp. If I did that, I am sure that the police authority, the chief constable and my hon. Friend the Member for Salisbury (Mr. Key) would be on to me for more men at the drop of a hat.
Rev. Martin Smyth: Does the Secretary of State accept that those of us who demand a high standard of protection for our people welcome the modernisation of our prisons, both for the morale of the staff and for the care of those who have suffered—quite justifiably in most cases—the deprivation of liberty?
The Secretary of State will be aware of a movement to transfer people to Northern Ireland. When speaking of remission, will he accept that there is something unfair in transferring people to complete sentences in Northern Ireland, where they receive a better approach to remission, while those who may be sentenced under Diplock courts and sent to prisons in England do not get the same facility? Does he accept that that kind of approach in dealing with remission causes unrest?
Mr. Hurd: The hon. Gentleman represents a part of the United Kingdom where there is 50 per cent. remission at the moment, although there are no arrangements for parole. That is the kind of variation of experience that I would expect the committee of inquiry that I have announced to consider to see whether any lessons can be drawn. I can certainly send the hon. Gentleman the rules that apply to the applications that we receive from time to time, as he rightly said, for people to be transferred to prisons in the Province. He will know that the rules and criteria are strict. Most of the letters that I write on this subject explain why we cannot do that. I shall certainly write to the hon. Gentleman and set that out in greater detail. He can come back to me on that if he wishes to do SO.
Mr. Richard Alexander: Will my right hon. Friend resist pressure for lesser sentences as a means of solving the problem? Is he aware that many of our constituents are deeply concerned about some of the lenient sentences that come out day by day from the courts? I congratulate him on the more robust prison building programme that he has announced and I commend that to him. I hope that in addition there will be considerably better pay and conditions for the prison officers who will man the new buildings.
Mr. Hurd: My hon. Friend is right on his first point. The occasional what we might call "wayward" lenient sentence shakes public confidence in the criminal justice system, in particular at the upper or violent end of the scale. I believe that we need to strengthen the proposals in the Criminal Justice Bill in that respect.
My hon. Friend will also be aware that we are in the middle of the biggest single reform of the prison service system for many years. We are trying to do away with the ruinous appalling over-dependence on overtime and get decent arrangements for basic salary and working conditions, and to settle the tasks in the prisons and how they are to be carried out. There was always a difficulty in introducing the fresh start reform at a time of overcrowding. However, if we had waited, we would have lost the opportunity. It would not have gone ahead. We

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now find that the prison officers are still worried about the limitations, but they have balloted overwhelmingly to support the reform. There is a great prize and we must press on, for the reasons that my hon. Friend gave.
Mr. Tom Cox: In view of the reply that the Home Secretary has just given, is he aware that the morale of prison officers is now at an all-time low? Sadly, at all major prisons they are reading the small print in fresh start and they feel that they have no confidence in it. What will the Home Secretary do to build up the confidence of prison officers who at the end of the day will be responsible for running any establishment for which his Department has the overall responsibility?
If the Home Secretary is thinking only of privatisation for the building of new prisons, will the people who are to run the establishments be brought in at a very early stage of the planning and designing of those establishments? Very often the people who build those establishments never have to run them.
The Home Secretary referred to people being kept in police cells. His right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), the former Home Secretary, said in 1983 that that system would be ended. It has not been ended. Has the Home Secretary visited any of the police cells in London where men and women are now being kept?
Mr. Hurd: In response to the hon. Gentleman's last question, my answer is yes.
My right hon. and learned Friend the Member for Richmond, Yorks gave an undertaking and carried it out. He undertook that the use of police cells would be ended, and it was. It has now resumed in my time, and I accept responsibility for that. It is thoroughly undesirable and has acted as a safety valve. However, there comes a time when the safety valve becomes dangerous, and that point has been reached in the use of police cells.
With regard to design. we must certainly consult the users. I went to what used to be RAF Lindholme, which my right hon. and learned Friend the former Home Secretary brought into the prison system several years ago. The users were consulted on the design for refurbishing that camp to turn it into a prison. The design there is admirable. Having made a decision, we must carry it out. We should not nibble away at it.
I disagree with the hon. Gentleman's point about morale. There was an all-time low. However, when people realised that the opportunity for fresh start was substantial, they rallied round to it. I acknowledge that there are problems of implementation and timing and those are particularly serious in London, as the hon. Gentleman knows. If he follows these matters closely, he will be aware that we are in close discussions with the unions involved about how to overcome those problems and the useful progress that we have made in the past few days will, I hope, be underlined and reinforced by what I have had to say today.
Sir Eldon Griffiths: Taking the five points in the statement as a whole, I congratulate and thank my right hon. Friend on making some important proposals and on taking what must for him have been a very difficult and uncomfortable decision on remission. Is he aware that he inevitably places some of his friends and admirers in something of a quandary, insofar as we are hound to welcome the relief that the decision will bring to
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the police service and the prison service, while at the same time we are apprehensive about the consequences of releasing earlier than the courts have judged right a proportion of the offenders—perhaps 18 per cent.—who will have been convicted for crimes of violence or sex crimes?
Will my right hon. Friend reassure the House, the police service and the public that this is an interim solution to a genuine crisis and that he does not intend to continue with it, without the authority of the House, beyond three or four years? Finally, will he reconsider the possibility of taking powers within the Criminal Justice Bill to enable examinations to be made of individual cases of violent crime so that he can overcome the problem of release that he has mentioned?
Mr. Hurd: I am grateful to my hon. Friend for the spirit behind his question. I do not believe that what I said about remission will exist in isolation for as long as three or four years. I shall be discussing with my former right hon. and learned Friend, Mr. Mark Carlisle, the speed with which his inquiry will proceed. I hope that it will be concluded long before three or four years. As my hon. Friend said, this is an interim measure, but I think that the time scale will be rather tighter than he thought might be acceptable.
I understand exactly—my hon. Friend put it well—the reservations that must be felt about some parts of the package. The right hon. Member for Gorton and others say that we should not press ahead with prison building, and there are others who have understandable reservations about remission. It would have been possible to continue hoping that without taking action the immediate crisis would pass. It might do so, but I am not sure about that.
My colleagues and I came to the conclusion that we had to tackle the problem by finding a solution that would have a lasting effect. I believe that there must be a package. I do not think that supply side measures only, or measures directed only to the demand side of prison places, would produce an adequate answer. I hope that on balance, and with reservations that are understandable, the House will agree that the balance is right.
Several Hon. Members rose——
Mr. Speaker: Order. I am bound to have regard to the business that will follow this statement, and we are likely to have a long night. I shall allow questions to continue for a further 10 minutes. I ask for questions and not statements.
Mr. Dennis Skinner: The right hon. Gentleman has given long replies.
Ms. Clare Short: I am sure that the Home Secretary's statement will be extremely welcome to the staff of Winson Green prison in my constituency. The conditions there are foul, and the conditions for the prisoners are the conditions for the prison officers. Is the right hon. Gentleman aware that most of the prisoners who will be released under the conditions that he has set out were convicted of trivial offences and that many of them have mental health and literacy problems? The real way to restrict crime is to apprehend those who are guilty, and that is not achieved by a substitute for a law-and-order policy that results in inadequate people being locked up for ever-increasing periods. That substitute policy does not help prison offices or prisoners, and it does not enforce law and order either.
Mr. Hurd: The hon. Lady is not correct. The prisoners who might benefit from remission are those who have been awarded relatively light sentences by the courts. That is the basis on which remission is calculated and awarded, and the only basis on which it can be considered by law. I shall not comment on the remainder of the hon. Lady's comments, because I have already been accused by some of her hon. Friends of going on for too long. We have had our exchanges on this "balance" often enough in the past and the hon. Lady knows why I do not agree with her.
Mrs. Elaine Kellett-Bowman: I am delighted that my right hon. Friend is to visit Lancaster castle prison a week on Friday. He will find that over many years the governor and his staff have pressed into use every square inch of prison, but it is still overcrowded. Therefore, prison officers will welcome a reduction in prison numbers. However, neither they nor my constituents would want sex offenders, many of whom have been too lightly sentenced, to share in the scheme that he proposes.
Mr. Hurd: I look forward to visiting Lancaster prison. As I always try to do on such occasions, I shall set aside time to talk to members of the prison service unions, including the Prison Officers Association. They will make their points to me about overcrowding, as they always do. I have already responded to questions about the nature of offences and the nature of the powers that are open to me in altering the rules governing remission.
Mr. Derek Fatchett: Does the Home Secretary recognise that the major cause of overcrowding at Leeds prison is the many prisoners who are on remand? Will he say whether he intends to take any steps to reduce their number? It has been clear for a long time that Leeds is probably the most overcrowded prison, and I ask him to explain why we must wait until the 1990s for any new building projects at the prison.
Mr. Hurd: One of the most encouraging visits that I made shortly before the general election was to Leeds prison. I am aware of the high state of morale of those of the hon. Gentleman's constituents who run the prison, and that, on the eve of fresh start, was extremely impressive.
It is for the courts to decide whether an individual should be given bail. It is reasonable to encourage the probation service to provide the greatest possible information so that the courts can make the right decisions. It is right to establish reasonable time limits where we can so that the process of justice is accelerated. It is reasonable to ask magistrates throughout the country to consider the reasons for the wide variation in the granting of bail. There may be good reasons for local decisions because of local circumstances, and that is a matter for local magistrates, but they need to establish to their own satisfaction that decisions are made on that basis.
Mr. Nicholas Budgen: Is my right hon. Friend aware that a high proportion of my right hon. and hon. Friends regret his decision to release 3,500 prisoners early? First, early release trespasses upon the independence of the judiciary. Secondly, it reduces the deterrent effect of sentences that increasingly do not mean what they say. Thirdly, the form of the order reduces the opportunities for discussion in the House and for voting against the proposition.
Mr. Hurd: I did not expect to carry my hon. Friend with me on this occasion. It would have been possible for me to proceed only on the supply side and to announce more camps here, there and everywhere. I do not think that my hon. Friend has addressed himself to the realities, including what I have said about camps, which are not sensible on the whole for remand prisoners. Nor are they sensible on the whole for those who might be a danger to the public. The problem of staffing camps properly when the prison service is severely stretched, as my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) said, and securely, which the public would expect, is a difficult one. I am not excluding the further use of camps, but those are the sorts of considerations that I must bear in mind.
Mr. Barry Field: Given the considerable increase in the prison population, will my right hon. Friend consider as a matter of priority bringing back into service A and D wings at Parkhurst prison? Will he consider also making an early change to the law to allow compulsory screening for AIDS in our maximum security and long-term prisons? As the Isle of Wight has one of the largest prison populations of any constituency, will my right hon. Friend consider making an early visit to my constituency to meet prison officers?
Mr. Hurd: I am much obliged to my hon. Friend. I congratulate him on his arrival at this place. Even before the glad news of his election reached me I had arranged—I trust with his approval—to visit the prisons in his constituency during the summer recess. My hon. Friend is right to drew attention to the fact that it has taken too long to make the necessary security changes in a couple of wings at Parkhurst. That has been drawn to my attention, and we are getting on with the changes. I entirely accept what my hon. Friend said about that. Perhaps I could write to him about screening for AIDS. The issue does not arise immediately from my statement. I could give an answer off the cuff, but I might get the detail of it slightly wrong. As it is an important subject, that would be a mistake.
Sir Nicholas Bonsor: My right hon. Friend will be aware of the sympathy that is felt for him by my right hon. and hon. Friends and myself in his predicament over prison accommodation. He will be aware also of the support that he has had from the Opposition over having to release about 3,000 prisoners prematurely. I hope that he will be aware further of the deep feeling of Conservative Members about a system whereby people are sentenced to appropriate sentences by judges, only to serve a small proportion of them. I hope that in the long term my right hon. Friend will make adequate provision to ensure that violent and sex offenders serve their full sentence, not a proportion of it.
Mr. Hurd: My hon. Friend puts that clearly, and he will know the thinking on the proposals that are in hand on lenient sentencing and maximum sentences and on several of the offences that he mentioned. Of course, there is a problem, which, as he rightly says, goes wider than the statement about remission and parole. Both of them offend against the principle that he proclaims, but both have been here for a long time. My right hon. and learned Friend the Member for Richmond, Yorks lowered the minimum qualifying period for parole, in a move that I strongly supported. The House knows that there continue to be problems and criticisms, which will not be removed

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by my statement, but will not be created by it. That is why, in our election manifesto, we proposed an inquiry, and that is why we are now getting on with it.
Mr. Teddy Taylor: Might not an inquiry on this be counter-productive, when judges can look at all the circumstances of the case and simply increase sentences to take account of additional remission? Could not the splendid abilities of Mr. Mark Carlisle be better put to considering ways by which we might more effectively deter potential criminals from getting engaged in crime in the first place?
Mr. Hurd: The splendid abilities of the Government Front Bench, and particularly of my hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten), are devoted to that second subject. There is a clear need to study the first subject, which is what I have asked Mr. Carlisle to do. My hon. Friend makes a fair point about the judges, but it is the judiciary who have been complaining about the present relationship between parole and remission. Their criticisms, expressed to me courteously hut forcefully for more than a year, led me, some time ago, to favour an inquiry, which will cover this whole subject.
Mr. Ivor Stanbrook: Is my right hon. Friend aware that the general public will not understand how it is that a Conservative Government, faced with overcrowded prisons, are about to release on to the streets thousands of convicted criminals and hundreds of violent criminals before their time is up? Is there not a strong argument for providing additional prison accommodation rather than doing what my right hon. Friend proposes? Is this not an error of political judgment?
Mr. Hurd: My hon. Friend is putting a point to which I have already replied. It would have been possible, although unrealistic and unproductive in the long run, or even in the medium run, simply to come forward with the part of the package of plans for expanding and accelerating provision for the prisons. For the reasons that I have given about timing, staffing and the limitations of camps, I would have had an easier afternoon if I had done that, but I would not have tackled the problem seriously.
As regards remission, my hon. Friend spoke about letting people out on to the streets before their time, but already the upper range beyond that about which I am talking has a system of parole and of remission of one third. I am making an adjustment at the lower end, for those whom the courts have not thought fit to award serious and heavy sentences. The maximum difference in an individual sentence as a result of this proposal is two months.
Several Hon. Members rose——
Mr. Speaker: Order. I shall bear carefully in mind those hon. Members whom I have not been able to call when this matter is next discussed.

Business Questions
5.13 pm
Mr. Frank Cook: On a point of order, Mr. Speaker. I do not consider myself a journeyman in the ways of this Chamber, so I must seek your guidance. Is it in order for an hon. Member during business questions to pose a carefully prepared question to the Leader of the House that elicits an equally carefully prepared answer? Neither question nor answer referred to the business of the House; it simply enabled the Leader of the House to make a governmental statement on a newspaper article on the day in question and to make a denial. Is this not a disorderly use of the proceedings of the Chamber? Is it not a practice similar to that which obliged you, Sir, only recently to admonish the Government for an abuse of the proceedings of the House? Would not a similar admonishment be proper in this instance?
Mr. Speaker: Business questions are traditionally wide. I have no foreknowledge of a question that an hon. Member may ask, nor of the answer that may be given to him. I cannot help the hon. Gentleman on that.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. You will recall that during business questions I referred to the call by some Members of Parliament for a six-day week for the miners and to the need for a debate on the issue, especially when Tory Members of Parliament are just off on three months' holidays. During the course of my question I referred——
Mr. Speaker: Order. The hon. Gentleman must not continue business questions.
Mr. Skinner: I want to refer to Hansard.
Mr. Speaker: The hon. Gentleman cannot do that. We cannot have a continuation of business questions. The hon. Gentleman asked his question and got his answer. I accept that it may be an answer that he did not like, but——
Mr. Skinner: It is not that.
Mr. Speaker: Order. This is not a point of order for me. Mr. Skinner: Yes, it is.
Mr. Speaker: Unless the hon. Gentleman can make this a point of order for me, I will have to stop him.
Mr. Skinner: Mr. Speaker, everybody knows that you have some responsibility for the Official Report. In my statement, I quoted the fact that the chairman of the London Docklands Development Corporation received £27,096 a year for a two-day week. I said no more and no less than that. In his response, the Leader of the House said that I had said things that were not true about this chairman. I quoted from Hansard, column 135, on 7 July and I have made——
Mr. Speaker: Order. Does the Leader of the House wish to clear this matter up?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Wakeham): Further to that point of order, Mr. Speaker. This is a simple matter. The hon. Gentleman will know, when he reads Hansard, that I did not question the fact of the salary paid to Mr. Christopher Benson. I disagreed with the hon. Gentleman when he said

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that the salary paid was not justifiable. Mr. Benson is worth every penny of his salary and he has done a great deal for the London docklands.
Mr. Speaker: I hope that this will not be a precedent for carrying on.

Sound Broadcasting
5.18 pm
Mr. Chris Mullin: On a point of order, Mr. Speaker. I seek your help. I understand that the sound recording of the Home Secretary's reply to the first question and all subsequent exchanges were not forwarded to the BBC as is normal practice. Would you inquire how this came about and report back to the House? I understand this to be unusual, if not unprecedented.
Mr. Speaker: I will look into that, but I am not responsible for what the BBC transmits, thank goodness.
Mr. Mullin: Further to that point of order, Mr. Speaker. The House is responsible for feeding the sound downstairs to the BBC. Therefore, it is not a matter for the BBC.
Mr. Speaker: I will look into the matter.

Sound Broadcasting
  BILL PRESENTED
    PUBLIC UTILITY TRANSFERS AND WATER CHARGES
    Mr. Secretary Ridley, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Walker, Mr. Kenneth Clarke, Mr. John MacGregor, Mr. Secretary Rifkind, Mr. Secretary Parkinson, Mr. Colin Moynihan and Mr. Michael Spicer, presented a Bill to confer powers on water authorities, electricity boards and the Electricity Council to act in relation to proposals for the transfer of any of the property or functions of water authorities or electricity boards to other bodies corporate; and to make provision for and in connection with the fixing of charges by water undertakers: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 10.]

  Resolved,
  That the Duchy of Lancaster Bill be referred to a Second Reading Committee.—[Mr. Lightbown.]

Orders of the Day

  Finance Bill
  Further considered in Committee.
  [SIR PAUL DEAN in the Chair.]

  Finance Bill
    Clause 80

      ROLL-OVER RELIEF NOT AVAILABLE FOR GAINS ON OIL LICENCES
      5.19 pm
      Sir William Clark: I beg to move amendment No. 48, in page 45, line 40, leave out from `not' to 'an' in line 41.
      The First Deputy Chairman of Ways and Means (Sir Paul Dean): With this it will he convenient to discuss the following amendments: No. 63, in page 45, line 45, leave out subsection (2) and insert—
      '(2) This section has effect in respect of gains or disposals made on or after 14th May 1987.'.
      No. 49, in page 45, line 45, leave out subsection (2).
      Sir William Clark: This amendment relates to roll-over relief. It is available to most industries in our fiscal system. Rio Tinto-Zinc challenged the Inland Revenue over whether it could deny roll-over relief, and took it before the special commissioners. The case related to the oil industry. The special commissioners ruled that RTZ was entitled to roll-over relief. The Inland Revenue then said, "All right, we will alter the law." If the Inland Revenue wishes to do that, it is fine, but I regret the fact that the Bill states that roll-over relief was never available to the oil industry. This is retrospective legislation.
      If a Labour Government had introduced retrospective legislation, we would be screaming blue murder. Ministers should alter this clause, preferably as I have suggested in amendments Nos. 48 and 49. Roll-over relief is available to other industries, and I do not understand why the oil industry should be singled out for this penal treatment.
      It is said that, since the Government grant licences to oil companies, they arc entitled not to allow them some fiscal advantage which is available to other industries. That cannot be correct. Although the Government issue licences to the oil companies, private enterprise exploits those licences. Had it not been for private money, North sea oil would not have been developed as quickly as it has been developed over the years. If the clause remains as it is, it will have an inhibiting effect on oil exploration in the future, which would be detrimental to our economy. The retrospective element is bad.
      I am heartened that one hon. Member said:
      "In my view, it is a most unsatisfactory principle"—
      he was talking about retrospection—
      "because of the degree of uncertainty it introduces into the affairs of the business men of this country which we legislators so constantly exacerbate. If we establish this principle of retrospection, we are on a slippery slope down which we shall be heading like Gadarene lemmings, and I am delighted to be on this side of the Committee in opposing the principle."—[Official Report, Standing Committee A, 6 June 1978, c. 747.]
      That was said by my hon. Friend the Paymaster-General. I know that he will not have changed his mind. Nor will my right hon. Friend the Financial Secretary to the
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      Treasury, who said yesterday in a debate on another clause that he was diametrically opposed to retrospection. At least two Treasury Ministers are on record as saying that they oppose retrospection.
      Mr. Neil Hamilton: Does my hon. Friend recall the debates on the Finance Act 1975, which introduced capital transfer tax, and the complaints from Conservative Members that the tax would apply from the date of its announcement but the details of which would not be revealed until 18 months later?
      Sir William Clark: My hon. Friend reinforces the point that I am trying to make, and I am grateful to him for jogging my memory and that of other members of the Committee. The Conservative party has always turned its face against retrospection. Perhaps the Government will say that the clause will not affect any company which has appealed before the date of Royal Assent, but only one company would be involved in that—Rio Tinto-Zinc—and the judgment was in its favour.
      What has happened to the other oil companies? When there is some disagreement between the taxpayer and the Inland Revenue, it is a well-known practice to send the case to the commissioners as a test case. Other taxpayers wait until the result of that test case is known before doing anything about it. Indeed, when a case is pending, the Inland Revenue—it might be too brutal to say that it drags its feet—is in no hurry to settle the disagreement between it and the taxpayer. I hope that my hon. Friend will not argue that the oil companies had the opportunity to appeal. This is the test case principle.
      This matter is fundamental to the philosophy of the Conservative party and the Government. I agree with my hon. Friend the Paymaster-General and my right hon. Friend the Financial Secretary that in no circumstances should we have an element of retrospection. If the Government or the Inland Revenue wish to change their minds, they should change the law, but they should not make the law retrospective. I urge my right hon. and hon. Friends to remove the element of retrospection. I appreciate that time is short. Report stage of the Bill will be on Monday and Royal Assent must be obtained before the House rises next Friday. There may not be time to do as I suggest in this Finance Bill. But I hope that my hon. Friends will assure me that the Government will take the matter seriously and include it in next year's Budget. If they do that, it must cover past and future roll-over relief.
      I have kept my speech brief because we started late. I hope that the brevity of my speech will not militate against the seriousness with which my hon. Friend treats the matter.
      Mr. Tony Blair: There is general agreement that clause 80 raises some important questions in relation to the oil industry and retrospection and the principles that should govern the House of Commons when considering whether to pass retrospective legislation.
      We debated the principle of retrospection on an Opposition amendment to clause 62, but it is right to debate the matter again because there are significant differences between the considerations that affect clause 62 and those that affect clause 80. This case relates to the availability of roll-over relief for oil companies on the disposal of their business assets. In normal terms, the capital gains tax liability on the disposal of assets can be deferred or rolled over if the proceeds are used to acquire

      1315
      replacement assets. If a company sells its buildings, land or fixed plant or machinery, and uses the proceeds to purchase new land, buildings or fixed plant or machinery, roll-over relief is available. Deferral can usually be obtained until the replacement asset is disposed of.
      The difficulty in relation to oil companies arises on what happens to their licences, especially the process that is called farming out licences. I am far from being an expert on the oil industry, but I understand that farming out operates as follows. The Department of Energy awards a licence to an oil company. That company will complete its initial working obligations, which might include the drilling of one or more exploration wells. It might not make an immediate commercial discovery, so, to share the risk of continuing exploration and discovery, it farms out a share of the licence to another company in return for the further drilling expenditure being paid by that "farmingee"—if I can use that ugly word. I did not coin that word. It was used by the United Kingdom Offshore Operators Association.
      5.30 pm
      Company A may spend a certain amount of money on exploration, then decide to sell 50 per cent. of its licence to company B in return for company B spending a certain amount of money on further exploration work. The Revenue is insisting that company A, the original licensee, should pay immediate capital gains tax on the expenditure contributed by company B, the company to which the licence has been farmed out. That farm-out is considered to be a capital gain.
      Sir Trevor Skeet: Surely there is no capital gain. If a third company is brought in, that company will take over the obligations of the initial company that obtained the licence. At the development stage I can understand that profit will accrue, but such profit will not accrue at the exploration stage.
      Mr. Blair: The hon. Gentleman may have misunderstood my argument. The Revenue considers that there is a capital gain, but the oil companies do not. That is the issue between them.
      When company A farms out 50 per cent. of its licence, it does not get any cash. Therefore, the oil companies believe that there is no capital gain and that it is perfectly right to defer liability. We are aware that the Revenue takes a different view. However, I believe that a test case was referred to the special commissioners by RTZ and judgment was given in favour of the company.
      Sir William Clark: I have already said that.
      Mr. Blair: I was listening, but it is important that the issues are made clear.
      It is not the case, as it was when we debated clause 62, that everyone had always agreed that a particular tax relief was not available, but then the special commissioners suddenly found a loophole so that that tax relief became available. The Financial Secretary argued for retrospection in clause 62 on that basis.
      I understand that the oil companies have never accepted that they were not entitled to this relief. The oil companies' understanding puts this matter in a critically different position from other areas of retrospection. It is not as though the test case in front of the special
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      commissioners suddenly discovered a loophole that no one believed existed before. The oil companies have always taken issue on this matter.
      I welcome the Economic Secretary to this Finance Bill debate. If the oil companies have always argued that they should be entitled to this roll-over relief, the Minister cannot advance the same argument as was used in favour of clause 62. Many cases are pending, awaiting the outcome of the test case. The Revenue's position is curious because it takes a particular view. It will allow a case to go to a hearing. If it wins the case, it is perfectly happy; but, if it loses the case, it immediately introduces legislation to reverse the effect of that decision. What is the purpose of allowing the matter to go to court if the Revenue intends to introduce legislation reversing the effect of the decision, should it go against the Revenue? Many people are waiting to take their cases to court on the basis of the outcome of the test case. It is unfair that they should be prejudiced as a result of waiting for the test case to be heard.
      Can the Minister give us an idea of the sums of money involved? I have always made it clear that we do not regard the principle of retrospection as absolute in the sense that we are prepared to support the principle if the sums of money involved are large or there are extenuating circumstances. There must be a balance between the principle of retrospection and the funds that are involved in a particular case. We want to know whether such extenuating circumstances exist in this particular case. Is this retrospection in clause 80 simply in accordance with what the law has always been perceived to be, or does it directly affect the interests of a group of people and make the law retrospective contrary to their understanding of the law over a period of 22 years? Those important points require an answer.
      Sir Trevor Skeet: I believe that my hon. Friend the Member for Croydon, South (Sir W. Clark) has revealed an important point of principle. It is not clear which side of the Committee is responsible for the initial error. I remember that many years ago the Burmah Oil company took its case to the House of Lords and succeeded. The result was that legislation was passed to reverse that decision. A decision on RTZ was taken by special commissioner Judge Patrick Medd in April 1987, but now that decision has been reversed.
      Clause 80 has established an extremely bad principle for the international oil companies. Let us consider the case of Enterprise Oil, set up by the Government. In the countries where it operates licences abroad, whether it be Indonesia, the Netherlands, France, Italy, the United States or Canada, the farm-out of licences is not subject to tax. Therefore, it is not wise to establish a principle in the United Kingdom that can be avoided.
      This is a difficult period for small operators in the North sea and elsewhere as a result of cumulative tax levels. The tax on revenues at marginal rates works out at about 86 per cent. The notional capital gains tax under clause 80 will be a deterrent to exploration.
      The effect of a combination of falling prices, varying exchange rates and the escalating cost of equipment and services in the North sea has led to serious difficulties. In the past 12 months the price of crude oil has risen from $8 to $20 a barrel, but in sterling terms it has risen from £4·96 to £13. The smaller oil operators in the North sea have come out of the deal extremely badly. This is not the time

      1317
      to consider using capital gains tax in the way outlined in clause 80. The roll-over procedure, which was advocated many years ago, should be used.
      The retrospective element has been adequately dealt with in previous debates. I do not believe that there has been any tax avoidance. A case was brought before the special commissioners, and I believe that the judgment reached was realistic and equitable. Since the mid-1970s there have been roughly 200 farm-outs, of which only about 12 cases have been settled. There will be appalling difficulties for the industry and for the Revenue if all those farm-outs have to be settled in the next two years. Indeed, cases can refer back to 1965 with subsequent complications.
      I believe that the Treasury has failed to distinguish between farm-outs made during the exploration and appraisal period—that practice has accelerated the fullest exploitation of the North sea—and those made after the grant of annex B approvals at the beginning of development. If, for example, a company wants to sell an interest in the Forties field or wants to sell an interest in a production capacity to the Japanese it is right that it should fall for assessment for capital gains.
      Mr. Dick Douglas: I apologise to the Chairman and the Committee for not being present earlier. As we deal with the vexed question of annex Bs, can the hon. Gentleman, given his knowledge of the industry, tell us how many annex Bs are not applied for or are held up because of fears in relation to this clause?
      Sir Trevor Skeet: I do not have the figures, and that fact can be put down to the Department of Energy. I should have thought that some had been held up, but not a great number. The Inland Revenue says that enormous profits can be made, but I believe that all this can be rendered nugatory.
      The risks and the uncertainties inherent in making an assessment today on future problems are shown in the RTZ case. The Inland Revenue had calculated a profit of £18·46 million which would be shared by the consortium, RTZ's share being £7·1 million, based on 35 per cent. interest. Those are fantastic figures and I dare say were matters of negotiation between the parties. On further assessment, the revised figures were £150,000, RTZ's share being £48,000. The arrangement that the Inland Revenue uses for its computations may impress hon. Members, civil servants and others, but it is pure guesswork. If it is pure guesswork, there is no reason why the exploratory elements operating in the North sea should be affected by it.
      I should like to emphasise some further points. There is no real gain at the exploratory stage if a licence is farmed out from A to B, because B will have to put in the money to develop the field. In many cases, there will be no discovery. If, as in one in 10 cases, there is a good discovery, it may mean that the field will be productive for the benefit of all. With roll-over, when earnings begin to materialise, the company will be in a position to pay. Front-end loading or commitment is totally unrealistic in respect of legislation. Front-end loading affects the cash flow of the smaller firms much more than the bigger ones. It is much more equitable for demands for CGT projections to be carried forward to the time when the fields come into operation. I hope that my right hon. Friend the Financial Secretary will consider my remarks carefully and bring about changes next year.
      Mr. Alex Salmond: I shall make a brief contribution because many of the points have been made. There are two issues at stake. The first concerns retrospective legislation. During last night's debate on clause 62, the Financial Secretary made it clear that the Government did not like retrospective legislation and that only in certain circumstances would it be a good idea. One of his key points was about the fact that the taxation commissioners had overturned what he described as the "generally understood" position. The Financial Secretary made that point no fewer than seven times in his contribution on clause 62. He used "generally understood" twice, "widely accepted" four times and "accepted" once.
      As I said yesterday evening, I do not understand how the Government can possibly maintain their position on clause 80 if they follow the arguments used on clause 62. Whatever the rights and wrongs of this clause, there is no question but that there was substantial controversy about whether farm-ins were eligible for roll-over relief on capital gains taxation. It was not a "generally understood" position. If there were such a position, the industry would have felt that roll-over relief was available at least for certain types of farm-ins. If there is consistency in the Government's position on clauses 62 and 80, they will have the grace to withdraw or amend clause 80.
      The second issue is whether this is the right moment to tighten oil taxation. We have heard some oil price figures, but we should also consider the number of exploration and appraisal wells drilled. At the end of last month 22 exploration and appraisal wells were being drilled, substantially more than in the spring this year, when there were only 13. The number is much less than at the end of 1985, when the total was 50.
      5.45 pm
      The industry is in a severe state. Part of the responsibility must lie with the Government's headlong and unwise pursuit of low international oil prices. [Interruption] The Government encouraged and welcomed the decline in world oil prices. That was a mistaken policy for a major oil producer.
      At this time it is unwise further to tighten oil taxation and further to restrict the necessary flexibility of people farming in to oil licences. In a previous incarnation the Economic Secretary knew something about this industry, so surely he accepts that it is a good idea to have this flexibility. If a company has fulfilled its obligation and been encouraged by the wells drilled, although no definite discovery has been made, it is a good thing for another company to be allowed to introduce new capital for further exploration wells. Surely the Government do not want to reduce flexibility and lessen the ability of other companies, especially small ones, to have particular licences, discover new fields and therefore secure the industry's future. I very much hope that, given those arguments, the Government will revise their position.
      Mr. Michael Morris: I support the submission of my hon. Friend the Member for Croydon, South (Sir W. Clark). My right hon. Friend the Financial Secretary should be under no illusion that the oil industry believes that this is a not a very cumulative tax. Add to that the retrospective element, which goes back 22 years—it has not just happened in the past year or 18—months—and there is a double problem. I think that my right hon. Friend the Chancellor will recall, if he is prompted by my right hon. Friend the Financial Secretary,

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      that when he was Secretary of State for Energy he commented to the Treasury that the implementation of the advance petroleum revenue tax was wrong in terms of its timing and measures. The Treasury did not listen but, 12 months later, it changed the law because it found that the oil industry was right and that the effects were detrimental to the industry.
      We are interested in further exploration in the North sea. Farming out has been a practice in some parts of the world, especially in the North sea, for years. The practice is not only well proven but helps small companies and British companies. If clause 80 remains as it is, the major companies will not be adversely affected. The Shells, BPs and Amocos of this world will be able to shrug it aside and carry on, but the British companies and small companies—the very ones that we want to develop—will lose. I very much hope that my right hon. Friend the Financial Secretary has listened to the comments of my hon. Friend the Member for Croydon, South.
      Mr. Peter Hardy: I can be relatively brief because many of the arguments have already been deployed.
      The Committee is indebted to the hon. Member for Croydon, South (Sir W. Clark) for tabling these amendments, although I did not think that it was entirely gracious of him to seek to take the credit for the development of our offshore industry purely for private enterprise. He may well be more interested in taxation than in energy, but he should recognise that the public sector has been involved substantially. This is not an amendment or a cause that should he approached in quite so partisan a fashion, but it is right that we should consider the matter seriously.
      The fact that the response appears to have been rushed is serious. It is a rather spiteful and swift response, not made at a gracious speed, to a decision by the special commissioners that the Government find discomfiting. It certainly does not seem entirely reasonable that the measure should have been rushed through in this way without, apparently, adequate consultation with the industry. I am beginning to wonder—perhaps the hon. Member for Bedfordshire, North (Sir T. Skeet) shares my concern, to judge from his comments—whether the Treasury consulted the Department of Energy at all. The effect of the measure would surely run contrary to the interest and policy that have long been adopted by that Department. Its effect has already been described by the hon. Member for Banff and Buchan (Mr. Salmond) and other hon. Members, who recognise that the effect of the clause, if unchanged, will be to reduce the level of offshore activity.
      My concern is not really a fiscal one, but has to do with energy policy. The Government have an obligation to ensure that we maximise the levels of extractions from each field in the North sea. That requires substantial investment. A tax policy that deters investment will mean that the amount of oil that we extract will fall. While oil prices have risen, though not, perhaps, on the significant scale that some hon. Members may have expected, the Minister cannot deny—he has experience of this—that oil prices in the 1990s will rise more substantially than they have in the past year or two. If that is the case, the Government should try to ensure that such a level of
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      investment is maintained offshore as guarantees the encouragement of tertiary extraction, orders for British industry and technology and the opportunity for British companies to which hon. Members have referred.
      All those aims will be embarrassed if the Government go ahead with this rather draconian step of retrospection. The hon. Member for Croydon, South (Sir W. Clark) may be much more opposed to the principle of taxation than I am; perhaps I take a more austere view of the cause of taxation than he does. While I accept that retrospection seems harsh—and, accompanied by inadequate consultation, it is even more severe—I believe that the Government may well be giving my hon. Friends and me some ideas. The prospect of retrospection is obviously alien to a civilised society. On the other hand, I suppose that a new approach to the wealth tax, accompanied by some retrospective arrangement, might have some attractions, although I do not suggest that the Minister withdraw his clause for fear of that prospect.
      However, I suggest that the Minister does not go ahead with the proposals until there has been adequate consultation with the oil industry and the Department of Energy to establish what the estimated effect of the measure is in terms of long-term energy policy and of maintaining a viable offshore industry. If the Minister examines the matter from that standpoint, he will make significant changes to the clause. If not, the Government will stand accused—with justification—of acting in a high-handed and draconian manner that is contrary to the best interests of sensible energy planning and development in the United Kingdom.
      Mr. Peter Rost: I support the amendment moved by my hon. Friend the Member for Croydon, South (Sir W. Clark). Indeed, I could hardly fail to do so, having been a member of the Energy Select Committee in the last Parliament that spent the six months in the run-up to the election on a detailed and intensive study of the North sea oil industry, the effects of the lower oil price on declining activity in the industry and the problems facing it. We made a great many detailed proposals and recommendations and we are still waiting for a response from the Government. Naturally, we hope that the response in the Budget is not their only one.
      One thing emerged clearly from that detailed report. We took a great deal of evidence, including evidence from the Treasury and the Department of Energy. Although the fiscal regime was, in our view, reasonably fair at that time, we made one specific recommendation that relates closely to the amendment. The report was published during the general election and has probably not been fully noticed yet by the House, but it certainly will have been noticed by my right hon. and hon. Friends on the Front Bench, even if the Treasury has not taken much notice of it. Our report is certainly relevant to the amendment:
      "Although the system of North Sea taxation is not the one which, with hindsight, might be most desirable, we have no fundamental criticisms to make except to emphasise the need for the Treasury constantly to watch developments in the rest of the world and to ensure that North Sea taxation is never a disincentive to activity. During the present critical period, the government, if anything, should err on the side of the taxpayers rather than the Revenue. We broadly welcome the two concessions contained in the 1987 Budget, though we believe that it is arguable that both should have been somewhat more generous in the broad national interest."
      We now find that, at the last moment, the Treasury appears to have thrown in, not only retrospectively, but in

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      a rather penny-pinching manner, a proposal that will undoubtedly have a damaging effect on continuing exploration activity. In view of the long lead times required and the slow-down in investment in the North sea that has already taken place, what is needed now, if anything, is a little pump priming by the Treasury rather than disincentives.
      The retrospective nature of the measure is bad enough. My right hon. and hon. Friends in the Treasury are well aware of the detailed workings of the oil industry; they understand what farm-outs are about, and that they are as much a part of the oil industry structure as, for example, reinsurance and some underwriting are at Lloyds, or partnerships or consortia are in the rest of industry. However, the Revenue does not seem to understand that. To propose to tax farm-outs for capital gains before the true nature of the reserves of oil have been proved as economic seems ludicrous. The proposal is unacceptable not only because it is retrospective, but because it would undoubtedly hinder further development in the North sea.
      The whole of clause 80 should be deleted until there has been more meaningful discussion with the oil industry to find a compromise. There are certainly plenty of precedents for proper negotiation, and the oil industry has always been prepared to come up with a compromise solution. In this case, it appears that the industry has not been properly consulted. Without amending or deleting clause 80, we shall be imposing a tax on the transfer of licences in cases in which no commercial discovery has yet been made in a way that will undoubtedly provide a major disincentive to further development. If there is not a major concession on this point, drilling activity will decline in precisely those critical years when we should be accelerating development in order to maintain self-sufficiency for the United Kingdom. If there is not a major rethink by the Treasury, the proposal will be not only counter-productive, but a penny-pinching, badly timed measure that is contrary to the best national interest.
      Mr. Douglas: I shall be extremely brief and I apologise again to the Committee for my lack of attendance.
      The Financial Secretary to the Treasury should know better, because he has had deep experience of the Department of Energy, and he knows that there are distinct differences between exploration and appraisal and the development stage. What would one be trying to do, either front the point of view of the nation's industrial and commercial interests or from that of future tax revenue? The measure would tie the oil companies at the exploration and appraisal stage. This clause is a backward step and would restrict exploration.
      I am not saying that the oil companies are not slick chicks and know how to manipulate taxation. On occasion the Government have been too generous in their taxation policy; I have made that plain. We are talking about trying to entice companies to specific licences in cases where either the consortium as a whole or one or two members on the licence have said, "We have carried out our exploration drilling, but we are in some difficulty and cannot go forward because of cash flow." They then look round to see if they can find someone who will come in. The company that comes in will not necessarily invest cash but may do something in kind. It will drill a couple of holes and get a share of the licence. That is totally in the national interest and seems a sensible way to proceed.
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      6 pm
      I take it that all hon. Members received a note from the United Kingdom Offshore Operators Association. It talks about companies A and B and says:
      "'A' should pay immediate capital gains tax on the £10m expenditure contributed by 'B', which is considered to be a gain by 'A' on 50 per cent. licence disposal to 'B'."
      Does the company pay on the total £10 million? We must be clear about that.
      There is another vexatious problem about which one of the Ministers in the Department certainly ought to know better. Annex Bs are not given away like Omo gift coupons. They have to be analysed in great detail by the Department and the operator or the consortium that is operating the licence. It surprises me that apparently there have been no discussions on this matter between the Department of Energy and the Treasury. I plead with the Government, in the interests not only of the oil companies but of ensuring a much more even development of the North sea, to examine these matters and to have discussions with the oil companies. There is ample precedent for this.
      The original Bill on oil taxation was moved by Edmund Dell and envisaged that tax procedures did not start immediately. If my memory serves me right, they started at clause 10 which gave more time for discussion with the oil companies. That was under a Labour Government.
      These are delicate and difficult matters and the Minister will not cave in all at once under the pressure of the points that have been made. There are good technical and national reasons and long-term taxation advantages for not inhibiting the oil companies. If they are inhibited, it will inhibit the eventual tax flow from the development of the fields. The Government ought to know better and ought to behave much more sensibly.
      The Economic Secretary to the Treasury (Mr. Peter Lilley):I join other hon. Members in thanking my hon. Friend the Member for Croydon, South (Sir W. Clark) for giving the Committee the chance to debate the two most crucial aspects that are raised by the clause. They are obviously matters of concern to hon. Members in all parts of the Committee. They are the issue of retrospection and the question whether the refusal of roll-over relief inhibits exploration activity. I shall begin by discussing retrospection.
      Both the inland Revenue and the oil industry have proceeded for a number of years on the basis that oil licences did not qualify for capital gains roll-over relief. The industry did not like this situation. Indeed, it lobbied annually for the law to be changed to make gains on oil licences eligible for such relief. However, the very fact that such lobbying efforts were made illustrates that there was broad agreement about what the law was—if not about what it ought to be. For example, before the 1983 Budget the United Kingdom Offshore Oil Industry Tax Committee wrote to my right hon. Friend the Chancellor saying:
      "CG rollover relief is not available under Sections 115–121 CGTA 1979 for a capital gain accruing on disposal of an interest in a petroleum licence … UKOITC propose therefore that the law he amended."
      Similar representations have been made by either Brindex or UKOITC before almost every Budget since then. In previous Finance Bills, my hon. Friend the Member for Croydon, South has put down amendments to change the law on these lines, as have my hon. Friends the Members

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      for Havant, (Sir I. Lloyd), for Devon, North (Mr. Speller), for Wansdyke (Mr. Aspinwall). and for Bedford, North (Sir T. Skeet).
      There has been broad agreement about what the law is. The hon. Members for Sedgefield (Mr. Blair) and for Banff and Buchan (Mr. Salmond) said that there was considerable uncertainty about the law. I think that they were referring to another aspect of the capital gains law as it applies to oil licences. It is whether a gain arises on the transfer of an interest in an oil licence when no cash changes hands. That was in dispute until fairly recently, but a settlement was reached and the parties to the settlement agreed that a gain did arise and settled with the Revenue.
      Only one company continued to pursue a case with the special commissioners and, as has been recognised, that was Rio Tinto-Zinc. It pursued the separate point about whether such a gain was eligible for roll-over relief. The resultant decision by the special commissioners casts doubt on this long-established application of the law. In that case, the special commissioners determined that an oil licence could qualiy for roll-over relief. Of course, a ruling by the special commissioners applies only to the specific case from which it arose and could be reversed in a higher court. To allow the matter to proceed through the courts would mean a long period of uncertainty and litigation until the courts had determined whether, and if so in what circumstances, gains on oil licence transfers are eligible for roll-over relief. Therefore. the Government announced on 14 May their intention to introduce clause 80 to establish the legal situation beyond doubt.
      I well understand the odium that attaches to the word "retrospection". Changes in the law which retrospectively upset the established and accepted legal basis on which people have planned their lives clearly are odious. However, the clause has no such disruptive effect. On the contrary, it reaffirms the legal validity of the established and accepted understanding on which the industry and the Revenue have planned their affairs up to now.
      About £ 1 50 million of tax on past gains is at stake. The hulk of this arose from a comparatively small number of sales of interests in developed fields. If these amendments were accepted, they could possibly give rise to an unexpected windfall gain to the companies that sold their interests in a field, and a corresponding windfall loss to the Exchequer and taxpayers. That is not right.
      Mr. Douglas: The Economic Secretary should look carefully at the words that he is using. He spoke about "interests in developed fields." A cash flow could be available. It seems that the Minister is asking for tax to be paid at the exploration and appraisal stage and not at the development stage. There is a substantial difference.
      Mr. Lilley: That is an important point, and it is an important distinction that has arisen in the debate. As I recall, no hon. Member, nor the industry, has ever argued that there would be any economic benefit or industrial gain from allowing roll-over relief on developed fields. The practical consequences of capital gains tax roll-over relief on oil exploration are restricted to exploration licences.
      My hon. Friends the Members for Croydon, South, for Bedfordshire, North, for Northampton, South (Mr. Morris) and many other hon. Members have drawn this distinction, as has the industry, and they have argued that
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      the lack of roll-over relief may inhibit transfers of interest during the exploration stage. I agree that such transfers can be beneficial. It is in the public interest that licences be in the hands of those who are most enthusiastic to develop them and who have the cash to do so.
      Sir Trevor Skeet: My hon. Friend has used a very blunt instrument—the Finance Bill—to bring about the change. What happens to the other 50 or 70 prospective claimants who feel that they have a case but who are not as lucky as RTZ? Will they lose out?
      Mr. Lilley: If my hon. Friend will contain himself, he may find that there is good news in store for them.
      It is desirable that there is no unnatural inhibition of transfers at the exploration stage, not only because we want licences to be in the hands of those who have the greatest interest in developing them and the greatest ability so to do, but so that companies can spread the risk where appropriate.
      My hon. Friends pointed out that, typically in these cases, no cash gain arises when a company farms-out in return for the farmer-in agreeing to undertake a programme of work on the block.
      Having listened carefully to what hon. Members and the industry have said in the consultations that we have had recently, I am persuaded that a distinction could be made. However, it is not one that can sensibly be sorted out in the compass of this Finance Bill. Accordingly, while we believe that clause 80 should be enacted unamended, I propose to discuss further with the industry over the coming months the possibility of introducing some form of roll-over relief for gains, past and present, on work programme farm-outs at the exploration phase where no cash profit is realised. If those discussions are fruitful, and I cannot guarantee that they will be, the legislation could not be introduced until the spring 1988 Finance Bill.
      I hope that my hon. Friends the Members for Croydon. South, Bedfordshire, North, Northampton, South and Erewash (Mr. Rost), as well as Opposition Members, will find that this goes some way towards meeting the points that they have made, and 'that it will reflect not only the work that they have done on the clause this year, but the efforts that they have made in previous years to obtain such relief. I hope that in the light of that my two hon. Friends who have tabled amendments will feel inclined not to press them.
      Before I sit down I shall respond to some of the points that have arisen in the debate. It was suggested that the oil industry is not entitled to roll-over relief, but that is not the case. Roll-over relief is available for plant and equipment in the North sea. It is only in regard to oil licences that there has been a general understanding that it was not available.
      Another point was whether the RTZ case that was before the special commissioners was a test case. It was not in any sense a test case. The other parties that had been involved in the earlier case as to whether a gain arose had settled, accepted that it did and had not pursued the question whether they were entitled to roll-over relief. As far as I know, there are no outstanding claims for roll-over relief from any company in the North sea, other than the company that is protected by a subsection of the clause.
      My hon. Friend the Member for Bedfordshire, North suggested that as a result of the main provisions of clause 80 the law would be affected as far back as 1965. Because

      1325
      there is normally only a six-year period during which back claims can be made, it merely alters the situation for the past six years. If the potential concession that I have announced is satisfactorily agreed, that would apply only to roll-over relief on developed fields.
      My hon. Friend the Member for Bedfordshire, North also mentioned that gains at the exploration stage were guesswork. There is an element of estimation, but, as a result of the change in the process of estimating gains that has recently been announced by the Inland Revenue, partly following the settlement relating to whether gains arose, the measured gain will be smaller than was previously thought to be the case.
      6.15 pm
      The hon. Member for Dunfermline, West (Mr. Douglas) asked whether UKOOA's statement that oil companies would have to pay the full £10 million was correct. Under the recently revised method of valuing farm-out concessions, that is not correct. It may become hypothetical or academic, but they will be liable only for a fraction of the £10 million, which reflects the probability of success.
      My hon. Friend the Member for Erewash mentioned the Select Committee report, in which he played a distinguished part. The Treasury has found that valuable and we have read it with care. He will note that the representations that were made to him confirm the general point that I was making, that the industry did not have any doubts about the existence of the law on roll-over relief and that it did not express any doubts about the uncertainty attached to it. That reinforces the general point that I was making with regard to retrospection.
      I hope that that covers most of the specific points that have been made.
      Mr. Michael Grylls: The concession that my hon. Friend has given is helpful and practical. In view of that, I do not intend to pursue my amendment. It has been a useful debate and the House is grateful to my hon. Friend for what he has said.
      Sir William Clark: We have had an interesting debate and it has shown the advantage and value of such debates.
      As the House knows, I am a consultant to Texaco. These debates are valuable because they demonstrate how the implications, technicalities and fiscal changes that harm the industry are sometimes overlooked by the Inland Revenue. I say that with the greatest respect to the Revenue and I am not trying to denigrate it in any way.
      With regard to retrospection, the assurances that my hon. Friend the Economic Secretary has given go a long way. In view of the unequivocal assurance that in next year's Budget we will have a clause that gives roll-over relief to the exploration element of the industry and that it will not only apply from 1988, I beg to ask leave to withdraw my amendment.
      Amendment, by leave, withdrawn.
      Clause 80 ordered to stand part of the Bill.

    Clause 81

      COMMODITY AND FINANCIAL FUTURES AND OPTIONS
      Question proposed, That the clause stand part of the Bill.
      Mr. Blair: I have a brief question on clause 81. It concerns the gains that are made on over-the-counter
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      options and on the futures exchange. As I understand it, over-the-counter options mean the grey market in these options or in futures. The Economic Secretary will tell me whether that is right or wrong. Whereas these were previously taxed as income under case VI of schedule ID, they will now be taxed as capital gains, which is a more beneficial tax treatment for the investor. Is the Economic Secretary aware of the cost of that tax change? Will he tell us why this has been brought forward now, bringing the over-the-counter options in line with the law on other options, and why it was not done before?
      Mr. Lilley: I am sure that the hon. Member for Sedgefield (Mr. Blair) was not intending to cast aspersions on the over-the-counter market by suggesting that it was grey. The distinction is between options carried out on a recognised exchange and those that are usually tailor-made and not regularly traded on an exchange but worked out for particular customers. There has been a distinction in the tax treatment between the two, partly because the tax treatment of traded options was related to the fact that they were traded on an exchange.
      The hon. Gentleman asked about the cost. I understand that the cost of the change will be negligible. None the less, it will be beneficial to those who produce the tailor-made options. The reason for introducing this clause now is that it is possible to follow the provisions of the Financial Services Act 1986 in regulating these sorts of options and to use that framework to extend the tax treatment presently accorded only to those on exchanges to the tailor-made options as well. For that reason, the clause will not come into effect until the Financial Services Act regulatory framework is in force.
      Question put and agreed to.
      Clause 81 ordered to stand part of the Bill.
      Clause 82 ordered to stand part of the Bill.

    Clause 83

      FAILURE TO MAKE RETURN FOR CORPORATION TAX
      Question proposed, That the clause stand part of the Bill.
      Mr. Blair: It may be helpful if I say one or two words about this part of the Bill, which will introduce a system of automatic penalties in relation to corporation tax and the pay-and-file system in an attempt to introduce sonic of the recommendations of the Keith committee. In essence, we support the structure of the scheme and have no objection to it. It will mean that the payment of corporation tax is speeded up and, therefore, that the tax system will work more efficiently.
      I want to return to something that we raised on several occasions when we were debating value added tax and the proposals of the Keith committee in relation to that, the absence of any power of mitigation in relation to the fines that will be imposed. There may be amendments to clause 84 that raise a similar point, so perhaps I can speak about that later.
      One of the great dangers of introducing a system of automatic penalties without mitigation is that the justice that we are introducing is a little rough. We have had the experience of the value added tax system of automatic penalties being applied without any process of mitigation being allowed. It is fair to say that that has caused widespread concern. The Opposition have made several

      1327
      attempts to secure some provision for mitigation of those penalties. Our pleas have fallen on deaf ears so far. I should be grateful if the Minister can tell us whether similar representations have been made in relation to the penalties to be introduced for corporation tax. Will he explain exactly why we cannot allow some system of mitigation when, especially with corporation tax, we could be dealing with large sums of money? There is a basic principle that if penalties are to be imposed there should be some attempt to allow a board of commissioners to consider mitigation in circumstances where it is clear that the offence was the result of inadvertence. The difficulty now is that businesses may be subject to considerable fines without mitigation being available. That cannot be in the interests of anybody. I would be grateful if the Minister would respond to that.
      As I said, we are generally in favour of the structure of the implementation of the proposals, but the absence of a power of mitigation is a grave drawback to the corporation tax proposals in the same way as it was for value added tax.
      Mr. Bruce Millan: I support my hon. Friend the Member for Sedgefield (Mr. Blair) in all that he said. It is convenient for the Revenue or, in the case of VAT the Customs and Excise, to have these standard penalties inserted into the legislation. However, as my hon. Friend has said, they can sometimes operate unfairly where there is no demonstrable offence or negligence on the part of the taxpayer but where there may simply be inadvertent neglect, if one can use that expression.
      The absence of mitigation is a fault in the legislation. What my hon. Friend the Member for Sedgefield said about VAT is true. The fixed penalties have given rise to considerable concern. I hope that we shall have some indication from the Minister this evening that the question will be looked at again and not only in relation to this clause.
      Mr. Lilley: I welcome the support from the hon. Member for Sedgefield (Mr. Blair) for the general structure of pay and file which will be a considerable advance for taxpayers when it is introduced, although that will not be until April 1992. It is intended to overcome the incredibly complex problems in the existing system where there is no direct obligation on companies to file their accounts. About two thirds of companies go to appeal before accounts are extracted from them by the Inland Revenue. It is possible to make an assessment only then.
      We have decided to simplify that by introducing pay and file, the essential principles of which are that companies will have an obligation to file their accounts within 12 months of the end of the accounting period. After nine months they will have an obligation to pay their self-assessment of tax due. Interest will be earned if they overpay when the final assessment is made and interest will be incurred if they have underpaid in their original assessment.
      It is important that we move to automatic filing of accounts so that the Revenue can reach an agreed assessment of the tax due. To achieve that, it is necessary to have fixed penalties. A phased system of penalties is proposed. After a delay of between 12 and 15 months the penalty will be £100 flat rate. After a delay of between 15 and 18 months the penalty will be £200, after 18 months
      1328
      and up to two years it will be £200, plus 10 per cent. of the underpayment of tax when eventually worked out, and after two years it is 20 per cent. of the underpayment of tax.
      We have avoided mitigation for three reasons.
      Mr. Blair: Is it not the case that there can be automatic filing and automatic penalties and that that can still lie easily with a system of mitigation? Is it not the case that, if a small company were to make a tax return incorrectly, it could still be subject to stringent and draconian penalties?
      Mr. Lilley: These clauses deal solely with the filing, not the payment. Any penalties that arise out of the clauses are due to late filing. The system of penalties relates to that. There is not so much of a problem with over and under assessment because that is dealt with by the automatic interest payments. In any case, that is dealt with in later clauses of the Bill. Therefore, we are dealing with penalties for late filing of accounts to the Revenue.
      Powers of mitigation have been avoided for three reasons. First, companies have the right to plead a reasonable excuse for not filing their accounts. If that is proved, there will be no penalty, assuming that they eventually get round to filing accounts. Secondly, we have set the maximum penalty below that suggested by the Keith committee. Thirdly, the penalty is lower than that which is theoretically available under the present system, which could be as high as 100 per cent. of the tax underpaid.
      6.30 pm
      Because we wish to avoid a situation in which everyone goes to appeal, we cannot have a system of mitigation. If it were open to the special commissioners to mitigate the penalty, there would be nothing to stop everyone lodging an appeal on the offchance and we should be back in the present situation in which 430,000 appeals are lodged every year.
      Mr. Blair: The argument that if mitigation is allowed everyone will wish to mitigate is the classic argument of bureaucracy, and we should be extremely cautious about accepting it without challenge. The same could be applied to the "reasonable excuse" get-out. On the whole, people do not seek to use such provisions if they have no argument to put. It is argued that the way to deter appeals is to have a system of automatic penalties without the power of mitigation, but one must balance the interests of the Exchequer in getting the tax in properly with those of the taxpayer.
      In relation to VAT, there have undoubtedly been cases of real and substantial injustice, to the extent that the president of the VAT tribunal has said that the law should be changed to allow for a power of mitigation. That tribunal does not expect to be flooded with unnecessary appeals as a result. I wish to put down a marker about this as we have raised the matter many times before and will doubtless do so many times again. We must be careful of moving to a situation in which bodies have power to levy substantial penalties but in which there is no power to graduate the amount of penalty according to the turpitude to the offence.
      Mr. Lilley: As I said, the penalty is automatically graduated in terms of the delay in filing the accounts. As delay is the essence of the offence, there is an element of automatic graduation.

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      The experience with VAT has given rise to the hon. Gentleman's concern. He will know that a review of that system has been promised in advance of the 1988 Finance Bill. Doubtless any lessons which come out of that review will be taken into account in a wider context.
      Mr. Milan: The Minister says that the taxpayer could plead reasonable excuse, but I do not see that in the clause. Could the Minister say where it appears?
      Mr. Lilley: It is a feature of the Taxes Management Act and is automatically incorporated in this.
      Mr. Blair: The Minister referred to the review in relation to VAT. Was he implying that the lessons of that review would be applied to automatic penalties in relation to corporation tax?
      Mr. Lilley: They would not be applied unless there were a logical relationship leading us to do so, but clearly we take all reasonable matters into account all the time.
      Sir William Clark: The taxpayer may plead reasonable excuse, but the Inland Revenue will be judge and jury in deciding whether the excuse is reasonable. I shall deal with mitigation on a subsequent amendment. Under this clause the penalty is imposed for failure to file accounts, but there is no pressure on the Inland Revenue to agree the computation within a certain period. Given the current backlog of work, is my hon. Friend satisfied that when these provisions become operative the Inland Revenue will be able to deal expeditiously with the accounts?
      Mr. Lilley: My hon. Friend is correct. In the first instance, the Inland Revenue will decide whether an excuse is reasonable. However, if a company objects to that ruling, it can appeal to the commissioners. It can take the matter to appeal on the question of reasonable excuse.
      Under the pay-and-file system, there will be an incentive for the Inland Revenue to deal with matters expeditiously because if a company has overpaid the Inland Revenue will have to pay interest on the money that turns out to have been paid in excess of the due assessment.
      Question put and agreed to.
      Clause 83 ordered to stand part of the Bill.

    Clause 84

      ASSESSMENT OF AMOUNTS DUE BY WAY OF PENALTY
      Sir William Clark: I beg to move amendment No. 60, in page 53, line 1, leave out from 'assessment' to the end of line 7 and insert—
      `or may reduce it to such an amount as they consider appropriate having regard to the provisions of that section and all the circumstances of the case; and
      (b) if it appears to them having regard to all the circumstances of the case that no penalty ought to be awarded, may set the assessment aside.'.
      The Temporary Chairman (Mr. James Lamond): With this it will convenient to take amendment No. 61, in page 53, line 7, at end insert—
      '(6A) In any appeal against an assessment by way of penalty under section 94 of the Management Act unless the Commissioners are satisfied on the basis of lawful evidence provided by the inspector or any representative of the Board and by or on behalf of the taxpayer that a penalty has been incurred they shall set the assessment aside.'.
      Sir William Clark: The amendments need not delay us for long, because much of the ground was covered by the hon. Member for Sedgefield (Mr. Blair) in the previous debate.
      There is no power for anyone to mitigate the various fines, although I appreciate that there is some scaling of the fines in relation to the delay in filing accounts. In the recent VAT tribunal case of Gailey, Jackson and Pook, the chairman of the tribunal described section 15 of the Finance Act 1985, which contains the automatic penalty provisions, as follows:
      "The section is draconian in that it imposes a penalty of 30 per cent. without power to any authority to mitigate, without reference to the amount of tax lost to the state and, indeed, without reference to the justice of the matter".
      That is a severe indictment of fixed penalties, because all cases are not the same. I accept that interest will be payable in the event of overpayment or underpayment, but I do not accept the argument that thousands of people would appeal if mitigation were possible. They do not do so in the normal course of events when assessments are made under the present system. People do not automatically appeal in relation to ordinary computations. They may appeal to protect their position, but very few cases go to the special commissioners or to the general commissioners. The matter is settled before the appeal comes up. A case goes to the commissioners only if the taxpayer appeals against an assessment but does not provide accounts and cannot prove that the assessment is wrong.
      In all justice, it is a bit much for my hon. Friend the Minister to say that there is to be no mitigation of penalties simply because the Government or the Revenue believe that everyone would appeal. That has not happened in practice, and I see no reason why it should now.
      On amendment No. 61, if one appeals against an assessment in the normal course of events, it is up to the taxpayer to prove why that assessment is wrong. If the Revenue, under the penalty procedure, says that there is a penalty and makes an assessment of that penalty, does the Revenue have to prove it, or does the taxpayer have to disprove it?
      Mr. Lilley: My hon. Friend referred to a criticism that applied to the original Keith committee recommendations, rather than to the modified version incorporated in these provisions. We have responded to that criticism by reducing the maximum proposed penalty from 30 to 20 per cent. of outstanding tax and by increasing the time before it becomes applicable. Therefore, a longer delay is allowed before any penalty comes into force for the non-filing of accounts, and the penalty is less than it was. Theoretically, the present maximum penalty is up to 100 per cent. of tax and obviously that is much more liable to require some degree of mitigation.
      Sir William Clark: The chairman of the tribunal said that 30 per cent. was draconian. My hon. Friend says that it has been reduced to 20 per cent., but that is still draconian.
      Mr. Lilley: Clearly it is less so, and it becomes applicable much later. This problem of appeal which my hon. Friend suggests is unlikely to be serious could become important and there could be widespread appeals. The practice of going to appeal already stands at about 400,000 cases a year, so we are not talking about small numbers

      1331
      of people who are in the habit of appealing. We cannot be sure that they would not continue this habit even under a regime where it was less appropriate.
      Mr. Blair: We must he a little careful. The Economic Secretary talks about people in the unfortunate habit of appealing, but they are perfectly entitled to appeal if they feel that their interests have not been properly considered. We should not necessarily think that everyone who appeals is attempting to abuse the procedures.
      The two amendments deal with the question of litigation and we have substantially dealt with that, but I wish to pursue a matter arising from amendment No. 61. I thought that in effect the commissioners, on appeal, would have to be satisfied that a penalty should have been incurred. I should be grateful if the Minister could tell me whether that is the case. Or is it the case that at present the duty is on the taxpayer to show that a penalty should not be incurred?
      Mr. Lilley: When the hon. Gentleman said "at present", did he mean in the clause as it stands, or under the present regime?
      Mr. Blair: Under the amendment.
      Mr. Lilley: I am not criticising the practice of appealing. It is almost built into the present structure of corporation tax and it has become established practice. However, I would regret its continuing under the new system, because it is partly to avoid the necessity of that that we are introducing pay and file. It would be sad to create a new system under which appealing was legitimate and so people did it. If mitigation was built in, obviously it would be open to people to lodge an appeal, because they would stand some chance of having their penalty mitigated. They stand to lose nothing, except in trivial cases where the cost of lodging an appeal may not be worth it.
      In answer to the question about the onus of proof, the Revenue must prove that a penalty is applicable. It must demonstrate that the filing had not been made by the relevant time. In that regard, the amendment probably has no effect. I can reassure my hon. Friend the Member for Croydon, South (Sir W. Clark) that the onus of proof remains where it is now and the Inland Revenue will have to prove that it has gone through the relevant processes of showing that a penalty is applicable.
      The amendment could require the Inland Revenue—it would depend on how the amendments were interpreted by the courts—to prove, for example in the event of a plea of reasonable excuse, that the company had no reasonable excuse: that is, not that a specific excuse was not reasonable, but that it had gone through all reasonable conceivable excuses and could prove that the company did not have one. Obviously, that would be extremely unsatisfactory, and I am sure that it is not the intended consequence of my hon. Friend's amendment.
      6.45 pm
      Sir William Clark: In view of the current investigation and review, which will be completed before the next Budget, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 84 ordered to stand part of the Bill.
      Clauses 85 and 86 ordered to stand part of the Bill.

    Clause 87

      INTEREST ON TAX OVERPAID
      Sir William Clark: I beg to move amendment No. 25, in page 56, line 1, leave out subsection (3) and insert—
      'In relation to a repayment of income tax falling within subsection (1)(b) above the material date is the 15th day following the end of the period specified in paragraph 2(2) of Schedule 20 Finance Act 1972 in which the corresponding payments referred to in subsection (1)(b) above fell to be received.'.
      The Temporary Chairman: With this it will be convenient to take the following amendments: No. 26, in page 56, line 49, at end add—
      '(9) For the purposes of subsection (1) above, where income tax is set-off against corporation tax under section 240(5) Taxes Act 1970, it shall be treated as a repayment of income tax made on the material date for payment of that corporation tax'.
      No. 27, in clause 90, page 60, line 6, after 'assessment' insert
      'For the purpose of this subsection, income tax deducted at source from income received shall be deemed to be corporation tax paid on the material date in section 87(3)'.
      No. 28, in clause 90, page 60, line 17, at end insert
      'this subsection shall take precedence over section 240(5) Taxes Act 1970'.
      No. 29, in clause 95, page 62, line 25, leave out subsection 3 and insert—
      '(3) Except in relation to sections 87 and 90(5) for which the appointed day shall be 6th April 1988, no day may be appointed by virtue of subsection (2) above which falls earlier than 31st March 1992'.
      Sir William Clark: These are probing amendments. The effect of amendment No. 25 is to ensure that the early payment of tax by companies through the deduction of income tax at source from the receipts of interest is fully recognised by the new interest on tax overpaid regime. Amendment No. 26 is necessary to give effect to that.
      Amendment No. 27 is to give corporate taxpayers the same right to recover an excess of tax paid by deducation of tax at source as they would enjoy if that pre-payment had arisen through an excess of corporation tax paid.
      Amendment No. 29 accelerates the date to after 1 April 1987 instead of the existing words.
      If my hon. Friend the Economic Secretary can answer those points, I am sure that we can proceed with the rest of the Bill without further delay.
      Mr. Lilley: These amendments would fundamentally alter the structure of the existing tax system, virtually abolishing the system of deducation of tax at source for companies. This would have serious effects. In the first year it would cost the Exchequer more than £1,500 million, more than £1,000 million of which would go to the chief beneficiary—the insurance industry. Naturally, this is a cash flow effect and I am not suggesting that it would permanently increase the cost to the Revenue by that amount.
      I can see the analogy that my hon. Friend the Member for Croydon, South (Sir W. Clark) draws between the interest charges on pay and file and the delays in payment inherent in the position particularly of the life insurance industry which can claim back tax paid at source on income that it has received. However, I do not think that the analogy is sufficiently close. Certainly it would not be appropriate to pursue the change in this Bill.

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      Our proposed interest charge under pay and file is viewed as a commercial restitution in the circumstances where a company accidentally overpays tax against what is eventually assessed. Likewise, if it underpays tax, it will have to pay a measure of restitution for underpayment. That is different from the sort of timing difference which is inherent in taxation at source, which my hon. Friend wants to seek compensation for or alter altogether. I understand his point, but I do not think that it would be appropriate in this Bill to consider changes that would affect the Revenue so substantially.
      Sir William Clark: I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 87 ordered to stand part of the Bill.
      Clause 88 ordered to stand part of the Bill.

    Clause 89

      PRESCRIBED RATE OF INTEREST
      Question proposed, That the clause stand part of the Bill.
      Mr. Blair: Clause 89 enables the Treasury to fix the rate of interest from time to time as it wishes. I should be grateful if the Economic Secretary would tell me what practice the Treasury intends to pursue. Will it be the same as it is at present?
      Mr. Lilley: The hon. Gentleman has raised an important point. We intend to consult widely on the appropriate structure of interest rates within pay and file, and that consultation will begin shortly. The Government have no fixed view. It will, of course, be important to ensure that the system is both workable and fair, and is as widely agreed within the industry as possible, while at the same time meeting the needs of the Revenue, but we do not approach it with a fixed idea in our mind.
      Sir William Clark: After consultation, let us suppose that it is agreed that the interest chargeable is one, two or three points above base rate, or whatever is thought reasonable. If we hypothesise a charge of two points above base rate, which today would give a rate of 11 per cent, would it. not be unfair to keep the rate at the previous level—particularly if the base rate came down'? I think that a month or two after the base rate comes down the interest charge should come down by the same amount.
      Mr. Lilley: I shall certainly bear that in mind. If there were too great a difference between the rate applied and that prevailing in the market, problems would indeed arise. We should have to take such considerations into account when reaching a decision.
      Mr. Blair: I should like to pursue the point a little further. Presumably at present interest is simply loaded on to whatever corporation tax is unpaid, and that is fixed by the commissioners in some way. How is it done? I am a little concerned about the Treasury fixing the interest rate. We are told that there will be consultation on the proper basis on which that is to be done. However, the whole structure of the provisions in the Bill is to put considerable power into the hands of the Inland Revenue or the Treasury, which will be making the assessments. There will be automatic penalties, and the prescribed rate of interest will be fixed by the Treasury from time to time.
      1334
      What concerns me is that there will probably be very little opportunity for us to debate the outcome of the change in structure. When the Treasury decides the prescribed rate of interest, will we have an opportunity to decide whether it is correct? The hon. Member for Croydon, South (Sir W. Clark) has raised a fair point. Will the rate be one, two or three points above the base rate? The difference between those figures could he millions or even hundreds of millions of pounds. It is important that we obtain clarification and are given some assurance that any Treasury decision on the prescribed rate of interest will be made only after the widest possible consultation, and that we shall have an opportunity to comment after that decision.
      Mr. Lilley: At present the interest rate is determined by statutory instrument placed by the Treasury. In theory, the House could object every time that the interest rate is changed. I understand—although I will correct this if I am wrong—that we will be able to establish a system that must be agreed by the House rather than the present pattern in which rates are altered by statutory instrurnent. However, that point may have to be clarified.
      Mr. Blair: It would be helpful and worthwhile if we were given some opportunity to assess the mechanism that the Treasury intends to use. The Economic Secretary has put his finger on a significant change. At present, through statutory instrument, we can vote against the Treasury's decisions. Presumably that will change when we have agreed to the new method of assessment. The Treasury will then be able simply to change the rate of interest, and there will be no opportunity to dispute it after we have agreed that method.
      Mr. Lilley: One option that will have to be considered is a differential between interest rates. At present the differential relates to the time when interest becomes payable. It is payable after six months if the company underpays, and after 12 months if it overpays. Although there is currently the same rate of interest, there is no symmetry between the two. If there were symmetry, there might be a possibility of round tripping, and so forth. I do not wish to mislead the Committee by suggesting that just one rate of interest will necessarily result.
      Question put and agreed to.
      Clause 89 ordered to stand part of the Bill.
      Clauses 90 to 95 ordered to stand part of the Bill.
      Schedule 6 agreed to.

    Clause 96

      INTERESTS IN POSSESSION
      Question proposed, That the clause stand part of the Bill.
      Mr. Blair: We have debated the principle of inheritance tax and the Government's reduction in it before, and I do not wish to rehearse old arguments. Last year the Government abolished inheritance tax on lifetime gifts between individuals. Clause 96 will extend that abolition to lifetime transfers into and out of interest in possession trusts—effectively, any trust that is not discretionary. I should be obliged if the Financial Secretary would tell me how much the abolition will cost, and whether I am right in thinking that it is primarily the better off who will gain.
      The Financial Secretary to the Treasury (Mr. Norman Lamont): The cost of the new relief is negligible. Although it may be affected by behavioural changes, we do not believe that it would be significant.
      Mr. Blair: Am I right in thinking that when the Treasury says "negligible" it is referring to the same principle as it uses in the Red Book, which is less than £5 million on an annual basis?
      Mr. Lamont: I am not sure that that is the same principle as that which is used in the Red Book, but it would fall within the definition of "negligible". If I can add to the definition of "negligible", I shall let the hon. Gentleman know. I do not know whether he wants me to confirm his understanding of the clause. As always, he interpreted it perfectly correctly.
      7 pm
      We are extending to transfers into interest in possession trusts the principle of potentially exempt transfers. That is because we recognise that many businesses and a great deal of the heritage are held in interest in possession trusts. This change was urged on us by various professional bodies. Having looked at it, I came to the conclusion that it was justified. I know that my hon. Friends are very much in favour of it, too. However, it is necessary for the change to be carefully buttressed with anti-avoidance provisions. It is emphatically not our intention to extend the principle of the exempt transfer to other trusts, such as discretionary trusts. We have stopped here. We were subjected to a great deal of pressure to extend exempt transfers into all sorts of trusts, but we have said that there are special features about interest in possession trusts. We have included the anti-avoidance provisions in the schedule so that it stops here.
      Mr. Blair: I suppose that we should be grateful for small mercies. I am happy to have the assurance that the abolition of inheritance tax will stop here. If the Treasury were to exempt transfers into discretionary trusts it would open up a huge loophole for avoidance.
      Question put and agreed to.
      Clause 96 ordered to stand part of the Bill.

    SCHEDULE 7

      INHERITANCE TAX: INTERESTS IN POSSFESSION
      Mr. Neil Hamilton: I beg to move amendment No. 91, in page 93, line 14, at end insert
      `and
      (d) that, within six months of the coming to an end of the relevant interest, any of the property in which that interest subsisted has neither—

      (i) become settled property in which a qualifying interest in possession subsists or to which section 71 below applies, nor

      (ii) become property to which an individual is beneficially entitled.'.

      As my right hon. Friend the Financial Secretary pointed out a moment ago, clause 96 and schedule 7 seek to restore the parity of treatment between life interest trusts and outright gifts made by individuals—an essential element of the old capital transfer tax legislation that was lost on the introduction of inheritance tax in 1984.
      I warmly welcome the changes that the Government have introduced in the Finance Bill. My right hon. Friend pointed out that had he gone further there would have
      1336
      been the prospect of considerable avoidance, and schedule 7 seeks, in a complex way, to prevent that from taking place. Were it not for schedule 7, property could be routed through life interest trusts to discretionary trusts. That could be misused in a variety of ways, two of which I shall mention by way of example and for the edification of the Opposition. The first is the so-called Chelsea pensioner scheme, whereby property is settled on somebody who is not expected to live for very long. The second example is the so-called man of straw scheme, under which property is settled on a person for life; but the trustees are given wide powers to appoint the property into a discretionary trust and thereby get around the limitations of life interest schemes.
      Schedule 7 is targeted accurately at these avoidance devices. My small amendment does not seek to disturb the safeguards against abuse in schedule 7. Many people, however, have come to the conclusion that, as drafted, schedule 7 is too wide and does not conform with the practice of trusts, particularly in relation to heritage property where life interests in possession are the normal way of passing on such property and of safeguarding it for the future.
      When property is settled on somebody for life, the terms of the trust often allow for some flexibility for appointment in the trustees, in case the life tenant dies prematurely. The trustees are allowed a short period—conventionally six months—in which to decide whether to appoint to a further life interest or to transfer property into absolute ownership.
      My amendment would allow the trustees a short breathing space before making the appointment without fear of being caught by the complexities of schedule 7. If my right hon. Friend wants a precedent, there is one in the Inheritance Tax Act 1984. Section 92 provides for the case where property is not treated as transferred on death until the beneficiary has survived for a given period that cannot exceed six months. The costs involved for the section and the schedule are negligible. If my small amendment were to be accepted, the cost would be even less. I commend it to my right hon. Friend and hope that he will accept it.
      Mr. Norman Lamont: My hon. Friend referred to the principle of parity between lifetime giving and giving to trusts that existed under the previous regime before the introduction of inheritance tax. He has called in aid that principle for this amendment. I am prepared to respond favourably to it.
      Although the principle of parity applied under the old regime, we do not feel that that principle should be incorporated into all trusts. We have made lifetime giving tax-free, provided the donor survives for seven years. Therefore, we did not feel that it was right to make that provision for all trusts. We have conceded that principle for interest in possession trusts, but we do not intend to extend it to discretionary trusts. Last year we made it possible for accumulation and maintenance trusts to be included in the potentially exempt transfers. The basic reasoning behind this, and my hon. Friend's amendment, is that the trust has a function as an instrument that is independent of any tax advantage. We do not wish to destroy the trust as an instrument. That is very important in relation to interest in possession trusts.
      My hon. Friend's amendment provides an opportunity for trustees who are caught by the anti-avoidance provisions in schedule 7 to rearrange matters so as to avoid

      1337
      the special rate of charge. If an interest in possession that was created by a potentially exempt transfer comes to an end within seven years of the exempted transfer and the property then becomes subject to discretionary trusts, which would be the normal route that might be used for avoidance, the termination may be subject to a special rate of charge instead of the normal rate, if the settlor is still alive. The amendment would prevent the special rate from applying on that termination if, within the following six months, the property is made subject to another interest in possession trust, or passed to outright individual ownership or to an accumulation and maintenance trust that already qualifies for exempt transfers. The normal rate charge will, however, remain.
      My hon. Friend's proposal has the merit that it would prevent people who have made perfectly proper trust provisions, with no avoidance motive, from being inadvertently caught by the special rate of charge. Without that a trust which provides for successive interests in possession at the trustees' discretion would be caught if an interest in possession ended prematurely, perhaps on the death of the life tenant, before the trustees appointed a successor. The amendment will allow trustees to make the appointment within six months after the life tenant's death without incurring a penalty.
      I am content to accept my hon. Friend's amendment. My hon. Friend alluded to men of straw, bed and breakfasting and other contrivances. We have built substantial anti-avoidance provisions into schedule 7. We will monitor the operation of my hon. Friend's amendment very carefully for signs of abuse. I do not believe that counter-measures will be necessary. However, if they were, we would not hesitate to bring them in.
      Amendment agreed to.
      Schedule 7, as amended, agreed to.

    Clause 97

      ACCEPTANCE IN LIEU: CAPITAL TRANSFER TAX AND ESTATE DUTY
      Mr. Milian: I beg to move amendment No. 89, in page 63, line 22, leave out 'may' and insert 'shall'.
      We are dealing with a case where property is transferred in settlement of capital transfer tax and the property has a value attributed to it at a date earlier than the date that the property is actually accepted. At present, the clause nevertheless provides that interest may be charged from that earlier date. It does not make that mandatory, but it allows the Revenue presumably to determine or argue that the interest should he payable although the value of the property is as determined at the earlier date.
      This is a case of the Revenue in certain instances trying to have it both ways. The logical position would be that if the value of the property was determined on a particular date, no interest should be payable from that date. The effect of my amendment would simply make that the position rather than allow what seems to be the present case in the drafting where there is an element of discretion on the part of the Revenue.
      Mr. Norman Lamont: In the Budget and the Finance Act 1987, before the election, we enacted provisions whereby property could be offered in lieu of tax—that provision already existed—but we said that the interest calculation could be from the point at which the property
      1338
      was offered or the point at which it was accepted. Previously, it had been from the time when the property was accepted and interest ran to that point.
      The right hon. Gentleman will appreciate that we gave the person offering the property the opportunity of having interest stopped at the point when the property was offered and he would have that choice. He would have the choice of a longer period of interest or the benefit of a possible higher value on the property over a longer period of time. That provision was enacted in respect of inheritance tax and it already exists in legislation. That legislation uses the word "may" to which the right hon. Gentleman objects. Clause 97 has only a minor function in that it mirrors the provisions to which I have referred, but in respect of pre-1985 capital transfer tax and estate duty. It has only a very narrow provision. If we simply alter the word "may", the right hon. Gentleman's amendment will not alter the provision with respect to the new tax. That is a minor reason against the amendment.
      7.15 pm
      I am not violently opposed to the right hon. Gentleman's proposition. It is born of a little distrust of the Revenue which seems to inspire some of these debates, I do not believe that substituting the word "may" for the word "shall" will mean that the Inland Revenue will not operate the policy announced in the statement of practice which was announced to the House. The question is being deliberately left open so that it will be negotiable along with other terms for the acceptance. The acceptance transaction represents a purchase by the Government at a negotiated price, and the interest terms are part of that price.
      In general, the offerer's options will remain open until the item is formally accepted, but I agree with those who have said that interest relief should be available only for bona fide offers. I do not think it would be right to allow the "offer date" basis to remain open indefinitely. That might encourage people to procrastinate in order to exploit the new arrangements—for example. by continuing to enjoy income from the property. We envisage that after two years have elapsed from the date of an offer without the terms being settled the Inland Revenue may give the parties six months notice that it will no longer be prepared to accept the item on the "offer date" basis. This was announced in a Revenue press release on 8 April.
      However, we do not want to rule out the possibility of a property being accepted on the basis of its value as at a date earlier than that of the acceptance even when waiver of interest is not appropriate because the two-year period has been passed. That is the only reason why the word "may" rather than "shall" has been used. We might seek to negotiate and be generous to the taxpaper who may wish to negotiate on the basis of the "offer date" value because the current value is less. That is why the word "may" has been used. We have a statement of practice. The policy was announced, and that is the only way in which the Revenue intends to exercise its discretion. I hope that my words in this debate will have some effect. I am not violently opposed to the right hon. Gentleman's suggestion.
      Mr. Milian: I am grateful to the Minister for what he has said. I appreciate the points that he has made about this being a matter for negotiation. On the basis of what

      1339
      the Minister has said and in the hope that the Inland Revenue will in practice apply the provisions in that spirit, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 97 ordered to stand part of the Bill.
      Clauses 98 to 101 ordered to stand part of the Bill.
      Schedule 8 agreed to.
      Clauses 102 to 104 ordered to stand part of the Bill.

    New Clause 18

      OPTION TO COMMUTE ANNUITY RIGHTS FOR A LUMP SUM
      'It shall be permissible for the trustees or managers of a scheme which is an approved scheme under the provisions of Section 18 of this Act or which is an exempt approved scheme under the provisions of Section 21 of the Finance Act 1970 to amend the rules of the scheme so that a member of the scheme may after the completion of not fewer than ten years as a member commute up to one-quarter of his rights under the provisions of the scheme for the immediate payment of a lump sum which shall be liable for taxation in the same way and to the same extent as a lump sum payable at the normal date of award of benefit under the scheme:—[Sir B. Rhys Williams.]
      Brought up, and read the First time.
      Sir Brandon Rhys Williams: I beg to move, That the clause be read a Second time.
      Some time ago when the concept of personal pension schemes was under general discussion it was suggested in some quarters that it would be a good idea if this facility could be made available as a build-up of a personal identifiable asset available for discretionary use at any time during the beneficiary's lifetime. The idea did not find favour because it was not thought acceptable that the beneficiary could perhaps lose what was intended primarily as a retirement benefit through taking advantage of the right to draw the capital out at any time. The Bill does not, as I understand it, give any facility for the lump sum in a personal pension scheme to be drawn out before the normal age of retirement.
      The object of my new clause is to give a partial option—a one quarter option—to the member if he requires his capital after a period of 10 years in the scheme. I think that it would be quite appropriate to allow this in the case of personal pension schemes and I can see no particular reason why it should not be permissible in all occupational pension schemes where the amount of money standing to the account of the member can be identified.
      The clause would permit the extension of the facility to make a part commutation of the entitlement to annuity at the time of retirement so that the ability to draw a lump sum becomes available to the member after 10 years' membership of the scheme. If the lump sum is taken early in this way, it will reduce the amount of the eventual retirement annuity, but no more than if the lump sum were taken at the normal date. The clause partially changes the nature of a pension scheme so as to turn it into a savings scheme with a potential somewhat wider objective than a pure retirement benefit scheme. I can see no objection to that.
      It is right to encourage savings and provision for emergencies as well as for retirement. If a man in middle life sees an opportunity to embark on a new venture or needs to have access to capital because of some emergency,
      1340
      is it not natural that he should be permitted to withdraw the money immediately from the fund which is accumulating for his benefit? My 10-year limit would prevent the abuse of the tax-haven status that we are offering to the schemes, which is founded on the principle of save now and pay tax later.
      I am not suggesting that withdrawing a lump sum in the way that the clause would permit should have any special tax advantage for the beneficiary. I think that my right hon. and hon. Friends know that I personally believe that the withdrawing of a lump sum, in so far as it is acquired through contributions made in future years, should be taxable at the standard rate. The clause does not make any special provision in regard to taxation. The object is to widen the facilities available to savers through occupational pension schemes, and I believe that it should commend itself to the Committee.
      Mr. Norman Lamont: As has happened on many other occasions during our consideration of the Bill, my hon. Friend the Member for Kensington (Sir B. Rhys Williams) has come forward with a new idea. We have been running hard to keep up with all his other ideas. Although we are digesting many of them and will talk to him about some of them, I cannot accept the new clause. I have no doubt, however, that as with his other ideas the drip, drip process will continue, and that in years to come we shall find ourselves wondering why we did not accept his ideas earlier.
      As my hon. Friend has said openly, the new clause would, in essence, convert pension schemes into the form of a tax-sheltered savings medium. My hon. Friend has emphasied that pension arrangements take the form of a tax haven, but the rules governing them, especially when Finance Bill proposals are in place, are designed to ensure that a pension scheme is used for its intended purpose, which is to provide a replacement income in retirement when paid employment ceases.
      The objection to the new clause is that it would allow any individual, no matter what his age, to withdraw a lump sum. He could take a part of his benefit at any time after completing 10 years' membership of the scheme. A person who joined a scheme at the age of 20 years could have a sum equal to one quarter of his benefits to date at any time after the age of 30. Although my hon. Friend expressed his reservation about the tax status of the lump sum, as he has done in all our debates, there would be benefit from the tax privileges even if we changed the taxation of the lump sum in the way that my hon. Friend suggests. I do not need to repeat what has been said about that and how that would be a radical change.
      The new clause would turn occupational pensions and personal pensions into highly tax efficient savings vehicles that in many ways would compete with other forms of savings and investment. I do not think that that is a role that pension schemes, which benefit from generous tax reliefs, should fill. I always think about my hon. Friend's ideas and, as I have said, we shall have discussions with him about some of them, but I cannot commend this one to the Committee and I do not expect my right hon. and hon. Friends to accept it.
      Sir Brandon Rhys Williams: I recognise the force of some of my right hon. Friend's arguments. On the other hand, there is an urgent need to encourage the savings motive as far as we possibly can. The country is not saving

      1341
      nearly enough, and we should not turn down any opportunity that is likely to be popular of encouraging people to save. Nevertheless, I have not put enough work into the drafting of the new clause to seek to insist that the Committee should accept it. I understand fully the arguments that my right hon. Friend has used. In the circumstances, I am glad that I planted the idea—I do not think that it is a new one—and I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.
      Schedule 9 agreed to.
      Bill reported, with amendments; as amended, to be considered.

  British Shipbuilders (Borrowing Powers) Bill
  Considered in Committee; reported, without amendment. Order for Third Reading read.
  7.28 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins): I beg to move, That the Bill be now read the Third time.
  As the House will appreciate, we debated the Bill at some length a week ago. I think that it would be inappropriate and unnecessary for me to speak at length now. With the permission of the House and of yourself, Mr. Deputy Speaker, I hope that at the end of the debate I shall be able to answer any comments or contributions that hon. Members may make.
  7.29 pm
  Mr. Bruce Milian: I wish to raise one matter that follows on from the contribution which I made to the debate on Second Reading. I had hoped—I think that the Government did as well—that the Brittany Ferries order would come to Govan Shipbuilders. I do not wish to rehearse all that I said on Second Reading, but I wish to emphasise my wish that the Government pursue the matter with the greatest vigour. The Government took the issue to the European Commission on the basis that an unfair subsidy had been granted by the French Government to enable this important order to go to a French yard. On the basis of free and fair competition, it had been the intention of the prospective owner of the vessel, Brittany Ferries, to place an order with Govan Shipbuilders.
  There has been a development since Second Reading, so I am intervening to ask for clarification from the Minister. The Commissioner responsible for these matters, Mr. Sutherland, yesterday announced that he had found both the French and British Governments in breach of the sixth directive on the maximum permissible amount of aid. There has been some rather misleading comment about this. It suggests that there was a deliberate intention on the part of British Shipbuilders and Govan Shipbuilders to put in a subsidised tender that was in breach of the directive so recently agreed within the Community, and operative only from the beginning of this year.
  The reality is rather different. The tender submitted by Govan Shipbuilders was within the directive's maximum limit, and what has placed it above these limits is the later intervention by the French Government. They offered an additional subsidy of 10 per cent. to the operator of the vessel and the ship owner, Brittany Ferries. It is the addition of the two subsidies that has brought the British tender outside the limits laid down in the directive.
  The French tender is an entirely different proposition, because this is a matter between the French ship owner, the French operator and the French Government. The French Government, having intervened in this matter—in my opinion quite improperly—have not only brought the French tender outside the limits, but have coincidentally brought the British tender outside the limits. They made, I suspect, a completely false promise that, no matter where the order went, the 10 per cent. subsidy would be payable. I do not believe that if Brittany

  1343
  Ferries had persisted in putting the order into Govan the 10 per cent. subsidy would have been paid. I would have been astonished if that had happened.
  The French Government have behaved deviously and cunningly in this matter, and have put us in the dock alongside them. I hope that the Minister will clear up the matter, because some newspaper reports today have suggested that we have been as much at fault as the French. I do not often defend the British Government, but in this case we are the injured party, not the culprit. I hope that the Minister will take this opportunity to clarify the situation. I think that my understanding of this matter is correct, but it is important that this should be put on the record at this convenient opportunity.
  I hope that the Minister will also take on board the point I made on Second Reading, and which I now repeat, that I hope that we will pursue this issue with the utmost vigour. It is my hope that we can start again the whole business of the placing of the order. However, being realistic, I am not hopeful that that can be achieved. The order has been placed with a French yard—I deplore that—but if there is any way to save the order for Govan I hope that the Government will attempt to do it. At the least, the position should be clarified. We should have an undertaking that the Government will continue to pursue this through the Commission in every possible way open to them.
  7.33 pm
  Mr. Ted Garrett: Because of the pressure of time I was unable to catch your eye, Mr. Deputy Speaker, on Second Reading. As I have said many times, I welcome any amount of public intervention in shipbuilding borrowing facilities. Therefore, I have no shame in saying that I support the Government in their decision to increase British Shipbuilders' borrowing powers.
  This is the first time that I have had to speak about Swan Hunter, which is in my constituency, when it will have no opportunity to benefit from such an order, because it has been privatised. However, that is not to say that the people in the north-east of England, particularly those connected with the long tradition of shipbuilding in the region, are not interested in what is happening in British Shipbuilders. Nor would it be true to say that they are not interested in the future of British Shipbuilders. I am pleased in one respect. The Government are still determined to keep this industry alive, in spite of world competition and in spite of the fact that they have faced the criticism of not being interested in this industry.
  I notice that my hon. Friend the Member for Gateshead, East (Ms. Quin) is waiting to catch your eye, Mr. Deputy Speaker. I gather that my hon. Friend is still a Member of the European Parliament. As such, she has played an active part in directing attention to what the European Commission is doing to help in the crisis facing the European shipbuilding industry. I am sure that she will have something to say about that.
  The people on Tyneside, especially those employed at Swan Hunter, are fully aware that now that the company is privatised they have to face the harsh realities of private and allegedly free competition, but in the big wide world they cannot hope to compete with other nations, particularly those in the far east. I should like the Minister to study the report on the shipbuilding industry produced
  1344
  by the Commission. I ask him to think seriously about how the Government can help in the implementation of the second of the three recommendations, that which concerns the social impact in the less-favoured areas of the EEC where shipbuilding takes place.
  I know that successive Governments have made some social contribution to the economic consequences of the decline in the coal industry. However, as far as I am aware, there has been no political decision in the United Kingdom Parliament about the social consequences of the decline of the shipbuilding industry. It would be helpful if the Minister had some influence on, and consultations with, his colleagues to see whether the Commissioner responsible for shipbuilding policies in the EEC can bear in mind that the north-east should be considered a less-favoured area within the Community and therefore have some priority in efforts to meet the crisis in shipbuilding.
  7.38 pm
  Ms. Joyce Quin: The Opposition do not oppose the increase in the borrowing powers of British Shipbuilders. However, traditionally Third Reading debates are used to voice some wider concerns about the shipbuilding industry, and I should like to add my voice to some of those concerns.
  I agree with many of those who spoke in the debate last week that a great deal needs to be done to ensure the survival of the shipbuilding industry. As my hon. Friend the Member for Wallsend (Mr. Garrett) said, my main interest in the industry arises from my experience as the representative of Tyne and Wear in the European Parliament. In the past, the area had within its boundaries one third of Britain's shipworkers, and even today it accounts for about one third of the very reduced shipbuilding activities in Britain. I have been struck by two things during our debates in the European Assembly. First—this point was made last week—the British decline in shipbuilding has been more dramatic than the reduction in almost any other European shipbuilding industry. The figures certainly bear that out. Secondly, during the past 10 years, there has been a dramatic collective decline in European shipbuilding compared with the expansion in some areas of the far east. We must act to make sure that shipbuilding has a future in Britain and that our capacity will allow us to respond to the range of designs of ships that will be needed in the future. Some of those ships will be very sophisticated vessels.
  The British and the EEC approaches to the industry have been too negative. Our response to the world market seems to have been that, since the market has been contracting, we had better contract twice as fast. Japan and Korea have said, "The market is declining, but we want a larger share of it." The emphasis in EEC policy has been very negative. It simply tries to reduce subsidies to the industry across the board. That was certainly the case in the EEC fifth directive on aids to shipbuilding. The sixth directive which replaced it is better in some respects, and I welcome the improvements, especially the fact that all aids are now included so that the more transparent British aids can be seen more clearly against the hidden aids that have been given in other countries.
  However, it remains true that almost the only shipbuilding policy in the EEC is one of controlling subsidies and trying to even out competition among European countries. That does not deal with the main problem, which is the survival of European shipbuilding

  1345
  in the face of increasingly intense competition from the far east. European shipbuilding policy has not been successful in that sense.
  I and some of my colleagues have argued repeatedly for a more positive and comprehensive strategy towards shipbuilding, including measures to stimulate demand in British and European shipyards and measures to scrap some of the older tonnage, which my hon. Friend the Member for Sunderland, North (Mr. Clay) mentioned last week. We must also spend more European money on research and development in shipbuilding. We need a European commitment to a level of capacity below which we will not go and which we will defend strongly in international negotiations, especially with Japan and Korea.
  My hon. Friend the Member for Wallsend mentioned the social and regional aspects of shipbuilding. Here again, British and EEC attitudes and approaches have been very dilatory. Perhaps the Minister remembers that, seven or eight years ago, there were proposals in the EEC to provide money for shipbuilding areas from the so-called non-quota section of the European regional development fund. That small programme took more than two years to negotiate, and when it was finally agreed it provided only 17 million ecu, which was about £10 million, for the whole of the United Kingdom shipbuilding industry over five years. That was totally inadequate, given the serious problems of many of our shipbuilding areas.
  The European Commission and the member Governments have still not agreed a new programme on the regional and social consequences of the crisis in the shipbuilding industry. The Commission's proposals are more than a year overdue, and they are still not being properly discussed. We have been told that, because of the financial crisis in the EEC, there will not be enough money in the budget for some time to implement such proposals. That is selling our shipbuilding areas very short.
  The Government and the EEC have treated the industry with insufficient priority. Britain's case has not been argued sufficiently in the EEC, and the European Community as a whole has not argued strongly enough for shipbuilding in its international trade negotiations. Can the Minister tell us when shipbuilding was last on the agenda in international trade negotiations with Japan and Korea? When will it be on the agenda in the future? I understand that it has been discussed far less often than the other areas about which we express concern when considering our trade balance with the far east—motor cars, video tape recorders or the range of consumer electronic goods. Shipbuilding is an important aspect of the unfavourable trade balance between Britain and the far east and it should be considered with more urgency than has been the case until now.
  Looking around the Chamber, one would think that shipbuilding was not a great priority for the majority of hon. Members. But many hon. Members have within their constituencies industries which supply goods and essential parts for shipbuilding. The health or sickness of the industry cannot be seen in isolation. It has serious ramifications for many constituencies in Britain. The industry uses the products of the new technologies. They include CAI)CAM facilities, which are important to the survival of shipbuilding and to the survival of our new technology industries and the important new technological sector.
  1346
  I plead with the Government to do all that they can to ensure the survival of shipbuilding for the long term, not just the short term, and to act in such a way as to give our shipbuilding areas and our shipyard workers real hope for the future.
  7.48 pm
  Mr. Gordon Brown; This has been a short debate, but we have heard wide-ranging and extensive contributions about the problems of shipbuilding. Our willingness to allow the Bill to go through quickly has nothing to do with complacency about the crisis in shipbuilding, but is a measure of our concern about the crisis affecting shipbuilding and our determination that measures should be taken as quickly as possible to allow the existing yards to flourish and maintain a merchant shipbuilding capacity.
  I congratulate my hon. Friend the Member for Gateshead, East (Ms. Quin) on her speech. Her eloquence and expertise will be of tremendous benefit in future shipbuilding debates, and I hope that the Minister will answer her main point. If there are problems with the European budget, social fund aid for shipbuilding areas should not be a victim of the disputes that are taking place in Europe. I am grateful to my hon. Friend the Member for Wallsend (Mr. Garrett) for mentioning the problems of Swan Hunter. My hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) did the same last week. Although warship orders are not the Minister's direct responsibility, I hope that he will bear in mind the problems of that yard.
  My right hon. Friend the Member for Glasgow, Govan (Mr. Milian) mentioned a problem which we read about in the newspapers this week and which arose in last week's debate. Those of us who have followed the amazing saga of the Brittany Ferries order during the past few months will find it extraordinary that the victims in the matter—Govan Shipbuilders and British Shipbuilders generally—have been found guilty by the Commission. I hope that the Minister will carefully consider what appears to be at best sharp practices by the French, and at worst a dangerous deception that caused Govan to lose the order. I hope that he will assure us tonight that, not only he will keep watch on what is happening in the Commission. but that he will press the Commission to a swift conclusion on this matter. This is the first case that has arisen since the new directive. There is no point in having an intervention fund and debating the future of that fund if we are unable to draw on it for major orders that we are capable of winning.
  Last week much was said about the British Shipbuilders' order book. I am grateful to the Minister for writing to other hon. Members and myself giving us specific answers to the problems facing North-East Shipbuilders and Govan Shipbuilders as well as some of the other yards outside British Shipbuilders. I trust that the enthusiasm that the Minister has already brought to his job as Minister with responsibility for shipbuilding, evident in the debate of last week and from his written answers of the past few days, will be matched by the enthusiasm of his Department and British Shipbuilders, backed up by his Department, to win the orders necessary to sustain the industry.
  My hon. Friends the Members for Gateshead, East and for Wallsend mentioned the draft European Commission report—it was mentioned in the press on 30 June—

  1347
  about the state of the shipbuildng industry in Europe and the world. I know the Minister agrees with me that it makes extremely gloomy reading. It suggests that even after a third cut in production capacity—it is estimated that it is likely to happen over the next two years—the yards in Europe will still run at 70 per cent. capacity for the rest of the 1980s and 80 per cent. capacity in the early 1990s. The report suggests that entire production centres will be shut down. It goes on to suggest that 30,000 jobs will be at risk in the European Commission countries. It paints an extremely gloomy picture.
  Mr. Garrett: My hon. Friend is quite correct in saying that 30,000 jobs in the industry will be at risk, but the knock-on effect could run to 100,000 jobs. The Commission has concerned itself directly with the industry, but has failed to take account of the wider impact of the closure of production centres.
  Mr. Brown: I am grateful to my hon. Friend for drawing attention to that. Throughout our debates on shipbuilding we should be concerned that, in the northeast and Scotland in particular, for every production worker affected by cuts and closures there are at least two or three others directly dependent on that production worker. When we discuss the number of jobs that have been lost in the past few years and the numbers still at risk, we are also talking about the effects on entire communities.
  We have suffered more than most of our European competitors. On 7 July the Minister was good enough to give me figures concerning the losses among shipbuilders and they confirm my belief. During comparable periods since 1979 Belgium has lost 2,000 jobs; France 8,000 jobs; Germany 5,000 jobs; Italy 7,000 jobs; and the Netherlands 4,000 jobs. Up to 1986, according to the Minister's figures, the United Kingdom has lost 18,000 jobs. However, according to my figures, based on a more up-to-date calculation, we have lost at least 25,000 jobs. Therefore, not only did we suffer more than our competitors in the past, but we are suffering more now.
  If we consider the current state of order books for the first two months of this year, as they appeared in Lloyd's List a few days ago, it is clear that, given the drastic problems throughout the world, Italy managed to achieve more orders in the first few months of this year than in previous months. West Germany managed to achieve more orders and South Korea has been able to move to the top of the shipbuilders' league. Taiwan has done extremely well, but, despite all the efforts of British Shipbuilders—management and work force—the number of orders that we have won is down on previous months. It is despite the orders won at Govan. Indeed, last week, my right hon. Friend the Member for Govan paid tribute to Mr. Eric Mackie for his efforts that enabled us to win the Chinese order. It is despite the work of North-East Shipbuilders to win Danish orders. Despite all those efforts, our share of the world market has not gone up.
  In the previous debate the Minister spoke of the generosity of the Government towards British Shipbuilders. However, he must bear in mind that, not only have our European competitors done more over a longer period, and still do, to support their industries, but privatisation, by selling profitable yards dependent on public sector orders into the private sector, has done
  1348
  enormous damage and harm. That view is confirmed by two former chairmen of British Shipbuilders who talked about acts of political dogma that put the future of the corporation at risk.
  The Government are still not doing enough to secure orders to guarantee the future of the yards. High wages are not the problem—we pay our workers less than most of our major competitors in Europe. The problem does not lie in the lack of advances in productivity because between 1979 and 1985 there was a 30 per cent. advance in the productivity of British workers. Indeed, since then there have been major improvements because flexibility agreements have been reached. British Shipbuilders is not technologically backward. A great deal of effort has gone into investing in the most modern computer techniques. The industry may be old, but it is no longer old-fashioned. The yards are not inefficient. A few weeks ago, with the completion of the North sea order at Govan, the chairman of P and 0 was so satisfied with the work that he has invited the work force to join one of the sailings of the vessel. Industrial relations are not a problem because the new chairman has expressed his satisfaction with the industrial relations record and has complimented the work force on it.
  The fact is that, given the difficulties of world demand, not enough is being done to safeguard the industry. The Minister should reconsider what he appeared about to investigate last week—he then rejected it—the establishment of a task force to scour the world for available orders.
  The Minister, as one of his first acts as Minister with responsibility for shipbuilding, should conduct a trawl of the various Departments to advance public sector orders. He should take the necessary action to persuade British shipowners to buy British. Large orders have been lost overseas in the opening months of this year.
  I share the faith of the work force of British Shipbuilders in the future of shipbuilding in this country. The Government must now show their faith in that future by investing and protecting the industry and by securing orders. They must support the loyal, efficient, dedicated work force who have made every sacrifice to ensure that the industry is able to win world orders. I hope that the Minister will back up the efforts of the management and the work force.
  7.58 pm
  Mr. Atkins: A number of today's points were dealt with at some length last week. I appreciate the fact that the hon. Members for Gateshead, East (Ms. Quin) and for Wallsend (Mr. Garrett) were not able to be here then and therefore made their points tonight, but if they take the trouble to refer to last week's debate, which they may have done already, they will see that a number of their points were covered then.
  The right hon. Member for Glasgow, Govan (Mr. Millan) referred to Brittany Ferries. I should like to take this opportunity to put the current position on the record. I think he recognises—there is not much difference of opinion—that we have tried to deal with the matter.
  As I anticipated in last week's debate, the European Commission has now decided to open an article 93 procedure against the French and against ourselves in respect of aid offered for the Brittany Ferries order. There are two reasons for this. First, when British Shipbuilders tendered to Brittany Ferries, the French authorities were

  1349
  robustly maintaining that aid that they grant for ships flagged in France was not state aid for shipbuilding of the kind to be covered by the new sixth directive. It is evident that, as a result of its investigations, the Commission has satisfied itself both that this is aid that it regards as subject to the limits in the new directive and that the aid would apply to a ship purchased from Govan. As further evidence of the pressure applied to Brittany Ferries, I have to say that Brittany Ferries told British Shipbuilders that the French authorities had let it be known that in their case this aid might not be available. It appears that the French authorities, not perhaps for the first time, have now changed their tune in responding to the Commission
  The second reason is that the Commission has confirmed, as a result of its investigations, that the Dutch authorities have offered a lower level of aid than either ourselves or the French and, according to Commission practice, this in itself gives rise to an article 93 procedure in a case where one Community member asks for an investigation under the new directive. We did so, of course, because of the way in which the French have behaved.
  As to what happens next, under Commission rules both the French authorities and ourselves will have a set period in which to respond to formal letters from the Commission. We have nothing to fear in this. We indicated to the Commission in advance of its decision that we had no interest in being in breach of the directive and would adjust our offer of aid once it confirmed that French flagging aid was, indeed, to be counted under the sixth directive and the French authorities had confirmed that it would be available for a Govan ship. We shall decide how far we should adjust our aid once the Commission details its reasons for opening the procedure against us.
  Whereas I applaud the action that the Commission is taking in ensuring that the aid applied to this order is fair and fully in accord with the new directive, it would be wrong of me to suggest—I suspect that the right hon. Member for Govan recognises this—that I thought there was any significant chance in the order coming to Govan. As I explained last week, the French are in a uniquely strong position to ensure that this order remains in France even if, for instance, Brittany Ferries ends up paying a far higher price than it would had it ordered abroad.
  I shall he pleased to let the House know the result of the Commission's procedures in due course. I emphasise again what I said last week. We shall do everything in our power to ensure that the case that needs to be put to the Commission and fought by the Commission on our behalf is made with all the strength that we can muster. I am grateful to the right hon. Member for Govan for raising the matter and giving me the opportunity to put the current position on the record. I hope that he will find it helpful.
  The hon. Member for Wallsend speaks with weight and authority on the matters that concern him, and I listened to him with interest, as always. He referred to social consequences, and his hon. Friend the Member for Gateshead, East, who is a Member of the European Assembly, will know of that authority's activities. I shall ensure that the hon. Gentleman's points are considered. He will know that Tyne and Wear is recognised by the
  1350
  Commission as a shipbuilding closure area. None the less, his points are well taken and I shall ensure that those involved listen to them.
  The hon. Member for Gateshead, East made some thoughtful points and spoke with authority on the problems facing her constituency. As I said, a number of those points were raised last week. I hope she feels that they were dealt with in some detail then, but I recognise that the hon. Lady wanted to get them on the record now. I am glad that she agrees with the Government that the sixth directive is an improvement. There is always room for improvement, but this is at least a better directive than the fifth.
  The hon. Lady suggested that the shipbuilding issues to which she referred were not the subject of as much discussion as they should be. I must disagree and point out that shipbuilding issues generally are constantly raised within the OECD. My ministerial predecessors raised points on behalf of the British shipbuilding industry and I hope that I, too, shall be in a position to do so.
  The hon. Member for Dunfermline, East (Mr. Brown), in what was perhaps his vale as a Front-Bench spokesman on the shipbuilding industry, as he moves to higher and more important things in the context of the Treasury—[Interruption.] Well, "different" things; perhaps I should put it like that. The hon. Gentleman brought us back to the arguments that he advanced last week about the task force. I do not wish to bore the House, but I tried to deal with those matters at some length last week. I can do so again, but I think that I would only be emphasising what has already been said.
  The hon. Gentleman will know that many of the problems faced by the shipbuilding industry are the result of changes in customers' ordering specifications and the problems associated with maintaining financial viability and with going into liquidation. Although there have been many improvements, as the chairman of British Shipbuilders and the hon. Gentleman have said, there have been problems with poor performance and delivery. I agree that the work force and management of British Shipbuilders are doing a lot to put matters right.
  The hon. Member for Dunfermline, East was a little uncharacteristically churlish about the Government's efforts. We have tried to do a great deal by devoting resources and interest to, and giving support for, export orders, which the hon. Gentleman mentioned in terms of the Chinese order. I cannot accept the charge that we have not done enough. However, I should like to end on a reasonably friendly note on a subject on which there are not many differences.
  We believe that the Bill will be passed on the nod, because we recognise its necessity and importance. I hope that the hon. Member for Dunfermline, East, as he rnoves to different duties, will not forget that the Government have played, and will continue to play, a part in looking to the interests of those involved in the British shipbuilding industry. I pledge that I shall do all that I can to assist the industry to maintain its position and, where there are difficulties, to work hard to try to solve them. I urge the House to give the Bill its Third Reading.
  Question put and agreed to.
  Bill accordingly read the Third time, and passed.

  Coal Industry
  8.7 pm
  The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): I beg to move,
  That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1987, which was laid before this House on 6th July, be approved.
  This is a technical amending order. I hope that the House will bear with me in what inevitably will be a rather detailed, but short, explanation. The purpose of the order is to make consequential changes to the redundant mineworkers' payments schemes following the introduction of provisions in the Social Security Act 1986.
  The redundant mineworkers' payments schemes provide for lump sum and weekly payments to mineworkers made redundant on or before 28 March 1987. Since 29 March 1987, British Coal has been responsible for its own redundancy terms, as announced by my hon. Friend the Member for Wirral, West (Mr. Hunt) on 24 March last year.
  There are five schemes still in operation. They are set out in orders made in 1973, 1978, 1983, 1984 and 1986, as amended. They provide for deductions to be made from RMPS basic weekly benefit paid to people who also receive special hardship allowance under section 60 of the Social Security Act 1975. The deductions are made so that a person does not simultaneously receive both special hardship allowance in compensation for reduced earnings through sickness or injury and RMPS benefit based on his full earnings before the sickness or injury reduced them.
  The Social Security Act 1986 replaced special hardship allowance from 1 October 1986 with reduced earnings allowance, which is payable in similar circumstances but subject to different detailed provisions.
  The reasons for making deductions of reduced earnings allowance from basic weekly RMPS benefit are exactly the same as those for making deductions for special hardship allowance. Our initial view was that in this context reduced earnings allowance could be treated as special hardship allowance under another name. On that view no changes to the schemes were necessary. However, further consideration has led us to the view that the differences between the detailed provisions of reduced earnings allowance and special hardship allowance require consequential legislation.
  An important difference is that, whereas special hardship allowance was an increase in disablement benefit, reduced earnings allowance is an allowance in its own right. A change made by the 1986 Act was to increase the threshold level of disablement for receipt of disablement benefit from 1 per cent. to 14 per cent. As a result, special hardship allowance, if it still existed, would no longer be payable to those with disablements of 1 to 13 per cent., whereas reduced earnings allowance is available to anyone with a disablement of at least 1 per cent.
  I am therefore advised that for those who receive reduced earnings allowance and have disablements of between 1 and 13 per cent., it is likely that deductions of reduced earnings allowance from RMPS basic benefit are not provided for by existing schemes. It is arguable that the existing rules of the RMPS allow deductions to be made in respect of those with disablements of 14 per cent. or more. Indeed, in substance it is clear that for such people reduced earnings allowance and special hardship
  1352
  allowance are equivalent. However, rather than leave this question to be tested in the courts, the Government have decided to make full refunds of all deductions of reduced earnings allowance from RMPS basic benefit since 1 October 1986. Those refunds will be made as soon as possible and should be complete by the first half of September.
  At the same time it is necessary to amend the redundant mineworkers' payment schemes to provide for the deduction of reduced earnings allowance from basic weekly benefit in the circumstances that I have described. That is the main purpose of the order before the House tonight. The draft order also makes minor amendments to the 1978, 1983, 1984 and 1986 schemes to anticipate the introduction of income support and housing benefit schemes under the Social Security Act 1986.
  I invite the House to approve the order.
  8.13 pm
  Mr. Alexander Eadie: I may take up the last comment that the Minister made because I believe that it is pertinent to the brief remarks that I shall make.
  It would be churlish of the House not to welcome the Minister on his debut in a debate on the coal industry. I have had the privilege of welcoming Ministers for the past 15 years. That is a long time and I am sure that many of the Ministers' hon. Friends may be sick of me standing at the Dispatch Box. Nevertheless, time goes on and we must deal with the issues before us.
  To some extent, I accept that a case could be made for saying that these are technical amendments that had to be made to conform with legislation that has already been passed by the House. However, we notice that there is a tendency nowadays to hold few consultations with interested parties. I make no apology for stating that I believe in consultation and conciliation. I know of no other way to further decision-making in industry. That is how I was brought up and that is what I believe.
  My inquiries have revealed that there was no consultation or discussion with the mining unions by the gentlemen in the Minister's Department or by British Coal. Of course, we can say that all this is a shift in the policy of British Coal. I remember when British Coal voluntarily briefed hon. Members about legislation that affected the industry. I am sorry to say that it does so no longer. I raised the matter with British Coal during the previous Parliament, and the only response that we had was its press releases. Of course, there has been a great deterioration in industrial relations in the coal industry. British Coal last year had its industrial relations named as among the worst in Britain.
  Whenever housing and concessionary coal are mentioned in any order that is associated with British Coal a raw nerve is touched not only among redundant miners but throughout the whole work force. In previous debates we have given a good airing to the policy of British Coal and to some of the scandalous cases that arose from its jumble sale approach to selling off its housing stock. Dubious, speculative figures, as far from the coalfield as London, appeared to be the new owners. It would have tested the powers of a modern-day Philip Marlowe or Micky Spillane to trace them.
  We are aware that British Coal had to make some changes in its plans. They may have been minor, but they owed much to some hon. Members, and to the Coal

  1353
  Communities Council, in particular. Much of what we are debating was discussed during the Committee stage of the Coal Industry Bill last year.
  As regards concessionary coal for redundant mine workers and other miners, the many unfair anomalies that have been before us have never really been given proper consideration. One case especially angers all redundant mine workers and all those who work in the mining industry. It relates to what is called a material change in circumstances, and it concerns the case of a widow and what happened following the death of her husband, who had enjoyed cash in lieu under a former agreement. It is surely harsh to classify the death of a husband as a material change, thereby disqualifying the widow from receiving cash in lieu. I am certain that hon. Members will find that absolutely incredible.
  British Coal's policy on industrial relations is costing the country dear. I estimate that it is costing us not millions but billions of pounds. Today we learn that there is a danger of the whole of Yorkshire being locked into strike action because British Coal has introduced a new code of industrial practice without consultation or conciliation with any of the mining unions. This order affords us the opportunity to say that it is time the Government looked into the matter, because the unions are having a national ballot on the issue.
  I confirm what the Minister has said about the order. As I understand it, weekly benefit under the redundant mineworkers payments scheme can be reduced or extinguished if beneficiaries are receiving a special hardship allowance, supplementary benefit, or workmen's compensation. Moreover, the rent addition payable with RMPS to some tenants of British Coal houses is not paid to claimants who are receiving housing benefit, rent or rate rebates.
  The Social Security Act 1986 makes substantial changes to the social security benefit system. Among the changes is the fact that the special hardship allowance has been replaced, as the Minister said, by reduced earnings allowance from 6 April 1987. We shall need to examine the Minister's comment about not wanting to test the matter in the courts. A further change is that supplementary benefit will be replaced by income support from April 1988; and housing benefit, although still called housing benefit, will be completely different from April 1988 onwards.
  As far as I can see, all that the draft order does is to substitute the new statutory references for the old. Thus, section 59A of the Social Security Act 1975, inserted by paragraph 5 of schedule 3 to the Social Security Act 1986, replaces special hardship allowance by reduced earnings allowance as the benefit for people whose earning capacity is reduced by an industrial accident or disease.
  Section 21 of the Social Security Act 1986 gives the Secretary of State power to set up the new income support and housing benefit schemes by regulation. Income support replaces supplementary benefit as a means-tested benefit for people who are not in work. Housing benefit is means-tested help for rent and rates and is available to low-income families that are in and out of work.
  The Minister apologised to the House for the rather technical nature of his speech. I have spent a minute or two illustrating how, although it could be argued that these are technical changes, the propositions put forward by the Government affect people in the industry. They affect members of all the mining unions. There should have been
  1354
  consultation and conciliation on this order. The order is about people. If the Government do not think that people are important, they should change their attitude. There should have been discussion about the order because it will affect members in the scheme, and those people are entitled to know the impact that the order will have upon them.
  The Minister is making his debut. I hope that he will consider some of the matters that I have raised because they are important. The Opposition do not oppose the proposition put forward by the Minister.
  8.21 pm
  Mr. Spencer Batiste: This is a slender order and I shall be brief.
  It is a great pleasure to welcome my hon. Friend the Minister to his first coal debate. He has a hard act to follow, hut, given his formidable reputation, I am sure that he will rise to the task.
  The order is a postcript to a scheme that saw the dramatic transformation and restructuring of the coal industry. Those things were an extraordinary achievement because they were done without a single forced redundancy. The order is a technical postscript bringing the scheme into line with current legislation. My hon. Friend's speech was technical, albeit brief. I and my constituents would like to be assured that none of the people who accepted voluntary redundancy under the terms of the scheme as it then stood will be any worse off as a result of this order. If that assurance can be given, I am sure that the House will give a general welcome to the order.
  The scheme as a whole has enabled the coal industry to face the future with optimism and with a promise of success. It has provided funds for a variety of important measures. British Coal Enterprise has brought hundreds of millions of pounds of investment into coalfield communities. The new realism that this has engendered has ensured that for the second time, following the last general election, there are now more mining constituencies represented by Tory Members of Parliament than ever before. Miners understand where their real interests lie. They lie with a Government who have resolutely shown——
  Mr. Deputy Speaker (Mr. Harold Walker): Order. I hope that the hon. Gentleman will address himself to the order before the House. I have clear recollections of the difficulties that he has created for me in the past.
  Mr. Batiste: I am aware of your strictures in the past, Mr. Deputy Speaker, and I shall not seek to strain your patience on this occasion. I was responding to the point made by the hon Member for Midlothian (Mr Eadie) who talked about consultation and the importance of good industrial relations in the industry. He spoke about the strike that erupted in south Yorkshire this morning. The continuing progress that has been made under the scheme depends upon all who are in the industry ensuring that it can take advantage of opportunities that are open to it. They must produce the right product at the right price and at the right time. Industrial action of the sort that we heard being urged today by the Opposition is the one thing that can cast a blight upon the future of an industry that is otherwise very rosy.
  I hope that on mature reflection the hon. Member for Midlothian will reconsider his words and join

  1355
  Conservative Members in urging members of the National Union of Mineworkers and constituents of his not to take part in such action. We should tell them that Britain needs coal and if the industry can continue to supply that need at the right price and free from disruption there is no limit to the progress than can be made or to the prosperity that will be created. Such success in the mining industry will spread prosperity throughout the mining communities. That is what we all seek to achieve.
  8.25 pm
  Mr. John Cummings: Thank you, Mr. Deputy Speaker, for affording me the time to address the House for the first time. As I was walking through St. Stephen's entrance shortly after the election it reminded me of going underground for the first time. I follow now the advice that I was given then. It was, "If you do not know, ask." I have followed the advice tendered by officers and staff of the Palace of Westminster and I am truly grateful for their support and help. I am also grateful for the help and advice tendered by hon. Members from all parts of the House.
  I am mindful of the fact that I represent a constituency with a very rich Labour and trade union history. I am also mindful of the fact that I follow in the wake of Sydney Webb, Ramsay MacDonald, Manny Shinwell and, more recently, Jack Dormand who was respected by all hon. Members. Like me, Jack Dormand was born and bred in the Easington constituency. He was educated and worked in the constituency and served as a parish councillor, district councillor and district education officer. In 1970 he was elected as the Member for Easington. He served in the Whips' Office and finally was elected chairman of the parliamentary Labour party. I wish Jack Dormand and his wife every happiness and health for a long and happy retirement.
  Easington is one of the eight districts in County Durham and it has a rich culture and history. We have fine Saxon and Norman churches, beautiful denes and woodlands and, of course, a delightful coast. Those are the areas that have not been despoiled by mining activities.
  Perhaps the most precious assets in Easington are its people. They are a very special breed. The people who populate the area came from Cornwall, following the closure of the tin mines in the 1860s. There are also people who emigrated from Ireland, following the potato famine in the 1840s. Many of those people were called industrial gipsies at the time, and now in 1987 they are again being called industrial gipsies. History has turned full circle. People who moved into the area looking for a future and security mined the coal that was necessary for the nation's wealth and well-being. They made Great Britain great, but now those people are virtually being turned out of house and home and are having to travel or move out of the area to make a living elsewhere. That is a disgrace of tremendous proportions.
  According to academics, Easington is a deprived area. It is a deprived area, but we should not confuse deprivation with squalor, for squalor we have not, but deprivation we have. We have been deprived of our pits and of our jobs. We have been deprived of our hospitals. We have been deprived of our beautiful coastline by an uncaring industry and by successive uncaring Governments, who have ignored the problems of
  1356
  deprivation in the Easington district. I believe that the Minister is the only junior Minister who has not been to Easington. We have had 16 Ministers in the past 10 years. They come with their tea and sympathy, but with no money, and the problem gets worse. I extend an invitation to the only Minister who has not been there to come along, follow in the footsteps of his predecessors and see the shocking conditions that prevail on our beautiful coastline. The polluter must pay. Must we ask Lord Londonderry to cough up? Must we ask the directors of the South Hetton coal company to pay up? It is no longer with us. British Coal must pay, because the price falls on the pit. As the hon. Member for Elmet (Mr. Batiste) said, we must produce at the right price, but I fail to see how it can be done if the polluter has to pay.
  We have been deprived and robbed—over over the past eight years, in particular—of the necessary funds to improve a decaying housing stock. We have been deprived of our housing investment programme and our rate support grant. We are losing population. Some 12,000 people have left the area in the past 10 years. We have an abundance of council houses, but we have an ageing population and a chronic shortage of aged persons' and special purpose accommodation, which is necessary to accommodate the aged, who, after a lifetime of work in the mines, are chronically sick and disabled.
  The tide must be stemmed, and that can only be done by an injection of funds into the area to enable us to help ourselves and to prime the pump. We do not bellyache or whinge, but we want the Government to help us to help ourselves.
  The only job-getting agency that has had any success in the area is to be wound up in 1988. The Government are depriving us of the Peterlee Development Corporation, which has been the only success story in the area. The only direct tap that we have into the central Exchequer is being taken away. Someone has nailed his political dogma to the mast and decided that it should be wound up in 1988.
  Feelings in the Easington constituency are of hopelessness and helplessness. We want to be able to help ourselves, but we require the funds to do it. We have the will, the people and the skills, but we require the Government to help us to help ourselves.
  We do not want redundancy pay; we want the dignity of a job. I am a sixth generation child of the coal industry. We have had six generations at Murton colliery who have been born and bred for the pit. We went to school at the age of five years and left school at the age of 15 years.
  My plea to the Minister—we should not have to plead; it should he our right—is for the Government to return a small proportion of what has been taken out of the area. Give us the opportunity, the funds, prime the pump, and we will get the area back to work.
  8.35 pm
  Mr. Andy Stewart: I have had many honours in this Chamber in the past, but none has given me greater pleasure than to congratulate the hon. Member for Easington (Mr. Cummings) on his maiden speech. It has been my pleasure not only to know the hon. Gentleman since he was elected but prior to that when we worked together in the Coalfields Communities Campaign. He was the vice-chairman of that august organisation, which is doing such marvellous work for the coalfields.

  1357
  The hon. Gentleman spoke eloquently about his predecessor, Jack Dormand, who was respected on both sides of the House. I know no one who is more suitable to replace Mr. Dormand than the hon. Gentleman who, as he rightly told the House, was born into the coal industry and during his lifetime has given everything to it. He must have been so busy working in the coal industry that he omitted to notice that my hon. Friend the Minister was the Conservative candidate in Easington for 10 years. The hon. Gentleman described his constituency beautifully and made us all wish that we had a beautiful coastline to share with our constituents. If the price had been right, I might have been farming in his constituency rather than in Sherwood.
  I listened with great respect to what the hon. Gentleman said about the coal industry. We represent different parts of the United Kingdom, but we are both concerned for this great industry which creates so much wealth for our constituents. I hope that for many years the hon. Gentleman will ensure that future generations have an industry in Easington in which to participate.
  Some eight months ago in the debate on the coal industry I told the House that it was recognised that the major reconstruction of the industry would come to an end and that the generous redundancy payments would be phased out. During that debate the new scheme, which was to be funded by British Coal, was introduced. At that time I asked my right hon. Friend the Secretary of State to consider the position of the Nottinghamshire miners over the age of 50 years who were unable to participate earlier in the redundancy scheme because of the coal dispute. As a result of the co-operation between the management and the Union of Democratic Mineworkers, I am pleased to inform the House that all those over the age of 50 years who wished to take part in the generous scheme that was implemented by the Government were able to do so.
  In Nottinghamshire there is a very bright future for British Coal. We have a democratic union that accepts the wishes of its members rather than forces them to do what it feels is best. That arrangement provides a strong foundation for a prosperous environment. I am proud to say that Nottinghamshire has set the pace for the rest of the country. Productivity levels are at a record high without endangering the safety of the workers. That has brought about a reduction in unit costs that will guarantee the future for our industry, even after the Central Electricity Generating Board has been privatised. I must remind the House that the CEGB already has the power to buy coal from overseas but does not do so because we do not have the facilities to import large amounts of coal nor the long-term contract prices attractive enough to do so. Those who tell us that that might happen do not seem to understand the system that operates. To deliver the coal from the colliery——
  Mr. Deputy Speaker: Order. I must remind the hon. Gentleman that he is widening the debate way beyond the terms of the order. He must speak to the order.
  Mr. Stewart: You are quite right, Mr. Deputy Speaker. I am just coming to the bit for which you were waiting. I was explaining how the productivity and the means of getting the coal from the pit to the power stations on the merry-go-round would protect jobs from overseas competition. The idea of importing coal and putting ships on the merry-go-round is beyond belief.
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  Today the Government hope to integrate the redundant mineworker's payments schemes with the social services benefits. That has been the aim of every Government since 1967. The scheme itself is no longer available, but, in my opinion, its replacement emphasises how successful British Coal has become. Like the majority of employers, British Coal has taken on the responsibility for its redundancy payments. It is a sign that the coal industry is no longer the liability that it once was. British Coal aims to break even next year—an aim that I hope and believe will be achieved. The Govenment have pledged £2,000 million investment over the next two years, and new attitudes and new optimism within the industry have made that possible. Because of that, the need for large scale redundancy payments no longer exists.
  The coal industry is no longer the poor relation of Europe and its plans for expansion highlight that. It is no surprise that it is the workers who understand the need for six-day coaling. I am sure that I have no need to tell the House that British Coal's proposals do not require the miners to work one day——
  Mr. Deputy Speaker: Order. There is nothing about that in the order. I hope that the hon. Gentleman will stick to the order. I hope he realises that if I allow him to pursue this course I shall have to widen the debate for everybody else.
  Mr. Stewart: Because of the prosperity of British Coal, about which we should all hear, we will protect those who work in the industry and we will not need to participate in debates on redundancy schemes.
  I am sure that I have no need to tell the House that British Coal's proposals do not require miners to work one day, one shift or one hour longer. It is only the machinery that will be working for six days. The potential for an increased work force is a logical result as is its financial benefit to the workers. It was stated this week in the press that Sir Robert Haslam has indicated to Arthur Scargill that miners would receive up to £20 a week more, ensuring the future of the industry. In Nottinghamshire——
  Mr. Deputy Speaker: Order. The hon. Gentleman is opening the way for a debate on the working hours of the coal mining industry. That has nothing to do with the order. I hope that he will stick to the order.
  Mr. Dennis Skinner: I would have been thrown out before now.
  Mr. Stewart: It is significant that most of the coal industry is following the Nottinghamshire miners and their optimism. How gratifying it is to see that new optimism in the coal industry and I hope——
  Mr. Graham Allen: Does that new optimism extend to the Linby colliery, which is now under threat of closure? Will it be a further extension of the generosity of the scheme, as we have seen it on the borders of my constituency, with the recent closure of Hucknall and Baffington pit since the hon. Gentleman spoke in the debate last year?
  Mr. Stewart: The Linby colliery is in my constituency. If you will permit me, Mr. Deputy Speaker, to answer my honourable colleague, I will explain that four years ago it was expected that Linby colliery would have a life of seven years. As I understand it, it is being looked at by the management and the trade unions, and I would hate to prejudice the outcome of those discussions.

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  The miners are entitled to have a redundancy scheme. That safety net is the right of every miner and it should be supplied and secured by British Coal. Alternatively, there has been the expansion of British Coal Enterprise Ltd. which provides alternative employment to those miners who have had to take redundancy, and I hope that this order——
  Mr. Deputy Speaker: Order. I hope that we can stick to redundant mineworkers and concessionary coal and not move on to the subject of British Coal Enterprise Ltd.
  Mr. Stewart: I hope that the order will be accepted by the House.
  8.46 pm
  Mr. Martin J. O'Neill: I am pleased to have the opportunity of following the speech of my hon. Friend the Member for Easington (Mr. Cummings). It was an exciting and relevant speech. It is significant that a new Member gave us a clear instruction on the rules of relevancy by the way in which he kept talking about the coal industry and its contribution to the constituency of Easington. I know that we wish him well in every sense, in the same way as he wished his predecessor, our good friend Jack Dormand, well. He was a much-loved figure among Labour Members. We know that the new hon. Member for Easington comes to the House with Jack's good wishes, and we wish him every success. I am sure that his maiden speech helped to give him the confidence that he will no longer require in order to address the House.
  I should like to speak about the two issues that relate to the order. One relates to a group of my constituents who will continue to, benefit from concessionary coal, and another group who will benefit from the order because their colliery is, sadly, being closed. I am talking about Polmaise colliery.
  I want to refer to those miners and former miners who are at present in receipt of concessionary coal but whose support under the scheme may not be sustained because of the policy of the Scottish Special Housing Association. That policy is changing the nature of the fuel source in their homes from electricity, which attracts payments in lieu of coal, to gas. Many miners and former miners in my constituency living in Scottish Special Housing Association homes in the villages of Tullibody and Sauchie in Clackmannan are losing their benefit under the concessionary coal scheme because of the change in energy source.
  Although the Minister may not be able to address himself to that problem at the end of the debate, I hope that he will take that matter up. It is a pressing issue which other Scottish colleagues will want to raise with him. It beggars understanding. The connivance of British Coal in Scotland with the Scottish Special Housing Association is denying people benefits which they have come to believe to be their right, and that has serious affects on the financial circumstances of many of the households in my constituency.
  The next issue relates to Polmaise colliery. I intervened in a similar debate in the summer of 1983 when the work force at that colliery was locked out because of a disagreement with the then director of the Scottish area, Albert Wheeler. That walkout soured industrial relations at the colliery. It was subsequently shown to be the fault
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  of management and the work force had to be reimbursed, at considerable cost to the taxpayer, for the period when they were out on the streets. Very shortly after that the miners strike began, again at a time when the colliery was under threat.
  The miners today decided reluctantly to accept the closure of the colliery. It is not for us today to discuss the closure—that is for union and management discussion—but it is clear that the redundancy payments of some of those miners will be affected by the order. This is the third time that Polmaise colliery has been given the death sentence and it looks as though this time British Coal will succeed in closing the pit. The village of Fallin, where the colliery is located, has been devastated by the news. Youth unemployment there is more than 50 per cent. and it had been hoped that the development plan for the colliery, which had been such a great success, would provide opportunities for many of the young males at present out of work.
  The dreams of that community have been dashed by the closure. The men at Polmaise fought hard during the miners' strike to save their pit. The strike had 100 per cent. support and pickets were not required because no one went to work. On one occasion, the close co-operation between the police and the striking miners resulted in the coal board being blamed for fomenting trouble at the pit gates.
  That colliery contributed a great deal to the colour, verve and life of the Scottish coalfield, and it would be remiss of me not to mention one man now benefiting from the redundancy scheme—John McCormack, who was the delegate at the pit and led the miners throughout the strike and for many years before. The men involved, who may well have to benefit from the order before us, have broken all productivity records in recent weeks and months working on the £18 million development programme which the board brought in after the strike. Having spent £4 million of that sum wisely and well, the board now seems more interested in providing money through the redundancy scheme than in continuing the life of the colliery.
  If more and more Scottish mineworkers are not to face the reality of the redundancy scheme, we must have far greater assurances about the long-term future of the coalburn in Scotland and of coal-fired power stations such as those at Longannet, which is just outside my constituency, but which is served by the mines at Solsgirth and Castlebridge. We need to know the Government's intentions in respect of the CEGB. Scotland has the capacity to produce very cheap coal-fired electricity which could be used in England if the Government would convince the CEGB of the desirability of installing switch gear to allow cheap Scottish electricity to be properly integrated into the national grid. If those guarantees are not forthcoming very soon, the order will apply to far more people.
  With regard to the tragedy of Polmaise, the last thing that I wanted was to participate in this debate and to have to talk about redundancy for men who fought so hard to save their pit and to save the coal industry in their area. I hope that we can be told something about the board's proposals, and the Government's views on those proposals, for the heating of houses by means other than coal and the effect of that on the concessionary coal scheme as it applies to my constituents.

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  We shall be coming to the Minister very soon to see what assistance can be afforded to a village which has been devastated by the closure of its pit and which no longer has any industrial employment, where male unemployment is 30 per cent. and youth unemployment 50 per cent. We expect the Government to do for that village what that village has done for the country, to provide it with the sustenance required to create employment for the future. The people of that village have worked hard to make Britain prosperous through the coal that they have dug in the past 100 years. They are entitled to support, not just from British Coal, but from the other arms of the Government which have resources—the Scottish Office and the Scottish Development Agency—to remove that monument to the coal mining industry, the bing which so dominates the village. The village is entitled to something better.
  I hope that today's debate will give the Minister the opportunity to appreciate what the cost of hewing coal and the consequences of closure mean for the people of that village. We need far more than the tuppeny-ha'penny order before us today to satisfy their needs and to give them hope and faith for the future.
  8.56 pm
  Mr. Gerald Howarth: Like my hon. Friend the Member for Sherwood (Mr. Stewart) and the hon. Member for Clackmannan (Mr. O'Neill), I congratulate the hon. Member for Easington (Mr. Cummings) on a most eloquent speech, which will surely have marked him out in the eyes of those on the Opposition Front Bench at the time. It was well within the spirit set by his predecessor, whose presence was valued and respected by Members on both sides of the House.
  I am delighted that the hon. Member for Easington has such attractive Saxon and Norman churches in his constituency. My constituency used to have an attractive Victorian church. Sadly, it was undermined by mining subsidence and no longer exists. I hope that the hon. Gentleman's churches do not suffer a similar fate. I also share the hon. Gentleman's view about entering this place, although I had not thought of it in quite that way. He likened entering the portals of this wonderful parliamentary building to going underground for the first time. I remember when I went underground for the first time—I have been down three times now—and I understand what the hon. Gentleman means. I think that we work as much in the dark here as some of those in the mining industry.
  Mr. Skinner: I have seen the hon. Gentleman poke his nose in the Bar.
  Mr. Howarth: I do not frequent the hon. Gentleman's Bar. He just gives the impression occasionally of having been in there. That is what is so charming about him.
  As my hon. Friend the Member for Elmet (Mr. Batiste) so rightly said, this scheme was fundamental to the restructuring of the industry that has taken place and led to the great progress that has been made in recent years. It is worth putting on record the incredible generosity of the redundant mineworkers' payment scheme. It was one of the most generous schemes, not just in the United Kingdom, but in Europe, and was unquestionably much envied by others in my constituency who found that they did not have the benefit of such a generous scheme when they were faced with redundancy.
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  It is also worth bearing in mind that the painful transition that has been made by the industry has been achieved without any compulsory redundancies, because of the generosity of the scheme. No other British industries can claim that they have been able to make painful adjustments to improve modern international trading conditions.
  This scheme has come at a time when the outlook for the industry has never been better, as my hon. Friends have said this evening. I should like to take this opportunity to congratulate, not only the miners in my constituency, but those throughout the industry, particularly those in the western area, on their productivity record. It is absolutely essential to ensure that the sort of scheme that was concluded at the end of March this year will not need to be reintroduced.
  Littleton pit outside my constituency has reached a productivity level of more than 4 tonnes per man shift and Florence colliery further north in Staffordshire has achieved more than 5 tonnes per man shift. Such output is in line with what is being achieved throughout the country. Productivity is at an all-time high. Last year no fewer than 15 national productivity records were broken, which is evidence that the miners are playing their part in strengthening the industry. I am sure that we all wish to pay tribute to them for all that they are doing.
  It is also important to bear in mind the Government's role. Opposition Members often accuse the Government of having a hands-off policy and of having no interest in the essential industries. I hope that, as they usually do in these debates, to be fair, they will pay tribute to the Government's efforts, especially in respect of investment since 1979. We hear a great deal from the Opposition about what they call a lack of investment in manufacturing industry. I dispute that. I think that no Government since the war can hold a candle to this Government's record of investment in the coal industry. I saw it at first hand at Littleton colliery only a few weeks ago, when I saw the new skip winder introduced at a cost of £4 million. Indeed, the hon. Member for Clackmannan mentioned an £18 million investment programme at Polmaise in his constituency. It is important to recognise that these are substantial sums of taxpayer's money.
  Mr. O'Neill: I was explaining that the £18 million programme has been cancelled after £4 million of it has been spent. The money must now be used for other purposes in the Scottish coalfield because of the constraints under which British Coal is forcing the Scottish coalfield to operate. Therefore, the exact opposite of what the hon. Gentleman was claiming for his coalfield is happening in the one in which my constituents are employed.
  Mr. Deputy Speaker (Sir Paul Dean): Order. Before the hon. Gentleman answers that, may I warn him that I have the impression that we are going rather wide of the order. We are dealing, not with investment in the coal industry, but with the redundant mineworkers payments schemes. I am sure that the hon. Gentleman will not be tempted by the intervention or continue with some of his earlier remarks, but will return to the order before us.
  Mr. Howarth: I most certainly would not wish to be tempted down the road that the hon. Member for

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  Clackmannan wishes to lead me. I would merely say that I am sorry if I misunderstood what he said. Nevertheless, I think that £4 million is a large sum.
  This debate is the first and will be the last on the coal industry in this new Parliament before the House rises for the long summer recess. Therefore, it is important to set the redundant mineworkers payment scheme in the context in which it was introduced. I shall say nothing more about the productivity record or about the Government's generous capital programme, because I believe that those things are now firmly on the record, not only because of what I have said tonight, but because of what has been said on previous occasions. However, I am bound to say that the industry's future, and the opportunity of avoiding the need for Opposition Members to press my hon. Friend and his colleagues to introduce a further redundant mineworkers scheme, can be secured only if the industry itself takes the necessary action.
  It has come as a great disappointment to me, and to many others, that the National Union of Mineworkers has rejected six-day working. I believe that the Margam pit will be launched only if six-day working is introduced. Let me quote from a constituent's letter in Coal News:
  "Yes, I would like to work four days a week instead of five. It would do very nicely. The extra two hours down the pit is only like working over."
  I think that Mr. Saunders has made my point for me.
  I welcome the efforts made by my hon. Friend on his first appearance at the Dispatch Box in our debates on the coal industry, which are always very friendly, if sometimes rather energetic. He has sought to tackle some of the problems that arise from the workings of the social security system as they affect schemes such as this. I believe that the long-term future of the coal industry looks extremely good. However, no Government can guarantee the job of anyone in the country, and the future security of the industry is largely in the hands of the people who run and work in it.
  9.6 pm
  Dr. Lewis Moonie: I am grateful for this chance to make my maiden speech on a subject that is close to the hearts of so many of my constituents, the mining industry. I ask for your indulgence, Mr. Deputy Speaker, if, as is customary on these occasions, what I say is somewhat wider than the narrow scope of tonight's debate.
  I am privileged to have been chosen by the people of Kirkcaldy and the surrounding villages and towns of Buckhaven, Wemyss, Thornton, Dysart, Kinghorn, Burntisland and Auchtertool, to represent them in the House.
  My predecessor, Harry Gourlay, should need no introduction from me. He served the constituency with distinction from 1959 until his untimely death in April this year, when he was denied the long and happy retirement that he and his wife Peg so richly deserved. He was well liked and respected in the House, both for his knowledge of its procedures and history and for his quiet, dry sense of humour. He served as Deputy Speaker, Deputy Chairman of Ways and Means and a Scottish Whip. He chaired important Committees of this House impartially and fairly. In short, I am sure that he will be missed by friend and foe alike.
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  Before I turn to the subject of tonight's debate, I should like to give some background to my constituency—historical rather than tourist—which may be helpful to hon. Members. It has hosted some important events in Scottish history. Lying in the south of Fife, opposite Edinburgh, the constituency houses in the Wemyss caves some of the oldest cave drawings in Europe, most of them sadly lost through the ravages of time and the failure of the owners of the land and of local and Government authorities to agree on a programme for their safe keeping. That same area is the ancestral home of the Thanes of Fife, immortalised by the Macduff family in "Macbeth"—not very accurately, I may say, but immortalised none the less.
  Further along the coast, at Kinghorn, Alexander III fell to his death, precipitating 25 years of struggle that culminated with the victory at Bannockburn and the declaration of Arbroath in 1320.
  More recently, the most famous son of the town was undoubtedly Adam Smith, the author of "An Inquiry into the Nature and Causes of the Wealth of Nations", to whom so many hon. Members adhere and pay tribute, in particular the hon. Member for Darlington (Mr. Fallon) with whom I share a university if not the same political ideology. I shall quote two short passages from Adam Smith which may give hon. Members some cause for reflection. Early in the section on labour he says:
  "No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable."
  He also said:
  "Poverty … is extremely unfavourable to the rearing of children. The tender plant is produced, but in so cold a soil, and so severe a climate, soon withers and dies."
  Those lines could equally have been penned by somebody with a more Left-wing reputation. They certainly reflect my views on the ills that affect an unfair and unjust society. In my work in health care day after day, I see the results of poverty, unemployment and inequality. I see the full effects of what has tritely been labelled the north-south divide.
  The Kirkcaldy constituency has been associated with coal mining for centuries. Prior to the nationalisation of the industry the pits were owned by the Wemyss Coal Company, renowned, as others, for its rapacity and selfishness. Its inheritor, the Wemyss estate, still owns a large chunk of my constituency. The decayed and derelict properties, the run-down houses that are still lived in by so many of my constituents and the overgrown gap sites in the potentially lovely villages of East Wemyss, West Wemyss and Coaltown of Wemyss pay a stark tribute to the estate's commitment to social change and its regard for
  the community.
  What about mining nowadays in my constituency? Kirkcaldy lies on the northern edge of the Dysart main seam. The coal seam is 12ft thick and runs under the Firth of Forth for many miles, and is one of the richest in Europe. On our side of the Forth it is now worked from only one coal face, the Seafield colliery. Formerly, on the north side of the town, the Frances colliery also operated, but the face was lost during the 1984–85 strike.
  The only other working pit, the Michael colliery at East Wemyss, was closed in 1967 due to the tragic loss of life after an underground fire. The seam is sadly prone to spontaneous combustion—hence the problems that we have with it. It has to be operated at the horrendous gradient of almost one in two. Anybody with any knowledge of mining technology knows that it is very

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  difficult for modern machinery to work effectively on such a gradient. One of the most impressive sights in mining is to watch a machine come down the face at that angle, cutting 12ft of coal at a time. If frightened me when I was down there two or three months ago.
  Only sterling work by miners and management saved that seam earlier this year, as well as the introduction of new technology, with gas injection around the face to maintain a reasonable working temperature. Spontaneous combustion is still a real danger, and with it would come the total loss of deep mining in the area. Seafield is a tribute to the hard work of its work force. They have secured their future by increased productivity, and in the Scottish coalfields that is not easy. They have increased their productivity to the magical figure of 4 tonnes per man shift. Therefore, the pit's future should be secure.
  But faces do not last for ever. There is to be investment in one new face. That will retain the existing jobs and add further years to the life of the mine, but we need more investment in coal seams such as this. Seafield's coal is low in sulphur. Therefore, it can be burnt with very little environmental damage. The rate of extraction could be increased by the development of at least one other face, either at Seafield or at the Frances colliery, which is still maintained on a care and maintenance basis. That investment will depend on the development of a secure market for the coal that we produce both here and abroad.
  We need Government support to develop outlets for our coal, perhaps for the new generation of coal-fired power stations that we all know we need so desperately rather than the monument to nuclear technology rising across the Forth from my constituency at Torness which I can only just see on a clear day from my house but which no doubt on a clear night will be much more visible as it comes into production.
  I am not just speaking tonight in support of coal mining in Fife. We need to preserve workshops in Cowdenbeath in the constituency of my hon. Friend the Member for Dunfermline, East (Mr. Brown). Those are vital for the future of mining in my area. With the loss of Polmaise colliery, the future of the workshops must be in doubt.
  The miners' strike in 1984–85 left a legacy of bitterness in my constituency which must be overcome if the industry is to thrive again. I want to see justice done to the men who were sacked unfairly during the dispute and those who have still not been reinstated two years later. The goodwill built up over the past few years must be encouraged and fostered, not neglected.
  The subject of tonight's debate concerns concessionary coal and that subject is frequently raised in my constituency. Unfortunately, I have more ex-miners than miners now in my constituency and the concessions are important to them. I want to draw the Minister's attention to the difficult situation in which many of my constituents are currently placed. Those who live in what are euphemistically described as "non-standard" houses with non-standard flues have been told that, due to the dangerous condition of the chimneys, they can no longer burn coal for heating and the houses will therefore have to be converted. The houses could be converted to a safer system of coal burning, but unfortunately the Scottish Special Housing Association claims that it cannot afford to do that because of restrictions on money. Many elderly people and pensioners depend on concessionary coal as it is part of their income. It is not a freebie or a free gift that they have been given by a grateful industry. Part of their
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  earnings was committed to that year after year while they were working and they are entitled to it now in their retirement to keep them warm in winter. They will lose that concession and be converted to more expensive forms of heating such as gas.
  I am sure that the Minister shares my sympathy for the plight of those people and I want him to do what he can on their behalf. I acknowledge that the difficulty is largely due to the current agreement between the National Coal Board and the unions and there are also problems with the Scottish Special Housing Association. Nevertheless, if the Minister could do something I would be grateful.
  I thank you, Mr. Deputy Speaker, for allowing me the opportunity to speak in this debate and for your forebearance as I have rather wandered from the subject. My constituency shows the stigma of years of unemployment, poverty and ill health. Coal mining offers many presently employed in the industry, those who are unemployed and the apprentices who could he working a chance of a decent productive future. I will fight to see that they get it.
  9.17 pm
  Mr. James Wallace: It is a great pleasure to congratulate a fellow Scot on making his maiden speech in the House. Both sides of the House will agree that the hon. Member for Kirkcaldy (Dr. Moonie) spoke eloquently and knowledgeably about his constituency and the problems facing his constituents. I also congratulate the hon. Member for Easington (Mr. Cummings) on his maiden speech. Having heard the hon. Member for Easington refer to some of his political predecessors, I wondered whether the hon. Member for Kirkcaldy would refer to the most famous political son to come from Kirkcaldy, and indeed he did. He rightly quoted from Adam Smith to show that perhaps all the propaganda that is sometimes associated with Adam Smith tends to be one-sided. If we read his writings as a whole, we find that parts of his writings could be learned and read by Conservative Members to great advantage. I forgive the hon. Member for Kirkcaldy for omitting to mention one of the other important sons of Kirkcaldy—my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel). I understand that he was born in Kirkcaldy.
  We all look forward to hearing the hon. Member for Kirkcaldy speak again. No doubt those of us who are privileged to be members of the Scottish Grand Committee will hear the hon. Gentleman speak in that Committee. We all share in the tribute paid by the hon. Member for Kirkcaldy to the late Harry Gourlay who for many years gave great service not only to his constituents and party but to this House.
  The order is detailed and limited in its scope, but the hon. Member for Midlothian (Mr. Eadie) rightly expressed some concern about the lack of consultation that took place before it was laid. The order might be technical and its purpose may be limited to clarifying that which might give rise to a challenge in the courts, but it is important generally for industrial relations that people are not taken for granted. When that happens, resentment tends to build up in an industry which has had considerable industrial relations difficulties over recent years. I hope that that point will be taken up by the Minister.

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  The Minister has talked about the need to avoid court action. Even as a lawyer, I would agree with him about that. If court action can be avoided, it is desirable that it should be. It has been argued that payments have been withheld since the introduction of the new social security legislation. I ask the Minister to confirm, when he replies, that the payments have been reduced, not withheld, and that they will be repaid in full over the coming months.
  The hon. Member for Clackmannan (Mr. O'Neill) referred to the closure of the Polmaise pit. That is of concern to him as a constituency Member, and over the past 24 hours it has concerned the whole of Scotland. The hon. Member for Kirkcaldy put his finger on the problem when he said that there are more ex-miners than miners in his constituency. I understand that 12 years ago there were 1,000 miners employed at the Polmaise pit, and we are now told that the closure will affect 112. That is a measure of the decline that we have seen in the industry. Many of the 1,000 who were employed at Polmaise 12 years ago will be in receipt of the benefits that stem from the scheme that we are debating. British Coal has said that it hopes to find jobs in other parts of the Scottish coalfield for the 112 who will be affected by the closure, but press reports say that many of the 112 are somewhat sceptical about whether they will all find jobs. There is the feeling that there will be redundancies.
  However generous redundancy and concessionary schemes may be, they cannot be any substitute for real jobs. We are talking of a community in which over 50 per cent. of the young people are unemployed. Four years ago hope was engendered by an £80 million investment plan. A community can be devastated when that which it thought was within its grasp is taken from it.
  I hope that the Minister will be able to answer the questions which have been asked about Polmaise, even though it may mean you stretching a point. Mr. Deputy Speaker, when deciding whether the hon. Gentleman is in order. I hope that he will be able to say whether those who find themselves out of work at Polmaise will have a real chance of re-employment elsewhere in the Scottish coalfield. The devastation that is brought to villages as a result of closures can be compensated only in small measure by redundancy payments. The various divisions of British Coal, the Scottish Office and the Scottish Development Agency must make every effort to ensure that new hope is brought to an area that tonight must be suffering great depression.
  9.24 pm
  Mr. Eric Illsley: The connection between the reduced earnings allowance and the redundant miners payments scheme, which is the basis of the order, highlights the fact that the Social Security Act 1986 was an ill-thought-out piece of legislation. The Government have neglected to tie up the loose ends by means of consequential amendments, and that is the reason for the order.
  It is interesting to learn that the Government intend to make repayments to miners who are affected by the terms of the order without there being a need for court action. That is an interesting departure from the situation in 1984. A number of my constituents, and literally hundreds of mineworkers in Yorkshire, accepted redundancy slightly before the 1984 strike, but even now they have not received
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  redundancy payment or the unemployment benefit that they should have received as a result of the redundant mineworkers payment scheme.
  The redundancy scheme was voluntary and we have heard from Conservative Members on at least two occasions that no worker in the mining industry was forced to accept redundancy. Unfortunately, that is not the case. Quite a number of workers have been faced with unreasonable transfers or redundancy. In the circumstances, they have been made compulsorily redundant. It is wrong to talk about the redundancy scheme as being wholly voluntary, particularly now.
  Many men were faced with redundancy either at a time when they did not want to accept it, because it would not benefit them, or when they were faced with a transfer to a colliery 30 to 40 miles away, which would involve too much travel-to-work time. These are the compulsory redundancies that have occurred throughout the industry.
  We must look to the future to see what problems will arise with redundancy payments. The average age of miners is about 35 years. These are men of my own age and slightly older who want not redundancy but jobs within their industry—something to which they are entitled. The Government should expand rather than contract the coal industry. My hon. Friend the Member for Kirkcaldy (Dr. Moonie) has already made that point about the closure of Polmaise. In the Yorkshire area, the South Kirby, Woolley Wath, Kilnhurst, Treeton and Manders collieries this year have suffered either partial or total closure. It is obvious that the smaller number of collieries and the increase in technology mean fewer job opportunities or transfers within the industry. Therefore, there must be redundancies if British Coal is to pursue its present policies. How is it to achieve redundancies without some compulsion, which is the next step?
  With the problems facing the industry, compulsory redundancy is compounded by a number of issues that are being debated. We heard from the hon. Member for Cannock and Burntwood (Mr. Howarth) that the NUM has rejected six-day working and flexible working. Had he been at the NUM conference last week he would have heard a decision to hold a ballot on the issue, so the members of the NUM have not yet made their decision on that issue. As to four-day working, that is within a seven-day cycle or a continental shift. The four-day period could be over a Friday, Saturday, Sunday and Monday nightshift. Would Conservative Members relish such a prospect? The industry is facing flexible working practices.
  Mr. Gerald Howarth: I am interested to hear what the hon. Gentleman has said about the ballot. However, what is his view? What recommendation will he be making to his constituents on how they should vote?
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will not be tempted by an experienced Member into straying out of order.
  Mr. Illsley: I shall not be tempted into replying to that question, Mr. Deputy Speaker. It is obviously a question for the members of the National Union of Mineworkers, according to the advice that they receive from their leadership. It is not connected with this order.
  To return to redundancies and the problems facing the industry, British Coal will be hard pressed to find the collieries and the job opportunities for future transfers. There will be thousands of job losses and colliery closures

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  because of increased opencast mining, increased imports—especially from South Africa and Colombia—and the privatisation of the electricity supply industry, which will be a forerunner to the privatisation of British Coal.
  Earlier in the debate, we heard that there has been a total lack of negotiation and consultation about this order. Since the end of the strike, there has been no negotiation or consultation on any issue between British Coal and the NUM. That includes flexible working, the wage increases that have been imposed during the past two or three years, the conciliation machinery and the disciplinary code of practice.
  The dispute over the latter during the past few days has resulted in about 18 collieries in my area taking strike action. Unless British Coal returns to the negotiating table with a genuine and sincere desire to negotiate on these issues, including redundancy, flexible working and a disciplinary code, there will be no peace in the industry and no prospect of achieving the future of which Conservative Members have talked. The industry does not have a rosy future. There will be more decline, more job losses and more pit closures. The problem will be eradicated only if British Coal has a genuine desire to negotiate.
  9.32 pm
  Mr. Dennis Skinner: I am pleased to be able to speak in the debate, partly because I was able to listen to two maiden speeches by Labour Members. My hon. Friend the Member for Kirkcaldy (Dr. Moonie) is a doctor. He has a doctor's voice. I can imagine a decent Socialist going into his surgery and coming out feeling better. I look forward to hearing a lot more from my hon. Friend.
  The same is true of my hon. Friend the Member for Easington (Mr. Cummings)—a different voice fashioned in a different way. He is not here now, but no doubt he will tell me later that I am right in thinking that his voice was fashioned in the canteen, when it is crowded in the morning, when there is fag smoke—unlike the doctor's surgery—when people have a problem, when the miners are a bit unsure and when there has been no consultation, as with this document. People have to raise their voices and appeal for solidarity. We have all done it—well, nearly all. The Liberals have been doing a bit of that lately. There has been some shouting and bawling going on with them. I do not know whether it has been in the SDP canteen. Of course, they do not have a canteen; it is a telephone box.
  Mr. Wallace: That is an old one.
  Mr. Skinner: It is an old one, but the old ones are very good. They keep coming back.
  It was delightful to hear the Liberals talking about a merger. It was a little gem to hear a Liberal standing up here and condemning the Tories and British Coal because there had been no consultation, after what their leader has been doing these past few weeks. I know that that has nothing to do with this order, Mr. Deputy Speaker, and I want to make it clear——
  Mr. Wallace: The hon. Gentleman will be talking about nothing else for months.
  Mr. Skinner: I think it is a good subject. The hon. Gentleman keeps intervening. He is heckling me and just encouraging me, Mr. Deputy Speaker. It is a delightful side show and there is no doubt about that.
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  When all the other things have gone off the front page of the newspapers, the editors can always turn back to the SDP and Liberal merger. The headlines will read "Is it on, or is it off?" That ballot will take longer than our ballot.
  I am delighted to see that my hon. Friend the Member for Easington is now back in the Chamber. I had just referred to the way in which he was able to deliver a wonderful maiden speech and capture the attention of the House. I said that my hon. Friend's voice, unlike that of my hon. Friend the Member for Kirkcaldy, was probably fashioned in the canteen, early in the morning, when it is necessary to raise one's voice to get the message of solidarity across. I look forward to hearing more from my hon. Friend.
  I am glad that my hon. Friend the Member for Easington mentioned churches. It gives me the opportunity to put on record—it does want putting on record—that I have enabled the coal board, or British Coal as it is now called, to start negotiations with Bolsover parish church over subsidence. Negotiations had reached a deadlock, and I was called in. The parish council said that British Coal would not pay subsidence costs. I said, "I will start the negotiations. I will have a debate in Bolsover parish church between me and Haslam." It was not long before British Coal went to its lawyers and started negotiating again.
  I am pleased to take part in this debate because a new Minister is on the Front Bench. I shall not welcome him, because I do not know how long he will be here and I am not into that anyway. However, I hope that he will make a better fist of this than he did the Tory party computer.[Interruption.] Well, we judge people by what they do, not what they say. The Minister got involved in running this outfit, the Tory party computer. The computer was to link up with every constituency in Britain, but what happened? The firm went bankrupt. There were 150,000 other bankruptcies in Britain, but there was only one computer firm involved. The Minister picked the wrong one. When we come to think of it, the Minister could have been in easy street now.
  Mr. Michael Spicer: The hon. Gentleman is going back a bit and scraping the barrel about my past. The Tory party purchased about 200 of those computers. My constituency purchased one and it is still working. I believe that the others are as well. I believe that that computer was rather successful, and we won the election as a result.
  Mr. Deputy Speaker: Order. The whole House is enjoying the preamble of the hon. Member for Bolsover (Mr. Skinner), but I hope that he will now come to the order.
  Mr. Skinner: May I just say that the Minister's reply sounded a bit defensive. The truth is that the Prime Minister and the rest of them in Tory party central office said, "Get it out and start afresh."
  This order is important because we believe that debating redundancy payments is not something that we should welcome. As my hon. Friend the Member for Barnsley, Central (Mr. Illsley) said earlier, this is all about more people being chucked on the Thatcher scrap heap. Every time we get one of these orders before us, however technical it might be, it is about people being thrown on to unemployment benefit and going to the Department of Health and Social Security. It is about people going for additional payments to Sheffield as contained in this

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  order. It means that more and more taxpayers have to pay more money to keep people idle. The Opposition want people back in work. If people were back in work we would not have to import coal from about 30 different countries, some of it subsidised up to the hilt by those countries. We would sooner not have these dates on redundancy payments.
  One of the reasons for this debate is the special hardship allowance. One of the reasons why the Government have changed from special hardship allowance to income support is that they have decided to get rid of that special hardship allowance. That allowance has been part of our welfare state since 1948. The miners needed that allowance because many injuries occurred in the industry. The result was that the Government changed the system in the Social Security Act 1986. Many miners and others will finish up with less on "special hardship", with its new title, and some will not receive any special hardship-type allowance at all, No doubt there will be a favoured few, but it is worth remembering that that is why the order has been introduced.
  The same is true of rent allowances. The adjustment has been made because the Government ensured in the Social Security Act 1986 that people would get less on rent allowance and rent rebate. The result is that people have to make up the money from another source—in our case, the Sheffield headquarters of British Coal, which pays the money out.
  The debate is not about sacked miners, as you said, Mr. Deputy Speaker. If we could get those 350 sacked miners back to work, that would be 350 people who could contribute to the nation's wealth, pay taxes and national insurance and reduce the mammoth bill of £21 billion paid out for those who are out of work. Although this debate is not about them, we cannot talk about redundancy without referring to them.
  The same is true of the new problem in the coalfields. British Coal thinks that it has the whip hand. It thinks that it can put the boot in, assisted by Tory Members, many of them moonlighters who come into this building only two days a week, yet want miners to work six days a week. I heard them say that the other day. It is a scandal. They are trotting off for a three-month holiday, yet telling miners to work six days a week.
  Mr. Andy Stewart: Withdraw.
  Mr. Skinner: The hon. Gentleman is a farmer. He is getting subsidies from the taxpayers, the miners, yet he wants them to work six days a week.
  Mr. Gerald Howarth: Will the hon. Gentleman give way?
  Mr. Skinner: I shall give way to jackboot.
  Mr. Howarth: I shall ignore that remark, Mr. Deputy Speaker.
  Mr. Skinner: The hon. Gentleman has to do so. I shall not withdraw it.
  Mr. Howarth: The hon. Gentleman has just said that miners will have to work six days a week. He knows that that is a total untruth and that the British Coal Corporation has made it clear that no miner will be required to work six days a week. What will be required to work six days a week is the machinery.
  Mr. Skinner: I have to say as quickly as possible, because I know that it is not quite within the realms of the order, Mr. Deputy Speaker, that the hon. Gentleman cannot find written evidence from British Coal that is being reported to the NUM or any other union in the industry.
  Mr. Howarth rose——
  Mr. Skinner: The hon. Gentleman is holding a press release. I have seen it. It means nothing. There have been no consultations with any of the trade unions concerned. That is just a bit of sky writing for people like the hon. Gentleman to pick up to try to confuse people in his coalfield. They will not accept six-day working. There will be a majority against it in every area—[HON. MEMBERS: "In South Wales?"] And in South Wales.
  The debate is also about coal allowances—it says so in the title. What has been happening lately to the miners' widows of 75 or 80 is a scandal. The Government are taking away the cash in lieu and the coal allowance. They have even introduced a new scheme under which people are put into little flats and bungalows and receive an allowance of 3 tonnes of coal a year instead of 5 tonnes. The Government have introduced other schemes under which people who have gone to live with in-laws, their daughter or son for a short period and then returned home have had their money or allowance taken from them. This is going back to Victorian days.
  I make a final plea to the Minister, if he wants to make a name for himself. I have said about a dozens times in the House—perhaps more—in the past 17 years that there is a small group of people who are part of redundancy schemes introduced before 1968 and who do not receive any allowance coal. It is time that they were allowed that coal. There are a few hundred in Lancashire, Derbyshire and elsewhere.
  The order is part and parcel of the whole jigsaw which, if the Tory Government remain in office, is a prelude to privatisation of certain parts of the British coalfield. That is why the Government like redundancy payments and coal imports coming in and taking away the jobs of miners. That is why they want to create a rat race and introduce flexible working and a six-day week. It is all part of that same pattern, and that is why we can understand that redundancy payments orders and coal allowance orders are all part of that same Tory creed.
  9.46 pm
  Mr. Frank Haynes: I welcome the maiden speeches that have been made tonight and since the general election, particularly those by my hon. Friends. I find that we have much quality on our Benches, as demonstrated by the contributions of our new hon. Members.
  Unlike my hon. Friend the Member for Bolsover (Mr. Skinner), I welcome the Minister to the Dispatch Box. I questioned him on Monday during questions on energy. He said that he was going to help me and my constituents who are in difficulty with claims for mining subsidence. I only hope that he will keep his word and kick over the traces of the raw deals that my constituents, and those of other hon. Members who serve in mining constituencies, have suffered on the issue of subsidence. We want some straightening up and some management of the board from this House.
  Under its new name, British Coal is running away with things. I remember the Prime Minister saying fairly

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  regularly that management is there to manage and the workers are there to work. The order speaks of what I experienced as a lad in the pit when managers managed and workers worked—and we were trampled on and pushed around and had to put up with it. If we did not, we got our cards. That is what we are going back to, and the order is encouraging it.
  The Minister comes from a different job. I regularly saw him on the television news. More often than not he was standing in an airport somewhere, so he has obviously been involved with aircraft and flying about all over the place. I am asking him to put his feet firmly on the floor——
  Mr. Kevin Barron: Underground.
  Mr. Haynes: I was going to say that, but my hon. Friend beat me to it. He should put his feet underground, too. I hope that he will make the necessary visits to talk to the men in the industry, and that he will do something else that British Coal is not doing. I refer to what my hon. Friend the Member for Midlothian (Mr. Eadie) said about non-consultation between British Coal and the trade unions. That is a shocking state of affairs. It is now up to the Minister—the ball is at his feet—to put this right, because it is wrong. The machinery for consultation should exist and there should be consultation with the trade unions on this order, and on other measures too.
  To hear Conservative Members talk, one would think that they were ex-colliers. They have never seen underground workings and do not know what mining is about. I agree with my hon. Friend the Member for Bolsover about moonlighting. The hon. Member for Sherwood (Mr. Stewart) had the nerve to talk about the subsidy and the investment in the mining industry. The Government pour money into his pocket because he is a farmer. He is doing two jobs.
  Mr. Andy Stewart: It is not illegal.
  Mr. Haynes: The hon. Gentleman tried to patronise us in his speech. He should be honest about the matter, because he knows full well that the policy underlying this order is linked to the problems in the mining industry. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) talked about more pit closures and about more people being made redundant. More money will have to be found to provide redundancy pay for those people. There are no jobs for the youngsters in the towns and villages where the pits are situated. There is no work elsewhere either, so the Government put them on a phoney training course that takes them off the dole queue. The hon. Member for Sherwood can grin and scratch his head, but we know what is going on. The hon. Gentleman is not prepared to accept but he knows full well that the unemployment figures are fiddled. Unemployed lads can no longer get jobs at the pits as lads used to do in years gone by.
  The order mentions concessionary fuel. The more pit closures we have, the fewer men will be working in the pits. I worked underground for 35 years and made my contribution from my fuel every month to a pool for widows and retired miners. Where has that coal gone? What happened to it? I think that there has been a fiddle. The Government talk about what they will do with concessionary fuel, but they do not realise that, with fewer miners, fewer contributions are being made to the pool.
  Retired miners nowadays are living far longer than they used to. There is an army of retired miners who have to
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  be provided with concessionary fuel. The Government keep closing pits and reducing manpower, and the remaining work force is making fewer contributions to the pool for the people who have given a lifetime of service to the industry and to the nation.
  Conservative Members are looking at me in a way that shows that they understand what I am saying but that they did not understand it before. This is a real problem and. the Government are not grappling with it. Most of the problems stem from non-consultation. I have many years of experience in the industry and I know what is going on today. I shall not wander to the subject of flexible hours, but even that will have a serious effect on redundancy pay and concessionary fuel.
  Many years ago, the management managed. They kicked us around all over the place. The hon. Member for Sherwood may grin, but he is only a lad and he does not understand.
  Mr. Andy Stewart rose——
  Mr. Haynes: The hon. Gentleman should sit down. He has made his contribution.
  Mr. Stewart: If the hon. Gentleman is so informed about the mining industry, why was it that at the recent election his majority went down and mine went up?
  Mr. Haynes: I cannot explain that. You should tell me" Mr. Deputy Speaker, not to answer that question.
  Mr. Deputy Speaker: Order. I believe in being fair. The hon. Gentleman should answer the question briefly, but. we must get back to the order.
  Mr. Haynes: I am obliged, Mr. Deputy Speaker. That is the first time that you have said that to me and I shall take it on board.
  How can I know why people voted as they did in Sherwood? I tell the hon. Member for Sherwood that I do not represent only the UDM. I represent all the miners in my constituency, which is more than can be said for the hon. Gentleman. He has been yawping about the UDM, but he never mentioned the NUM. He has NUM members in his constituency, but I represent all my constituents, not just one section. The hon. Gentleman might not get a 5,000 majority next time.
  Mr. Stewart: It will be 10,000 next time.
  Mr. Haynes: The hon. Gentleman might have to return to farming, which would be welcome.
  The hon. Gentleman and his colleagues think that they know about the mining industry, but they have never seen a No. 10 shovel. It is as big as a table top. Conservative Members may laugh, but this is a serious matter. I had a No. 10 shovel in my hands for donkey's years. I know what it is like to work underground in a mine. In this order we are talking about people who have given a lifetime's service to the industry but who have been put out of work by the Government because of their policies with regard to the mining industry.
  My final plea is that we must return to the way that things were before I came to this place, when the National Coal Board, the trade unions and the men worked as one. That is how it used to be, but it is no longer like that.
  Mr. Ray Powell: When my hon. Friend mentioned returning to the way that things were, there were sniggers from the Conservative Benches. However, if we returned to the way that things were in Ogmore in 1979

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  we would have seven collieries employing 5,500 miners. I am sure that my hon. Friend would like to comment on that.
  Mr. Haynes: I shall comment on that, and I hope that Conservative Members will wipe the grins off their faces, because this is a serious matter. Conservative Members have a job, and some of them have as many as seven. One has only to look at the Register of Members' Interests to see the moonlighting that occurs, as my hon. Friend the Member for Bolsover said.
  I used to have nine pits in my constituency, but there are now only four. That is all that is left under this Administration. The young lads who are leaving school cannot get a job at the pit. There are a lot more men who are not making a contribution because of those five pit closures. Therefore, money has to be found from somewhere else and the Government keep coming back with orders such as the one that we are discussing tonight.
  I saw a list, not from British Coal to a Member of Parliament, or from British Coal to the trade unions, but in the Today newspaper only this week. It showed a list of pits that are uneconomic and ready for closure. All four of the pits in my constituency were on the list. If British Coal continues in that way, we will not know what is going on until Energy Question Time, when, if we are lucky enough to be called, we can ask the Minister what British Coal is doing and what is going on. It is not telling us anything.
  The hon. Member for Cannock and Burntwood (Mr. Howarth) held up a copy of a press release from British Coal. It means nothing. We are not talking about that; we are talking about the real things taking place in the industry, such as non-consultation. We have to keep emphasising that, and I hope that the Minister will do something about it. There is no consultation, either with the trade unions or with the men themselves.
  The industry cannot work without the men. The results of the men are fantastic, they really are. The Minister knows that each week output records are being broken. I agree that the machines are doing the job, and they will be doing a bit more in the future if an agreement can be struck between the coal board and the union. That is where it must happen, not in here, not by talking to Tory Members of Parliament who represent mining constituencies. It has to be done in a proper way, like it used to be done before I came to this place. It is only since 1979 that it has all gone wrong. We have told the Government time after time, but they are not prepared to listen. They do not want to know. All they want to do, as my hon. Friend the Member for Bolsover said, is to let British Coal keep putting the boot in. That is all that is happening. It is high time it stopped, and I hope that the Minister will do something about it.
  10.2 pm
  Mr. Richard Alexander: I intend to speak briefly, but I must say to the House, particularly to my hon. Friend the Member for Sherwood (Mr. Stewart), that Conservative Members view the anger of Opposition Members as the anger of people who find that they no longer exclusively represent coal-mining areas. That is largely the reason for the invective imposed upon my hon. Friend the Member for Sherwood, who—I shall be
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  corrected if I am wrong—looks after the interests of more pits than any other hon. Member, and Labour Members do not like that.
  I thought that the invective coming from Labour Members was a bit rich. It was unfair to my hon. Friend the Member for Sherwood. The fact that he may be a farmer has nothing to do with this debate. We are debating an order. Snide remarks about people such as my hon. Friend, who happens to do a good job as a farmer as well as an excellent job as a coal-mining constituency Member of Parliament, are wrong. He did not deserve the abuse that he received this evening.
  I wish to make two points in connection with the order, and they have both been raised in the previous two contributions. They were raised by the hon. Member for Bolsover (Mr. Skinner). One would imagine that since the Tory Government took office, and only because the Tory Government took office, we have seen mass redundancies, on an enormous scale. What we never hear from the Labour party spokesmen is that none of them has been compulsory. Those concerned have taken redundancy on very generous terms. It is wrong for the Labour party to suggest otherwise.
  It is a smear on the Coal Board, and Sir Robert Haslam in particular, to say that it is asking for six-day working. The hon. Member for Bolsover said that it is all sky writing. I do not think that that is fair either. Sir Robert Haslam has made it perfectly clear. In a press release dated 9 July 1987—sent not just to Tory Members, but to all Members—British Coal states:
  "There is no intention to introduce six-day working for miners. British Coal are proposing to introduce six-day coal production at a limited number of less than a dozen new or extended pits."
  To hear the invective from some Opposition Members, one would not think that that had been stated publicly and in writing. Unfair party political smears are not to the benefit of hon. Members' constituents or of the industry; the order is.
  10.6 pm
  Mr. Allen McKay: As usual, the debate has been extremely lively, as it always has been and always will be because there are so many differences of opinion about this great industry.
  The Minister says that this is a technical order which makes technical changes. Rather than seeking to explain the details at the Dispatch Box, perhaps the Minister will put explanatory notes in the Library about the technical changes, how and why they have come about, why they are needed and the effects that they will have. When the Government talk about technical changes, it usually means that someone will lose. It does not mean that everyone will win or even stay the same. Under the cover of technical changes, people lose money. I hope that the Minister will place explanatory notes in the Library so that we can advise our constituents.
  I was surprised and annoyed that such a measure should be introduced without consultation with the trade unions concerned—any trade unions, as my hon. Friend the Member for Midlothian (Mr. Eadie) said. It is important that there should he consultation. The six-day week proposal is not new. It has been mentioned many times in the past. There have been changes, because restructuring did not begin in 1979. It began on vesting day

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  and has been a continuing process ever since, and it will continue for some while yet. That is why there must be consultation before we debate orders of this kind.
  When people consider the six-day week, they forget what has happened in the past. Output used to be calculated as output per man shift. Collieries with a high output per man shift were regarded as economic and fairly safe. That no longer applies because profitability is now calculated not in output per man shift but in cost per gigajoule. Miners have never been fools and they realise what six-day working will mean. The coal already on the floor will increase because six days' output will flow from six days' production. If we cannot cope with five days' output, what will happen to the increase? Without a shadow of doubt, it will mean colliery closures.
  Lack of consultation shows lack of trust, and trust is very important in the mining industry. Back in the 1930s and 1940s, we had the Fleck report which said that there was too much academic experience in management and not enough practical experience, especially in industrial relations. Colliery closures have made this order necessary and not only miners, but administrative staff have become unemployed. The old, long-in-the-tooth managers and industrial relations officers have gone and we are left with a lot of whizz kids who have no practical experience and do not understand our history.
  Before the strike we warned the House in a similar debate what would happen. In Yorkshire 19 collieries are on strike and the warning bells are ringing again. It is no use the Government saying that that is no responsibility of theirs. It is a nationalised industry with a chairman appointed by the Government. The Government must say to that chairman, "Let's bring back consultations. Let's get round the table and talk about these problems and measures." If they do not, they will again force the miners into a corner and the reaction will be exactly the same because that is the mining industry as it is, always has been and always will be.
  The problem is that we have Ministers and bosses who do not understand the history or future of the mining industry. A future is there providing the Government take the men along with them. Without the men, the Government will fail. That was my first lesson in industrial relations. However good the idea is, it is no good unless the men accept it.
  Let us have more explanation of the order and let us now have an assurance from the Minister that no one affected by it will lose either now or in future.
  10.12 pm
  Mr. Eadie: I am proud to refer to the maiden speech of my hon. Friend the Member for Easington (Mr. Cummings). He said that he was a sixth generation miner and was a child of the mining industry. He has mining skills and experience of the coal industry, and he has worked in local government and for his trade union. The whole House will agree that his maiden speech showed that he will make a good contribution to this House as Member of Parliament. I am particularly proud because my hon. Friend is now a member of the largest industrial group in this House, the miners' parliamentary group, and on another occasion we had the opportunity to welcome him warmly.
  I should also like to refer to my hon. Friend the Member for Kirkcaldy (Dr. Moonie). He has special significance for me because he happens to be my Member
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  of Parliament. When he described the seams of coal and the gradients of one and two in the Wemyss area where I worked for 30 years at the coal face, man and boy, I began to feel a little sore. He showed in his speech, as he has already shown in the constituency, that he will make a worthy Member and successor to the late Harry Gout-lay. I am pleased to welcome him to the House.
  The most depressing aspect of the debate is that only Opposition Members have talked about conciliation and consultation. The hon. Member for Elmet (Mr. Batiste) completely distorted everything that I said. I made a plea for consultation and conciliation. We heard nothing about that from Conservative Members.
  It is wrong to impose, for instance, a code of conduct without any consultation or conciliation taking place with the mining unions. As a consequence, the whole Yorkshire coalfield is now alight. That should be a lesson to us. There must be a fresh attitude. We must get down to talking. discussing and arguing with British Coal as an employer. The Government must assist in that, because they are being accused of conspiring with British Coal to destroy industrial relations. This great industry of ours will never work without proper industrial relations.
  There have been no negotiations about the six-day week. It is not good enough to quote a press release. Sending out press releases and saying, "This is what we are going to do" is no way to bring about good industrial relations. New proposals must be discussed with the representatives of the industry. Unless British Coal gets down to consultation and conciliation, when the miners' union decides to hold the ballot vote, I am afraid that. British Coal will get the result that it does not want. Now is the time for talk; now is the time for consultation; now is the time for conciliation. That should be our message, and only the Opposition have tried to convey it throughout the debate.
  My hon. Friend the Member for Clackmannan (Mr. O'Neill) talked about the closure of Polmaise. I am very sorry to hear about that, because I was an agent in the area over 20 years ago, and I know the village of Fallin well. The villagers are a proud people, and they were proud of their pit. They had supplied generations of miners to that pit, and I know that they are suffering terribly from the staggering blow that the news of the closure has deak them. Incidentally, as a consequence of that closure, a £4 million investment will be wiped out. I feel for my hon. Friend the Member for Clackmannan.
  We shall listen with interest to what the Minister has to say.
  10.17 pm
  Mr. Michael Spicer: It is understandable that the debate, as was anticipated at the outset by the hon. Member for Midlothian (Mr. Eadie), has ranged somewhat wide of the terms of the order. Concessionary coal, the code of conduct, Conservative party computers and many other issues have been raised. I hope that the House will forgive me if, on this occasion at least, I address my few remarks to points relating directly to the order. No doubt there will be many opportunities to debate some of the other extremely important points that have been raised.
  I begin by adding my warmest congratulations to those already given to the two hon. Members who have made their maiden speeches tonight. The hon. Member for Easington (Mr. Cummings) spoke movingly of his

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  constituency and of his eminent predecessors. By coincidence, as has already been mentioned, I found myself opposing two of them—Manny Shinwell in 1966 and Jack Dormand in 1970. I can now say, without harming either Jack Dormand's career or mine, that he was a very close friend of mine, and I fully agree with what the hon. Gentleman had to say about him.
  I think that the hon. Member for Easington said that I was the only Minister not to have visited Easington. I have to tell the hon. Gentleman in all humility that I am probably the only Member of either Front Bench who has ever lived there. Be that as it may, I congratulate the hon. Member on a model maiden speech.
  I congratulate also the hon. Member for Kirkcaldy (Dr. Moonie), who spoke movingly about the Seafield colliery. I know that the House will wish to join him unreservedly in paying tribute to the bravery and dedication of the Seafield miners who in January fought that underground fire.
  One of the main themes of the debate has been consultation. The word has been used many times, in particular by the hon. Members for Ashfield (Mr. Haynes), for Orkney and Shetland (Mr. Wallace) and for Bolsover (Mr. Skinner). I recognise the great experience on both sides of the House concerning this industry. Therefore, I have listened carefully to what has been said about consultation. I do not necessarily agree with all that has been said about consultation, but I shall read carefully what has been said about it.
  As for consultation on this order, there has been no change in the policy relating to or the substance of the redundant mineworkers payments scheme. It would not have been reasonable, therefore, to engage in a long period of consultation.
  My hon. Friend the Member for Elmet (Mr. Batiste) asked for an assurance that nobody would be worse off as a result of the order. I can go further than that. I explained in my opening speech that the recipients of RMPS basic benefit who have also been in receipt of the reduced earnings allowance since 1 October 1986 will receive a refund of the reduced earnings allowance deductions that have been made since that date. Apart from that, there will be no significant change to the payment of basic benefit as a result of the order.
  The hon. Members for Orkney and Shetland and for Clackmannan (Mr. O'Neill) referred to Polmaise. There will be no compulsory redundancies at Polmaise. Transfers will be available for those who do not wish to accept voluntary redundancy. The hon. Member for Barnsley, Central (Mr. Illsley) said that payments that are due under the RMPS have not been made in certain cases. I was surprised to hear about that, and if he will write to me I shall look carefully into it.
  Mr. Gerald Howarth: The hon. Member for Barnsley, Central (Mr. Illsley) made an important point that is a cause of concern to both sides of the House. It relates to payments that should have been made to men who accepted voluntary redundancy before the strike was announced, who became redundant during the strike and who have been unable since then to obtain unemployment benefit. The matter has gone to the social security commissioners. If my hon. Friend could find time to
  1380
  introduce an order to help those people, he would be doing a great service to the constituents of many hon. Members on both sides of the House.
  Mr. Spicer: That is an interesting point. As the case is with the commissioners, I imagine that it is being looked at very carefully. However, I shall certainly look into the matter.
  The hon. Member for Barnsley, West and Penistone (Mr. McKay) said that this is such a technical order that further details, if any, should be placed in the Library. I will certainly consider whether there is any further information that I can sensibly publish. If so, I will write to the hon. Gentleman and put a copy of that letter in the Library. However, I will consider whether there is anything further that can usefully be said of a technical nature.
  My hon. Friends the Members for Cannock and Burntwood (Mr. Howarth), for Sherwood (Mr. Stewart) and for Newark (Mr. Alexander) made the theme of their speeches the fact that the industry has a great future if it can continue on its present path of producing coal more and more efficiently. I agree with them. I also agree with those who have said that the greatest challenge of all is to take those who work in the industry with us.
  Mr. Barron: At the moment, Colombian coal is shipped into the Thames estuary and delivered at 80p a gigajoule. How can the British deep-mine coal industry compete with that? We are competing with very low production costs because children are being used to produce that coal. This House, more than 100 years ago, said that it was illegal to employ children in that way in this country.
  Mr. Spicer: The hon. Gentleman, who is extremely knowledgeable on this matter, knows that the vast majority of coal that is currently imported is specialist coal for coking purposes. That is why we want to see the Margam pit developed and coming into production. Coal from that pit would be import-substituting. That is why we want that pit to be open and working efficiently. That meets the point raised by the hon. Member for Rother Valley (Mr. Barron).
  Mr. Barron: The Minister has not answered my question.
  Mr. Spicer: I have the perfect answer. British coal of the right type must be produced so efficiently that we do not need to import coal in the way described by the hon. Gentleman.
  Mr. Batiste: Does my hon Friend agree that the greatest incentive for importing coal is industrial action in the coalfields, which makes customers for coal concerned about the security of their supplies?
  Mr. Spicer: My hon. Friend has made an extremely important point which I hope will be heard outside this Chamber.
  I have had only a short time to look at this industry. However, the more that I look at it, the more I think that it has a great future.
  Question put and agreed to.
  Resolved,
  That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1987, which was laid before this House on 6th July, be approved.

  Coal Industry
    STATUTORY INSTRUMENTS, ETC.
    Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).
    STATUTORY INSTRUMENTS, ETC.
      EDUCATION
      That the draft Education (Assisted Places) (Amendment) Regulations 1987, which were laid before this House on 25th June, be approved.

      VALUE ADDED TAX
      That the Value Added Tax (Construction of Buildings) (No. 2) Order 1987 (S.I., 1987, No. 1072), a copy of which was laid before this House on 24th June, be approved.—[Mr. Neubert.]
      Question agreed to.

  University Funding
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
  10.27 pm
  Mr. Malcolm Bruce: I am very glad to have the opportunity at last to debate the issue of the funding of universities. This matter has caused me considerable concern. It has also caused many hon. Members concern and was a major issue in the general election in Scotland. It probably cost one Conservative Member his seat and nearly cost a then Government Minister his seat also, a fact that he has acknowledged.
  Dealing with the body responsible for the universities—the University Grants Committee—is rather like grappling with warm blancmange. Nevertheless, the more we get involved with the funding of universities the clearer it becomes that the funding provided by the Government for any real constructive future for the universities is woefully inadequate. The universities are not merely being pressurised to change direction in ways about which they are unconvinced—as the Government would have us believe; they are effectively being asked whether they want to cut off their hands or their feet. Whatever decision they take, they will be crippled.
  Matters get worse. When the universities appeal to Minsters or when I appeal on their behalf—and I hope that tonight will be the exception that tests this rule—for clarification whether the Government are aware that decisions are leading to wholesale destruction of areas of value and achievement, devastation of morale and quite definite brain drain, the standard response is that these matters are delegated to the University Grants Committee to which it appears that there is no appeal.
  There are some general matters of importance that I wish to raise before I turn to examples from the Scottish universities, for which I have most concern and which, in my view, seem to demonstrate the inadequacy and inconsistency of the present system of funding universities. First, I shall quote the Prime Minister, or, as she was at the time of the letter to a prospective constituent, the parliamentary candidate for Finchley. She wrote:
  "One of the main tasks of the universities in London, as elsewhere, is to carry out research. It is therefore important to ensure that university staff do not bear too great a load of teaching. Recognising this, the Government have taken action to ensure that the contraction in the numbers of academics has been matched by a comparable contraction in student numbers."
  I suppose that that is clear and that we should be grateful for that, but that is not something that is appreciated widely outside the House. If it were, I think that it would be challenged.
  I am concerned about the Government's determination to put a measurable price tag on everything. In the context of university education, that means that we are looking for the cheapest degrees rather than the best, even though British universities by any independent standard are already extremely cost effective. It means also that pure research will be sacrificed in favour of applied research by contract. The consequent underfunding of research will drive away the brightest and the best, not because they are badly paid but because they cannot get the support and the facilities that they need and that other countries are likely to offer them. That is already the experience. The overseas

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  staff that we are getting in exchange, without denigrating the value that they contribute, are not of the same level of achievement or record.
  There is widespread concern at the latest suggestion that universities should be divided into three tiers, with only the top 10 being designated as full-blown research centres. If the suggestion is implemented, it will be a devastating blow to many fine, well-established centres of learning and research. It will be bitterly resented in Scotland, which had four established universities when England had only two. I ask the Minister to tell us whether the proposal is supported by his Department. Or will he state clearly that, whatever changes may be made, Britain needs at leat approximatley its present number of universities, and that to be universities they must offer a mixture of research, undergraduate and postgraduate learning?
  Will the Minister explain also why Government policy is to see the number of university students declining over the next few years and into the next decade instead of increasing as the lower birth rate offers the opportunity to a larger proportion of the population to secure access to a university education? When we read the glossy publication that masquerades as a White Paper, it is difficult to get at the facts. There are many pretty charts, but the figures that are needed to make a fair analysis are not spelt out clearly. Perhaps that is because the Government are not proud of them.
  The system of finance that is applied by the UGC is having an effect in the sense that it is diverting energy, effort, time and academic brain power to the drafting and redrafting of academic plans, which most of those involved know savage the best of our university system and lead to the worst kind of academic infighting. Hon. Members who have been involved in university politics know that they are capable of reaching depths that we only play at in this institution. The worry is that that diverts the attention of the dons, the students and the public from the fundamental philistinism of the Government's attack on university education, which is substantially going by default.
  I do not think that anyone denies that universities need to change, and nor is it denied that outside bodies need to apply pressure to bring about that change. I have been critical of my local university of Aberdeen for its failure to respond in a sufficiently ambitious way to the oil industry.
  However, the proposal to replace the inadequate UGC, which has been dominated too much by academics, with a new body that will be dominated by business men leaves many open but important questions. The fundamental point to which the Minister should address himself is that universities have to be more than short-term responders to commercial pressures. Scottish universities are suffering much more from the system of funding and from a committee that does not seem to understand the Scottish tradition and system and the pivotal role that education and the universities play in the life of Scotland.
  Examples from my experience reinforce the arguments that I have been making. I do not normally quote my direct connections, but in this case they are relevant and may even amount to a declaration of interest. I am a graduate of both St. Andrew's university and Strathclyde university. I am the elected rector of the University of
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  Dundee, and co-chairman of the university defence committee for Aberdeen, along with three parliamentary colleagues representing the National, Conservative and Labour parties.
  Dundee is a small university which gained its independence from St. Andrew's just 20 years ago. It has fought hard and successfully to build up a reputation and attract students. It has done well and gained a well-earned reputation. I spoke to the university finance officer today. With the threatened removal of the safety net, the university faces nothing less than insolvency in about two to three years time. To avoid that, it would have to make devastating cuts, which would restrict its ability to attract students and leave it open to further cuts.
  Already, the proposal to move the modern languages department to St. Andrew's—it was to be Exeter, so that is an improvement—has caused an understandable outcry. How can a university which can justifiably say that it is responding positively to the UGC's constraints, in expanding its already successful business department, do that in a modern European Community when it does not have the facility to teach modern languages such as German and French? It is an absurd situation. I know that the response is that there will be some residual teaching outside the modern languages department, but the university will lose the staff that built up that reputation for teaching French and German. That will be damaging to the future of the university.
  The Minister will not be surprised to hear me come closer to home. The situation in Aberdeen is becoming a cause célèbre. The Minister may say that he is not here to reply on behalf of a specific university, but what I shall say about Aberdeen is a criticism of the whole system of funding universities. I have had first-hand and detailed experience of this, and I do not like what I see.
  What is happening at Aberdeen is an abuse of the system. As many people will know, the principal of the university, Professor George McNicol, produced what he described as a radical plan to end the four-year honours degree course in favour of what I would describe as a crammer approach for a 40-week year, three-year course. Many of us would agree that such an approach may benefit some students in some subjects, but it will undoubtedly damage and undermine others, many of whom would not be able to take that intensity of study. They would not get the full benefit of the new course, which would change the character of the honours degree course and have implications for schools.
  The Government have asked universities and others to listen and respond to the market. Market research in this case has shown that, far from attracting more students to the University, the new course would put off many who would seek to go elsewhere where they could get a more traditional degree. The chairman of the UGC, Sir Peter Swinnerton-Dyer, said early on that he would fund the plan, in spite of the subsequent representations. The principal, having seen his plan pasted by almost everyone within the university, described it as being "in intensive care" and said that he would not the one to resuscitate it. But Sir Peter, in collusion with the principal, is trying to be the one who does. It is no less than a conspiracy, because every alternative plan that has been put forward is being rejected out of hand without any consideration—by return of post so far—by the chairman of the UGC. It is clear that he is trying to put pressure on the university to accept something which the university has

  1385
  discussed in detail and has decided is very damaging to its interests. It is a devastatingly destructive plan, and the university is right to resist it.
  It goes further than that, because the collusion has been watched closely by other Scottish universities, which know perfectly well that this is not just an argument over one academic plan. It is a matter of picking one university and leaning on it so heavily that it will capitulate. If that happens, the dam will have been breached for the crammer degree to have been imposed on the other seven Scottish universities. It will not be acceptable for the Minister to say tonight that this is a matter entirely for the UGC. I think that it is a matter of deep concern and a matter for all those concerned with Scottish universities. I have no doubt that similar practices are being applied in different directions to English universities, but of that I have no direct experience.
  There is little understanding of the Scottish system or the Scottish tradition or the implications of such changes. There is a total refusal to recognise Aberdeen"s role, which I remind the Minister has been carried out for 500 years, as the university for the north of Scotland—an area covering about one fifth of Britain. They fail to recognise that students have come to expect a fair range of subject choices within their regional university. They know that they cannot get everything; they know that there should be change; but they do not believe that if we lose research and too many of the options, the university will offer enough attractions to continue as the regional university. Worse, it will be even harder for the university to attract students from further south. It is, after all, the northernmost university in Britain. All of these matters could seriously undermine its viability in the future. The system of university finance is not changing our universities; it is potentially destroying them.
  Can the Minister give me an assurance that Aberdeen university will celebrate its quincentennial in seven years' time as a full-status university carrying out research and offering postgraduate and undergraduate courses fully comparable to the best available anywhere in Scotland? If he cannot or will not do that, my case is made; and I do not believe that saying that it is a matter for the UGC is good enough. When every other country is expanding its universities, the vandals in his Department are trying to contract and destroy our universities. That is unacceptable.
  I conclude by quoting from a partisan article that forcefully expresses my point written by Michael Dummett in The Tablet. The point that he makes summarises what many people feel about what is being done. If the Minister does not believe that that is the case, or believes that it is unfair, his Department must do a great deal to change people's view. He says:
  "The three relevant Thatcherite dogmas are: people do things only in response to financial incentives; human beings are commodities like other commodities; what matters is not quality but cost-effectiveness."
  Crammer degrees are not what the Scottish system wants, and cut-price degrees are no substitute for the best degrees available. The course that the UGC is adopting is taking us downhill in every sense of the word. Change is welcome; destruction is not acceptable.
  10.47 pm
  The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson): I
  1386
  congratulate the hon. Member for Gordon (Mr. Bruce) on his luck in the draw, and on the cogency and commitment with which he put his case. I also pay tribute to my right hon. Friend the Member for Kincardine and Deeside (Mr. Buchanan-Smith), who is unable to be here tonight but who telephoned me today to discuss the important issues that are the subject of this debate.
  I begin with a few remarks on the broad theme of the hon. Gentleman's debate, which concerns the general question of the funding of universities. In the light of the hon. Gentleman's remarks—and his quotation from my good friend, Professor Michael Dummett—about Philistinism, I hope that the hon. Gentleman will be pleased to hear that one of the books that I have re-read in preparation for my present job is Matthew Arnold's "Culture and Anarchy". Arnold would have seen the question raised by the hon. Gentleman as a mere matter of machinery. But in this he would have been wrong. Indeed, it is striking that Arnold failed altogether to understand the bearing of machinery on values. But in my first speech from the Dispatch Box on educational matters I should like to make a profession of Arnoldian faith; I hope that no one standing in this place will ever lose sight of the wider and higher purposes which all the machinery and all the apparatus of the universities are intended, if not designed, to serve.
  Before I plunge straight into these questions of machinery I shall recite a few facts—that should never be lost to sight in the welter of polemic and special-pleading that tends to surround these matters.
  Between 1979 and 1985 the number of students in higher education increased by 160,000. The share of the 18 to 21 age group that graduates in Britain is one of the highest in the Western world and the highest in the European Community. And in answer to a direct question from the hon. Member for Gordon let me remind him of the Government's clear commitment to a further increase of 50,000 in the numbers of them in higher education by 1990.
  University funding has increased by more than 10 per cent. in 1987–88. The very substantial increases in public expenditure that were announced last November were accompanied by letters from the UGC and the Committee of Vice-Chancellors and Principals outlining a forward-looking and ambitious programme of action for maintaining and improving academic standards and strengthening management. The first fruits of that programme are beginning to appear. By this autumn we shall have, for example, comparative information about university costs in the form of a range of performance indicators. The universities are to be congratulated on the progress that they have already made in this and other areas. As they know, the additional funds that we have undertaken to provide will remain conditional upon continued progress.
  Mr. Alex Salmond: Is the Minister aware that in the three years 1986–87 to 1989–90 there has been a 10·6 per cent. increase in terms of the average to English universities from UGC distribution grant? However, in terms of the average to Scottish universities there has been an increase of 6·1 per cent. Surely those figures support the argument of the hon. Member for Gordon (Mr. Bruce) that the UGC simply does not understand the Scottish university system.
  Mr. Jackson: The hon. Gentleman is being impatient. Later in my speech I shall be dealing with the question of the allocation of resources between universities, especially with regard to the Scottish universities.
  I should like to highlight two points relating to the broad theme of this debate. First, management. It is now over two years since the Jarratt committee reported. It concluded that throughout the university system there was scope for improvements in management to ensure that full value could be obtained from the large sums of public money that are expended. It also reommended that there was scope for improvements to make the university system more flexible and responsive; above all, I would say, to realise more effectively the ideas and values for which it stands. The Jarratt committee made important recommendations about the need for management structures that would clearly define the levels of decision making and responsibility. There is encouraging evidence that many universities have taken the Jarratt recommendations to heart and introduced important and far-reaching reforms. I look forward to receiving shortly the UGC's report and commentary on what has been achieved.
  Secondly, there is the matter of teaching quality. I recognise that judgments in that area are both controversial and technically complex. However, we cannot get away from the central importance of the quality of teaching for the success of higher education. Our universities must hold fast, some would say recover, their teaching vocation. As Newman reminds us, that vocation is at the heart of the idea of a university. The committee of Vice-Chancellors and Principals has undertaken to produce two pieces of work—a report on university practices in maintaining and monitoring academic standards, and guidelines on the appraisal of the performance of academic and academically-related staff. Those reports will be of key importance.
  I have made it clear that, over the past year, the Government have shown their commitment to make increased resources available to the universities. I have also emphasised the areas in which we are looking for progress. Let me now consider the distribution of resources between individual universities.
  It is, of course, central to our philosophy of academic self-government that this is a matter in which Government should not be too directly involved—hence, the importance of the UGC. In 1986–87 the UGC introduced new machinery for resource allocation. This has two distinctive features. It distributes the teaching component of grant on the basis of a standard cost per student per subject; and it introduces into the allocation of that part of the grant attributable to research a new element of explicit selectivity, based on universities' success in attracting outside income for research and on judgments about quality. The Government welcome the UGC's new approach. It has a somewhat egalitarian cast, but it is more rational and objective, and it rewards success—which is how it should be in these matters.
  The Government believe that in particular the UGC was right to introduce measures to provide more support for high-quality research. Much academic discourse turns on the judgment of quality. I cannot see why it should ever have been thought that such an approach was inappropriate. Public funding for research is not a matter of entitlement; it has to be merited.
  Of course, there is debate about particular ratings—it would be surprising if that were not so. But the UGC has
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  begun well and it is, of course, clear that no rating is cast in stone for all time. There will be continuing review, which will have to take account of shifts in the quality of research performance, both improvement and, dare I say, deterioration.
  Selectivity in research will inevitably and rightly lead to increased concentration on areas of strength. It means giving extra support to high-quality work and taking a hard look at what is below par. In institutions with a vocation for excellence none of this should be controversial. The UGC is encouraging the rationalisation of small departments. Its grounds for doing so are maximum academic effectiveness as well as the best use of resources. It has the Government's full support. Aspirations to universality, perhaps never very realistic, may have to be abated. But, without becoming too narrowly focused, universities which concentrate on building on their strengths will be healthier in the long run.
  The position in Scotland is the special concern of the hon. Member for Gordon and my right hon. Friend the Member for Kincardine and Deeside. I do not think that I need say that the UGC's funding formula is blind to geography. Standard criteria are applied to all universities on a national basis. At the same time, the special and valued characteristics of university provision in Scotland have not gone unrecognised. The UGC's grants fully reflect the fact that most honours degree courses in Scotland last for four years. Consequently, the universities north of the border receive roughly 30 per cent. more funding per honours graduate than do their English and Welsh counterparts. Meanwhile, however, the impact of the UGC's new and more rational approach to funding inevitably differs in individual cases, depending on the institution's previous level of funding and on the quality of its research efforts. On that basis, in 1987–88 three of the eight Scottish universities received above average increase of basic recurrent grant.
  The hon. Member for Gordon referred specifically to Aberdeen university. Its initial allocation of basic recurrent grant in 1987–88 was no more than 0·7 per cent. higher than the comparable figure for the previous year. That was a consequence of the application in this case of the UGC's general policy of supporting research strength and external research income. At Aberdeen, these were both some way below the national average. That is not to say that there is no high-quality research at Aberdeen. On the contrary, the UGC assessed research in three subject areas of that university as being of above average quality in United Kingdom terms, and geography and French were considered to be outstanding by international standards. But those judgments, I am afraid, were counterbalanced by below average ratings in 10 other subject groupings.
  The university is in discussion with the UGC about the careful planning which is needed for a transition to a new funding level, and I must obviously not comment on the delicate negotiations which are going on. I wish merely to stress that there is no question of any discrimination against Aberdeen or of any conspiracy—such as the hon. Member for Gordon has fancifully alleged—and that, with regard to the future of the four-year degree course, the UGC has deliberately stated that it has no view either way upon the academic aspects of this matter.
  Returning to the future of the university funding system, the Government have announced their intention to legislate to reform the UGC along the lines

  1389
  recommended by the Croham committee. This will give a firm legal foundation for the universities' funding and it will clarify responsibilities for the large sums of public money that they receive. The new university funding council will be smaller than the present UGC and will have a stronger non-academic element. I noted what the hon. Member for Gordon had to say about that.
  With regard to the general position of Scotland within the new arrangements, the Government consider that the university system should be planned on a United Kingdom-wide basis, and I believe that that is the view of most Scottish academics.
  Mr. Salmond: Will the hon. Gentleman give way?
  Mr. Jackson: I am coming to the end of my time.
  We accept that there is a need to improve the planning of higher education in Scotland generally. The intended Scottish committee of the Universities Funding Council will provide an appropriate means of achieving that. Precisely how that committee operates will be a matter for
  1390
  the new council. The Government see their primary task as being that of advising the UFC on the needs of the Scottish universities in relation to their particular circumstances—including, I would expect, their special history, their special ethos, to which the hon. Gentleman referred and, of course, their geographical distribution.
  To conclude, I do not think that it is necessary to stress that the Government attach great importance to our universities. They are institutions that embody and transmit values that are central to our civilisation, and they are critical centres for the development and creation of new values. In addition, they continue to make a vital contribution to the nation's economic development. The thrust of all our policies can be simply summed up; it is to strengthen the ability of Britain's universities to fulfil their historic vocations with increasing rigour, drive arid effectiveness.
  Question put and agreed to.
  Adjourned accordingly at four minutes to Eleven o'clock.