Commons Sitting of 3 March 1987

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

  COUNTY OF CLEVELAND BILL [Lords]
  Order for Third Reading read.
  Queen's consent, on behalf of the Crown, signified.
  Read the Third time and passed.

  WEST GLAMORGAN BILL [Lords]
  Order for Third Reading read.
  Queen's consent, on behalf of the Crown, signified.
  Read the Third time and passed.

Oral Answers to Questions
  EMPLOYMENT

    Employment Creation Programmes
    Mr. Ray Powellasked the Paymaster General what funds he proposes to allocate to each of the Government's employment creation programmes in 1987–88; and if he will make a statement.
    The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): The public expenditure White Paper provides for total expenditure in 1987–88 of over £3,000 million on employment, enterprise and training measures. Details of the expenditure proposed for each of the measures will be published shortly in the Supply Estimates.
    Mr. Powell: Will the Paymaster General admit that the funding for the new job training scheme which he suggests has been transferred from existing adult training programmes? Is it not true that a number of the major trade unions have expressed reservations regarding the safeguarding of quality training and that the quality training has been abandoned?
    Mr. Clarke: The new job training scheme, to which the hon. Gentleman refers, will cost £216 million, and of that £102 million will be in addition to the adult training budget. There will be some switching from other parts of the programme to the extent that the new scheme provides a better option for some of the people being trained. However, we are still greatly increasing the number being trained and we will certainly be giving them quality training. The Trades Union Congress is not expressing reservations generally of the sort that the hon. Gentleman has described, despite the attempts of some Opposition spokesmen to persuade the TUC to oppose it.
    Mr. Gregory: Did not the Labour Government propose a youth training scheme, but disregard it as being too expensive and beyond their capabilities?
    Mr. Clarke: I believe that to be the case. The present youth training scheme, which now costs £1 billion, is a high quality scheme that was devised, introduced and improved by the Government in the face of constant carping by most of the official Opposition spokesmen.
    Mr. Foot: If the right hon. and learned Gentleman will examine the matter again, he will discover that what he has just said is false. There was no scrapping of such a scheme by the previous Labour Government, so would he get the facts right about that? Will the right hon. and learned Gentleman tell us how much of the extra burden for the new programme is to fall on local authorities? Some of it is being paid for by the local authorities and we would like to know how much.
    Mr. Clarke: There is absolutely no extra cost to fall on local authorities. It is up to local authorities to decide whether they are going to be managing agents in the ordinary way.

    Inner Cities
    Mr. Spencerasked the Paymaster General what recent initiatives he has taken to promote employment in the inner cities.
    Mr. Kenneth Clarke: So far I have approved some 75 projects committing around £4 million in our eight inner city task force areas, which will encourage enterprise training and job creation. We have also concentrated the efforts and programmes of the Manpower Services Commission and other Government Departments on the eight areas and their residents. We are also making progress on the greater use of local labour on inner city building work and targeted training schemes which link training with specific job opportunities for local people.
    Mr. Spencer: When we welcomed my right hon. and learned Friend to Leicester recently in the inner area, did he notice the increase in the number of small businesses and the amount of training available, which has given rise to a large increase in jobs? Does he not think that the time has come for the city council to put its opposition to the Highfields task force on one side and show where its compassion really lies?
    Mr. Clarke: I agree that the hostility of the extreme council in Leicester has slowed up progress in the early stages in that city. I have been told that the latest example of that is that the city council is refusing to co-operate with the Industrial Society in introducing the head start programme for training for young people, so its officers, in effect, cannot discuss the matter with the Industrial Society's officers. However, we are getting on without them and finding the sponsors we require. On my recent visit to Leicester, I was extremely grateful to my hon. Friends for introducing me to those who wish to take advantage of the scheme. I was also delighted to announce grants to the textile arts centre to increase the training of many more young people in the skills which are in desperately short supply in Leicester in the textile industry.
    Mr. Mason: With regard to promoting employment, is the right hon. and learned Gentleman aware that since the Government changed the assisted area status map more

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    than two years ago, there have been massive job losses, especially in coal mining areas due to pit closure programmes? If he wants to promote employment will he now consider changing the assisted area status map once again and—
    Mr. Speaker: Order. The question is about inner cities.
    Mr. Mason: Will the right hon. and learned Gentleman consider areas, such as Barnsley, which have suffered drastically from job losses and give them development area status so that they can benefit from the new investment that goes with it?
    Mr. Clarke: Development area status is, of course, a matter for my right hon. Friend the Secretary of State for Trade and Industry. The job losses that have been caused in south Yorkshire have been largely the consequence of the closure of uneconomic coal mines taking place in a short space of time. Certainly my Department will consider the problems being created in some of those south Yorkshire towns, and, if any of them could benefit from the inner city initiative, I will certainly consider that.
    Mr. Brandon-Bravo: My right hon. and learned Friend has often acknowledged that the promotion of employment, particularly in our inner cities, is a most complex matter which is not often helped by the actions and words of Opposition Members. Does he agree that one area of action is in real estate and land development? My right hon. and learned Friend has been most kind in meeting business men and others from the city of Nottingham. Will he comment on the degree of interdepartmental co-operation in that area?
    Mr. Clarke: I made a special visit to the part of Nottingham represented by my hon. Friend. Indeed, my right hon. and noble Friend the Secretary of State for Employment and my right hon. Friend the Secretary of State for Environment have recently paid visits to the city. We have seen the vast extent of unoccupied land and the need for more work experience and training of people living in the centre of Nottingham. I assure my hon. Friend that we are all working closely together to consider how to take further forward the present encouraging signs of a desire to take an initiative within the city.

    Labour Statistics
    Mr. Ron Brownasked the Paymaster General how many people under the age of 25 years are currently unemployed in the United Kingdom.
    The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): On 8 January 1987 the number of unemployed claimants in the United Kingdom aged under 25 years was 1,133,000.
    Mr. Brown: Judging from the figures obviously the Minister must realise that many youngsters these days leave school with no job, hope or future. Does he realise—I am sure he does—that in Leith 40 per cent. of the long-term unemployed are under the age of 25? Will he therefore use YTS funds to create real jobs, for example, by investing in engineering apprenticeships? Will he follow that constructive line, which has been taken in Germany?
    Mr. Lee: The Government are spending overall about £3·5 billion a year on employment and training measures.
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    We now have in place probably the most comprehensive range of training measures almost anywhere in the western world.
    With regard to Leith and the Edinburgh travel-to-work area, I am pleased to note that, since January 1984, there has been a reduction of 9·4 per cent. among those aged under 25 who have been unemployed.
    Mr. Marlow: Has my hon. Friend read the Audit Commission report, which says that in parts of inner London 45 per cent. of young people are unemployed and 60 per cent. of young blacks are unemployed? My hon. Friend will know that London is awash with work opportunities. He will also know that the Inner London education authority spends twice as much per head in educating the young people in London. They are therefore obviously properly educated. Why do they not get some work? What will my hon. Friend do to ensure that they take jobs when they are available?
    Mr. Lee: Certainly in the past, across the political divide, we have failed to educate and train our people properly. There are job opportunities in inner city London. Indeed, I noticed in the Manchester Evening News last Thursday that there were no fewer than 28 pages of jobs available in that inner city.
    Mr. Leighton: Can the Minister explain why the Government are cutting, economising on and thereby damaging, the community programme? Is it so that he can steer the 18 to 25-year-olds away from the community programme and on to the new job training scheme which is an even cheaper way of taking people off the register? Has not the Manpower Services Commission been told to make cuts of 10 per cent. across the board in the community programme? Is he aware that I have been told by local MSC staff that even people now on the programme could be made redundant? Would not that be an appalling experience for them?
    Mr. Lee: We are not reducing the funding for the community programme, although it is true that overall the programme has plateaued and there is a slight reduction in places. Nevertheless, the job training scheme that is coming through will present new opportunities.
    Mr. Lawler: Has not unemployment among those under 25 actually fallen by 80,000 over the last year, and as a percentage of total unemployment has it not also fallen? Is this not a reflection of the success of YTS as an employment-creating scheme?
    Mr. Lee: My hon. Friend is right. Unemployment for the under-25s fell from about 20 per cent. in 1983 to 18 per cent. in 1986, and we are now below the EC average of 22 per cent.

    Skill Shortage
    Mr. Easthamasked the Paymaster General if he has any plans to improve programmes to tackle skill shortages in the economy.
    Mr. Corbettasked the Paymaster General what steps he has taken to alleviate skill shortages in British industry.
    The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): The Government continually review their training programmes to ensure

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    that they are relevant to the needs of the economy. We have increased spending by the taxpayer on training and retraining from £460 million in 1979 to some £1·5 billion and reduced the proportion of employers' expected output to be constrained by skill shortages from over 25 per cent. to 9 per cent. in January this year. A major new job training scheme has just been introduced which will provide further help for unemployed people to gain the skills required by industry.
    Mr. Eastham: Has the Minister yet had an opportunity to examine the Audit Commission report which was published at the end of last month? That report is highly critical. It says that the MSC is not keeping adequate records about the kind of skills that are required. This is at a time when 20 per cent. of employers say that they could create more jobs if the right kind of skills, such as new technologies, professional engineers and computer engineers were available. Are not the Government failing to find the right skills for the people that are needed by industry?
    Mr. Trippier: It is important to tell the hon. Gentleman that the Audit Commission report about which he spoke covers the period from 1981 to April 1986. Since that time we have introduced three measures which have helped to relieve the problem that he has identified. First, we have introduced a computer-assisted local labour market information system; secondly we have introduced a skills unit which has been set up by the MSC to provide a clear focus for work on skills, including specific changes in skill needs; and, thirdly, local employer networks which specifically deal with the problem that the hon. Gentleman mentioned.
    Mr. Corbett: How can the Minister be so complacent about this? In their eight years in office the Government have closed most of the training boards and skill centres and sat idly by and seen the virtual disappearance of apprenticeships. When will he get on his feet and help employers in the west midlands and elsewhere who regularly report to his Department that their output is being affected by the lack of suitably skilled people?
    Mr. Trippier: I do not think that it is in any way complacent to have increased substantially the amount of money that the Government are spending on training, now reaching the record figure of £1·5 billion, compared with the paltry sum that the Labour Government spent on training. The hon. Gentleman cannot have it both ways. He and his colleagues are quick to criticise the introduction of a new job training scheme to deal with the problems that his hon. Friend the Member for Manchester, Blackley (Mr. Eastham) has identified. As soon as we bring out such a scheme, the Opposition try to rubbish it, even though it is devised to meet the skill shortages that we all too clearly see.
    Mr. Heathcoat-Amory: Can my hon. Friend explain what efforts are made to identify skill shortages in each jobcentre area and to feed the information to the local training initiatives? In Wells there seems to be a mismatch between some skill shortages and the training places available, even in quite basic skills such as those in some construction trades.
    Mr. Trippier: My hon. Friend is right to identify the fact that we obviously have those skill shortages. As I said at the last Question Time, there are undoubtedly skill
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    shortages, but I suggest that the percentage of skill shortages is now much lower than it was during the last few years of the Labour Government.
    On the precise question that my hon. Friend has raised, we are developing training access points, set up by the MSC, to provide better access to information on the education and training opportunities available locally, together with the local employer networks which are growing and have already been set up in a number of pilot areas. Those will be replicated elsewhere—I hope in my hon. Friend's constituency.
    Mr. Watts: Does my hon. Friend agree that the existence of skill shortages is a symptom of the rapid economic growth in the British economy? Does he also agree that, contrary to the experience of the Labour Government, this Government have invested large amounts of taxpayers' money to help to meet those skill shortages? Will my hon. Friend remind the House of the range of Government funded schemes available to help meet the skill shortages now and compare that to 1978–79?
    Mr. Trippier: In fact, as my hon. Friend has suggested, they bear favourable comparison. One of the problems that we have identified is that the apprenticeships, which all hon. Members have come to know over a number of years, are perhaps outmoded and not as appropriate in the 1980s as they were in the 1960s—[Interruption.] The hon. Member for Huddersfield (Mr. Sheerman) may pour scorn on that, but he should listen to what Mr. Eric Hammond the general secretary of the Electrical, Electronic, Telecommunication and Plumbing Union, said when he was talking about the success that the union had achieved because its contribution has been to scale down wage rates to bring them into line with YTS allowances. He said:
    "Of course, we had considerable criticisms from other trade unions … But at the end of four years, with thousands under training, thousands becoming skilled, we can feel justly proud to have provided hope for so many."
    Mr. Sheerman: Does the Minister agree that the truth of the matter is that the present skill shortages demonstrate what has happened during eight wasted years? In those eight wasted years, we have seen the Government concentrate on schemes for 1 million people, which give them a thin layer of training, whereas in fact real training for people in work, on which our productivity is based, has been allowed to go to the wall. Less than 7 per cent. of people in work receive any training. How do we compete on that basis in skills?
    Mr. Trippier: That is an amazing allegation. The hon. Gentleman could not have heard what I said in reply to the substantive question from his hon. Friend the Member for Manchester, Blackley (Mr. Eastham). There is a contrast now of a shortage of skilled places of about 9 per cent., which contrasts with a shortage of 25 per cent. during the last three years of the Labour Administration. His hon. Friend the Member for Blackley summed it up remarkably well in a speech in this House on 12 February, when he made the lunatic suggestion :
    "We have got training schemes coming out of our ears."—[Official Report, 12 February 1987; Vol. 110, c. 526.]
    So we have and we are proud of it.

    Labour Statistics
    Mr. Nichollsasked the Paymaster General, during the last monthly period for which figures are available, how many listed as unemployed were unemployed for less than a week.
    Mr. Lee: On 8 January 1987, the number of claimants in the United Kingdom who had been unemployed for one week or less was 113,600.
    Mr. Nicholls: Does my hon. Friend agree that there are several anomalies behind even those figures? Does he agree that if a man worked for two days every week, but not for the same two days every week, he would have worked for 40 per cent. of that week, but be recorded as 100 per cent. unemployed? If the unemployment figures are to be a record of all those who are unemployed should they not be adjusted to take account of anomalies like that?
    Mr. Lee: If a person is working on a regular part-time basis, the full extent normal rule applies; in other words, he is excluded from unemployment benefit. If the part-time work is not regular, unemployment benefit is payable for the unworked days. Therefore, he is on the count. But I have to say that we do not statistically calculate parts of people.
    Mr. Winnick: Should not that answer be compared with the reply that the Minister recently gave to me in which I was informed that 158,000 people in the west midlands have been unemployed for 12 months or more, compared with 34,000 in April 1979? Does that not show the devastation and misery that has taken place in the west midlands?
    Mr. Lee: Eight per cent. of the new claimants leave the count within a week, a quarter of those becoming unemployed leave the count within a month, one half within three months and two thirds within six months. Each day 30,000 people start new jobs.

    Local Enterprise Agencies
    Mr. Couchmanasked the Paymaster General if he will give the latest figures for the number of local enterprise agencies.
    Mr. Trippier: There are currently 368 local enterprise agencies throughout the United Kingdom, of which 294 are approved under the terms of the Finance Act 1982 which allows business sector sponsors tax relief on their contributions to such bodies.
    Mr. Couchman: Does my hon. Friend have plans to extend the local enterprise agency grants scheme, operating during the past year — [HON MEMBERS: "Reading."] Does my hon. Friend propose to extend the LEAG scheme to embrace larger and perhaps more successful local enterprise agencies, such as the Medway enterprise agency? [Interruption.] Does my hon. Friend not think that those larger agencies may also benefit by being taken into the LEAG scheme and that that may catalyse the creation of even more new jobs?
    Mr. Trippier: The local enterprise agency grants scheme was not introduced to help and support the more successful enterprise agencies, such as the one in the Medway, which has an excellent reputation and to which I am happy to pay tribute. If we had done that, we might have been in danger of supporting the London enterprise
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    agency, which has a vast number of sponsors. We had to draw the line somewhere. Although I am happy to pay tribute to the enterprise agency and its director, we cannot help in the immediate future. However, we shall continue to monitor the position.
    Mr. Bruce: Does the Minister accept that the development of enterprise agencies and similar organisations is a crucial way to develop small businesses further? I know that he is to visit Aberdeen on Monday to open the new offices of the Aberdeen enterprise trust. Will he acknowledge that these agencies have identified the need for finance to be pulled in behind them in a way which caters for the needs of small businesses, particularly for venture capital?
    Mr. Trippier: The hon. Gentleman is absolutely right, and I am glad that the enterprise agency movement is playing a part in this. I am impressed at the way in which some enterprise agencies are joining together to form local business expansion scheme funds. Some enterprise agencies are acting as marriage brokers, trying to indentify investors and target companies. I hope to see that develop, particularly in Aberdeen.
    Mr. Bellingham: Is my hon. Friend aware that since the west Norfolk enterprise agency was set up it has overseen more than 600 individual clients, and that of those more than 70 have set up businesses of their own creating more than 100 new jobs? Is that not a perfect example of the way in which local enterprise agencies can inject new vigour into a community?
    Mr. Trippier: I am bound to say that Question Time would not be the same if my hon. Friend did not have the opportunity to pay tribute to his local enterprise agency, which he played a significant part in forming in the first place. I am impressed with the success of that enterprise, particularly as it has been formed for only a relatively short time.

    Wages Act (Deregulation)
    Mr. Torneyasked the Paymaster General how many new jobs he estimates have been created by the deregulation contained in the Wages Act.
    Mr. Trippier: Attempts to estimate the job creation effects of these particular reforms are not likely to be fruitful. However, in my opinion the adverse effects of over-regulation on business enterprise are such that the provisions of the Act can only increase employment beyond what it would otherwise have been.
    Mr. Torney: In view of that answer, is the Minister prepared to tell the Chancellor of the Exchequer to eat his words, introducing the last Budget, when he said that "lower wages mean more jobs"? Does he agree that the real reason for the Wages Act was to cut the wages of the lowest paid workers in order to increase the profits of friends of the Tory party who contribute huge sums to Tory party funds?
    Mr. Trippier: I am certainly not in a position to ask my right hon. Friend the Chancellor of the Exchequer to eat his own words, nor would I ever dare to do so. But the hon. Gentleman has given the House the incorrect impression that the legislation which we introduced took everyone out of the purview of the wages councils orders. That is not the case. We took only those under 21 out of that purview. The

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    purpose of introducing that legislation was to give those young people a chance to get on the first rung of the employment ladder, a chance that we do not think that they would have had without that sort of legislation.
    Mr. Grylls: Does my hon. Friend not agree that, if the partial deregulation of the Wages Act has been successful in creating new jobs, that is an argument for deregulating the entire Act?
    Mr. Trippier: My hon. Friend's question shows the dilemma that the Government were in when they were reviewing this position not that long ago. On the one hand some Labour Members wanted to keep the wages council orders in their old form and on the other hand some Conservative Members wished to scrap them altogether. As a responsible Government, we listened to the representations made by industry during the consultation process. We decided to retain the purview to which I referred earlier for those over 21. We believe that we have got the balance right.
    Mr. John Browne: Does my hon. Friend accept that over-regulation is far more of a disincentive to new enterprise and to new employment than are either access to capital or high interest rates? Will he reaffirm that the Government will continue their drive towards deregulation and the encouragement of enterprise and creating even more new employment than is contained in their fine record to date?
    Mr. Trippier: My hon. Friend is absolutely right. I am happy to confirm that our latest White Paper, "Building Businesses …Not Barriers", was simply the second chapter of what will be a long-running novel.
    Ms. Richardson: Will the Minister answer a simple question? Why, through deregulation under the Wages Act and under the Sex Discrimination Act 1986, is he dragging more people, especially women, into low pay?
    Mr. Trippier: As I have already told the House, women over the age of 21 are not affected by the legislation to which we have referred. We are talking about those who are aged 21 and under.
    Mr. Marland: Does not my hon. Friend agree with me that it was trade union negotiators who, in the 1970s, took youth wages to such an unrealistically high level that denied young people the opportunity of work then and even now?
    Mr. Trippier: The result of that, as my hon. Friend implies, is that those young people could not price themselves into jobs. With this legislation we are giving those young people an opportunity that they otherwise would not get.

    Job Training Scheme
    Mr. Maddenasked the Paymaster General what reduction in registered unemployment he expects as a result of job training scheme by summer 1987.
    Mr. Kenneth Clarke: Our new JTS aims to provide quality training for the long-term unemployed and its impact on unemployment will depend on its rate of expansion, its take-up and its success in providing the skills necessary to help participants back into jobs.
    Mr. Madden: Is the Paymaster General concerned about people recruited under the job training scheme
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    replacing people already in employment and, if he is, what safeguards has he adopted to ensure that job displacement does not take place? The right hon. and learned Gentleman mentioned quality in his reply. What, in practical terms, does that mean?
    Mr. Clarke: Work experience is provided by one or more employer. The training will also include quite a bit of training off the job. Therefore there is little risk of the new trainees displacing existing jobs, as the hon. Gentleman fears. We are certainly making sure that the MSC and all concerned work towards good quality schemes, because we are aiming to raise skill levels in this country. That means that we need good quality training.
    Mr. Kenneth Carlisle: Does my right hon. and learned Friend agree that the one thing that unemployed people want, on the road to a proper job, is good training and that a job training scheme is an essential step in this direction in that it provides training for the unemployed if they so wish it? Will he give an account to the House of how this new scheme is progressing?
    Mr. Clarke: Certainly. So far almost 2,000 people have been entered into the scheme—1,992 in fact. However, it is expanding steadily and it is well on course to get up to over 200,000 trainees a year if it continues to expand at the present rate. We should like to maintain that rate of expansion, so long as we can ensure that the quality of training being given will indeed steer unemployed people back towards jobs.
    Dr. Godman: Are there not structural weaknesses in the scheme which allow disreputable employers to exploit it and, by so doing, harm the interests of their employees?
    Mr. Clarke: As far as I am aware, the answer is no. If the hon. Gentleman knows of any example of a disreputable employer being taken on to the scheme, I should be anxious to hear about it. We hope that as soon as possible we shall move to a situation whereby all the managing agents will be approved training agencies.
    Mrs. Virginia Bottomley: Are not the problems of the unemployed so often compounded by the Labour party's cynical and negative attitude? Would not the Labour party be better advised to follow the example of its brothers and sisters in the TUC whose representatives, I understand, endorse the MSC's job training scheme?
    Mr. Clarke: I entirely agree. We could probably offer a year's free supply of beer to all the unemployed and the Opposition would oppose it. Their reaction to every positive idea which we put forward is one of carping criticism and negative attitudes.
    Ms. Clare Short: Will the Paymaster General admit that the funding for the job training scheme at YTS equivalent costs provides for only three weeks' training in six months? That reveals the cynicism behind the scheme. It is not real training. It requires the unemployed to work for supplementary benefits. And to pay for the scheme — because there is no new money — TOPS, which provides real training, has been cut.
    Mr. Clarke: I am afraid that the hon. Lady has chosen an incorrect route to guide her towards an assessment of the amount of off-the-job training. In practice, for most individuals it will be substantially more than that. Of

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    course, the length of the scheme will vary from individual to individual according to the needs of the individual and of the local labour market.
    Mr. Patrick Thompson: Does my right hon. and learned Friend agree that Opposition attempts to rubbish the Government's initiatives on training schemes, such as the attempt which will be made tonight by Labour-controlled Norwich city council, will completely fail to conceal the success of the Government's measures in helping our young people and the long-term unemployed?
    Mr. Clarke: Some Labour-controlled councils turn away job experience, training opportunities and cash from the Government which would assist the inhabitants of their areas. No doubt they are encouraged in that by the totally negative attitude of the Labour Front Bench to whatever we propose.

    Disabled People
    Mr. Ashleyasked the Paymaster General what percentage of disabled people are unemployed compared with the national average rate of unemployment.
    Mr. Lee: Figures on unemployment among handicapped or disabled persons are not available from the unemployment count. However, the 1985 labour force survey showed an unemployment rate of 23·4 per cent. among those whose work would be limited by health problems or disabilities, compared with a rate for all persons of 10·6 per cent.
    Mr. Ashley: Will the Minister acknowledge that the rate of 23·4 per cent. is shocking and disturbing and is a clear sign that the Government's reliance on purely voluntary policies is grossly mistaken? Does he recognise that Western Germany has a tough, realistic and statutory provision which is enforced and which works? Why can there not be the same kind of legislation for disabled workers in Britain?
    Mr. Lee: The problem with the labour force survey is that, essentially, it is a self-assessment of health problems and disabilities and is not very satisfactory. We do not favour a legislative approach. We much prefer a code of good practice and specific help. Government are spending about £118 million a year on specific programmes for the disabled.
    Mr. Thurnham: Does my hon. Friend agree that far too many employers are unaware of many of the excellent schemes available—for instance, the £6,000 in grants to adapt premises and the £45 a week for the job introduction trial scheme?
    Mr. Lee: I agree with my hon. Friend that many employers are not aware of what is available. The MSC is conducting major research into the numbers, characteristics and attitudes of the disabled work force and will also take into account the attitude of employers to the quota.
    Mr. Haynes rose—
    Hon. Members: Speak up.
    Mr. Speaker: Order. I want to hear too.
    Mr. Haynes: Is the Minister aware that so many disabled people are unemployed simply because big business will not take them on? Is the Minister further aware that there is a firm called Metal Box in my
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    constituency that does very well in employing disabled people? I suggest to the Minister that he gets off his backside in his Office and goes into the Paymaster General's Office and does something about employing the disabled, instead of sitting around a table with the Paymaster General organising the unemployment figures to be announced in here.
    Mr. Lee: Although that question may well have been in character, it really was unworthy of the hon. Gentleman. I could not comment on Metal Box and its approach, although I will look into that case. I repeat that the Government are spending something like £118 million on specific measures to help the disabled into employment.

    Labour Statistics
    Mr. Andrew MacKayasked the Paymaster General if he will make a statement on the current level of unemployment.
    Mr. Kenneth Clarke: Unemployment is lower now than a year ago, and has fallen 100,000 over the last six months.
    Mr. MacKay: Will my right hon. and learned Friend confirm that in the last quarter of 1986 unemployment fell faster in this country than in any other country in the western world? Would he care to speculate on why the now silent hon. Member for Kingston-upon-Hull, East (Mr. Prescott) cared to mock this good news for those seeking jobs?
    Mr. Clarke: I cannot answer the last part of my hon. Friend's question. The fall in unemployment over the last six months is the best we have known since 1973 and it seems to have reduced the official spokesman for the Opposition to total silence.
    Mr. Duffy: Is the Paymaster General aware that, although unemployment has fallen a little in the Sheffield travel-to-work area, that is accounted for almost entirely by the expansion of special job schemes and there is scant evidence of any relief of unemployment arising from economic activity?
    Mr. Clarke: I share what I have no doubt is the hon. Gentleman's pleasure that unemployment has been falling in Sheffield. I would expect schemes in Sheffield to help people get back into regular employment, as they are doing elsewhere. I would be very surprised if there was not an increase in the total number of jobs in Sheffield, as is now happening across the country.
    Mr. Yeo: Does my right hon. and learned Friend agree that one very helpful measure which would cut unemployment even further would be to reduce the amount of taxation paid by lower paid employees? In this context, will he urge his right hon. Friend the Chancellor of the Exchequer to introduce tax cuts—which we are all looking forward to in two weeks' time—directed to reducing the burden of tax on low-paid workers?
    Mr. Kenneth Clarke: I agree with my hon. Friend that the burden of tax on low-paid workers is still too high. I will commend my hon. Friend's remarks to my right hon. Friend the Chancellor of the Exchequer, who, I am sure, will have regard to the job-creating potential that tax reductions could have.
    Mr. Prescott: I think the country accepts that all the claims based on the unemployment figures are part of a

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    mass fiddle of the statistics. Does the Paymaster General accept that the claim of a million new jobs since 1983 is equally fraudulent? The recent Oxford study has shown that those jobs are made up of a quarter of a million second jobs, a quarter of a million through schemes, and half a million based on a dubious statistical survey of the self-employed and other equally fraudulent figures?
    Mr. Clarke: Firstly, the Oxford study that appeared in New Society is not very good research and its figures are wrong. There are over a million more people in work currently than in March 1983. On the question of figures, during the hon. Gentleman's unexpected absence from our exchanges on unemployment matters in this House, I have been studying what he has been saying in print. In the 27 February edition of Tribune, he is reported as saying, in answer to the question :
    "Would Labour put the unemployment figures back on their old basis?"
    "No. They are becoming increasingly meaningless."

    Industrial Relations Legislation
    Mr. Tony Lloydasked the Paymaster General when he next proposes to meet trades union leaders to discuss industrial relations legislation.
    Mr. Kenneth Clarke: I meet trade union leaders from time to time to discuss a variety of subjects. I have invited the trade unions to let me have their comments on our Green Paper "Trade Unions and their Members", but I do not yet have any specific meetings arranged on the subject.
    Mr. Lloyd: When the Paymaster General meets the trade union leadership, will he take the time to explain to them what principle underlies the decision to make the leader of the National Union of Public Employees, for example, seek election when that same principle is clearly not being put into practice in the case of the non-elected Secretary of State for Employment?
    Mr. Clarke: The principle that is being applied is that of democracy and accountability to the membership of the trade unions. It is probable that the present leadership of the National Union of Public Employees will be re-elected. Mr. Rodney Bickerstaffe has a reasonably safe seat. When hon. Members are returned by their constituents it is, nevertheless, the case that their relationship with them is affected by the need to get their support. The relationship of trade union leaders with their members will be improved by the need for periodic re-election.

  PRIME MINISTER

    Engagements
    Mr. Lilleyasked the Prime Minister if she will list her official engagements for Thursday 3 March 1987.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings today. This evening I hope to have an audience of Her Majesty the Queen.
    Mr. Lilly: Does my right hon. Friend welcome the constructive disarmament proposals that were put forward by Mr. Gorbachev? Does she accept that it is only because of the stalwart refusal of her own and other Western
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    Governments to remove the weapons that defend us that the USSR is now prepared to offer to remove those that threaten us?
    The Prime Minister: I am grateful to my hon. Friend for his comments. An agreement on intermediate range nuclear weapons was singled out for progress when I met President Reagan last November. It is a useful step—[Interruption.]
    Mr. Speaker: Order.
    The Prime Minister: It is a useful step forward that Mr. Gorbachov has now accepted this without making any link with SDI, but a great deal of work remains to be done. I agree with my hon. Friend absolutely in the view that Western strength and resolve have been crucial in bringing the matter to this point.
    Mr. Kinnock: Is the Prime Minister aware that her latter point is somewhat difficult to sustain, given the 3:1 superiority in intermediate nuclear forces of the Soviet Union in Europe? Given that she welcomes Mr. Gorbachev's proposals and the positive response of the United States to such proposals, does she agree that it would be wrong now to make the elimination of intermediate nuclear forces conditional upon an agreement to reduce short-range and tactical nuclear forces? Does she agree that the best route now to the reduction of tactical and shorter range forces is through the elimination of intermediate forces?
    The Prime Minister: First, the right hon. Gentleman would abolish all our nuclear weapons and leave the Soviet Union with all of theirs, and then he actually complains—[Interruption]
    Mr. Speaker: Order. This noise is unseemly.
    The Prime Minister: The right hon. Gentleman then complains that we looked at the small print of a proposal that has been put to us. I shall quote from the communiqué that was issued after my meeting with President Reagan at Camp David. It states :
    "We agreed that priority should be given to:—an INF agreement, with restraints on shorter range systems,"
    We were not so foolish as to say that it could all be sorted out with intermediate range systems when we knew that the Soviet Union had a total preponderance of shorter range systems. They have to be dealt with at the same time. We also said that
    "effective verification would be an essential element.
    We also agreed on the need to press ahead with the SDI research programme … At the same time, reductions in nuclear weapons would increase the importance of eliminating conventional disparities. Nuclear weapons cannot be dealt with in isolation, given the need for stable overall balance at all times."
    The complete matter was reviewed carefully at Camp David. That was the stance that we took and the stance that we shall continue to take.
    Mr. Kinnock: Obviously when such important matters are concerned it is worth looking, as the Prime Minister suggests, at the small print, but knowing that Mr. Gorbachev's various initiatives stem almost entirely from the pressures on his economy and the need for alternative technological development, will the Prime Minister now say whether she is to turn her back on the current opportunity or encourage its use, bearing in mind the fact that she once said, quite rightly, that no weapons would be better than some but few are better than more?
    The Prime Minister: I believe that the proposals that have come from Moscow stem from the resolve of the West to stand firm and that they would never have come from any of the right hon. Gentleman's policies. It is, nevertheless, absolutely vital that we have strict verification arrangements and negotiations to correct the huge imbalance in the Soviet Union's favour in shorter range systems. The right hon. Gentleman would throw away the security of our defence system too easily. We look at it very carefully, and we shall consider it extremely carefully where it should be considered — in the negotiations in Geneva.
    Mr. Kinnock: Yes, but—[Interruption.]
    Mr. Speaker: Order.
    Mr. Kinnock: Are those matters relating to other force reductions a precondition, as far as as the Prime Minister is concerned, of intermediate force elimination, or are they not? Yes or no.
    The Prime Minister: The right hon. Gentleman would have heard, had he listened—[Interruption.]
    Mr. Speaker: Order. The Prime Minister must be given an opportunity to answer.
    The Prime Minister: The right hon. Gentleman would have heard, had he listened to what I said earlier, that the Soviet Union has total superiority in shorter range systems. We in this country are within range of those shorter range nuclear systems. He would throw away our own security and defence. I would consider those shorter range systems, as well as the intermediate ones.
    Sir Frederic Bennett: Quite contrary to what the Leader of the Opposition has suggested, does my right hon. Friend the Prime Minister recall what she said last November on her return from Washington? In her own words she said—
    Mr. Speaker: Order. The right hon. Gentleman must paraphrase, please.
    Sir Frederic Bennett: My right hon. Friend said that a reduction in short range missiles would have to be negotiated at the same time as those on INF. Has the Government's position changed since then?
    The Prime Minister: Unless we deal with shorter range systems at the same time, we are left with a total preponderance of shorter range systems in the hands of the Soviet Union and very, very few in the hands of Western Europe. That would not be enhancing our security. It would be taking certain risks.
    Dr. Owen: Could anything be more absurd than lessons in arms control and nuclear negotiations from the leader of the Labour party? [Interruption.]
    Mr. Speaker: Order. We often hear things in this Chamber that we do not agree with. [Interruption.] Order. Dr. David Owen.
    Dr. Owen rose—[Interruption.]
    Mr. Speaker: Order. Dr. David Owen.
    Dr. Owen: Does the Prime Minister not agree that it would be extremely foolish to link the INF negotiations either with conventional force reductions, desirable though they are, or with a chemical weapons ban,
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    desirable though that is? Will she make it clear to other European countries that the INF negotiation stands on its own as part of the zero-zero option?
    The Prime Minister: I believe that to keep the security of the West and NATO, we must look at all of them together. In particular, I believe that we can go ahead as a matter of priority with intermediate range nuclear weapons, but at the same time we must also look at the shorter range ones. The right hon. Gentleman will be aware that if we succeed in getting an agreement upon that matter there is an enhanced importance for our own nuclear deterrent. I shall be delighted, therefore, when he agrees to update Polaris with Trident.
    Sir Peter Blaker: Is it not clear, from Mr. Gorbachev's proposals, that he sees no prospect of one-sided western nuclear disarmament, and that, therefore, he must have written off any prospect of a Labour general election victory?
    The Prime Minister: As my right hon. Friend says, there would have been no point in coming to negotiate had we, like the Labour party, unilaterally given up own powers, with the result that Russia would have kept all of hers.
    Mr. Terry Fieldsasked the Prime Minister if she will list her official engagements for Tuesday 3 March 1987.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Fields: In the course of a busy day, will the Prime Minister reflect on news items in the United States media to the effect that Colonel Oliver North had drawn up plans for shipping Blowpipe missiles and launchers to the Nicaraguan Contra terrorists, from Short Brothers in Belfast—
    Mr. Speaker: Order. Is that a Prime Ministerial responsibility?
    Mr. Fields: It was a fact that was denied last July by Baroness Young, the Minister of State, Foreign and Commonwealth Office. Is it not a fact that the only way in which we will break this sinister and undemocratic link between this Government and the— [Interruption.]—warmongering of Reagan is the calling of an early general election?
    The Prime Minister: I could not hear all of the question, but I got the gist of the early part, which referred to a report in the United States media that we had given approval to the supply of Blowpipe to the Contras. Those allegations are totally unfounded. We have clearly demonstrated our support for political and not military solutions to the problems of central America.
    Sir George Young: Will my right hon. Friend find time today to tell the Chancellor of the Exchequer how much we in Ealing are looking forward to his Budget on 17 March, and how we hope it will help us to pay for the Labour budget on Thursday when our rates are forecast to go up by 80 per cent? Can she think of any better way of underlining the difference between the two major parties in this House than by giving the widest possible publicity to these two contrasting budgets?
    The Prime Minister: I am very grateful to my hon. Friend for having done just that. The difference is that we

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    trust the people to spend the greatest share of their earnings, whereas the Labour party wants to maximise the amount which it takes out of people's pockets.
    Mr. Nellistasked the Prime Minister if she will list her official engagements for Tuesday 3 March 1987.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Nellist: Will the Prime Minister take time today to explain why her Government are so reluctant to grant asylum to the Tamil refugees, despite the evidence that they have fled the bombing of their homes and the torture and murder of their families and neighbours, while six ex-Nazi war criminals are allowed to live here freely as she waits for sufficient evidence to be collected against them? What is that? Racism or hypocrisy?
    Mr. Tony Banks: A bit of both.
    The Prime Minister: As the hon. Gentleman is aware, there will be a statement on the Tamils after Question Time, and therefore I leave comments on the Tamils to my right hon. Friend the Home Secretary. On the question of asylum abuse generally, this country has an excellent record of hospitality towards genuine refugees. We are entitled, however, to take firm action to deal effectively with the large increase in the number of passengers who are arriving here with forged documents, or who have destroyed their documents and who are making asylum claims that prove to be baseless.
    With regard to the other matter that the hon. Gentleman mentioned—which is also within the duties of my right hon. Friend the Home Secretary—my right hon. Friend has met right hon. and hon. Members to discuss the allegations of the Simon Wiesenthal centre. We have urged the centre to provide information to substantiate its allegations. The case for any change in our law would depend substantially on the weight of evidence brought forward. The hon. Gentleman does not need reminding that it is not guilt by accusation, but it is guilt only through evidence in a court of law.
    Mr. Michael Marshall: Is my right hon. Friend aware of the growing concern over the delay in responding to the proposals on future space policy of the British National Space Centre? Is she further aware of the opportunities which are open to us through the European Space Agency and NASA? Will she bend her efforts to reaching an early decision on this important matter?
    The Prime Minister: Yes. One has to look at those space proposals carefully to see what part of them would benefit the United Kingdom. Many people want more to be spent on research and development. It is not just extra expenditure that would yield returns, but being selective in the amount of expenditure one makes. We must look at the proposals in that light.
    Mr. Kennedyasked the Prime Minister if she will list her official engagements for Tuesday 3 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Kennedy: In view of the magnificent and resounding SDP-Liberal alliance triumph in the Greenwich by-election last week, will the Prime Minister take this opportunity to congratulate and welcome an excellent new Member of Parliament for the constituency? Will she have a wee word with her party chairman, whose advice to the electorate is clearly as discredited as that of the leader of the Labour party? [Interruption.] An alliance vote—
    Mr. Speaker: Order. We shall have all of this in a minute. The hon. Gentleman must relate this to the Prime Minister's responsibilities.
    Mr. Kennedy: Will the Prime Minister exercise her responsibilities over her Cabinet Minister and remind him that an alliance vote, far from letting in Labour, keeps out Labour and Conservative and will help to elect an alliance Government after the next general election?
    The Prime Minister: I remind the young Member of what happened to the alliance Member who was returned for Crosby when it came to the general election.

Rail Crash (Shropshire)
3.31 pm
Mr. Derek Conway: I am grateful to you, Mr. Speaker, for allowing this question. I wish to ask my right hon. Friend the Secretary of State for Transport whether he will make a statement about a matter of which I have given prior notice — the rail crash at Westbury in Shropshire yesterday.
The Minister of State, Department of Transport (Mr. David Mitchell): At about 8·55 yesterday evening, one of the new Sprinter class 150 diesel multiple unit trains ran round the passing loop in the down direction at Westbury on to the line from Shrewsbury to Aberyswyth and passed at danger the signal controlling the entry to the single line section to Welshpool. A similar train was waiting at the signal in the other direction before proceeding into the loop.
The down train collided head-on with the up train. The leading bogie of the latter was derailed and there was considerable damage to the front-end superstructure of both trains. The emergency services were quickly on the scene. I regret to inform the House that 37 people were taken to hospital suffering from minor injuries, but I am able to say that only four were detained overnight. One of those detained was the driver of the down train and it has not yet been possible to interview him formally. In these circumstances, I am sure that the House will understand that I am unable to give any reasons for the likely cause of the accident. British Railways is planning to hold its own internal inquiry on 10 March, but it is still too early to say whether my right hon. Friend the Secretary of State will order a formal inquiry by an inspecting officer of railways.
I pay tribute to the emergency services and in particular to the ambulance crews, who appeared promptly. I am sure that the House will wish to express the hope that the injured will make a rapid recovery.
Mr. Conway: I am grateful to my hon. Friend for that reply. I wish to associate myself with his thanks to ambulance men and firemen who were efficient and prompt in dealing with the incident. When I talked to the Royal Shrewsbury hospital this morning I was given to understand that of the 37 patients admitted, five have been detained. I hope that, in view of that, my hon. Friend will think again about appointing a railways inspector for a formal inquiry. If that is not possible, will my hon. Friend ensure that the details of the British Rail internal inquiry be made public? Will my hon. Friend also ensure the expedition of claims for personal injury submitted by my constituents and the constituents of other hon. Members who were involved in this sad train crash?
Mr. Mitchell: I thank my hon. Friend for his comments. It is important to say that British Rail's internal inquiry, colloquially known as the joint inquiry, is held by senior regional officers to establish not only the cause of the accident, but a basis for any disciplinary proceedings or a defence in any litigation. Therefore, at this early stage, we have to wait to see whether there is an open-and-shut case for the cause of the accident before we proceed to the greater arrangements involved in establishing a formal inquiry.
Mr. Alex Carlile: My constituency is served by this railway line and for a long time my constituents have been anxious about the use of single track along part of that line. If the inquiry recommends that there should be a double track along the line will the Minister undertake to ensure that that is installed without delay?
Mr. Mitchell: It would be prudent to wait to see what the inquiry finds as the cause of the accident. If the inquiry was to make the recommendation to which the hon. and learned Gentleman referred it would be given serious consideration.
Dr. John Marek: With all the restrictions placed on British Rail in recent years—the singling of railway lines, less checking of the permanent way by British Rail employees and the introduction of advanced automatic level crossings, will the Minister ensure, as a result of the inquiry, that he can reassure those of us who have single track railway lines in our constituencies that they are perfectly safe and that safety standards have not deteriorated? If the Minister cannot do so will he take immediate action to ensure that he can give us such reassurance?
Mr. Mitchell: I am not quite sure what restrictions, to which the hon. Gentleman referred, have been placed on British Rail—
Dr. Marek: Financial.
Mr. Mitchell: There are no financial restrictions that in any way affect the safety of British Rail operations. I must say that the hon. Gentleman is trying to make bricks without straw. The signalling was checked after the accident and a full report will be made to the British Rail internal inquiry regarding that.
Mr. Robert Adley: I hope, Mr. Speaker, you will not mind if I aim this question as much at you as at my hon. Friend the Minister of State. Is it not extraordinary that, as a result of this accident, albeit one in which few people suffered minor injuries and some superstructure damage occurred, a parliamentary question has been granted by this House—
Mr. Speaker: Order. The hon. Gentleman must not say that. I granted the private notice question.
Mr. Adley: In that case I withdraw that comment.
Does my hon. Friend agree that 15 people are killed each day on the roads but that we never have statements about that? Indeed, last week a coach fell off a bridge onto a motorway, yet no statement was made to the House. Will my hon. Friend use this opportunity to state that, were it not for the strength of these new Sprinter units, a more serious accident may have occurred? Will my hon. Friend pay tribute to British rail for doing everything it can to maintain an outstandingly good safety record?
Mr. Mitchell: My hon. Friend has rightly put his finger on the safety aspect. This is new rolling stock and it is the first time that there has been an accident of this nature involving such stock. I believe that it is a good indication of the strength of the design and of the build that there were not worse casualties on this occasion.
Mr. Peter Snape: Will the Minister accept that we associate ourselves with his thanks to the emergency services for their prompt attention to the

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accident? Does the Minister have any idea of the age of the signalling equipment used at Westbury at the time of the accident, and does he believe that the age of that equipment had any bearing on the accident? Following the comments of the hon. Member for Chirstchurch (Mr. Adley), is it not a tribute to the safety standards of British Rail that we have a private notice question after a comparatively minor accident—the sort of accident which, if it took place on our roads, would scarcely merit a paragraph in a local weekly newspaper?
Mr. Mitchell: The hon. Gentleman is entirely correct in the point that he has just made. On the signalling, it would be wrong for me to pre-empt in any way the British Rail inquiry. I can say that in any event British Rail is hoping to install the radio-electronic token block system in the middle of next year. It would be quite improper for me to influence opinion in anyway in advance of the inquiry.

Asylum Seekers
3.41 pm
The Secretary of State for the Home Department (Mr. Douglas Hurd): With permission, Mr. Speaker, I will make a statement about claims for asylum by travellers without proper documents.
Many Western countries have become increasingly concerned in recent years at the large number of people who seek entry with forged or fabricated passports or visas or without any documents at all. Very often they or the organisers of their journeys know that they have no legitimate claim to entry but hope that the absence of documents will hinder the immigration authorities in securing their return. At the same time, large numbers of people who aim to find a more secure or prosperous life in Western countries have been abusing asylum procedures as a means of evading immigration controls. Last year, during the United Kingdom presidency, the Ministers of the Interior of the European Community set work in hand on these problems. Last week I sent a message to the Belgian presidency expressing the Government's hope that this work would be pressed forward urgently.
In December and January, 600 people arrived here and sought asylum, the large majority of whom did not have the right documents. It is only recently that members of the public and of the House have become generally aware of the problem which faces us, so the Government have been considering what action to take to prevent evasion of visa requirements and the abuse of asylum claims as a means of securing entry.
We have decided to introduce legislation tomorrow to give power to impose a charge on carriers who bring to this country people who require leave to enter the United Kingdom but who carry no valid passport or other identity document, and those who have no valid visa where one is required by the immigration rules. The charge would he £1,000 for each passenger without valid documents and would be applied from midnight tomorrow. The carrier would not be liable to pay if he could show that the passenger had the necessary valid documents when he boarded the ship or aircraft or, in the case of forged documents or visas, that the forgery was not reasonably apparent. Payment would be enforceable, if necessary, by civil action in much the same way as detention and removal costs can already be recovered from carriers.
This change in the law would reinforce the messages already given to airlines and other carriers that they have a responsibility for ensuring that those who wish to travel here have obtained the necessary papers before they do so. A similar provision already operates in many other countries, including Canada, Australia, New Zealand, the United States and, more recently, West Germany and Denmark.
In the case of the Tamils who were last week given leave by the court to move for judicial review, I have to take account of the passage of time—more than two weeks—since their arrival and of the fact that the litigation is likely to take further time to resolve, given the rights of appeal on either side. Moreover, I understand that the United Kingdom Immigration Advisory Service has already been able to interview many of the applicants. In these circumstances, and in the light of the outcome of last week's court proceedings, I have decided that the most sensible way forward is to refer to UKIAS each of the 64

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cases and thereafter to reach fresh individual decisions in the light of all the relevant facts, including any representations UKIAS may wish to make. In doing so, I shall of course take account of any other representations I receive, including those from hon. Members. In the circumstances, I would expect to receive representations by Wednesday 18 March and to take decisions after that. My willingness to proceed in this way has been conveyed to the applicants' solicitors and UKIAS.
For the future, however, we need to change our procedures to ensure that we are properly protected against immigration rackets which take advantage of our generous procedures. In particular, we must not allow procedures which were intended originally as safeguards to become the vehicle by which those who have no entitlement to come here, whether as refugees or in whatever other capacity, achieve their ends.
Accordingly, the present arrangements under which my Department refers cases to UKIAS will be revised and I shall be inviting UKIAS to join in discussions to that end. I should stress, however, that the present arrangement does not involve the reference of all cases, and for the avoidance of doubt I must place it on record that in future there will be cases which will not be referred to UKIAS and that therefore applicants for asylum can have no expectation in future that as a result of the arrangement arrived at in 1983 or otherwise there will in their cases be such a reference. Similarly there will be instances in which early removal is necessary in the interests of immigration control and it would not be right for me to defer removal on a Member's seeking to put a stop on the case. It follows also that those who seek to challenge in the courts decisions to refuse asylum cannot expect that they will automatically be allowed to stay here until proceedings are completed.
The Government remain fully committed to their obligations under the United Nations 1951 Convention to genuine refugees as defined in that Convention. The decisions on individual cases which I make as Home Secretary will respect that obligation. But we have to find the right means of preventing abuse of the asylum provisions and preventing evasion of the visa requirements which Parliament has endorsed. The policies which I have announced aim to strike that balance.
Mr. Gerald Kaufman: Is the Home Secretary aware that in making that statement he is having to swallow a great many of the words uttered by his right hon. and learned Friend the Minister of State the week before last? The Minister of State told the House on 17 February that it was
"obvious, from the examination carried out by the immigration officers at the port, that the claims made by these people were manifestly bogus."—[Official Report, 17 February 1987; Vol. 110, c. 770.]
The Home Secretary has now decided that he disagrees with the Minister of State, and that he is not satisfied that the claims are manifestly bogus.
The Minister of State told the House on 18 February that the Government would
"contest … any application for judicial review."
The Government have now completely reversed that stand on the 64 Tamils in order to dodge the adverse outcome of a judicial review. Is the Home Secretary aware that it is because he fears that if he does not abandon his position
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in the House of Commons he will be knocked off it in a court of law? That is why he has announced this change in his position. He is now coming to the House with news of a hasty piece of panic legislation. Is the right hon. Gentleman aware that that legislation has nothing to do with general immigration control, but is to meet what he views as a special situation?
Opposition Members are against bogus refugees who wish to exploit Britain's hospitality, and we certainly condemn greedy-for-money racketeers who prey on the vulnerability of people such as the 64 Tamils. Is the Home Secretary aware that even people who are the prey of greedy-for-money racketeers may, all the same, be bona fide refugees and that the problem arises in finding a procedure to identify bona fide refugees? The Home Secretary has recognised that by deciding, as he has put it, to reach fresh decisions on the 64 Tamils and to refer each of the cases to the United Kingdom Immigrants Advisory Service.
Can the Home Secretary answer my questions? What, in future, will be the position of bona fide refugees without visas who arrive in this country under his newly announced legislation? Is he aware, for example, that if someone such as Mr. Shcharansky arrived as a refugee from Russia without a visa, the airline carrying him would be fined under the legislation that he has announced? [AN HON. MEMBER: "Quite right, too."] Oh, SO Mr. Shcharansky should be turned away because he does not have a visa. The Prime Minister would not have been able to meet him in those circumstances.
Is the Home Secretary aware that the same goes for other seekers of political asylum from eastern Europe, Iran, Afghanistan, South Africa, Chile and elsewhere? In those circumstances, is it not clear that the words of the Minister of State were baseless when he said :
"we are determined to honour our obligations under the United Nations convention in the treatment of refugees."—[Official Report, 18 February 1987; Vol. 110, c. 909–911.]
and that foreign airlines are now to have delegated to them responsibility for implementing or failing to implement the United Kingdom's commitment under the United Nations convention?
The fact is that a problem has arisen that the Government have found themselves unable to cope with without panic legislation. If that problem exists, the Home Secretary would be better advised to consider carefully how to deal with it rather than rushing through the House of Commons legislation which he may well repent.
Mr. Hurd: I am not all that clear after listening to the right hon. Gentleman where the Opposition stand on the basic question of immigration control. Last year they proposed to leave open the loophole for so-called visitors, which we have closed. Now, they propose to leave open, although the evidence is clear before them, the loophole for so-called refugees. In the face of their determination to leave every available loophole open, it is less and less clear how they can claim to be in favour of effective control.
In answer to the right hon. Gentleman's points, we obey the law and, as a Government, we are under the law. We made the attempt to remove the 64 but were prevented from doing so by the intervention of the court. Since then, there have been judicial proceedings and in view of the course of those and the line taken by the court, the likelihood of no immediate outcome in sight, given the rights of appeal, has led me to take this action. That simply illustrates the point that I was trying to make to the House

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—that our present procedures are well adapted to meet the needs of individual refugees coming into this country under the United Nations convention. They are not well adapted to people who come here, and who are coming here in increasing numbers, claiming a right of asylum to evade the controls. That is why we propose to change the procedures.
The great majority of refugees will not be affected in any way. Until the recent increase in the number of applications made from abroad, most applications for asylum have been made in this country by people who are already here. Genuine refugees do not usually have to travel very far to obtain immediate safety because they can find refuge in neighbouring countries. If they have links with this country or particular reasons which they wish to argue for coming here, applications for asylum here can be made by people given temporary refuge elsewhere. It is also open to those who wish to come to this country, for whatever reason including asylum, to apply for a visa and make arrangements at one of our posts abroad and many asylum seekers do that. In practice, I do not believe that the difficulty to which the right hon. Gentleman has drawn attention will arise.
Mr. John Wheeler: Is not my right hon. Friend aware that the 64 Tamils referred to had found sanctuary in a safe country but were then transported to the United Kingdom for economic reasons and for gain by an individual or individuals? Is he not further aware that all the Western democracies are having to find other ways to contain the flow of people from Third-world countries who arrive for bogus reasons? Is he not also aware that there is a substanital increase in the forgery, alteration and counterfeiting of passports and other travel documents?
Mr. Hurd: In view of what I have said, I think that I had better not comment on particular cases. My hon. Friend is entirely right in his general point that this is an international problem. For the first time more and more people in the Third world have the means, knowledge and the will to try come to Europe, North America and Australasia in search of a more prosperous or more secure life. The present procedures are not adequate to meet that particular pressure. Many countries with which we are in touch have found the same experience and are looking for the right answers under their systems. As I have explained, we are in close touch with our partners in the European Community to exchange experiences on that. However, I did not feel that we could wait until those exchanges were completed before announcing the action that we propose.
Mr. Michael Meadowcroft: Is the Home Secretary aware that every hon. Member despises and condemns the actions of racketeers? However, the more that the Government place restrictions on immigration, such as visas, the more they force refugees into the hands of racketeers. Is it not wholly unreal to put the restrictions on the airlines and shipping companies? How else are people to get out of countries? Are they supposed to come in rowing boats? What on earth does the Home Secretary think is going on if he believes that people under oppression are able somehow to get out of countries without using means of transport? Is the Home Secretary claiming that there are to be no means of appeal whatever and that there is no interview other than that by his own staff—[Interruption.]
Mr. Dave Nellist: Telephone the high commission and ask what is going on in Jaffna.
Mr. Speaker: Order.
Mr. Nellist: What about the hon. Member over there?
Mr. Speaker: Order. If I call the hon. Gentleman he will have a chance to say something, but not yet.
Mr. Meadowcroft: Does the Home Secretary not accept that for centuries Britain has had a reputation as a haven for people fleeing from oppression and that some hon. Members in all parts of the House would not be here if that were not the case? What price that reputation now, and what price the Home Secretary's reputation as a liberal Conservative?
Mr. Hurd: If being a liberal means that one denounces racketeers while opposing every effort to deal with them, I disclaim that label, because that is what the hon. Member for Leeds, West (Mr. Meadowcroft) has just done. In reply to the question by the right hon. Member for Manchester, Gorton (Mr. Kaufman), I answered the point about the genuine refugee. The hon. Member for Leeds, West asked about a right of appeal. Carriers who consider a penalty to be unfair may make representations, including representations to Ministers. The penalty is not automatic but discretionary. If such representations are rejected, the carrier can refuse to pay and can challenge his liability when he is sued in the courts. That seems to be a perfectly reasonable procedure.
Sir William Clark: Is my right hon. Friend aware that the legislation he is introducing tomorrow to fine carriers will be widely welcomed? Does he agree that it appears that our immigration laws are too loose to cover this problem? Why can we not change the immigration laws at the same speed at which we change the fining of carriers? Will he tell the House how much it costs the taxpayer per day to house these immigrants? Surely it is a gross abuse and waste of public money to allow this sort of spectacle to go on.
Mr. Hurd: Under existing agreements the financial responsibility for detention costs and for the homeward passage falls on the airlines in respect of those people who eventually return to the countries from which they came. It is only in cases where eventually they are granted asylum or entry to Britain that the cost falls on the taxpayer. Of course I do not exclude any future revision of the immigration rules. We have often done that in the past.
The legislation that I have announced will put the onus where to a large extent it belongs—on the carriers. My hon. Friend will know that many airlines already follow this practice in their dealings throughout the world. They regard it as an elementary precaution to make sure that those whom they carry have the right eventually to go to the country to which they are being carried. We are proposing by legislation to impose that responsibility on all carriers whether or not they are carrying voluntarily. I draw my hon. Friend's attention to the last part of my statement, which talks about the new procedures that we propose to work out. The legislation on carriers and the new procedures when added together will provide an effective way of blocking this loophole while preserving our obligations under the United Nation convention. I am keen to preserve those obligations and, indeed, under international law we are bound to preserve them.
Mr. David Winnick: I welcome the decision to allow careful representations to be made in the case of the Tamils. Of course, that should have occurred at the beginning when they came here. However, is there not a contradiction between the commitment that the Home Secretary gave again today and which the Prime Minister gave a short time ago about continuing the long and honourable tradition of this country of giving help to those fleeing from persecution, and the restrictions and obvious difficulties, because of the further restrictions, faced by anyone wishing to claim such refugee status?
Is the Home Secretary also aware that, while it may be expected from some Government Members, it was extremely disappointing to note that, in his response to my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), the Home Secretary seemed to be playing the race card in this pre-election period? Those who play the race card, whether from the Front Bench or from the Back Benches, usually end up by being totally discredited. Perhaps the right hon. Gentleman will rethink what he said.
Mr. Hurd: In answer to the hon. Gentleman's first point, there is no contradiction. However, there is a balance which must be struck between the solidity of immigration control and our obligations under the 1951 convention, which applies to individuals who have well-grounded fears of personal persecution. The measures that I have announced and the discussions that we shall have with UKIAS will enable us to strike that balance.
I entirely disagree with the hon. Gentleman's second point, which was bad history. It was the Leader of the Opposition who, in India, raised that general question. As often happens, he spoke to please a particular audience without regard to the impact of his words elsewhere. Ever since, those who know more about the matter than he does have tried to pick up the bits and emphasise the desire of the Opposition to maintain effective immigration control. However, the fact is that their reactions to what we have had to do, first of all on visitors' visas, and now on the right of asylum and our proposals for closing those loopholes, illustrate, to put it mildly, that they still have not thought the thing through.
Mr. Terry Dicks: May I welcome the rather meagre moves that my right hon. Friend is taking tomorrow to deal with this? However, I advise him that many thousands of people in this country will be angered that these liars, cheats and queue jumpers will have the right to be considered to stay here. Can my right hon. Friend advise me why he has disregarded the comments made by the Sri Lankan authorities about those in Malaysia who pointed these people out as racketeers? Will he promise me, as the Member for the Heathrow area, that people who demonstrate in our terminals and strip off their clothes will not see that as an opportunity to gain a quick entry to this country?
Mr. Hurd: The answer to my hon. Friend is that the Government operate under the law and I am sure that he would wish the Government to do so. He has asked me why I did not send those people back where they belong, and I shall rehearse the history of that. We come under the courts and must accept the legal proceedings. Even in his most ebullient moments, my hon. Friend would not suggest that the Home Secretary of a Conservative Government should ignore the rule of law.
Mr. Andrew Faulds: The right hon. Gentleman pretends to be preventing the abuse of our immigration procedures. Does he not realise that a direct result of his intended legislation will be the prevention of genuine refugees seeking asylum in this country? He must comprehend that. Does he not realise that this whole unhappy episode will be one of the less glorious chapters of his tenure of the Home Secretaryship?
Mr. Hurd: I vividly recall the hon. Gentleman huffing and puffing in a similar way when we discussed visas and visitors. That change, which was vigorously opposed by the Opposition, has now settled down and is accepted by many people in the ethnic communities as a great improvement on the previous turmoil. That is what we did against the huffing and puffing which we have experienced again, and I think that that will happen again.
Mr. Michael Morris: Is my right hon. Friend aware that his statement this afternoon will be welcomed? However, two key questions remain to be answered about these Tamils. First, why did they choose not to go to the British high commission to seek visas, unlike hundreds of their compatriots, many of whom were much poorer than those people? Secondly, why are reports coming from the press and the Government in India, that hundreds of Indian and Sri Lankan Tamils are returning voluntarily to Sri Lanka, whereas we seem to believe that they require asylum?
Mr. Hurd: For the reasons that I have already given, I shall not comment on these cases—indeed, I cannot. However, it is important that all concerned benefit from a balanced view of what is actually happening in Sri Lanka and what is not, and my hon. Friend has contributed to that.
Dr. M. S. Miller: Does not the right hon. Gentleman understand that Opposition Members are not objecting to his clamping down on the racketeers? There is no doubt of the rightness of that. However, we feel strongly that the draconian measures that are proposed will, as one of my hon. Friends has said, keep out genuine refugees. How does the right hon. Gentleman propose to ensure that genuine refugees are not kept out? It is impossible for them to bring with them certificates from their commissioners of police from the places in which they are persecuted saying, "This man is a genuine political refugee. We are persecuting and torturing him." Does the right hon. Gentleman expect them to bring such certificates with them?
Mr. Hurd: The hon. Gentleman says that he is not objecting to dealing with racketeers, but he is not helping in any way. We have not heard a single idea from the Opposition about how we could effectively strike the balance that I am talking about between the right of refugees under the United Nations convention and the absolutely crucial need to maintain an effective immigration control. All that Opposition Members have done is to suggest that what we are proposing is wrong. The House will have the opportunity to discuss this in detail when we come to the legislation because, unlike the West German Government, we do not have executive powers to do that without legislation—I am not complaining about that.
I repeat that if, between now and then, the hon. Gentleman does his homework about the way in which

739
genuine refugees come here, he will find that the majority are here anyway because they come for other purposes. Others, like Shcharansky, of whom the right hon. Member for Gorton made great play, come here by agreement and understanding, so this would not apply. Others go to countries which are much nearer to the places where they feel persecuted, and if they have a particular link with this country, they can apply from that country and their cases can be discussed in the ordinary way. That is how genuine refugees exercise the right of asylum in this country, and none of those means will be blocked or affected.
Several Hon. Members rose—
Mr. Speaker: Order. I have to protect the rest of today's business, and as there are two other statements after this, I shall allow questions on this to go for a further 10 minutes—[Interruption.] Order. I shall allow a further 10 minutes and take that into consideration when we come to the debate that is to be held shortly.
Mr. Michael Foot: Does not the right hon. Gentleman understand that legislation that is rushed through in a panic is usually the worst kind of legislation, especially when it deals with questions of civil liberties and when strong passions are aroused? If he is genuine in wishing to strike the right balance and to seek to protect the ancient right of people to come to this country when they are escaping from persecution, will he not consider postponing the introduction of the Bill until he has had a little time to think about it?
Mr. Hurd: It is not a matter for me, but I do not believe that the House will be asked to consider this issue in anything approaching a panic. That is partly why I made the statement that, if the House eventually agrees to the legislation, the penalties would be effective from tomorrow night, to make sure that the House has reasonable time to consider them. I entirely accept that that is desirable and I agree with the right hon. Gentleman that it is not a good idea to pass legislation in a panic. However, he is not facing the situation that we must face as the Government, which is that this is a loophole from which countries in Europe, North America and Australasia suffer and of which they are feeling the effects even more than we are. We cannot delay unreasonably before finding the right means to stop that loophole. Otherwise, we should look amazingly foolish. Those who obstruct what we are trying to do would bear a heavy responsibility.
Several Hon. Members rose—
Mr. Speaker: Order. I have just called two hon. Members from the Opposition Benches, so I will balance that.
Sir Dudley Smith: Is my right hon. Friend aware that his statement will be welcomed by many people who are deeply uneasy about this current case? Can he say, because it is part and parcel of what has happened, whether he has any knowledge of what Malaysia and the other countries affected are doing to stop these immigration rackets from proliferating?
Mr. Hurd: I do know that the Malaysian authorities have arrested several people in connection with the fraudulent acquisition and sale of passports. We shall supply the Malaysian authorities with any information that we hold on forged documents, which may help them with their inquiries.
Mr. John Stokes: Is my right hon. Friend aware that the vast majority of people in this country are thankful for the steps that he is taking to deal with bogus immigration? Is he further aware that the attitude that we have heard from the Opposition is quite untypical of the vast majority of all classes of people living in this country? In a small island, we simply cannot take in people from every country in the world, irrespective of whether they are bogus.
Mr. Hurd: I am grateful to my hon. Friend. I worked out for myself one morning that, at the moment, 15 countries in the Third world have war or civil war at least as bad as, and in many cases considerably worse than, anything that may have been happening in Sri Lanka. The fact that we are not dealing only with the Sri Lankan Tamils adds to the importance and the vividness of the difficulties that we face.
Mr. Max Madden: Have not the Government done an embarrassing U-turn today to avoid greater embarrassment in the courts shortly? Will the Secretary of State make some amends for the lack of co-operation of his Department with those seeking to represent the Tamils, by allowing those with relatives here temporary admission while the inquiries are undertaken? Does he not understand that by introducing a procedure which denies those seeking refuge here independent judicial review, he is introducing a system which is arbitrary and denies justice? It is a recipe for injustice and he will rue the day that he introduces this procedure.
Mr. Hurd: I said that I would receive representations and I gave a date by when I should like to have them; that would cover both the temporary and substantial questions of detention. I do not agree with the hon. Gentleman's basic point. Like all Opposition Members except for the right hon. Member for Blaenau Gwent (Mr. Foot), he has not faced the problem. To use those objectives and such rhetoric before he addresses the problem with which we must deal shows a shallowness which is not right for someone with his experience of the matter.
Mr. Roger Sims: Further to my right hon. Friend's reply, does he agree that, unfortunately, communal violence in Sri Lanka is of long standing? Does he agree that most of the Tamil community there could claim to be in fear of their life or in danger of persecution and that they amount to some 2 million people, not to mention the Sinhalese community which has also been attacked from time to time and which numbers 11 million?
Mr. Hurd: The United Nations convention and our practice in the matter draw a clear distinction between people who live in a troubled part of the world—as I have said, there are many troubled areas—and wish to lead a more prosperous and secure life here and those who individually have a well-founded fear of persecution. Only the latter category is covered by the United Nations convention and therefore by our international responsibilities. We must strike the right balance so that we can continue to honour that obligation to the second category while excluding the first, and my statement aims to achieve that.
Mr. Jeremy Corbyn: Is the Secretary of State aware that his statement represents a further massive stride away from civilised behaviour by the Government? Is he aware that he should recognise that all

741
asylum seekers are victims and not the cause of the problem? Instead of trying to appease European xenophobia by his racist remarks, should he not consider the root causes of the problem in Sri Lanka and other places and perhaps, just perhaps, question the sense of the British Government selling arms to fuel the flames in Sri Lanka at present?
Mr. Hurd: As I have tried to make clear, it is not just a question of Sri Lanka; the question goes wider than that. It is not uncivilised or wrong. Indeed, it is essential for the countries of Europe, working together to the extent that they can, to find a way of preserving, or in some cases instituting, effective immigration control. If we do not do that, the future for race relations and harmony in the United Kingdom is bleak.
Mr. John Carlisle: My right hon. Friend will know that his welcome legislation will take some time before it is enacted. What guarantee can he give the House that we will not be treated to this same spectacle of intending refugees with similar spurious qualifications before that legislation is enacted?
Mr. Hurd: Because of my announcement that the penalties will become effective from tomorrow night.
Mr. Nellist: Why does the Home Secretary not admit, as the court case later this week would force him to admit, that a series of cursory 20-minute interviews three weeks ago has nothing to do with Britain upholding its obligations under the United Nations convention? When did he last phone the high commission in Colombo to find out the real position in Jaffna, the north and east of Sri Lanka? Does he realise that one of the families of economic refugees fled because their three-year-old daughter was shot dead? Does he realise that other families fled because their homes were bombed in the villages where they lived? Does he realise that they have relatives in Coventry and elsewhere, which enables them to come here? [Hon. MEMBERS: "Ah."] Yes, I am doing my job as an elected Member of Parliament, which is more than I can say for the bunch opposite. If the Home Secretary had occupied the same post in the 1930s or 1940s he would have sent thousands of people back to Germany, Italy and Spain and to their deaths.
Mr. Hurd: I am not going to comment on the particular cases, as I have said, but obviously we keep in constant touch with our High Commission in Colombo about the state of affairs in Sri Lanka.
Mr. Richard Page: Does my right hon. Friend agree that all carriers should act responsibly towards the country that gives them landing rights? If the £1,000 fine is not sufficient, will my right hon. Friend be prepared to review the landing rights of companies which abuse the particular procedures of our country?
Mr. Hurd: The sum involved is roughly in line with what other countries have instituted. We would propose in the legislation to take powers to revise that sum if it seemed inadequate, but that is a matter which the House may want to discuss. The House may also wish to discuss my hon. Friend's second point. He asked what would
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happen if this arrangement were not enough. The experience of other countries and our expectations are that this will be a powerful deterrent.
Mr. Kaufman: In response to a question, the Home Secretary said that the penalty on the airlines was discretionary, not automatic. If that is so, surely the airline will have responsibility to distinguish the bona fide from the bogus refugees? Faced with a fine in those circumstances, is an airline not likely to turn away bona fide refugees? Therefore, will the Home Secretary answer this question, which he has so far failed to answer and on which human lives may depend : how is a refugee without a visa—there will be such people, just as there were Jews in the 1930s in such circumstances, as I have cause to know—who seeks asylum in this country from oppression to find it if there is no provision for refugees without visas to be admitted without the airline being fined?
Mr. Hurd: I think that I have answered the right hon. Gentleman's question already. I have gone through the different ways in which refugees normally successfully obtain asylum here. First, they can come here through some agreement. The right hon. Gentleman mentioned Shcharansky previously, but he did not do so this time because that case would not be affected in any way by our proposals. Secondly, refugees can come here on some other basis and then seek asylum. Thirdly, they can go to a third country and argue that, because of a particular link with this country, this is where they need asylum. In practice, as opposed to theory, the right hon. Gentleman's point is not likely to be valid.
Later—
Mr. Tony Marlow: On a point of order Mr. Speaker. Earlier this afternoon we had a statement on bogus asylum seekers. I myself did not want to get in to ask a question of the Minister. I was just here, sort of observing an interest and seeing what was happening. You will know, Mr. Speaker, that there are perhaps one and a half times as many Conservative Back Benchers as there are Labour Back Benchers, You will know that during that statement, probably about one and a half times or twice as many Conservative Back Benchers sought to catch your eye as Labour Back Benchers.
You, Mr. Speaker, are the guardian of interests of individual Members, and you will know that each individual Member is equally important, irrespective of the party that he represents. I am asking you, Mr. Speaker, in future circumstances, if it appears that there are a preponderance of Members of one side of the House or the other who wish to involve themselves in a particular statement, debate or whatever, that you take account of the balance of Members on either side of the House. I know it is a very difficult situation for yourself, but today it was very much one-sided. There were many more Members on this side of the House who wished to question my right hon. Friend than there were on the other side of the House. Given that, and given that each individual Member is as important, pari passu, as any other individual Member, I wonder whether in future you could take account of the balance on interest in a particular statement when people catch your eye?
Mr. Ron Leighton: Further to that point of order, Mr. Speaker. Could I urge you to take a long-term view, and bear in mind that in the next

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Parliament Conservative Members may be in that minority situation, and that you would need to look after their interests in those circumstances?
Dr. Norman A. Godman: Further to that point of order, Mr. Speaker, might I point out to you that the same problem, as outlined by the hon. Member for Northampton, North (Mr. Marlow), obtains in the Scottish Grand Committee, given the small number of Conservative Members who are on it?
Mr. Speaker: It is always a difficult balance. As the hon. Member will know, I am reluctant to cut off question time after statements. Indeed, I gave that statement a long run, much longer than the other two statements. It is always a matter of deep regret if I cannot call on the statement every hon. Member who wishes to participate. I can only seek to be fair in giving them priority when the matter arises later. I always do that. It is a question of balance every day. I wish that it were possible to call all hon. Members, but the constraints of time do not allow it.
Mr. Marlow: On a further point of order, Mr. Speaker. I fully accept what you have said, and most hon. Members will believe that you are more than generous in the amount of time that you gave for that statement today. My point is not with your generosity and the amount of time that you give for a statement, but the balance that you give. There is a 100 per cent. chance that a Labour Member would have caught your eye today. There is probably a 65 per cent. chance that a Conservative Member would have caught your eye today. I just wonder whether, in the future, if there is a predominance on one side of the House or the other of people who wish to catch your eye, you would take account of the proportions of those hon. Members.
Mr. Speaker: That might have happened today. I always have to calculate and balance these matters. I seek on every occasion to be totally fair to both sides of the House.

Community Programme (Unemployment Benefit)
4.17 pm
The Minister for Social Security and the Disabled (Mr. John Major): With permission, Mr. Speaker, I wish to make a statement on the benefit position of participants in the community programme following a recent decision by the social security commissioners.
As the House will know, it is a fundamental principle of benefit law that people who work part time and do so regularly are not entitled also to unemployment benefit for those days on which they would not normally work. That principle is not novel and has been applied consistently under successive Administrations since 1948. It has not been a source of contention. The point is currently covered in the Social Security (Unemployment Sickness and Invalidity Benefit) Regulations 1983 and was previously covered by the corresponding regulations made in 1975. It is frequently referred to as the full extent normal, or FEN, rule.
The community programme provides temporary work—normally for people who have been unemployed for 12 months, or six months if under 25—and a substantial proportion of those employed in the programme work part time. Until now, the adjudicating authorities have held that the full extent normal rule applies. This approach has hitherto been supported by the social security commissioners, and was also endorsed by a Court of Appeal decision in 1985.
However, in the case of Mr. Brunt a tribunal of' commissioners has now decided that participating in the community programme on a part-time basis will not normally bring the full extent normal rule into operation. This decision was promulgated last week to the chief adjudication officer, who is independent of the Government, and I understand that he proposes to apply for leave to appeal against it.
The result of the commissioners' decision, if it were sustained upon appeal and applied generally, would be a significant change in current well established and understood benefit procedure. It would also cause a rise in benefit expenditure of around £2 million a week. This expenditure would be directed to people participating voluntarily in a programme from which the overwhelming majority receive earnings significantly higher than any unemployment benefit entitlement. The Government regard that as a quite unacceptable use of resources. We do not believe that community programme earnings and unemployment benefit should both be payable. Moreover, the adjudicating authorities will be uncertain of the law pending the conclusion of any appeal proceedings which could be lengthy. This, too, is unsatisfactory.
I am therefore laying regulations today under the urgency procedure to provide that people receiving earnings from the community programme are not entitled also to unemployment benefit. These regulations do not affect any supplementary benefit entitlement, because that benefit is not affected by the full extent normal rule.
I emphasise that these regulations are intended to establish beyond doubt the position that had, until now, generally been understood and applied. The regulations will take effect immediately.
Mrs. Margaret Beckett: Is the Minister aware that the statement that he has just made will cause depression and real anger among those who are working part-time on the community programme, for whom he has just explicitly confirmed that the programme is not an avenue for hope but a dead end? Did he not also confirm that, far from the community programme grooming people to move on to full-time work, it is the best that they can expect under this Government before they go back to the dole?
Is the Minister aware that the statement itself is in some respects misleading? It is not true that the application of the principle of full extent normal work
"has not been a source of contention,"
as the Minister says. Nor is it true that adjudicating authorities have always held that the rule applies, as he said in the statement. Indeed, it has been overturned in a number of cases.
The Minister's remarks on the community programme are contradicted explicitly by a document produced by the Department of Employment in March of this year, which stated :
"some part-time participants may be entitled to claim unemployment benefit for the days they are not working".
The commissioners' decision makes it quite clear that that is the case, quoting the leaflet issued by the Manpower Services Commission.
Many would doubt—I hope the Minister will confirm this—whether someone who is offered only two and a half days a week on the community programme and is pushed into taking opportunities offered by programmes, such as the Government's restart programme, has voluntarily chosen part-time employment in preference to full-time work. Will the Minister now confirm that the long-established principle of the rule to which he refers is that a person should not be encouraged by benefit rules to choose to take well-paid work for a few days and then supplement his income by drawing unemployment benefit? Will he tell the House whether he really believes that that is the definition of the community programme? Does he not understand that for some time there has been increasing concern at the rigid application of this rule, especially at a time of high unemployment? Does he realise that he has confirmed the view that people on the community programme are not being groomed for real jobs, but are merely being kept off the unemployment register?
Are not the Government, as usual, simply ignoring an opportunity to reassess the operation of the full extent normal rule and the community programme and to improve the training content and other aspects of that programme as the commissioners suggested in the judgment to which the Minister referred?
Finally, are the regulations intended to preclude the consideration even of different individual cases in future, as has been the case in the past?
Mr. Major: The hon. Lady should remember that, when the community programme began in 1982, it was not envisaged by the Government or by anyone else that both community programme earnings and unemployment benefit would be payable. That underlying point, which undercuts a substantial amount of what the hon. Lady had to say, was fully understood by all concerned at the time.
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As regards the hon. Lady's remarks on depression and anger, my announcement today re-emphasises and re-endorses what has long been understood to have been the position.
The hon. Lady will know that a large number of people do not conclude their participation in community programmes, precisely because they obtain employment during the passage of that programme.
There has been some uncertainty about the full extent normal rule, although I quoted the most notable court case that had taken place. I confirm that I shall be considering the operation of the full extent normal rule separately from the instance that I mentioned today.
As regards the hon. Lady's comments about people being pushed into the community programme, I reaffirm what has long been understood—that the community programme is and will remain voluntary.
Mr. Roy Galley: The fact that the social security commissioners' decision in this case is ludicrous is surely underlined by the thin arguments presented by the hon. Member for Derby, South (Mrs. Beckett). It is anomalous that the state should provide work for someone and yet allow him to register as unemployed. It is also anomalous that the state should provide a wage and expect at the same time to provide unemployment benefit. Will my hon. Friend assure the House that he will act swiftly in bringing these regulations before the House and that they will be legally watertight when they are presented?
Mr. Major: On my hon. Friend's second point, I live in hope and trust that that will be the case. On his earlier remarks, it is certainly true that the present position would be anomalous if people received both earnings on the community programme and unemployment benefit. That was never the intention, and these regulations will take effect immediately to prevent that occurring. The commissioners' decision may be surprising, but that is a matter for the chief adjudication officer who has appealed against it.
Mr. Jack Ashley: Is the hon. Gentleman aware that this is the first time that I have known a Minister to step in and change the rules before an appeal has been heard? I wonder what he would say if someone was found not guilty of a criminal charge and the Government stepped in before any sort of appeal could be heard—although, of course, one cannot appeal against a not guilty verdict in a criminal case. However, is the Minister aware that by these regulations he is robbing unemployed part-time workers of up to £15 a week? It is wrong to regard people who are employed for a fixed temporary period as being fully employed. Will he think again and withdraw these regulations?
Mr. Major: I reiterate that the regulations will ensure that the law that we all thought existed does exist. There is nothing novel in the principle of these regulations. On the matter of cost, the right hon. Gentleman will know, as well as any hon. Member of this House, that there are a vast number of competing demands upon Social Security Ministers. Double provision of this sort is not the most effective use of the resources at my hand.
Mr. Tony Marlow: I congratulate my hon. Friend on coming to the House with quick and effective action which will stop a disincentive to

747
people taking jobs that are available and will also save the taxpayer money which should not have been spent and otherwise would have been spent. Will he tell the Chief Secretary to the Treasury to add another £100 million to the taxi meter, so that he is operating on behalf of the Labour party? Will he also assure the House that he will now take much more vigorous action to stop the payment of supplementary benefit to those many hundreds of thousands of people in the south-east of England who are not taking jobs when the jobs are manifestly available?
Mr. Major: I take note of my hon. Friend's important points. I shall certainly draw the attention of the Chief Secretary to the Treasury to the observations of the hon. Member for Derby, South (Mrs. Beckett).
Mr. Ron Leighton: Is not one problem the low level of earnings on the community programme? The average rate of pay, £67, has been virtually the same now for many years. As the community programme has to pay the rate for the job, the participants have to work fewer and fewer hours, so that there are very few now doing a full-time job. Many do only two days a week. Therefore, is it surprising that the industrial tribunals do not look upon those as proper jobs and award unemployment pay?
Should we not increase the level of earnings and upgrade the community programme, so that it is not a cheapskate programme but a proper, credible programme that would be so regarded by industrial tribunals?
Mr. Major: It is so proper and so credible that it tends to be substantially over-subscribed. The hon. Gentleman might also bear in mind the fact that the amount available as earnings under the community programme is substantially higher than the amount of unemployment benefit that would generally be payable. The community programme is popular and successful. I am sorry that the hon. Gentleman cannot see that.
Mr. John Watts: Does my hon. Friend agree that it would be totally unacceptable for someone employed part-time on the community programme to be treated more favourably than someone employed part-time in the private sector? Will he confirm that entitlement to family income supplement is not affected, just as he confirmed that entitlement to supplementary benefit is not so affected?
Mr. Major: I confirm my hon. Friend's latter point, and I entirely agree with his earlier observations.
Mr. Charles Kennedy (Ross, Cromarty and Skye): May I follow the point raised by the Chairman of the Select Committee on Employment, the hon. Member for Newham, North-East (Mr. Leighton), and take the Minister one step back? Surely the nub of the problem is the large proportion of people on the community programme who are there on a part-time basis. Will the hon. Gentleman look at the per capita funding of the programme? There seem to be some signs that the suburban criterion which is used as the base line is not relevant to the creation of full-time CP jobs in rural areas and inner cities which, for different reasons, have higher overheads. Will the hon. Gentleman ascertain whether the method used is sensitive enough to give an accurate figure for those two categories?
Mr. Major: I understand the points that the hon. Gentleman makes so cogently. I shall draw them to the attention of my right hon. and noble Friend the Secretary of State for Employment.
On the community programme, I am bound to reiterate what I have said : whatever defects the hon. Gentleman may fear exist in the programme or in its funding, it is substantially over-subscribed and very popular.
Mr. D. N. Campbell-Savours: Is not the reason why it was never envisaged that benefit would be paid in addition to earnings the fact that, when it was introduced, it was a full-time scheme based on full-time employment? Transforming it into a scheme of part-time working was a Government cut. Does the hon. Gentleman recognise that, although many people want to have a place on the community programme, they want full-time employment? The reform should come there. It should not be a matter of changing the rules in this way when they were set following a perfectly reasonable commission decision.
Mr. Major: The hon. Gentleman, as ever, is very ingenious in the points that he makes to the House. The underlying principle is the full extent normal rule, which precedes the community programme by some 25 years, so the hon. Gentleman's point is not valid.
Dr. Norman A. Godman: The Minister spoke about the community programme's success and popularity, but I should point out that a recent inquiry by the MSC in the west of Scotland revealed serious irregularities in the management of such a programme. Surely we need an independent inquiry into the management of such schemes.
Mr. Major: I understand that that matter is under investigation, but, to be frank, I am not sure that it arises from the statement that I have just made.
Ms. Clare Short: It is very difficult to believe the Minister when he says that this is such a long-established principle. Why have the social security commissioners found differently? They must understand the law and the principles only too well. All my hon. Friends who have spoken have pointed out that thousands of people on the community programme desperately want to work because they have been unemployed for so long. That means that they feel poor and cut off and that they cannot contribute to society. Most are taking home about £40 a week, which leaves them poor.
Does not the hon. Gentleman think that, as the commissioners have found that those people are entitled to a top-up on that money, they should have it? Should he not appeal against the decision and not change the law in the middle of the game? Is not the Government's real worry the fact that this rule means that many people on the community programme will again be counted in the unemployment figures? Is not the Government's major intention keeping the figures down rather than helping the unemployed?
Mr. Major: I cannot comment directly on the commissioners' decision in this case, which is the subject of an application for leave to appeal by the chief adjudication officer. Commissioners had previously specifically endorsed the full extent normal principle, as has the Court of Appeal.

Diabetics (Needles) and NHS Charges
4.33 pm
The Minister for Health (Mr. Tony Newton): With permission, Mr. Speaker, I should like to make a statement about the supply of disposable syringes to diabetics and NHS charges from 1 April 1987.
There are in this country an estimated 1 million people who suffer from diabetes, of whom up to 200,000 require regular injections of insulin to maintain the stability of their condition. While some receive disposable syringes through the hospital service, the majority receive only reusable syringes and needles, which is all that is available from their general practitioners on prescription.
As the House is aware, this situation has been widely perceived as unsatisfactory. We have received many representations from hon. Members, the British Diabetic Association and others about the disadvantages of the reusable equipment, and the greater comfort and convenience of disposables. This has been particularly strongly argued in respect of children.
I am pleased to be able to tell the House today that the Government have decided to make disposable insulin syringes and needles available on general practitioner prescription. Since diabetics are among the groups who are exempt from all prescription charges, this supply will, of course, be free. Discussions with the manufacturers to make the necessary arrangements, in particular to ensure an adequate supply at an appropriate price, will start immediately. Our aim will be to introduce the new supply at the earliest possible moment. The estimated cost may well approach £10 million in a full year.
As I am sure the House would think right, we have linked our consideration of this matter with that of the appropriate level of prescription and other charges for the forthcoming year.
First, taking account of the existing wide range of exemptions from prescription charges, which will continue to mean that some 75 per cent. of all prescriptions—including all those for pensioners—are free, we propose to increase the charges broadly in line with the cost of the service, balanced, however, to improve still further the value-for-money offered by the "season ticket" arrangements. The item charge will rise by 20p to £2·40, the four-monthly pre-payment certificate by 50p to £12·50, and the annual pre-payment certificate by £1·50 to £35. Full details are available in the Vote Office, and the necessary regulations will be laid shortly with a view to their taking effect on 1 April. Equivalent steps will be taken by my right hon. and learned Friend the Secretary of State for Scotland and my right hon. Friend the Secretary of State for Northern Ireland. We estimate that these increases will produce of the order of £10 million in 1987–88.
Secondly, there will be no change in dental charges. They will therefore remain on the basis set in April 1985.
Thirdly, on charges for private patients, the House will be aware that, in response to recommendations from the Public Accounts Committee about the structure and level of these charges, regulations were laid last month to allow health authorities in England and Wales from 1 April either to determine their own charges to recover costs or to adopt the model charges of a central reference list. I have today placed in the Vote Office details of these model charges. For amenity beds, they are 8·3 per cent. higher
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than the current charge, set two years ago. For private out-patients, they are 6·1 per cent. higher than that set last year. For private in-patients, the increase is larger at 17·6 per cent., to reflect not only increased costs but the PAC recommendations and the fact that private in-patients have shorter lengths of stay than NHS patients.
Fourthly, charges for overseas visitors in England and Wales will be increased in line with the central reference lists for private patients. Regulations to specify these new charges from 1 April will be laid shortly. Charges for private patients and overseas visitors in Scotland will also be announced shortly.
The context of the measures which I have announced today is an overall increase of expenditure on the NHS in England of over £1 billion in the coming year. Alongside the development of cancer screening services announced last week by my right hon. Friend the Secretary of State, I believe that the House will endorse the sensible ordering of priorities that now enables us to develop our services for diabetics, too.
Mr. Frank Dobson (Holborn and St. Pancras): I welcome without reservation the announcement that the Government have decided to provide free disposable syringes and needles for diabetics, as called for by my right hon. Friend the Leader of the Opposition. The Opposition always welcome the Government's conversion to the principle of providing national health services on prescription free of charge. Will the Government agree to make blood glucose test drips available free to diabetics, so that diabetics can carry out tests on themselves necessary for the proper control of their condition?
The need for the Government to be converted to the free provision of national health services is demonstrated by the Minister's suggestion that the free disposable syringes for diabetics are to be paid for by a £10 million increase in prescription charges. That is insulting to diabetics and to those who have to pay the higher charges. This is an increase up to £2·40 from the 20p which prevailed in 1979 when, as reported in that model of accuracy, the Daily Mail, when reporting matters to do with the Conservative party, we were told that the Prime Minister—then the Leader of the Opposition—had said :
"We have no intention of increasing"
prescription charges.
The increase is disgraceful. As the Minister knows, doctors believe that people are putting off treatment. Some doctors are resorting to the unfortunate practice of giving prescriptions covering a lengthier period so as to reduce cost. That is a reasonable thing for the doctors to do, but it is dangerous to have those drugs about. The Opposition welcome the decision not to increase dental charges and assume that the Government accepted our recommendations that the 1985 increase in charges discouraged people from seeking necessary treatment.
As to charges for private patients, the Government have got into the ridiculous position whereby, since 1979, there has been a substantial increase in the number of pay beds in NHS hospitals but fewer patients are being treated in them. The Government are now failing to recover the costs of those patients. Health authorities are now faced with the ludicrous dilemma of increasing charges and losing patients or cutting charges and losing more money. The Government have not yet resolved that dilemma.
We regarded charges for overseas visitors as a squalid measure when they were introduced. We were told that

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those charges would raise £6 million a year. I doubt whether they have yet raised £6 million in all the time that they have been in operation. Those charges have only damaged this country's reputation as a hospitable place for people to visit.
Mr. Newton: To take those points in reverse order, I believe that most hon. Members will regard charges for overseas patients as entirely sensible and justified. Those charges have raised about £6 million—albeit less than we originally hoped—which would not otherwise have been available to the Health Service. The hon. Gentleman has persistently failed to recognise that point. As to private patients, the Government are concerned to respond to the Public Accounts Committee and to ensure that costs are recovered on a better basis than in the past. That is the basis of the proposals.
On dental charges, there is no evidence to support the propositions put forward by the hon. Gentleman. The number of courses of dental treatment has continued to rise. We seek to check prescribing for long periods through the normal operation of the administration of prescriptions and their control. Lastly, the cost of blood-testing insulin strips would be roughly the same as the cost of supplying needles which I announced today. Although that is something we would like to do in due course, we have come to the conclusion that the supply of needles should be given priority at this point. The hon. Gentleman's whole response was typical of the Opposition, who relentlessly promise everything and will never face up to the need to pay.
Sir Peter Hordern: I congratulate my hon. Friend on his announcement about disposable needles, which will do more for those who suffer from diabetes than almost any other action apart from the supply of blood-testing insulin strips, which he also mentioned. This campaign has been continuing for a long time. The Minister's announcement is all the more welcome news for that and demonstrates beyond doubt that the Government listen and do what is right for those who suffer most.
Mr. Newton: I am grateful to my hon. Friend and I pay tribute to his efforts to bring about the decision which I have announced today.
Mr. Simon Hughes: I welcome the announcement about disposable syringes for diabetics. The Minister will accept that, not least among the campaigners for that change over a long time, both to his Department and to the Prime Minister, has been my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith).
Does the Minister not accept that the increase in prescription charges of over 200 per cent. since 1979 is bound to mean that some people are deterred from going for a prescription when they need one? Does he not accept that last year the estimate was that by putting up the charge there would be a £30 million loss because of over-prescribing to compensate and that there may well be a similar loss to the Health Service this year?
In relation to private patients, in addition to this change, which is less than the increase in prescription charges, are the Government satisfied that the so far unrecovered money will be recovered? Is he aware that in the health authority in Camberwell. in my area, the figure
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was about £83,000 in the last full year and over £100,000 in unpaid private patients' fees in the regional health centre?
Mr. Newton: It is my growing experience in this Department that there are few policies that can he undertaken without problems but the income we have gained from prescription charges has been more than matched by the improvements in various services which have been made possible.
As to private patient charges, the aim is that costs are properly and fairly recovered. That has not been done effectively in the past and we are now seeking to change that.
Mrs. Elizabeth Peacock: I welcome my hon. Friend's statement. There are many diabetics in my constituency who will welcome this measure greatly, including the parents of a three-year-old boy, whom I recently wrote about, and a young lad who will now find it much easier to continue in his normal daily employment with disposable syringes rather than having to bother with the ones that have to be sterilised.
Mr. Newton: It is the children that I am particularly pleased about. I am glad to have been able to do something to respond to my hon. Friend's efforts in this field.
Dr. M. S. Miller: May I extend to the Minister a welcome for his decision on the supply of disposable syringes. It would have been ludicrous not to supply diabetics with disposable syringes when drug addicts are to be treated to that so-called privilege. May I impress upon the Minister the necessity of these disposable syringes being disposed of and not used again. In today's context it is essential that there be no contamination and that patients should be given a clear indication that the disposability of the syringes and needles is absolute, and that they cannot be used again.
In connection with the increase in prescription charges, many people are exempt but a number of people are still put to the very considerable expense of paying more and more. Would it not be better for the Government to consider methods of decreasing rather than increasing the prescription charges?
Mr. Newton: On the second point, it is precisely to assist with that possible problem, which I recognise, that the hon. Member will find that the increase in the season tickets is only about half, in percentage terms, the increase in the per item charge. We think that is a sensible approach. As to disposable needles, we shall be giving further consideration to whether extra steps need to be taken to safeguard their disposal.
Mr. Graham Bright: May I ask my hon. Friend to accept grateful thanks from every diabetic and certainly from the parents of young children and young people in general for his announcement? May I ask that this measure be introduced as soon as possible and that, where young people and children are concerned, clear instructions are given about disposal, because otherwise there might be other problems? With that in mind I welcome the Minister's statement.
Mr. Newton: The answer to the latter question is yes The answer to the former question is yes, as soon as possible, but we are talking about tens of millions of syringes and needles and we need to be sure that the supply is available.
Mr. Laurie Pavitt: While the Minister claims 75 per cent. exemptions, has he also read the report of the Pharmaceutical Society, which shows that one in two of every FP10 is paid for? With regard to the increase in the season ticket, is it not appalling that people who are chronically sick with angina or Parkinson's disease—young people—may be paying this extra burden for the rest of their lives? Young women who have had mastectomies and chemotherapy are paying £2·40 every three weeks or £35 a year. Is this not really the height of meanness?
On overseas charges, is the Minister aware that, although he takes the credit for income, he does not take the debit for extra administrative costs that every hospital's in-patient and out-patient departments must bear? This has a racist impact. Those who are questioned the most are the ones with a different skin pigmentation.
Mr. Newton: I am sure that the hon. Gentleman knows—he has studied the matter carefully — that we have issued guidance to health authorities which is designed to avoid the problem upon which he has touched and to keep administration to a minimum. On prescription charges, I should not at this stage wish to hold out hope of reopening the exempt list. It is precisely for reasons of the type upon which the hon. Gentleman has touched that I have taken steps to keep down the increase in season ticket prices.
Dr. John G. Blackburn: Will my hon. Friend accept the warm and generous appreciation that has been expressed by all hon. Members on behalf of diabetic patients? In addition, will he seriously consider the provision of blood glucose treatment and the provision of Nova pens, which are most important in treating diabetics, bearing in mind the tremendous savings to the Health Service by not having such people in hospital? Will he accept that his statement will be greeted with acclamation?
Mr. Newton: I am afraid that I cannot give my hon. Friend an immediate yes to either of his specific questions, but we shall certainly keep his points under sympathetic review.
Mr. Geoffrey Lofthouse: Is the Minister aware that his statement will be most welcome, certainly throughout my constituency and in Dr. White's clinic in my area? Has he considered that the costing is only for syringes that will be disposed of immediately after they have been used? Has he also taken into consideration the saving that will be made by non-disposal of syringes?
Mr. Newton: I have certainly heard it argued that the cost will turn out to be lower because some people will use syringes more than once. The hon. Gentleman will understand that I do not wish to base a Government policy proposal on the assumption that people will use syringes more often than originally intended.
Mr. Geoffrey Dickens: The Minister will know from the dozens of letters that I have sent him from diabetics and their children that we welcome such a compassionate move by Her Majesty's Government. We recognise that prescription charges have gone up, but my hon. Friend has announced that 75 per cent. of all drafted prescriptions do not need to be paid for. That is an important element.
Mr. Newton: I am suitably grateful to my hon. Friend, and likewise pay tribute to his efforts on behalf of his constituents in this matter.
Mr. Gareth Wardell: I am pleased also to associate myself with what other hon. Members have said in welcoming the Minister's announcement. None-the-less, it is a pity that the announcement was not made at the same time as the announcement about free disposable syringes for drug addicts. On 3 November, the Under-Secretary of State wrote to Sir John Nabarro of the British Diabetic Association, stating that there were strong arguments for making blood monitoring equipment available on prescription. This afternoon, the Minister said that the priority must be disposable syringes. Will he give hon. Members some idea of how long it will be before the other important matter will be put right?
Mr. Newton: I cannot give a definite commitment as to time. I have made it clear that the Government are aware of the point and will continue to keep it in mind.
Mr. Robert Atkins: I declare an interest as a parent of a child who is a diabetic, and has been for about eight years. On her behalf and on behalf of many other children and adults who suffer from the disease, I inform the Minister that we are grateful for the way in which he has listened and heard representations from many hon. Member. Does he agree that it makes nonsense of the continuing cries from various parts of the country that the Government do not care? The Minister's statement demonstrates to all concerned that we care, that we listen to representations and that we act.
Mr. Newton: I entirely agree with my hon. Friend. Frankly, not the least of my pleasures this afternoon is to know that I have helped to serve a cause in which he is greatly interested.
Mr. Ernie Ross: Does the Minister accept that the decision was absolutely necessary because of the furore caused by the fact that drug addicts were to be issued with free syringes, whereas those who were born with an illness over which they have no control were prejudiced? Does he accept also that it is nonsensical to talk about giving massive tax handouts when such an announcement is likely to bring support from all hon. Members? Will he discuss with his right hon. Friend the Chancellor of the Exchequer a better use of resources rather than giving tax handouts?
Mr. Newton: My right hon. Friend the Chancellor of the Exchequer has readily agreed to large increases in resources going to the Health Service over a number of years. I am grateful to him for that. Of course I am aware of the connection that has been made in the argument, but this measure stands on its own merits and could rightly have been done, and has been done, in its own right.
Sir Hector Monro: I thank my hon. Friend and the Scottish Office Ministers for urgently reconsidering a matter that many hon. Members have raised. Does he understand that many diabetics will appreciate the decision that has been made?
Mr. Newton: I am happy to pass on my hon. Friend's remarks to the Under-Secretary of State for Scotland, who is sitting close by me. I know that he will be grateful.
Mr. A. J. Beith: In warmly thanking the Minister for his decision may I associate with

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those thanks the Under-Secretary of State for Health and Social Security — the hon. Member for Derbyshire, South (Mrs. Currie)—who replied to my Adjournment debate on this issue and added her efforts? I assure the Minister that costs could be substantially lower than he now supposes if admissions to hospital are fewer because better control is exercised through the more accurate plastic syringe. I ask him to be a little clearer about how quickly he hopes to get the measure into operation.
Mr. Newton: No one will be more pleased than I if the cost proves to be lower. It will make it much easier for us to do some of the other things that people have mentioned. On timing, I do not think that, at the moment, I should like to go beyond early summer. We shall urgently discuss the matter with manufacturers, but there is no point in saying that something will happen until we can say that supplies are available. I am glad to associate my hon. Friend the Under-Secretary of State, who I am sure deserves thanks on this occasion, as on all occasions.
Mr. Andrew Rowe: Given the cynical propensity of the Opposition to misrepresent everything that the Government do, will my hon. Friend assure the House that, when he puts out publicity about new prescription charges, he will reiterate the many categories of people who do not have to pay?
Mr. Newton: I certainly have no intention whatever of hiding our light under a bushel.
Mr. Nicholas Winterton: I thought, Mr. Speaker, that I would have to strip off like the Tamils at Heathrow to be noticed. [Interruption.] The Minister is considered by Conservative Members and by millions of other people to be one of the most caring — [Interruption.]
Mr. Speaker: Order.
Mr. Winterton rose—[Interruption.]
Mr. Speaker: Order. Mr. Winterton.
Mr. Winterton: I am sorry, Mr. Speaker, if you find it difficult to hear me. I was saying that my hon. Friend is considered by his colleagues and by millions of other people as perhaps one of the most honest, courageous and caring Ministers. His decision to provide free disposable syringes and needles to diabetics is warmly to be welcomed, although such a move is only just, bearing in mind that we provide free replacement needles to drug addicts. Diabetics deserve consideration and sympathy more than drug addicts do. Will he highlight to the people of—[Interruption]—
Mr. Speaker: Order. The hon. Member might as well get it right.
Mr. Winterton: I apologise, Sir. Because of the polemics from the Opposition, will he highlight to the people of this country the fact that 75 per cent. of all prescriptions are provided free and, therefore, that the benefit of a free prescription system is available for all who need it?
Mr. Newton: I am grateful to my hon. Friend for re-emphasising that important point. As for the earlier part of his question, I am tempted to ask whether I can now quit while I am ahead.
Mr. Derek Conway: I hope that my hon. Friend will accept that the Shropshire
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diabetic association will greatly welcome his statement this afternoon, along with the 60 colleagues who very generously signed my early-day motion. Is it not the case that the more efficiency that my hon. Friend and his colleagues can introduce into the National Health Service the sooner the day will come when we shall also have a similar encouraging and welcome statement on testing strips?
Mr. Newton: I very much hope that the forecast will prove to be true, and I should like to pay tribute again to my hon. Friend, of whose early-day motion we have been very conscious.
Mr. Eric Forth: Along with so many other hon. Members, I welcome my hon. Friend's announcement about needles for diabetics, particularly since their condition is not brought on by anything that they have done.
In that light, will my hon. Friend reconsider his decision to give free syringes and needles to drug addicts who impose their own condition on themselves? Will he talk to the Minister of State, Home Office, who is attempting to reduce drug addiction, compare notes with him and ask himself what his Department is doing and whether it ties in with what the Home Office is trying to do?
Mr. Newton: My hon. Friend will probably have heard me resisting the straightforward parallel that was implied in an earlier question. I shall say only this about pilot schemes for needle exchange in relation to drug abuse: intravenous drug abuse and the sharing of needles is one of the main ways in which AIDS can be spread into the heterosexual population, and it is vital that the Government should do everything possible to reduce that risk.
Mr. Harry Greenway: As some of my constituents have had to pay £10 a month for needles for diabetic usage, I warmly welcome what my hon. Friend has said. Will dentists be paid a fee for examining people when no treatment is required? In order to obtain a fee, I believe that in some cases fillings and other treatment is given unnecessarily.
Mr. Newton: Having announced no increase in dental charges, I think that I ought to confess that I have not focused on that point very much this afternoon, but I undertake to look at my hon. Friend's point.
Mr. Patrick Thompson: I join the many hon. Members on both sides of the House in warmly welcoming the Minister's announcement about free disposable syringes. I have received very many representations from diabetics and their relatives and friends in Norwich. Obviously they will welcome wholeheartedly this announcement. Also I join hon. Members on both sides of the House in asking my hon. Friend to think again as soon as possible about blood glucose testing strips and their inclusion on the prescription list.
Mr. Newton: I am grateful to my hon. Friend. I note what he said in the latter part of his question.

Diabetics (Needles) and NHS Charges

  NEW MEMBERS
  The following Member made the Affirmation required by law:
  Mrs. Rosemary Susan Barnes, for Greenwich.

Medical Act 1983 (Amendment)
5.3 pm
Mr. Nigel Spearing: I beg to move,
That leave be given to bring in a Bill to amend section 36 of the Medical Act 1983 to enable the Professional Conduct Committee of the General Medical Council to exercise greater discretion in respect of conduct which they judge cannot be regarded as acceptable professional conduct.
The Bill arises from the tragic and harrowing experiences of two lady constituents of mine in Canning Town and Silvertown, respectively. The Bill has been printed and distributed in two previous Sessions, and it was opposed by the General Medical Council and the then Minister for reasons that they have given.
The Bill has been prepared after extensive consultation with medical institutions and bodies, including the General Medical Council. Last year, the council of the British Medical Association passed a resolution that it would not oppose the Bill. I am glad to see in their places the two hon. Members who are sponsoring the Bill with me, my hon. Friend the Member for East Kilbride (Dr. Miller) and the hon. Member for Cambridgeshire, South-West (Sir A. Grant). He and other hon. Members have examples of other tragic cases that highlight the need for amendment of the law. The hon. Gentleman explained his tragic case to the House on 25 March 1986. I am also glad to see the Under-Secretary of State for Health and Social Security, the hon. Member for Derbyshire, South, (Mrs. Currie), on the Treasury Bench.
This is not kite flying or a testing of the temperature of the ten minutes rule procedure. In 1982, young Alfie Turner of Canning Town revealed, through his untimely death, an otherwise unknown and unsuspected gap in the legislation. I believe that this private Member's Bill, which consists of only two clauses and eight lines, is an excellent way of putting right the law in this case and that it is a proper use of this procedure.
It is not a matter of doctor bashing. The overwhelming majority of the members of the medical profession are dedicated and skilful, and I pay tribute to them. Indeed, at the age of 13 I owed my life to the work of a general practitioner who operated on me in a cottage hospital. But for that, I might not be here. Because of the very nature of its work, the profession needs protection, as do the public, from that tiny proportion of doctors whose conduct has proved to be unacceptable. The task of dealing with this problem falls to the General Medical Council, which was set up as a self-regulating professional body under section 36 of the Medical Act 1983.
Through its professional conduct committee, the GMC is able, by statute, to administer the mildest of sanctions at its legal disposal — that of conditional registration. There is an elaborate series of standing orders and rules that assist and are auxiliary to the legislation, but the General Medical Council can apply those sanctions, particularly the mildest of them — conditional registration—only if a doctor is found to be guilty of serious professional misconduct.
Even if professional misconduct is proved, or even if, according to its own rules, that conduct cannot be regarded as professional, the General Medical Council has no sanction. In the case of the late Alfie Turner of Canning Town, the facts alleged were proved. The doctor had failed to treat, to call an ambulance and to be courteous to the family of a seriously ill boy who was later found to be in
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a coma. Unfortunately, he died five days later. I am not suggesting that he would not have died had there been treatment immediately. Nevertheless, they were found as facts. The General Medical Council found that those facts were unacceptable, but did not amount to serious professional misconduct. Therefore, no action could take place.
A second, and rather horrific, case occurred in Silvertown some time later and, as a result, the doctor was found guilty of serious professional misconduct and appropriate steps were taken. But for that—two and a half years after the first case — the doctor would still have been practising.
Most hon. Members and others might be surprised that the hurdle of serious professional misconduct must be surmounted before constructive and remedial steps can be taken. The law at present does not permit appropriate action that could protect the public and the profession. The purpose of my Bill is to give discretionary power to the GMC so that it can impose conditions on a doctor where its professional conduct committee judges that the doctor's conduct is unacceptable. I use that term because it is already used by the GMC in respect of its own internal processes, and was accepted in the case of Alfie Turner. Although it found the doctor's conduct unacceptable, it did nothing about it. But for the bravery of a lady and her husband in Silvertown, in particularly distressing circumstances, in bringing the second case, that doctor could be practising today.
I hope that the House will find that position unacceptable. Why then does the GMC oppose my proposals? It gave its reasons in correspondence to a former Minister. First, it considers that its powers are adequate. As I and others have demonstrated, the events show the opposite.
Secondly, the GMC fears the substitution of the greater charge for the lesser. But do we have only dangerous driving? It not driving without due care and attention a useful and proper measure? In any case, surely Parliament and the public are more concerned with proper preventive and remedial measures than any technical difference between serious and other professional misconduct?
Thirdly, the GMC says that it is impracticable or inappropriate to attach conditions to a doctor's registration. The GMC already has that power and it uses it, as it has done for so many years. In my proposal, the use of it would be optional and at its discretion.
Recently, in notes sent to Members of Parliament, the GMC states that it is not conceivable that it could equitably examine all cases of alleged unacceptable conduct in relation to 100,000 doctors. The professional conduct committee could not do that. There is already an understandably elaborate preliminary process.
My Bill, as published, would mean that only doctors whose conduct was judged unacceptable by the professional conduct committee could be placed on conditional registration. In the same notes that were sent to hon. Members, the GMC states:
"The Council's primary task is, and always has been, of informing and protecting the public."
If that is so, it must not only be done, but be seen to be done. The Merrison report of 1976, Cmnd. 6018, on which much of the current legislation was based, in paragraph 10, says:
"We have suggested that the regulation of the profession can be looked upon as a contract made between the public

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and the profession. It is important to understand in this context that the GMC is merely the instrument for the proper supervision of this contract and that it derives its authority, and indeed its being, from legislation. The legislature—that is, Parliament—acts in this context for the public, and it is for Parliament to decide the nature of the contract and the way it is to be executed."
On that, I rest my case in the hope that the Bill can proceed without opposition or objection.
Question put and agreed to.
Bill ordered to be brought in by Mr. Nigel Spearing, Dr. M. S. Miller and Sir Anthony Grant.

Medical Act 1983 (Amendment)
  MEDICAL ACT 1983 (AMENDMENT)
  Mr. Nigel Spearing accordingly presented a Bill to amend section 36 of the Medical Act 1983 to enable the Professional Conduct Committee of the General Medical Council to exercise greater discretion in respect of conduct which they judge cannot be regarded as acceptable professional conduct: And the same was read the First time; and ordered to be read a Second time upon Friday 13 March 1987 and to be printed. [Bill 94.]
Orders of the Day

  Local Government Bill
  5.19 pm
  The Minister for Local Government (Dr. Rhodes Boyson): I beg to move, That the Bill now be read a Second time.
  This Bill contains four measures. First, it contains provisions to prevent authorities from using advance and deferred purchase schemes to avoid the Government's capital expenditure controls and store up major future commitments. Secondly, it gives local authorities powers to provide financial assistance to the private sector to provide rented housing accommodation. Use of the powers will be subject to the agreement of my right hon. Friend the Secretary of State for the Environment. Thirdly, it makes minor adjustments to the arrangements for paying block grant relating to expenditure on further education. Finally, it contains measures to make the land register system more effective.
  This is a further local government Bill. It is the same cast, but a different play. We do not move around. so we cannot say that we are in rep. However, the House must blame, if it blames anybody, a minority within local government for the Bill. Particularly in the case of the provisions dealing with advance and a deferred purchase, we have been forced to take action because of the breakdown, from a small minority of the local authority side, of consensus. There used to be an acknowledgment by local government that central Government govern in the national interest, but that has been challenged by a handful of reckless authorities. This handful of authorities is tarnishing the reputation and honourable traditions of the majority.
  Central Government take a view of what can be afforded by way of public expenditure. I remember that. in 1976, when I sat on the Opposition Benches, the Labour Government, under pressure from the IMF, had to tell local government that it must reduce its expenditure substantially across the board. It is difficult to do this when budgets have already been set, but local government made significant reductions in its spending because it automatically responded to central Government priorities when it came to safeguarding the national economy.
  By the same token, the then Government felt able to ask for cuts. They did not have to wield the weapon of statute. It is a sad reflection on what has happened in some parts of local government in recent years that such consensus has disappeared. Nowadays, it is necessary to bring the weight of Parliament to bear before any local government worthy of the name is carried out in certain parts of London under hard Left control, including in my borough of Brent. I see the right hon. Member for Brent, East (Mr. Freeson) here. This also happens in other major cities.
  Let us look at this against the background of advance and deferred purchase schemes. Such schemes have a long and reasonably respectable history, but recently they have been transmuted by a minority of authorities into creative accounting devices as a means of evading the Government's spending controls on a grand scale. In that guise, those devices are borrowing masquerading as expenditure.

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  My right hon. Friend announced on 22 July, as hon. Members will remember—that was the day in 1918 that the Allied forces crossed the Marne in France—that he would be introducing legislation to stop this abuse. These schemes make use of a bank or other intermediary to transfer expenditure artificially from the year when the work is done, and is normally paid for, to an earlier or later year. The interest is rolled up and the first payments deferred, usually for at least three years.
  If indulged in on any scale, as in some authorities, the devices store up massive problems for ratepayers, regardless of future election results. The recent Audit Commission report on the management of London's authorities identified eight boroughs that have entered deferred purchase arrangements amounting to over £550 million. The Government deplore the use of any creative accounting device that leaves ratepayers facing huge bills in the future. We consider it reckless and imprudent. It mortgages the future to save people facing up to reality now.
  Some authorities are relying on an incoming Labour Government to bail them out of the financial consequences of using these devices. They will have to wait a long time. However, out of interest, let us spend a few moments exploring just what the Labour party would do if it were in power. I trust that this afternoon we shall hear what the Labour party would do about creative accountancy as it is now and as it may be if other authorities went on with it and we did not legislate.
  In a speech to the Association of Metropolitan Authorities' annual conference last year, the hon. Member for Copeland (Dr. Cunningham), whom I see in his place, made an important statement. Far be it from me to take biographical details from him, but I shall honour him with quotations. I have the full speech here, with the correct page marked.
  Mr. William Cash: My hon. Friend used the expression "creative accountancy", and we have come to hear that expression a great deal. Does he not agree that, not only in the context of the Bill but in many other sectors of accountancy, the expression "creative accountancy" means nothing more or less than cheating?
  Dr. Boyson: It is financial cheating in so far as money that should be paid that year in total is rolled forward for somebody to pay in a minimum of three years, and sometimes up to 10 years, later. I have illustrations of the number of years in some cases. Such authorities are living off the future generation and taking on commitments for which they will not have to foot the bill. That is wrong and the Government deplore it. I was quoting from a speech made by the hon. Member for Copeland to the AMA. I am not sure where the conference was.
  Dr. John Cunningham: In Newcastle-upon-Tyne.
  Dr. Boyson: That is a good north-east location.
  I shall not read all that the hon. Gentleman said, because I do not have the time. If the hon. Gentleman wishes a copy of his speech, I can provide it to him. He said :
  "There can be no blank cheques, no easy money."
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  No hon. Member would disagree with that, and perhaps we can take it as the text for our debate today. So far, so good. That is an admirable sentiment, but what does it mean in practice?
  We get a further clue from the Labour party's latest policy document, which I have with me, unleashed at its local government conference in Leeds recently. The document proposes manipulating the control system to ease the problem of the handful of reckless authorities that have indulged in these schemes. Page 51, paragraph 7·3—I like to be helpful to hon. Members by providing information — of the Labour party's document "Local Government Reform in England and Wales", which is a draft consultative paper, says :
  "The sensible solution is to recognise that capital expenditure under deferred purchase arrangements has already taken place."
  Those two quotations are completely different. Would a Labour Government be legislating as we are against creative accountancy? If we were in opposition, we would support such moves because we also do not believe in blank cheques.
  Mr. Jack Straw: I am grateful for the opportunity to come back on this point. The direct answer to the questions is that in government we would review the situation. [Laughter.] There is no point in laughing at this, as Conservative Members are. We do not know, and neither does the Minister, the full extent of indebtedness of individual local authorities until that indebtedness arises in a particular year.
  Secondly, I should have thought that the Minister would approve of the point that the expenditure incurred should be counted in the year in which it takes place rather than in any future year. Thirdly, if these authorities are as reckless as the Minister suggests, how does he explain why the Government-controlled Public Works Loan Board has not been reducing its lending to London boroughs such as Haringey? It has increased lending to these boroughs quite dramatically in the past four years so that, for example, in Haringey's case, 50 per cent. of its debt four years ago was accounted for by the board while today 82 per cent. is accounted for by the board. Why have the Government increased their lending to such boroughs if they have been so reckless?
  Dr. Boyson: I am delighted that the Labour party, if in government, would be considering what to do. The hon. Gentleman is right to say that the document states that the capital expenditure will be charged for that year, but what will happen in future years? Will extra money be given to the authorities or will they have to contain their budgets?
  Mr. Reg Freeson rose—
  Dr. Boyson: The right hon: Gentleman may not like that, and I gladly give way.
  Mr. Freeson: Earlier on, the Minister said that there are situations—there have been plenty in the past and there are plenty today—when the use of the deferred purchase procedure is quite reasonable and produces good results. I am almost quoting the phrase that he used. Is it not perfectly possible for individual local authorities to work out, with the help of the director of finance, a likely programme of capital spending over a given run of years—providing the Government do not interfere too much with that spending—so that authorities may judge the profile of expenditure?

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  That spending may go up or down over a period. To an extent, it is possible to adopt the procedure to even out — not to always increase — the burdens over a run of years. I used that method many years ago when I was a chairman of finance in my local authority. No great harm, if any, was done, but a great deal of good was done.
  Dr. Boyson: When local authorities used that procedure responsibly—not involving great amounts—it was fair enough, but things have run amok. Hon. Members will recall the article in The Guardian on 19 November 1986. The hon. Member for Newham, North-West (Mr. Banks) now reads the Sunday Telegraph, but I read The Guardian. Under the headline:
  "Councils facing £2 billion catastrophe after election, Labour warned",
  John Carvel, the political correspondent, wrote:
  "This problem of 'suppressed' expenditure was likened yesterday by one member of the report team to a financial time bomb which could explode on a Labour government if Neil Kinnock wins the next general election."
  I have a list of deferred purchase schemes undertaken by local authorities and known to the Department of the Environment. It includes £100 million borrowed by Hammersmith, £100 million borrowed by Camden, £100 million borrowed by Sheffield and £100 million borrowed by Manchester. Nothing will be paid back for three years, and that will leave a bill—
  Dr. Cunningham: What about Torbay?
  Dr. Boyson: Torbay is not on that list, but I would welcome any information from the hon. Gentleman.
  The right hon. Member for Brent, East (Mr. Freeson) may say that the procedure has an honourable history, but nobody knows the extent of the spending at present; that is why the Government are stepping in. The hon. Member for Blackburn (Mr. Straw) accepted that, if the Labour party was in government, it would be considering the problem. We are all concerned about the problem. The loans must be paid for by the ratepayers. Where will the banks rushing to put up money for the schemes stand when the burden turns out, as it may in some cases, to be more than ratepayers can reasonably be asked to bear?
  I wish to reiterate what my right hon. Friend the Secretary of State for the Environment said in answer to a written question from my right hon. Friend the Member for Guildford (Mr. Howell) on 19 February. He said :
  "A local authority's debt and its creditworthiness have always been its own responsibility. The Government do not stand behind local authority debt." — [Official Report, 19 February 1987, Vol. 110, c. 743.]
  That type of recklessness must be curbed. To deal with the problem, clause I and schedule 1 of the Bill define the time at which an authority will be treated as incurring expenditure against its spending ceiling by reference to the time at which works are carried out, regardless of when payments are actually made. The new provisions apply to all works carried out under arrangements to which an authority becomes committed after 22 July 1986.
  Mr. Tony Banks: I wish that the Minister would cease to use the pejorative term "reckless" when referring to arrangements that have been made by local authorities with respectable lending institutions. When a bank decides whether to lend money to a local authority, it takes into account all the factors, including the ability of that borough to pay back the
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  money that it borrows. Who is the Minister accusing of recklessness — the local authority that borrows or the bank that lends?
  Dr. Boyson: Every bargain requires two sides — the lender and the borrower. The reason I repeated what my right hon. Friend said is that we will not stand behind that form of local government debt.
  Mr. Straw: The Government never have.
  Dr. Boyson: It is a good thing for all to know. I am glad that I have the unanimity of the House, as that is always pleasant.
  I consider it reckless for local authorities to undertake commitments that they cannot meet at the time and roll them forward on to future ratepayers five or 10 years ahead. The ratepayers will have to pick up the bill from the limited income of the local authority and pay for what is being spent at the present time.
  Mr. Banks: I am fortunate to be a member of the Treasury and Civil Service Select Committee. When one studies international debt, it is apparent that a number of the banks that lend to local authorities in London arid around the country also lend to Third-world countries. The banks often lend at a rate that is grossly in excess of their capital. Who is being reckless — the country that borrows or the bank? Who is being reckless—the local authority or the lender, the bank?
  Dr. Boyson: I have put on record my views and those who read them must learn. I must point out the recklessness of one London borough that follows an antiapartheid policy, but which has borrowed from a bank in Paris, which is financed from South Africa. Very odd things are going on. The hon. Gentleman may consider that reckless—
  Mr. Banks: Unwise.
  Dr. Boyson: The regulation-making powers will enable my right hon. Friend to make exemptions from, or to modify, the provisions in the Bill if that is seen to be necessary. My right hon. Friend has promised an exemption to allow authorities to continue to use deferred purchase schemes prudently for their original purpose—
  Mr. Freeson rose—
  Dr. Boyson: I must finish this—I am not finishing a sentence, let alone a paragraph, at the moment.
  The original purpose was an occasional, one-off project that would be difficult for a local authority to accommodate within its spending ceiling for a single year. The exemption will be restricted to one project, not exceeding a given value, per authority in a specified period. I will announce the precise details of the exemption during the passage of the Bill. I am willing to give way to the hon. Member for Brent, East if he till wishes to intervene.
  Mr. Freeson: I am grateful to the Minister. I accept that the Minister intends to introduce the details during the Committee proceedings, but it would be useful to have some idea of the criteria that will be used. If there are cases where the excessive use of such procedures builds up an indebtedness in a few years, well above reasonable levels, that is not very prudent. However, there will be other cases where there is likely to be a downturn in basic expenditure

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  on capital programmes and it would be perfectly reasonable for an authority to undertake such schemes. Is that the type of guidance that will be issued?
  Dr. Boyson: I have listened to what the hon. Gentleman has said. I cannot go into more detail. We are concerned about small authorities facing large expenditure in one year. Such expenditure may be easily covered by a large authority through its rate income, but in the case of a small authority the cost must be spread over a number of years. We are bearing in mind the fact that a small district council may have heavy capital expenditure in one year.
  I turn now to the provisions in the Bill that deal with the financial assistance for private housing and the statement made on 5 February by my hon. Friend the Minister for Housing, Urban Affairs and Construction. It is the Government's wish to widen the variety of landlords providing rented housing. Our aim is to increase the choice for the substantial number of people who want or need to rent their homes. We want to re-establish the right to rent.
  In many areas, the supply of privately rented accommodation has simply dried up. In 1951 there were 6 million privately rented homes in England, whereas today there are 1·6 million. The numbers are declining by an estimated 70,000 a year.
  A combination of statutory rent controls and private landlords' inability to compete with other subsidised forms of housing has forced many of these landlords out of business. In some areas, local authorities are virtually monopoly suppliers and their provision of housing has some of the worst characteristics of old monopolies. There is restricted access to rented housing and little choice. Tenants get a low standard of service and poor value for money. That is not true of all authorities, of course. Some manage their housing effectively and I pay a tribute to them. [Interruption.] Hon. Members may disagree, but I visited a council housing estate in my constituency on Sunday and heard the complaints of the tenants. They took advantage of my coming and showed me rooms that were continually damp, and other things, and they had written to their authority.
  I realise that there have been bad landlords, but in the north, from which many hon. Members come, the old ambition of the Lancashire working class was to retire on three houses. They would live in one and spend their old age on the income from the other two. Since the House insists on more information, I will tell hon. Members that I grew up in 18 Hoyle street in a house owned by a person who lived five doors further up the road. My father is dead now, so I cannot find out what we paid, but we lived in harmony with the landlady. The house was whitewashed every year and was in a very much better condition than many council houses that I have seen.
  Mr. Straw: The Minister said that it was the ambition of Lancashire working-class families to retire with three houses, in one of which they lived, with the other two from which they gained income. That could only ever apply to one in three families. What about the other two out of three families who lived in private rented accommodation?
  Dr. Boyson: I will answer mathematically. They had to save up to the age of 40 to 50 before they could buy their houses. So the first 50 years were spent in the two out of three group and they then moved into the one out of three
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  group. The average age of death was 75 so it was only necessary to buy at the age of 50, and 50 was known as the house-buying age. That may not be understood by all hon. Members.
  Mr. Michael Brown: Is not the point in answer to the question of the hon. Member for Blackburn (Mr. Straw) that there are hundreds of thousands of young people who are here in London homeless and who want access to rented housing accommodation, and that they are the other two thirds who yearn for the day when this Conservative Government will deregulate new lettings?
  Dr. Boyson: I am very grateful to my hon. Friend, for whose clarity and strength of view on this matter I have great respect.
  We want to give tenants greater choice. We want less municipally provided housing and more rented housing provided by other agencies. This Bill will help to achieve the second of those objectives. It gives local housing authorities a new and specific power to give financial assistance to private landlords, including housing associations. The aim is to stimulate the provision of rented accommodation by the private sector, using predominantly private sources of finance.
  I see this as an important step in developing the role of local authorities as "enablers" rather than providers of housing. That is the same attitude as we have on competitive tendering. They provide the services, but they do not need to run them. Under this new power, they can use public money to draw into the provision of rented housing larger amounts of private investment. Every pound of public investment can lever two or three pounds of private investment. They can help the private sector to develop rented housing schemes which might otherwise not have been economically viable, and they can help tenants by keeping rents down to affordable levels. The most appropriate form of assistance may be annual revenue grants: these would enable an authority to make its assistance conditional on the maintenance of acceptable standards by the landlord. But other forms of assistance may be appropriate, depending on the circumstances, and the Bill provides for this.
  The financial help which will be possible under this Bill is aimed at the new breed of responsible landlords who are now beginning to let under the assured tenancy scheme—landlords who have been approved by the Secretary of State. They comprise housing associations and offshoots of building societies and pension funds, as well as property companies and developers. The all-party support which the newly extended scheme has attracted for assured tenancies in recent months is a great fillip to our efforts to rehabilitate the reputation of responsible private landlords. We think that financial assistance given under the new power might be particularly appropriate for the support of developments involving assured tenancies.
  I urge all authorities to make the maximum use of the new power. This is, however, subject to an important proviso. As my hon. Friend the Minister for Housing, Urban Affairs and Construction said when announcing these proposals to the House on 5 February, we do not intend that financial assistance should be used simply to featherbed the private sector. Nor would we want the new provision used as a device to provide more municipal housing in a private sector guise.

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  The Bill therefore provides that the use of the new power and of any existing powers which are capable of being used for similar purposes should be subject to the consent of my right hon. Friend the Secretary of State. The criteria which we propose to use when considering applications for consent were set out fully in a consultation document sent on 5 February to all local authorities and a variety of other interested bodies. We have invited views on these criteria and on other aspects of these new powers by 31 March. I would emphasise that we are ready to listen to views from both local authorities and the House, this afternoon, about how the new powers can best be used.
  Sir George Young: Would my hon. Friend say what the position is about those proposed deals involving housing associations and local authorities in the private sector where an umbrella agreement had been entered into shortly before my hon. Friend's statement but where section 9 consent from the housing association had not been secured? What is the position about those proposed deals?
  Dr. Boyson: I take the point that my hon. Friend makes. I know that he is concerned about a particular scheme in the Ealing area, along with our hon. Friend the Member for Ealing, North (Mr. Greenway). The Department is looking at the material, which has only just come to us from Ealing. I also take the point regarding the Housing Corporation having to give permission for this. This has already been mentioned to me earlier today and I shall pass the information on. But at the moment I cannot say whether it had been sealed before midnight on 5 February or had not been completely sealed, in which case it would come under these regulations. As soon as a decision has been made by the Department, I will let my two hon. Friends know.
  Mr. Michael Meadowcroft: It is not just Government Members who are concerned about this, because my colleagues in Tower Hamlets have been caught by the same position. Is it not slightly unusual to put something out for consultation and while that is going on to bring forward a Bill for Second Reading? Could the Minister give us some indication of what he proposes to do in Committee with regard to the particular clauses if the result of his consultation is not available in time to be enacted through the various clauses as they come forward in the Committee? The Committee stage may well be completed before we get the appropriate decisions.
  Dr. Boyson: I know that Parliament has been considering this for some time and it is quite an accident that this is linked with certain other matters. The date 5 February is an important one, as the hon. Member will agree. It was the birthday of Sir Robert Peel and also of John Dunlop, the pioneer of the pneumatic tyre. It was the day that General McArthur re-entered Manila—at the same time I was serving in the East Indies fleet—and we all remember Guantanamo. So it was a very significant choice of date.
  Mr. Harry Greenway rose—
  Dr. Boyson: I have not finished yet, unless my hon. Friend would like to help me, in which case I do not need to finish that bit.
  We have given them until 31 March for that consultation. It is 3 March today and I hope that we shall be going into Committee in about a fortnight's time. I
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  should not imagine that this Bill will get through as speedily as the last one, which got through in two sittings in the other House.
  Mr. Greenway: I am just trying, Mr. Speaker, to interpret my hon. Friend's answer. Does he mean that, until his Department has had a chance to look at the situation, he will ask the Housing Corporation to withhold section 9 consent to any of these proposed deals?
  Dr. Boyson: If the deal was not settled before midnight on 5 February, it does not stand. I shall look into what my hon. Friend said, but I understand that the deal had to be fully settled and legally tied up before midnight on 5 February. I believe that the Department is looking into the material that has only just come from Ealing to find out whether that is the case. I take the point that the Housing Corporation has to give permission, and we shall be considering the matter with that body.
  The criterion of risk seems to us to be critical, and some of the schemes already put to us by local authorities are unsatisfactory in that respect We are trying to encourage the provision of rented housing by the private sector, and that means that the commercial risk of any development should rest substantially with the private sector investor. Schemes under which the local authorities give an open-ended guarantee to meet the whole of any difference between costs and income would not normally be acceptable. In such schemes, I he private investor takes no risk because the local authority stands fully behind the landlord. That is barely distinguishable from ordinary local authority borrowing — the private investor relying not on the landlord's creditworthiness but on the local authority. Such use of guarantees can be simply a device to evade normal controls over local authority borrowing—controls that all Governments have found it necessary to maintain to regulate the volume of public spending.
  That does not mean that guarantees are unacceptable per se. A limited arrangement under which a local authority guarantees an agreed proportion of the financing cost may be perfectly reasonable, but the main burden of risk should lie in the private sector. Furthermore, authorities should not have to carry the risk of overruns in construction costs, inefficient management or unexpected repairs. The private investor should shoulder the risks.
  Clause 2 provides a new power for local housing authorities to give financial assistance, including grants, loans and guarantees, to housing associations and other private landlords in connection with the provision of housing for letting. Clause 3 contains the requirement for local authorities to obtain the consent of the Secretary of State. That applies both to the new power in clause 2 and to any existing local authority powers. The clause has effect from 6 February 1987. It specifies a number of exemptions from the need to obtain consent.
  Mr. Freeson: In the past two or three years agreements have been fairly extensively negotiated on the initiative of housing associations and the like. Is the Minister saying that in future only a proportion of the capital costs involved can be subject to a local authority guarantee, rather than the general overall guarantees that have been negotiated? Is he saying that an important criterion will be that local authorities will be allowed to guarantee only a proportion of the burden to be carried by the financial institutions? Does he realise that that will wreck about

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  £500 million-worth of expenditure that has already been the subject of negotiations? Will that not now be put at risk by the Minister's decision?
  Dr. Boyson: I should have thought that the Labour party would agree that, if housing is built largely with private money, the private investor should take the risk, and should not be covered by public guarantees. I thought that the Labour party believed that private enterprise should be private enterprise and should not be socialistically guaranteed.
  Mr. Freeson: Answer the question.
  Dr. Boyson: I am answering the question. If housing is built by one of the private bodies that I have listed, that body should take its share of the risk. We do not want to socialise private enterprise. Without the risk factor, it would become corrupt, and I am sure that the hon. Gentleman would not wish that to happen. [HON. MEMBERS: "Answer."] I have answered clearly; I am not running away from the question. Private enterprise is not private enterprise if it does not carry any risks. I know the definition—
  Mr. Tony Banks rose—
  Dr. Boyson: This is the hon. Gentleman's second time, and his last. He will have to wait until I have finished if he wants to say any more.
  Mr. Banks: It is my third time, so I am even more grateful. The Minister asked why a local authority should guarantee or underwrite a scheme undertaken by private enterprise. But that principle is established throughout the capitalist economy. Through the Export Credits Guarantee Department, for example, the Government underwrite private transactions between suppliers in this country and buyers abroad.
  Dr. Boyson: I do not wish to get involved in credit for overseas trade.
  We are a radical Government, and we believe that private enterprise should stand on its own two feet. It may amaze Opposition Members that we take that view. Indeed, there is a look of horror on Labour Members' faces.
  Clause 4 sets out the way in which the Secretary of State may exercise consent powers. In particular, the clause provides for the matters that the Secretary of State may take into account during the transitional period before the Bill comes into effect. A number of authorities have come forward with schemes since 5 February, including Winchester, which is a Conservative-controlled authority, Tower Hamlets, which is alliance-controlled and Castle Morpeth, which is Labour-controlled. The popularity of the scheme is clearly spreading rapidly throughout the country.
  Clauses 5 and 6 deal with the arrangement known as pooling, whereby the costs of advanced further education are shared between local education authorities. Neither clause reflects a change in policy. They are designed to allow the pooling system to operate as intended by the Government and as expected by local authorities.
  Clause 5 is technical and amends part I of the Local Government, Planning and Land Act 1980, which provides for the transfer of block grant between England and Wales. The purpose of that part of the 1980 Act is to
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  ensure that the costs of advanced further education are shared equitably between authorities in England and Wales, and the proposed clause would more accurately reflect that purpose.
  Clause 6 will allow my right hon. Friends the Secretaries of State for Education and Science and for the Environment to recalculate allocations from the advanced further education pool for 1981–82 as originally intended, and to adjust the block grant of local education authorities accordingly. The local authority associations asked that the legislation be so amended, and we think it right to meet their request. The provisions will be spent when the adjustments have been made. On 7 July 1986, the hon. Member for Denton and Reddish (Mr. Bennett) asked for such a provision, and Lord Irving of Dartford also requested the change. This clause should therefore be non-controversial, although I am glad to see with us my hon. Friend the Minister with responsibility for advanced further education.
  At the beginning of my remarks I referred to recklessness; at the end I refer to the scandal of idle land. Land that lies unused and neglected in public hands is a particular outrage, as public bodies have a special duty to use the resources available to them economically, efficiently and, above all, for the common weal. We have already made a determined attack on the problem in order to get such unused land back into use. Under the 1980 Act, we set up registers of unused and under-used public land, with the result that an important part of the problem has been quantified for the first time. Of the 150,000 acres registered since 1980, about one third have been removed, most because the land has been brought into use by the owners or sold. There are now 99,000 acres on the register that need to be tackled.
  My right hon. Friend the Secretary of State has intervened to secure a substantial programme of disposals, using his powers under the 1980 Act. We have initiated statutory procedures on 175 sites, 110 of them in 1986. However, our increased use of the statutory procedures has led us to the belief that what has proved an elaborate, cumbersome and time-consuming process should be speeded up and made more efficient. That is why we propose, in this Bill, to take powers to improve the quality of the information about the idle land in the registers, and to streamline the procedures for securing disposals. That is what clause 7 and schedule 2 are designed to do.
  One key feature of the new provisions is that they will enable my right hon. Friend the Secretary of State for the Environment to modify or revoke a direction to sell that appears inappropriate in the light of the owners' representations, without much ado or further delay. At present we would have to issue a further notice of a direction, consider further representations to that further notice, and only then decide whether to proceed, not to proceed or to go back to square one with a further notice, and so on ad infinitum. This is subject to the safeguard for the owner that such a variation can only reduce the area of land to be sold, or be in response to the owner's representations. Any wider variation would still require the old full procedure.
  The other key feature is that our powers to obtain information about land are clarified and, to some extent, increased, particularly by a right of entry on to registered land.
  Mr. Straw: What does that mean?
  Dr. Boyson: I shall explain it to the hon. Gentleman. I would not want him to pass the evening wondering what I meant. At present, we have no right of entry, so we cannot even go and look through binoculars. We can only look through binoculars from a tower some distance away.
  Mr. Tony Banks: We have 110 of those in Newham.
  Dr. Boyson: I saw them last week. I thought that there were 113, so three must have gone since then. However, the hon. Gentleman's mathematics may be better than mine.
  At the moment we have no right of entry. It is interesting that the hon. Member for Blackburn should have asked me that question, and I welcome it. I obtained the information only this morning and I can now pass it on to an astonished world. It appears that when we issued a directive, the public body that owned the property visited it and found, to its amazement, that people were already using it. Therefore, in future we can go and look as well. It came as a shock to the public body to learn that the property was registered. That is why the Bill gives a right of entry on to registered land.
  Owners will be placed under a duty to tell us if our information is wrong or out of date. Provided that public bodies maintain their own records of land efficiently, that should not present them with much difficulty, but it will enormously assist our task in maintaining the registers as a useful tool for developers and others needing to know about idle land.
  This speech has been a long haul for a short Bill. The Bill contains important provisions that will protect the ratepayer and improve the effective use of public assets. I commend it to the House. As I said earlier, I began with a reference to recklessness, and 1 end with a reference to scandal.
  Dr. Cunningham: I intervene only because the Minister keeps referring to these matters as scandals. I should put it on record first that all local authorities, regardless of political control, have been acting quite properly within the law. There is nothing scandalous about that. As the Minister has used the word "scandal", I ask him to comment on what is happening in the Conservative-controlled borough of Merton, where, without any committee decision and against the standing orders of the council, the Conservative leader of the London borough of Merton has instructed the officers secretly to expend £100,000 of ratepayers' money on the Pollard's hill estate, but the expenditure can be agreed only if it is done before 19 March.
  I should like the Minister to ask his civil servants to inquire into the behaviour of the Conservative leader of the London borough of Merton. It has come to our notice that not only had he issued those instructions without any committee decision, but that it may not be unconnected with the fact that a by-election is taking place at the Pollard's hill ward in Merton. If the Conservative party does not hold that seat, it will lose its control of the council. As the Minister is talking about scandals, will he look into that matter?
  Dr. Boyson: I was unaware of any by-election in Merton. However, I shall certainly look into the point that the hon. Member for Copeland has made. The hon. Gentleman seems to object to the word "scandal". I do not think that "scandal" means something that is illegal. I do
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  not have the Oxford English dictionary with me, but 1 stand by the word "scandal" as well as the word "reckless". Scandal means something that upsets people and everybody says, "Shame." I am sure that my hon. Friends would also shout, "Shame," in the context of idle land. If one incurs a great deal of expenditure that has to be paid for by ratepayers in three, four, six, seven, eight, nine or 10 years, it is a scandal and it is wrong. I am sure that most people would think that. I am sure that the hon. Member for Copeland, at the bottom of his heart, also thinks that. I believe that the Bill will meet that problem, and on that ground, as well as for other reasons, I commend it to the House.
  6.7 pm
  Mr. Jack Straw: This is the third occasion in six weeks on which the House has had the doubtful pleasure of debating a Second Reading of a local government Bill. The Second Reading of the Local Government Finance Bill was on 12 January. No sooner had it gone to the Lords, than we had the Second Reading of the Rate Support Grants Bill on 4 February. That Bill had hardly found its way upstairs into Committee before the Secretary of State announced on 18 February that the Local Government Bill, which we are debating this evening, was to be published.
  In 1974, just after the Minister had entered the House, he made a speech that is worth repeating because he roundly attacked his party's reorganisation of local government in London and elsewhere. He said:
  "One of the reasons for much of the cynicism of the public towards politicians is that people feel that no one in politics is prepared to admit that has made a mistake".—[Official Report, 5 July 1974; Vol. 876, c. 822.]
  It is a great pity that the Minister and his hon. Friends did not accept his advice, because the present chaos into which local government finance has been plunged is a direct result of one major misjudgment and mistake by the Government compounding another. If we are to talk in hyperbolic terms of scandal, the real scandal is the chaos into which local government finance has been thrown by the Government and the fact that this Bill will be the 43rd Bill to affect local government since the present Administration came to power in 1979.
  Not a week passes without local authorities having to cope with another change, whether it be by Bill or administrative fiat. No sooner had this Bill been published than local authority chief executives received a missive, dated 23 February, from the Under-Secretary of State for the Environment, responsible for local authority expenditure and rates, apologising for what he described as
  "two small errors that we have discovered in the calculation following inquiries from local authorities."
  Because of those two small errors, which amounted to millions of pounds for individual local authorities, tables F, G and I of various papers sent out had to be resubmitted to the authorities.
  The Government criticise the efficiency of local authorities and we have heard that again this afternoon. However, the Government are the single greatest source of inefficiency. No set of institutions can run efficiently when the rules of the game are literally changed week by week. The fact that there are three Bills on exactly the same subject, local government finance, proceeding through Parliament at the same time is a testament to the extraordinary and unrivalled incompetence of Ministers at the Department of the Environment. There is nothing in

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  this Bill that could not have been included in the Rate Support Grants Bill and there is nothing in that Bill which could not have been included in the Local Government Finance Bill.
  The story of this Bill is the story about the dog that did not bark. We were promised a mountain of a Bill. Instead, the Government have brought forth, if not a mouse, a rather mangy gerbil.
  In October, I spent one afternoon watching the Secretary of State make his keynote speech to the faithful at the Conservative party conference. I have to say that my heart went out to the Secretary of State.
  Mr. Michael Brown: It was a good speech.
  Mr. Straw: That is a matter of opinion.
  Dr. Cunningham: He did not receive a standing ovation.
  Mr. Straw: My hon. Friend has stolen my line. As he said, it was almost the only speech from a Minister that failed to earn a standing ovation.
  Mr. Michael Brown: That says a lot about how good it was.
  Mr. Straw: My impression of the Conservative party conference is that if one were to read out the Ascot telephone directory, one would gain a standing ovation. I do not know why the Secretary of State failed in that respect, except that he had the misfortune to speak after lunch.
  The centrepiece of the speech was his proposal for legislation on privatisation of local authority services and competitive tendering. The Secretary of State repeated that promise in the debate on the Queen's Speech on 17 November. His ever loyal, if hapless, lieutenant, the Under-Secretary of State, repeated that pledge again in a speech to a Local Government Chronicle seminar on 4 February. The Under-Secretary of State said that the new Bill
  "will introduce a regime of compulsory competitive tendering and separate accounting for the provision of six major services which were first mentioned in the 1985 consultation paper."
  The Under-Secretary of State may smile. Throughout his speech, he spoke as if the Bill had already been drafted. He told his audience time and again what the Bill would contain. There was no qualification and no hesitation. Two weeks later the Secretary of State came to the House and had to announce that that major part of the Bill and two others were to be dropped, on the incredible grounds that there had been insufficient time to draft the necessary legislation. The argument that it is drafting difficulties alone which led to that section of the Bill being dropped does not bear examination. I am glad to see the Minister smile along with his colleague, the Under-Secretary of State.
  Dr. Boyson: Pleasantness of nature.
  Mr. Straw: Yes, that may be, and an understanding that the Government told a bit of a whopper.
  In his statement to the House on 18 February the Secretary of State said:
  "we did not know at the time of the Gracious Speech that we would have the problem of total expenditure which, as the House will acknowledge, proved to be an exceptionally complex and complicated matter."—[Official Report, 18 February 1987; Vol. 110, c. 920.]
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  That was incorrect. The Secretary of State knew on 17 November, when he made his remarks on the Gracious Speech, about the problems of total expenditure. It is true that we had to drag the information out of him as to when he knew, but in two successive interventions on the Floor of the House he admitted that he knew at the end of September, even before his speech to the Conservative party conference, that there was a major problem on total expenditure and that he knew by the end of October, two weeks before his speech on the address, about the advice of the Attorney-General that there would have to be legislation.
  In any event, if that policy is so important to the Government, what have the Secretary of State and his predecessors been doing for the past two years? It is two years this month since the Government first published the consultation document, to which the Under-Secretary of State referred in his now inoperable speech of 4 February.
  In the consultative document on competition in the provision of local authority services, issued with a great fanfare in February 1985, those consulted were invited to send in their comments on the proposals, to arrive no later than 30 April 1985. What have Ministers been doing since 30 April 1985 if the legislation is so important?
  Mr. Tony Banks: In fairness to the Government, there have been many changes in Ministers in the Department of the Environment since that time.
  Mr. Straw: That is true, but my hon. Friend will know that the constitutional theory, at least, is that Ministers are like a seamless robe—as one bows out, another bows in.
  Mr. Meadowcroft: All roads lead to Boyson.
  Mr. Straw: My hon. Friend the Member for Newham, North-West (Mr. Banks) may be suggesting that the two previous Secretaries of State were lukewarm about the idea and did it only by way of a gesture towards their Right wing. However, there has been a clear-out of any reasonable people. We now have zealots in the Department of the Environment to deal with local government. The present lot are the Right wing of the Conservative party. They believe in the nonsense contained in the consultative document; they believe in the wholesale privatisation of services.
  When the Under-Secretary of State comes to reply, I hope that he will tell us what he was doing. No doubt when he got into the office after recovering from the shock of the call to No. 10, he said to his officials, "Let me have all the stuff on privatisation." Indeed, he has claimed credit elsewhere as the inventor of privatisation. That is one of his great claims to fame. We will listen to his reply to the debate with great interest because he has yet to explain how he came to make his promise to the local government seminar on 4 February in which he told the country what the Bill would contain in detail. Did he make that speech with the approval of the Secretary of State?
  Mr. Tony Banks: Answer.
  Mr. Straw: The Under-Secretary of State says that he will have a chance later, but I would be happy to give way.
  Was that speech made with the approval of the Secretary of State? It was certainly billed by the press office at the Department of the Environment as a keynote speech. It went out on official Department of the Environment paper. I assume that the press officer tells the Secretary of State what he is doing, if it is anything like the

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  old system. Had the Bill been drafted? One or two of us were made aware that the Bill was fairly thick. Are we to believe that two weeks before the Secretary of State came to the House and made his announcement it was all off, that nothing at all had been drafted? Is that what we are expected to believe? I put it to the Minister that there were duplicated drafts of the Bill, clause by clause, in the Department. Is that true? Of course it is true and they know it is true; we can tell from their smiles. The idea that it is all down to drafting is utter nonsense. Perhaps when the Minister comes to the Dispatch Box he will come clean and tell us what he knew on 4 February and what changed in the intervening days. It was clear that it was nothing to do with drafting difficulties. In our judgment the real reason for the removal of a major section of the Bill is that at the eleventh hour the Secretary of State woke up to the damaging electoral consequences of such a measure after, as the Local Government Chronicle put it, the
  "private and powerful warnings of Conservative opposition."
  It has been said that the slogan of Right-wing Ministers is "the next move forward." It has now become "the latest move backwards".
  With regard to the other sections of the Bill, the excuse about drafting difficulties has no foundation. As my hon. Friend the Member for Bootle (Mr. Roberts) said on 18 February, those sections of the Bill dealing with so-called political publicity by local authorities had not only been drafted. but were published and debated by the House a year ago. The Government should have the grace to admit that these proposals have now been dropped because of the united opposition of the local authority associations, including the Conservative-controlled Association of District Councils. Given the Government's outrageous use of the central Government publicity machine for wholly party political purposes, the Government may have developed some sense of shame about the restrictions on the freedom of speech of councillors — including Conservative councillors — that they were seeking to impose.
  The Minister was also coy about the omission of contract compliance provisions from the Bill. Why have they been dropped? Have they been dropped because of drafting difficulties? Were they dropped because of an argument that has been well reported between Environment Ministers, on the one hand, who wanted all contract compliance conditions declared unlawful and Employment and Home Office Ministers, on the other hand, who declared their support for authorities which, for example, used provisions in race relations legislation to enforce equal opportunity employment practices by councils?
  Good relations between contractors and local authorities are essential. That is why the Association of Metropolitan Authorities has been holding discussions with the CBI and the Building Employers Confederation to discover whether there can be voluntary agreement on the acceptable boundaries of contract compliance provisions. I hope that the Minister will support those discussions in the same way as the Opposition have supported them.
  Another previously promised section of the Bill to which the Minister made no reference relates to another pledge by the Under-Secretary of State in a written answer on 3 December 1986, when he said that
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  "provisions relating to…(the 'Local Ombudsmen') will be included in the Local Government Bill."—[Official Report. 3 December 1986; Vol. 106, c. 684–85.]
  The Under-Secretary of State in his written answer itemised nine amendments to strengthen the powers of the local ombudsmen. They related especially to the need to ensure that local authorities, when they are served with a second report by local ombudsmen, must consider that report and cannot simply pigeon-hole it as they can at present. The amendments included other provisions to give local ombudsmen power over the housing functions of the Commission for the New Towns and other sensible practical changes in the way in which the local government ombudsman conducts his business. All those proposals were sensible and uncontroversial. The House needs to know why they have been omitted.
  I now want to consider what is left in the Bill. The Minister sought to make much of the advanced and deferred purchase schemes by local authorities. However, the truth is that the Government have been two-faced about local authorities' borrowing through those arid other schemes. Publicly, as the Minister did today, they seek to damn such borrowing; privately, they have encouraged it. Much of the money so borrowed has been spent on building new homes, renovating old homes and on non-housing construction projects from the improvement of road systems to the building of sports halls. Most of the work has been carried out by private contractors. That borrowing has maintained thousands of jobs within the construction industry and greatly improved the profits of construction companies. Once again, the Government have willed the end but refused to will the means.
  The Government have not simply encouraged all kinds of additional borrowing — additional to authorities' principal allocations—but they have budgeted for that borrowing. Why else was £700 million deducted from auhorities' housing investment programme allocations for 1986–87? Why has £1,200 million been deducted this year as the Government's own estimate of what authorities will spend from accumulated capital receipts and other sources of finance? The Government are expecting authorities to borrow in that way. They have made a judgment about how much the authorities will spend and they have deducted that from the money that would otherwise be allocated by way of housing investment programme allocations. The Government have done that because of their obsession with the size of the public sector borrowing requirment.
  We do not need any lectures from the Government about the true size of the borrowing by local authorities. The Government are in pursuit of the shibboleth of the money supply figures. They have overfunded. In other words, they have borrowed £17·5 billion through the purchase of commercial bills to get the money supply figures down and then lent that money on to commercial companies. If a Labour Government had done that, we would never have heard the last of it. However, because a Conservative Government are borrowing at about 2·5 times the nominal size of the PSBR, we hear virtually nothing about it.
  If the borrowing position of the authorities to which the Minister referred is reckless, why is the Public Works Loan Board increasing its lending to those authorities" The Minister has not answered that question. He may want to send a missive from the Dispatch Box. Why, in 1983, did only half of Haringey's borrowing come from the Public

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  Works Loan Board when last year 82 per cent. came from the board? I will give way to any other critic of the so-called reckless councils. Why have the Government increased their lending to the authorities? Is there no one on the Government Benches who can answer that question? I offer the Minister the opportunity to answer, and I will give way. He obviously does not know the answer.
  Dr. Boyson: Purely and simply, the Public Works Loan Board is lending to those bodies reasonably and well. However, over the past six months to a year recklessness has crept in. Presumably, the Labour party is aware of that recklessness. Sheffield is borrowing £100 million and over seven years it will have to pay back £175 million. If that is not reckless, I do not know what is. I noticed that the hon. Member for Blackburn (Mr. Straw) pulled out his cuttings of the comments made by my hon. Friend the Under-Secretary of State for the Environment. He also quoted from speeches that I have made, and I do not mind that at all. However, no mention has been made about what action the Labour party would take. The comments of the hon. Member for Blackburn are a smokescreen to hide the fact that the Labour party has no policy to deal with this matter. The Opposition have been condemning what has been happening, but they have no policy. Would the Labour party introduce a similar Bill? I believe that it would. Although it may not be hypocrisy, it would be ill advised for the Opposition not to admit that today.
  Mr. Straw: I have answered that point before, and I will answer it again. The Minister seemed to refer to page 52 of the consultative document. However, it has only 28 pages. We have spelt out in great detail, and I will repeat for the Minister, what the Labour party will do.
  Dr. Boyson: Tell us what the Opposition would do, because the country is anxious to know.
  Mr. Straw: The country is very anxious about the chaos to which the Government have reduced local government finance.
  The Minister had no answer to the fact that lending to Labour-controlled local authorities by the Public Works Loan Board had increased. That will continue. Nothing has happened in the past six months to change that. Since 22 July last year — more than six months ago — local authorities have been on notice that such arrangements for advanced deferred purchase would become unlawful. The Minister has not answered that point.
  In the debate on housing and homelessness three weeks ago, we were treated to a lecture from the Secretary of State about the merits of the free market and the perils of buying shirts in Moscow where no such free market is alleged to exist. No man believes in a free market more than the Secretary of State and no one believes less in Government interference. As he rightly reminded the House two weeks ago and as the Minister reminded us again today, local authority debt is not backed by central Government. Everybody knows that except, apparently, Ministers. The authorities are on their own.
  As my hon. Friend the Member for Newham, North West said in an intervention, not only has the Public Works Loan Board been happy to lend the authorities money, but many of our leading financial institutions have
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  also done so. Those institutions are not charities. Indeed, they are packed full of the Secretary of State's friends. They do not lend money unless they are satisfied that they will get it back, and they must have been satisfied about the financial probity of the authorities before they lent them millions of pounds. Why does the Secretary of State think that he is in a better position to judge the risk than such financial institutions?
  The Minister asked what we would do. First, we would not start from such a point, and indeed we did not. We had a sensible relationship with local government. I remind the Minister that he and his colleagues voted for the 1980 Act which we opposed. The Conservatives voted for it on the basis that it would produce a new and improved relationship between central and local government. It has done no such thing. In its report, published at the end of January, the Audit Commission said that creative accountancy was an inevitable consequence of the chaos into which the Government had plunged the rate support grant system.
  Mr. Michael Brown: The hon. Gentleman talks about the relationship between the previous Labour Government and local authorities. That Labour Government had the good fortune to be dealing with responsible Conservative-controlled local authorities. This Government have the misfortune to have to deal with irresponsible Labour-controlled local authorities led by people like the Labour candidate in last week's Greenwich by-election. That is the problem that we have; and, indeed, the Labour party has the same problem in dealing with such people.
  Mr. Straw: That is not the case. I have experience of some of these so-called responsible Tory councils. Many of them were highly irresponsible, for example, in neglecting the needs of the homeless and in failing to meet social need. The difference between this Government and the Labour Government is that we respected the autonomy of local councils, whether they agreed with us or not, whereas this Government seek to control any institution with which they disagree.
  I shall now deal with clauses 2 to 4 which relate to housing. We were treated to a lecture by the Minister of State about the need to re-establish the right to rent and about how there has been a decline in the private rented sector. For their own advantage, Ministers ought to look again at what happened after rents were decontrolled in 1957. The then Parliamentary Secretary to the Ministry of Housing and Local Government, the right hon. Member for South Down (Mr. Powell), moving the Second Reading of the Rent Bill in late 1956, said in terms—the Minister can look at the Second Reading debate, but I know it almost by heart—that the Bill to decontrol the private rented housing would reverse the decline in the private rented sector. That was the clear promise of decontrol. However, it was followed by the swiftest decline in the rented sector that there has ever been.
  If Ministers seek to decontrol the private rented sector
  again—they are being coy about their real intention this side of the election—that is what would happen. We have no objection to responsible private letting by institutions by way of assured tenancies. Our support for assured tenancies did not occur in the last two weeks. I was on the Committee that looked at the Housing Bill in 1980

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  and we fully supported assured tenancies at that time. We object to the evils of individual private landlords.
  The Minister talked about Lancashire. Two weeks ago, in the Mill Hill area of my constituency, I was called across the road by an old lady and asked to look at her house. Its condition was Dickensian. She had a galvanised tin bath in which she was expected to bathe, and one cold tap. I saw an oil lamp on the dresser in the scullery and I asked, "What is that for, love?" She said, "That is to go to the lavatory with." The lavatory was 10 paces across the yard and it was frozen up and had no electric light. That house was rented from a private landlord. That is the reality of private landlordism, and that is why the Labour party has opposed the evils of private landlordism. I also discovered that that old lady paid about £10 a week in rent. That was £10 too much for the conditions in which she was living.
  I am happy to say that, not least because of representations that I made, a housing association has now agreed to buy the property and the woman will be rehoused. The idea that somehow the welfare of our people would be served by reversion to private landlordism and that if rents were decontrolled the homeless in London could pay the rents that the overheated market demands is utter nonsense.
  Mr. Michael Brown: Surely Opposition Members who represent constituencies in places such as Newham and Islington recognise that it is the shortage of rented accommodation that drives up the price and gives rise to vast numbers of young homeless people. The hon. Gentleman and I are probably about the same age. When I first came to London, after I graduated from university in the early 1970s, I found that many people who leave college or university and come to work in large cities like London are unable to obtain housing or rented accommodation because the present rent legislation means that only a certain amount of rented accommodation is available. The prices go sky high and a whole raft of young people in their teens and twenties and early thirties cannot be housed. If rents were decontrolled, prices would come down and people like that would be able to get accommodation.
  Mr. Straw: This is a crucial point and I hope that I can teach the hon. Gentleman something. I do not say that in any derogatory way. In London and elsewhere, the price of rented accommodation is determined by the price of owner-occupied accommodation. The two are not separate. The average price of a house, even in Walthamstow, is £60,000. Whether one buys such a house for renting or for owner-occupation, it means that even to make a 10 per cent. return on capital—and in practice if a landlord is borrowing money at an interest rate of 15 per cent. he will want a return of 18 or 20 per cent. — a landlord would have to charge at least £6,000 a year. That is £120 a week for an ordinary three-bedroomed terrace house in Walthamstow. That is the reality. That is what the market rent would be. No one would be willing to rent out properties like that unless he could recoup his investment. A landlord would be better off putting his money in national savings.
  There is a shortage of accommodation in London and people are homeless, because, unfortunately, they had to accept the advice of the chairman of the Conservative party and come to London to search for work. They then had to register as homeless people. Changing the regime
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  for private renting by individual landlords will not solve that problem.
  Mr. Jeremy Corbyn: My hon. Friend is making an excellent point about this problem. In my constituency there were a large number of privately rented flats and rooms occupied mostly by low-paid single people or by low-paid or unemployed families. Now those people are being persuaded—I use the word advisedly—to leave those places so that they can be converted into up-market flats or second or city homes for the wealthy. Those tenants are literally forced on to the street and come under the care of the local authority, if the local authority can provide anything.
  There is a great increase in homelessness, but there is no increase in the number of homes available at cheap rents. Decontrol has forced those people on to the streets and caused homelessness. It is the enemy of good housing and working-class people. We need much more money spent on local authority and social ownership schemes to provide cheap rented houses for the people who need them, not for the yuppies that the Conservative party wants to bring into central London.
  Mr. Straw: My hon. Friend makes the important point that the more there is decontrol, the worse the position will become, not better. That was the economic fact of life that Conservative Ministers and many Conservative Members discovered to their shock after the passage of the Rent Act 1957. I repeat that it was said that that was introduced to expand the supply of private rented accommodation, but it had exactly the opposite effect.
  The Government say that they would like to encourage local authorities to enter into co-operative arrangements with private institutions such as housing associations and building societies to provide housing for rent or sale. Most authorities, whatever their political hue, have taken the Government at their word and are actively working in cooperation with the private sector. The best but by no means the only example of that is Sheffield, which has developed an imaginative scheme with the housing association and the Nationwide building society to build 2,000 houses, of which 1,200 would be available the local authority, 200 to the housing association and 600 would be for sale. However, unable to keep their fingers out of anything, the Government's response has been not to praise the authority but to seek to control it.
  In his statement and consultative document, the Minister claimed that he would provide "new powers" for local authorities. However, as far as we can see, that is disingenuous nonsense, because we see no new powers, only new controls. Nobody that we have consulted can find a single additional, substantive new power in the Bill that the authorities do not already have. However, instead there is the most horrendous system of controls, at a time when the Department made much of the fact that it is abandoning detailed project control over schemes wholly in the public sector. Much of the detail of those provisions will have to be examined in Committee.
  I ask the Minister to advise us whether the authorities are correct in fearing that the provisions in those clauses could make many of the bed-and-breakfast arrangements for homeless people unlawful; that the schemes that the Government say that they encourage, by which authorities

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  take on short leases of private property to accommodate homeless families could be rendered unlawful, as could some community care schemes.
  How many staff will the Department of the Environment need to vet the thousands of applications for consent? How does the Minister intend to implement his pledge in the so-called consultative document to take account of the local authorities' comments received before 31 March, when, according to the Whips, by that date the Bill will have completed half its stages? The more we look at these clauses, the more we are led to the conclusion that they are motivated by ideological spite against the local authorities, not by any significant problem which has arisen.
  Clauses 5 and 6 take us into the arcane area of further education pooling. It is all to do, I am told, with the need to make lawful the rolling process to cap the pool. Happily, those clauses have been agreed with the local authority associations and they need not detain us.
  Clause 7 relates to land held by public bodies, and it also contains a schedule, which we shall examine in detail in committee.
  The Government were elected in 1979 on a pledge to reduce the controls on local authorities—to set the town halls free. However, 43 Bills later, the Government have enmeshed local authorities and themselves in a tangled web of restrictions and controls without precedent in this country, without equal in the Western world.
  Time and again, the Government have sought to override the wishes of local electors and their councils, in the name of democracy. However, I remind the House that all the local councils in this country have a mandate that is far more recent than that of the Government. All the London boroughs, which were so woefully abused by the Conservative party, had full council elections last May when, almost without exception, the Labour party sharply increased its share of the vote and its number of councillors. True accountability of local councils can only be achieved through the ballot box. The Labour party is not afraid of that test, although the Government may be.
  Elsewhere in the country, outside London, there are annual electoral tests for local councils in almost all districts, through the retirement by thirds of district councillors, and all-out elections in the fourth year of the shire councils. In London, since the abolition of the GLC, there will now be an electoral test only once in four years. That period is far too long.
  In its consultative document on local government, which was published last month, the Labour party proposes electoral tests for all districts and London boroughs each year by rotation. I challenge the Government to bring forward legislation to do that. If they do, and if they are ready to discuss its provisions cooperatively and in advance, we shall raise no impediment. Indeed, we shall welcome it. It would be one of the few local government Bills for which the Minister would receive the acclamation of the House.
  We understand the problems that the Conservative party faces, and appreciate that its local base has been severely eroded. The centralisation of local government has been paralleled by the centralisation of the Conservative party. That was spelt out in a perceptive article in last Friday's Spectator, which stated:
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  "Poor electoral results have meant that many Conservative supporters have found themselves out of office in local government …many long standing Conservative workers believe that they have not had what they would regard as a proper recognition for their years of service …can the Conservative party really survive without these sort of people in the longer term? How long can it succeed in national elections, if it is an ever decreasing force in local life and politics?".
  In 1974, in a much better speech on local government finance than he has made today, the present Minister said:
  "I believe that at some point in the future we shall have to return to local government units which are answerable to people within a measurable distance."—[Official Report, 5 July 1974; Vol. 876, c. 822.]
  The Minister believed in local accountability then. Why does he not do so now? This is a bad Bill, born of the Conservative party's new centralist tendencies. We shall vote against it.
  6.46 pm
  Mr. Michael Knowles: If I may, I should first like to turn to a point made by the hon. Member for Blackburn (Mr. Straw) about the large number of local government Bills. That is easily explained by our parliamentary system. In other countries the problems that have arisen would have been dealt with by executive fiat, in one form or another. However, in our system, if a case goes to court and the law turns out not to be what people think it is—even if they have acted upon that presumption for many years—the only way in which that can be remedied is to pass another Act of Parliament. That explains the large number of Bills that go through the House, not just in relation to local government but in many other areas also.
  Mr. Meadowcroft: The hon. Gentleman is arguing for a written constitution, rather than defending the present system.
  Mr. Knowles: That may well be so and I am tempted to stray because we may find some common ground there. There are good reasons why a written constitution should be considered. Indeed, I took part in a vote the other week, as did the hon. Gentleman, that would have incorporated features of that.
  However, the point made by the hon. Member for Blackburn was that relations were easier between the central Government and local government under the Labour Administration. Although in some ways that was true, the reason for it was simple. Most of that time was a period of expansion and much of our local government machinery over the years was built up during times of expansion when central Government, for good or ill, and in my view ill—
  Mr. Corbyn: I thought that it was supposed to be expanding now.
  Mr. Knowles: Central Government used local government machinery for a large part of the welfare state which was built on an endless expansionary network. However, when money was short the system suddenly had to be tightened up. I well recall that in 1979 the then Secretary of State for the Environment my right hon. Friend the Member for Henley (Mr. Heseltine) told local government that finances would have to be tightened and that there would have to be a downturn in expenditure. At the time, all the local government associations said that they had always delivered when local government and national Government had gone to them. That was the proud boast

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  of local government, but it failed to deliver. That Secretary of State has since said that he regretted his decision not to incorporate that provision in legislation. It was another 18 months before that nettle was grasped.
  People will recall that during that same period of the Labour Government, Tony Crosland said that the party was over and in a sense it was. Both local government and the Labour Administration cut capital expenditure, not current expenditure. Indeed, the country is still recovering from the savage cuts in capital expenditure made at that time. That has been the problem in local government time and again.
  All too often when one calls for cuts in local government capital expenditure is cut because it is easy to cut something in the future that people do not see the necessity for today. If current expenditure is cut, one can be sure that the beneficiaries of that current expenditure will immediately bring pressure to bear, and they do. Therefore, the easy step is always to mortgage the future and that is what has happened.
  That is what has happened and is now being called creative accountancy. It is the endless deferment of the costs of capital expenditure, leaving a reasonably free hand for current expenditure. The time will come when those bills must be met—in many cases in two or three years' time. Some London boroughs may feel the pressure by the end of this year. In two or three years' time local government units could face a real crisis of finance because those bills will become due.
  We have seen what has happened in other countries. The best examples come from the United States where precisely the same tragic path was followed: the future was mortgaged in order to maintain current expenditure. The best known example is New York, but it also happened in Boston and Chicago. When the horrible moment of truth arrives one is talking of cutting current expenditure, not by 5 per cent. in a year, which good management can cope with, but by 25 per cent. or even 40 per cent., as those American cities had to do. Some of our cities may face that if the Government do not pass the Bill and impose some sort of control over deferred payments.
  I am worried that the Government may have left the legislation too late already and that we shall see some local government units go to the wall. When any local government unit starts to default on payments and must go to Carey street, the whole of local government will be affected together with its status on the money markets. Indeed, that may affect the whole of government. This is not a negligible problem, considering what it could portend. It could produce a real crisis.
  The hon. Member for Newham, North-West (Mr. Banks) mentioned lending and asked who was reckless—the banks or the local authorities. The truth is that both probably are. Certainly, Margaret Hodge has written to colleagues saying that mortgaging the future "is a high risk strategy, because not only does it depend on a change of government, but it also depends on a commitment by the Labour Front Bench to bail us out when they return to power."
  Will they do so? Neither local government nor we have heard any specific pledges.
  Mr. Corbyn: As the hon. Gentleman mentioned the leader of my borough council perhaps he will answer this question. If he were a councillor in Islington and faced long housing waiting lists, rapidly increasing demands on social services and pre-school provision and a whole host
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  of serious social problems, would he seek to carry out the mandate that the electorate gave him to do something about those problems, or exacerbate them by dismissing home helps and meals-on-wheels workers, increasing housing waiting lists and ignoring social problems? If he were to do the latter, he would merely bring on the day of the most awful social deprivation, instead of trying to find a way out. Moreover, he would do so when the Government in power were not even prepared to recognise that the problems existed in the first place.
  Mr. Knowles: Let me go through the various points of that statement. First, I would not have stood on such a mandate. At the end of the day one can spend only what one can afford and the sooner the country realises that, the better. That was proved in London by my hon. Friend the Member for Southampton, Itchen (Mr. Chope) when he was leader of Wandsworth council. The contrast between Wandsworth and Lambeth has been drawn endlessly. Conservative-controlled boroughs have proved that throughout the country. Moreover, when it comes to the delivery of services at the front line, their delivery is better than that of neighbouring Labour-controlled authorities. A willingness to recruit endless numbers of local authority staff and compassion do not go together.
  I was speaking about the recklessness of local authorities and banks. I have no background in banking and I do not worship at the shrine of banks. Indeed, I have doubts about their judgment, considering some Third-world countries to which they have lent in the past and other areas of their lending. I suspect that, just as the banks expect someone else to bail out Third-world countries when those countries get into trouble, so they expect someone else to bail out local government when it gets into trouble and, consequently, to bail them out too. The banks, too, are taking a gamble that may not come off.
  I am sorry that the hon. Member for Blackburn (Mr. Straw) has left the Chamber, because he made an impassioned speech about housing and said that having housing controlled by the private sector inevitably leads to shortages. That could have been a tremendous speech made by the Labour Front Bench in 1950 or 1951 against removing controls on food. We have three necessities in life: shelter, clothing and food. It is a historic irony that one of those is controlled by local government mechanisms. I ask hon. Members to picture a system with council food committees, a council food officer and a council clothing officer. Can we imagine how well dressed and well fed our people would be? We know what the result would be.
  Mr. Meadowcroft: The hon. Gentleman's analogy falls down. The problem with housing is that a permanent supply cannot be created because land cannot be created. An everlasting supply of food and clothing can be created with good management skills and production, but that cannot be done with housing.
  Mr. Knowles: But private enterprise brings other factors into play. The greatest factor that raised our housing standards had nothing to do with the creation of land; it was the electric tramway. More land became available on which to build houses and people could still get to work. We preclude developments to freeze society

  785
  in a certain mould—the mould at the end of the first world war—and so long as we do so, we shall not solve the problems of our cities.
  We froze rents during the first world war for the best of reasons. In 1918 the Government intended to release them but did not and they only slowly released them in the 1930s. When they were released, blocks of flats began to be built, and indeed one can still see the blocks that started to be built before the second world war. Before that came fully into effect we got into the second world war and rent control was imposed again. We have lived with the awful consequences ever since. We must grasp that nettle. I hope that this Bill is a step in a strategy to that end. If it is, there is some hope for homelessness and solving the problems of housing in this country. If it is not, it is yet another tinkering with the problem.
  Mention has been made of the postponement of parts of the Bill as it was originally drafted. The hon. Member for Blackburn has postulated various reasons as to why parts have been put off. I suspect that I share a sense of relief with various other Conservative Back-Bench Members. We do not wish the Secretary of State to shoot our fox. I am sure that that thought would never have occurred to the Secretary of State. There is a lot of political mileage in this yet. Once this legislation has been drafted can we get it absolutely right this time?
  I remember the words of a previous Secretary of State in a debate similar to this. I said that I could see loopholes in the Bill being discussed. He said that that was no doubt true, but that we must draft laws on the basis that we expect people to comply with them, that we should not expect people to try and deliberately break the law. The Secretary of State must have the laws drafted with precisely that in mind. If they cannot be that watertight it is as well to defer them until such time as we can get them that watertight.
  7.1 pm
  Mr. Reg Freeson: I shall concentrate my remarks on clauses 2, 3 and 4, although I could perhaps preface them with a brief reference to the matters with which clause 1 is concerned. Much play has been made of that by the hon. Member for Nottingham, East (Mr. Knowles), the Minister and others.
  I make it perfectly clear that I hold no brief for irresponsible financial management by any local authority or for any authority or any Government that consciously conduct their financial affairs in such a way as to create burdens that they cannot foresee being carried sensibly in two or three years from now. That does not, in my view, justify the sort of interference that the Government seek to introduce in clause 1.
  Some local authorities probably behave somewhat irresponsibly or thoughtlessly in that respect, but they are a tiny minority. There can be no justification for introducing this catch-all legislation that will cover all local authorities, whoever they are, and whatever sort of schemes they may be trying to introduce. The legislation cannot be justified because two or three local authorities may be behaving in a way that the Government do not like and therefore the Government consider that they should all be brought under this sort of control.
  I do not wish to concentrate my remarks on clause 1, or on any clauses other than those concerned with
  786
  housing. Let me say straight away that the announcement of this legislation on 5 February and the implications of clauses 2, 3 and 4 halted a whole series of major housing schemes using private finance that had been pioneered by housing associations and local authorities. Although most of the local authorities concerned were Labour authorities, there were also some Conservative authorities. Tower Hamlets, which is alliance-controlled, has also been involved.
  On 5 February when the Minister for Housing, Urban Affairs and Construction made his announcement with which today's Bill deals under those clauses—ostensibly clause 2 was forecast—I quote the Minister's words on that occasion—
  "to give local authorities an explicit statutory power to provide financial assistance to the private sector, including housing associations in order to assist in the provision of rented housing using private finance"
  In making that statement, the Minister stopped all such schemes not signed by midnight that day. They would in future need his permission. We must presume that the permission will be forthcoming only when this legislation gives him the power to give such permission. He has no authority to give such permission until the legislation is passed.
  What was the consequence of that? As I have said briefly, and as I shall spell out in rather more detail, the Minister halted several major housing schemes using private leasing arrangements that had been pioneered by local authorities and housing associations. He said, in effect, that they would not proceed even in the future under this legislation without four conditions applying. I summarise what is a detailed series of conditions that are set out in the consultative document that I have read. They are:
  "that the financial risk should rest with the private sector that assistance"
  which includes guarantees by local authorities, among other methods,
  "should not amount to more than 30 per cent."
  The Minister came very near to confirming that in his reply to my intervention earlier this afternoon. The conditions continued:
  "that the private sector must own and maintain the housing, and that if local authority land is involved, the land should not be sold freehold or on a lease of not less than 99 years."
  Other factors will be taken into account which I shall not proceed to deal with. I wish to spell out the results of this legislation already, not in the future but as we debate the Bill this evening. As a result of the legislation it is estimated by the National Federation of Housing Associations that £500 million-worth of privately financed schemes have been brought to a halt or are at risk.
  It is interesting to observe in passing—this is not in any way an insignificant point — that the Building Employers Confederation in recent documentation urging the input of £500 million-worth of capital expenditure in the public sector, calculated that that would produce an additional 60,000 jobs directly and indirectly.
  Mr. Ron Leighton: Sixty-two thousand.
  Mr. Freeson: I am corrected. Sixty-two thousand jobs will be created directly or indirectly as a consequence of new building, refurbishment, furniture, fittings and all the other things that go with such building activity or come as a consequence of it. Under cover of pretending to

  787
  introduce or to encourage more private finance, the Government have put a block on it and have prevented the potential for 62,000 jobs being created as a result of such investment.
  Sheffield city council's scheme has been mentioned. It seems that, with good fortune and very hard work, that scheme got in before the midnight bar came down, but for many schemes that has not been the case or, at the least, the housing associations and the local authorities concerned are doubtful and worried about whether they got their schemes through in time.
  I shall quote the director of a major housing association in my area which has pioneered, after 18 months to two years of hard work, such private finance schemes with the local authority. Malcolm Levi, director of the Paddington Churches housing association, which is one of the major associations active in my borough and in the inner-city
  area of north-west London generally, said:
  "It's a great shame that the combination of housing associations, local authorities and private sector money providing schemes for the homeless have now been stopped in their tracks."
  Following the Minister's statement, Stephen Hill, a director of the Samuel Lewis housing trust, said:
  "We are bitterly disappointed because we have been working on schemes for the last 18 months. Now all that work has gone down the drain. We could have provided homes which would be cheaper than bed and breakfast."
  That is an understatement. My borough has to spend
  millions of pounds a year on keeping homeless people in bed-and-breakfast hotels of poor standard. Hundreds of those people—I do not exaggerate—would have been taken out of that sub-standard accommodation and rehoused in good flats under a privately financed scheme, which one or two of the major housing associations and the borough have negotiated over the past 18 months, but that has been blocked because of the Government's action.
  A consortium of four housing associations has been negotiating for £120 million on the Eurobond money market through the brokers Merrill Lynch to finance private leasing schemes. Hyde housing association, the Nottingham Hill housing trust, the United Kingdom
  housing trust and the South London family housing association intended to use £50 million of the total raised to fund a development of 600 homes in Tower Hamlets built by Samuel Lewis and the East London housing associations and arranged by the United Kingdom housing trust, which was also responsible for the Sheffield
  project. The remainder was to be divided between the other associations' schemes. That development is now at risk, to say the least. It is extremely doubtful that it will proceed.
  The future of other deals using the same procedures to obtain other Eurobond finance are in doubt. The South London housing association says that its two schemes with Southwark and Lewisham are unlikely to go ahead. One was a scheme to convert the Amos estate in the London docklands, a plan which had the full backing of the London Docklands Development Corporation. Following the Minister's announcement, it is thought unlikely that the consortium will be able to use Eurobond money. The finance was conditional on the local authorities being able to provide the guarantees.
  Richard Smillie, director of the East London housing association, doubts whether housing associations will be able to enter into many leaseback schemes in the future. He says:
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  "The City is extremely cautious about leasing money for these schemes. We need the Government to agree to guarantees if we are to be able to raise the money from private sources."
  So much for those signs of the immediate consequences of the Government's action. Hundreds of millions of pounds of private finance have been blocked. Excellent housing schemes, imaginatively conceived and worked on for months and sometimes for more than a year, have been blocked.
  What about the general position, even in the future? I listened with great care, although with some difficulty at times, to what the Minister said about the Government's policy, just as I did when the Minister made his announcement on 5 February, and I have read the consultative document. It seems that the Government—the Minister confirmed this today in reply to my intervention — believe that the main way to get the private sector involved again in housing is by ensuring that the market takes most of the risk. I shall not go into the detailed pros and cons of that, but shall just state what all observers have concluded for months and years—this is cloud-cuckoo-land. It is potty. I have said so before, and I mean it. Everyone who has observed and studied the scene knows that it is potty. That is not a condemnation of getting private clients into housing, but it has been recognised by all observers of the scene, apart from those who indulge in windy rhetoric in places such as this and elsewhere, saying that private finance — mainly institutional money of one kind or another — will come back into housing, as I wish it would, only if the right mechanisms are created. It will do so significantly —it may happen a little on the margin in other ways—only if we separate investment from provision and housing management.
  If no one else has produced studies on this, I should think that the Government at least would have studied the report a year or so ago by the committee chaired by the Duke of Edinburgh which went into this matter. Its views were representative of institutions, house builders, housing associations and all manner of private and public sector bodies. On pages 27 and 28, the report states:
  "We believe it is desirable effectively to separate the investment and provision aspects of providing rented housing. We do not think that major financial institutions will be interested in providing and managing rented housing. They might well, however, be willing to invest"—
  the word "invest" is italicised to make clear the point
  about which the committee speaks—
  "in its provision if it were built and managed by some secure body, and if their investment yielded an attractive return."
  The report continues:
  "We believe that suitable vehicles for such investment include index-linked housing bonds or units in a specially formed unit trust."
  It refers later to an
  "intermediary body standing between the investor and the approved landlord which would actually use the money to provide and manage the housing. The 'wholesaler' might draw in large sums of money, then lend them out in smaller chunks to the local authorities, housing associations, commercial bodies"—
  for example, assured tenancy bodies—
  "and so on, which would be responsible for provision of the housing. Building societies might well be an ideal instrument, acceptable both to the investors and to the organisations borrowing, to carry out this wholesaling function."
  I could read other extracts from the report, but I shall not.
  Since Labour left government, I have spent a lot of time pursuing ideas that I was pursuing while in government,

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  directly involving myself in discussions with the building societies, pension funds, housing associations and other bodies with the aim of achieving such joint enterprises. Now the Government say, "Perhaps there should be a 30 per cent. guarantee only, or perhaps it should be 40 per cent. or a lesser proportion." Financial institutions will not lend money at risk but will seek a 100 per cent. guarantee, what the Government call an open-ended guarantee, either from the Government—which the Government will not give — or from a local authority or some other local sources. I am not concerned where that is, but they have said they will accept local authorities. These schemes have been negotiated with great effort, much imagination and hard work.
  The Government have now turned around, firstly blocking financial institutions for an indefinite period until this Bill is passed, and requiring them to seek approval in the Department of the Environment by detailed centralised project control. Secondly, the Government say that approval will be granted to schemes only where there is a limited guarantee, if there is one at all. That Government intervention will drive some schemes into negotiating some insurance cover. That will not be easy and, even where that is achieved, will add unnecessarily to the cost of the housing provision because of Government intervention.
  Mr. Christopher Hawkins: I have also looked into private financing, including building and housing associations. Even if the Government and perhaps a local authority give a financial guarantee, the Treasury has an idiotic definition of the PSBR, which means that the whole of that expenditure counts on the PSBR even if all the money is put up by the private sector or a building society. Would the right hon. Gentleman like to comment on how much that is blocking the problem?
  Mr. Freeson: The hon. Gentleman should not tempt me too far down that road. I started to get a little uppity about that with my then fellow colleagues in the Treasury when we were in government. I do not want to go into things here which I should not be talking about in these circumstances. It is an idiotic convention or rule. After several years of pressure, there have been signs that the Treasury has begun to relent a little on two or three schemes coming forward. The Minister on a previous occasion referred to them in this House. The Housing Corporation has been encouraged to become involved in putting housing association grant schemes together with private finance. The Treasury will not insist on categorising the private capital along with the housing association grant, as it is all public expenditure.
  I remain unclear whether that is general policy, or is confined to the £20 million announced recently in this connection. I have never seen any reason why the rule should not be done away with. There should be a reliance only on the contingent spending of money. It is possible to calculate what has actually been spent in the event over a number of years and to say that is what should be slotted into the PSBR for a given year. I hope that the blocking action of certain Treasury rules, which have no financial or economic merit, will be ended if we can sustain sufficient pressure across the party divide. That is my answer and I agree with the hon. Member for High Peak (Mr. Hawkins).
  790
  The Minister has made the announcement. The Bill is as much a Treasury Bill as a Department of the Environment Bill, although no Treasury Minister is on the Front Bench. I suspect it is as much, if not more, the Treasury initiative which has led to the introduction of these controls, pernicious as they will turn out to be. I trust that better sense will prevail in Committee and on Report and in another place, and that, at best, the controls will be withdrawn from the Bill by the clauses being voted out or at least will be watered down to reduce the controls that the Government are seeking to impose.
  I trust, secondly, that the controls, if they are retained, are not retained in such a fashion as to make it more difficult for housing associations, local authorities and financial institutions to get together. The only way we will garner private capital resources into housing, be it housing for rent or other projects to refurbish our cities, is by encouraging rather than restricting the mechanisms of the housing associations and local authorities, which should be congratulated and not criticised for what they have been doing.
  The Government have said that they want more private funding for rented housing, but Government actions are cutting that funding. Funding will be reduced, not increased, despite all the rhetoric. The Government have said they want to see funding widened and yet it is cutting it back. The Government should put their actions where their mouth is and ensure that the money is provided and not restricted.
  The Government should drop the idea that we can go back to some imagined dream world in which all sorts of private sector people financed, provided and managed housing. That housing was pretty inadequate and that was why so much of it was cleared away by local authorities. But that will not happen, even if it had not been rubbish. The only way to get good housing is by creating the kind of mechanisms that the housing associations, the local authorities and the financial institutions have been using and with which the Government are now interfering. That policy should be reversed. Let us give them free rein and encourage them to do it. More housing will be provided and public sector expenditure will, I hope, be increased.
  7.26 pm
  Mr. Nicholas Budgen: The right hon. Member for Brent, East (Mr. Freeson) has addressed the House from his background of a great wealth of experience in housing. He knows, better than most of us, the difficulties and complexities of that subject in which he has immersed himself. To him this Bill is an irritation and a damaging limitation on what he describes as local democracy, whereas to many hon. Members on the Government side, the Bill is a disappointment —which we recognise perhaps most of all by our absence —and a recognition of the difficulties and complexities of controlling from the centre the vagaries of local government.
  To many of my constituents in Wolverhampton this Bill, if they have noticed it, is more than a disappointment, it is a cause of deep frustration. Many of my constituents wonder how it is that Wolverhampton council can parade itself by reference to the figures as a moderate council which has not yet been rate-capped and in the immediate future may not be rate-capped but which nonetheless is able, within the very loose constraints of rate capping, to

  791
  demonstrate its prodigality and generosity to the narrow interest groups which the Labour-controlled council in Wolverhampton regard as its captive friends.
  It is an extraordinary thing that, when one looks at those local authorities that have been selected for rate capping, there are our old friends Newcastle, with 26·41 per cent. over grant-related expenditure, Camden with 53·11 per cent. over grant-related expenditure, and one notes with interest Brighton with 13·31 per cent. over grant-related expenditure. Yet when one considers the figures, one will see that Wolverhampton is 3·4 per cent. below grant-related expenditure. Does that show that this has been a vicious doctrinaire Government, determined to take all local discretion from the elected councils of the land? Within the allegedly tight restriction, the Wolverhampton council now proposes to raise its rates by 15 per cent., and that is deeply resented throughout the town.
  Since 1979, the Wolverhampton council has not only acted most generously in response to the demands on its conventional services but has introduced new areas of activity. For instance, contrary to the rhetoric in the House, the Government pursue a fairly interventionist policy towards industry. But it is not sufficiently interventionist for the Wolverhampton council. Since 1979, it has engaged in its own forms of industrial support. It has also extended its activities by support for ethnic groups. [Interruption.] My hon. Friend the Member for Leicester, East (Mr. Bruinvels) said, "And in Leicester, too."
  Council support for ethnic groups in Wolverhampton has become more expensive. As you know, Mr. Deputy Speaker, much of that expenditure was supported by grants paid under section 11 of the Race Relations Act 1976. That expenditure was justified on the basis that the persons who benefited from it were immigrants. Of course, the population in Wolverhampton is no longer an immigrant one. It is a second-generation population, sometimes even a third-generation population. Therefore, the council is no longer able to claim some of the grants that were available under section 11. Of course, to use grants, many people have been employed, but the council has a policy of no redundancy for all its employees. When the Home Office says that there must be a reduction in section 11 funding, there can be no question of making redundant those who were funded by section 11 money.
  Wolverhampton, in spite of its considerable former immigration population — at any rate, its Commonwealth population—in common with all other areas of the country, has been hit by falling schools rolls. Of course, an effective local authority that did not regard education as, in part, a way of employing as many teachers as possible would have thought of ways of reorganising secondary education. Wolverhampton council has displayed a great deal of subtlety in the way in which it has sought to reorganise secondary education.
  Since 1979, the council has put forward two proposals for reorganisation. As the House knows, the Secretary of State for Education and Science has only limited powers. He can either accept a whole proposal or reject a whole proposal. The Secretary of State has twice rejected proposals for reorganisation of secondary education in Wolverhampton because they included proposals for the abolition of the girls grammar school, a selective single-sex school which, of course, Tory Secretaries of State for Education and Science on the whole rather wish to
  792
  preserve, and which is anathema to Socialist-controlled councils. The council proposes also to abolish a good comprehensive school called the Regis comprehensive school at Tettonhall in my constituency. That is very useful as far as the council is concerned. Its plans for reorganisation would have led to substantial economies being kicked out by the Secretary of State. The council knows that they will be kicked out because they include proposals that no Tory Secretary of State for Education and Science will countenance. The council will say, "But we have been prevented from taking economy measures by central Government."
  Again, when one looks at the way in which the council conducts itself in relation to the activities of central Government, one will see that there is a need for reform. For instance, fun has been made by some commentators of the way in which central Government, in what may be an election year, bustled forward with their cold weather payments, even before their own indicators required such payments to be made. Whatever opportunism may have been undertaken by central Government, it was not good enough for Wolverhampton council—my goodness me, no. It had to make its own cold weather payments. It had to demonstrate that, however generous central Government might be with taxpayers' money, it could be even more generous.
  Mr. Tony Banks: What was the reaction of elderly people and pensioners in Wolverhampton who received the extra additional weather payment?
  Mr. Budgen: I have no doubt that they were absolutely delighted to receive it, in just the same way that business men who receive various handouts as part of the council's industrial policy are delighted. Most people are prepared to receive money that is lawfully handed over to them. Unfortunately, one usually finds that they say, "Thank you very much," for the money, and, when they find that the money that they have put into their right hand pocket has come out of their left hand pocket, they get frightfully angry.
  As everybody knows, expenditure on legal aid is rising. One constantly hears of the way in which the Lord Chancellor recently pointed out that legal aid is an aid not only to litigants but to lawyers. That is not good enough, of course, for the Wolverhampton council. There was a tragic incident a short time ago in the centre of Wolverhampton. A young black Rastafarian, who was allegedly acting in a criminal way in a shop, was arrested by two police officers. He died during the arrest. There were riots on two days, in protest at what was alleged by many people, including the acting leader of the council, Councillor Bilson, to be bad behaviour by the police—bad behaviour which was wholly inappropriate.
  To demonstrate that the council was on the side of black Rastafarians and against the police, the leader of the Labour group on the council said that the council would pay for the travel expenses of the mother of the deceased who lived in New York. He arranged for her to be transported from New York to Wolverhampton so that she might look after the interests of the deceased. It was also arranged that legal aid should be provided for the estate of the deceased so that Mr. Paul Boateng might be employed as solicitor to the deceased and, no doubt, pursue his vendetta against the police. That will probably not cost a very large sum of money, compared with some

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  of the other activities. However, it demonstrates that in the opinion of many people the Government have imposed restrictions upon local government that are too lax and that they still give local government extraordinary discretion to abuse taxpayers' and ratepayers' funds, the consequences of which are regarded gravely and seriously by the people of Wolverhampton.
  The level of rates acts as a major disincentive to those who might invest in industry in the west midlands. The level of rates has the effect of lowering the value of housing in residential areas. As people with money are less inclined to live in Wolverhampton, there is a knock-on effect in the shops. Far from describing this Government as being viciously restrictive in their attitude towards local democracy, the mood of my constituents, in the face of the 15 per cent. increase in rates with which they have now been saddled, is that there should be tighter control. They cannot understand whey a council that behaves in his way should still be 3·4 per cent. below its grant-related expenditure. They cannot understand why, so long after 1979, there is still no requirement to tender for so many of the council's services.
  It is difficult to understand why, even under our unwritten constitution, there is no proper demarcation between the activities of central Government and those of local government. If there is a system of central legal aid funding, why is it lawful — if it be lawful — for Wolverhampton council to pay the legal aid costs of Mrs. McCurbin? If there is a system of making severe weather payments through central Government, why is it lawful for a local authority to make its own severe weather payments to a selected class of ratepayers? This Government have not yet solved these problems, but they have to face them.
  I dare say that the reform of the rating system will create many difficulties, but I give my unreserved support to one of the Government's proposals—that everybody should pay something towards the rates. The more I see the way in which people in Wolverhampton behave, the more I regret the fact that some people, who are paying nothing towards their rent and nothing towards their rates, constantly demand more and more services and more and more employment by the local authority, in the sure and certain knowledge that they will not have to pay for any part of that which they demand.
  There may be very many good arguments about how to shift the burden of local taxation, and I do not suppose that the balance will ever be precisely right between the private individual and industrial and commercial ratepayers. We may never even get it right as between those who rent houses and those who own houses, but I am absolutely certain that this Government are right when they say that in future everybody, but everybody, must make some payment towards local expenditure. That would go some way towards imposing discipline and saying to those who demand services, "If you want those services you must pay something towards them."
  7.45 pm
  Mr. Michael Meadowcroft: We have an easy task this evening because of what is not in the Bill. I am wondering whether the hon. Member for Wolverhampton South-West (Mr. Budgen) was addressing himself to what is not in the Bill rather than to what is in the Bill. If his local authority is as appalling as he
  794
  described, why are his Conservative colleagues so incompetent that they cannot defeat the sitting council? I suggest that the hon. Gentleman ought to address himself to that question.
  It is not realised that everybody contributes towards the rates. Every customer in a shop and every employee in a company makes a contribution towards the rates—not necessarily directly, but indirectly. Some time ago the Confederation of British Industry asked its members to tell their employees that every £10,000 extra on the rates means that one job is lost and to make the point to customers that increases in prices are in part are due to the rates. Nobody escapes paying rates. Rates are paid in other ways than simply through the rates payment to the local authority.
  We are not debating a Bill that might have provided us with more fun, but that would have taken longer. We are not dealing with competitive tendering, trying to limit political propaganda being paid for on the rates, or contract compliance. We await with interest the exigencies of the system that will produce draftsmanship that will include those points in a future Bill. Nevertheless, this attenuated Bill is no more worthy of support than such a Bill would have been. It further restricts and constrains local government and does not deserve support on Second Reading.
  I am worried not just about the centralising tendency of the present Government, who go too far anyway, but about the suggestion that centralisation should be extended. Local government is not a servile lackey of central Government. It ought to be and must be an equal partner in a healthy constitution. If we move away from that position we remove that part of our constitution which guarantees the possibility of peaceful change in our towns and cities. Local self-government is the rock of our survival as a democratic state. Central Government, even more than local government, must recognise that fact.
  As regards clause 1 and schedule 1, I accept that some local authorities have gone well beyond the bounds of legitimacy in their creative accounting. I accept that some local authorities are at a stage that will require some retrospective action if they are to be bailed out. At some point whether it is the Minister for local Government, a Labour Minister or myself, someone will have to do something about it. In the end, local people, not elected councillors, will suffer.
  I want to make clear, as I have on previous Bills, what I believe to be the distinction between legitimacy and illegitimacy on expenditure. It is perfectly legitimate for a local authority to manipulate its accounting processes, if it can continue to maintain that expenditure indefinitely within the ideology of the Government who are in office—in other words, if it is not mounting up a debt that can only be paid by retrospection. That is perfectly legitimate. I do not understand why local authorities, with all their resourcefulness, should not be allowed to do that. However, when they are banking on a change of Government to one who will say, "These are our friends in local government; we will bail them out retrospectively," that is illegitimate, and I would not be prepared to countenance that as part of any philosophy which I could endorse.
  Mr. Tony Banks: An additional dimension to the problem is that, even in the prevailing ideology of this Conservative Government, there is no consistency that

  795
  local authorities can use, for the simple reason that—as we have heard time and again and as the hon. Member for Brent, North (Dr. Boyson) knows — we get a local government Bill almost every week, which changes the accounting practices. That is another dimension to which the hon. Member for Leeds, West (Mr. Meadowcroft) has to direct his attention.
  Mr. Meadowcroft: I am quite happy to direct my attention to that, because it enhances the argument that local government is so diffuse and diverse that no Bill can ever control all the different aspects of local government. The Government are chasing a mirage if they believe they can control it. They will not. It will break out in some other way, and other ways will be found to get round the restrictions that are imposed by the Bill.
  The difficulty of the hon. Member for Newham, North-West (Mr. Banks) was raised in an intervention by the hon. Member for Islington, North (Mr. Corbyn), who told us about the wonderful expenditure of his local council. I endorse that, of course. All the items of expenditure that he set out were beneficial to the local ratepayers in his borough. The problem is that it is no use my spending money on things that are wonderful and then seeing my bank manager and saying, "All the things that I have bought are worth while; they are all splendid things that have benefited my family and community." He would turn round and say, "That is splendid, but you do not have the income to meet the expenditure." If the hon. Member for Islington, North is correct, there is no city in the world, whether it be Calcutta, Dacca or whatever, that cannot solve its problems by simply spending money. That cannot be done. At the end of the day, we must find the income to meet expenditure.
  The article by Councillor Hodge in New Socialist in January, which pleaded with the Labour Front Bench to rescue local authorities from the problems of having held up the dented shield for so long, was very good, and it set out the matter very honestly. However, we cannot continue a policy that requires retrospection to bear it out.
  Local government has been culpable in different ways, collectively. One of the things that, in retrospect, local government should have done was to grab with both hands the Layfield report on finance. The report had many faults and it was defective in many ways, but the local authorities concentrated on those defects instead of realising that this was a way in which they could have got financial independence, could have gone along with local government reorganisation and obtained a powerful base which no Government would have been able to upset in the long term.
  Mr. Freeson: I can assure the hon. Gentleman that although it was true at the time—I was in government at that time—that local authority representatives did not welcome the report, neither did the Treasury. It would not welcome it today either.
  Mr. Meadowcroft: I remember it vividly. I urged at the time that it was the best solution that would be put forward and that local authorities should have grabbed it. It may be, as the right hon. Gentleman says, that it would never have gone through Parliament. Nevertheless, local authorities were culpable in not grabbing what was put forward and moving with it at the time.
  The other matter which is interesting in this context is the change that took place in the constitutional position
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  of the treasurer as a result of the 1972 Act. Prior to that, the treasurer was the city treasurer, not the council treasurer. He had the legal authority to refuse to carry out an instruction from his local authority which he believed to be against his fiduciary responsibility. That was taken away by the 1972 Act. The Government should look carefully at what occurred there, because it added to the problems that were faced in endeavouring to control local authority expenditure.
  Central Government have a right to set out the total amount of borrowing that they regard as sustainable nationally and to negotiate with local government how much of that should fall within the local government sphere. Beyond that figure, it is up to local authorities to determine how best and how successfully they can raise and use that money, and beyond that they should not go.
  Clauses 2 to 4 deal with housing and have a worthy aim. The problem with the aim is that it is no good without the means of fulfilling it. It is an aim of the Bill to draw private money into housing and to endeavour to utilise the good will of many people in the private sector—the building societies, insurance funds and pension funds—who are interested and concerned and not just trying to get their hands on some extra money in an exercise of bloated capitalism. I have spoken to many such people myself. The Bill, as fashioned now, will prevent that aim from being achieved.
  It is no use saying that private bodies should take on the responsibility and risk. That would be fine if public authorities, whether central or local, could command the money. They cannot. We are crying out for the money to come into housing. We are desperate. All over the country, whether it be Newham, Leeds or Tower Hamlets, we desperately want money to come into housing. We shall find it impossible, whatever public money we could divert and devote to it, to resolve the problems of the fabric of our housing, let alone the problems of homelessness or of bed-and-breakfast accommodation. We need this extra money.
  We are clamouring to draw money into housing, but we are saying to people, "The terms that you have negotiated with the local authorities are not acceptable to us. The people in London will stop these resources from corning in." I suspect that it is not possible to prescribe in a Bill such as this the means by which, on any uniform basis, the deal can be done between one local authority and a financial institution. Again, it is so diverse and diffuse. Therefore, this problem of how to draw three organisations together—the public and private sectors and the housing associations—is so delicate that the relationship cannot be prescribed in a Bill of this nature if it is to succeed.
  Mr. James Hill: Surely the hon. Gentleman would support the Minister's statement of trying to get institutions into the private rented sector? Is it not a fact that financial assistance may not be necessary, in as much as the property may already be owned by the local authority or may be land which is surplus to requirement? There are many ways in which local government can help private institutions. My hon. Friend the Minister said that perhaps a 30 per cent. grant could be made available. That will not be on every transaction; it will be on very rare transactions.
  Mr. Meadowcroft: I am prepared to go along with what the hon. Gentleman has said. The Bill is not only

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  concerned with that aspect. The Bill is saying that the underwriting has to be carried out by the independent organisations as well. The 30 per cent. may have some validity, and so may other questions of tenure. The question to which the Minister has been addressing himself is the underwriting. He wants the financial institutions to take that risk. It may be that they are too cautious and that they ought to take more of the risks, but our problem is so acute we should look at it in a more delicate way, rather than simply say that we can prescribe it by statute.
  Dr. Boyson: I am grateful to the hon. Gentleman for giving way, because it is difficult, however long we speak, to cover all aspects. One factor in this is that the 30 per cent. which is coming from the Government and the 70 per cent. which is coming from the private sector should mean that the rents that are chargeable are such that on the 70 per cent. they get a fair return. The 30 per cent. that is put in by local authorities is an "affordable rent". It should be 30 per cent. more than an open market rent.
  Mr. Meadowcroft: The problem is that, once one has interfered in the market, whether it be by fair rents, and taken out scarcity, one has upset the market anyway. I shall not go along the road of deregulation, because there are other problems with that, particularly in the City, but I understand what the Minister says.
  The hon. Member for Southampton, Test (Mr. Hill) is saying that in a sense our developments are only worth what return of rent we can get from them. It is no use a local authority saying that it has properties on its books at £20 million if the rent is only £1 million, because that means that they are worth only £10 million. If one wants to deal with a private institution and one knows that the properties need £5 million spent on them, then. they are worth only £5 million to the private institution. Local authorities might have to write off £15 million, so the book value is wholly irrelevant. The properties might not even be lettable. The problem arises as to how one sorts out the future from the past, because in so many places the past is a tremendous millstone stopping the private institutions from coming in.
  Mr. Hill: Surely the whole focus of what my hon. Friend the Minister was saying was about enabling local authorities to get rid of sub-standard housing—in many cases, perhaps, high rise blocks of flats. The hon. Gentleman is right. The book value of those is so low in some cases that some authorities have had to pay additional sums to demolish the buildings. The private sector alone can carry out such developments, on the understanding that it gets a fair return on rents for improvements.
  Mr. Meadowcroft: I take that point. I am trying to look at broader perspectives than rehabilitation. In the interest of other hon. Members, I shall not give way again.
  Mr. Leighton: Hear, hear.
  Mr. Meadowcroft: I am glad that I have support for something.
  It is an insensitive aspect of the Bill to suggest that there should be some consideration of what kind of tenants one has on the basis of whether they can pay. To say that one has to have regard to how many people will be in receipt of benefit runs counter to all sensitive management and
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  will hurt those most in need. We already know that 75 per cent. of people in housing association dwellings are in receipt of housing benefit.
  I find the catch-all provisions of clause 4, which virtually give the Secretary of State a free hand to bring in any kind of secondary legislation by allowing him to do anything that he believes to be necessary to constrict housing, is unacceptable.
  The Bill also deals with education and capping the pool. I had some involvement with that in local government, and I found it then as complex as I do now, although I understand that this provision is relatively uncontroversial.
  Clause 7 deals with land. In this day and age, particularly in areas under great stress, the hoarding of land is immoral. It is monstrous for people to hoard a substance that one cannot create, presumably with the prospect of making a quick killing in the future. That is immoral, and it should not be allowed. It is unacceptable. This happens not just with public authorities but with private people. We should be able to deal with it. I agree with registration and I do not object to the provisions in clause 7.
  I am, however, concerned about the length of notice that is to be given to owners before officers can enter. I am concerned about the rights of owners and of possible abuse by those exercising the power of entry. Perhaps we could take account of that in Committee.
  The register needs two improvements. One is that there might be a distinction on the register between land registered as available for development within five years and that which is not. Secondly, to deal with the point made by the hon. Member for Leicester, East (Mr. Bruinvels), I would wish the register to deal with land held in private hands. If we are ceasing to make a distinction in housing between public and private land as set out in clauses 2 to 4, I do not see why we should allow private owners of land to be feather-bedded in this way. Why do we treat them differently?
  In politics, as in physics, laws apply. Newton's third law applies in politics. For every action there is an equal and opposite reaction. Whatever local government does, central Government will do it worse, and whatever the Government do, local government will do worse still. So the nonsense continues. Political problems require a political solution, not a solution by repression. The Government are in the Paul Daniels school of politics. They think that they can produce a Bill out of a hat and that will solve the problem of what is going on in local government, but that just does not happen.
  The Leader of the Opposition may be the only bull I know who carries his own china shop around with him. He carries it from by-election to by-election. However, that is of no value if one cannot solve the problems in the way that one would wish. I cannot understand why the Conservatives, who can identify the horrors of local government so vividly, have so little faith in their local candidates and associations and no trust that they can defeat these appalling councils. Instead, these local politicians have such inferiority complexes that they turn to the Government to do the job for them.
  Accountability to local electors must be enhanced. That is the real test of local government, not constraining, constricting and repressing it. Accountability should be

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  developed and that is the right path down which to go. The Bill goes in the wrong direction. It is another repressive measure that will not succeed and should be defeated.
  8.5 pm
  Mr. Lewis Stevens: I was surprised at some of the comments by the hon. Member for Leeds, West (Mr. Meadowcroft). I never thought of politics as being as logical as the laws of physics. He spoke about his general approach to local government spending relative to central Government's ideas. That is all very well as a theoretical aspect, but, following his argument, at the end we come to the point where some action has to be taken by central Government when local government does not fit in. This Bill, like other local government Bills, would not be necessary if councils and local organisations worked in an acceptable manner. However, when there are abuses of the system, action is necessary.
  The Bill is concerned with the provision of rented properties. There is heavy regulation of such properties, which restricts their provision. We know that the restrictions are there to ensure that the abuses that we sought to get rid of in the early 1960s are not permitted to return. So often, our legislation is concerned with the prevention of abuses of the system. Often, those who abuse the system think that they have a good reason for so doing.
  This is not just a matter of political colour. Some councils dominated by the Opposition party do not come into the category of high spenders, so do not need to find ways to fiddle the books. They carry on much more reasonably. Others take all the advantages that they can find in any system to get the maximum. I accept that they are not acting illegally. I have heard Opposition Members argue about what happens in business and how people look for ways around this, that or the other. Over the years, Labour Governments have attempted to bring in restrictions to close what they call the loopholes on that.
  The important thing about the first part of the Bill is that it has undoubtedly been put in to answer a system of borrowing money that definitely increases the amount of the PSBR, puts forward, although not too far, the repayment problem, and creates a false impression. That is legal but it must be stopped if local government accounting is to fall properly within what is accountable in the short term and in the best way for total local government expenditure. It is only as a result of such abuses that the Bill has become necessary. The hon. Member for Leeds, West made an important point when he said that when we squeeze local government in one place, something else breaks out somewhere else. That is always a possibility with any system, whether it be local government or some other part of the law.
  Within the general attitude to creative accounting, I believe that there has been a deliberate practice of finding ways round the restriction on capital expenditure. Some authorities have greatly exaggerated that practice, with the result that it has impaired their financial management. I have always questioned how far local government should go in its borrowing to finance particular projects. I have always held the view that local government finance should he considered within shorter-term borrowing. I do not believe that some local authority expenditure in the past 40 years—including over and above borrowing—has represented the most economical way of running local government finance.
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  Times have changed and we no longer have the expanding economy of the 1960s, which some local authorities thought could continue for ever. The escalation of costs and spending was, on occasions, out of control.
  The Bill is concerned with the borrowing practices of local authorities. Many people in the financial world have thought that, if they were lending to local government, there was absolute security. They believed that, no matter what happened, Government would fork out for the local authority debts. They believed that there was no way in which Government would not step in—Government of any colour — and pay the debts of local government. Despite the absence of such a commitment, it is understandable for many people in the financial institutions and others outside this House to believe that if local government borrowed money it was as safe as central Exchequer borrowing. It is certainly not as safe.
  The Bill also seeks to deal with the combined efforts of the private sector and local authorities with regard to the provision of housing. The provisions in the Bill are not as black or as preventive as has been claimed tonight. The Government are trying to encourage co-operation between the housing authorities and the private sector in financing projects. A local government contribution of 30 per cent. would help towards the prospect of a better return than present on the private sector money invested especially in the rented sector.
  I am not suggesting that if one got rid of rent controls, a mass of private rented accommodation would become available at a reasonable rate. Some believe that total deregulation would provide satisfactory and quality accommodation. I do not believe that it is as simple as that. I do not believe that there should be total deregulation; we need some controls and regulations. However, present regulations deter private investment in the housing stock.
  One thing that disappoints me about the Bill is that, unlike previous announcements, it contains no provisions relating to restrictions on contracts. Such restrictions would have been a most important area covered in the legislation. It must be in the interests of ratepayers and people in the community to know that their councils act in a responsible financial manner. I do not believe that local councils should allow their prejudices to influence, unwarrantedly, the placing of contracts for whatever purpose—for roads, equipment or anything else. I do not believe that it is reasonable for local councils to take that attitude.
  It is certainly true that local authorities express their views on central Government and on what the Foreign Office or any other Department has done. Local authorities express their views on many things regarding privatisation and all the rest of it. I believe that it is to the detriment of ratepayers if such prejudice is incorporated in the placing of contracts. Perhaps when my hon. Friend replies he will be able to say whether there is a possibility of discussing this in Committee.
  I appreciate that other items that have been omitted should also be considered, such as the use of rates for propaganda purposes and competitive tendering. I appreciate that, with regard to competitive tendering, there may be difficulties in providing satisfactory legislation—that is satisfactory from a legal rather than a principled viewpoint. I can understand why competitive tendering is not incorporated in the Bill.

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  Competitive tendering is extremely important. I do not believe that it would represent a threat to a local council's direct labour organisations. Some direct labour organisations are very efficient. Indeed, the report of the auditors in my local authority is very favourable about some of the services provided by such bodies. It is important that competitive tendering becomes more common and results in a much more practical and democratic process within an authority to the benefit of that authority. It would not mean that, automatically, private firms would be brought in to do the work.
  The Bill also deals with land held by local authorities. It is wrong that local authorities hold land for which there is no immediate or anticipated purpose within a reasonable future. This difficulty is especially acute in city and urban areas, but it also applies to some rural areas. Some local authorities hold land for no particular purpose—land that is needed for all sorts of projects. I believe that local councils should be encouraged—if they do not do so, action should be taken — to make such land available.
  I do not believe that some of our schools—primary, middle or senior—need all the land that is designated for them. However, I am not suggesting that we should chop off an acre just because it is there. Often that land is a useful local amenity. I believe it is important to introduce legislation that puts at the forefront the need for local authorities to declare the purpose they have in holding land and to make possible the action needed to release that land deemed to be unnecessary to the local authority. A decision on unnecessary land would be an important qualification in the legislation.
  I believe that this Bill introduces positive restrictions on local authorities. Essentially, it imposes those restrictions on those authorities which have deliberately taken advantage of the existing system to the detriment of their ratepayers and of local government in general.
  8.20 pm
  Mr. Ron Leighton: For nearly eight years we have had antagonism and a virtual state of war between central and local government. We have had one Bill after another until we have almost lost count. I think that my hon. Friend the Member for Blackburn (Mr. Straw) counted 43. We are suffering from legislative indigestion. Even the parliamentary draftsmen cannot keep up; hence this truncated Bill.
  The Department of the Environment regularly falls foul of the law. Unprecedented and sweeping powers have been arrogated by the Secretary of State and more are taken in this Bill. There has been an unheard of centralisation of state power, but not of the wisdom to exercise it. Elected councils have been turned into mere ciphers. The Government have moved the burden of local government finance from the taxpayer to the ratepayer.
  When this Government came to office, rate support grant was 61 per cent. It has been slashed every year since then and is now only 46 per cent. So, while in 1979 for every £100 of local government finance, £39 had to be raised in rates, now, for that same £100 of expenditure, £54 has to be raised in rates. That is an increase of 35 per cent. in rates for the same expenditure. That is the reason why rates have gone up, but, while central Government make the cuts, it is local government that gets the blame.
  802
  I want to address myself briefly to the position of the London borough of Newham and to use it as an analogue and an example. Mine is an inner-city area in east London wrestling with a legacy of deep-seated problems. I will not take the time of the House by cataloguing details of the borough's social economic and environmental deprivation. I do not have to tell the Government about this, because they have told us. The figures from the Department of the Environment reveal that, with one exception, we are the most deprived local authority in the whole of England and Wales. Our difficulties are greater than those of eight of the nine authorities which have been given partnership status and therefore extra resources. This is a serious source of grievance locally. Expenditure per head in Newham is considerably below that in comparable areas. I am concerned that Government action should not exacerbate and compound our difficulties.
  In the 20 February issue of The House Magazine the Home Secretary wrote an article in which he said:
  "we cannot complacently wait for the next spark. Dereliction, disinvestment and despair in inner city areas need to be and will be tackled. For whatever reason, there have sprung up pools of disaffected youths in some of these areas and we must do our utmost to see that the springs of discontent are dried out, that the pools are not replenished."
  This is the whole point. The Government's local government policy is threatening to make the dereliction in the borough worse and to take funds away from the voluntary groups working with the disaffected youth. That cannot be right. Government policy threatens to cause a crisis in Newham. Where is the sense in that ? Any alleged savings could easily be swallowed up by the Home Office in the extra costs of maintaining law and order.
  I was very pleased that the Minister of State accepted my invitation to visit Newham last Friday, when he had the opportunity to meet those principally concerned—the elected members and officers charged with administering the borough. He will have observed that they are reasonable, decent people, wrestling as best they may with intractable problems. He will have noticed that Newham is not a profligate or wasteful authority. The Audit Commission recently made a report. I am critical of the methodology of that report. However, it covered two groups of authorities, one of which it criticised and the other of which it did not. The Minister will know that Newham was in the group that was not criticised. It is an authority which is seeking to be responsive to local opinion and to achieve an efficient delivery of services. I hope that he felt that his visit was instructive and worth while, and I very much hope that something constructive will emerge from it.
  The Government have decided to rate-cap Newham. This is not the time to debate the principle of that. I am opposed to rate capping, but Newham is not asking for the ability to raise its rates. The borough is aggrieved about the way it is rate-capped, the formula on which the rate capping is based and the base year that is used, which results in such a freakishly harsh effect. The infamous algebraic formula in the Bill now in another place was cobbled together in haste to meet the Government's legal problems. They were not of our making, yet we are expected to suffer because of them.
  I hope that the Minister will agree that a standard, common formula saddled on disparate authorities must lead to anomalies and to uneven and grossly unfair results. In Newham's case it leads to a 26 per cent. rate reduction

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  —twice that of all but one of the other rate-capped authorities and more than three times that of 15 of the other 20 authorities. Furthermore, 16 of the others can spend 10 per cent. above grant-related expenditure, seven can spend 20 per cent. above GRE, but Newham can spend only 3·7 per cent. above. I do not think that the Minister will pretend that that is fair or evenhanded.
  The legislation of 1984 recognised that. It allowed—great play was made of this at the time—redetermination, that is, appeal to have cases looked at on their individual merits. Last year six authorities appealed and they got increases of between 2·2 per cent. and 7·7 per cent. In other words, some attention was paid to individual and local circumstances. We came to see the Minister to do the same and we still feel sore that, although he listened to us, he knew that a Bill was coming to take away the right to redetermination because of the Government's stampede to get out of their legal fiasco.
  Something has to be done, and I hope that the Minister learned in Newham that the main cause of our difficulty is the base year of 1985–86. The Government under-estimated what the council spent in that year by about £15 million. That is where things have gone wrong. The budget of that year was distorted by completely lawful and legitimate special accounting, about which the council has been absolutely and completely open. Basing the Government's standard formula on that year's distorted budget means a cut of 15 per cent. of the amount above GRE in one year. That is an unreasonable and absurdly unrealistic cut.
  What is to be done? The Government could not easily accept amendments that would wreck the Bill now going through the other place—I accept that—but they could accept the modest amendment moved by Lord Elwyn Jones, and I should like to give the Minister six reasons for looking upon it favourably. First, it would be a "class" amendment and so would not cause hybridity. Secondly, it would affect only three authorities. Thirdly, Newham would not gain at the expense of others. Fourthly, it would not cost the Government anything. Fifthly, it would mean that Newham would still have a cut in rates by 6·2 per cent. Sixthly, Newham would still have a cut in expenditure.
  Those are six very good reasons for looking favourably upon that amendment. I do not claim that this would be a perfect solution, but it is something with which the borough could cope, with which it could live. It is my duty as a constituency Member to say that, unless something of this sort is done quickly, the Government will cause a crisis in the borough. Why do that? Who would gain from it? It would undermine the locally elected civic leadership. It would badly damage morale among council staff. It would cause cuts in education, environmental services, housing, social services and much else which would excaberate inner city decay and bring distress to my constituents. I call upon the Minister, after seeing the situation at first hand, to take action now to avert that iniquity.
  8.29 pm
  Mr. Peter Bruinvels: I was interested in what the hon. Member for Newham, North-East (Mr. Leighton) said about rate capping. As I am someone who believes very strongly in rate capping, obviously we would disagree widely on the need for it. But it is an uneviable position for any constituency Member of Parliament to
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  have rates levelled at 80 per cent. as happened in Leicester last year and, as is, I understand, to happen in Ealing in this coming year.
  I urge my hon. Friend the Minister to look at the way in which creative accounting has been used to deflect the wishes of the community. I know that the hon. Member for Newham, North-East (Mr. Leighton) genuinely represents his own constituents, but I can say that my constituents felt let down when one year there could be rate capping imposed and in the next year, to recoup it, it was possible to whack in a tremendous increase of 80 per cent. and now, in local government election year, with the use of creative accounting, deferred payments and general liaison with the banks and other financial institutions, it has brought forward a 4·9 per cent. rate rise. Anyone in the House can understand why that is. In local election year it is obviously a great opportunity to get the most votes out of the electorate.
  I would say to any hon. Member that if a local authority wishes to put the rates up to such a high level it should be fair and put that proposal in the manifesto. It is all very well for local authorities to say that they have a mandate to do this or that. However, in my own local authority only 30 per cent. of those who voted Labour pay rates in full. That is a significant fact. That is why, when community charges are introduced at a later date, it will be important to give the electorate a proper say in the running, administration and the levying of rates in their area. I look forward to that with great enthusiasm.
  I say to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) that we must all stand for what is to be paid in local expenditure. It is necessary to have regular monitoring. That is why this Bill is so important. I do not deny, and my hon. Friend the Under-Secretary of State knows, that I am disappointed that the Bill does not embrace propaganda on the rates or, at this time, competitive tendering. He, like me, has been active in the Right wing of the Conservative party and sees it as an important principle that we should get value for money. We should have the opportunity to compete fairly and we should certainly monitor the expenditure, which has been going crazy, like Topsy, in many ways. Local government expenditure has got out of hand. The hon. Member for Leeds, West (Mr. Meadowcroft) made that very point.
  Every local authority wishes to act in a responsible way but proper checks to prevent any abuses by local authorities; any devices brought forward to advance and defer purchase schemes, and payments to get round the present capital expenditure control system, must be particularly important now. Creative accounting and the using of reserves must be stopped. I believe that matters have got out of hand.
  We should look at the typical local authority of Leicester and the extravagance taking place there. I know that my hon. Friend the Minister is fully aware of the fact that at the moment there is no control over whether a local authority such as mine is twinning with Nicaragua or appointing a twinning officer at more than £13,000 a year. That is paid for by the rates with no consultation or advance notice that it is to be done.
  There is no control over the creation of nuclear-free zones. There are more than 170 such zones in the country. That was not part of any mandate. It never appeared in

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  any election address. Local authorities should stand ashamed of such partisan and political propaganda. There were no undertakings to do those things.
  In my own area, because the Leicester Tigers, a well-known rugby team, went to South Africa to take part in special sporting competitions, the name of the park the team uses in Leicester, known as the Welford road recreation ground, was changed overnight to Nelson Mandela park. There was no consultation and no one spoke to Nelson Mandela to find out whether he approved. That was vindictive and spiteful. The local authority was trying to kick those good ambassadors for Leicester who were playing the best sport in the land. The team had people such as Dusty Hare and Paul Dodge, well known international players, but because of that visit they are to be kicked, effectively, in the crotch—after the game—and they are to be penalised.
  My hon. Friends know that section 137 of the Local Government Act 1972 gives many additional powers to local authorities to levy a rate, but it must not be in a partisan way. We must have accountability of councillors. The GLC, Lambeth councillors and others have been fortunate to have surchages levied on them for what they have done. Some of them cannot even stand for office at the moment. I think that that is correct. If one breaks the law, one must face up to the fact that one could be surcharged and lose one's position as a councillor.
  There is also the issue of the misuse of inner area programme funds. In my area the Labour-controlled authority never admits that, for every £1 spent, 75p comes from the Department of the Environment. One sees great big signs saying, "Your local council working for you." That money goes to the council's pet project.
  The hon. Member for Barnsley, West and Penistone (Mr. McKay), who is sitting on the Opposition Front Bench, is a fair man. He cannot approve of a partisan approach such as that. I am sure he wants to see, as we all do, finance given to help the entire community and not just one part of it. In my constituency there are more than 26,000 members of the ethnic community and because of that a large amount of the funds goes to the ethnic community. I am becoming almost a threatened species by not being a member of the ethnic community. We want to see a fair distribution of those additional funds to the entire community, not just one part of it. The fact that my Labour opponent may come from the ethnic community has nothing to do with it. It is interesting that the money can be misused in a way that might almost be said to be buying votes. That is unacceptable, and that is why a local government Bill has been brought in and is to be welcomed.
  We hear a lot about the housing investment programme. In Leicester I believe that it may be misused to help pay for the pet projects and poodles of the Labour-controlled council. I cannot accept that there is a housing crisis in Leicester. I listened to the hon. Member for Leeds, West (Mr. Meadowcroft) talk about the hoarding of land. He condemned it, and so do I. I ask my hon. Friend the Minister to come to Tithe street, in Leicester, East. He should come and see the areas owned by the council which it has not redeveloped, and ask, what is the purpose of that? I suspect that if the council developed it into a nice area and brought more jobs into the city along with new developments, housing developments and housing associations
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  plans, people might come in, take over the projects and vote Conservative. I have a suspicion that that is why those areas have deliberately been allowed to run down. I am not exaggerating. Those are the facts of life.
  That is why clause 7 and schedule 2 are to be welcomed. There will be a land register and it will show those empty areas. It is disgraceful that the council in Leicester can be campaigning for additional funds to build more council houses when there are 947 empty houses at present and 77 of them have been kept empty for more than a year. If that land was on the register and my right hon. and hon. Friends in the Department of the Environment were given the power to dispose of it, we could have proper buildings and proper jobs and we could stop some of the bellyaching we get from the council, which deliberately keeps those parts of the city run down for political purposes.
  I am interested in the education provision of the Bill. There is no doubt in my mind that additional funds are available to help, yet again, the ethnic community, but they should help the entire community. There are music grants available under section 11 of the Race Relations Act 1976 to teach ethnic music. I see nothing wrong with that, but we should have all sorts of music. There should be more music teachers to teach the entire community. Why should ethnic groups have priority? Any additional help under the Bill that can be given to both the ethnic and non-ethnic communities must be welcomed.
  We should look at the county council's education policy and see it justify a proper education policy for the entire community. Perhaps there could be more religious education. That could be paid for from the rates. That is more important today than the "go gay" policies we have in Leicester. At least religious education would promote family life, which is important now when normal people are treated as abnormal and people living outside wedlock are being encouraged and those living within wedlock are being treated as exceptional and rather strange. That is a sad fact of life.
  It is important that the Bill comes before us today, because housing developments will be encouraged. I am sad that we cannot deal with propaganda on the rates at the moment. However, I can tell my constituents and anyone else who feels let down that more is to come soon. I have every confidence about that. In the meantime, the Widdicombe committee has reported. Anyone who believes that there is political or partisan propaganda on the rates must use the district auditor. When my hon. Friend the Minister replies, I am certain that he will refer to that. If the controls are tougher, and if the district auditor's address is publicised more regularly, we can catch out those councils which are abusing ratepayers' money. Thousands of pounds are spent every year on propaganda. That is a scandal and the councils will be brought to order over that.
  When my hon. Friend the Minister of State introduced the Bill, he referred to competitive tendering. I appreciate that we are not to have that at the moment. However, even my local authority in Leicester is operating a restraint on trade. Organisations which have dealt with South Africa or have a nuclear interest — and there are plenty of companies with defence interests in Leicester which obviously have a nuclear dimension—are being denied their rights to take on contracts. The council insists that companies use the direct labour organisation. I do not knock everyone who works in a direct labour organisation, but it would be the jewel in the crown if we could bring

  807
  in competitive tendering to ensure the best tendering and the cheapest work and so do away with the amazing questionnaires which small businesses in Leicester guarantee that they do not have time to fill in and compromise their positions.
  This is a good Bill which will help to bring councils to check. We have nothing to be ashamed of. The Bill will control public expenditure and stop councils and councillors cheating. Hopefully, local authorities will be more responsible. I would never knock all local authorities because some have done their best. However, the council in Leicester must pull up its socks quickly. My hon. Friends will have the powers in this Bill. The Bill is not a retrograde step and it is not regressive. It will ensure that local authority ratepayers have an absolute say. I welcome the Bill and look forward to its becoming law. I also want to see competitive tendering and the outlawing of propaganda on the rates brought in as quickly as possible.
  8.42 pm
  Mr. Tony Banks: It was interesting to hear the hon. Member for Leicester, East (Mr. Bruinvels) referring to himself as some form of threatened species. I can only think of him as a species of Leicester leprechraun and I can say that without being accused of being "sizeist" since I am the same physical height as the hon. Gentleman.
  The hon. Member for Leicester, East raises the name of Leicester regularly, in the same way that my hon. and learned Friend the Member for Leicester, West (Mr. Janner) raises it. We hear Leicester mentioned in this House almost as often as we hear Newham mentioned. For a change, it would be nice to hear the hon. Member for Leicester, East supporting his own council. His council is democratically elected. It represents the people of the city. Indeed, some of those who voted Labour in the local council elections might even vote Conservative at the general election. From my experience on the GLC over many years, someone like Sir Horace Cutler who was the Tory leader of the council was quite prepared to defend London and attack the Conservative Government in the interests of London.
  There is an unfortunate divide in the House. Conservative Members take great delight in attacking their own local councils — mainly, of course, because those councils are controlled by a party other than their own. I should like to see a little more community loyalty, which would involve Tory Members defending their councils. They need not necessarily agree with everything that the councils do, but they could defend the councils rather than take every opportunity to attack them.
  I will not speak for very long about the Bill as it is rather like Hamlet without the prince. However, it would be wrong of Opposition Members to make great play of the fact that it is not the Bill that we were all expecting. Frankly, I am absolutely delighted that it is not the Bill that we all expected. Obviously, we will take some pleasure in the general discomfort that will be felt on the Government Front Bench as they hear the criticisms from Conservative Members. I am glad that the Bill does not involve compulsory tendering amendments to the Local Government Act 1986 or controls over contract compliance.
  A number of hon. Members, including the hon. Member for Leicester, East, referred to contract compliance as if somehow that was an invidious demand
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  made upon local enterprise and that there was nothing good in it. The way Conservative Members refer to contract compliance, one would think that it had been imported by Labour authorities direct from Moscow. The GLC did much pioneering work on contract compliance. We drew our experiences exclusively from the United States, because we found that the practices adopted there had a great deal to commend them.
  Contract compliance is taken from the world's premier capitalist state, not a Socialist state. It is not taken from the sort of country to which one would necessarily expect a Socialist GLC to be looking. We discovered that the way in which contract compliance was used to combat racism and discrimination in the United States was something we could bring into this country. I am glad that the Government are not pursuing the banning of contract compliance.
  We have heard a great deal from hon. Members referring to creative accountancy and the reasons why local authorities have adopted such practices. The hon. Member for Leicester, East—I am sorry to give him this additional publicity; we know how much he thrives on it and it is very much his oxygen—referred to the list of problems in Leicester. Indeed, the hon. Member for Wolverhampton, South-West (Mr. Budgen), like the hon. Member for Leicester, East, ran out an annoying list which did not amount to a row of beans in financial terms.
  When a local authority is spending money on policies aimed at ending discrimination against gays or lesbians, it is not the amount of money that upsets Tory Members, it is the principle. Even if it was only a matter of a few pounds, it would still offend and outrage them. When local authorities attempt to pursue policies to end discrimination against gays and lesbians, they run up against the accumulated years of prejudice and bigotry in our society. It is not surprising that there has been a backlash against Labour authorities especially in London which have attempted to deal with the problems of such discrimination.
  Local authorities have become involved in creative accountancy not because they want that, or because they are "profligate" as I understand the word profligate, but because they are trying to counteract central Government policies. They have found that central Government policies have deprived them of the resources they so desperately need to defend jobs and services in their areas. It is not surprising that boroughs, especially in London, which have become so deeply involved in the various accountancy procedures are precisely those inner London boroughs with the greatest problems. The Government must surely be prepared to acknowledge that.
  In a very statespersonlike speech, my hon. Friend the Member for Newham, North-East (Mr. Leighton) spelt out the problems in Newham. On this occasion, we are doing our best to be as nice to the Minister as we possibly can. That actually causes me physical and mental strain. However, I do not wish to upset the Minister too much while he is thinking about the things that he saw in Newham. We want extra resources for Newham. We are prepared to explain the problems to the Minister as patiently as we can so that he can understand our case. If he rejects our case in the end, we can at least say that we tried to demonstrate the problems, but the Minister was not impressed and we did not convince him. However, we did our best. That is because it is the responsibility of Opposition Members who represent Labour boroughs to

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  talk to Tory Ministers. Sometimes we find that a fairly unappetising prospect—not in the case of this Minister, I hasten to add, but in the case of some of his colleagues. However, we have to do it, because that is the democratic process.
  With creative accountancy, local authorities have been using the tactics, the techniques, and the skills to try in a democratic and lawful fashion to protect the jobs and services in their areas. They should not be subjected to the sort of vile campaign that they so often have to endure in this House and in the press generally. It cannot be unconnected with the fact that rate support grant, the money that goes from central to local government, has gone down from about 62 per cent. in 1979 to 46 per cent. of local authority expenditure. Even the Financial Times is prepared to acknowledge, and published a fine leader on the fact, that such reductions had a great deal to do with the level of rate increases that local authorities were imposing in order to try to defend their jobs and services,
  None of this creative accountancy is unlawful, and it is wrong for Conservative Members to suggest that somehow it is. Indeed, Environment Ministers rather than local authorities have more often been found to be acting unlawfully. Therefore, we do not need any great lectures on legality from the Government.
  My third point is about local authorities and their relationship with their communities, the electorate and the government. The hon. Member for Leeds West (Mr. Meadowcroft) and other hon. Members made a good point about this. If those authorities are so appalling, I am surprised that people still vote for them, It is not just a question of whether or not people pay the rates, because I do not think that this necessarily affects their voting pattern. When and if we get around to some kind of community poll tax, Conservative Members will find that what they thought would be a way of opening up these various local authorities to Conservative control will not work.
  In terms of voting Labour, there is no direct connection with the amount of rates that are paid. There is nothing advantageous in just sticking up the rates. No one likes to find the rate demand going up by 30, 40, 50, 60, or indeed 80, per cent.
  In his speech, the hon. Member for Leicester, East moved around the country and mentioned Ealing. I am surprised and to a certain extent disappointed that his hon. Friends the Members for Ealing, Acton (Sir G. Young) and for Ealing North (Mr. Greenway), who travel mob-handed when it comes to local government Bills, did not come to the House to talk about Ealing's possible 80 per cent. rate increase. The residents of Ealing are probably not delighted about the likely increase, but if one looks, as I have, at what Ealing borough council is doing, one can see why those rates might increase by that amount.
  I shall list some of the things that the council has done since May, 1986 when Labour was elected. It has signed deals to acquire 600 new homes to meet the housing crisis; employed extra home helps and under-fives staff; restored free milk to 10,000 first school pupils; taken on much-needed local housing repair teams; recruited 150 extra teachers; begun a £12·1 million programme of road and pavement renewal, including dropped kerbs and new cycle routes; restored grants to voluntary play groups; spent £500,000 on emergency care, responding in particular to
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  the needs of the elderly during the recent cold spell; given schools 11 per cent. more to spend on equipment and books; funded a wide range of new summer play schemes; reduced adult education fees, resulting in a 25 per cent. increase in numbers and started a borough magazine to keep people informed about what their council does.
  Mr. Peter Bruinvels: It is political propaganda.
  Mr. Banks: The hon. Gentleman says that it is political propaganda. These are good services that the people of Ealing want and need. If the Government had not reduced the rate support grant and did not impose draconian penalty systems on local authority finance, the residents of Ealing would not now be facing an 80 per cent. rise, or whatever the increase will be, in their rates. Let us be clear about this. Local authorities which are given the choice will clearly attempt to maintain the existing level of services in their boroughs. It is wrong for them to be totally and continually castigated in this House and outside.
  We have a major problem in Newham. My hon. Friend the Member for Newham, North-East summed it up in an excellent speech. There was a meeting with the Labour group, the Labour party and representatives of the trade unions on Sunday afternoon. My hon. Friend and I were there listening to our colleagues agonising over how they will meet the Government targets.
  My hon. Friend the Member for Newham, North-East has made the case that Newham is the second most deprived local authority area in Britain. We have the worst housing situation and the fastest growing level of homelessness in the whole of London. Yet we have been told by the Government that we have to make a 26 per cent. reduction in our rates and must reduce our expenditure by about £12 million from its current level. We are attempting to do that.
  The Minister knows what the problems are. He knows from his own officials and from the indices in his Department that we are not exaggerating the position. How can the Minister honestly expect us in Newham to make the sort of cuts that the legislation will require us to make? It cannot be done without risking all the social disruption mentioned by my hon. Friend the Member for Newham, North-East. I do not expect riots on the streets of Newham, but already we have a multiplicity of deprivation in our part of east London. This will make it worse.
  The Government may well say, "Why bother about Newham? After all, it is a Tory-free zone." We do not have any Tories on the borough council, but we do not propose to put up any posters at the approaches to Newham saying, "You are now entering a Tory-free zone." If one were being cynical, one could ask why the Government should bother about Newham because in electoral terms there is nothing in it for them. There is no way that the Tories will win any of the seats in Newham—Newham, South; Newham, East; Newham, North-East; or Newham, North-West.
  In the name of social justice and social harmony, and in order to try to solve Newham's problems through the ballot box, through the democratic process, the Minister cannot now require us to impose the level of cuts that he proposes. Frankly, it is beyond our ability to make such cuts. He came round with us and saw the problems and I ask him again to consider the case that we made, fairly,

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  coolly and objectively. If he does that, he will end up conceding that we have a case in Newham, and that despite everything that we have said about the Government and that they have said about us, on this occasion they will hear our case and make sure that we have the resources we need.
  8.57 pm
  Mr. Roy Galley: I congratulate the hon. Members for Newham, North-West (Mr. Banks) and for Newham, North-East (Mr. Leighton) on the way that they put their case. In local government debates we seem to hear ad nauseam about the problems of Newham. It is a compliment to those two hon. Members that the House is so well briefed on the details of the affairs of Newham. However, all that I have heard from those hon. Members suggests to me that a newer and more innovative approach, involving private enterprise and the private sector, would assist Newham, rather than thinking along the tracks and in the ruts about which we hear so much. However, one must compliment them for bringing the affairs of Newham so much to the forefront of the affairs of the House. Only my hon. Friend the Member for Leicester, East (Mr. Bruinvels) is more assiduous in putting local matters before Parliament.
  Mr. Leighton: Does the hon. Gentleman accept that there is no antipathy towards private enterprise and that the borough is trying to bring in private enterprise? We want a partnership between central and local government, involving the public and private sectors and the public authorities and voluntary organisations. That is what we are working for and the chamber of commerce supports our efforts.
  Mr. Galley: I am delighted to hear those remarks from the hon. Gentleman because they form part of the theme that I shall develop in my comments. It is important to develop that partnership. Too often, I fear, Labour Members suggest that the public sector is the be-all and end-all and that there are no solutions which are not publicly funded. We must get away from that and have a genuine partnership of all the interested organisations in the one locality to try to sort out the problems of that locality and to try to have a meeting of minds.
  That brings me to one of the points that I wanted to make in this debate. There has been far too much politicisation — if that is the correct term — of local government during the past 20 years. It has so often been to the detriment of local communities that there has been so much political content in those debates.
  The Bill is useful and its provisions relating to housing are sensible. Its provisions relating to the land register are vital and it has other useful tidying-up measures. However, one must regret that it does not get to the root of any of the local government problems with which we have to grapple in the 1980s. I pick up a point made by the hon. Member for Newham, North-West and record my disappointment that the Bill is such a slim measure and that it does not deal with the issues that we hoped to tackle during this Session.
  It would have been most helpful if the Bill had dealt with the issues of privatisation, contract compliance and political progaganda on the rates. However, one accepts the difficult problems facing my hon. Friend's Department over the drafting of the legislation and the very heavy
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  burden of technical legislation that he is facing during the Session. Therefore, one accepts, with regret, that it is not possible to bring forward the major measure for which we were hoping. With luck, in the next Session of Parliament we shall tackle those more fundamental issues.
  In our debates on local government in the House we tend to lose sight of the functions of local government. we have almost ceased to debate and consider the relevant functions of local government. So often many local authorities seem to set themselves up as mini-governments for their area and regard themselves as having an all-pervading influence on all the relevant affairs. That is a fundamentally misconceived view. In our future local government legislation I hope that we shall address that problem.
  One can understand immediately the enormous drafting and practical problems that would be involved. However, if at all possible I should like to see in future local government legislation some measure to set out, curtail and catalogue what is and what is not an appropriate responsibility for a local authority, and to see rather more than we see now aimed at curtailing the amount that local authorities may expend upon other matters. In various sections of the Local Government Act 1972 there are provisions to curtail expenditure on certain aspects. However, in recent years peripheral expenditure has burgeoned. One thinks especially of some London boroughs' activities with regard to equal opportunities, gay and lesbian rights, and a whole host of other aspects where money is spent in a way which is not pertinent to local authorities and detracts from their carrying out the essential functions of local government.
  Mr. John Powley: I am interested to hear what my hon. Friend is saying. Is he aware that at this moment Norwich city council—not a London borough by any means — is discussing the Government's trade union legislation? Does my hon. Friend agree that that is far removed from being a responsibility of local government? Does he further agree that the council would do better to spend its time and expertise on matters over which it has some direct control than to make pronouncements on matters that are properly the province of central and national Government?
  Mr. Galley: My hon. Friend is right, and he graphically demonstrates my point. We need to say to local government that there are certain functions which this House delegates to it and that it is responsible for carrying out those particular functions. We must say that other functions are not the proper concern of local government. If local government wishes to debate, either within its political groups or outside the council, a whole host of national issues, that is up to the political parties, but local government should not spend its time dealing with national considerations at the ratepayers' expense. We need to set out a catalogue of what local government should do, draw a line under it and say, "Thereafter your activities must be curtailed."
  Compared with other local authorities, my local authority is moderate and modest in some of its activities. However, recently in the Calderdale authority we have seen campaigns on social security, which have no relevance to the functions of that council. Recently we have, fortunately, seen the authority wind up a committee on health services in the Calderdale area which, again, is not

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  a matter delegated to it by Parliament. We have seen the development of Calderdale foreign policy over a wide variety of matters. We have seen the chief executive, who is properly dealing with housing policy and the regeneration of our area, writing speeches for the leader of the council about South Africa and umpteen other matters. That is wrong. We have seen attempts to name peace parks in our area. That is nonsense and diverts attention from the proper functions of local government.
  We have seen to much politicisation of local government and with it too great an adversarial element in the conduct of local government affairs. I constantly return to the words of wisdom of the hon. Member for Newham, North-West. He talked about loyalty to an area and co-operation. I must say to him that co-operation must be both ways. The hon. Member of Parliament and the council must work together, even if they are of different political persuasions. That is the only way to make progress in an area. Far too often, local councillors snipe at the local Member of Parliament if he is not of the same political persuasion, when, if they put their resources together, they could achieve far more.
  It is even more worrying that often in this adversarial contest councillors use senior officials to fire the bullets. We are beginning to see an abuse of senior officers. Political debates should be between politicians. Members of Parliament should not be engaged in purely political debates with the chief officers of their local authorities. We need to examine the role of chief officers and define it more clearly. Indeed, I hope that when we consider Widdicombe and further legislation, we shall deal with that. We must consider the functions of chief officers in supporting the council and selling their area.
  Surely one function must be to seek the greatest efficiency of services and to persuade the council to use its resources in the best way possible. I can cite a good local example. We have Audit Commission reports which would save over 3p on the rates this year if they were fully implemented and which are supported by many officers, yet they are gathering dust on shelves. If the officers pressed for support for those reports, we would have greater efficiency and more accountability.
  The Bill deals in part with capital expenditure controls. Prescribed expenditure often produces a variety of agonies for Members of Parliament. In the Green Paper it is suggested that capital controls should be tied more closely to capital receipts. That is useful but it should be applied in a limited way.
  My authority, going back to its Conservative years, has a good record of selling its assets and making the best use of the resources that it has accrued. As a result the assets that it can sell have now been reduced somewhat. It is also the case—looking especially at houses but also at other property—that property values in my area are among the lowest in the country. Therefore, a substantial sale of council houses will produce a smaller net return than would be the case in London and many other parts of the country. Some mechanism must be built into future legislation to deal with that problem.
  Finally, I shall deal briefly with some of the housing aspects of the Bill. I greatly commend my hon. Friend the Minister for bringing forward those provisions. There are, throughout this country, large estates that have serious difficulties. There are perennial problems on monolithic
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  estates which we cannot solve by public sector solutions. We must have far more tenant involvment and local management. That does not just mean devloving the management from the housing director; it means that the people living on the estates must make meaningful decisions about the way in which their estates are run.
  Mr. Meadowcroft: Where is that in the Bill?
  Mr. Galley: There are in the Bill, as the hon. Gentleman knows, provisions for involving the private sector more in housing. We need to involve the private sector, the housing associations and the tenants. We need to break up the enormous housing empires and transfer responsibility in a diverse sort of way back to the people who run the estates and back to more manageable organisations, such as housing associations.
  I must close there, despite the intervention from the hon. Member for Leeds, West (Mr. Meadowcroft). I commend especially the housing provisions of the Bill, but I hope that those provisions, and a number of other matters to which I have referred, will be developed much further in the near future.
  9.12 pm
  Mr. Harry Cohen: Rates are currently a significant source of concern for my constituents in Leyton and for residents throughout Waltham Forest. A substantial rise is imminent of 62 per cent. for domestic ratepayers and 57 per cent. for businesses. That is an appalling prospect. No one is happy, including the local councillors with whom I have talked and who have to make this unpleasant decision.
  My investigations have revealed four main reasons for this rise. The first reason is that the Government have savagely cut the rate support grant; for example in the Rate Support Grants Bill that follows this item of business, there will be no recycling of RSG. That effect will be a loss of grant to Waltham Forest of £1,678,000. That will mean 5½p on the rates at a stroke. Then there is the rate support grant cut overall. The director of finance wrote last month about the total local authority expenditure met by grant. He said :
  "In 1979–80 it was 61 per cent., whereas the settlement for 1987–88 is based on a figure nearer 46·3 per cent. Over this period, expenditure has almost doubled, but ratepayers will have to pay 2·7 times"—
  it is well over that double figure—
  "more in 1987–88 than they did in 1979–80."
  The leader of the council wrote:
  "If RSG was on the same formula as in 1981–82 (when the present system was introduced), the grant this year would be £20 million higher, and the rate-rise 35 per cent. lower".
  The Government have also inflicted penalties. That is a substantial reason for the rise. For every pound that is spent, the Government are insisting that ratepayers are charged £1·64 because of those penalties. It cannot even be said that local ratepayers will get value for money as a result.
  The second reason for the rates increase is that the Government have not properly allowed for inflation, which is running at about 3 per cent. Inflation on local authority costs, services and especially wages, which is a large part of the bill, is well above that.
  Then there is teachers' pay. The Government are not properly financing the new level of pay that was announced yesterday. They are shifting that bill to the local authorities and to ratepayers.

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  The third reason for the rates measures is that, before the election last May, the previous council—it was a hung council but to all intents and purposes was controlled by the Conservatives and the Liberals in coalition —deliberately left the cupboard bare by spending £5 million of balances. It used up all the balances and reserves. Even the housing repairs budget was raided for about £600,000. Posts were deliberately kept vacant to save money, which meant that classes in local schools were regularly sent home because there were no supply teachers. Because of that, a 30 per cent. rates rise would have been needed to do nothing, just to stand still and provide the same services.
  Before the last council elections, local Conservatives said that, if they were in control, they would cut services by 3 per cent. and still feel justified in raising rates by between 15 per cent. and 20 per cent. The SDP and the Liberals have supported many of the service developments, but do not properly explain what they would do about the rates. Even though the previous council cut the balances, it still left commitments to be funded this year.
  The important service developments by the new council are the fourth reason for the substantial rates increase. The council was elected to develop services and this has caused an increase of about 10 per cent. in the budget.
  I shall give some examples which reflect the local authority's response to the serious problems. Leyton's housing stock is among the worst 2·5 per cent. in the country for housing problems. The local authority is to put the £600,000 taken from the housing repairs budget back into housing repairs. It will provide £700,000 for permanent supply teachers and £418,500 for school building maintenance and repairs which are badly needed. It will provide £113,000 for social work services in child abuse cases and another £31,000 for legal services in such cases. Only last week, the front page of the local newspaper announced that, unless that money is provided, deaths will occur because of child abuse and child neglect in the borough. The council must be right to respond in that way to the problem.
  The council has allocated £100,000 for improved foster care services and £113,000 towards the running costs of a disabilities resource centre. It is concerned with a range of services for community care and is providing, for example, £128,500 for a community alarm system for the elderly, £109,500 to extend home care services for the elderly at risk, £57,500 for improved meals on wheels services and £122,000 on improved staffing in the homes for the elderly. Are any Conservative Members laughing at those services? Are they saying that they are not necessary? Of course not. The council will provide £77,000 to employ extra crew for refuse collection services which have been run down. The council is making up for the urban aid to voluntary organisations which the Government have cut by allocating another £225,000 for special projects. Those are some of the developments which have been promoted by the council.
  The 62 per cent. rates increase which results is a harsh burden on local people. It will force many more to rely on rebates. Already, about 50 per cent. of Leyton residents have to have rebates, and this means that they are caught in a poverty trap. Rebates do not help businesses or individuals who are just over the rebate level or those who arc too proud or too worried to claim. One of the ironies
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  of the increase is that the Government fork out for the rebate but have not paid the proper level of grant needed to keep the rates down in the first place.
  Comparisons can be made with other boroughs. Rates increases will be huge in three London boroughs in which the Tories were in control last May. Ealing has been mentioned, but rates are also well above average in Hammersmith and Fulham and Waltham Forest. The unfair penalty system effectively says to such local authorities, "You must have the same policies as the previous council, the one that you defeated in the local election." How can that be democratic? How can the Minister justify that as being democratic?
  Another comparison can be made with Waltham Forest and Redbridge, the borough next door. There will be a 3 per cent. rates rise in Redbridge compared with 62 per cent. in Waltham Forest. The rates in Redbridge will be half those paid by Waltham Forest ratepayers. Waltham Forest has greater needs and provides better services. That has been the local choice for many years, but it is nowhere double what is provided in Redbridge.
  The Tories like to use examples like this as simplistic propaganda in an election year. This unfair situation shows how the Government have cultivated a perverted rate support grant system purely for political purposes. The Government have given to the Tory local authorities and deliberately targeted Labour authorities. This is cheap propaganda but it is expensive for local ratepayers. The Tory Government are principally to blame for the massive rates rise in Waltham Forest and in other areas.
  What is needed is an increased level of Government grant to local authorities like Waltham Forest, an end to the spiteful political manipulation of the rate support grant system and to the grossly unfair penalties, and a fairer distribution of grant based on need. Labour in Waltham Forest wants to supply good quality services to the local community at a reasonable rate level. The Conservative Government are deliberately denying and thwarting that.
  9.22 pm
  Mr. Roland Boyes: We have had a very interesting series of contributions this evening. My right hon. Friend the Member for Brent, East (Mr. Freeson) identified the positive gains of £500 million expenditure under the Bill in creating, directly or indirectly, 62,000 jobs in the industry and improving conditions for the people who live in the houses. My right hon. Friend the Member for Newham, North-East (Mr. Leighton), in what I consider to be a brilliant speech, defended the unprecedented taking of local power by central Government and illustrated the problems of social, economic and environmental deprivation in Newham. When my hon. Friend mentioned that the representatives on his local authority were responsible, decent people, the Minister of State nodded his agreement, having visited the area.
  I share the delight of my hon. Friend the Member for Newham, North-West (Mr. Banks) that the Bill was not expected or anticipated and that a series of services that were to be included have been removed, as detailed by my hon. Friend the Member for Blackburn (Mr. Straw).
  My hon. Friend the Member for Leyton (Mr. Cohen) concluded with a vigorous contribution on the problems of his local authority and the financial problems left by the hung council to be dealt with by the present council.

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  We heard contributions from the hon. Members for Halifax (Mr. Galley), for Nuneaton (Mr. Stevens) and for Leeds, West (Mr. Meadowcroft), and—the only speech I have not heard this evening, for which I would apologise if the hon. Gentleman had bothered to stay in the Chamber — for Wolverhampton, South-West (Mr. Budgen). I was glad that he was able to put on record the positive decision of the Labour-controlled authority in Wolverhampton, whose concern for the elderly by making special payments to protect them in the cold weather spell undoubtedly saved many lives in that area.
  I also mention that the leader of the Wolverhampton council, Mr. John Bird, will be our Euro-candidate in the European elections. I realise that the hon. Member for Wolverhampton, South-West will find it impossible to utter the words "European Parliament" with his reactionary attitude. [AN HON. MEMBER: "It is an Assembly."] No, it is a Parliament and it has been deemed to be a Parliament.
  We are clearly of the opinion that John Bird will enjoy a good victory in the forthcoming midlands elections. I take this opportunity of wishing him well.
  We are discussing a Bill that reminds me of a bus with its wheels taken off. A host of matters that we anticipated have been blocked out of the Bill — for example, competitive tendering, contract compliance and powers to strengthen local ombudsmen and their relationship to new towns. Obviously, Opposition Members welcome that move.
  We are debating yet another Bill that affects local government. From the Secretary of State's reply to my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) we know that the Government have introduced 43 Bills that directly affect local government. Many of them are in serious financial difficulties. Whether the Government intended to control spending and cash-raising powers or generally add to the mass of existing legislation, the effect is the same. Hon. Members and officers are finding it increasingly difficult to take decisions that are in the interests of the people that they represent. In fact, Derrick Hender, the local government adviser of Coopers and Lybrand Associates, said :
  "If asked for a statement of key tasks many chief executives would simply state 'survival'.
  That is no reflection on individuals who struggle against ever mounting odds but it emphasises the pressures caused by political upheaval or indecision, tight resource constraints and a hostile Government attitude."
  Local government, like business, needs to plan. It needs to be able to formulate rolling programmes. However, local government has existed in conditions that are a continuing nightmare. Since the summer recess, many Bills have introduced retrospective legislation on matters that have been proved in the courts to be illegal Government actions. Bills have been introduced to rob local authorities of essential cash. In fact, immediately after the Division this evening, the concluding stages of the Rate Support Grants Bill will be discussed. A consequence of this Bill is that a further £400 million to £600 million will be taken from local authorities. Because of grant recycling, local authorities would have shared that sum, but the Government decided to end recycling. In support of that, the Government use dubious arguments, one of which is that local authorities cannot be certain of the amount that
  818
  they will receive. Therefore, the Government are introducing certainty into local government finance. The uncertainty about how much a local authority will receive is replaced by the certainty that it will get nothing.
  The Bill also further increases the power of the Secretary of State and civil servants. That has been a feature of successive Bills, ranging from the abolition of a whole tier of local government to giving increasing powers over local authorities and the power to discriminate between them.
  By virtue of the Local Government Bill the Secretary of State will increase his authority and power over local government by the creation of consent procedures on housing and detailed regulations on deferred purchase. The chief executive of a major north-east local authority described the present processes as a continuing erosion of local government, which is a weakening of one of the strengths of our democracy—that politics is able to play a real and constructive role at local as well as at central level in Parliament. Eroding the scope and opportunity for local politics can only weaken the development of a mature and responsible political system. Politicians of all parties should be alert to that trend and seek to reverse it.
  There are real dangers and related consequences if central Government continues to abuse the power of local authorities and their ability to serve their communities. In an article on the "Agenda" page of the Local Government Chronicle, George Jones and John Stewart stated :
  "The decision may or may not be agreed with but it should be the right of the local authority to make it and be held accountable for it to its voters.
  An elected local authority exists to make such choices. There will always be disagreement about the exent of local choice but it is critical that a council should itself decide how to organise its services."
  There is a very real need for capital expenditure on our towns and cities. Many of the problems faced by the inner cities—housing, unemployment, social service needs and infrastructure renewal, to cite only a few of them—are horrendous. To begin to solve some of those very real and visible problems requires not only the injection of capital but local authorities which are able to determine needs and priorities and to decide how to make the best use of their scarce resources.
  Local authorities spend a considerable amount of time on determining how to make the most effective and efficient use of their resources. This Bill increases the problems that local authorities have to face and therefore the problems, both social and economic, of the people they represent.
  In addition, projects that require capital injection—for example, to protect the infrastructure — obviously become worse when starved of funds, and the cost to future generations is on a geometric, not linear, scale. Local authorities are being forced to pass the buck to our children. We have an obligation to provide for future generations. The Government are guilty of neglect, which I shall illustrate by considering the consequences of clause 1.
  On 22 July 1986 the Secretary of State made an announcement in the House of Commons about his proposals for the rate support grant settlement for 1987–88. One aspect of that statement concerned capital expenditure. The Secretary of State said :
  "I shall therefore introduce legislation to ensure that prescribed expenditure is incurred in the proper year regardless of when the local authority pays. This will apply

  819
  to all advance and deferred purchase arrangements, and other arrangements with a similar effect, entered into after midnight tonight."—[Official Report, 22 July 1986; Vol. 102, c. 183.] Clause 1 brings into effect the consequences of the announcement that was made in July 1986 about the Secretary of State's intention to introduce legislation to negate the benefits of advance and deferred purchase schemes.
  These schemes were being used by some local authorities as a means of either accelerating or deferring the impact of capital expenditure for prescribed capital
  expenditure control purposes, but I must emphasise that these activities were perfectly legal.
  The words "scandal" and "reckless" were used by the Minister this evening. How can legal activity, supported by hard-headed, competitive business men, be reckless? I shall return to that point in a moment.
  A deferred purchase scheme is the means used by a local authority to spend money on a capital project — for example, a sports centre—and to defer the time when the council spends the money over a few years. A financial institution is used to pay another company to build the project over a given period—say, three years—and the council repays the financial institution over, say, eight years. For an authority, in particular a small authority, the building of a major but necessary project—for example, a sports centre—could force major cuts in its planned capital budget. A local authority keeps within its capital allowance by spreading the cost. In effect, the bulk of the planned capital programme can take place in the short term and the sports centre can be built.
  It is clear that by such means—strictly legal devices —local authorities have had more flexibility in scheduling their capital projects. Local authorities know quite well that the payments they eventually make will count against their capital allocations in future. However, the Association of Metropolitan Authorities makes two important points. First, the local authority and the finance
  company concerned are well able to assess the likely calls on the capital allocations of future years. Secondly, the Secretary of State will be substituting his discretion on the wisdom and appropriateness of deferred advance purchase schemes for that of local authorities.
  However, on 22 February 1987 the Local Government Chronicle said:
  "'But City financiers always carefully examined any deferred purchase arrangements before lending', said Jack Halligan of Butler Till. 'The money market has been looking very carefully at named authorities for a long time now, and business has still been carried out'".
  Why must this process take place? The problem is that present capital allocations are inadequate. The treasurer of a county council told me in confidence that some local
  authorities have had to enter into these schemes because capital allocations have been dramatically reduced and the capital expenditure control system does not allow
  sufficient flexibility to enable authorities to respond to the needs of their areas. The treasurer says:
  "It is not surprising that, faced with appalling problems, some authorities have found these schemes offer the only real alternative to a continued decline in the state of their capital assets."
  The decline in the state of capital assets is caused by the Government, who are seeking to enforce their harsh regime of controls on the capital expenditure of all local authorities.
  Since 1978–79, local authority capital expenditure has dropped by 41 per cent. overall and by 60 per cent. on
  820
  housing. There are some illustrative figures in the September/October issue of Community Action. Only 33,000 new public sector houses were started in 1985, compared with 170,000 in 1976. Some 39 per cent. has been cut from capital expenditure on schools since 1981, £500 million needs to be spent on maintaining primary schools, and a further £700 million on secondary schools. Spending on local roads has been cut by 34 per cent. in real terms from 1976 to 1983 and £176 million extra needs to be spent on roads just to stand still.
  The Association of Metropolitan Authorities has published a table of figures, produced by the Department of the Environment, which shows a massive reduction in gross local authority capital spending from 1976–77 to 1986–87 in real terms at 1984–85 prices. In 1976–77, the figure was £7,898 million and by 1986–87 the gross amount had been reduced to £3,952 million. In reality, the figures have almost been cut in half and mercilessly slashed. The massive swingeing cut is a backcloth to the problems that are faced by local authorities. I shall quote what one person has said:
  "Into what state of decay is our physical environment to be allowed to sink before the Government recognise the distinction between just spending money and investing it to create real jobs and real wealth? Will we have to wait for a typhoid epidemic or some other disaster before the Government will permit essential expenditure on infrastructure in our towns and cities?" — [Official Report, 18 December 1984; Vol. 70, c. 167.]
  That was the right hon. and learned Member for Hexham (Mr. Rippon).
  Clauses 2 to 4 introduce specific statutory powers to give legal assistance to the private sector and require the Secretary of State's consent for the new power. Clause 2 deals with powers of local authorities to enter into leaseback schemes with housing authorities or other bodies through the arrangements which have been made subject to a consent procedure under which the Secretary of State will have to approve the terms of the scheme. These consents can be conditional, unconditional, specific or general as to class benefits, which can be provided and revoked at any time.
  The Minister, in considering whether to grant a consent, has to take into account whether an authority should bear the financial burden and risks of acquiring, constructing, concerting, rehabilitating, improving, maintaining or managing any property and he may take into account any other matters that he considers relevant. In short, Ministers may do whatever they wish in terms of granting or not granting consents.
  Clause 3 also contains retrospective provisions. Under clause 3(4) everything done by a housing authority after midnight of 5 February 1987 in pursuance of such a scheme which was not signed by that time and which would, after enactment of the Bill, have been subject to the consent requirements of clause 3, is deemed to require such a consent. There is little doubt that the announcement by the Minister for Housing, Urban Affairs and Construction on 5 February 1987 halted some major schemes. My hon. Friend the Member for Birmingham Perry Barr, (Mr. Rooker) said:
  "The Opposition refuse to do that, but the Minister must be aware that his midnight deadline is causing problems up and down the land. I ask the Minister, while he is consulting on the issues, to reconsider whether he needed that midnight deadline last Thursday." — [Official Report, 10 February 1987; Vol. 1406, c. 246.]

  821
  Again, I ask the Minister to answer the question put by my hon. Friend.
  The situation is simply not good enough. No wonder local authority members and officers have such difficulty in administering services when they are treated in such a cavalier way by the Government. It is only because of the devotion and professionalism of the people running local authorities that the system is not plunged into an unworkable morass. It was because of its capable members and officers that Sheffield city council was able to beat the 5 February midnight deadline. The people of Sheffield will benefit greatly by the joint venture between the city council and the United Kingdom housing trust. Some 2,000 houses will be built on land provided by the local authority. Development finance is being provided by the Nationwide building society and a merchant bank. I understand that Ealing council also managed to beat the deadline, but we do not know how many imaginative schemes missed the deadline. We will now suffer the consequences of the Government's action and such schemes may never reach fruition.
  This is a bad Bill. It would have been much worse if it had not been gutted by the loss of the clauses that would have contained another major assault on the powers, responsibilities and duties of local authorities. Nevertheless, there is enough in the Bill to affect local government adversely. It will result in less investment in infrastructure, fewer houses being built and consequently more people living in substandard houses, and, even more of a tragedy, an increase in the number of homeless people. The Government's doctrinaire attitude to local government, as illustrated by the number of local government Bills that we have discussed since 1979, is simply strengthening Whitehall and weakening local authorities. This is a dangerous, backward step in the country's democratic process. As a consequence, we shall have no alternative but to oppose it.
  9.41 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): We have had a good debate on this short but important Bill. I shall try to answer as many of the points that have been raised as possible.
  I thank my hon. Friends who participated in the debate for the good humour which they showed in the way in which they disguised their understandable disappointment that the Bill is much smaller than we would have wished. In case anybody thinks that we were frightened of proceeding with the compulsory competitive tendering provisions, I assure him that every day that goes by we get more independent evidence of the importance of going down that road. The most recent addition to that mass of evidence is the Audit Commission's occasional paper on competitiveness in contracting out local authority services. The conclusion is:
  "The Commission is aware of a wide range of strategies adopted by authorities to avoid tackling the problems of noncompetitive in-house services. Quite apart from any legal considerations, such moves are misguided. There is a massive backlog of work outstanding, on council houses and school maintenance in particular. So non-competitive local authority services are, quite simply, destroying value to no good purpose. The proposals set out above are designed to realise the potential value improvements worth some £500 million a year which seem to be available."
  822
  It is not necessary for there to be legislation for local authorities to carry out and realise these savings voluntarily. I am disappointed, although not surprised, that Labour Members are not prepared to encourage their local authorities to make those savings, which are there for the asking.
  Comments have been made about the disparity between the performance of local authorities in response to what the labour Government were doing in the late 1970s, when they got the economy into such a mess, and what is happening now. It is worth reminding hon. Members that between 1976–77 and 1979–80 there was a 3 per cent. reduction in real terms in local authority current expenditure, whereas since 1979–80 there has been a 12 per cent. real terms increase in expenditure. I do not believe that I am alone in saying that I wish that more of that expenditure had gone on capital projects. If local authorities had controlled their revenue expenditure to a greater extent, more money would have been available for capital projects.
  The hon. Member for Blackburn (Mr. Straw) made a number of remarks that cast aspersions upon my right hon. Friend the Secretary of State and myself concerning the circumstances in which this Bill had to be reduced in size. At the time of the Gracious Speech it was not apparent just how much work would be involved in the Local Government Finance Bill. It was that volume of work that delayed the preparation of this Bill. Indeed, my hon. friend the Member for Nottingham, East (Mr. Knowles) stressed the importance of getting the measures exactly right. My right hon. Friend was correct when he said in his statement to the House on 18 February that had we waited until all the provisions we had originally intended to bring forward in this Bill were completed there would have been unacceptable delay of a month or more before we would have been in a position to bring forward this legislation for the House's consideration.
  Although those facts have been stated on more than one occasion, I am disappointed that the hon. Member for Blackburn has not been prepared to accept them.
  Mr. Straw: If those are the facts, will the Minister explain why he categorically told the nation on 4 February that the new Bill would contain all the provisions about competitive tendering?
  Mr. Chope: At the time that I made the speech on 4 February, it was the Government's intention to bring forward the Bill as proposed in the Gracious Speech. What changed was the realisation that it would take at least a month, beyond February, to bring the Bill — [Interruption.] I do not know whether hon. Members are disappointed about that. However, I am correct in saying that the extra provisions will be introduced a lot sooner than the Opposition would wish.
  Many references have been made to the number of local government Bills that have been introduced. However, as soon as we introduce a Bill there is almost always a universal chorus of, "We want another one." I do not doubt that more local government Bills will be brought forward in due course.
  The hon. Member for Blackburn discussed clauses 2 to 4 and he made a serious allegation that should be answered. He asked whether certain types of local authority activity would become unlawful under clause 3. The short-term leasing of property by a local authority for

  823
  letting to its tenants is not affected by the controls in clause 3. Some leasing schemes which have come to the Department's attention involve the giving of guarantees to housing associations. Schemes of that nature may well require the Secretary of State's consent.
  Bed and breakfast arrangements under which local authorities top up supplementary benefit are not affected by clause 3. Care in the community schemes may come within the exemption in clause 3(2)(b) or may be exempted from the need for consent if topping-up payments of the type I have already mentioned are invoked. Otherwise, consent may be needed and my Department will be ready to issue specific or general consents as appropriate for such schemes.
  My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made an all-too-rare intervention in the debate on the affairs of local government. He is a master of local government matters and I hope that we will have the benefit of hearing further contributions from him. He quite rightly referred to the frustration that he and no doubt many other ratepayers in Wolverhampton feel about the fact that that authority has increased its rates this year by 15 per cent. My hon. Friend asked why we were not able to introduce rate capping.
  Mr. Greenway: What about Ealing?
  Mr. Chope: I will come to Ealing in a moment. Unfortunately, Wolverhampton did not comply with the requirements set down by my right hon. Friend for rate capping. [HON. MEMBERS: "Unfortunately?"] I can assure my hon. Friend that the Secretary of State will carefully consider any authority that is spending and rating at high levels when considering the criteria for selection for rate capping.
  My hon. Friend referred more widely to the unacceptable activities of his authority. I entirely share his concern, and I trust that the electors of Wolverhampton will take due note and elect next time a council that will concentrate on its proper responsibilities.
  It is worth reminding the House of the very short intervention by the hon. Member for Copeland (Dr. Cunningham) in which he made an allegation about Merton council, no doubt related to the forthcoming local by-election. I was surprised at his intervention because he comes fresh from the bruising at Greenwich and is now dreaming another impossible dream that the Labour party will be able to win the by-election in Merton.
  I do not know whether the hon. Gentleman was aware that we would be able to make contact with Merton so quickly after his allegation and therefore to answer it, but I can assure him that from the conversations that have been taking place this evening it is apparent that the Merton council officers have been asked to bring forward proposals for expenditure this month throughout the borough to avoid an underspend in the current year. As the hon. Gentleman will know, this is common practice not only among local authorities but also in central Government. I am assured that no special consideration is being given to the Pollards Hill ward. Projects are being brought forward throughout the borough.
  I think that this is an important factor in a by-election because the electors in Merton will realise that their council is so prudently run that at this stage in the financial year it has extra resources to put into its programmes.
  Dr. Cunningham: I am grateful to the Under-Secretary of State for dealing so promptly with this matter. I want him categorically to assure the House and the people of Merton that the instructions from the Conservative leader of the Merton council, Councillor Cowd, that £100,000 should be spent before 19 March in the Pollards hill ward, which is the ward where the by-election is taking place, will not be followed through, but that the expenditure will be considered on the basis of the problems of the borough as a whole and not just those of that one ward. It is his responsibility, he is the leader of the council and is a Conservative, and there is ministerial responsibility for these matters. Will the Minister give the House that assurance?
  Mr. Chope: I cannot give assurances on behalf of Merton council, but I can assure the hon. Gentleman that the Conservatives will retain control of that council when the by-election takes place. It is significant that, whenever we are able to answer the allegations, the ground suddenly shifts and an alternative allegation is put forward.
  My hon. Friend the Member for Nottingham. East (Mr. Knowles), in a perceptive speech born of his experience when he was leader of Kingston council, made some excellent comments about the need for local government to behave prudently. He said that in two or three years' time local authorities would have built up massive bills which could only result in either substantial cuts in services or enormous rate increases. He referred to what has been happening in Islington. Hon. Members will know that in Islington there are experts in raising all the "funny money" and in accounting measures designed to disguise from ratepayers the true expense of what is being done. It is estimated that by 1981 Islington will he paying for various creative accounting schemes no less than £11 million a year; and that is on top of the more orthodox debt servicing to which that borough is committed.
  The right hon. Member for Brent, East (Mr. Freeson) made a long speech about the various housing provisions in the Bill, but, rather significantly I thought, he omitted to make any reference to the performance of the London borough of Brent on its deferred purchase schemes. In case anybody is in any doubt about the dramatic way in which the use of deferred purchase schemes can result in burdens being placed on ratepayers and citizens many years in the future, I can tell the House that as a result of the deferred purchase schemes already carried out by Brent, some 16 years ahead—that is, after the year 2000—there will be revenue burdens on the Brent ratepayers of £13 million a year. Those burdens will have to be borne as a result of spending which has already taken place but for which the bill has not yet been paid because of the deferred purchase schemes. I understood from the hon. Member for Houghton and Washington (Mr. Boyes) that the Labour party supports the deferred purchase scheme and thinks that the Government have behaved unreasonably in putting an end to them.
  Mr. Freeson: Will the hon. Gentleman give way?
  Mr. Chope: I will not. This is only a short wind-up speech.
  During the debate we have had many reminders of what the Labour party is like when it is in power. My hon. Friend the Member for Leicester, East (Mr. Bruinvels) reminded us that last year the Labour council in his area

  825
  increased rates by some 80 per cent. but this year, when facing the electorate, it will increase them by only 4.8 per cent.
  Mr. Straw: It faced the electorate last year.
  Mr. Bruinvels: It lost two seats—a 7·5 per cent. swing in Leicester, East.
  Mr. Chope: I am grateful to my hon. Friend the Member for Leicester, East for reminding me that last year the Leicester Conservatives had one of the best local election results anywhere in the country as a result of that massive increase.
  We have heard references to Waltham Forest's 68 per cent. increase in rates this year, which is appalling. Hammersmith is talking about a 50 per cent. increase and Ealing is talking about an 80 per cent. increase. As far as I know, none of those increases was referred to in the manifestos put to the electorate of those local authorities.
  For those hon. Members who have not seen The London Evening Standard tonight — an excellent newspaper, if I may say so—I should point out that it draws attention to the implications for ratepayers in Ealing of an 80 per cent. increase. It also draws attention to the implications for the health authority in Ealing. The proposed rate increase will add £400,000 to the bill of the health authority in Ealing. That means that some 30 nurses will have to be taken off the staff. That demonstrates that Labour local government in practice is cutting the ability of health services to meet patient need.
  The same is true of the massive rate increases on business. For example, the Lyons Tetley company employs a large number of people in Ealing. The additional rate increase will impose the burden of £320 per annum for each employee of that company. That is a totally intolerable burden to place upon employees of any organisation.
  During the debate we have heard reference to the Ealing schemes and it has been asked whether they would be caught by the Bill. We are aware of the two housing schemes being planned by Ealing with housing associations and using private finance. Whether the authority entered into legally binding obligations in respect of those schemes before 6 February and therefore does not require my right hon. Friend's consent is not clear. That is primarily a matter for the authority itself and for its legal advisers. However, the housing associations concerned also require the Housing Corporation's consent. My Department has just received from the corporation certain documents relating to the scheme at Drayton Bridge road and is studying those. When we have reached a view I shall let my hon. Friends know the outcome.
  This is an important Bill. It is not as large as we hoped at one time that it would be, but it will bring important protection to ratepayers and ensure the effective use of public assets. I commend it to the House.
  Question put, That the Bill be now read a Second time: —
  The House divided: Ayes 259, Noes 196.

  Division No. 105]

  [10 pm

  AYES

  Alison, Rt Hon Michael

  Atkins, Rt Hon Sir H.

  Amess, David

  Atkins, Robert (South Ribble)

  Ancram, Michael

  Atkinson, David (B'm'th E)

  Arnold, Tom

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

  Aspinwall, Jack

  Baker, Nicholas (Dorset N)

  826

  Baldry, Tony

  Gardner, Sir Edward (Fylde)

  Banks, Robert (Harrogate)

  Garel-Jones, Tristan

  Batiste, Spencer

  Gilmour, Rt Hon Sir Ian

  Beaumont-Dark, Anthony

  Glyn, Dr Alan

  Bellingham, Henry

  Goodlad, Alastair

  Bendall, Vivian

  Gow, Ian

  Benyon, William

  Gower, Sir Raymond

  Bevan, David Gilroy

  Grant, Sir Anthony

  Biffen, Rt Hon John

  Greenway, Harry

  Biggs-Davison, Sir John

  Gregory, Conal

  Blackburn, John

  Griffiths, Peter (Portsm'th N)

  Blaker, Rt Hon Sir Peter

  Grist, Ian

  Body, Sir Richard

  Ground, Patrick

  Bonsor, Sir Nicholas

  Grylls, Michael

  Boscawen, Hon Robert

  Hamilton, Hon A. (Epsom)

  Bottomley, Peter

  Hampson, Dr Keith

  Bottomley, Mrs Virginia

  Hanley, Jeremy

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

  Hannam, John

  Bowden, Gerald (Dulwich)

  Hargreaves, Kenneth

  Boyson, Dr Rhodes

  Harvey, Robert

  Braine, Rt Hon Sir Bernard

  Haselhurst, Alan

  Brandon-Bravo, Martin

  Hawkins, C. (High Peak)

  Bright, Graham

  Hawksley, Warren

  Brinton, Tim

  Hayhoe, Rt Hon Sir Barney

  Brittan, Rt Hon Leon

  Hayward, Robert

  Brooke, Hon Peter

  Heathcoat-Amory, David

  Brown, M. (Brigg & Cl'thpes)

  Heddle, John

  Browne, John

  Henderson, Barry

  Bruinvels, Peter

  Hickmet, Richard

  Bryan, Sir Paul

  Hicks, Robert

  Buchanan-Smith, Rt Hon A.

  Higgins, Rt Hon Terence L.

  Budgen, Nick

  Hill, James

  Bulmer, Esmond

  Hirst, Michael

  Burt, Alistair

  Hogg, Hon Douglas (Gr'th'm)

  Butler, Rt Hon Sir Adam

  Holt, Richard

  Butterfill, John

  Hordern, Sir Peter

  Carlisle, John (Luton N)

  Howard, Michael

  Carlisle, Kenneth (Lincoln)

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

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

  Howarth, Gerald (Cannock)

  Cash, William

  Howell, RtHonD. (G'ldford)

  Chope, Christopher

  Howell, Ralph (Norfolk, N)

  Churchill, W. S.

  Hubbard-Miles, Peter

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

  Hunt, David (Wirral W)

  Clark, Dr Michael (Rochford)

  Hunt, John (Ravensbourne)

  Clark, Sir W. (Croydon S)

  Hunter, Andrew

  Clarke, Rt Hon K. (Rushcliffe)

  Hurd, Rt Hon Douglas

  Conway, Derek

  Irving, Charles

  Coombs, Simon

  Jackson, Robert

  Cope, John

  Jenkin, Rt Hon Patrick

  Cormack, Patrick

  Jessel, Toby

  Corrie, John

  Johnson Smith, Sir Geoffrey

  Couchman, James

  Jones, Gwilym (Cardiff N)

  Cranborne, Viscount

  Jones, Robert (Herts W)

  Critchley, Julian

  Joseph, Rt Hon Sir Keith

  Crouch, David

  Kershaw, Sir Anthony

  Currie, Mrs Edwina

  Key, Robert

  Dickens, Geoffrey

  King, Roger (B'ham N'field)

  Dicks, Terry

  Knight, Greg (Derby N)

  Dorrell, Stephen

  Knowles, Michael

  Douglas-Hamilton, Lord J.

  Knox, David

  Dover, Den

  Lamont, Rt Hon Norman

  Dunn, Robert

  Lang, Ian

  Dykes, Hugh

  Lawler, Geoffrey

  Eggar, Tim

  Lawrence, Ivan

  Evennett, David

  Lee, John (Pendle)

  Eyre, Sir Reginald

  Leigh, Edward (Gainsbor'gh)

  Fallon, Michael

  Lennox-Boyd, Hon Mark

  Farr, Sir John

  Lester, Jim

  Fenner, Dame Peggy

  Lewis, Sir Kenneth (Stamf'd)

  Finsberg, Sir Geoffrey

  Lightbown, David

  Fletcher, Sir Alexander

  Lilley, Peter

  Fookes, Miss Janet

  Lloyd, Sir Ian (Havant)

  Forman, Nigel

  Lloyd, Peter (Fareham)

  Forsyth, Michael (Stirling)

  Lord, Michael

  Forth, Eric

  Luce, Rt Hon Richard

  Fraser, Peter (Angus East)

  Lyell, Nicholas

  Freeman, Roger

  McCrindle, Robert

  Fry, Peter

  McCurley, Mrs Anna

  Gale, Roger

  MacKay, Andrew (Berkshire)

  Galley, Roy

  MacKay, John (Argyll & Bute)

  827

  Maclean, David John

  Price, Sir David

  McNair-Wilson, M. (N'bury)

  Proctor, K. Harvey

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

  Raffan, Keith

  McQuarrie, Albert

  Raison, Rt Hon Timothy

  Major, John

  Rathbone, Tim

  Malins, Humfrey

  Rees, Rt Hon Peter (Dover)

  Malone, Gerald

  Renton, Tim

  Maples, John

  Rhodes James, Robert

  Marlow, Antony

  Ridley, Rt Hon Nicholas

  Marshall, Michael (Arundel)

  Robinson, Mark (N'port W)

  Mather, Sir Carol

  Roe, Mrs Marion

  Maude, Hon Francis

  Ryder, Richard

  Mawhinney, Dr Brian

  Sainsbury, Hon Timothy

  Mayhew, Sir Patrick

  Scott, Nicholas

  Merchant, Piers

  Shepherd, Colin (Hereford)

  Meyer, Sir Anthony

  Shersby, Michael

  Mills, Iain (Meriden)

  Skeet, Sir Trevor

  Mills, Sir Peter (West Devon)

  Smith, Sir Dudley (Warwick)

  Mitchell, David (Hants NW)

  Stern, Michael

  Moate, Roger

  Stevens, Lewis (Nuneaton)

  Monro, Sir Hector

  Stewart, Allan (Eastwood)

  Morris, M. (N'hampton S)

  Stewart, Andrew (Sherwood)

  Morrison, Hon C. (Devizes)

  Stokes, John

  Morrison, Hon P. (Chester)

  Thatcher, Rt Hon Mrs M.

  Moynihan, Hon C.

  Thompson, Donald (Calder V)

  Murphy, Christopher

  Thompson, Patrick (N'ich N)

  Neale, Gerrard

  Townsend, Cyril D. (B'heath)

  Nelson, Anthony

  Trotter, Neville

  Neubert, Michael

  Vaughan, Sir Gerard

  Newton, Tony

  Wakeham, Rt Hon John

  Nicholls, Patrick

  Walker, Bill (T'side N)

  Norris, Steven

  Waller, Gary

  Onslow, Cranley

  Walters, Dennis

  Oppenheim, Phillip

  Watts, John

  Oppenheim, Rt Hon Mrs S.

  Wells, Sir John (Maidstone)

  Osborn, Sir John

  Wheeler, John

  Ottaway, Richard

  Wilkinson, John

  Page, Sir John (Harrow W)

  Winterton, Mrs Ann

  Page, Richard (Herts SW)

  Winterton, Nicholas

  Parkinson, Rt Hon Cecil

  Wood, Timothy

  Patten, J. (Oxf W & Abgdn)

  Yeo, Tim

  Pawsey, James

  Young, Sir George (Acton)

  Peacock, Mrs Elizabeth

  Percival, Rt Hon Sir Ian

  Tellers for the Ayes:

  Pollock, Alexander

  Mr. Tony Durant and

  Powell, William (Corby)

  Mr. Michael Portillo.

  Powley, John

  NOES

  Abse, Leo

  Buchan, Norman

  Alton, David

  Callaghan, Jim (Heyw'd & M)

  Anderson, Donald

  Campbell, Ian

  Archer, Rt Hon Peter

  Campbell-Savours, Dale

  Ashdown, Paddy

  Canavan, Dennis

  Ashley, Rt Hon Jack

  Carlile, Alexander (Montg'y)

  Ashton, Joe

  Carter-Jones, Lewis

  Atkinson, N. (Tottenham)

  Cartwright, John

  Bagier, Gordon A. T.

  Clarke, Thomas

  Banks, Tony (Newham NW)

  Clay, Robert

  Barnes, Mrs Rosemary

  Clelland, David Gordon

  Barron, Kevin

  Clwyd, Mrs Ann

  Beckett, Mrs Margaret

  Cocks, Rt Hon M. (Bristol S)

  Beith, A. J.

  Cohen, Harry

  Bell, Stuart

  Coleman, Donald

  Benn, Rt Hon Tony

  Conlan, Bernard

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

  Cook, Frank (Stockton North)

  Bermingham, Gerald

  Cook, Robin F. (Livingston)

  Bidwell, Sydney

  Corbett, Robin

  Blair, Anthony

  Corbyn, Jeremy

  Boothroyd, Miss Betty

  Cox, Thomas (Tooting)

  Boyes, Roland

  Craigen, J. M.

  Bray, Dr Jeremy

  Cunliffe, Lawrence

  Brown, Gordon (D'f'mline E)

  Cunningham, Dr John

  Brown, Hugh D. (Provan)

  Davies, Rt Hon Denzil (L'lli)

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

  Deakins, Eric

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

  Dewar, Donald

  Brown, Ron (E'burgh, Leith)

  Dixon, Donald

  Bruce, Malcolm

  Dobson, Frank

  828

  Dormand, Jack

  Maxton, John

  Douglas, Dick

  Maynard, Miss Joan

  Dubs, Alfred

  Meacher, Michael

  Duffy, A. E. P.

  Meadowcroft, Michael

  Dunwoody, Hon Mrs G.

  Michie, William

  Eadie, Alex

  Mikardo, Ian

  Eastham, Ken

  Millan, Rt Hon Bruce

  Evans, John (St. Helens N)

  Miller, Dr M. S. (E Kilbride)

  Fatchett, Derek

  Mitchell, Austin (G't Grimsby)

  Field, Frank (Birkenhead)

  Morris, Rt Hon A. (W'shawe)

  Fields, T. (L'pool Broad Gn)

  Morris, Rt Hon J. (Aberavon)

  Flannery, Martin

  Nellist, David

  Foot, Rt Hon Michael

  Oakes, Rt Hon Gordon

  Forrester, John

  O'Brien, William

  Foster, Derek

  O'Neill, Martin

  Foulkes, George

  Owen, Rt Hon Dr David

  Fraser, J. (Norwood)

  Park, George

  Freeson, Rt Hon Reginald

  Parry, Robert

  Freud, Clement

  Patchett, Terry

  George, Bruce

  Pavitt, Laurie

  Gilbert, Rt Hon Dr John

  Pendry, Tom

  Godman, Dr Norman

  Pike, Peter

  Golding, Mrs Llin

  Prescott, John

  Gould, Bryan

  Randall, Stuart

  Gourlay, Harry

  Raynsford, Nick

  Hamilton, James (M'well N)

  Redmond, Martin

  Hamilton, W. W. (Fife Central)

  Rees, Rt Hon M. (Leeds S)

  Hancock, Michael

  Richardson, Ms Jo

  Hardy, Peter

  Roberts, Ernest (Hackney N)

  Harrison, Rt Hon Walter

  Robertson, George

  Hart, Rt Hon Dame Judith

  Robinson, G. (Coventry NW)

  Haynes, Frank

  Rooker, J. W.

  Healey, Rt Hon Denis

  Ross, Ernest (Dundee W)

  Heffer, Eric S.

  Rowlands, Ted

  Hogg, N. (C'nauld & Kilsyth)

  Sedgemore, Brian

  Holland, Stuart (Vauxhall)

  Sheerman, Barry

  Home Robertson, John

  Sheldon, Rt Hon R.

  Howarth, George (Knowsley, N)

  Shields, Mrs Elizabeth

  Howell, Rt Hon D. (S'heath)

  Shore, Rt Hon Peter

  Howells, Geraint

  Short, Ms Clare (Ladywood)

  Hughes, Robert (Aberdeen N)

  Short, Mrs H.(Whampt'n NE)

  Hughes, Roy (Newport East)

  Skinner, Dennis

  Hughes, Simon (Southwark)

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

  Janner, Hon Greville

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

  Jenkins, Rt Hon Roy (Hillh'd)

  Snape, Peter

  John, Brynmor

  Soley, Clive

  Jones, Barry (Alyn & Deeside)

  Spearing, Nigel

  Kaufman, Rt Hon Gerald

  Steel, Rt Hon David

  Kennedy, Charles

  Stott, Roger

  Kirkwood, Archy

  Strang, Gavin

  Lambie, David

  Straw, Jack

  Lamond, James

  Thomas, Dr R. (Carmarthen)

  Leadbitter, Ted

  Thompson, J. (Wansbeck)

  Leighton, Ronald

  Thorne, Stan (Preston)

  Lewis, Ron (Carlisle)

  Tinn, James

  Lewis, Terence (Worsley)

  Torney, Tom

  Litherland, Robert

  Wallace, James

  Lofthouse, Geoffrey

  Wardell, Gareth (Gower)

  Loyden, Edward

  Wareing, Robert

  McCartney, Hugh

  Weetch, Ken

  McDonald, Dr Oonagh

  Welsh, Michael

  McGuire, Michael

  White, James

  McKay, Allen (Penistone)

  Williams, Rt Hon A.

  MacKenzie, Rt Hon Gregor

  Winnick, David

  Maclennan, Robert

  Woodall, Alec

  McNamara, Kevin

  Wrigglesworth, Ian

  McWilliam, John

  Young, David (Bolton SE)

  Madden, Max

  Marek, Dr John

  Tellers for the Noes:

  Martin, Michael

  Mr. Tony Lloyd and

  Mason, Rt Hon Roy

  Mr. Ray Powell.

  Question accordingly agreed to.
  Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Rate Support Grants Bill may be proceeded with, though opposed, until any hour.—[Mr. Boscawen.]

  BUSINESS OF THE HOUSE

    LOCAL GOVERNMENT BILL
    Queen's Recommendation having been signified—
    Resolved,
    That, for the purposes of any Act resulting from the Local Government Bill, it is expedient to authorise the payment out of money provided by Parliament of—

    (a) any administrative expenses of the Secretary of State incurred in consequence of that Act;

    (b) any increase attributable to that Act in the sums payable out of money so provided under any other enactment.—[Mr. Boscawen.]

  Rate Support Grants Bill
  Not amended (in the Standing Committee), considered.
  Rate Support Grants Bill
    Clause 1

      EXCLUSION OF ADJUSTMENTS OF BLOCK GRANT BY REFERENCE TO TOTAL EXPENDITURE OR AGGREGATE AMOUNT AVAILABLE
      10.15 pm
      Mr. John Fraser: I beg to move amendment No. 4, in page 1, line 24 at end insert—
      '(3) If, pursuant to (2) above, the amount of block grant payable out of money provided by Parliament in pursuance of a supplementary report is less than any amount previously calculated as the aggregate amount available for it, the Secretary of State shall publish in a Report to Parliament any information he has received from the local authority associations on the effects of such a reduction in block grant on the services provided by local government.'.
      We understand that the Government have decided to limit by statute to two per day the number of amendments to local government law, so we now come to the second one today, which is the Rate Support Grants Bill.
      On Second Reading, we drew attention to the overwhelming objection to the Bill, which is the ending of the recycling of rate support grant. In other words, the objection is to the way in which the Treasury will recover money for itself and reduce public expenditure by removing from local authorities sums which they forfeit by means of penalty,—and it is a penalty, no matter how the Government may describe it.
      The amendment underlines that objection. Having allocated rate support grant to meet the perceived needs of local authorities, the Government are taking it away through recycling. We do not have any objection to altering the way in which rate support grant is allocated. Indeed, in a discussion paper on the reorganisation of local government finance, we have said that the income levels of those living in a local authority area should be considered as much as the other factors which are at present considered. We have no objection to considering a fresh and more helpful way of allocating central Government assistance for local government functions, but we object to this Bill, which permits the Government to manipulate such factors as slopes, penalties and negative marginal rates in such a way that the coinage of rate support grant is debased and the support given to local government expenditure is diluted and weakened.
      The House may want an analogy. Under the Bill, the Minister will be rather like those who visit a patient in hospital with a box of chocolates. They have ostensibly devoted the box of chocolates to the patient, but no sooner do they reach the patient's bed than the box is opened and it is not the patient who gobbles up the goodies but the visitors. The goodies that are gobbled up by the Treasury will be substantial.
      If Brent council, the Minister's local authority, spends 5 per cent. above the level of expenditure estimated for it by the Government, it will lose £12 million under the Bill. That is a deprived quasi-inner-city borough. However, it is not just the inner-city deprived boroughs that will lose as a result of the Bill. If local authorities spend more than 5 per cent. above the estimates given to them, even rich,
      832
      affluent, areas such as Surrey, the home of many Ministers, will lose £14 million. But is that really amazing, when one considers those areas to which resources should he devoted and where the Government ostensibly say that they are trying to help with things such as the inner-city problem? Nevertheless, if Gateshead—an inner-city area —spent more than 5 per cent. above the Government's levels, it would lose £1·6 million in a year. Newcastle would lose £9 million. Liverpool, which is without dispute an area of great deprivation and poverty, would lose £12 million. Birmingham would lose £14 million and Manchester as much as £22 million.
      We have made these arguments before. I shall not discuss them at any great length. It is true that we were defeated in Committee, but we seek in this amendment at least to make the Secretary of State own up to the consequences of the cuts that will result from the rate support grant being recycled, not to local authorities but back to the Treasury. We want him to ask local authorities which services should be cut as a result of rate support grant recycling. Let him spell out those authorities—sometimes Tory, shire county education authorities—in which books will not be available for children and those authorities where tire cover will be withdrawn or reduced as a result of the Bill.
      Let him spell out the domains, even the Metropolitan police, where less money will be available for fighting crime and for defending people on our streets and those authorities which will find that they have fewer resources to devote to the problem of homelessness and to deal with bed and breakfast and houses in multiple occupation as a result of the Bill.
      By this amendment, we would at least compel the Government to translate the loss of grant into the loss of services. Let them own up to the consequences of their act.
      Mr. Allen McKay: Amendment No. 4 gives me an opportunity to return to the problem of the South Yorkshire fire service. I thank the Minister for the reply that he sent in a letter to me, but I am afraid that I cannot accept it, because it is wrong. The Minister said:
      "Lord Caithness explained to the Authority that the Home Secretary considers the expenditure for 1987–88 yielded by the formula approach in the Local Government Finance Bill is adequate to enable the Authority properly to maintain its existing level of services."
      The phrase
      "to maintain its existing level of services"
      is important. However, the budget is not enabling the authority to maintain the level of services that it has at present.
      We explained that there was every likelihood that the new training facility that was being provided will remain empty. There is every likelihood that there will be no recruitment of service personnel and that 50 personnel will be made redundant. There is every likelihood that the machine and the appliance time available will have to be extended, which means that appliances that should be off the road will remain on the road and will cost more in the long run.
      I am saying that because of the letter from the inspector of fire services in the Home Office. We must bear in mind the fact that we are now talking about the level of services that has already been reduced to what the Home Office said was required. The chief fire officer of the South Yorkshire county council says that it will have to be

      833
      further reduced under the Home Office figures. There is no way that we can retain the service as it is at the present time.
      It is not only Members who represent south Yorkshire constituencies, councillors from that area, the residuary body and the fire service trade union, the Fire Brigades Union, but, more importantly, the chief of the fire services, who are going along with what we think. I shall quote from the letter of the inspector of fire services at the Home Office. He says:
      "My inspection clearly could not examine in detail all areas of responsibility and activity, but this year I have concentrated on matters relating to training, brigade structure, appliance manning, fire prevention and finance."
      He confirms his
      "satisfaction with the level of efficiency and management under the leadership of your Chief Fire Officer."
      By those few words, he showed that he accepted that we have an excellent chief fire officer.
      The inspector continued:
      "During the inspection a visit was made to the recently acquired school premises which are to be used as the training centre for the brigade".
      That is likely to be closed. He said:
      "Although the premises were purchased at a very reasonable cost there is still a good deal of work and money to be applied … the full development of the new centre should be carried out as opportunity permits. The operational and financial advantages of a residential facility should not be overlooked and it may be possible to introduce this on a temporary basis".
      In other words, the inspector says that the facilities are necessary. But those facilities will not be opened. The inspector continued:
      "I am aware that you are considering a reduction in the number of divisions which may enable some managerial resources to be transferred to operational needs."
      That has already been done. We have tried to maintain the level of services that the Home Office said should be maintained.
      The inspector said:
      "Whilst looking at the structure of the brigade … the Authority will need to give full consideration to the outcome of your Chief Fire Officer's review into standards of fire cover."
      That review has taken place. We are concerned because fire cover will remain inadequate. As the inspector said:
      "fire authorities have been requested to review risk categorisation following the publication in 1985 of the Standards of Fire Cover Report".
      In the light of the 1985 report, the fire services are already undermanned and there is every indication that they will be further undermanned.
      The inspector said:
      "The Inspector did however note that the review of the Fire Precautions Act might require a change in emphasis on inspections and re-inspections and has discussed this with the officers concerned."
      But if the men who carry out inspections are moved from the managerial side, how will not only fire inspections but re-inspections, which the Home Office requests, be carried out?
      The inspector stated:
      "expenditure in the current year will enable the brigade to broadly maintain the level of services provided by the previous authority but it is noted that this has only been achieved by the use of economies having a short term effect."
      This means that fire services in south Yorkshire, which are already undermanned, will be severely undermanned.
      834
      I suggest that all this should be put above board. A meeting has already taken place, but I suggest that there should be a meeting with south Yorkshire Members of Parliament, a person from the Home Office, a person from the office of the Secretary of State, and the chief fire officer. I have already asked the chief fire officer whether he will come. There should be no politicians at local level, although it would be prudent for the council chairman to attend. The chief fire officer, whom the Home Officer has made responsible for the efficiency of the fire service, is worried. May we have a meeting with him over the table to get this matter thrashed out?
      The Minister for Local Government (Dr. Rhodes Boyson): I appreciate, although I do not necessarily agree with, the points made by the hon. Member for Norwood (Mr. Fraser). A number of images were presented during the short Committee deliberations. Tonight we heard of chocolates being taken to a hospital patient. We were told that, when the patient wanted to eat the chocolates, they were whisked away. They were a mirage. Undoubtedly, there will be more imagery on the next amendment because of the hon. Gentleman's versatility.
      Let us say that a person was in hospital for a week last year and he enjoyed 100 chocolates. This year he would have 105¾ chocolates—a 5·75 per cent. increase. Under this year's settlement, everyone will get about 5·75 per cent. more. People will lose no money and will have more chocolates. The lucky ones will have nine more chocolates, so it is more chocolates for all. If they are very greedy, when they see the trolley coming past with other people's chocolates, they all dive on them and eat them up, and they are taken away. That is good discipline. We are sorry for anyone who has to go into hospital. The strike of fate is an amazing thing. We know that that sort of thing breaks morale, but if any of those hon. Members are going into hospital they should remember that if this year they had 100 chocolates next year they will have 105¾ chocolates. That is a fine discipline.
      10.30 pm
      Nobody loses money unless he spends more than the settlement level. I shall consider what the hon. Member for Barnsley, West and Penistone (Mr. McKay) has said about a meeting. As he knows, decisions are made in consultation with the lead department, and we are the sweeper-up department in most respects here. I paid attention to what the hon. Gentleman said and will consider a reply. I have already sent him a reply on a previous query.
      I do not want people to get swept away with sweetmeats and chocolates. This is a discipline that the Government are placing on all whereby no one loses anything if he spends at that settlement level; if he spends at less than that level, he gets more. By doing it this way, everybody knows from the beginning of the year how much he will get according to how much he spends. This will help self-discipline to advance on every front.
      Mr. John Fraser: The Minister has again reinforced our thoughts about the idiocy of the rate support grant system, in which the less one spends on services and the less one cares for the needs of the citizens, the more support one gets. I do not propose to call a Division on this amendment. We should reserve the chance to vote on Third Reading to express our disagreement with the Bill.
      Amendment negatived.
      Mr. John Fraser: I beg to move amendment No. 6, in page 1, line 26, at end insert—
      '(4) Before making assumptions in relation to different authorities or different descriptions of authorities in a Rate Support Grant Report or any supplementary report, the Secretary of State shall specify in an Order the basis on which he proposes to differentiate between authorities or descriptions of authorities.
      (5) An Order made under subsection (4) above shall be subject to annulment in pursuance of a resolution of the House of Commons.'.
      The other issue in this Bill is the ability of the Government to subdivide classes of authorities by having a subdivision within a class which will now be known as a description of an authority. By example, the London boroughs can be divided or subdivided by description as between the inner and outer London boroughs. There is some logic in that because the outer London boroughs are education authorities and the inner boroughs are not.
      We understand that the Government wish to make such a distinction in classes of authorities for the purpose of making a supplemental or original rate support grant settlement to deal with the increase in teachers' pay. Secondly, we understand that the ability to subdivide might be used to distinguish between rate-capped and non-rate-capped authorities.
      What concerns us about the ability to describe or to have descriptions of authorities as well as classes of authorities — the word "class" is used in the Local Government Act 1980—is that the Government may use this power to subdivide and discriminate between one authority and another. Although the Government have given assurances that they will not do this, I ask for those assurances to be repeated on the Floor of the House—that the only authorities that will be described will be those that are rate-capped or those that are education authorities in London, as against those that are not education authorities in London.
      I ask for a second confirmation of an assurance given in Committee relating to clause 2 of the Bill. The Government were asked at the end of the Committee proceedings to give an assurance that the sub-division of classes of authorities into descriptions would not be done so as to have any retrospective effect, and that the only purpose of these powers was to deal with the settlement for teachers' pay. May we have that assurance now?
      The amendment would at least give some parliamentary control over the assumptions which will be put forward for different descriptions of authorities. We should know that there will be parliamentary scrutiny about assumptions that are made for, say, the outer London education boroughs and the ILEA. We should indeed be annoyed if we found after the passage of the Bill that different assumptions were made for education authorities within the area of the metropolis, with the powers conferred by the measure being exercised in an unexpected way. We are entitled to have the assumptions put before the House, with hon. Members having a chance to negative orders which, put forward those assumptions.
      I urge the Government to accept the amendment and so allow a degree of parliamentary scrutiny over assumptions which may be of considerable financial importance to local authorities and to give an assurance that there will be no retrospective use of the powers in the Bill—in other words, that they will not be operated for the current year. May we also be assured that they will be
      836
      used only to distinguish between inner London non-education authorities and outer London education authorities and that no distinction in assumptions will be made between ILEA and the rest of the London authorities?
      The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): I explained at some length and in some detail in Committee the purpose of subsection (3), when I sought to reassure Opposition Members that this provision was innocuous, that it had been inserted for proper and sensible reasons which local authorities should be able to accept, and that it could not be used to discriminate against individual authorities' grant entitlements, even if we were minded to do anything of that sort.
      It would appear that I was only partially successful. Opposition Members have taken some note of that explanation. They appear at least to acknowledge the genuine reasons why it might be desirable to assume that rate-limited authorities were likely to spend at their designated expenditure levels rather than at the common assumption that we have used next year for all other authorities. They seem to acknowledge also the need to be able to differentiate between different classes of authority in some possible circumstances. But there is clearly a residue of suspicion that the provision as drafted might be used in some less desirable way, although Opposition Members have not been able to offer any convincing ideas about what that might be or how it could come about.
      I will not repeat in full the detailed explanation which I gave in Committee. I will simply reiterate that the purpose for which these expenditure assumptions are used here is to set the grant-related poundage for spending at GRE, which is a national figure. By using a different spending assumption for one authority, or for a group of authorities, the national GRP for spending at GRE is affected, but this would not have a differential effect on the grant entitlement of that particular authority or group of authorities.
      As I pointed out in Committee, if for some reason we were to make a wildly different spending assumption for one authority, that could alter the national GRP, but the effect on that authority would be minimal and would he the same for all authorities. I would not be possible by this method to discriminate against one or more authorities' grant entitlement.
      With this in mind, the degree of protection which the amendment is presumably designed to set up is entirely unnecessary for what is in all conscience a highly technical but entirely innocuous provision. If Opposition Members and their friends in local authorities cannot accept our assurances about the purpose and operation of this provision, they can exercise their right to challenge in the courts any assumption which they feel to be unreasonable.
      As for consideration of these matters by the House, all rate support grant reports and supplementary reports are subject to the approval of the House, and I do not think hon. Members would wish needlessly to add to that burden in the manner suggested by the amendment.
      We cannot give a categorical assurance that we will use the description of authorities to cover only rate limits and education authorities. We might want to use it in the future to cover authorities carrying out functions which were not covered by the description of classes — that is, if an authority wished to secede from a joint authority such as

      837
      a fire board. ILEA is already covered as a separate authority in the existing legislation. It is worth emphasising again that clause 2 is not intended to have any retrospective effect in the sense of validating any past decisions or actions.
      For those reasons, I hope that the House will reject the amendment.
      Amendment negatived.
      10.40 pm
      Dr. Boyson: I beg to move, That the Bill be now read the Third time.
      I hope that the House will support Third Reading of the Bill. It is the second of the three local government Bills that are going through this House and another place. The basis of the Bill is to enable each authority to know at the beginning of the year exactly how much money it will have to spend. Under the previous recycling arrangements, local authorities were given more money, or it was taken back, according not to what the individual authority had done but to what all the 485 local authorities did. The amount of money that was received by a local authority depended on the spending habits of the other 484 authorities. If local authorities overspent, money was taken away from them, put in a pool, and then recycled to all the authorities, including the overspenders. They were punished for overspending and then money was given back to them. I do not think that that system can morally be defended.
      I remind the House that there has been an increase of 9 per cent.—£1·3 billion—in rate support grant. That is a very generous settlement. According to the formula, the money has been divided between the 485 local authorities and they have been informed of how much money they are to have. If they spend according to the settlement intention, which is 5·25 per cent., they will keep that amount of money. If, for example, £1 million goes to an individual authority, it will keep that sum. If it spends more than 5·25 per cent., it will lose part of the £1 million, but if it spends below 5·25 per cent., it will gain extra money from the Treasury.
      I have a chart that shows what this will mean. If all local authorities spend at 3·75 per cent. — the inflation intention as against the settlement intention— they will receive £150 million more from the Treasury. That is an additional £1·35 billion over last year. If, however, they spend more, they will receive less money. If they spend at 8·25 per cent. instead of 5·25 per cent., they will lose £312 million out of an increased settlement of £1·3 billion. They will, therefore, still be £900 million better off. Every local authority will know exactly where it stands and it will be able to work out its budget for the following year.
      Under the previous system, local authorities could not do that. Money was taken from them in some years when they had underspent. It could be called decycling. At other times there was recycling. This is a confusing subject, to say the least, and I am trying to explain it in simple terms. I need a blackboard to explain the system. It is almost like taking a sixth form calculus lesson without a blackboard or textbook and nothing to write on. I shall leave it at that in case we get mixed up even further. However, we are certain that this is a better system. It is a more moral system and it encourages greater self-control.
      I shall state my case, as on Third Reading I cannot come back. This time last year, reference was made by the
      838
      hon. Member for Blackburn (Mr. Straw)—who led for the Opposition on Second Reading—to speeches that I had made in 1974. I quite enjoyed listening to them again. Reference was also made to a recent speech of my hon. Friend the Member for Southampton, Itchen (Mr. Chope). We were pleased to hear that as well. It is always nice to hear speeches recalled from time to time.
      One year ago, the hon. Member for Copeland (Dr. Cunningham) made an attack on the recycling system, saying that nobody could budget. I shall read what he said and state my case on that. He said:
      "the local government finance system is now much more difficult to understand and predict than before."
      That is because of the recycling.
      "The figures issued by the Government on the entitlements on individual authorities are misleading, because they ignore the 'close-ending' factor."
      The close-ending factor is another form of recycling, as everybody knows, because all hon. Members are nodding in agreement.
      "The Secretary of State cleverly made seductive promises this afternoon to right hon. and hon. Members about what their authorities might get. Does he suppose that responsible councils"—
      that is the important key here—
      "and treasurers can fix budgets and levy rates and precepts on what they might get after close ending? Of course not."
      They did not know what they could get.
      "He knows that that is a preposterous suggestion. He knows that no responsible local authority would dream of budgeting on that basis." —[Official Report, 20 January 1986; Vol. 90, c. 57.]
      That is what recycling was. We are bringing reality back to local government so that it knows how much it will get. A local authority will know that it will get more or less according to what it spends, and it is not dependent on what the other 484 authorities do. The statement of the hon. Member for Copeland is as clear and convincing a statement as we heard this evening on the difficulties and uncertainties that are caused by close ending, or grant recycling, why the Bill is necessary and why it will bring positive benefits to local authorities.
      In previous years, a borough treasurer or chairman of finance, in the run up to the new year, had to budget without knowing how much he would receive because it was dependent on other authorities, and budgets were changing every day. Imagine the sleepless nights and collapse of many treasurers and chairmen of committees as a result. It must have been intolerable. For the sake of the health of borough treasurers and the chairmen of committees, something had to be done. It would have been ignoble — I use that word very carefully — of any Government to ignore it. They will all be in bed now, at 22.47 hours, because they know exactly how much they have to spend; they will already have made their arrangements for next year. They cannot make any excuses to their wives now for late nights because they are working—that may be a disadvantage in certain cases.
      Mr. Michael Brown: The borough treasurer of one of my borough councils, the Glanford borough council, is taking early retirement this year. Presumably, he is retiring in great happiness as a result of the Bill going on to the statute book.
      Dr. Boyson: I did not know about that. Everybody in the House who knows him has a high opinion of that gentleman. Undoubtedly, he would have stayed on had he known that he would have to manage such a complicated

      839
      system; he would not have wanted to pass it on to somebody else. He can now retire with a degree of personal satisfaction that he would have considered impossible last year. We wish him a happy and long retirement. We wish all the other borough treasurers and chairmen of committees a happy year, knowing that, having made their budgets they have made them firmly. There will he no worry at night, no late nights. The idea is securely before them this year that borough treasurers and chairmen of committees will next year have one long holiday.
      10.49 pm
      Mr. Michael Hancock: The Minister should be congratulated on having the neck to come here and make that speech in defence of the indefensible. His comments about borough treasurers will not be lost on them, because many of them will have endless sleepless nights trying to interpret his speech and understand the Bill.
      At no time during the passage of the Bill have the Government produced a convincing argument that would ensure that the money earmarked for local authorities will end up in their pockets and not those of the Treasury. I am sure that many other hon. Members will agree that the Treasury will be the only beneficiary of the Bill. The Government have said that no authority need lose any grant, but they know that they have set local authority expenditure assumptions unrealistically low, thereby guaranteeing an overshoot in most local authorities, and a subsequent windfall to the Treasury.
      I came here hotfoot from Portsmouth, where we set a rate this afternoon. I voted against a rates increase of just under 4 per cent. That was ridiculously low when one takes into account the miserable conditions in which so many of the people are living. The increase took no account of the real priorities in Portsmouth, but the council had no alternative. Already, it had been rate-capped once, and if the rate increase had been set higher, it would have been rate-capped again. To avoid that, many things that needed to be done will be ignored. Once again, the Minister has shown no recognition of that example or of the many that were quoted in Committee.
      The Bill, like other local government Bills, will give the Secretary of State more and more powers. The language in the Bill is vague, but it gives the Secretary of State wide powers that have not been properly discussed either here or in Committee. No proper explanation has been given as to why the Secretary of State wanted those powers and how they would be used. The Minister has not clarified why such strong controls are needed. On determining the principles for calculating grant-related poundages, the Secretary of State can make assumptions as he sees fit, once again ignoring many of the real problems with which local authorities have to deal. That is a sinister step in the wrong direction.
      The Government in clause 1(3) take powers to distinguish between local authorities, and that is again a dangerous and worrying prospect. Once again, things will happen and different local authorities will be treated differently, and the Government will be able to shift a local authority from one category to another and inflict grievous wounds on its ability to cope with the problems that it has to face. The wide discretion open to the Government could be a good and a bad thing, and that depends on the Government. Local government must know clearly in law what the position is. Despite all the
      840
      Minister's good intentions. as he attempts to lighten a nightmare of legislation, that position is not properly clarified. Many local authorities will still be in doubt as to exactly what their position is.
      The Minister should admit that the Bill is another attempt to tighten the screw on local government by restraining its expenditure. It does not deal with the problems about which the Minister spoke when he introduced the Bill some weeks ago. The inadequate spending provision, coupled with negative marginal grant rates and no grant recycling. amount to a severe and unfair mechanism for restricting local authority spending. The ending of recycling and with it the Government's ignorance and shunning of the need of local authority expenditure leads to yet another extension of centralised control.
      Hon. Members do not need me to lecture them on the pressures and difficulties of too much power at the centre. We have had clear examples, because of the difficulties that Ministers have had of explaining to the House the problems associated with the Bill, of the difficulty that local authorities will have in trying to interpret it. That is why the House should reject the Bill.
      10.54 pm
      Mr. Roland Boyes: I have listened to the Minister and I can only conclude that he must have got his PhD by studying George Orwell. The Minister has said that there will be an end to uncertainty, but the Government are putting us through a nightmare, week in and week out, when we discuss local government Bills. Those Bills have created absolute uncertainty for local government officers and members. I believe that doublespeak underestimates the powers of the Minister.
      This evening we have gone from one Bill on local government to another. This Bill is vital, because it is robbing local government of its money. Parliament will vote for local government to be given a certain pool of cash, but through the Bill the Secretary of State is enabled to distribute to local authorities less money than Parliament has decided that they should receive.
      If we study individual local authorities, we can appreciate what that will mean. Let us consider the borough of Sunderland — I make no apology for choosing that borough, as it is the one that I know best. The Minister is correct that the Bill will give local authorities certainty — the certainty of nothing rather than the uncertainty of not being absolutely sure how much they will receive.
      Local government will lose approximately £300 million to £400 million, which equates to a 4p or 5p rate increase for all the authorities. No wonder that Jack Layden, chairman of the Association of Metropolitan Authorities, said today:
      "Less than a week after the Courts have found Nicholas Ridley guilty of robbing Greenwich of £4m, he is preparing to push a Bill through Parliament to rob local government of up to £400m".
      [Laughter.] The hon. Member for Brigg and Cleethorpes (Mr. Brown) may find this amusing, but his council will suffer exactly the same as my council and those of other hon. Members. He will discover that the consequences of this Bill will be that his council will receive less cash than expected from the amount determined by Parliament. That cannot be right.
      Dr. Boyson: I am grateful to the hon. Gentleman. He is always courteous in giving way. I believe that it was rather unfair for the hon. Gentleman to quote the Greenwich case. The basis of the Greenwich case, as I understand it—
      Mr. Nigel Spearing: The Minister always says that.
      Dr. Boyson: One has to say that, because local government finance is complicated. [Interruption.] At least we have unanimity on that.
      I think that it is unfair to say that the Secretary of State robbed Greenwich of £4 million. The allowance of money on the abolition of the Greater London Council was dependent upon who maintained certain roles. A wrong decision was made as to where the money should go, not by the Secretary of State, but by the staff and one authority—[Interruption.] I shall continue. A total of 75 km of road was allocated to the south London borough of Bromley.
      Mr. Jeff Rooker: Kilometers?
      Dr. Boyson: I think that it was kilometers. That is what I read, but I shall check it tomorrow. I wish we had kept our old currency and had kept inches and feet. Is the hon. Gentleman living in the past, or is he living for the present?
      Mr. Rooker: We have not got kilometers.
      Dr. Boyson: That is the only thing we have not got. If I had my way I would be more traditional than the hon. Gentleman.
      No money was given to Bromley for that road, but the money was given elsewhere. The decision was made by the Secretary of State that the money should go to those who needed it. I do not consider that to be robbery. I think that it is unfair on the Secretary of State for the hon. Member for Houghton and Washington (Mr. Boyes) to say that.
      Mr. Boyes: The Minister said that he would not have a second opportunity to speak, and that therefore he would say all he wanted to say on his first go. However, he has said more in his intervention than he did in his speech on Third Reading. He has taken the opportunity to try to mislead the House. We are all aware that the Secretary of State for the Environment has been found guilty in the courts on more occasions than any other Secretary of State in modern times.
      The effect on Sunderland will be a grant loss of anywhere between £2 million and over £3 million and we have estimated that to be equivalent to a rate overall of 4 or 5p. Sunderland had this year to reduce the rates by 1·5 per cent. It naturally wants to avoid the penalty of being rate-capped and losing control of its own destiny and finances, and it is the objective of this Government to control local government as a whole.
      I want the Minister to take note of this. Conservative Members are always saying that high rates lose jobs. I will illustrate the position in Sunderland this year with a few figures.
      A large town-centre store will have an annual reduction over 1986–87 of £5,000 and, if we assume a 4 per cent. increase for inflation, that is £19,000. A large factory has an annual reduction of £5,700 for 1986–87, plus 4 per cent., which is £21,000. All companies probably budgeted for a 4 per cent. increase in inflation. I shall be watching very carefully in Sunderland, which is one of the areas of
      842
      highest unemployment, to see how many new jobs are created as a result of the borough council's keeping the rates low. One could imagine that, given the extra £3 million from grant recycling, even more could have been done by the borough of Sunderland in protecting jobs, services and the environment for the people it represents.
      We listened carefully to the Minister's arguments in Committee. We responsibly, as he acknowledged, put forward our arguments on clauses in the Bill and on a series of amendments, and the Minister was unable to accept them. We are concerned about some aspects of the Bill, particularly clause 1(1)(b) and (3), which seem to give a special and unlimited panoply of powers to the Secretary of State. But the hon. Member for Portsmouth, South (Mr. Hancock) has gone through those, and I do not want to detain the House further.
      Our major concern is the vital, essential cash that is due to local authorities. It was determined by Parliament that the local authorities should have it, and through this Bill they are going to be robbed of £400 million. As a consequence, we are forced to divide the House on this issue. We are against this Bill.
      Question put:—
      The House divided: Ayes 171, Noes 116.

      Division No. 106]

      [11.02 pm

      AYES

      Alison, Rt Hon Michael

      Dykes, Hugh

      Amess, David

      Eggar, Tim

      Ancram, Michael

      Evennett, David

      Atkins, Robert (South Ribble)

      Eyre, Sir Reginald

      Atkinson, David (B'm'th E)

      Fallon, Michael

      Baker, Nicholas (Dorset N)

      Fenner, Dame Peggy

      Baldry, Tony

      Finsberg, Sir Geoffrey

      Batiste, Spencer

      Forman, Nigel

      Bellingham, Henry

      Forsyth, Michael (Stirling)

      Benyon, William

      Forth, Eric

      Best, Keith

      Fraser, Peter (Angus East)

      Bevan, David Gilroy

      Freeman, Roger

      Biggs-Davison, Sir John

      Gale, Roger

      Blackburn, John

      Galley, Roy

      Blaker, Rt Hon Sir Peter

      Garel-Jones, Tristan

      Bonsor, Sir Nicholas

      Goodlad, Alastair

      Boscawen, Hon Robert

      Gower, Sir Raymond

      Bottomley, Peter

      Gregory, Conal

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

      Griffiths, Peter (Portsm'th N)

      Bowden, Gerald (Dulwich)

      Ground, Patrick

      Boyson, Dr Rhodes

      Hamilton, Hon A. (Epsom)

      Brandon-Bravo, Martin

      Hampson, Dr Keith

      Bright, Graham

      Hanley, Jeremy

      Brinton, Tim

      Hannam, John

      Brooke, Hon Peter

      Hargreaves, Kenneth

      Brown, M. (Brigg & Cl'thpes)

      Harvey, Robert

      Browne, John

      Haselhurst, Alan

      Bruinvels, Peter

      Hayward, Robert

      Budgen, Nick

      Heathcoat-Amory, David

      Burt, Alistair

      Heddle, John

      Butler, Rt Hon Sir Adam

      Henderson, Barry

      Butterfill, John

      Hicks, Robert

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

      Hirst, Michael

      Cash, William

      Hogg, Hon Douglas (Gr'th'm)

      Chope, Christopher

      Holt, Richard

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

      Hordern, Sir Peter

      Clark, Dr Michael (Rochford)

      Howard, Michael

      Clarke, Rt Hon K. (Rushcliffe)

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

      Conway, Derek

      Howarth, Gerald (Cannock)

      Coombs, Simon

      Howell, Ralph (Norfolk, N)

      Cope, John

      Hubbard-Miles, Peter

      Cranborne, Viscount

      Hunt, David (Wirral W)

      Crouch, David

      Hunt, John (Ravensbourne)

      Currie, Mrs Edwina

      Hurd, Rt Hon Douglas

      Dorrell, Stephen

      Jackson, Robert

      Douglas-Hamilton, Lord J.

      Jenkin, Rt Hon Patrick

      Dover, Den

      Jessel, Toby

      Durant, Tony

      Johnson Smith, Sir Geoffrey

      843

      Jones, Gwilym (Cardiff N)

      Norris, Steven

      Jones, Robert (Herts W)

      Onslow, Cranley

      Key, Robert

      Osborn, Sir John

      King, Roger (B'ham N'field)

      Ottaway, Richard

      Knight, Greg (Derby N)

      Page, Sir John (Harrow W)

      Knowles, Michael

      Page, Richard (Herts SW)

      Lang, Ian

      Parkinson, Rt Hon Cecil

      Lawler, Geoffrey

      Patten, J. (Oxf W & Abgdn)

      Lee, John (Pendle)

      Pawsey, James

      Leigh, Edward (Gainsbor'gh)

      Peacock, Mrs Elizabeth

      Lennox-Boyd, Hon Mark

      Percival, Rt Hon Sir Ian

      Lester, Jim

      Pollock, Alexander

      Lewis, Sir Kenneth (Stamf'd)

      Portillo, Michael

      Lilley, Peter

      Powell, William (Corby)

      Lloyd, Peter (Fareham)

      Powley, John

      Lord, Michael

      Proctor, K. Harvey

      Lyell, Nicholas

      Raffan, Keith

      McCrindle, Robert

      Rathbone, Tim

      MacKay, Andrew (Berkshire)

      Renton, Tim

      MacKay, John (Argyll & Bute)

      Rhodes James, Robert

      Maclean, David John

      Ridley, Rt Hon Nicholas

      McQuarrie, Albert

      Robinson, Mark (N'port W)

      Major, John

      Ryder, Richard

      Maples, John

      Sainsbury, Hon Timothy

      Marlow, Antony

      Shepherd, Colin (Hereford)

      Marshall, Michael (Arundel)

      Stern, Michael

      Mather, Sir Carol

      Stokes, John

      Maude, Hon Francis

      Thompson, Donald (Calder V)

      Merchant, Piers

      Thompson, Patrick (N'ich N)

      Meyer, Sir Anthony

      Wakeham, Rt Hon John

      Mills, Iain (Meriden)

      Walker, Bill (T'side N)

      Moate, Roger

      Waller, Gary

      Morris, M. (N'hampton S)

      Wells, Sir John (Maidstone)

      Morrison, Hon P. (Chester)

      Wilkinson, John

      Moynihan, Hon C.

      Wood, Timothy

      Murphy, Christopher

      Young, Sir George (Acton)

      Neale, Gerrard

      Nelson, Anthony

      Tellers for the Ayes:

      Neubert, Michael

      Mr. Gerald Malone and

      Newton, Tony

      Mr. David Lightbown.

      Nicholls, Patrick

      NOES

      Alton, David

      Boyes, Roland

      Archer, Rt Hon Peter

      Bray, Dr Jeremy

      Ashdown, Paddy

      Brown, Gordon (D'f'mline E)

      Banks, Tony (Newham NW)

      Brown, Hugh D. (Provan)

      Barron, Kevin

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

      Beckett, Mrs Margaret

      Buchan, Norman

      Beith, A. J.

      Callaghan, Jim (Heyw'd & M)

      Benn, Rt Hon Tony

      Campbell-Savours, Dale

      Bermingham, Gerald

      Canavan, Dennis

      Bidwell, Sydney

      Carlile, Alexander (Montg'y)

      Blair, Anthony

      Clarke, Thomas

      844

      Clay, Robert

      Lloyd, Tony (Stretford)

      Clelland, David Gordon

      Lofthouse, Geoffrey

      Clwyd, Mrs Ann

      Loyden, Edward

      Cocks, Rt Hon M. (Bristol S)

      McDonald, Dr Oonagh

      Cohen, Harry

      McGuire, Michael

      Cook, Frank (Stockton North)

      McKay, Allen (Penistone)

      Cook, Robin F. (Livingston)

      McWilliam, John

      Corbyn, Jeremy

      Madden, Max

      Craigen, J. M.

      Marek, Dr John

      Cunningham, Dr John

      Martin, Michael

      Deakins, Eric

      Mason, Rt Hon Roy

      Dewar, Donald

      Maxton, John

      Dixon, Donald

      Michie, William

      Dormand, Jack

      Millan, Rt Hon Bruce

      Dubs, Alfred

      Morris, Rt Hon J. (Aberavon)

      Duffy, A. E. P.

      Nellist, David

      Dunwoody, Hon Mrs G.

      O'Brien, William

      Eadie, Alex

      O'Neill, Martin

      Eastham, Ken

      Park, George

      Evans, John (St. Helens N)

      Parry, Robert

      Fatchett, Derek

      Patchett, Terry

      Fields, T. (L'pool Broad Gn)

      Pendry, Tom

      Forrester, John

      Pike, Peter

      Foster, Derek

      Powell, Raymond (Ogmore)

      Foulkes, George

      Prescott, John

      Fraser, J. (Norwood)

      Redmond, Martin

      Freeson, Rt Hon Reginald

      Robertson, George

      Freud, Clement

      Rooker, J. W.

      George, Bruce

      Ross, Ernest (Dundee W)

      Godman, Dr Norman

      Rowlands, Ted

      Golding, Mrs Llin

      Sheerman, Barry

      Gould, Bryan

      Shields, Mrs Elizabeth

      Hamilton, James (M'well N)

      Shore, Rt Hon Peter

      Hancock, Michael

      Short, Ms Clare (Ladywood)

      Hardy, Peter

      Skinner, Dennis

      Harrison, Rt Hon Walter

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

      Hogg, N. (C'nauld & Kilsyth)

      Spearing, Nigel

      Holland, Stuart (Vauxhall)

      Steel, Rt Hon David

      Home Robertson, John

      Straw, Jack

      Howell, Rt Hon D. (S'heath)

      Wallace, James

      Howells, Geraint

      Wardell, Gareth (Gower)

      Hughes, Simon (Southwark)

      Welsh, Michael

      Kennedy, Charles

      Woodall, Alec

      Kirkwood, Archy

      Wrigglesworth, Ian

      Lambie, David

      Young, David (Bolton SE)

      Lamond, James

      Leadbitter, Ted

      Tellers for the Noes:

      Leighton, Ronald

      Mr. Frank Haynes and

      Lewis, Terence (Worsley)

      Mr. Chris Smith.

      Question accordingly agreed to.
      Bill read the Third time, and passed.

  Takeover Bids
  Motion made and Question proposed, That this House do now adjourn.—[Mr. Ryder.]
  11.15 pm
  Mr. Bill Walker: This Adjournment debate is about matters that I have been pursuing for some time in connection with the takeover problems that exist in the City. I have two objectives. They are to seek out the truth about the Guinness scandal, and to see that justice is seen to be done. My hon. and learned Friend the Under-Secretary of State will recollect that I raised the question of skulduggery in the City in my Adjournment debate on 25 July 1985. Sadly, the evidence that I presented on that occasion about Ernest Saunders, Guinness and Morgan Grenfell was not acted upon by the Minister responsible, by the takeover panel, or by the guardian of the City's morals, the Bank of England.
  The failure to act resulted in the activities which have become known as the Guinness scandal. The reputation of the City and the good name of many City institutions have been damaged by what I have described in earlier speeches as skulduggery, greed and ministerial incompetence. I wish to make clear that I do not include my hon. and learned Friend or his colleagues at the Department in these remarks. He and his team of inspectors are to be congratulated on the way that they have set about clearing up the appalling mess that he inherited.
  Unfortunately, in a matter as complex as the Guinness affair, any investigation or inquiry must take many months. While I have no doubt that all those who are guilty of breaking company law or the takeover code will in time be brought to book, the damage that the Guinness affair is doing to the Scotch whisky industry will, if not arrested, be horrendous.
  I should like to draw my hon. and learned Friend's attention to the damage that is being done to what used to be Scotland's most efficient and most profitable independent whisky company—Arthur Bell and Sons. It was a fine company which increased sales and profits every year. It never made anyone redundant, and when it opened new modern blending and bottling plants it bussed the workers from Perth to Dunfermline and from Leith to Broxburn. Every employee was a shareholder, and each year shares were issued to all who worked for the company. An equation was used to work out the issue, and, provided the dividend was covered by a multiple which was fixed and agreed, everyone, from the chairman to the girls in the bottling hall, was allocated the same value of shares.
  The company won the Queen's award for exports and technology in the year prior to the takeover. It was a slim, highly motivated company with superb management and a highly motivated work force. This was the company that the takeover panel allowed to be described as having "lost its way". If only every company in Scotland could have lost its way like Bells, how happy we would all be and how different would be the industrial and manufacturing prospects in Scotland today.
  Ernest Saunders and Guinness acquired that company. To do so they gave certain firm pledges which persuaded the Scottish institutions to accept the Guinness offer and Scottish merchant banks to join Guinness in its takeover
  846
  attempt. What were these pledges? They are on page 9 of the Guinness offer document dated 27 June 1985. The first pledge says:
  "Bells will continue to be managed from Perth as an autonomous company, subject only to overall strategic direction and normal disciplines of financial reporting."
  The second pledge says:
  "We guarantee that there will be no redundancies within Bells as a consequence of Bell's joining the Guinness Group."
  The third pledge says:
  "We have given an assurance that the rights of the employees of the Bells Group will be fully safeguarded and that their conditions of employment, including existing pension rights, will not be adversely affected by our acquisition of Bells."
  As I said earlier, these were firm offer document pledges. It is not unreasonable to suggest that the failure to honour the pledges, so solemnly undertaken, must be considered to be against the interests of Bell's employees and shareholders and, I suggest, against the public interest.
  I shall deal with each pledge in turn. First, Bell's is no longer an autonomous company. The overseas sales department has been moved to Hammersmith in London, The United States sales operation has been closed down, and the promised advertising in the United States has not been implemented. Export staff have been told that they are being moved from Bell's to Dewars. A Bell's brand has been sold to Lonrho. Bell's premium brand is being sold at a discount and is now just one of the many brands in the Guinness stable.
  In a letter to me dated 24 February 1987, the new chairman of Guinness, Sir Norman Macfarlane, states:
  "Bell's has been well integrated into the beverage group run by Mr. Vic Steel."
  So much for Bell's remaining autonomous. Whatever it is today, it most certainly is not an autonomous company. Therefore the first pledge that I mentioned has been broken, and, what is more, broken deliberately. It did not happen accidentally.
  The second pledge has also been broken. There have been redundancies, and more are likely to follow if the practice of discounting Bell's premium brand continues. Brand name and reputation are everything in the Scotch whiskey industry. Unlike beer, whisky cannot be offered at a discount to vendors and the public without destroying the reputation and the up-market image of the brand. Years of hard work can be destroyed in a few months. What price job security if the up-market image of Bell's premium brand is destroyed by down-market trading practices? That may turn stock into money in the short term, but it will destroy the brand in the long term. Redundancies in Bell's would then become inevitable and be a direct consequence of Bell's joining the Guinness group.
  The third pledge about employee rights has also been broken. As an independent company Bell's issued shares to all employees. The share issue was dependent on the company being able to cover the dividend by an agreed multiple, as I said earlier. Each year every employee was issued with the same value of shares. The chairman and managing director received the same issue as the girls on the bottling line. In today's circumstances, which have been widely reported in the financial press, Guinness may not be able to pay a dividend and certainly it is unlikely to cover the dividend by the agreed multiple. Today The Scotsman has a headline which reads:
  "City alarm over Guinness profits."

  847
  I shall not bore the House with all the details, but the article clearly states that provisions will have to be made for certain problems. I shall deal with those problems later.
  Consequently, the employees of Bell's cannot expect to receive an issue of shares, as they would have expected under their independent management. The problem cannot be blamed on adverse trading conditions. It is the direct consequence of the way in which Guinness has been managing Bell's and the rest of the Guinness empire. More than £200 million has been moved out of the Guinness group of companies on the instructions of the directors.
  Possible lawsuits and massive claims for damages are also in the pipeline. Legal opinion in Scotland is now coming round to the view that every shareholder of Guinness, Distillers and Bell's will have grounds to claim against Guinness that their interests have been adversely affected by the Mafia-like manner which has been the Saunders' way of managing Guinness. The mind boggles at the sort of legal nightmare that may be ahead. The lowest claim for the total volume of damages that may be faced by Guinness in cash terms is put at £500 million. That is a conservative claim. I have heard it put as high as £1,000 million in some other quarters.
  I remind my hon. and learned Friend the Minister that Bell's did not wish to be taken over. He will also remember that at the time when Bell's was attempting to offset the Guinness efforts to take it over I and other Scottish Members fought vigorously to prevent it, especially the hon. Member for Livingston (Mr. Cook), who has a long and distinguished record of doing everything he can to protect his constituents who are affected. I remind my hon. and learned Friend that Bell's employee shareholders did not sell out to Guinness. Each and every one refused the Guinness offer, although it could have given them thousands of pounds in their hands. Not for Bell's employees was the quick and easy buck. How different they are to the likes of Ernest Saunders and others who were motivated by greed. Bell's employees wished to remain independent.
  What has been the reward for such loyalty? Let me examine the circumstances of the export sales staff. The overseas sales employees are being moved to Distillers, their export organisation in the United States has been scrapped and individuals have been made redundant, contrary to the Guinness pledges. Export and sales executives have had their salaries reduced by 25 per cent. and a new salary has been introduced which requires them to achieve given case sales targets against profitability and personal assessment. They have also had a reduction in the class of travel they enjoy and the quality of hotels used. All that is in contradiction to the firm pledge about conditions of employment.
  Is there a message for the Government in all this? I believe that there is. It is that if we, the Government and the Conservative party, are serious in our attempt to persuade firms to issue shares to employees and to introduce share incentive schemes to encourage better production and to improve loyalty to the company, we must also have measures on the statute book which protect employee shareholders from predators like Ernest Saunders, the Guinness directors and merchant banks such as Morgan Grenfell. If we do not have such statutory powers, we must introduce them now.
  Part of the message must also be that legislation, such as the Fair Trading Act 1973, must be applied in every possible legal manner to protect the interests of employee
  848
  shareholders. As Winston Churchill used to prescribe, what is wanted is "action this day". Failure to act will lay the Government open to the charge that the Conservatives can find time to introduce measures to protect employees from unfair trade union activities, but they have neither the time nor the will to implement present legislation or to introduce new measures to protect employee shareholders.
  If it was right— I believe that it was—to introduce measures to allow employees the right to work, it must also be right to protect employees from the likes of Ernest Saunders and the other directors of Guinness who have corporate responsibility for what happened when he was in charge.
  Sir Hector Monro: Will my hon. Friend give way?
  Mr. Walker: No.
  The Guinness family directors and the executive directors appointed by Ernest Saunders should not be allowed to keep the spoils. They sat in the board room and allowed the Guinness affair to happen. If the directors are allowed to retain control of Bell's, the employee shareholders and others whom we may wish also to become employee shareholders cannot be blamed if they decide to have no part in schemes which embrace the issue of shares as part of an employee's working conditions.
  My warnings were ignored in July 1985, but I hope that they will not be ignored today. Indeed, in some ways I was treated like a leper, but I was no leper; I saw the leopard's real spots and drew attention to them. Bell's is slowly being killed off by a thousand changes. The company, which was an institution in Perthshire, is disappearing. It was unique in Perthshire. There was no other company in that area like it.
  The only way to prevent its destruction is to disinvest it from Guinness and restore it to the former directors and the employee shareholders. I am confident that there would be no problem in raising City finance for such an operation.
  On another aspect of this unhappy and sad affair, my hon. and learned Friend the Minister is aware of my quest to find the truth about the Guinness takeover of Bell's. He knows that I have supplied him and his inspectors with all the information that I have. He has received copies of all the correspondence that I have received. Some of the correspondence has been most unflattering to myself, but I have made sure that my hon. and learned Friend and his inspectors received it.
  I draw my hon. and learned Friend's attention to my recent correspondence with the present chairman of Guinness, Sir Norman Macfarlane. In particular, I draw his attention to the 14 questions that I put to Sir Norman in my letter of 16 February 1987, and to the questions in my letter of 25 February 1987. I remind my hon. and learned Friend of those questions. In my letter of 16 February I asked Sir Norman:

  "1. Why did Mr. Peter Stevenson of Noble Gossart write to you in terms which specifically stated 'that Raymond Miguel and Bell's must not be sold down the river by the General Accident'?

  2. Why did Mr. Peter Stevenson, who, I have been advised, may be a business associate of yours, subsequently leave Noble Gossart?

  3. Why did you not offer to Raymond Miguel the Bell's Chairman, the chance to put to you a non-executive director of the General Accident the case for Bell's remaining independent? I am advised that you do admit to meeting

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  Ernest Saunders a number of times during the takeover, so why did you not give the same even-handed treatment to Bell's?

  4. Can you confirm that the Executive at the General Accident responsible for this kind of investment, Mr. Ian Menzies, was on vacation when the decision to sell out to Guinness was implemented?

  5. Can you confirm that on the Monday of the last week for acceptance of the Guinness offer, the General Accident sent to Morgan Grenfell their acceptance of the Guinness offer with strict instructions that the acceptance was not to be announced until after the Friday deadline, because the General Accident did not wish to be seen to be 'selling Bell's down the river'?

  6. Can you confirm that Andrew Gifford, a former Personal Assistant to the Liberal Leader, Mr. David Steel, M.P. and Mr. Gifford's company, GJW, were advisers to Guinness during the Scotch Whisky takeovers?

  7. Can you confirm that you were invited by Ernest Saunders to join the Guinness Board?

  8. Can you confirm that Bell's sales and marketing employees have had their mode of travel and accommodation standards reduced and that their salaries have been reduced by 25% and also that the new salaries are dependent on profit achievements, whisky case sales and personnel assessments?

  9. Can you confirm that Bell's premium brand is being offered for sale at a discount and that the famous Bell's label may soon be changed?

  10. Can you confirm that some of the Bell's Head Office staff will soon be transferred to Dewars and that the promised Bell's sales drive and advertising in the USA has not been implemented? And also that there has been substantial reductions in UK advertising, including the cancelling of Bolus spots?

  11. Can you confirm that the Cherrybank Gardens Trust will continue to enjoy the support of Guinness and that the Chairman of the Trustees will continue to serve in that capacity?

  12. Can you also confirm that the Bell's house in Hay Street, which has been used by Perth women who were in difficult circumstances, will continue to allow the women access in the future?

  13. Can you confirm that Bell's other good local deeds, such as support for children's parties and activities, will continue?

  14. Can you state what the Guinness Board intend to do about the pledge given to myself and other Scottish MPs and also, I understand, to Mr. Peter Tyrie, that the Gleneagles Hotel was to become the flagship of an international group of hotels?"

  My two questions in my letter of 25 February were:
  "Can I ask you to confirm that you told me 'that Ernest Saunders, whom you described as a liar, had during the Bell's takeover offered you the chairman's post at Bell's?'
  Can you also confirm that you said 'that as Bell's were a competitor of your firm's major customer—Distillers—you were unable to accept the offer?'"
  Another question which I put to Sir Norman at the meeting with him on 18 February, and which he did not answer, was: if Sir Norman was not involved in the decision by General Accident, why did he write to General Accident requesting that the decision with regard to the Bell's investment should not be taken in his absence? Sir Norman was afraid that he was going to be absent from one of the meetings.
  My hon. and learned Friend the Minister is aware that I believe that a concert party was in operation during the Guinness takeover of Bell's. Such a concert party would be against the takeover code. Consequently, Sir Norman's failure to answer my questions is not clever. It will encourage the view that Sir Norman has something to hide, and it would be very sad if that view were
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  encouraged. In view of the track record of senior Guinness officials and appointees, it would be unfortunate if Sir Norman were to be wrongly branded.
  Another question which has never been adequately answered is why the leader of the Liberal party — I warned him that I would raise this matter—who had no constituency interest and no knowledge of Bells, should have said that he advised Bells shareholders that
  "the best interests of Bell lie in accepting the Guinness bid without delay."
  He continued:
  "in the interests of the shareholders and of the future security of Bell's trading position, the investors in Bell would do well to accept the Guinness bid without waiting for further damage to be caused by maverick manoeuvres."
  I remind my hon. and learned Friend the Minister of the agreement by Guinness to pay the merchant bank advice costs of Bells director, Peter Tyrie. This agreement was made during the takeover and no declaration of that agreement was made by Guinness or Mr. Tyrie during the takeover and the Quayl Monro account was paid. The value of this account was £51,000. It was material to the way that Mr. Tyrie behaved and had an impact on the way in which the institutions reacted to his breaking ranks.
  I believe that there is sufficient evidence for my hon. and learned Friend the Minister to declare that the public interest is affected by what happened during the take-over and since. Yesterday, I received a written answer from my right hon. Friend the Secretary of State for Trade and Industry to my question asking
  "what criteria he uses in deciding the degree to which the public interest is involved in matters falling for decision by him."
  He replied:
  "There are no absolute criteria. The matters taken into account depend on the circumstances of the case and the relevant legislation."
  I love the nice, wide, sweeping choice which is available. I hope that my hon. and learned Friend has noted that the hon. Member for Dundee, East (Mr. Wilson) in a ten-minute Bill proposes the setting up of a Scottish takeover panel. That is merely a manifestation of the effect of this matter in Scotland.
  I hope that my hon. and learned Friend will respond positively to my speech and will give hope to my constituents who work for Bell's and wish that fine company to be disinvested from Guinness and restored to independence.
  11.38 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard): My hon. Friend the Member for Tayside, North (Mr. Walker) is to be congratulated both on his success in securing this Adjournment debate and on the determination with which he pursues issues such as this which he considers important to his constituents.
  My hon. Friend has raised this evening a number of concerns relating to recent takeover activity and my Department's role in monitoring both the conduct and the impact of takeovers. I cannot, as he will appreciate, comment on all the aspects of the particular case which he has mentioned tonight, and which indeed he has raised with me on a number of occasions in the past, for these are still under consideration, but I shall respond to some of the points which he has raised and illustrate some of the

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  procedures and powers at my Department's disposal for examining takeover bids and any potential public interest effects which they may have.
  I do not believe there to be any justification in my hon. Friend's criticism of my predecessor, my hon. Friend the Member for Edinburgh, Central (Sir A. Fletcher), who replied to the debate in 1985. It is impossible to act in circumstances such as these unless there is sufficient evidence on which to act, as I shall demonstrate. I do not believe it would have been appropriate for my hon. Friend to institute an inquiry on the basis of the evidence which was available to him.
  The motion on the Order Paper refers to the role of the DTI in monitoring takeover bids. The Department's main role relates to the period before a proposed acquisition takes place. There are well-established procedures for this under the Fair Trading Act 1973. The Act lays down a three-tier procedure, under which the Director General of Fair Trading has a duty to advise my right hon. Friend, in respect of all mergers involving a transfer of assets of at least £30 million, or a market share of at least 25 per cent. whether the merger should be referred to the Monopolies and Mergers Commission. Our policy is that references are made primarily on competition grounds, though the possibility of reference on other public interest grounds is not excluded.
  The MMC is required to consider whether the merger is likely to operate against the public interest, and report to the Secretary of State. Only if the MMC reaches an adverse public interest finding does the Secretary of State have discretion to prevent the merger, or take other steps which he considers appropriate to remedy the adverse effects identified by the MMC. In the case of a completed merger, one remedy open to him would be divestment of the merged enterprises.
  Hon. Members will also be aware that a review is also under way of the law and policy on mergers and restrictive trade practices. As far as mergers are concerned, the review is focusing on the legislative framework provided by the Fair Trading Act and the policy which is applied within that framework. We have had a large number of submissions to the review and these are being considered carefully. Work on this is continuing; but one thing is already clear —that there are no easy or straightforward answers to the complex issues which have been raised.
  As my hon. Friend is aware, power to refer a merger normally lapses six months after the event. If, however, it appears to the Secretary of State that material facts are brought to his notice or made public that were not disclosed at the time, he has a discretion whether to make a reference to the Monopolies and Mergers Commission. If the commission makes an adverse finding, the Secretary of State has discretion to remedy or prevent the adverse effects identified by the commission through the normal powers available to him.
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  My hon. Friend is particularly interested in this provision, and has suggested that it might apply to Guinness's takeover of Bells in 1985. I cannot comment on that or any other particular case, but I must stress that the power has never been used, and before using it my right hon. Friend would need to be satisfied on two counts: first, that "it was or might be the case" that previously undisclosed material facts had been brought to light—that is, facts which were material to the original decision as to reference but which were not disclosed at the time; and, secondly, that there was a genuine public interest issue to be addressed by the MMC. His decision would have to be made in the light of all the circumstances prevailing at the time.
  One of the grounds upon which my hon. Friend argued for divestiture was that Guinness had not honoured a number of undertakings in the offer document sent to Bell's shareholders, but departures from undertakings or intentions expressed in an offer document do not necessarily argue for annulment of an offer which succeeded and has been carried into effect.
  This is not to say that no consequences should attach to an offer document containing statements which the offeror knows to be false or misleading. Section 13 of the Prevention of Fraud (Investments) Act provides for criminal sanctions in such a case. My hon. Friend will not expect me to comment on the possibility that a particular person or persons may have committed a breach of the criminal law. The inspectors who are already conducting inquiries will be looking into the matters which he has raised.
  I hope that—although there is a limit to the extent to which I have been able to comment on the specific case about which I know my hon. Friend the Member for Tayside, North is concerned — I have been able to demonstrate that we have in place a range of measures to scrutinise both the conduct and the effects of takeovers. We are, however, ready to acknowledge that recent developments—for example, in the volume of mergers and the conduct of takeovers — may be making new demands on our law and policy. For these reasons. we are currently engaged in the review that I have mentioned.
  11.44 pm
  Sir Hector Monro: I think my hon. Friend the Member for Tayside, North (Mr. Walker) was most unfair to Sir Norman Macfarlane and the new management of Guinness, who have set out to develop the whole of the Guinness beverage empire in Perth, to the advantage of that area, and to develop the Scots whisky industry as one would hope. It would be quite unfair that this should go—
  The Motion having been made after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at sixteen minutes to Twelve o'clock.