Commons Sitting of 11 March 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  GRAMPIAN REGIONAL COUNCIL (HARBOURS) ORDER CONFIRMATION BILL
  Lords amendments agreed to.
Oral Answers to Questions
  SCOTLAND

    Golden Wonder Factory, Broxburn
    Mr. Robin Cookasked the Secretary of State for Scotland what reply he has received from the management of the Dalgety group to his expression of concern at the social consequences of the closure of the Golden Wonder Factory at Broxburn.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Ian Lang): The managing director of Dalgety UK Ltd has made it clear that the company is not prepared to reverse its decision. However, he has expressed a commitment to considering alternative uses for the Broxburn facility which would alleviate the unemployment consequences of the decision to cease crisp manufacture.
    Mr. Cook: Will the Minister recognise that many of us find it distasteful that a new management which has owned the company for only three months should, without consultation, dismiss a work force, some of whom have served the factory for 20 years? In his discussions with Dalgety, will he make it clear to the company that if it does not intend to run the factory as a crisp-making centre, it would be wholly unacceptable for it to refuse any genuine offer to take the factory over as a going concern and thereby save 350 jobs in a travel-to-work area where unemployment is already over 20 per cent?
    Mr. Lang: I shall happily relay that message to the company. Like the hon. Gentleman, I regret the lack of prior consultation which is always desirable in such circumstances. However, I am glad to be able to remind the hon. Gentleman that there has been a net increase of 3,000 jobs in the Livingston area in the past two years, and that manufacturing employment remains at the 1979 level.
    Sir Alex Fletcher: Does my hon. Friend accept that although Dalgety has every right to rationalise its own manufacturing capacity, it has no right to attempt to stifle competition by refusing to entertain offers from potential
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    competitors, particularly in an area of high unemployment? Has my hon. Friend had a satisfactory response from Sir Peter Carey, the chairman of Dalgety and a former champion of regional policy?
    Mr. Lang: I have been in touch with both Sir Peter Carey and with Mr. Maurice Warren the managing director of Dalgety UK Ltd. I must say that I have not had a satisfactory reply. I share my hon. Friend's view that it is desirable that the facility should be made available to an alternative user who will maintain employment in the area.
    Mr. Dalyell: What exactly did Sir Peter Carey say?
    Mr. Lang: Sir Peter Carey passed the matter over to Mr. Maurice Warren.
    Mr. Allan Stewart: Is my hon. Friend aware that the Dalgety group also owns the Spillers factory in Barrhead which has an outstanding record in production, industrial relations and new investment? In his discussions with Dalgety, will he reinforce the Scottish Office commitment to the success of that factory and explore possibilities for expansion?
    Mr. Lang: My hon. Friend is absolutely right to draw attention to the successful factories also operated by the group in other parts of the country. Major companies of this kind have made notable contributions to the Scottish economy.
    Mr. Wilson: Is this not yet another case of a company in Scotland being closed down to facilitate company strategy elsewhere to the disadvantage of a Scottish work force? What industrial strategy do the Government have to deal with such cases?
    Mr. Lang: The hon. Gentleman is absolutely wrong. Golden Wonder—Dalgety—also closed a factory at Long Buckby in the south.
    Mr. Dewar: Does the Minister not agree that it would be shameful if Golden Wonder was to block any offer for the factory as a going concern? Will he take it from the Opposition that it is not good enough simply to say that he will relay the message from my hon. Friend the Member for Livingston (Mr. Cook)? That is all right as far as it goes, but we want that same message to come very forcefully from Ministers. It is quite unsatisfactory that the fate of 350 employees at the plant should be passed around like a paper parcel between executives in the way that the Minister has described. Can he assure us that he is making the point strongly to the company that the Government will deeply resent any attempt to block any purchaser who wishes to maintain the factory in its present industry?
    Mr. Lang: I am sure that the company is in no doubt about the Government's view of the matter. My officials and the local authorities remain anxious to consult the company on the best alternative use of the facility.

    Springburn
    Mr. Martinasked the Secretary of State for Scotland what steps he is taking to bring more employment to Springburn.
    Mr. Lang: The full range of the Government's employment, enterprise and training measures, which have recently been extended, are already available in Springburn. In addition, good progress is being made with

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    discussions on a local economic intiative, involving the Scottish Development Agency, based principally on measures intended to create new employment in the area.
    Mr. Martin: By the end of the month, the work force in the main industry—railway workshops—will be reduced to 300. That contrasts with the community of 10,000 people who used to work in that industry. Last year, the Minister promised an initiative for Springburn, but not one job has come to my community. In Springburn and the surrounding areas, there are young people who have never had decent jobs. If the Minister will not deliver jobs, he should resign.
    Mr. Lang: We are anxious to get the initiative off the ground and have been trying to do so. Broad agreement has now been reached on the component parts of the initiative, but as the hon. Gentleman knows it involves not only the Scottish Development Agency and British Rail Engineering Ltd, but the local authorities, the Manpower Services Commission and the Glasgow Opportunities Enterprise Trust. It has been difficult to get the scheme off the ground, but I hope that progress can now be made.
    Mr. Henderson: In view of the long and historic association between Springburn and the railway system, does my hon. Friend believe that employment there would be greatly improved if British Rail would run an efficient, reliable, and clean service that met the needs of the people of Scotland?
    Mr. Lang: My hon. Friend is right. It is also fair to say that the running of the engineering workshops must be a matter for BREL, and it is right for that company to try to provide a competitive and efficient service. It is the intention that part of British Rail's light maintenance of rolling stock should be carried out at BREL after 1 April.

    Caterpillar Tractor Co.
    Mr. James Hamiltonasked the Secretary of State for Scotland if he will give the up-to-date position regarding the proposed closure of the Caterpillar Tractor Co, Tannochside; and if he will make a statement.
    The Secretary of State for Scotland (Mr. Malcolm Rifkind): I regret to say that the company's decision to close the plant remains unchanged. Work is in hand aimed at exploring all possibilities for retaining manufacturing operation and employment facility. In this connection, officials of the Industry Department for Scotland and the Scottish Development Agency are discussing with Caterpillar the preparation of a detailed profile of the facility with a view to marketing it, if this proves necessary, to potential users within the United Kingdom and abroad.
    Mr. Hamilton: Is the Secretary of State aware of reports that a circular letter has been sent to all the employees in the factory saying that if they do not stop their illegal sit-in they will receive notice to quit their jobs without redundancy payments? When will he have the meeting which he promised the workers he would have outside the factory? As it is in my constituency, I want to be at that meeting. Lastly, it is reported that two companies are interested in the factory. What is the truth of the matter and what are the prospects?
    Mr. Rifkind: I do not recall agreeing to a meeting outside the factory. I told the workers whom I met last week and who invited me to visit the factory that I have
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    no objection to visiting the factory but cannot do so while the unlawful occupation continues. I am sure that the hon. Gentleman understands the relevance of that consideration.
    I am aware of the circular that has been distributed by the company. Obviously, the work force will wish to consider that factor. We must also consider the extent to which the attraction of alternative users of the plant, should that prove necessary, is being helped or hindered by the continuing occupation of the plant.
    Mr. McQuarrie: Does my right hon. and learned Friend agree that the Caterpillar management's treatment of the work force, the Government and him especially, is disgraceful? Does he further agree, with regard to the comments that he made when he was subjected to that disgraceful treatment, that if there is any possibility of an offer being made from the work force or any other source, he will consider sympathetically giving Government aid towards getting the project off the ground and saving those 1,200 jobs?
    Mr. Rifkind: The company's attitude to the work force is the cause of greatest concern because it was informed by the company that the plant had a future. I can happily confirm that if there were alternative proposals for the continued use of the plant, which would give it a prospect of viability, obviously the Government would be willing, in the normal way, to see whether some financial contribution through regional policy was able to assist the fulfilment of that objective.
    Mr. Strang: Will the Secretary of State acknowledge that there was some surprise at the reported remarks of his hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang) that the workers should give up their occupation so that officials could visit the plant? Is he aware that when he spoke of the determined efforts of the work force when he met it last week, he was reflecting the aspirations of all Scottish people? Will he assure the House that he stands by what he said to the work force last week and will continue to support the whole of Scotland in its support for the work force's stand?
    Mr. Rifkind: I stand by everything that I said to the work force last week. Indeed, there was nothing inconsistent between that and what my hon. Friend the Member for Galloway and Upper Nithsdale has also said. We have emphasised that if it should prove necessary to seek to find an alternative user of the plant, the presentation of a profile of the plant becomes extremely difficult if it is not possible to visit the plant because its lawful owners are denied access to it. I know that the work force is having to consider the implications of those considerations. We are all anxious to make progress in this matter and one has to consider a sensible judgment as to whether continuing occupation of the plant is in the interest of the work force itself with a view to alternative users being identified and attracted to Uddingston to provide long-term employment.
    Mr. Hirst: I assure my right hon. and learned Friend that the whole of Scotland admires the vigorous way in which he has stood up to the Caterpillar management. However, if the United States management of Caterpillar does not change its mind about the closure, can he remind the House yet again that the Government will spare no effort in making resources available to find alternative

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    employers to come to Uddingston? Does he agree that in those circumstances a prolonged occupation of the factory could deter an alternative employer?
    Mr. Rifkind: I thank my hon. Friend for his opening comments and would add only that Mr. Gavin Laird and Mr. Jimmy Airlie expressed similar, if not identical, observations after my meeting with them. I certainly confirm the additional points made by my hon. Friend.
    Sir Russell Johnston: May I press the Secretary of State on the question of assistance to alternatives? If, for example, no alternative buyer was found and a workers' takeover was demonstrated to be a commercial proposition, would the Secretary of State, in those circumstances, be prepared to produce money? Will he say to Caterpillar that it would be a clement act, considering the genuine criticism to which it has been subjected, if it released the tractor over which it is playing silly legal games?
    Mr. Rifkind: The ownership of the tractor is a legal matter and it is not for me to comment on it. On the hon. Gentleman's earlier comments, we are interested in a long-term commercially viable proposition for the continuation of the plant and we would be interested in assisting any proposal that was likely to prove commercially viable so far as it was within our power to do so.
    Mr. Dewar: In his initial reply, the Secretary of State said that the position of the employer, the Caterpillar Tractor company, remained unchanged and put considerable emphasis on the work being done to prepare a profile of the plant. Does that mean that he is still pressing the company for a change of mind? As a static position is of little help in that respect, is he taking any positive initiative to try to bring it about? As the time scale is important, given the genuine and general anxiety and, indeed, anger at the way in which the company has acted, will he undertake to come back to the House and, in the form of a statement, report progress so that we may know how negotiations with the company, if any, are progressing and, if the reply is disappointing, so that he will have a chance to outline the alternative proposals he has for the plant?
    Mr. Rifkind: I have not accepted, and still do not accept, the inevitability of Caterpillar's withdrawal from the plant and I shall continue to use every opportunity to try to persuade Caterpillar to reconsider its decision. However, clearly, it would be foolish to suggest that it is likely to do so in the absence of any new information or new consideration. Nevertheless, one will seek to use any opportunity to persuade it to reconsider the decision it has reached.
    It is also in the interest of the work force and suppliers to that plant to explore simultaneously other possible uses of the plant, because we must accept at least the strong possibility that there will not be a reversal of the decision by the ownership of the company. To put all our eggs in that particular basket might be an unwise proposition, most of all from the point of view of the work force itself.

    North Lanarkshire (Unemployment)
    Mr. George Robertsonasked the Secretary of State for Scotland by how much unemployment in North Lanarkshire has risen since May 1979.
    Mr. Lang: Between May 1979 and January 1987 unemployement rose from 15,531 in the former North Lanarkshire travel-to-work area to 35,089 in the new Lanarkshire travel-to-work area. As a result of changes in the travel-to-work area boundaries and in the method of the count, those figures are not comparable.
    Mr. Robertson: While the outrage of Caterpillar dominates the dismal picture that the Minister has highlighted, is he aware that there are other examples in that area of conglomerates pulling out and abandoning ship, for example, Reyrolle Belmos in my constituency, where Northern Engineering Industries is simply abandoning the area, and 40 years of local history, and taking with it all the tools, machinery, drawings and brand names, as well as 300 jobs? It is also blocking any possibility of anybody else taking over the factory. For how long will the Minister and the Government allow our industrial life-blood to drain away before taking any action to stop it?
    Mr. Lang: The company has taken a commercial decision based on its perception of the demand for its products in power stations, but I can assure the hon. Gentleman that our attempts to help the area are reflected in the substantial Motherwell and Coatbridge projects, with a budget of around £57 million in the Motherwell project, which has been extended to 1990. That has attracted £80 million of private sector finance and helped to create or safeguard more than 4,000 jobs.
    Dr. Bray: Did the chairman of the British Steel Corporation volunteer the closure of hot-rolled coil capacity at Ravenscraig in the present Eurofer round? Has that offer now been withdrawn as contrary to the Government's commitments at Ravenscraig arid elsewhere?
    Mr. Lang: I am not privy to the deliberations of Eurofer, but the hon. Gentleman will be aware of the commitment given again recently by my right hon. Friend the Secretary of State for Trade and Industry, that we remain committed to a five-integrated-plant plan for BSC, and that nothing can be done to prejudice the subsequent decision before 1988.

    Crofters (Community Charge)
    Mr. Donald Stewartasked the Secretary of State for Scotland what representations he has received on the financial effect on crofters arising from the introduction of community charge.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): My right hon. and learned Friend the Secretary of State has received representations on that matter from the Western Isles islands council, the Crofters Commission, the National Farmers Union of Scotland the Scottish Crofters Union and the Harris Council of Social Service, as well as from a number of individuals in the crofting areas.
    Mr. Stewart: Is the Minister aware of the concern and resentment felt throughout the crofting community at the imminent disappearance of the rating control concession under the poll tax legislation? Is he further aware that the factors that gave rise to that in the first place still exist to the same extent, and were accepted by a previous Conservative Administration and, indeed, have been by all

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    Governments since? Are we to believe that the present occupants of the Scottish Office are more hard-nosed and uncaring than the Conservatives in 1956?
    Mr. Ancram: I congratulate the right hon. Gentleman on his mischief in raising the issue, which he knows from the Standing Committee on the Abolition of Domestic Rates etc. (Scotland) Bill splits the Labour party in three ways. The present relief attaches to property rather than to the individual. The new charge that is being introduced is a personal charge, and the rebate system that we intend to introduce will make sure that those on low incomes are sufficiently protected.
    Mr. Michael Forsyth: Will my hon. Friend confirm that when it comes to being hard-nosed towards crofters, the policy of a local income tax that is espoused by the Scottish nationalists and the Liberals would be far more damaging than the community charge because of the narrowness of the tax base? Is it not double standards on their part to complain about something that will be to the benefit of their constituencies?
    Mr. Ancram: I agree with my hon. Friend. I would go further and say that the type of relief that is being sought by the right hon. Gentleman and by other hon. Members would be given to people in a specific category. Some of them might benefit from it and some of them would not need it. I call in evidence the words of Mr. Brian Wilson, who I believe is a Labour candidate. Writing in the West Highland Free Press on Friday 27 February, he said:
    "It simply is not on to introduce, in 1987 a new scheme which gives the well-paid schoolteacher with crofting status a 25 per cent. tax rebate, while the pensioner next door in a non-croft house is hit for the full whack."
    That is a sensible approach.
    Mr. Wallace: Does not the example that the Minister has given underline the indiscriminate way in which the poll tax will affect people? A local income tax is by far the fairest way by relating liability to one's ability to pay.
    Mr. Ancram: I should be interested to hear what figures the Liberal party can produce about how a local income tax would work. On the figures that we have produced, the impression is that anybody earning over £112 a week as a single earner would end up paying more in local income tax than he would in community charge.

    Gross Domestic Product
    Mr. Fallonasked the Secretary of State for Scotland what proportion public expenditure represents of the Scottish gross domestic product.
    Mr. Rifkind: Identifiable public expenditure in Scotland in the financial year 1985–86 was 48 per cent. of Scottish gross domestic product at factor cost in the calendar year 1985.
    Mr. Fallon: Can my right hon. and learned Friend confirm that for every £4 of public expenditure south of the borders about £5 is spent north of the border? [Interruption.]
    Dr. Godman: The hon. Gentleman should get his hands out of his pockets.
    Mr. Speaker: Order. The hon. Gentleman has as much right as a Scottish Member to raise this matter.
    Mr. Fallon: To what does my right hon. and learned Friend attribute this extraordinary difference? Is it the automatic element in the block formula, or is it his own formidable lobbying skill at the Treasury?
    Mr. Rifkind: I know that my hon. Friend visits Scotland quite frequently. He will know that although the population of Scotland is a relatively small fraction of that of the United Kingdom, the land mass of Scotland is a far higher proportion than the population would imply, and therefore requires somewhat disproportionate expenditure on, for example, roads and transport, and because of the special circumstances of the islands of Scotland, which have specific requirements. Therefore, rather crude comparisons of the kind that my hon. Friend makes are not entirely appropriate.
    Mr. Roy Jenkins: As it is the Government's desire to reduce public expenditure as a proportion of gross domestic product, and as the Government regard public expenditure as an albatross around the neck of private industry, does the right hon. and learned Gentleman regard the public expenditure level in Scotland as an achievement or as a failure?
    Mr. Rifkind: I can tell the right hon. Gentleman that the proportion that I mentioned has actually gone down over the last few years. Therefore, I consider the level an achievement.
    Mr. Fairbairn: Does my right hon. and learned Friend appreciate that one reason for the excellent level of public expenditure in Scotland compared to that in England is that the mother of my hon. Friend the Member for Darlington (Mr. Fallon) lives in my constituency, and it is spent on her? I do not understand his complaint. Will my right hon. and learned Friend make sure that the message is spread that the quality of life in Scotland is infinitely better, thanks to him and his fellow Ministers, and that more people could live there and commute to the south than the other way round?
    Mr. Rifkind: My hon. and learned Friend is correct. The definition of public expenditure that I used in my reply to my hon. Friend the Member for Darlington (Mr. Fallon) is of identifiable public expenditure as a whole and not merely that of the Scottish Office, and does include transfer payments of the kind to which my hon. and learned Friend refers.
    Mr. Douglas: Can the Secretary of State confirm that we are talking about public authority current expenditure on goods and services and, of course, about gross domestic capital formation, and part of that is public expenditure?
    Mr. McQuarrie: That is big talk.
    Mr. Douglas: The hon. Member for Banff and Buchan (Mr. McQuarrie) says that that is big talk, but he ought to remember that, like me, he is only a wee fellow.
    If the Secretary of State wants to go further, will he tell us about the jobs related to that public expenditure and the essential services and about the infrastructure that is created by it and which is essential to Scotland's economic progress?
    Mr. Rifkind: Throughout the United Kingdom, public expenditure supports a certain level of employment. The hon. Gentleman will be aware that a previous Labour Government came to the conclusion that one could not

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    expect public expenditure to answer the questions of unemployment. The country as a whole now fully appreciates that.

    Scottish Development Agency
    Mr. Knoxasked the Secretary of State for Scotland what has been the total expenditure by the Scottish Development Agency since its inception.
    Mr. Rifkind: On the assumption that provision for 1986–87 is fully spent, the Scottish Development Agency will have spent at the end of March a total of £1·03 billion in the period since it was formed.
    Mr. Knox: Can my right hon. and learned Friend say how much the agency has spent on average, each year, since the Government came to office and how that expenditure compares with the amount spent on average, each year, under the Labour Government?
    Mr. Rifkind: I cannot immediately give an average figure, but what I can say is that, in constant prices, the gross expenditure of the Scottish Development Agency has gone up both in cash terms and in constant prices. I believe that that is a measure of the great significance that the Government attach to the role of the agency in dealing with the economic and infrastructure problems of Scotland. That important role was recognised in a recent review of the agency carried out some months ago.
    Dr. Godman: It is reported that, following the deal with Trafalgar House over unused land, the Scottish Development Agency will spend several million pounds on the redevelopment of unused land for new industrial sites. I take it that that money is in addition to the financing of the Inverclyde initiative. Will the right hon. and learned Gentleman now sanction an increase in the staff of the Inverclyde initiative? Will he now respond to my request for consultancy support for the Inverclyde initiative?
    Mr. Rifkind: The hon. Gentleman's latter point concerns detailed matters that are currently under consideration. I am sure that the hon. Gentleman joins me in expressing pleasure that the discussions, which the Government authorised the agency to have with Trafalgar House, have led to such a great success. I am aware that when the Inverclyde council came to see me it correctly pointed out that the availability of land for potential investors was the single most important consideration in achieving the regeneration of Inverclyde. Now that over 40 acres of land have been released as a result of the arrangements with Trafalgar House, it will enable the SDA, which in agreement with the Government, attaches great priority to the regeneration of the area, to prepare the land for potential investors from other parts of the country and from overseas.
    Mr. Pollock: Does my right hon. and learned Friend agree that the SDA has an important, positive role in rural coastal seats, such as my constituency, and in the central belt? Is my right hon. and learned Friend aware that, at present, the SDA has undertaken to help to try to regenerate the somewhat parlous economy of Buckie, which is facing problems? Will he ensure that the agency is given adequate resources to do what it deems to be necessary?
    Mr. Rifkind: I happily confirm what my hon. Friend said. The SDA has a role to play throughout the whole of
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    Scotland. Indeed, it is estimated that some 25 per cent. of its expenditure is within the rural as opposed to the industrial areas of Scotland.
    Mr. Canavan: What proportion of SDA expenditure has been spent on environmental, tourist, hotel and prestige projects, such as the garden festival, and how much has been spent on genuine public investment in industry? Such investment was one of the key roles for the SDA when it was set up by the Labour Government.
    Mr. Rifkind: I believe that the hon. Gentleman is mistaken in' trying to draw a distinction between what he chooses to call the genuine role of the SDA and that which he presumably believes to be of no great significance. He should be aware that, to many parts of Scotland, the tourist industry is of great economic significance. He will also appreciate that people are interested in finding jobs and his rather superficial arid spurious distinction is of little relevance to the needs of Scotland.
    Mr. Maxton: In view of the answer that the Minister gave to his hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) can the Minister explain how it is that at 1986–87 prices SDA expenditure was £133·2 million, for the coming year it will be £131 million, while in 1979–80, the last year of the Labour Government, expenditure was £134 million? How does the present figure represent an improvement?
    Mr. Rifkind: I must say to the hon. Gentleman that the last full year of the Labour Government was 1978–79 and the figure then was £124 million. I hope that the hon. Gentleman has noted the remarks made by a large number of American companies which have studied the role of the SDA and identified the SDA, as reformed by the present Government, as the most successful agency of its kind anywhere in western Europe. Those companies went on to say that the prospects for further investment in Scotland were splendid and could only be marred by the return of a Labour Government. That was not the view of politicians, that was the view of overseas business men whom we are seeking to persuade to invest in Scotland.
    Mr. Kirkwood: In the absence of any properly co-ordinated rural development agency north of the border—as the Secretary of State will know, such an agency is available to places such as Northumberland south of the border— will the right hon. and learned Gentleman consider giving the Scottish Development Agency a modest increase in funds so that it can begin to play a part in the current debate in Scotland about new development and alternative uses of land in rural areas? With modest funds, a rural development agency in Scotland could provide significant help.
    Mr. Rifkind: The Scottish Development Agency already carries out such a role. The hon. Gentleman should be aware of two proposals, development of rural area workshops— DRAW— and programme for rural initiatives and developments—PRIDE— which have already involved significant investment in various rural areas in Scotland, including, I suspect, the hon. Gentleman's constituency.
    Mrs. McCurley: I congratulate my right hon. and learned Friend on yesterday's announcement about the Inverclyde initiative. I add my warm congratulations in

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    respect of the part played by the SDA in breaking the logjam in Inverclyde, which will enable the initiative to take off at a great rate.
    Mr. Rifkind: I thank my hon. Friend. She is absolutely correct. All those who know Inverclyde know that non-availability of land was proving to be one of the most serious obstacles to progress. That obstacle has now been removed.

    Fine Defaulters
    Mr. Norman Hoggasked the Secretary of State for Scotland what proportion of the present prison population is made up of fine defaulters; and if he will make a statement.
    Mr. Lang: The latest available figures are for December 1986 when approximately 4·5 per cent. of the average daily population in Scottish penal establishments were fine defaulters.
    Mr. Hogg: I thank the Minister for that reply, but does it not show that there is a continuing crisis in the Scottish prison system? What steps is he taking to ensure that this problem is met, so that the offenders are dealt with under the original sentence that they receive and not under this secondary imposition? Surely, this displays a very unhealthy situation in the prison system.
    Mr. Lang: The hon. Gentleman may know that about 78 per cent. of sentences passed in 1985 involved fines. The vast majority of those fines are paid. But it is necessary to preserve some sanction of imprisonment to sustain the credibility and effectiveness of fines. We have introduced fine enforcement officers in sheriff courts, and it is hoped that this will relieve the problem arising from fine defaulters.
    Mr. John Mark Taylor: Does my hon. Friend agree that fine defaulters are customarily given every tolerance by the courts, so he can safely say that those who are in prison are those who are defiant or even contemptuous of their liabilities?
    Mr. Lang: My hon. Friend has underlined the point that I made. We need the sanction of imprisonment to support the effectiveness of fines. Only about 7·5 per cent. of those who are fined end up in prison and they are there for only short terms.
    Mr. Hugh Brown: Given the recent serious disturbances in the Scottish prisons, would the hon. Gentleman agree to some kind of inquiry— public or otherwise— to investigate the possibilities of reducing the number of fine defaulters in prison and of imposing more non-custodial sentences?
    Mr. Lang: That point certainly justifies further exploration. As I have said, we have introduced fine enforcement officers. So far, there are 12 in place and there are to be three more. The success of this arrangement will be evaluated by the Scottish Office central research unit. During the past three years, community service orders have been used increasingly, and they should also help to relieve the problem.
    Mr. Fairbairn: Will my hon. Friend look urgently at the possibility of having a much simpler regime for fine defaulters so that they do not have to go through the rigidity of admission and release, which is absurd for people who are merely being detained until they pay a fine?
    Mr. Lang: Yesterday, my hon. and learned Friend the Solicitor-General for Scotland explained in some detail how the Debtors (Scotland) Bill, which is before the House, will provide for more efficient methods of arresting the earnings of a debtor in the hands of his employer. I hope that this, too, will help to relieve the problem.
    Mr. Tom Clarke: Has the Minister considered the important report on this matter by the Association of Directors of Social Work in Scotland, which takes into account the fact that nearly half of those admitted to prison come from this category? Is the hon. Gentleman prepared to consider the alternatives proposed by the association?
    Mr. Lang: I have just received that report, which is being closely studied. As the hon. Gentleman knows, it was published only a couple of weeks or so ago.

    Food Aid
    Mr. Home Robertsonasked the Secretary of State for Scotland what estimate he has of the costs incurred by voluntary organisations in Scotland on the administration, distribution and handling of free food for the needy from European Economic Community intervention stocks.
    The Parliamentary Under-Secretary of State for Scotland (Mr. John MacKay): Costs incurred for the delivery of foodstuffs to the charities' distribution points are, within limits reimbursable. I have no estimate of the other costs incurred by the voluntary organisations.
    Mr. Home Robertson: Is the Minister aware that we welcome the admission by the Government that there are a lot of needy people in Scotland? We also welcome the principle of distributing the surplus food. Obviously we are all grateful to the voluntary organisations for the splendid job that they have done. However, will he accept that there have been significant problems in the distribution? In view of the substantial cost and the workload involved in the exercise for voluntary organisations in Scotland, will he make contingency plans for public agencies to fund and co-ordinate any future distribution?
    Mr. MacKay: Perhaps I may first join the hon. Member in congratulating and thanking the voluntary bodies which have done such a splendid job in distributing the food. I have to remind him that it was a decision of the Commission that the best, quickest and most effective way of distributing the food would be through voluntary bodies and that FEOGA, for example, will reimburse the charities at a rate of £159 per tonne for the repacking into small packs and the transport of butter. There will also be reimbursement for the transport of boneless beef. The charities knew when they took over the job that they would be involved in costs. I believe that they have seen it as a worthwhile job and I do not think they will complain too much about the success of the venture.
    Mr. McQuarrie: I am sure my hon. Friend will accept that the voluntary organisations, while they undertook willingly to carry out the work, have not got a bottomless purse. Will he try to ensure that the costs are reimbursed to the Salvation Army, Age Concern and similar organisations, because they do not have funds other than the voluntary contributions of many people? FEOGA and the Commission have plenty of money to reimburse these organisations.
    Mr. MacKay: I repeat the point that I made in response to the hon. Member for East Lothian (Mr. Home Robertson) that there will be reimbursement for the cost of distribution to the main distribution points. That is probably the major part of the cost. The Commission has made it clear that the limited costs thereafter will have to fall on the charities themselves. As my right hon. Friend the Minister of Agriculture, Fisheries and Food said in the House the other day, we will be prepared to talk to any charities that have trouble.
    Mr. Ron Brown: The Government believe in market forces. If we believe the various statements by individuals who allege that the EEC is wonderful, surely these foodstuffs should be made available in village shops. It is a question of cost. Surely prices should come down. Would it not be better if we withdrew completely from the EEC?
    Mr. MacKay: I am not sure whether I have fully understood the hon. Member's question. The Government have long argued for a reduction in support prices under the common agricultural policy, but other member states have not been prepared to agree. Even if we got that, the elasticity of demand for foodstuffs in the European Community would still mean that we had a major surplus problem.
    Mr. Bruce: Will not the Minister acknowledge that the problem is not simply one of cost but of physical human resources and that in many areas distribution has been patchy or non-existent because the charities did not have people on the ground? Will he recognise that in future it would be better if such distribution was co-ordinated by local authorities? Further, what will he do for those areas that missed out altogether, and for those individuals who were denied participation?
    Mr. MacKay: I am sorry to hear that the hon. Member representing the Liberal party has so little confidence in the voluntary organisations. While I accept that distribution started off rather patchily my information is that it is now in full swing and that many people are giving a lot of time to getting the butter and so on to elderly people. I am sorry to see the hon. Member dissenting because in his constituency, as in others, many volunteers in, for example, the WRVS are doing an excellent job. I am prepared to pay tribute to them, if he is not.

    Labour Statistics
    Mr. Foulkesasked the Secretary of State for Scotland what are the five travel-to-work areas in Scotland currently with the highest levels of unemployment; and what special initiatives his Department or the appropriate Government agency has set up in each of the five areas concerned.
    Mr. Lang: The five areas are Cumnock and Sanquhar, Forres, Girvan, Irvine and Skye, and Wester Ross. A special initiative for the Cumnock and Doon area is now well under way. All the other areas are assisted areas under the Government's regional policy.
    Mr. Foulkes: That is certainly a list that one does not wish to be on. I regret to say that two areas in my constituency are in the top five. Does the Minister appreciate that 400 jobs in the mining industry in Cumnock and Sanquhar have been lost over the past seven years? Although we welcome what is being done following
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    the Coopers and Lybrand report, it is in no way enough to tackle the enormity of the unemployment problem in the Cumnock area. Will the Minister ask the Scottish Development Agency to adopt one of the special initiatives that have been instituted in other areas in Scotland? Girvan, which is No. 3 on the list, does not even have development status. Will the Minister give serious consideration to Girvan's problems, make sure that it is awarded development area status as a matter of urgency, and find some special initiative scheme for the area?
    Mr. Lang: I must tell the lion. Gentleman that we have no plans to reconsider the map in the immediate future. The maps were drawn up only two years ago. There is a necessity for stability to enable the situation to be properly assessed. The Cumnock and Sanquhar travel-to-work area straddles the boundary between the hon. Gentleman's constituency and my constituency. I know that he is appreciative of the speed with which the SDA has responded in the case of UK Opticals in Mauchline. I am sure that he will join me in welcoming the successful takeover of Brocks Fireworks in Sanquhar, which has secured a number of jobs, and the establishment of Fisher and Holden in Kirkconnel in my constituency, which has brought 100 new manufacturing jobs to the area.
    Mr. Michael Forsyth: Will my hon. Friend confirm that unemployment in each area would be much higher if we were to follow the advice of the Labour party and close down nuclear power stations, thereby putting up electricity prices by 25 per cent., and to allow rates to rip?
    Mr. Lang: My hon. Friend is absolutely right. Indeed, almost all the policies of the Labour party seem to be designed to raise unemployment and cause problems for the economy. I have not yet been able to see details of its policy for jobs, announced today. As far as I understand it, the Labour party relies largely on artificial, unproductive public sector jobs, which may be best characterised as postmen going around in pairs.
    Mr. Lambie: As the urban travel-to-work area in my constituency is also on the list read out by the Minister, will he see that his officials in the Scottish Office and officials in the Scottish Development Agency realise that something is still needed for the Cunninghame area? Is the Minister aware that the Irvine area received a further blow to unemployment during the week, and one at the weekend, when Marlow Textiles went into receivership, causing the loss of another 100 jobs? Today I heard a rumour that Dawson International, in carrying out the process of rationalisation, is considering closing McKinnon's Textiles in Irvine, which will involve the loss of another 100 jobs. That cannot go on. I do not want the area to top the unemployment list. In spite of all the initiatives coming into the Cunninghame area. the Minister must ensure that officials do something, go to Irvine and try to get more jobs.
    Mr. Lang: As the hon. Gentleman may know, I recently had the pleasure of visiting Irvine new town. I spent a considerable time in the area. The hon. Gentleman may welcome the fact that, last month, Scottish-based companies announced project; promising almost 2,000 new manufacturing jobs as a result of orders received. One major inward investment that was recently announced was the establishment of the Finnish paper mill at Irvine, which

    289
    will create up to 1,000 direct and indirect jobs in his constituency and a further 1,000 or more jobs in the construction period.
    Mr. Pollock: Does my hon. Friend accept that the figure that he gave for Forres is artificially high because of the distortion caused by the presence of RAF Kinloss in the travel-to-work area? Apart from the assisted area status to which he referred, does he recall that, in Elgin last year, our right hon. Friend announced the extension of the Highlands and Islands Development Board boundaries to embrace the Forres travel-to-work area? That was a clear sign of the positive steps that the Government are taking to battle with the problem.
    Mr. Lang: I am grateful to my hon. Friend for his welcome to our response in extending the Highlands and Islands Development Board area. It will enable the Forres area to have access to all the resources of the board. I hope that it will assist the unemployment problem in that part of his constituency.

    Dundee
    Mr. Wilsonasked the Secretary of State for Scotland what steps he intends to take to maintain investment and employment in Dundee following termination of the Dundee project.
    Mr. Lang: Development area status, supported by access to the full range of the Government's employment, enterprise and training measures, will help Dundee to attract new investment and jobs. Enterprise zone benefits remain in force until 1994 and major investment by the Scottish Development Agency in projects such as the technology park and the waterfront development guarantee substantial agency resources well beyond the end of the project.
    Mr. Wilson: Is the Minister aware that the Dundee project, which is a major investor, comes to a close at the end of this year and that there is considerable worry in the city about what will happen after that event, in terms of the level of cash and the degree of attention that the Scottish Development Agency will give to the city? Does he not realise that unemployment is still at about the 15·5 per cent. level, which is extremely high, and that there is no sign of it abating?
    Mr. Lang: The Dundee project has helped to create over 2,000 new jobs and bring over £40 million of private investment into the city. It has undoubtedly been a successful venture. The hon. Gentleman knows that the agency has already stated its intention to maintain an office in Dundee for the foreseeable future. I hope that the hon. Gentleman will give consideration to the Scottish Nationalist party standing down its candidate in Dundee, East as a contribution to its realistic approach to Dundee's problems.

  SOLICITOR-GENERAL FOR SCOTLAND

    Solicitors (Public Service)
    Mr. Foulkesasked the Solicitor-General for Scotland what responsibility he has for the professional conduct of Scottish solicitors working in the public service.
    The Solicitor-General for Scotland (Mr. Peter Fraser): Criminal conduct apart, my noble and learned Friend the
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    Lord Advocate and I are responsible only for the professional conduct of solicitors employed in our own Departments.
    Mr. Foulkes: Although I accept that the conduct of solicitors in the Solicitor-General's Department is impeccable, I am sure that the hon. and learned Gentleman will share with me the concern about disciplining solicitors in private practice. He will be aware that many complaints have been made for over a year against Mr. Graeme Adam, a solicitor, but that despite all these complaints Mr. Adam has consistently refused to turn up at auditors' hearings to deal with them. The Law Society has been totally powerless to act. In the meanwhile, Mr. Adam is practising as a solicitor. Is it not about time that the complaints procedure against solicitors was taken out of the hands of the Law Society and dealt with by a proper, independent complaints procedure?
    The Solicitor-General for Scotland: I am aware of the case to which the hon. Gentleman refers, but I think that he readily appreciates that that is not a matter that comes within my area of responsibility. If there are problems over Mr. Adam's attendance before the auditor, I think that there are steps that can be taken. The hon. Gentleman is wrong to say that the Law Society is not anxious to pursue the matter. I understand that it is looking at the complaints that the hon. Gentleman and others have made about this particular solicitor. It is for the Law Society to deal with the matter rather than me, unless of course there are indications of fraud by him or any other solicitor.

    State Security
    Mr. Dalyellasked the Solicitor-General for Scotland if he will make it his practice, when the Crown Office or procurators fiscal are applying for search warrants in relation to offences under the Official Secrets Act, that all applications be made to a justice of the peace.
    The Solicitor-General for Scotland: No, Sir.
    Mr. Dalyell: May I ask the Solicitor-General a question of which I gave the Crown Office notice on Monday, to which I hope that there will be a considered reply? By what statutory provision or principle of the common law does he assert that the sheriff has legal authority to grant a warrant that Parliament specifically stated should be granted by someone else? [HON. MEMBERS: "Reading."] Yes, I am reading, because I had the courtesy to give the Crown Office notice.
    The Solicitor-General for Scotland: As my noble and learned Friend the Lord Advocate indicated in another place last week, the sheriff possesses magisterial powers under the common law and statute in relation to the issue of warrants. He also said that he was satisfied that the proper procedures for obtaining a search warrant were followed in this case and that the involvement of the procurator fiscal and the sheriff was in accordance with the established law of Scotland. It is true that the hon. Gentleman gave something of advance and public notice of his supplementary question—
    Mr. Dalyell: And to the Solicitor-General's Office.
    The Solicitor-General for Scotland: Yes, and to my Office, but he went on to say that it was improper or wrong to go to sheriffs because they were beholden to Law

    291
    Officers and that it would he more appropriate to go to a justice of the peace. On proper reflection, I hope that the hon. Gentleman will realise that that was a wholly unwarranted slur on the sheriffs in Scotland.
    Mr. Fairbairn: Will my hon. and learned Friend advise the hon. Member for Linlithgow (Mr. Dalyell) that if all warrants were granted by justices of the peace rather than by sheriffs they would be very much easier to obtain than they are now?
    The Solicitor-General for Scotland: I do not know whether that is so, and I do not think that I can comment on my hon. and learned Friend's point. However, I have already said that I find it extraordinary that the general view seems to be that there is something improper about going to a sheriff to obtain a warrant. That is wholly in accordance with our law. What surprises me is that south of the border, when Opposition Members were contemplating the Police and Criminal Evidence Act 1984 in relation to journalistic material, they sought to ensure that warrants were obtained from more senior judicial office holders rather than from lower ones.
    Mr. Dewar: As the Solicitor-General said something rather sharp about the remarks made by my hon. Friend the Member for Linlithgow (Mr. Dalyell) concerning sheriffs, will he take just a second to disassociate himself from the remarks made about justices of the peace by his hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn)? With hindsight, does the Solicitor-General not accept that there are lessons to be learned from the raid on the BBC premises? Was that not heavy-handed, coloured by political considerations and seen by many people as intimidatory in character? Does he agree that, in terms of the independence of the BBC, it is important that "The Secret Society" series of programmes should be screened as soon as possible?
    The Solicitor-General for Scotland: The screening of the BBC's programmes "The Secret Society" is entirely a matter for the BBC. As my noble and learned Friend and I have already stated, all the material that the BBC requires for the screening of those programmes has been returned to it. The BBC accepts that fact. If, for some reason or other, the BBC chooses not to screen one or more of those programmes, that is its business. I do not accept that it was intimidatory. The hon. Gentleman first made those remarks when he had not even looked to see what the terms of the petition and the crave were.
    On the first point that the hon. Gentleman raised, in relation to the granting of a warrant by justices of the peace, I accept that under particular statutes and, more generally, on occasions it is appropriate to go to justices of the peace. However, I dissent from the suggestion made by the hon. Member for Linlithgow (Mr. Dalyell) that there is something improper or wrong about going to a sheriff. Where a procurator fiscal is involved, that would be the most appropriate course to take.
    Mr. Dalyell: On a point of order, Mr. Speaker. In view of the unsatisfactory non-reply to that question, I beg to give notice that I shall seek to raise this matter on the Adjournment.

    Forensic Science Services
    Mr. Allan Stewartasked the Solicitor-General for Scotland when he expects to receive the report of the Crown Agents' working party on forensic science services in Scotland; and if he will make a statement.
    The Solicitor-General for Scotland: It is expected that the report will be submitted to Ministers by late summer. Given the ever-increasing importance of forensic science in the successful detection and prosecution of crime, I await with interest the conclusions and recommendations of the Crown Agent's working party.
    Mr. Stewart: I am grateful to my hon. and learned Friend for that information. Can he say anything more about the focus of the working party's report? Will it concentrate on forensic science services in relation to drug offences or will it cover more general matters?
    The Solicitor-General for Scotland: The working party will look at the arrangements for providing forensic science services in Scotland more generally. Clearly, with the increase in drug cases of which my hon. Friend is aware and concerned about, there has been some anxiety that there may be some delay. That matter is being examined as part of the working party's remit. However, I should like to emphasise that it is not a question of the standard! or quality of the forensic scientists in Scotland. Rather it seeks to ensure that the provision is as adequately and satisfactorily provided as possible.
    Dr. Godman: What part do the police surgeons play in the forensic science services? Is it not time that more women doctors were trained as police surgeons?
    The Solicitor-General for Scotland: The specific matter of police surgeons is not part of the working party's considerations. However, I am aware that my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang) has given a parliamentary answer to the effect that although there are only a limited number of women police surgeons in Strathclyde, the Strathclyde police have taken steps to ensure that an additional number are acquired to assist in those sensitive cases in which it would be more appropriate for a woman doctor to undertake the examination.

    Licensing Courts
    Mr. Hendersonasked the Solicitor-General for Scotland how many prosecutions have been mounted in the last 10 years against councillors who sit on licensing courts despite their spouses being licence holders and who fail to declare an interest when speaking against approval of a licence from another establishment in the same town.
    The Solicitor-General for Scotland: There have been no such prosecutions under section 2 of the Licensing (Scotland) Act 1976. Such councillors are not disqualified by virtue of that section from acting as members of licensing boards or from taking part in proceedings before them.
    Mr. Henderson: I am grateful to my hon. and learned Friend for his reply. However, does not that suggest that the position of licensing courts may be slightly different from other activities in local government? Will he bear this in mind when future legislation is considered to bring them into line, including cases in which a councillor may live with someone who is not their spouse, in another town?
    The Solicitor-General for Scotland: Certainly the position under the Licensing (Scotland) Act 1976 is different from that which obtains under the Local Government (Scotland) Act 1973, where, in the case of married persons living together, the interests of one spouse, if known to the other, shall be deemed for the purposes of the section also to be an interest of the other. However, as my hon. Friend will appreciate, any change in local government legislation or in licensing legislation would be for my right hon. and learned Friend the Secretary of State.

    Sheriff Courts (Reckless Driving Charges)
    Mr. Robin Cookasked the Solicitor-General for Scotland if he has any plans to review the role of sheriff courts in hearing charges of reckless driving resulting in a fatality; and if he will make a statement.
    The Solicitor-General for Scotland: Crown counsel carefully consider every case and decide, not only whether proceedings should be taken, but whether the case should be indicted in the High Court or the sheriff court.
    Mr. Cook: Is the Solicitor-General aware that last year 601 people were killed on Scottish roads but that only two
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    cases resulting in fatality were brought before the High Court? Will he acknowledge the widespread feeling in Scotland that this offence is not being treated with sufficient gravity by the Scottish courts? Will he take this opportunity to remind the courts that any legal proceedings arising from a fatality should be handled with dignity and respect for the feelings of the relatives of the victim?
    The Solicitor-General for Scotland: I know that the hon. Gentleman appreciates that sentencing is not a matter for me. Following a recent meeting with him and a representative of the organisation SCID, I am aware of the concern that proper allocation of cases should take place, making sure where it is appropriate that they are heard in the High Court or before a sheriff and a jury. As I said then, that matter will be considered carefully by Crown counsel. I also said previously that steps will be taken to see what we can do to ensure that the parents and families of victims are dealt with sympathetically when cases come before the courts.
    Several Hon. Members rose—
    Mr. Speaker: Order. I shall take the application under Standing Order No. 20 first.

Westland plc (Share Transactions)
3.31 pm
Mr. George Park: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the need for an inquiry by the Director of Public Prosecutions into share transactions in Westland plc."
The matter is specific because it refers to share transactions at a particular point in time which determined the outcome of the Westland deal. It is important because the voting decision, influenced substantially by anonymous shareholders, determined the future shape and ownership of Britain's only helicopter manufacturer, with all the implications for defence. It is urgent, because the House cannot wait for normal processes to elapse before a Select Committee report is debated, which could take several months.
Two elements arise in the Select Committee report. The first is the long-term issue of legislation; and the second—my reason for raising the matter—is the question of illegality and criminality, on which urgent Government action is required. I refer the House to the evidence to the Select Committee given by Mr. Wills, a member of the Stock Exchange Council, when he said:
"it screams concert party to me",
and to further written evidence from the Stock Exchange Council which stated
"that they found it difficult to credit that overseas buyers should consider it worth their while to pay much more than what a company appeared to be worth without some collaboration with one or other of the parties involved."
I submit that the latter issue of illegality and conspiracy requires urgent action and investigation by the police. I had hoped that there would be a statement today to say that criminals had already been called in, but it seems that the Government are unwilling to treat the criminals in the City of London in the same manner as other criminals. In the face of a commercial mugging, the Government apparently want to do nothing. Because of that refusal to act, I submit that the House needs to debate this matter under its emergency procedure.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of disccussing a specific and important matter that he thinks should have urgent consideration, namely,
"the need for an inquiry by the Director of Public Prosecutions into share dealings in Westland plc."
I have listened with great care to what the hon. Member has said, but I do not consider that the matter which he has raised is appropriate for discussion under Standing Order No. 20; therefore, I cannot submit his application to the House.

Points of Order
3.36 pm
Several Hon. Members: On a point of order, Mr. Speaker.
Mr. Speaker: I will take Mr. Canavan first.
Mr. Dennis Canavan: I rise on a point of order, Mr. Speaker, which concerns an abuse of the procedure for tabling ten-minute Bills.
On Monday 23 February I went up to the Public Bill Office, and while waiting I discoverd that the hon. Member for Fife, East (Mr. Henderson ) was sitting there. He informed me that he was waiting with the intention of presenting a Bill the following day for presentation on 17 March. It will not have escaped the attention of the House that 17 March, as well as being St. Patrick's day, is Budget day. The hon. Gentleman is a PPS to a Treasury Minister.
On the following day, no motion appeared in the name of the hon. Gentleman, but a motion relating to the Airports (Discriminatory Charges) Bill appeared on the Order Paper in the name of the hon. Member for Bristol, North-West (Mr. Stern), who, by coincidence, is also a PPS to a Treasury Minister.
If the events of last year are repeated, the motion will be withdrawn before Tuesday, thus allowing the Chancellor of the Exchequer a free run, and allowing him to kick off at 3.30 pm without interruption. It will then be too late for any hon. Members to fill the vacant slot.
What protection can you give, Mr. Speaker, to genuine Back Benchers against this abuse of the system, whereby Tory Cabinet Ministers are using their lackeys on a rota basis to outdo other hon. Members and put down bogus motions which they have no intentiont of moving? That is a dog-in-the-manger attitude, which deprives genuine Back Benchers of the limited time that is available for Private Members' business. I ask you to look into that.
Mr. Tony Marlow: On a point of order, Mr. Speaker.
Mr. Speaker: Is it the same point?
Mr. Marlow: No, Sir—a different point of order.
Mr. Speaker: I shall deal with one point at a time.
The hon. Member for Bristol, North-West (Mr. Stern) has given notice of a motion under the ten-minute Bill procedure. I am informed that that is still on the Order Paper. The House will understand that I cannot look behind the notice of a motion and rule on the motives which may have caused the hon. Member to put it down.
Mr. Anthony Beaumont-Dark: On a point of order, Mr. Speaker. The rules of the House must be obeyed. There are traditions in the House, which, with its long tradition, are of profound importance. There are certain areas in the House, are there not, Sir, where conversations that occur are meant to be private? Many of us were distressed t o hear yesterday that conversations, in which comrades grabbed each other warmly by the throat, became public knowledge. Is it not an outrage that these friendly chats, which take place in the private areas such as the Tea Room or Annie's Bar, become public knowledge? Will you stop this abuse from occurring?
Mr. Eric Forth: Further to the point of order—
Mr. Speaker: Order. I am not responsible for conversations in the tea rooms or outside this Chamber. I hope very much that the conventions and traditions of the House will be kept by hon. Members.
Mr. Tam Dalyell: On a point of order, Mr. Speaker, arising out of questions. You will recollect that, about three weeks ago, a certain difficulty arose about a second Adjournment debate, for which I had applied, and there was a question of notice. On that occasion, Mr. Speaker, you said f hat you deprecated very much the fact that proper notice was not given.
Thinking that the bussiness of the House would collapse yesterday, as, indeed, the Whips said that it might, I applied for a second Adjournment debate to give the Solicitor-General an opportunity to explain in detail the legal background on which he based his—
Mr. Speaker: Order. I heard the hon. Gentleman say that he would seek to raise this matter in an Adjournment debate. I know about his application for a second Adjournment debate yesterday, to which I agreed. It would have come on had the business of the House allowed. As it happened, the hon. Gentleman knows that the Northern. Ireland order continued until 11.30 pm, which was its allotted time. There was nothing out of order in that. The hon. Gentleman must now try for another Adjournment debate, and he has already given notice that he will do so.
Mr. Dalyell: Further to the point of order, Mr. Speaker—
Mr. Speaker: Order. I do not think that I can help the hon. Gentleman. He correctly applied yesterday for an Adjournment debate, which was not reached. He says that he will apply again, and jolly good luck to him.
Mr. Forth: On a point of order, Mr. Speaker. Are you satisfied about the extent of confidentiality of meetings held in the Committee Rooms of this building? You will be aware that there was a crisis meeting of the parliamentary Labour party in Room 14 this morning. Are you fully satisfied that such matters as, for example, the reported threatened resignation of the Leader of the Opposition at that meeting this morning cannot possibly be leaked or overheard during the conduct of such meetings in Committee Rooms? Are you prepared to look into this, Mr. Speaker, so that when the Labour party, or any other party, holds such a crisis meeting, the matters conducted in the privacy of such rooms are kept absolutely secure?
Several Hon. Members rose—
Mr. Speaker: Order. I understand that crisis meetings are occasionally held in Room 14 on a Thursday. I read about them in the newspapers on Friday morning.
Mr. Dennis S kinner: Further to the point of order, Mr. Speaker. I know that you have already said that what goes on in the Tea Room or anywhere else is not really a matter for you, but you have claimed to be a fair man and we have heard the reports from Conservative Members. Iris e in the into rests of party balance.
I happened to hear the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) on the radio the other day—[Interruption.]
Mr. Speaker: Order. The hon. Gentleman, who is becoming an important figure in the House on procedure, must know that he must not refer to a matter that happened several days ago unless it happened in the Chamber or other areas of the House over which I have control; I have no responsibility for what is said on the radio.
Mr. Skinner: The hon. Gentleman was repeating what he was alleged to have said in the precincts of the House—that he is fed up to the back teeth with his hon. Friend the Member for Derbyshire, South (Mrs. Currie)—
Mr. Beaumont-Dark: That was today.
Mr. Skinner: That is right.
—preaching to him and to other Tory Members about almost everything else under the sun. He said, "I am fed up to the back teeth with her telling me who I have got to take on holiday. I am fed up to the back teeth with her telling us about not smoking when she can't control her husband." Then he went on to attack the Prime Minister. That is an even better story. [Interruption.]
Mr. Speaker: Order. We have an important series of debates before us today and there is great pressure from hon. Members who want to speak in them. I cannot answer the hon. Gentleman's questions. On grounds of balance I have heard him, but I cannot hear any more.
Mr. Marlow: On a completely different point of order, Mr. Speaker. You will recall that on Monday night there was a particularly important debate about the regions which was shunted into a fairly short period. Three quarters of that time was taken up by Front Bench spokesmen. I was one of those who was fortunate enough to catch your eye, so I have no personal axe to grind. But my point is that the first speech, which came from the Liberal party, took something over 25 minutes. The second speech, which came from my right hon. and learned Friend the Paymaster General, took a similar period. Then there was another speech from the Labour Front Bench that took a similar period.
Mr. Speaker, we have a divided Opposition. We know that the Labour party is poised on a precipice of terminal decline. We are not quite sure as to the potential fortunes of the Liberal party and the Social Democratic party. Surely in these circumstances and with a split Opposition, it is sufficient for one opposition party to put the Opposition case and then for a Minister to put the Government case—[Interruption.]—and then allow Back Benchers a proper time to speak. I stress the point that only 25 per cent. of the time in that important debate was allowed to Back Benchers. I was one of the fortunate Back Benchers, but on behalf of other hon. Members, I wonder whether you can comment on that, Mr. Speaker.
Several Hon. Members rose—
Mr. Speaker: Order. The hon. Gentleman has raised a chivalrous point of order. I can tell the hon. Gentleman and the whole House that I am concerned about the time that is left for Back Benchers. The average Back Bencher will not speak more than four times in a Session—in a major debate. Last Session, thanks to the operation of the ten-minute limit, that number rose to six. However, I am very concerned about the time allowed for Back Benchers.

299
I frequently appeal to hon. Members to keep their speeches brief, and that especially applies to the debates that we are to have later today.
Mr. Harry Greenway: On a point of order, Mr. Speaker. Am I not right in thinking that you have a responsibility to defend the dignity of the House and the dignity of hon. Members? When there is an attack upon the Father of the House, as there has been by the right hon. Member for Leeds, East (Mr. Healey)—
Mr. Speaker: Order. We have already heard about things that happen in rooms over which I have no control. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) quite rightly said that we have conventions in this place, that conversations in tea rooms and dining rooms do not become public. I agree with that.
Mr. Edward Leigh: On a point of order, Mr. Speaker. May I refer you, to the strictures that you have often made in the House about the correct use of parliamentary language? I ask you to make a ruling on whether it is correct in parliamentary terms to talk about the ego and vanity of the Labour party as the leader of the Labour party did in a private Committee Room this morning. Is that parliamentary language?
Mr. Speaker: Ego and vanity have been perennial attributes in this place. Presentation of Bill.
Mr. Michael Brown: On a point of order, Mr. Speaker. I do not want to raise—
Mr. Speaker: Order. Just let me deal with the Presentation of a Bill.

Points of Order
  BILL PRESENTED

    PRESCRIPTIONS (SCOTLAND)
    Mr. Michael Hirst, supported by Sir Alex Fletcher, Mr. Donald Stewart, Mr. Allan Stewart, Mr. Hugh D. Brown, Mr. Albert McQuarrie, Mr. Tom Clarke, Mr. James Wallace, Sir Hector Monro, Mr. Alexander Pollock and Mr. Nicholas Fairbairn, presented a Bill to amend Part I of the Prescription and Limitation (Scotland) Act 1973; and for connected purposes: And the same was read the First time; and ordered to be read a Second time, upon Friday 3 April and to be printed [Bill 112.]
    Mr. Michael Brown: On a point of order, Mr. Speaker. I do not want to raise matters which have already been covered with regard to private conversations in the Tea Room. However, a point of order was raised by my hon. Friend the Member for Ealing, North (Mr. Greenway). The point is that the Father of the House was attacked in public, in Truro, by the right hon. Member for Leeds, East (Mr. Healey), who described the Father of the House—whom I regard with the same respect as you do, Mr. Speaker—as "an old man". Surely the right hon. Gentleman should come to the House and apologise to the Father of the House?
    Mr. Speaker: I do not think that that is unparliamentary. I consider myself to be an old man.

Coal Mining Subsidence
3.48 pm
Mr. Frank Haynes: I beg to move,
That leave be given to bring in a Bill to change the system of compensation for coal mining subsidence.
Mr. Speaker, Sir—[HON. MEMBERS: "Speak up."] I know that I have a loud voice and that it can be heard from the Committee Rooms upstairs. I also know that it can be heard from here in the Tea Room—or so I am told. That does not make any difference with regard to the bogus points of order that were raised not many moments ago.
As a lad, in 1944, I started work at the pit. At that time, the workings of the pit were very old fashioned and there was not much mechanisation then. Advances were made in the removal of coal from the coalface. However, the old-fashioned system was good in respect of mining subsidence. Former colliers who serve in the House understand—[Interruption.] I wish that you would close the mouths of those public schoolboys over there, Mr. Speaker. The only noise that I can hear is coming from across there.
At that time, there was a certain amount of packing underground behind where the coal had been taken out, and it supported the ground about it. The result was that the ground did not fall in too much. Then we had high mechanisation for increasing productivity. Indeed I was one of those who enjoyed larger wage packets, because it all went together. The trade union and the National Coal Board used to work together in the interests of safety, production and earnings, but that got worse as time went on. Following the mechanisation of the pits, there was no packing behind after the coal had been shifted, so we had total caving in when everything fell. It was even felt on the surface. We were told at the time that it would all fall together, but it did not. It fell unevenly, and many properties in the mining communities were seriously damaged.
There is a serious problem of mine subsidence in Ashfield. I am pleased that the Under-Secretary of State is here to listen to what I have to say about this serious problem, because the Government encourage people to buy their homes. If mine subsidence affects a local authority property, the tenant will have no financial problems because the local authority will carry out the repairs after negotiations with British Coal. But the home owner must take the initiative if he wants to carry out repairs and obtain compensation.
I remember the Widdicombe report, which dealt with people in that category, suggesting that there should be much more fairness in the system. What is happening is that British Coal, and the National Coal Board before it., has for some time been telling claimants that they are out of time and that they will obtain nothing. It is shameful. After all, the industry caused the problem and I, my constituents and other hon. Members' constituents believe that it is the board's responsibility to put it right. I understand that the Government will introduce a White Paper on the matter. I should have thought that they would have done so before I introduced this Bill, but they have decided not to release it until after the Bill has gone through, as I hope it will, this afternoon.
I know of umpteen cases of people who have been refused compensation to repair their homes because the

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board says that they are out of time. In the Nottinghamshire area, people were allowed to claim within 12 years following the ceasing of coal mining under their properties. Not long ago, the board shortened the period to six years. That reduction left people outside the limit, and now the board is telling people that they will obtain nothing. The Government should have made some representations to British Coal about the problem, bearing in mind the number of cases of which I, never mind other right hon. and hon. Members, have heard.
I have a whole file of cases which the Coal Board has refused. I can give two classic examples. There is a road in my constituency with about 100 properties on it. Claims on every one of those properties have been settled, except two, which have been refused. They were damaged at exactly the same time, but their owners are being told that they are out of time. That is one example of unfairness about claims. The other is an 82-year-old lady who, 10 years ago, made a claim to the board. The board said that it was no good settling because it was coming back. The result was that it did small repairs and, in the meantime, a new face was opened. The lady got in touch with me nine years and nine months after the board, after visiting her again, had told her that it would settle up. She got in touch with me because the board told her she was out of time. That is ridiculous. The board has already accepted liability.
All those claims should be settled in a proper manner. The board should accept its responsibilities and the Parliamentary Under-Secretary of State for Energy, on behalf of the Government, should be telling British Coal in no uncertain terms to get off its backside at Hobart house and get stuck in to sorting out the problems. I do not want to be running around my constituency doing the work of the Under-Secretary of State and British Coal. They are well paid. I hope that, following the Minister having listened to what I am trying to introduce today, the Coal-Mining (Subsidence) Act 1957 will be amended so that the problems can be sorted out and we will have a much fairer deal for the people that many mining Members of Parliament represent.
Question put and agreed to.
Bill ordered to be brought in by Mr. Frank Haynes, Mr. Ray Powell, Mr. Don Dixon, Mr. Jack Ashley, Mr. Lawrence Cunliffe, Mr. Dennis Skinner, Mr. Martin Redmond, Mr. Michael Welsh, Mr. Allen McKay and Mr. Terry Patchett.

Coal Mining Subsidence
  COAL MINING SUBSIDENCE
  Mr. Frank Haynes accordingly presented a Bill to change the system of compensation for coal mining subsidence: And the same was read the First time; and ordered to be read a Second time upon Friday 8 May and to be printed. [Bill III.]
ESTIMATES DAY
[1ST ALLOTTED DAY] [1ST PART] considered
ESTIMATES DAY
  SUPPLEMENTARY ESTIMATES 1986–87

    Coal Industry (Grants)
    [Relevant document: First Report from the Energy Committee (House of Commons Paper No. 165 of Session 1986–87.]
    Motion made, and Question proposed,
    That a supplementary sum, not exceeding £166,300,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of Energy on assistance to the coal industry including grants to British Coal and payments to redundant workers.—[Mr. David Hunt.]
    3.57 pm
    Sir Ian Lloyd: I was a little surprised that the hon. Member for Ashfield (Mr. Haynes), whose every word reaches its intended destination, should have risked referring to the analogy of caving. So fragile is the geological and political underground structure that I would have thought that he would have preferred not to do that today. However, without wishing to disparage the serious points of his speech, some of which are likely to be referred to during this debate, I wish him well with his Bill.
    I should perhaps ask the House to retune from Radio 2 to Radio 3. We are about to consider a series of Supplementary Estimates which occupy a fairly thick volume. That, as we all know, has for long been a rather impractical obligation, so we are obliged to pick and choose the items of expenditure that we subject to close scrutiny. Today it is the item of some £166 million of further assistance to the British coal industry. That not inconsiderable sum is in itself noteworthy, for the coal industry has had and continues to have a gargantuan appetite for public funds.
    Technically, it is usual to move a nominal reduction in the amount, and it would have given me greater pleasure to do that, for our ultimate objective must be the elimination of all public support for an industry which, in due course, and sooner or later, has to become completely self-sustaining. Alas, that would have been inconsistent with the general thrust of the report that my Committee, the Select Committee on Energy, has just made to the House on the coal industry. In it we argued that if financial provision is to be consistent with the consequences of policy, that provision should be increased from its already formidably high level. As that was the case, it seemed to my Committee that we were justified in seeking this opportunity to explain to the House precisely why we had reached what, at least for some of us, was an unpalatable conclusion. The coal industry will continue to demand and justify such consideration and analysis while it continues to make such a large claim on the nation's resources.
    Before coming to my main points, I wish to make two general observations. First, I should like to thank all the members of my Committee, its Clerks and advisers, who laboured so diligently, travelled so far and argued with such conviction to produce the report. Whatever our knowledge of coal mining may have been—some

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    members of the Committee had spent half a lifetime at least in the industry—our perspectives were widened. Those of us who saw a coal face or a longwall system in operation for the first time acquired a real respect for those who undertake that arduous, dirty, demanding and dangerous work. All of us were dismayed by the visible evidence of industrial dereliction and an almost tangible sense of despair in abandoned or declining coal mining areas. All were heartened by the sense of purpose and opportunity that new technology provided in mines both old and new.
    Secondly, I should like to stress the general sense of disappointment over the highly selective and misleading way in which our conclusions were reported in some of the press, which seemed concerned only with those phrases or paragraphs in which the evidence that we received compelled us to reach conclusions critical of British Coal, the Government or the Secretary of State. It is not that we are unwilling to justify such conclusions, which came mostly from direct evidence rather than from our analysis or unchecked political prejudices. That is not the point. Such emphasis, however, detracts from the main analysis and conclusions of our report, which is but the tip of a very large iceberg of evidence.
    I shall give the House but one example. The Daily Telegraph, referring to the Committee criticising the Coal Board for starting the 1985 pit strike, said:
    "The … committee … united in a scathing attack on the handling of pit closures which led to the bitter year-long dispute."
    Not so. Our emphasis was on all parties learning lessons and avoiding mistakes. There was no scathing attack. Our words, in paragraph 133, were:
    "The 1985 strike was precipitated by the decision to bring forward the closure of Cortonwood colliery where the NCB was regarded by miners as having broken an earlier promise".
    We say, in effect, "Avoid that in future if you can." We suggest attaching to that problem a notice saying, "Explosives: handle with care".
    The press was also excited by the fact that the Committee was unable to agree all the analysis or conclusions. That, too, was incidental, for what we agreed was both substantial and significant, and provides a context in which the whole matter of current and future financial support for the coal industry can be judged. If the press seeks constantly to sensationalise Select Committee reports, it will trivialise them in the eyes of the public and Government. Governments of all parties, understandably, will react to the hostility of unfavourable press comments rather than the constructive analysis that such reports generally contain.
    I do not ask the press to sugar the pill. What I ask is that it does not always coat it in cyanide when no cyanide is present. The system has strong critics, and some would gladly hasten its demise. It is my personal judgment that that would deprive the House, Government and the country of a valuable source of knowledge and objective policy appraisal.
    So what did the Committee agree, as it is relevant to the Supplementary Estimate? I shall endeavour to summarise our main conclusions. First, after examining the market for coal—we realised that it is an immensely difficult task for all those who undertake it professionally—we agreed that the reduction of costs was critical and that it depended on three things: the continuing availability of large sums of capital; an adaptive and co-operative work force, which both sides of the Committee regarded as
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    crucial; and the abandonment of those faces, seams arid mines where, for one reason or another, the new management rules cannot be met. That was unanimous.
    Secondly, we pointed out that major unresolved uncertainties dominated the industry's future and that the major uncertainty was
    "the extent to which, and the speed at which, it will be able to grasp the further economies that are undoubtedly available to it."
    That was also unanimous.
    Thirdly, we agreed that the price of coal must respond to market realities in a market that included not only competitive coal but competitive energy, which is perhaps even more significant.
    Fourthly, we concluded that British Coal's cost level target of not more than £1 per gigajoule for new capacity will, in all probability, have to be moved downwards. That has the consequence that more collieries will be at risk and that there will be greater social risk of closure.
    Fifthly, we concluded that the present plans will produce a net increase in deep-mined capacity of 8 million tonnes by the early 1990s and that there was no convincing evidence of increasing demand. We looked at that very carefully. That led inevitably to our main conclusion that capacity reduction would exceed 2 million tonnes per annum. From that followed our next conclusion that the industry would have to manage a controlled reduction in its work force, with predictably large effects on both British Coal's corporate finances and the Treasury's liabilities. I shall return to that subject.
    We concluded that British Coal's capital would have to be restructured and that, in he light of that analysis, a deficit grant in the range of £100 million to £200 million per annum would not be adequate; nor would a provision of £300 million to £750 million for the continuation of the redundant mineworkers payment scheme, because, if our analysis is correct—I believe that we were justified in it—we expect a higher level of redundancies. That lengthy analysis culminated in our conclusion that the Government's policy was "not fully credible". It is important to emphasise that the difference between "credible" and "fully credible.' is small but important.
    A further unanimous conclusion of the utmost significance was that British Coal should not be asked to evaluate pit closure economics from a social standpoint, which, we argued, must be the responsibility of central Government. We made further suggestions about the organisation of that assistance and its scale, but pointed out that, whatever the present mismatch between resources and problems might be, a resolution of the problem would require in addition a commitment of energy, imagination and purpose. Those three qualities are not financial, but they are in equally short, if not shorter, supply.
    All that was the unanimous view of the Committee. Where did we disagree? We disagreed on what were in my judgment—hon. Members may have a different scale of values—two minor issues and one major issue. The first minor issue was whether the French power supply by the cross-Channel link should be terminated to help bring demand and supply into balance. The second was whether the adoption of new mining techniques, which we all witnessed in the United States, would prejudice safety. On both, we understand but do not share our colleagues' reservations. Doubltless they will say something about that if they catch your eye, Mr. Deputy Speaker.

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    The major disagreement was on a largely theoretical assertion of principle. The majority favoured the principle of opening the industry in due course, and in a marginal sense, to private mining. For the minority, that ran counter to deeply held political convictions. Nevertheless, the Committee's unanimous recommendation was:
    "For the immediate future … BC should remain in the public sector."
    One would not necessarily have judged that from some of the press reports. Obviously, there is no realistic prospect of a substantial supply of privately mined coal in the United Kingdom this century.
    I shall now return to finance. Despite all the encouraging progress in the industry—and it is indeed encouraging—we are staring at an alarming slough of despond. If capital investment is included, the net cost to the taxpayer of coal mining in the United Kingdom was over £1·6 billion in 1984–85; well over £2·1 billion 1985–86, the strike year; still over £2 billion in 1986–87, and likely to remain there this year if the estimate is passed.
    Inflation and all sorts of other things have produced an age in which large figures followed by noughts have almost ceased to have meaning. The net cost to the taxpayer of coal mining in the United Kingdom represents about £40 per head per annum for every man, woman and child in the country, or about £160 per annum per family. The total loans to the coal mining industry amount to £77 per head of population, or £308 per family. That helps to put the figures into perspective.
    The achievement of true viability will require a turnaround of some £1·8 billion on a turnover of £5 billion. Despite truly remarkable progress since the strike, that remains a formidable challenge. It will not be met unless two things happen. The first is that the present rate of progress must be sustained and, if possible, accelerated. Secondly, there must be confidence within the industry and the coal mining communities that the social costs will be fairly assessed and generously provided. In saying that, I do not for one moment wish it to be inferred that I do not believe that the scale of provision has been very generous.
    However defined, this is a colossal burden, but if, as has been argued, the yoke of support can be lifted, if the cost of that relief is a small further increase in a very large sum and if that will supply both the confidence and the resources required to achieve a final and permanent turnaround of this very expensive industry, then we must find the resources to do the job. I believe that that is the unanimous view of the Committee. Failure will leave the British people with this massive subsidy burden in perpetuity.
    The acceptance of that burden would imply that British Coal should become a permanent section, not of the Department of Energy but of the Department of Health and Social Security. That would be the reality. It would be as painful as it is unnecessary. It would establish an alarming and most dangerous and controversial precedent. Today coal: tomorrow, who knows what? On what grounds would a Government be able to discriminate if they once accepted the principle that one industry, because of its economic position, its political clout or the social consequences of its decline, should become a perpetual pensioner of the state? There is no answer to that question, and that should be our warning.
    4.14 pm
    Mr. Kevin Barron (Bother Valley): I am pleased to speak in this debate, which will be short. I should like hon. Members to reflect on the fact that the Select Committee on Energy has had time away from the miners' strike to consider the arguments that were made at the time of the strike. It was with some disappointment that I left the Select Committee just as it was about to turn to that subject and to draw up the report that we are debating. I read with great interest one or two sections of the report that relate directly to that 12 months from March 1984 to March 1985 that will be remembered, perhaps for ever, or while there is a British mining industry.
    I should like to examine the conclusions of the report about things that happened during that strike. The first matter is the colliery review procedure. I am sure that many people will know that trade unions in the mining industry argued that that procedure should have been introduced before the strike. The strike was sparked off at a colliery in south Yorkshire in the constituency of my hon. Friend the Member for Wentworth (Mr. Hardy). Hon. Members will be aware that if the review procedure had been in place the strike might never have happened.
    During the strike, a colliery review procedure was introduced and the trade unions said that they did not believe it went all the way towards settling the problems in mining communities that were threatened by closure. This report says little different from what the unions said then. If the case that British Coal put throughout the strike was as good as the Coal Board said it was, then by now, away from the emotion of that strike and what was happening in the British coalfields, we should be able to say that one side was right and the other side was wrong.
    The report says that due weight should be given to decisions. Two colliery group procedural reports on two working collieries, Bates colliery in Northumberland and Cadeby colliery in south Yorkshire, have found that those coal mines should have remained open. However, the colliery review procedure did not give that due weight before and during the strike.
    The other interesting sector of this report is in relation to what should happen about closures. The hon. Member for Havant (Sir I. Lloyd) mentioned two things that had struck him when his Committee was taking evidence. One of them was about what happens at the coal face. He said that many members of the Committee saw for the first time working conditions underground. I should like to pull the memories of hon. Members back to the phrase that the hon. Gentleman used. He spoke of the despair in the British coalfields about the decline in the industry and the scars created by that decline. That is certainly not new and has not happened just since 1984. Perhaps one of the major causes of the miners' strike was that nothing was put in the place of coal mines that were closed.
    Government Members have spoken many times since the strike about the decline in the coalfields, but the Government have done little to bring jobs to those areas. British Coal Enterprise Ltd. is expanding and I am pleased about that, but a very small number of jobs are being created to replace the ones that have been lost, even in the last two years. One of the most interesting parts of the report is its references to the economic decisions that British Coal has to take before closing a coal mine.
    Social cost is the nub of what the miners' strike was about. Mining communities have been arguing about this

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    not just for one or two years, or since the strike, but for decades. They argue about the economic consequences of colliery closures and about how decisions are reached. I am pleased that the Select Committee decided to look into this in some detail. The Committee concluded that social costs should be part and parcel of colliery closures in the colliery review procedure, and should be a major part of the economic equation when deciding whether mines should be closed. I would have liked to see the Committee go further than that, but even that is welcome. However, at least the Committee looked into the matter.
    In paragraph 131, the report says:
    "although BC should be allowed to continue making decisions on pit closures on commercial grounds after a thorough and comprehensive review of the decision with other interested bodies, this should be done in the closest consultation with Government departments. If the macroeconomic and social disbenefits of the policies of the management of a strategic industry like coal outweigh the benefits to society of those policies, then it is the job of government to right the balance by fiscal or other means."
    It is my contention that that has never been the practice. That is why we had the miners' strike, which was all about the gap that is left when coal mines are closed. It was a lot easier in the 1960s, when employment prospects were so much better. At that time, people were not worried about redundancy or lack of job prospects. However, in the 1980s—especially the past eight years under this Government—there has been a massive increase in unemployment and obviously a decrease in job opportunities, especially for young people. Under those circumstances, it is part and parcel that any decisions on closures should be taken in consultation with Government Departments. I am afraid that the Committee's recommendation is not as strong as I had hoped.
    Paragraph 133 of the report states:
    "the board must recognise the special vulnerability of mining communities which we outlined in the introduction of this report, and must take local authorities"
    into account. British Coal was a massive ratepayer to my local authority. It put tens of thousands of pounds into the local authority each year. The rundown of the coal mining industry in south Yorkshire, together with the accumulated cut in rate support grant, has meant that the local authority had to cut services in many areas. Thus the rundown of the coal mines has had an effect not just on coal mining families but on everyone throughout the community. That should be taken into account.
    The Select Committee recommends
    "that a special ministerial Cabinet Committee be set up and charged with this task-cabinet committees have been set up for many less urgent tasks in the past".
    The task in question is the rundown of the British coal mining industry and its effect on regions and communities. I believe that that is one of the major conclusions from the report. The rundown of the industry affects the lives of thousands of people who work in the coal mines or who live in coal mining areas but are not directly employed in the mines. I hope that the Minister will spend a few minutes discussing that recommendation.
    I do not intend to discuss the work practices in America. Those practices have been the subject of ample discussion in the House and in the Standing Committee on the Coal Industry Act of which I was a member. One of the most urgent matters for consideration relates to the new grant for coal conversion schemes. That grant is
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    supposed to finish in April this year. The scheme represented a lifeline to the coal industry because it created new markets for coal, especially in industry.
    The sad part about the ending of the scheme is that the grant has never been made available to the public sector. Paragraph 44 of the report contains an important recommendation:
    "not only … that the Government reconsider its policy of discontinuing the coal firing grant, but that the scheme should be extended to the public sector so that hospitals, schools, swimming pools and other potential coal users can he aided in converting their old boiler stock to burning British coal."
    A great deal of research has been carried out at Stoke Orchard by British Coal, as well as by the manufacturers of boiler equipment to ensure that coal is clean burn and easily usable and also to improve storage facilities. As a result, less work is involved in keeping the boilers going. The Government's failure to extend the scheme to the public sector is a sad judgment on the Coal Board and those in the industry who have been working to perfect the use of coal in boilers. I hope that the Minister will tell us what will happen in April.
    Many hon. Members, on both sides of the House, believe that it is wrong to discontinue the grant on the basis of the recent drop in oil prices. Such a position may alter. Although I accept that the take-up of coal has reduced because of the oil price drop, to discontinue the coal-firing grant to all sectors is a disservice to the community. I hope that the Minister will consider the recommendations in the report.
    I do not wish to go into great detail on the Select Committee report as I believe that other hon. Members will have the opportunity to discuss the different aspects of it. It is a wide-ranging report—indeed, we could talk all day about it.
    The most important thing that we must do is to look after the well-being of the coal communities. That care has not been given for many years. It behoves us all to take cognisance of the paragraphs that I have mentioned—they are not as strongly worded as I would have liked—and to ensure that a Cabinet Committee or something similar is set up. I hope that such a Committee offers not merely words to the communities but action and grants to create job opportunities. Those opportunities are badly needed throughout British coalfields.
    4.25 pm
    Mr. Andy Stewart: I could not miss the opportunity to pay tribute to all those who work in the coal industry for achieving present productivity records that would have been considered unobtainable only 12 months ago.
    The productivity increase of 23 per cent. in the past year is unmatched by any other industry, giving us unprecedented national levels of production, at over 3·68 tonnes per man shift. In my constituency of Sherwood, a productivity level of 5 tonnes per man shift has been reached. Those levels meet the objectives of the Select Committee report. The results ensure that the operating costs for this year will be 20 per cent. lower, in real terms, than they were before the damaging industrial dispute. They give us a guarantee of long-term success in the future.
    Only last week, the chairman of British Coal announced that we are now the lowest cost producers in Western Europe, and that West Germany is our nearest rival with 75 per cent. higher costs. The Coal Board has

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    now recognised the need for competitive prices in relation to other energy suppliers. Therefore, it has reduced the cost of coal to the Central Electricity Generating Board by £4 per tonne. That has cut its sales realisation by £400 million, but it has meant that industrial manufacturers have found that their energy unit costs will be frozen once again. That will give manufacturers the opportunity to be successful against their international competitors.
    British Coal hopes to contain its loss this year to £300 million. That shows that, without the dramatic cuts in oil prices, British Coal would actually have shown an operational profit of £100 million this year. There is no doubt in my mind that oil prices will rise rather than remain at their current level for any considerable time. That ensures and endorses my optimism in the future of the coal industry.
    Nine major industrial companies share my confidence, since in the space of eight months they will confirm their proposal to convert to coal. In the light of that, I ask my hon. Friend the Minister to reconsider the continuation of the 25 per cent. grant for conversions of coal boilers for industrial use. Perhaps he would be persuaded if he knew that the recent proposals by the nine industrial manufacturers will result in the security of 1,200 jobs in the coal industry and many more in other industries as the conversion to coal will result in £90 million investment in British-made boilers and plant technology.
    In addition, British Coal has recently placed orders with British manufacturers for contracts to the value of £50 million, including £1·5 million for safety boots and shoes. On my recent visit to Bilston Glen in the constituency of the hon. Member for Midlothian (Mr. Eadie) I discovered that Scottish boots are better than those issued in Nottinghamshire. If we had better boots, I wonder whether our productivity would rise even further.
    We must not forget that industry is not the only sector to benefit from lower costs. In the weeks of severe weather during the winter, much concern was voiced for our elderly citizens, and it is important to note that frozen electricity prices will give much benefit to them as well as to other private consumers.
    The National Health Service will also find the current prices advantageous, since British Coal is to continue to supply some 200 NHS hospitals. Energy requirements are high and it is vital that there is economy of use and strict cost control.
    Mr. William O'Brien: Would the hon. Gentleman care to comment on the use of imported coal by the NHS in hospitals in Yorkshire rather than British coal, to which the hon. Gentleman has been referring?
    Mr. Stewart: I cannot comment on what is happening in Yorkshire. I have a big enough job commenting on matters relating to my constituency, which is the largest coal producer in Britain. There are 200 hospitals in Britain using British coal. This will save the NHS well over £2 million, which will be used for other patient care. If Yorkshire hospitals are using foreign coal, it is for the hon. Members who represent those areas to raise the matter with my hon. Friend the Minister.
    I have illustrated the benefits that we all enjoy as a result of a successful coal industry, not only for consumers but for those who work in British Coal. Their financial rewards are complemented by the knowledge that they are
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    enhancing job opportunities for others in the community. I am convinced that, if at the end of the coal dispute a certain political persuasion had prevailed over the miners in this country, electricity prices today would be at least 30 per cent. higher, with all the serious repercussions to the economy that that involves. Today's Estimates would not only be higher but would be totally unacceptable to the House.
    The miners have demonstrated the way forward for the industry into the next century via the actions of the Union of Democratic Mineworkers and recently by the actions of the Welsh miners, accepting in principle 18 coaling shifts a week. They recognise that the £5 billion of capital investment in the mines must be utilised effectively. However, there is concern that localised stoppages lost British Coal 700,000 tonnes of coal last year. Surely the example set by the UDM and the Welsh miners is the way forward.
    I strongly repudiate the Select Committee's view that there is uncertain long-term demand and its belief that structural change towards higher productivity and lower costs have some way further to run. I recognise that much of the report was written before this new era of prosperity for the coal industry had arrived. Nevertheless, the Select Committee introduced an element of doubt, quite unnecessarily. I want my hon. Friend the Minister to show his confidence to those who have brought such benefits to this country by ensuring that the CEGB places its new coal-fired boilers in position as soon as possible. We have a site in Nottinghamshire; the planning permission needs only to he resurrected; the coal is there; the infrastructure is ready; and the UDM will make it work. We need positive action now.
    Those who work in the coal indusry have so far recognised the personal commitment that my right hon. Friend the Secretary of State for Energy has given to the industry's future by his positive actions. The industry's excellent condition is a sign of his success. The future for coal is guaranteed not by wishful thinking but by the positive action of those who work in the industry. Scientific knowledge shows that coal will replace other finite fuels in years to come. We must ensure that the industry is ready to meet that demand. Today's Estimates show that British Coal is heading in the right direction.
    4.34 pm
    Mr. Malcolm Bruce: I think that hon. Members agree that, despite the difficulties facing the British coal industry, it is more robust than many people would have thought even a year ago. The Minister will not be surprised to hear that, although the alliance was rightly critical of the way in which the strike was conducted, it agrees that elements within the coalmining industry which were destructive to its future had to be defeated. They have been defeated and, therefore, the climate is much more favourable. We look to the Government to give British Coal the maximum following wind.
    The Select Committee did a good job and, although there clearly were divisions, it managed to reflect in its report the genuine difficulties and dichotomy in the industry and the choices that must be made. Coal is a major resource for the United Kingdom and will be for generations to come. It is a strategic resource and therefore requires strategic forward planning. As the Select Committee acknowledged, it cannot simply be left to the whim of market forces. The Committee said that to

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    differentiate between simple planning and simple market forces is, by definition, to take a simplistic view of the coal industry. The Committee did a good job in identifying that.
    The Government face choices with serious implications which must be taken fully into account. The most immediate one is obviously the future of generating capacity in the United Kingdom. Recently, the House debated the possibility of building Sizewell B. It would be foolish in the context of this debate to suggest that the building of Sizewell B and of a range of PWRs, which is clearly what the CEGB wants, will not have significant effects on the coal industry, just as any commitment to pull back nuclear capacity would have significant implications, in the other direction, for the coal industry. As the Committee rightly pointed out, this action cannot be taken in the short term because the industry cannot respond in the short term to such changes.
    The circumstances and competitiveness of coal have changed substantially in recent months. Of course, this is only a short-term change—we do not know the longterm implications. Simple economics suggest that coal as a source of generating capacity looks very much more competitive than it did six or 12 months ago. The coal versus nuclear debate is not entirely realistic. I think that most hon. Members recognise that, even if the emphasis shifts, there will be a significant nuclear capacity and a coal-burn capacity for a long time to come. It is not clear what the real costs will be. The nuclear industry must take on board many significant changes concerning safety, which could seriously affect its costs. By contrast, the coal industry must take on board environmental protection from flue pollution, and costs are associated with that.
    Reference has been made to the world market for coal, but the House should treat that with a little caution. The concept of a world market for coal is misleading. I understand that only 4 per cent. of world steam coal is traded and that, in polite parlance, this is known as overflow coal. Many of us would regard it as dumped coal. That is not a realistic point. But the comparative costs of producing the coal, most of which is traded domestically rather than internationally, are realistic.
    I tried to find out from British Coal the extent to which it thought that it was faced with unfair competition. Although it was aware that certain countries such as South Africa and South America were said to be unfair—I have strong reservations for political reasons about whether we should trade in coal with South Africa—British Coal believed that there was insufficient evidence to be satisfied that competition was fair in regard to Polish coal. Poland is desperate for foreign currency and we cannot be confident that the price of Polish coal reflects the cost of its production. British Coal believes that in that context it is subject to unfair competition. The Government should investigate that to the extent that it is possible.
    The other problem that affects coal and other energy commodities is the exchange rate. It was pointed out to me that the change in the value of the pound in recent months has affected adversely—by £3 a tonne—the competitiveness of British Coal. Given that coal is priced in dollars, the coal industry regards an exchange rate of about $1·40 as more congenial than the rate for the last few months.
    As an aside—but an important aside because Ministers know that my colleagues and I have made the
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    point frequently—I suggest that the argument that we cannot build a significant number of power stations based on too great a dependence on one fuel should be countered by moving much more rapidly into alternative energy sources.
    I draw to the Minister's attention a report from the British Wind Energy Association. No doubt the Minister has seen it because it came out at the end of January. It claims that the experience of wind energy, which regrettably has been used more outside this country, particularly in California, than inside it, has proved that it is as cheap, if not cheaper, than other forms of power generation. The cost is as low as 2p per unit compared with 3p for most other forms of energy. As much of the technology associated with wind energy is British, we should he going further and faster in that direction.
    Another sphere in which the coal industry needs to improve its competitiveness, and where the Government have a role to try to ensure that, is research into new methods of coal combustion. Clearly there is potential there. Benefits are being achieved but more resources could produce greater benefits faster. That would alter substantially the ability of the coal industry to compete. Given its constrained resources and its deficit financing, there is evidence that that area is underfunded.
    The hon. Member for Rother Valley (Mr. Barron) referred to the phasing out of allowances for conversion to coal which the Government are suspending in June. The House should ask why this is so, what will follow and whether the Government are prepared to consicler extending the scheme or introducing an alternative scheme which would extend to the public sector the option for conversion. Paragraph 44 of the report refers specifically to that and is worthy of being put on the record. It states:
    "We not only recommend that the Government reconsider its policy of discontinuing the coal firing grant, but that the scheme should be extended to the public sector".
    I ask the Minister to address himself to that in his reply. It would help the coal industry significantly and would be a legitimate way of giving an invigorated coal industry more help when it most needs it. It would also benefit the users and consumers of energy.
    The Select Committee recognises, and I think the Government recognise, that our coal resources should be accepted as a strategic long-term asset which will require Government involvement at least for the time being. The House may be divided about how long that involvement should continue, but Government responsibility is clear. They must ensure that long-term considerations triumph over short-term pressures and that the coal industry is adequately funded. They have a responsibility to coalfield communities which are facing such painful readjustments. Many such communities need. substantial investment to improve the environment and to be promoted as attractive areas. The dereliction of many of these areas does not make them attractive for alternative investment and they need resources to enable them to respond.
    The House is pleased that there is a more positive frame of mind and a more positive attitude within the coal industry. It believes that the Government have a duty to give the coal industry proper and adequate support and to recognise that, whatever their medium to long-term objectives, right now they must give coal a realistic and positive chance to compete effectively and to provide the nation with the proper energy mix which it deserves and expects.
    4.45 pm
    Mr. Peter Rost: I enjoyed the constructive contribution by the hon. Member for Gordon (Mr. Bruce). I agree with much of what he said. I was surprised to hear my hon. Friend the Member for Sherwood (Mr. Stewart) say that our report perhaps painted too pessimistic a picture of the future market for coal. I suggest to him that he should reconsider the report because there is a great deal more in the small print than the media have picked out.
    We made a detailed analysis and took a great deal of evidence about the future range of the market. My conclusion was that we drew an optimistic picture of the future of the British coal industry, provided that it accepts a more realistic market climate and provided that the enormous progress in greater efficiency continues. That more realistic assessment of the industry came through strongly in the report. We took account of the latest developments and found them most encouraging. We acknowledged the success of the industry, the fact that management was able to manage, and the more constructive support from the miners themselves.
    Certainly we acknowledged in the report the long-term importance of the coal industry. Indeed, if anything, we over-emphasised it, in that we believed that our coal resources have not been fully exploited and that the coal industry has not had the opportunity to develop as some of us believe it could have developed. The industry has not made the contribution to the economy or benefited consumers or those who work in it to the full extent of its potential. That was why as part of the inquiry we examined the structure of the industry. For example, we considered whether it was time to look again at the statutory constraints of the original nationalisation legislation passed in 1946. We came to some conclusions about that.
    I hold the strong view that the coal industry need not necessarily and exclusively be within the nationalised sector. I support the main recommendation of the Select Committee that for the immediate future the industry should stay within the nationalised sector, but that does not mean that we should not at the same time stimulate and encourage the evolution and development of a private sector coal industry. The majority view was that the nationalised sector would benefit from the development of a little more competition from the private sector and from the participation, on a partnership basis, of private investment.
    I maintain that if the Government's policy is to promote competition, private enterprise, employee share ownership, incentives and motivation, and to improve industrial relations—which I accept has been successfully pursued by the Government in the rest of its privatisation programme—surely, if that policy applies to Jaguar, British Aerospace, British Airways, British Telecom and so on, it should apply to the coal industry. The privatised coal and gas industries are successful. The electricity industry is no longer a state monopoly. The Energy Act 1983 freed the private sector to develop in competition with the nationalised industry. Why has British Gas been privatised? It is because the Government believe that that privatised industry, as with other privatised industries, will better serve the consumer, will give a better deal to those who work in the industry and will benefit the economy. Let us at least hope that my hon.
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    Friend the Under-Secretary of State will look seriously at the constructive proposals in the report about restructuring the statutory framework.
    In particular, the Select Committee cannot understand why the licensing of the private sector coal industry—such as it is allowed to exist—should continue to be under the patronage of British Coal. We believe that it should be within the power of the Department of Energy to issue licences, in the same way that it issues licences to the oil and gas industries. Moreover, we cannot see how one can justify the limited private sector that is allowed to exist having to pay royalties to British Coal. If royalties are to be paid, they should be paid by all coal producers—nationalised and private—to the Treasury. The limited and restrained private sector should not, in addition to having to obtain a licence from British Coal, have to pay royalties to its main monopoly competitor. The majority recommended that the present restrictions on private operators should be lifted.
    I shall give one example of my experience. I apologise to hon. Members who may have heard it before, but it does not hurt to repeat it. One or two of the Select Committee members visited a private deep mine in Stoke. The company wants to operate two or three shifts in 24 hours to make the operation more viable. It cannot operate more than one shift because it is restricted to employing only 30 people. It is not viable to operate more than one shift in that mine unless the company is allowed to employ more than 30 miners. Meanwhile, ex-British Coal miners have been made redundant. They are willing and able and want jobs in the private sector, but cannot he employed. Thirty or 60 potential jobs are going begging in that area. Extra coal production at lower cost is being frustrated. That is just one of many examples. It seems to be economic Luddism of the sort that one would perhaps expect the Labour party to continue to encourage.
    I hope that my hon. Friends will agree that that is not the sort of policy that we would expect this Government, of all Governments, to continue to promote. The Government are doing nearly all that they can to encourage private enterprise, the growth of the economy and job creation. That is just one example of how, if restraints were removed, the private sector could expand—modestly but constructively—and provide some competition to British Coal. It would help the consumer because it would offer an alternative source of production and would certainly help to lower coal prices.
    There is a further example. The Select Committee recommended that if the British coal industry is to remain nationalised, we must encourage private investment. Again, it seems illogical for this Government, of all Governments, to continue to support a situation in which private British mining expertise must go abroad to invest in the coal industry because our legislation prohibits it from participating in the British coal industry. However, we know that, despite the enormous resources that the Government are injecting and have injected for new capital investment in the nationalised industry, it is still not enough and more could be provided.
    New coal fields could be developed more quickly and more economically if the private sector—coal mining enterprises that have expertise that, at the moment, they must use abroad to create jobs and wealth abroad—could contribute to the British coal industry. I urge my hon. Friend the Under-Secretary of State to take that recommendation seriously.

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    No hon. Member—least of all myself—would argue other than that the coal industry is absolutely central to our future energy means. Indeed, we have the only major coal industry in Western Europe. We could play a bigger role in exporting coal to European countries, as we did many years ago, if we could only make our industry more competitive. We could expand production. It is shortsighted to hold back the industry by restraining it exclusively within the nationalised monopoly.
    Let us remove some of the restraints, liberate the industry, let private enterprise play a partnership role, and let the private sector develop alongside the nationalised industry so that we can genuinely reap some of the advantages that this enormous resource could provide. The extra competition that it could create would help energy prices, the industry, the consumer, and, therefore, the whole economy. It would certainly benefit those who work in the industry. They would have an alternative source of employment. It would help the viability of jobs in the longer term because the industry would be given an opportunity to expand and to meet its full potential.
    4.57 pm
    Mr. Dennis Skinner: I listened carefully to the speech by the hon. Member for Havant (Sir I. Lloyd), who introduced the report of the Select Committee. He began his remarks by stating that we cannot have a coal mining industry that has to be subsidised. He used words such as gargantuan. He gave the clear impression that the coal industry, of all industries in Britain, is using taxpayers' money. It comes very ill from Tories to attack the coal mining industry for being subsidised to some degree when, only in the past few weeks, they wrote off £750 million for the Rover Group. Hon. Members must not get me wrong. I am not against the write-off of the £750 million. I know that it means jobs in the midlands and in other parts of the British Isles. I know that workers risk being thrown on the scrap heap. I know that they must call at the employment exchange and the jobcentre and that they must receive taxpayers' money from another source. It has never made sense to me to say, "Get rid of the subsidies. We want more people on the dole." Tories do not say that, but that is roughly what they are talking about. It is monetarism gone mad.
    I want to dispose of the argument that we should assume in this debate that only the mining industry has had Government subsidies since the end of the second world war. When the hon. Member for Havant was supporting the right hon. Member for Old Bexley and Sidcup (Mr. Heath)— I do not think that he supports him now—when he was the Prime Minister of the day, many hon. Members will recall that one day the right hon. Gentleman came along to the House and said, "Oh, by the way"—I do not think he used quite these words but this is what he meant— "Rolls-Royce has gone bankrupt. I'm afraid we shall have to subsidise it, chaps." The Tories trooped through the Lobby to support the right hon. Gentleman. Some of them tried to escape. Some of the purists said, "I'm a monetarist. I'll have nowt to do with this." So some of them disappeared—but not many.
    We on these Benches stayed behind that night because we thought that that was not a bad idea. A lot of jobs were affected in Derby, the midlands, Scotland and north-west Lancashire. We said that we would save those jobs, because we believed that if private enterprise could not do
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    the job we should have to get Rolls-Royce into the public sector—and sharp. So let us have none of that nonsense about only the mining industry being subsidised.
    Not so long ago the Government handed over roughly £5 million to Murdoch of the Wapping press so that he could go down into the enterprise zone. Was that a proper use of taxpayers' money? Was it right to hand over £5 million to Murdoch, who has made £50 million out of The Sun and invested it in Hollywood films? Was it right to hand over taxpayers' money to Murdoch to slag off the Government with the News of the World publication about Peter Archer and Victoria station? It is bizarre, but it was taxpayers' money. [Interruption.] I apologise; I should have said Jeffrey Archer. Let us get that straight.
    Is it not bizarre to say that we cannot subsidise people's jobs? Fancy Members of Parliament saying that we cannot subsidise people's jobs. This place would close down tomorrow without taxpayers' money. The Prime Minister often refers to the next door neighbour as the one we collect the taxes from. Not so long ago on television she said, "Remember that the taxpayer is your next door neighbour." I wonder what would be the result of one of those clever opinion polls— or perhaps a real opinion poll— if people were asked, "Who do you think you ought to subsidise— miners or MPs?" It would be dodgy.
    Sir Ian Lloyd: The hon. Gentleman would be out of a job.
    Mr. Skinner: The hon. Gentleman says that I would be out of a job. The reason I understand his argument is because I do not want miners. steel workers, railwaymen, social workers and the hundreds of thousands who ought to be working in local government to be sacked. So let us have no more of that nonsense. The hon. Gentleman was one of those who cheered his Front Bench when they handed over £100 million to save Johnson Matthey Bankers—a big, fat subsidy. There has been no Select Committee. No hon. Member has got up and said, "Let's have a Select Committee to see whether the £100 million that was handed over to Johnson Matthey Bankers was well spent." No, of course not. There was no Select Committee on that, or even on the tax relief that the banks get.
    Why are the Tories not complaining? The National Westminster Bank will shortly produce profits amounting to more than £1 billion, to be followed by Barclays Bank. They are friends. When I was looking at the small print I wondered how they had made all that money. It says that £160 million is being written off the National Westminster Bank's accounts because it is not going to pay tax; it has been put down to bad debts. Bad debts? So the British taxpayer— the next door neighbour that the Prime Minister talks about—is ladling out £160 million to the National Westminster Bank so that it can write off bad debts in this country and abroad.
    If it had not been a Scottish Bill that was discussed yesterday, I should have raised the issue on that debtors Bill. But that is enough of that. Let us have no more talk about subsidies being paid only to the coal industry, especially when the Prime Minister has caused the cost of running 10 Downing Street to rise from £1·3 million in 1979 to more than £5 million now. She can talk about subsidies! She has caused the running costs of 10 Downing street to rise by up to 300 per cent.
    Mr. Gerald Howarth: Will the hon. Gentleman give way?
    Mr. Skinner: Only very briefly, because my hon. Friends want to speak.
    Mr. Howarth: The hon. Gentleman fails to point out that in respect of the accounts for No. 10 there is a new accounting practice that includes counting as the costs of No. 10 the costs of other Departments. That was not formerly the case.
    Mr. Skinner: The hon. Gentleman means that the Prime Minister became so wary of these other Departments that she decided to have a foreign affairs adviser and another kind of adviser in No. 10. Why? She also has Bernard Ingham and his staff there, full time. The result is that No. 10 is costing the taxpayer—the next door neighbour taxpayer—300 per cent. more under the Prime Minister's administration than it cost under Uncle Jim Callaghan's—the man who has a book coming out very shortly, they tell me, but I do not want to advertise that fact.
    I see that the Select Committee has dealt with the effects of nuclear power and with the side issue of a smaller work force and less production in the mining industry. Those who believe that the way forward is nuclear power must bear in mind that the cost is met by the taxpayer via the Ministry of Defence, but that cost is never calculated. I know that my hon. Friends will take up with zeal the point that the next Select Committee on Energy should consider how much taxpayers' money is going into the nuclear power industry.
    I am pleased that my hon. Friends who served on the Select Committee divided the Committee on this issue. Many hon. Members know that I am not keen on Select Committees. They tend to be very sloppy, consensus-type Committees. However, my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) decided, along with his two colleagues, to oppose certain measures and recommendations. I applaud them for doing so. They managed to drag themselves away from the idea that they are all pals together, waltzing down the yellow brick road.
    The Select Committee said that the coal mining industry cannot be privatised until the year 2000. I thought that that was rather surprising, when one considers some of the hon. Members who serve on the Select Committee. Therefore, I wondered whether it was possible that some of them had mining experience and whether they had been able to influence the Committee to a far greater degree than is usual. I agree with my hon. Friends that there should be no privatisation. That is why the Committee was divided. We have only to consider what happened in the mining industry before the war when it was privatised and to listen to the old people who are still around. They would tell us.
    Mr. Geoffrey Lofthouse: And so would some hon. Members.
    Mr. Skinner: My hon. Friend says that some hon. Members would also be able to tell that story. I went into the industry in 1949, after nationalisation. They could tell us what happened under privatisation. The safety standards were abysmal.
    Mr. Lofthouse: They were shocking.
    Mr. Skinner: My hon. Friend says that they were shocking. He went through it. The owners did not care
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    about life and limb. That is what would happen in future if the mines were privatised. We want no more nonsense about privatisation being the salvation of the mining industry, because it would result in more deaths and injuries than in any other British industry.
    What else would it do? Those who have worked in the pits know the answer. The owners would immediately say, "Here's a nice easy seam, only 300 yards down." But looking at a coal mine a real planner would say, "If we are to maximise the output in this coal mine, we must think about the seam that is 400 yards down, and the next one that is 800 yards down, if we are sensibly to extract from the earth what has lain there for thousands of years."
    Privatisation would mean easy profit and easy killings. The attitude would be, "Let us mine what we can get hold of first and to hell with all the rest of it." There would be exploitation, but a lot of coal would be lost for ever. Safety standards would fall and easy seams would be taken on.
    As my hon. Friends know, we in the mining industry have had to fight for compensation for colleagues who have been injured and for widows of colleagues who have been killed. One can just imagine how, in this new, privatised, monetarist world, attempts would be made to get rid of trade unions—those which have represented the miners over the years— altogether. Imagine what paradise that would be for the lawyers—
    Mr. Michael Brown: Will the hon. Gentleman give way?
    Mr. Skinner: No. My hon. Friends must have a chance to speak because they served on the Committee.
    If the mining industry were privatised, there would be more casualties and longer hours—
    Mr. Brown rose—
    Mr. Skinner: The hon. Gentleman threatened to pack in his seat if it was decided to go ahead with the dumping of nuclear waste on his back doorstep. The threat is still hanging over his constituency, but he is still here. I would be more inclined to give way to him if he showed a bit of principle for a change but, like his hon. Friends, he does not.
    There would be longer hours in the new privatised mining world. What else would ensue? More people would be on the dole, and more youngsters on tin-pot youth training and other Thatcher-devised slave labour schemes. In addition, more South African coal would pour into the country to service hospitals. Indeed, some South African coal is already going into Nottinghamshire and depriving Nottinghamshire miners of their jobs. [Interruption.] Some members of the UDM have said that that is happening, and, incredibly enough, they supported a motion that I tabled a few weeks ago. South African coal would be cheap to begin with, but once South Africa had seized the coal market it would call the price, as did the oil industry in the 1950s and 1960s. There would be no more nuclear power.
    The report also recommends the allocation of an additional £166 million for the coal mining industry. The hon. Member for Havant said that that was a gargantuan amount, but I do not believe that. I would support the proposals more readily if I knew that more money was to be allocated on top of that to ensure that those who live in Coal Board houses and who are being preyed on by the speculators could live in better conditions. More money

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    should be allocated to further the cause of those of us in this House who since 1970 have represented the pre-1968 miners who are still doing without concessionary coal. Why does not the Minister get stuck into that? There are not many left in the country; a few in Lancashire, a few in Derbyshire and a few in other coalfields. We should make sure that those people— widows and ex-miners who were made redundant—are treated the same as the rest.
    There should be more money to compensate for subsidence, as my hon. Friend the Member for Pontefract and Castleford said earlier. In addition, there should be action on the issue of the 450 sacked miners. I should like to think that we were going to support in the Lobby today a decision that those 450 miners should get their jobs back, as they undoubtedly will under the next Labour Government.
    Mr. Bruce: It will be a long wait.
    Mr. Skinner: The hon. Gentleman comes from Scotland. I have been looking at the polls and statistics for Scotland, and I can tell him that if he does not watch his back, the speach he made today may be his last speech. My information is that Labour is riding very high indeed in Scotland. The hon. Gentleman is a Liberal, and I note that his SDP colleagues have not graced us with their presence. I think that I know why. The SDP is not very keen on getting rid of nuclear power or on the hon. Gentleman's ideas about mining as expressed in his speech. In fact, they are not very keen on the Liberals. Members of the SDP are using the Liberals, and when they have used them they will dump them, just as the Tories want to dump the miners. The hon. Gentleman has plenty on his own plate, and he should deal with that before talking about the Labour party.
    As my hon. Friends have said, unless some changes are made, our union representatives will have to go to court. The problem stems from the Government's sequestration policy. They say that they are at arm's length with the courts, but I do not believe that.
    I want the Minister to bear in mind what the Lord Chancellor said last week about another issue. Unimar, one of the firms involved in Lloyds, cheated more than 1,000 people— nearly all of them Tories—out of their money on the insurance market. The Lord Chancellor—the top Tory in the other place— said, "We cannot really pursue this very complicated and complex financial matter." Millions of pounds were involved.
    That was one of the biggest scandals in the City during the past 10 years. More than 1,000 people were swindled out of their money, but there is to be no sequestration. There is to be no hunting or hounding or rushing to Switzerland, because the Lord Chancellor believes that it would cost too much time and money to pursue the matter. This wonderful British justice of ours is to allow all those in Unimar and PCW to escape. They will not get their collars felt, or be hauled before the courts. If the Government can do that for City crooks, who represent the underbelly of the Tory party, they should stop this nonsense of dragging the NUM through the courts.
    We have heard today about soaring productivity, a wonderful golden future for the mining industry and conciliation. If those words mean anything at all, the Minister and his right hon. Friends should stop their witch hunt of the NUM.
    5.17 pm
    Mr. Gerald Howarth: We have been entertained by a good rant from the hon. Member for Bolsover (Mr. Skinner), who has clearly been practising in the Tea Room.
    Mr. Skinner: Not with jackboots on.
    Mr. Howarth: The hon. Gentleman does his practice with jackboots outside the Chamber. Clearly, the Tea Room provides the Labour party with an alternative to the hustings. They cannot face the people; they can only fight one another.
    It will come as interesting news to the Leader of the Opposition that the hon. Member for Bolsover has made a most compelling case that, far from deserting manufacturing industry in this country, the Conservative Government have littered taxpayers' money throughout manufacturing industry. That was the point that he made. Perhaps he had better rush round to Miss Patricia Hewitt's office, or somewhere else where they specialise in leaking letters, and have a few words. The Leader of the Opposition should be aware that it is no good berating this Government for not supporting manufacturing industry, because the hon. Gentleman has produced a veritable catalogue—
    Mr. Robin Squire: A cornucopia.
    Mr. Howarth: As my hon. Friend says, we have heard a cornucopia of examples illustrating the extensive support given by the Government to manufacturing industry.
    The hon. Member for Bolsover was ranting, rather than delivering a speech, so let me tell him now that the figure for which he was searching was £2,900 million. That is the amount of money that has been diverted from the taxpayer to British industry in respect of the aerospace, steelmaking, shipbuilding and vehicle industries. Later this afternoon we shall no doubt debate the excellent support that Her Majesty's Government have given to the British vehicle industry.
    Mr. O'Brien: I am grateful to the hon. Gentleman for making that point. However, can he explain how much of that £2·9 billion has been spent in the coalfield community areas, because that is what the report is about? Can the hon. Gentleman explain how much has been spent in west Yorkshire to replace the coal industry that has been devastated by the Government?
    Mr. Howarth: I am not here this afternoon to be responsible for west Yorkshire. However, I advise the hon. Gentleman that the Government have made substantial contributions, in one form or another, to alleviate the distress—
    Mr. O'Brien: In the south.
    Mr. Howarth: British Coal Enterprise Ltd., with capital of £40 million at its disposal, is doing a fantastic job to try to regenerate jobs. Nobody underestimates the difficulty in those areas where there have been major shutdowns in coal capacity. The hon. Gentleman should explain and be aware of the fact that the coal industry is not alone in having to undergo restructuring. It has had to take place throughout British industry, largely as a result of the post-war conspiracy between previous Labour Governments and the trade unions, which has prevented the introduction of new technology and the elimination of

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    overmanning that has so beset British industry since the war. It is only now that those structural changes are taking place.
    If the hon. Gentleman comes to the west midlands, he will see that the area has suffered more than anywhere else. It has gone from the top of the earnings league to the bottom, but nobody in the west midlands complains. Instead, people say, "We recognise that we have a problem, but we are tackling it and, what is more, we are coming through it." The good news about this report is that the coal industry itself is tackling the problems. I shall discuss that later.
    I am sorry that the hon. Member for Bolsover cannot take any more of my speech. He is not in his usual seat. I am delighted that he has moved to higher ground, next to the seat occupied by his right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan), a former Prime Minister, who will undoubtedly be a friend of his in the next general election. I am glad to see that the hon. Gentleman has not deserted us, but will remain to contribute to our discussions because he asked for more money for the coal industry. I find it extremely odd—I am sure that I am not alone among my hon. Friends in finding it so—that he wants more money for the coal industry. He has been a Member of the House for a long time. In those ancient, dim and distant days when there was a Labour Government—I cannot remember it but I believe that there was a Labour Government at one stage—the hon. Gentleman supported them.
    Perhaps the hon. Gentleman can explain, not only to his constituents but to the country as a whole, why there were more pit closures when there was a Labour Government and why more people were put out of work in the coal industry when the Labour party was in office. Perhaps he could also advise us why the terms of compensation for redundant mineworkers were so poor. The answer is that Opposition Members are a bunch of hypocrites and that when in government they did not do half the job that this Government have done.
    Mr. Barron rose—
    Mr. Howarth: I shall give way to the hon. Gentleman in a moment. I continue by reminding the House—I am sure that hon. Members need to be reminded of this, after what they have heard this afternoon from Opposition Members—of the immense turnaround that there has been, thanks to the leadership of my hon. Friend the Under-Secretary and the Government.
    Mr. Barron: I do not know whether the hon. Gentleman was present earlier when I spoke. However, I should like to say briefly that, when the mining industry went through restructuring because of the increase in the import of oil because it was so cheap abroad, there was a Government scheme for 26 weeks training for those who left the industry. Under the National Coal Board's enterprise scheme set up in the coal strike, three weeks' training is provided. For most of that time unemployment in coal mining areas was below 3 per cent. It is much higher now; the hon. Gentleman should know that before coming to these debates.
    Mr. Howarth: I was here for the hon. Gentleman's speech and I do not disagree with much of what he said.
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    I know that he makes strong representations on behalf of his constituents. I understand that he has been elevated to higher things and was unable to remain on the Committee. I am sure that the Committee was the poorer for the lack of his deliberations.
    However, the hon. Gentleman has ignored the part played by British Coal Enterprise Ltd. to deal with the problems in the coalfield communities. As my hon. Friend the Member for Havant (Sir I. Lloyd) and others have said, it is not the responsibility of the coal industry to consider all the social consequences of its decisions. Of course it must take them into account, but it is there to run a business and it is the duty of Government to see where the commercial operation of a business so inflicts damage on local citizens that action needs to be taken. The Government have taken that action, and will continue to do so.
    That seems to have disposed of the hon. Member for Bolsover, although I hope that he will come back and regale us with further comments.
    Mr. Andy Stewart: Before my hon. Friend leaves the hon. Member for Bolsover (Mr. Skinner), I should like to say that he criticised people who receive subsidies, while his own brother is taking voluntary redundancy from the coal industry. Is not that taking a subsidy?
    Mr. Skinner: He is a fireman.
    Mr. Howarth: I am sure that the hon. Member for Bolsover will want to tell the House about that in his own time.
    I move on, because I know that some hon. Members have not had a chance to speak yet who wish to do so. I start by congratulating my hon. Friend the Member for Havant and his Committee on producing an excellent report which, in my view, ranks alongside the 1983 Monopolies and Mergers Commission report as one of the great works on the coal industry—[Interruption.] If you think, Mr. Deputy Speaker, that I am only now embarking on my speech, I hope that you will—
    Mr. Deputy Speaker (Mr. Harold Walker): Order. The hon. Gentleman said that he was just starting his speech. I thought that he had been talking for nine minutes.
    Mr. Howarth: I undertook to make a short speech but the hon. Member for Bolsover enticed me down an avenue which perhaps I should not have gone down. I hope that I have been able to put the record straight about some matters that would not otherwise have been dealt with.
    One of the features of this Parliament is the fact that so many coal miners and mining communities are represented by Conservative Members. It is now often the case that the Conservative party speaks for the miner more than the Labour party does. I have every confidence that, after the next general election, that will continue to apply. That is not a reflection on individual Labour Members who work extremely hard in their constituencies. Indeed, there is a certain camaraderie among those of us who have an interest in the mining industry. Opposition Members speak as sincerely about their views of the industry as I do about mine. It is more a reflection of the present state of the Labour party, which no longer speaks for the English working man, or for the many miners who now seek to buy their own homes, or who have bought their own homes, and who have benefited from the Government's policies on the mining industry.

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    The first success of the Government's policies can be seen in investment. The hon. Member for Bolsover should listen to this. It is no good his making a speech and then not listening to what other hon. Members have to say. From 1974 to 1979, total investment in the industry by the previous Labour Government was £1·5 billion, whereas between 1979 and 1986 this Conservative Government invested no less than £5 billion. Nothing so demonstrates the commitment of this Conservative Government to the coal industry than the efforts by the Department of Energy during the past eight years. Investment in new pits is now running at more than £2 million every working day and we know that in Margam there is to be a new £90 million drift mine which I hope will come on stream soon.
    Secondly, productivity has increased by no less than 50 per cent. since 1979. Each year under the Labour Government productivity fell, despite the fact that in 1974 in the much-heralded "Plan for Coal" the target was a 4 per cent. per annum growth each year. Therefore, productivity is increasing dramatically, so much so that we are now the lowest cost coal producer in western Europe. Nevertheless, there is further to go.
    I draw attention to the remarks of the chairman of British Coal to the Coal Industry Society:
    "Out-moded restraints such as the 1908 Hours of Work Act and the 40-year-old five-day week agreement mean that highly expensive equipment is only operating for a third of the maximum time available. This is in sharp contrast to the position in other highly capitalised industries such as chemicals and steel."
    It is greatly to the credit of the men in South Wales who have gone back on long-standing practices that they recognise that new investment will come only where there is a change in working practices to conform with those in other industries.
    Thirdly, the Government should be given credit for the pay that miners now enjoy. It is much higher than it was under the Labour Government. Fourthly, and not least— I do not wish to be unduly divisive about this—the Government are to be given credit for standing firm in the face of industrial intimidation from the NUM. It was a tyranny and the Government did a great service to the country and indeed to the coal industry in standing firm against it.
    I have no deep pits in my constituency and there have not been any for some time. My constituents work at the pits of Littleton, which is represented by my hon. Friend the Member for Staffordshire, South (Mr. Cormack), and Lea Hall, which is represented so ably by my hon. Friend the Member for Mid-Staffordshire (Mr. Heddle). The increase in productivity at Littleton has been 38 per cent. and at Lea Hall 24 per cent. Those figures compare with an average for the western area of 22 per cent. That is no mean achievement. At the same time, they have been able to reduce costs at Littleton by 16 per cent. and at Lea Hall by the same figure. The overall figure for the western area is 10 per cent. Output has increased by more than 20 per cent. at both pits. I am pleased to inform the Minister that Littleton colliery has just achieved a 1 million tonne per annum output for only the second time in 85 years. Output per man shift is averaging 3·44 tonnes, and in February 4·44 tonnes was achieved.
    Most important, Littleton and Lea Hall are both profitable. The message to Opposition Members is that that is good news for the industry. My constituents are to be congratulated on their efforts, not only to withstand the strike, but to recover from it and produce those
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    magnificent results. It is good news when men can see that, as a result of their efforts, it is not necessarly to dip into taxpayers' pockets, when they can say, "We can stand on our own feet. We are profitable. We are showing the way to recovery for the whole industry." It is a measure of the success of the industry in the western area that total output from its present 11 pits is approaching 10 million tonnes—just 1 million tonnes short of the output 12 years ago, when there were 24 pits. The western area is heading for a profit for the first time in 14 years.
    I know that I have spoken for some time and I shall conclude by making two further points. I endorse the remarks made by my hon. Friend the Member for Erewash (Mr. Rost) about the need to introduce private sector involvement into the coal industry. There is nothing incompatible with congratulating miners in the nationalised British Coal on their achievement and welcoming the involvement of the private sector. Throughout industry, we have seen that private sector involvement and the move towards privatisation have had a galvanising effect on the work force. British Airways was a moribund, sleepy, nationalised state airline, losing £500 million, but now the work force is motivated to an extent which was unimaginable five years ago. It is greatly to their credit that the airline is now doing so well. I would like to see that ethos and esprit de corps introduced into the coal industry.
    I hope that my hon. Friend the Minister will discard some of his caution, welcome the introduction of more private sector involvement and say that the way ahead for the coal industry must involve the maintenance of the highest standards, coupled with a determined and inexorable move towards privatisation in one way or another.
    Subsidence affects all mining constituencies and is a major problem for British Coal. In paragraph 160 of its report, the Select Committee rightly states:
    "British Coal currently pays some £90 million a year m repairs and compensation for all those affected … BC cannot plan sensibly either its finances or its mining developments with no idea of the size of the subsidence compensation payments for which it may be liable."
    In paragraph 161, the Committee recommends
    "that BC should no longer be liable for subsidence caused by historic mining operations."
    I make a vehement plea to the Minister to take note of that. Whatever else he does in response to the report, I hope that he will feel able to act on that forthwith. He knows from my correspondence with him of the anguish of our constituents whose principal asset is their home which—they cannot mortgage to raise funds to invest in a business, to extend their property or for any other purpose that they have in mind because of the blight caused by the uncertainty of mining subsidence.
    I thank my hon. Friend the Member for Havant (Sir I. Lloyd) for the lead that he has given on the coal industry. There is a long way to go, but the Government have done a magnificent job. If the Minister would tackle subsidence now and privatisation next month, that would be grand.
    5.36 pm
    Mr. Geoffrey Lofthouse: For many months I have had the privilege of being a member of the Energy Select Committee which produced this report. As the hon. Member for Havant (Sir I. Lloyd) said, we have spent many hours on it and have travelled many miles. Some of our travels have brought me great

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    pleasure. I have seen Conservative colleagues visiting a coal mine probably for the first time and finding great difficulty reaching some of the coal faces. The House will appreciate the pleasure I had in Wales when I watched the hon. Member for Littleborough and Saddleworth (Mr. Dickens) get halfway through a coal face, but no further. He had to be dragged back. I do not know how they would get on on a 9-hour shift at a coal face which some of them are advocating. They would find great difficulty indeed.
    Nevertheless, we have made an honest endeavour to produce a responsible report on the future of the coal mining industry. Some people believe that over the past few years the financing of the coal industry could be described as rigged. Hon. Members will recall that, following the fall of the Heath Government in 1974, the Conservative party set up a nationalised industry policy group chaired by the present Secretary of State for the Environment. The final report was leaked to The Economist in May 1978. Although most attention has been focused on the right hon. Gentleman's plans to defeat strikes in the coal industry, he also proposed two financial rules for nationalised firms.
    In particular, the chief inspector said that "totally inflexible" rates of return should be set for the nationalised industries and that these rates should be adhered to even if whole businesses were to be closed down as a result. It is interesting that setting the totally inflexible rate of return of 12·2 per cent. on the Margam project in south Wales was used to force the south Wales miners to accept the concept of a six-day week for coal production at the Margam colliery. I do not think that anybody would refute that. The Government's rigid financial rules became enshrined in a series of coal industry Acts from 1980 onwards. They were reflected in the 1983 Monopolies and Mergers Commission report and were built into the financial objectives for the coal industry, agreed by Ian MacGregor in 1983.
    Since 1979, the coal industry's finances have been progressively rigged to make its results appear worse year by year. By 1982, the NCB began making a loss for the first time since 1974. There are three major factors behind that loss. First, the costs of contracting the industry were being loaded back on the accounts—for example, the cost of past employees' pensions.
    Secondly, the agreements with the CEGB, cutting the price of coal in real terms, were forced on the industry from 1979. By 1983, the price of coal sold to the CEGB was cut in real terms by £2·25 per tonne. That reduced revenue by more than £150 million a year by 1983. Thirdly, Government grants were taken out of the profit and loss account and added as a deficit payment to the end of the balance sheet, contrary to continuing practice in the private sector. The new agreement with the CEGB has meant the transfer of profits.
    The latest agreement with the CEGB, backdated to April 1986, means a cut in the price of coal by a further £3·80 per tonne. Since 1979, therefore, the industry has lost revenue of £6 per tonne on coal sold to the electricity industry—or some £500 million a year. A further £100 million has been lost through knock-on price cuts in other coal markets. If that had not happened, instead of making a projected £300 million loss in 1986–87, the coal industry would be making £300 million profit. Had that been the
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    case, how many pits that were closed because they were uneconomic would have been able to survive because they would have been economic?
    Indeed, Sir Robert Haslam has acknowledged that a £300 million annual profit would make the industry fully viable and that it would be able to generate its own investment funds. Instead, the Coal Board had to set off another severe round of cost cutting in the industry to claw back half the loss of potential profit in the current year. Furthernore, he admits that the now notorious Wheeler plan has been drawn up to push the industry past a break-even position into full financial viability. In the chairman's own words, the board wants to remove
    "outmoded restraints such as the 1908 Hours of Work Act and the 40-year-old five day week agreement."
    The board wants to shed another 50,000 mining jobs over five years. If the Minister does not agree, he should say so when he winds up.
    The Supplementary Estimates add £95 million to the external financing limit. The Government say that the EFL for the industry for 1986–87 was set at £730 million before the oil price collapse. What the Government really mean is that it was set before the new agreement with the CEGB was forced on the industry. As a result, the industry lost £400 million in revenue. The Government are now proposing to increase the EFL by £95 million. That would add further interest payment burdens to the coal industry.
    By contrast, it was announced last week that the CEGB expected to make £750 million profit in 1986–87. It is interesting to note how the Financial Times, published on 4 March, interpreted that announcement. It stated:
    "Thanks largely to last June's revised understanding with the British coal industry, the CEGB this year expects to make about £750m profits, after depreciation and before interest."
    On top of that creaming off of the coal industry's profits, the Chancellor announced in his autumn statement last November that the amount that the electricity supply industry in England and Wales would have to pay to the Government in 1987–88, through its negative EFL, would be increased by £237 million. For the first time, the electricity industry will make substantial corporation tax payments in 1989–90.
    What is now known as the Ridley plan is being operated in top gear to cream off the wealth produced not only by the mining communities but by the electricity workers. It is operating at full throttle because this is an election year. However, electricity consumers have not received full benefits, as the Government pretend. Electricity prices for domestic consumers have merely been frozen, as this policy is aimed at raising Government revenue and destroying mining communities. Electricity prices were increased by 5 per cent. at the beginning of 1986–87. The later price reduction merely offsets that increase. The only real beneficiaries are the big business users of electricity, who have secured, collectively, a £50 million price cut.
    Mr. Andy Stewart: And jobs.
    Mr. Lofthouse: I am not disputing that. I welcome new jobs.
    The Government might object that, if the new agreement had not reduced coal prices, the CEGB would have substituted oil or imported coal. That argument does not stand. Oil prices are so uncertain that Lord Marshall says that the CEGB does not intend to build any more oil-fired stations, and a huge oilburn by the CEGB would have lifted the international price of oil to such high levels that the policy would be counter-productive.

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    Secondly, as the Financial Times coal report demonstrated, in its evidence to the Energy Committee, imported coal is being sold at $10 per tonne, on average, less than its costs of production and transport. In other words, imported coal is being dumped at around £6 per tonne less than the price that it should have been sold at. At the same time, British Coal has been forced to cut its prices by £6 per tonne. If an import duty of £6 per tonne were placed on imported coal, the coal industry could be freed from the shackles of the CEGB agreement and it would be making a profit of £300 million.
    To import massive volumes of coal is economic nonsense for other reasons. Huge balance of payment problems and large costs to the country will result from yet more pit closures, which will cost the economy and the Exchequer dear.
    As to the Supplementary Estimate of £71·3 million for the redundant mineworkers payments scheme, the Government are proposing to add that figure to the provisions under the RMPS, because costs in 1986–87 are now expected to be much higher than the original estimate of £540 million. That is because 29,000 miners have been made redundant up to January 1987. The £1,800 million that was provided under the Coal Industry Act 1985 has been exhausted.
    As a result of the huge increase in redundancies in 1986–87, the provision in the Coal Industry Act 1987 for the continuing costs of past redundancies will also be insufficient. The public expenditure White Paper has already estimated that, in the first three years, continuing payments will total £514 million. The maximum figure of £750 million which was provided for redundancies and redeployment is meant to last until March 1992. I must ask the Minister, are the Government planning to load yet another burden on the coal industry?
    I will cut my speech short because I know that other hon. Members wish to speak. Nevertheless, the question appears to be, how many redundancies does the Minister expect over the next three years? The figure that I have been able to work out is about 30,000. I shall give him the opportunity to refute that or agree with it.
    What I would call the minority report— the major amendments proposed to the report— was brought about purely and simply by our fear of the prospect of privatisation. People such as myself, who have had experience of privatisation of the mining industry, know a little about it. We fear that dramatic safety problems will be created by the privatisation of the coal industry. We have seen that before and we saw it in our visit to America. We established our evidence that the system in America of roof-bolting roadways was not the safest. That was confirmed by the chief inspector of mines. If British Coal continues its policy of using roof bolts purely for economic purposes, it will be going against the views of the chief inspector of mines, who feels that it is not the safest method, and British Coal always prides itself on providing the safest methods.
    5.53 pm
    Mr. Spencer Batiste: I am grateful to you, Mr. Deputy Speaker, for calling me in this important debate. I shall be brief because I realise that other hon. Members wish to speak.
    In the main this has been a constructive debate, except for the contribution from the hon. Member for Bolsover (Mr. Skinner), who spoke in his customary diplomatic and
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    tactful manner. I am indebted to the hon. Gentleman for his suggestion that I should read the novels of Peter Archer. That was the one constructive suggestion that he made and was, I suspect, about as accurate as the rest of his speech.
    However, he raised one fundamental point which underlines what I want to say in the first part of my speech. It is the difference between providing assistance for an industry, even massive assistance, to help it restructure itself so that it can stand on its own two feet, and providing long-term open-ended subsidy without taking the necessary and sometimes painful steps to put that industry right. In industrial terms, it is the difference between the hospital and the hospice. It was clear from the hon. Gentleman's contribution that he did not understand that difference, certainly in the way in which he contrasted the role of Government intervention in different industries.
    Let me return to the point that I wanted to make, with what I have said as a preface. I was a member of the Select Committee when it started its report on coal and, like the hon. Member for Rother Valley (Mr. Barron), I had to leave it before it reached its conclusion. I am deeply indebted to the Committee for producing a report which will be extremely valuable to those who have the interests of the coal industry at heart. I am sure that the current hon. Members on the Committee will forgive me for saying that it is not so much their conclusions that are important— although they are interesting, but we shall all have our own ideas on them— it is the way in which they have pulled together evidence in such a careful, constructive manner and given their own careful deliberations in weighing that evidence that gives us a valuable source for considering the future of the coal industry. While I missed out on some of the pleasures of visits that took place in the preparation of the report, there is a lasting testimony before us which will act as a bible on the industry for many years.
    The message that comes from the report is that there is wide acceptance of the important strategic need for coal at the centre of the country's energy policy. Many hon. Members have touched on that theme time and time again over the years— each of us, perhaps, from a different viewpoint—but it is clear that in a country such as ours there needs to be a diverse policy on energy. Coal must be at the heart of such a diverse policy.
    It is necessary to achieve productivity improvements so that coal can compete effectively and be viable in its own right, rather than having to be propped up merely for the sake of diversity. The progress that has been made under my hon. Friend and the Secretary of State has been such that over the last year a month has rarely passed without one reading of a new record level of productivity being achieved in the industry. All hon. Members must congratulate the industry on that.
    I am not sure that I go along with the Select Committee on its analysis of supply and demand, in particular on demand, because it is a notoriously difficult thing to predict a long time in advance. The evidence that it collected and its analysis of it is useful, but anyone who looks back 10 or 15 years at the development of energy demand in the world could say only that there are many factors which emerge which could not have been taken into contemplation at the beginning. I have no doubt that in the next 10 or 15 years other factors will arise which may cause us radically to review our assessment of demand.

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    It is important for the coal industry that supplies should, in the words of my right hon. Friend the Secretary of State, and repeated in the report of the Select Committee, be "adequate and secure". If we have a native energy source which is reasonably readily available, that is its prime selling point to United Kingdom customers. It does not then matter to them whether there is political instability in the middle east; it does not matter whether there are problems with other sources of energy. Coal has the benefit of being here, being locally available and being relatively easy to supply.
    It is with some concern, therefore, that I look at the one way in which the coal industry could defeat itself. I look to see what progress has been made in industrial relations since the end of the strike, and how the militancy that was so apparent in some quarters during that strike has been accommodated. On the whole, the industry's productivity record speaks for itself, but I am still concerned. My hon. Friend the Minister will know that towards the end of last year I visited the Selby coalfield so that I could report back first-hand to the House on how well that project was going. To my dismay and surprise, I was greeted by a halfday strike in opposition to my visit. I understand that my hon. Friend has had a similar experience at other pits. I understand that in the last month or so other people visiting the Selby coalfield have had similar experiences. The Opposition laugh at that. That is a tragedy, because not only did those one day strikes take place, but, a few weeks ago, the Selby coalfield went on strike for a week on the basis that the men should have had bonuses for the weeks when they had taken industrial action.
    The mining industry should by now realise that its future depends above all upon the support of its customers. Nothing can destroy their confidence more than a reputation for unreliability. Let us hope that that reputation for unreliability has been firmly buried. The voice of realism is increasingly being heard from the shop floor in the mining industry, as it is in south Wales over Margam. I only hope that the invective directed towards south Wales from the president of the NUM, which in some ways is reminiscent of the invective that he loosed on Nottingham some while ago, will not be repeated but will be repudiated by all in the industry who have its best interests at heart.
    My second point relates to something that has not been picked up significantly so far in the debate—new jobs. British Coal Enterprise Ltd. was set up to achieve various specific objectives within the coal community. Where there have been closures it was important that funds should be available to assist and help in the creation of alternative employment. There are different problems in different areas. [Interruption.] It is noticeable that whenever one talks about the successes of the mining communities the Opposition do nothing but barrack and harass speakers. They do it here and in the coalfields. It goes to show just how much they are really interested in constructive progress.
    Mr. Barron: Will the hon. Gentleman give way?
    Mr. Batiste: With great respect, I promised to be brief, so I shall not give way. I must press on.
    My point is clear. British Coal Enterprise Ltd. has been successful in bringing investment and jobs to many areas where they are desperately needed. However, the needs of
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    different areas are very different. In some places what is needed is to convert the premises of an old pit or to put up buildings for new business to move into; such is the strength of the business community in some areas that those premises will be taken up. My constituency has two such sites at Micklefield and Ledston Luck close on the A1. The commitment to develop those sites, making them suitable for business, should, because of their excellent siting, enable industry to move in and provide jobs in those areas.
    It is equally clear—the Select Committee focused on this point—that in many places more help is needed. The Select Committee says that the Government should invest more money through British Coal Enterprise Ltd., but I recall my hon. Friend the Minister saying during many coal debates that as much money as British Coal Enterprise Ltd. could usefully use would be made available for it. It merely happens that £40 million is the current level of funding because that is what it requires. My hon. Friend nods as I say that and it is something that he has repeated over and over again.
    The Select Committee makes an important point when it draws a comparison with the development of the docklands in London. There is a need for a catalyst. We need more than just investment. We need a more wide-ranging approach to the development of some areas. The highly successful mechanism of the urban development corporations in London and in Liverpool, which have recently been extended elsewhere, should not be confined only to city centres. The coalfields are just as worthy recipients of such a package as are the city centres. They have similar problems and the comprehensive response of an urban development corporation adapted to the coalfields would have a great deal to contribute to the redevelopment of those areas. That is a constructive suggestion by the Select Committee and I hope that the Government will take it on board.
    6.3 pm
    Mr. William O'Brien: The hon. Member for Elmet (Mr. Batiste) referred to the Government's financial support for the mining industry. The inference was that it is not good for the Government to sustain the mining industry. Other Conservative Members also referred to the subsidy which the mining industry receives. However, little has been said about the tremendous subsidy that we give to agriculture, and that is shocking. The subsidy to mining is nothing compared with the subsidy to agriculture. Let us put the record straight.
    The hon. Gentleman also referred to the dispute in the Yorkshire coalfield which in the main has arisen because of the lack of negotiation and consultation. The hon. Gentleman says that disputes are the responsibility of the men in the industry and that they should know better. Yet when a record is broken no reference is made to the men who work in the industry. Instead, the hon. Gentleman says that the Minister should be congratulated. The record should be put straight on that too.
    The Select Committee's Chairman referred to the Supplementary Estimate of £166 million. The industry is worthy of that and the Select Committee did not condemn that assistance to the coal industry. My hon. Friend the Member for Bolsover (Mr. Skinner) said that more money should be made available to meet the concessionary fuel costs on which many widows and retired workers for the industry are losing out because of an ancient agreement.

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    I want to draw attention to a recent agreement under which widows and retired members are losing benefit because of British Coal's attitude. I hope that there will be a rethink and that the Minister will have a word with British Coal's chairman about the reduction in benefits to widows and retired members.
    The hon. Member for Sherwood (Mr. Stewart) referred, in reply to my intervention, to the need to transfer money saved in the Health Service for more health facilities. If we follow that philosophy and say that imported coal should be used in hospitals throughout Britain, those whom the hon. Gentleman represents will be out of work.
    Mr. Andy Stewart: I never said that.
    Mr. O'Brien: The record will show that that is what the hon. Gentleman said. That will not be in the best interests of the hon. Gentleman's constituents.
    The Select Committee examined the problems and prospects of the British coal industry and reviewed the progress which has been made to set the industry on a sound footing. We had to look beyond the 1990s and make recommendations for the coal industry. Although the Committee's terms of reference suggested that we were responsible only for monitoring the work of the Department of Energy and British Coal, the Government's evidence made it plain that the task of dealing with the consequences of a coal policy to mining communities rests with the Government.
    The hon. Member for Erewash (Mr. Rost) referred to privatisation—the real issue that divided the Committee. Whether an industry is publicly or privately owned has no bearing on its efficiency. Sir Robert Haslam, British Coal's chairman, who has spent most of his life in the private sector, said:
    "the perception that somehow private industry has some great magic wand and can come in and do something which nationalised industries cannot do has not got a great deal of validity."
    The Committee believes that the privatisation of the coal industry is an unnecessary and potentially harmful sideshow, which the chairman of British Coal called an "unfortunate diversion".
    The real structure of the industry is broadly accepted as it is and its ownership by the public brings real practical and strategic advantages. No case for the alteration of that position has been adequately made, either in evidence to the Select Committee or in the debate this afternoon.
    On several occasions the Government assured the Committee that there were no plans for the privatisation of British Coal, although at times we have been assured that that is only for the present. However, we are equally sure that some Ministers remain ideologically committed to privatisation. With regard to coal, we set particular store by the Prime Minister's words on this matter since decisions about the privatisation programme are clearly taken at No. 10 and the Treasury rather than in the sponsoring Departments. We ask the Minister this afternoon and the Prime Minister to give a categorical assurance that privatisation will not take place.
    The Government have privatised one fifth of the state sector of industries that they inherited in 1979 and will have transferred a further one fifth to the private sector by the end of this parliamentary Session. It is also the Government's intention to return most of the remainder to the private sector in the next Parliament. However, we have been told that there are no current provisions for the
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    privatisation of British Coal. Do we infer from the answers that have been given in relation to privatisation that there is no future involvement or commitment for the privatisation of British Coal? In the Select Committee report, we recommended in an amendment that the Government should give a categorical assurance that British Coal will not be privatised. I hope that the Minister will comment on that when he replies.
    I readily admit that part of my opposition to a privatised coal industry is based on the experience to which hon. Members have referred in this debate of the private coal industry in this country before 1946. Sir Robert Haslam must be one of British Coal's few remaining employees who worked in the private industry and he spoke graphically of some of the problems of the old private system. I do not want a return to the contract system in the mining industry. I have experienced that and I would not wish it on any other person working in the industry. I also believe that in the interests of safety the British coal industry must remain in public ownership. That will secure a safe industry in which people will be proud to work.
    A further principal argument for maintaining public ownership of British Coal is my belief that important strategic assets should remain in public control so that the temporary storms in world energy markets can be ridden out and our principal energy assets preserved for the country's future needs. The case for running down the coal industry is based on short-term economic factors. That is not in the best interests of this country.
    The Select Committee had no quarrel about the small deep mines in Great Britain. A more rigorous argument was presented for allowing more private sector opencast on bigger sites. That argument was backed by the Monopolies and Mergers Commission in 1983. I have argued elsewhere that there should be a limit on the quality and quantity of coal extracted by opencast methods as a means of easing the pace and scale of British Coal's difficulties. We tabled an amendment that was carried in the Committee about restriction on opencast workings.
    I want to refer briefly to the references made to the new mine in south Wales and the fact that if it is to achieve the necessary output it will be necessary to break all the existing agreements about working hours and the five-day week. That is not necessary. To illustrate that point, I want to refer to Sharlston colliery in my constituency. The pit at Sharlston was sunk in 1865 and it has been running for more than 120 years. In February this year, the men at the pit achieved one million tonnes output—and that was achieved in an old pit working to the existing agreements on hours and conditions. That pit knocks sideways the Government's philosophy that there must be changes if achievements are to be made. The achievement at Sharlston was made with six weeks still to go in the current year. The productivity at Sharlston colliery in the past two years has risen from three tonnes to five tonnes per man shift. During the year, the workers set a new weekly output of 31,000 tonnes and an all-time productivity best of 5·6 tonnes per man shift.
    We do not need the changes in conditions that we have been told are necessary. The men in the industry can produce the output if they are given the resources to do so. The pit at Sharlston has also reduced its costs to £ 1·20 a gigajoule. No one has mentioned that today. We do not need the changes in the industry that are being propounded by Conservative Members. The men in the

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    industry can achieve that if they are given the resources. The £1·20 per gigajoule at Sharlston is well within the yardstick laid down by the Government of £1·50 a gigajoule. The one million tonnes of coal produced at Sharlston are for power station use. Such achievements can be made at Selby and at any colliery if the men and the management are allowed to work together and if there is the same family atmosphere at other coalfields and collieries as there is at Sharlston.
    As time is running out, I shall be brief. There must be a different spirit in the mining industry if it is to achieve the aims that were set out in the Select Committee report. I hope that the Minister will consider the points that have been raised, especially those about the relationship with the industry and the fact that the machinery must be provided for the men to achieve the objectives.
    6.17 pm
    Mr. Michael Brown: I will finish my speech by 6.20 pm. I am grateful to the Opposition Front Bench for being so generous as to give me the opportunity to participate in the debate.
    I was stimulated to intervene in the debate by the remarks made by the hon. Member for Bolsover (Mr. Skinner). I am sorry that the hon. Gentleman is not in the Chamber to hear my comments. I wanted to intervene during his lively speech to ask him whether he felt that, in view of his comments about his hon. Friends quite legitimately dividing the Select Committee because they were unhappy with certain aspects of the report, he regarded the report as giving the green light for privatisation of the coal industry. If he had allowed me to intervene, I would have expected him to answer, "Yes." That is my interpretation of the Select Committee report.
    I joined the Select Committee on Energy when it had finished taking evidence, and during the time when it was considering what the report should contain. Like the hon. Member for Bolsover, this was the first time that I had served on a Select Committee and, like the hon. Gentleman, I had my reservations. To be honest, as a member of the Select Committee, I still have reservations about the whole idea of Select Committees.
    Nevertheless, the Select Committee on Energy has produced a clear, crisp and concise report which, in my view and I suspect in the view of the hon. Member for Bolsover, points the way to the future. That future contains an involvement of the private sector in the coal industry.
    I do not have pits in my constituency. However, the site of the South Killingholme power station is in my constituency. That site was purchased by the CEGB after the second world war with the idea that a power station should be constructed there. As it has this dead land lying around, the CEGB wants to use it, via its subsidiary NIREX, to dump nuclear waste there. The hon. Member for Bolsover made some remarks about that. I am on record as saying that, as long as I am the Member of Parliament for Brigg and Cleethorpes, there will be no nuclear waste there. There is no nuclear waste there, so I am the Member of Parliament for that constituency today, and that will be the case tomorrow, the day after and the day after that.
    I say to the hon. Member for Bolsover and to all hon. Members with mining constituencies that I believe that
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    there is a demand for coal if we can get that coal out of the pits at competitive prices. When we get it out of the pits at competitive prices, there is a case for the South Killingholme power station site being used for a coal-fired power station. The CEGB has selected the site for study as a coal-fired power station. It would provide the demand for coal from hon. Members' constituencies. I want coal to be successful. I want it to be mined competitively and cheaply by private enterprise, because that will protect jobs in other constituencies and create jobs in mine. We do not want a nuclear dump in South Killingholme; we want a coal-fired power station.
    6.20 pm
    Mr. Alexander Eadie: It is fortunate that the House is debating the Estimates in the setting of the report of the Select Committee on Energy which was published on 28 January. It would be extremely churlish not to thank the Chairman of the Committee and its members for the report and the two volumes of evidence. They must have spent long, painstaking hours on its compilation. It would be shallow and inaccurate if I suggested that we could do the report justice in three hours, and I apologise in advance for doing it less than justice. I hope that it will be accepted that I am disciplined by the time at my disposal.
    On examining the report, one soon observes that
    The House will be interested to know how British Coal described the strategy. The report states:
    "Capacity planning is therefore not designed to maintain forward output at a pre-determined level, but by the application of 'minimum regret' rules to make the best decisions possible on a year to year basis."
    That raises questions about planning in the industry, which belongs to the people of Britain. How will it be possible to go ahead with the new pits when it is known that long lead times will be involved in bringing those pits into production? The period mentioned is between seven and 10 years, but unless we have new pits the industry will inevitably contract.
    What are the cost parameters for what British Coal describes as capacity planning? Its evidence was that it would write off capacity with an operating cost of more than £1·65 per gigajoule. Those pits will be closed. Any additional or incremental output generated during the next few years should have marginal costs not exceeding £1 a gigajoule. British Coal argues that that is what the market says, but the country must be made aware that the policy will mean writing off millions of tonnes of coal, especially in existing pits. The company will take the best seams first and will leave those that it deems uneconomical. It will bring the life of many pits to a quicker end and the coal left will be lost for ever. Even new pits that are sunk could have a reduced life.
    The policy is a throwback to the days of private enterprise, which I and many of my hon. Friends believe

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    vandalised our coalfields. The policy was, "Take the berries first and leave the rest." I predict that, before long, British Coal will tell us that we do not have 300 years' worth of coal, that the figure will be slashed to 50, 60 or 70 years. My right hon. Friend the Member for Salford, East (Mr. Orme) told us that Mr. MacGregor said that his policy would mean that we were left with only 50 years' worth of coal. That would be a disastrous policy. If Parliament agreed to such a policy, Britain would live to regret it, because coal is the only fossil fuel that we have in abundance, compared with the reducing assets of oil and gas. I agree with those hon. Members who made the same point in the debate, although perhaps in another context.
    The Coalfield Communities Campaign submitted stark evidence of the contraction of the coal industry. That evidence went up to 1985, but the position is worse if we take it up to 1987. In 1972, the National Coal Board employed 271,000 wage earners. By September 1985, the figure had fallen to 156,000—a drop of 115,000, or 42 per cent. The campaign suggested in evidence to the Committee that, if present trends continue, the 156,000 people employed in September 1985 could drop to between 62,000 and 109,000—minus 30 per cent. to minus 60 per cent.—by 1990.
    The campaign's remarkable evidence to the Committee gave two examples contrasting Scotland with Nottingham. In 1975, Scotland had 22 collieries with more than 24,000 employees. Today, it has fewer than 6,000 employees. The scale of the decline has been dramatic. The multiplier effect has been dramatic job losses in the electricity industry, steel, the railways and mining equipment manufacturers. They have been severely affected by reductions in employment and capacity in the coal industry.
    The campaign says that the Nottinghamshire coalfield is generally regarded as one of the most prosperous in the country, with an assured long-term future, yet it is not an area of stable employment. At paragraph 2.8 on page 191, the campaign states:
    "In March 1980 almost 42,700 people worked for the NCB in the County. By March 1985 this had reduced to some 34,000. The rate at which jobs have gone has been accelerating with about 7,000 jobs going between 1982 and 1985. Since March two collieries, Moorgreen and Pye Hill, have closed with the loss of a further 950 jobs, though employment at these pits had been substantially higher in previous years. In addition, the amalgamation of the two NCB Nottinghamshire Areas into one administrative unit in August will almost certainly have led to further job losses. The former South Nottinghamshire area has been particularly hard hit, as about 38 per cent. of the area's jobs have disappeared since 1980."
    It is on record that it lost in the region of 10,000 jobs. We have to place on record the fact that the Select Committee—
    the Committee divided along party lines on some fundamental issues. The hon. Member for Havant (Sir I. Lloyd) described them as two minor issues and one fundamental issue. We learn from the report that the British Coal document entitled "New Strategy for Coal" signalled the end of indicative planning in the industry, with the market being left to decide its shape. Some of my hon. Friends have commented on the Opposition's view of that. The new strategy replaces five and 10-year plans with annual reports, including discussion with area directors.
    Mr. Andy Stewart: Voluntary.
    Mr. Eadie: I suppose it is voluntary but, in Nottinghamshire, the same as in any other area, when a job is lost, it is lost for somebody. The community has lost that job. It means that some kid leaving school will have fewer opportunities in his quest for a job. We should never be complacent about the loss of jobs. We should certainly demand that people who lose their jobs should be compensated—to that extent I am at one with the hon. Member for Sherwood (Mr. Stewart).
    The Select Committee tried to respond to the evidence of the Coalfield Communities Campaign, because of the scale and likely persistence of unemployment in mining, by
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    recommending that a special Cabinet Committee be set up and charged with the task of dealing with and coordinating the work. One will find in the report that the recommendation made by the Select Committee was based on the complacent reply furnished by the Government when they were asked about steps taken to alleviate hardship.
    British Coal Enterprise Ltd. was set up to assist in creating jobs. It was a positive recommendation that substantially more resources be committed to match the size of the problem found in mining areas. However, after all the claims made about the organisation and its work on the scheme, it can be observed in the report that the deputy chairman of British Coal said that he did not claim much for the scheme.
    We should look with interest upon the recommendation that British Coal should no longer be liable for subsidence caused by historic mining operations. We have had many debates on that in the past. The argument has been, roughly, that it was always unfair that the National Coal Board, and now British Coal, should have financial liability for operations carried on by their predecessors. I know that that is a controversial area but the Select Committee should be congratulated on the other things it said and the way in which it has tried to seize what I would regard as a difficult nettle.
    I referred earlier to the change in the redundant mineworkers payments scheme, which is scheduled for withdrawal by the Government from 1 April 1987. The Select Committee has said that it wishes the Government to review that. That matter has been raised previously during debates on orders relating to redundancy and the Coal Board. It will be a litmus test for the Government to look at the recommendation and examine the evidence that led the Select Committee to make the recommendation.
    It is no secret that when the Government announced— one may say, timorously— that the existing scheme would end on 1 April this year, managers in certain areas of British Coal were boasting that, because the agreement was being terminated and because British Coal had already intimated that there would be an agreement that would be less financially worthy, they could close any pit in the British coalfield: when the men knew that the existing redundancy agreement was ending, they would decide to take the better of the two schemes. That is a hell of a way to run an industry.
    The Select Committee dealt with the financial burden of interest that British Coal has had to meet. That has had many airings in coal debates in the House. I am not sure whether the Under-Secretary of State has taken part in those debates, because he is fairly recent addition. It has been said many times in the House, and it is on record in Hansard, that we starved the coal industry of proper investment until 1974. I said that, in 1974, the undertakers were ready to take away the coal industry. Successive Governments have ploughed substantial investment into the industry since 1974. It has to be said that, as a consequence, it has been the policy of Governments to accelerate investment in the industry.
    The Select Committee highlights the burden of interest payments. For example, it mentions the £437 million in 1985–86. It recommends restructuring British Coal and, if necessary, writing down the value of assets in line with the revenue earning potential. It challenges with doubts British Coal's ability to break even financially by the end

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    of 1988–89. Those doubts are shared in many quarters. It asks for a reconsideration of the deficit grant payable. I do not know whether the Minister will respond to that today or whether the Government will respond at some later date, but those are items of tremendous importance and weight. The Government have to consider those recommendations, which could influence the future trends of what we should all regard as "our" coal industry.
    I shall be sketchy on industrial relations. Some comments were made on that in debates on the Coal Industry Bill this year. Part of the main thrust of that Bill was to give statutory rights in consultation and conciliation to the Union of Democratic Mineworkers. We tried to introduce a new clause, which in essence meant that all mining unions would get rights. We did not think that the Government had the prescription for better industrial relations. I see that the UDM rejected British Coal's wage offer and British Coal has produced a special issue of Coal News asking the members to vote against the union. It says that £10 a week is fair to everyone.
    We are entitled to ask hon. Gentlemen who have been so articulate—I do not quarrel with their articulateness—in defending the UDM, "Whose side are you on? Are you on the side of the membership or British Coal?" [HON. MEMBERS: "Democracy."] If one is on the side of democracy, one will be on the side of the men. It is unique in the history of industrial relations that British Coal should decide to issue a special four-page supplement to try to undermine the recommendation by the men's union in Nottinghamshire. That is important.
    The part of the Select Committee's report dealing with the structure and ownership of the industry is the least satisfactory in the report. It is riddled with political ideology. It is an attempt by the Government majority on the Committee to fit out the industry for privatisation. History and experience have been ridden over roughshod. Popular capitalism is supposed to be a different beast from the days of the old ruthless capitalist coal owners. History gives a catalogue of what was nothing less than callous brutality towards miners, their wives and children.
    I was pleased to read in the report that my hon. Friends divided the Committee on that matter. One aspect was safety. I remind the House that more than 53,000 miners have been killed in this century in this country's coal mines, and most of that slaughter took place in the days of private enterprise.
    Although we have some disagreements with the Select Committee's report, I repeat that we congratulate the Committee. To coin a pun, the report is a mine of information, which I hope hon. Members on both sides of the House will study from time to time.
    6.40 pm
    The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): When coal is the subject of debate, discussion is always wide-ranging and often controversial. This afternoon has been no exception. I have listened with interest and, in some cases, with incredulity to what hon. Members have said.
    As I believe hon. Members know, I have been taking every possible opportunity to visit British Coal pits all over the country. I look forward to a visit next week to Ollerton in the constituency of my hon. Friend the Member for Sherwood (Mr. Stewart). On those visits, I have spoken to
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    the men, to British Coal management, to representatives of all the trade unions, but in particular to the men working underground. I can tell the House quite categorically that men and management are in good heart. Morale is very high, with men and management looking forward with an optimism now based not on empty words but on solid achievements.
    My hon. Friend the Member for Havant (Sir I. Lloyd) speaks with a great deal of authority on these matters, not just because he has been a Member of the House since 1964, not just because he joined the Select Committee on Science and Technology as long ago as 1971 and then became Chairman of various important Sub-Committees, but because he has been Chairman of the Select Committee on Energy since 1979.
    My hon. Friend introduced the report constructively and positively, in the great tradition of reports of that nature and in the considerable tradition of Chairmen of Select Committees. I thank all those involved in the production of the report. However, I hope that my hon. Friend will not mind if I say that, on a preliminary view, I find myself in considerable difficulty following the train of thought behind several of the recommendations. That may be because
    This has been an interesting debate. The hon. Member for Rother Valley (Mr. Barron) has a considerable tradition in the industry. I think that he was with the National Coal Board, as it was then, between 1962 and 1983. I respect his views, but, in view of all that has passed between us, I do not think that he would expect me to agree with virtually anything that he said. However, some parts of his speech were constructive, notably when he talked about the recommendations.
    My hon. Friend the Member for Sherwood has established a reputation as one of the most articulate and able coal mining Members of Parliament. There are nine pits in his constituency, and I look forward to going underground with him next week, following our visit underground in his constituency at Blidworth and Bilsthorpe. He needs no lessons from anybody in the House about how to articulate most effectively the needs and wishes of his coal mining constituents.
    The hon. Member for Gordon (Mr. Bruce) said that during the strike there were elements in the National Union of Mineworkers that had to be defeated. I do not criticise him, but he was speaking on behalf of the Liberals and indeed the alliance as a whole in the debate, and I wish that we had had more support from the alliance in the difficult days of that dispute. He is right to point to the importance of alternative energy, but it was in the days of the Lib-Lab pact that we had the lowest expenditure on alternative energy research and development. During all those years it totalled merely £17 million. Now, under this Government, who came to office in 1979, the total is rising this year above £100 million.
    My hon. Friend the Member for Erewash (Mr. Rost) was an original member of the Select Committee in 1979. He reiterated many of his longstanding views. I pay him

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    credit for consistency if he will please give me the opportunity of continuing my disagreement with several of the things that he says.
    I am afraid that the debate took a downturn with the speech by the hon. Member for Bolsover (Mr. Skinner). Our debates used to follow the course that he followed this evening, but the usual coal war has ended and it seems that the hon. Gentleman is the last to realise it. I do not need to go further, however, because my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) destroyed effectively the hon. Member's arguments. I was glad that my hon. Friend the Member for Cannock and Burntwood paid tribute to Littleton and Lea Hall. He will know that I went underground at Lea Hall comparatively recently. The people in those pits have done a remarkable job to achieve above-average increases in productivity.
    The hon. Member for Pontefract and Castleford (Mr. Lofthouse) has a great tradition of experience in the industry. I think that he was a personnel manager with the NCB. He has been a member of the NUM, the British Association of Colliery Management, and the Association of Professional, Executive, Clerical and Computer Staff. I am sorry to have to tell the hon. Gentleman—it will not come as a great surprise— that I disagreed with much of what he said. He made several important statements about the finances of the coal industry. Just about all of them were wrong. I do not have time now to go through them individually, but I remind him that when British Coal moved into accounting deficit the deficit grant was introduced to deal with the problem. It had nothing to do with social grants.
    The joint understanding between British Coal and the Central Electricity Generating Board reflects movements in energy prices, especially international coal prices, and is not some sort of Government-inspired malevolence as the hon. Gentleman sought to describe it. The hon. Gentleman was wrong even about current events. The £95 million increase in the external financing limit will be reflected in higher grants, not higher borrowing.
    My hon. Friend the Member for Elmet (Mr. Batiste) has also established a reputation as a great protagonist for working miners, and has a depth of knowledge of coal mining that is the envy of many in the House. One of the tasks that he has always undertaken in these debates has been to identify militancy as the great enemy of the industry.
    The hon. Member for Normanton (Mr. O'Brien) was a longstanding coal miner. Indeed, I believe that he has been a member of the NUM since 1945. He told us that he would put the record right, and then proceeded to put the record wrong more than I can recall in the House for a long time. I tell him again that as the Minister proud to be responsible for the coal industry I never cease to congratulate men and management on productivity records. He wrongly represented what my hon. Friend the Member for Sherwood said.
    My hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown), who is always robust, continued his tradition by, as the newest member of the Select Committee, already speaking of his doubts about the whole Select Committee system. That is his prerogative. He established in his speech that he is a strong champion of coal and I recognise his interest and that of his constituents in the development of South Killingholme. I hope he agrees that that is more a matter for the CEGB.
    the Committee divided on certain portions with certain majorities in control at certain times— [Interruption.]—but I think that the hon. Member for Midlothian (Mr. Eadie) would criticise me if I did not make my feelings clear about the report. I saw the report only recently, at the end of February. Obviously, I want to study carefully, with my right hon. Friend the Secretary of State and my Department, all the facts and statistics, and all the recommendations.
    Mr. Geoffrey Dickens: Does the Minister agree that now that the mining industry has increased its productivity, is getting coal out of the ground at the right price and is becoming competitive with the rest of the world, that makes imports of coal less likely and assures the future of the mining industry? The industry has now justified capital expenditure on the mines, but has it not taken the defeat of a year-long miners' strike and the stupidity of Arthur Scargill to bring the industry to its senses?
    Mr. Hunt: There is a great deal in what my hon. Friend says. In a very short contribution he encapsulates many of the key points about the industry.
    The hon. Member for Midlothian has a great reputation spread over many years for service to the coal industry. To utilise a speech in this debate to seek to try to identify Nottinghamshire as an area where British Coal and the Government stand to be criticised is once again operating according to a Scargill brief. His speech was not the sort that he would have made under other circumstances. I know that he takes that as a compliment.
    Mr. Eadie indicated dissent.
    Mr. Hunt: The hon. Gentleman shakes his head. Other people do not take that as a compliment, and I am glad that he does not. He was very selective in his statistics. He talked about a reduction in the number of people working in the mines since 1970–74. He omitted to mention what happened when his Government were in power during the six years before 1970. In 1965–66, about 455,700 men were on colliery books, and by 1970 the number had fallen to 287,000.
    When the hon. Gentleman is giving statistics, he should do the House the credit of mentioning that his Government were responsible, through compulsory redundancies, for a reduction in the coal mining work force— men on colliery books— of approximately 180,000. I know that the hon. Member for Bolsover still worships the ground on which Arthur Scargill walks.
    Mr. Skinner: The Minister ought to do his homework. I have been in this House since 1970 and for many years before that I served in local government and in the union. Most hon. Members will know that I do not go in for worshipping leaders of any kind. I am more concerned about principles, and I shall stick to those. I am not prepared to bow down to leaders of any kind. I am not like the Minister who has to scrape and wipe clean the shoes of Madame Dross, the Prime Minister.
    Mr. Hunt: It is surprising to find that not only are the miners deserting Arthur Scargill in droves, but Opposition Members are queuing up to join them. The sooner the president of the NUM stops his articulate line of militancy the better it will be for the future of the industry.
    Mr. Skinner: Arthur Scargill is right.
    Mr. Hunt: The hon. Gentleman says that he is right. Only this week Arthur Scargill said:
    "Colleagues, I'm sick and I'm tired of listening to those apologists, those advocates of so-called 'new realism'. Their alternative policy apparently is the kind of thing that's taken place in Wales, it's to collaborate, it's to accept, it's to cooperate with the employer or the Government. Well, I wasn't elected President of this Union to do any of those things."

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    That is one of the most disgraceful things that I have heard from Arthur Scargill— and that says something. [Interruption.] The hon. Member for Bolsover agrees with him, but that only proves that what I say is true.
    Hon. Members spoke about morale problems in the industry. However, productivity records have been broken week after week and on the front page of Coal News I see the smiling faces of miners who are proud that they have joined the million club by producing a million tonnes of coal this year and are turning in record levels of productivity. I am proud to tell the House that we thought we had a productivity record of 3·68 tonnes. However the figure has been revised upwards and for the week before last coal productivity was 3·69 tonnes, compared with 3·06 tonnes for the same period last year.
    In the weeks to come I shall consider very carefully the Select Committee report. The Chairman and the members of the Committee would not expect me to give an immediate reaction to a carefully thought out report. I disagree with some parts of the report but I shall consider carefully all that it says. British Coal is now the lowest cost coal producer in Europe. It is absolutely vital that British Coal continues to make progress in cutting costs—given the competitive nature of the energy market. The turnround in British Coal's fortunes will take time, especially following the dramatic fall last year in oil prices and the CEGB agreement.
    The motion that we are considering demonstrates once again the Government's commitment to supporting British Coal through this necessary restructuring. The Government are seeking Parliament's approval to make a further £166 million available to the coal industry this year—£95 million in deficit grant and £71 million for the redundant mineworkers payments scheme. This brings the amount of Government support to the coal industry this year to a total of £1,380 million.
    This latest increase in the amount of grant paid to British Coal this year reflects the increase in the external financing limit— from £730 million to £825 million— announced in the House on 19 January. In the event, the market pressures on British Coal have continued into 1987 and it now expects its external financing requirement for this year to be higher than the limit that was set in January.
    British Coal has also said that it is having to look again at its external financing requirement for next year. When
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    Sir Robert Haslam, the British Coal chairman, has given my right hon. Friend his considered view, the Government will consider whether a revision of the external financing limit for 1987–88, presently £727 million, is necessary.
    My right hon. Friend today announced the objectives that he has agreed with Sir Robert Haslam. The basic objective of British Coal is that it should earn a satisfactory rate of return on its net assets and achieve full financial viability without Government support. That is vital not so much for narrow reasons relating to public expenditure, but because the future security of the industry depends on it being competitive.
    We believe that the industry can be a success. Sir Robert Haslam has committed himself to achieving break even in 1988–89 and thereafter looks to achieving full financial viability. Break even by 1988–89 is a tough target, but the Government and British Coal believe that it is attainable. Moreover, in future the industry's capital requirements will increasingly come from the industry's own resources rather than the industry depending on Government funds. By 1989–90 British Coal is aiming to reduce its operating costs by at least 20 per cent, compared to last year.
    Until such time as British Coal is ready to stand entirely on its own feet, the Government are committed to supporting the industry financially. The Coal Industry Act 1987 provides a further £200 million in deficit grant support and up to £750 million in restructuring grant support.
    In view of the shortage of time, I shall respond in correspondence to those hon. Members whose points I have not covered. I felt it right to give everyone possible an opportunity to participate in the debate.
    In the past two years the industry has gone through a massive process of restructuring. It has been successful in creating and establishing the basis of a stable, viable industry capable of offering long-term employment and contributing positive benefits to the nation. There will always be restructuring in an extractive industry such as coal. The important news is that we now see this vital restructuring coming to an end with a great future ahead for this magnificent industry.
    The debate having continued until Seven o'clock, MR. SPEAKER interrupted the proceedings, pursuant to the Resolution [9 March].
    Question deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of Estimates).

    Motor Vehicle Industry
    7.1 pm
    The Secretary of State for Trade and Industry and President of the Board of Trade (Mr Paul Channon): I beg to move,
    That this House welcomes the Government's approval of the Rover Group Corporate Plan; recognises the valuable contribution made by the vehicle industry, both United Kingdom and foreign-owned, to the United Kingdom economy; notes the important role of the United Kingdom component suppliers; welcomes the encouraging outlook for the future of the industry as a whole; and endorses the Government's policies to create the conditions for the long-term success of the industry.
    Mr. Speaker: Under the terms of the business motion passed by the House yesterday, we are to discuss at the same time the amendment in the name of the Leader of the Opposition, together with the third item on the Order Paper:
    That the draft Industry Act 1980 (Increase of Limit) Order 1987, which was laid before this House on 19th February, be approved.
    I must tell the House that very many hon. Members are anxious to take part in the debate, and I appeal for short speeches.
    Mr. Channon: Two motions are on the Order Paper for debate this evening—one relating to the motor industry in general, the other to allow an injection of equity into the Rover Group. I shall deal with both in my remarks.
    I welcome the opportunity to have a debate on the fortunes of the motor industry. In recent months the House will be aware that the focus of attention has naturally been on the affairs of the Rover Group, culminating in the statement on the group's corporate plan that I made last month. That has tended to obscure other significant and positive developments that have been taking place in the rest of the vehicle and components industries.
    First of all, I want to make clear—I am sure that the House agrees— that the motor industry, in its widest sense, is undoubtedly one of the United Kingdom's most important industries. It is a major contributor to the creation of wealth and employment, both directly and through the many supplying industries for which it is a customer. According to industry estimates, it accounts for about 600,000 jobs and represents some 2·5 per cent, of gross domestic product. Last year, its exports were worth nearly £4·5 billion—half from the components sector. The motor industry also occupies a very important place in the technological base of this country, both as a producer and customer. It has been in the vanguard of introducing new manufacturing technology, particularly robotics, and in investigating the potential of new materials such as ceramics.
    It is also an industry that has seen considerable change over the last eight years. Eight years ago, the car industry was in a terrible state. Its reputation throughout the world was one of strikes, bad industrial relations, poor productivity and poor quality. British Leyland appeared to the outside world to spend more time on strike than at work and was associated in the public mind only with the pictures on television of the bully-boy tactics of men like "Red robbo" at factory gate meetings. It was hardly any wonder that the most common advice that any potential car purchaser was given was, "Don't buy a British car."
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    As a result, import penetration of the British car market had been growing by leaps and bounds—under 30 per cent, in 1974 to over 56 per cent, in 1979.
    Most serious of all, the United Kingdom was no longer seen as a place where it was competitive to manufacture vehicles. That was the legacy of the 1970s— not an accidental legacy. Major investments were taking place abroad rather than in this; country. Tied imports by multinationals were growing, whereas these firms have recently been increasing their sourcing from the United Kingdom.
    The past eight years have seen a sea change in the industry's competitiveness— promoted and encouraged by the better climate for business that we have created. It is a dramatic example of the change that has taken place under this Government. It is no longer strike-ridden, paralysed by wildcat strikes and endless demarcation disputes. Austin Rover enjoyed over 99 per cent, strike-free working in 1985 and 1986. Similar improvements have taken place all over the industry.
    There has been an equally dramatic change in the industry's productivity record. With investment in new manufacturing technology and improvements in working practices, the United Kingdom is now on a par with the best and most efficient plants in Europe. As the professor of motor industry economics at University college, Cardiff has said recently:
    "Britain is becoming a highly efficient place to manufacture cars. The underlying productivity is as good as anything on the Continent".
    There is also a renewed recognition of the vital importance of quality for success in the market place. We have been particularly keen to emphasise that through my Department's national quality campaign. All manufacturers have greatly improved their quality performance. Hertz, the world's leading car rental company, has recently said that it now feels that Austin Rover meets the high standards it requires for its fleet in terms of reliability and value for money. It has placed a £36 million order with Austin Rover for 1987. Peugeot-Talbot's determination in this area has taken its Ryton plant to the top of the Peugeot Group's international quality league. Nissan consider that the quality of the cars produced at its new Sunderland factory is at least as good as in its equivalent Japanese plant. The component suppliers have also made tremendous strides in improving quality— as all the vehicle manufacturers will acknowledge.
    The Rover Group obviously occupies a central position in the United Kingdom vehicle industry. I have already told the House that the Government have approved the Rover Group corporate plan in full. That means that the Government have backed the strategy which the company's management, following a thorough examination, has formulated. It is a positive strategy for the continuation of Austin Rover Group as a major producer and leading exporter of cars made in Britain. An important feature in that strategy is developing the model collaborative programme with Honda with a new medium-sized car, the AR8. Austin Rover Group and Honda have both determined that their relationship should be a long-term one whose exact form will develop in the light of experience. The corporate plan also provides for a £200 million investment to take the new K series engine forward to full production. That is evidence of ARG's commitment to developing the small car range as a vital part of its marketing plan.

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    The sharper commercial approach of the Austin Rover Group is already showing up in increased fleet orders and in improved United Kingdom market share. In the first two months of the year that has been running at just under 17 per cent.— significantly up on the levels in the last months of 1986. The export performance will be further boosted by the American launch of the Sterling, and therefore Rover Group's prospects are encouraging.
    Mr. Anthony Beaumont-Dark: I have the genuine privilege of possessing one of the first Rover Sterlings in the country. I have had it since June and I have not had a moment"s problem with the car. Does my right hon. Friend accept tht the most important change that has taken place at Austin Rover is improved quality control, good labour relations and high quality? Having regard to my right hon. Friend's recent statement, and whatever the problems at Leyland Trucks—we all understand those problems—does my right hon. Friend agree that Austin Rover has a genuine, high flying progressive future that augurs well for the manufacturing and motor industries of the midlands?
    Mr. Channon: I agree with my hon. Friend. I have also had a Sterling for a considerable length of time and I endorse what he says. The importance that my hon. Friend attaches to quality and industrial relations are two of the key factors in Austin Rover's future success. With regard to the corporate plan, the Government have given the Rover Group what it asked for and it is now up to that group to win its share of the market place; I see no reason why it should not.
    Many hon. Members are interested in Land Rover. It is important, but I need not take up the time of the House in speaking about it in detail. The launch of Range Rover in the United States and steps to broaden the company's product base are key features in a strategy to take Land Rover into a position where it can successfully take its rightful place in the private sector.
    Many hon. Members are interested in the commercial vehicles businesses. We obviously have had to take into account the fact that the whole sector faces very difficult market conditions not just in the United Kingdom but throughout Europe. The sector faces massive overcapacity, low profitability and a fall in demand for commercial vehicles, especially in developing countries to which British firms had traditionally exported a significant proportion of their output.
    Throughout Europe, the response has been a mixture of rationalisation and increased co-operation. Following years of losses, General Motors has decided to cease production of heavy trucks in the United Kingdom. Iveco's French subsidiary has ceased truck production and last year Ford merged its truck operations with those of Iveco.
    I told the House on 19 February of the plans for Leyland Trucks, Freight Rover and DAF to form a new joint company. The aim is to create a single, strong European joint venture able to move forward positively in a difficult market.
    All right-hand drive trucks will be built in the United Kingdom, as will be the successful Roadrunner light truck which will be distributed throughout Europe. Freight Rover will continue to develop its van business in Birmingham, building on the opportunities of using
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    DAF's distribution outlets in Europe. DAF will manufacture medium and heavy trucks for left-hand drive markets. This new joint venture with integrated manufacturing and distribution facilities throughout Europe will enable Leyland Trucks and DAF fully to develop their business.
    While the combined company will be stronger, the market it faces will still be very difficult. Over-capacity in Europe has fallen, but remains a significant problem. The production levels of six or seven years ago were heavily dependent on markets outside Europe where demand is unlikely to recover quickly. Of course, I regret the closures of the Leyland engine plant and foundry and the Scammell works at Watford, and I am grateful for the constructive concern and great interest which my hon. Friends the Members for South Ribble (Mr. Atkins) and for Watford (Mr. Garel-Jones) have shown. With losses running at £1·5 million a week, rationalisation was vital if Leyland Trucks was to have a real future. I believe that the merger with DAF, which is itself profitable, can provide that future.
    I well understand concerns about the effect that this may have on the component suppliers in the United Kingdom. Rationalisation of Leyland was unavoidable. The joint venture with DAF will be reflected over time in changes in the components industry. But the opportunity to create a viable and secure truck industry in the United Kingdom which the merger presents offers by far the best prospects for the future of the components industry. I assure the House that the merged company intends to make significant and continuing purchases of components in the United Kingdom.
    Mrs. Ann Winterton: What figure can my right hon. Friend put on the percentage of components purchased in this country? What assurances has my right hon. Friend been given that this level will be kept to by the new Anglo-Dutch company?
    Mr. Channon: It has promised to purchase a significant amount of supplies from the United Kingdom. With the new opportunities available to the merged truck venture, the prospects for United Kingdom components suppliers are better than they would have been under an option which would have been extremely painful for the Leyland truck industry. It is up to components suppliers to deliver what the customer wants on quality, reliability and price.
    The House will recall the Government's intention to meet the debts and the cost of rationalisation of the Rover Group's commercial vehicle business. As I told the House on 6 March, these are now expected to total £680 million.
    The statutory basis for the injection of new Rover Group equity is the Industry Act 1980. Section 5 of the Act— I have tabled a motion dealing with this— places a limit on certain kinds of funding for ex-NEB companies which, for these purposes, means Rover Group and Rolls-Royce. The order which I laid in draft before the House on 19 February increases the limit from £4·4 billion to £5·25 billion. This increase will ensure the necessary headroom over the overall limit to permit the Government to subscribe for new equity in the Rover Group and, following the intention which I announced to the House on 18 December, in Rolls-Royce.
    Mr. John Smith: On a point of clarification about the writing off of the Rover Group's debts, what difference would this make to interest payments by Leyland Vehicles? The Secretary of State has

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    talked about losses. Many of the losses arise from interest payments. If Leyland Vehicles were not being disposed of, what would be the continued reduction, as a result of writing off the capital debt, in the amount that the company was losing?
    Mr. Channon: Clearly, there would be some effect. The debts and the cost of rationalisation are expected to be about £680 million. This aspect would have to be analysed in detail. It is difficult to get an exact picture of it. The right hon. and learned Member is on a good point. Of course writing off would make some difference to the debts of the truck company. It is necessary to write off the debts and the cost of rationalisation at this time so that the car business is not burdened with the debts of the truck business. I am speaking in shorthand, but that is the significant reason for the actions that I am recommending to the House.
    Mr. David Madel: My right hon. Friend has referred to General Motors' decision to cease manufacturing heavy trucks. General Motors still makes military vehicles for the Ministry of Defence. We in Dunstable are desperate to have that crucial order renewed.
    Mr. Robert Atkins: So are we.
    Mr. Madel: I know that. But we are desperate in Dunstable. I draw my right hon. Friend's attention to the fact that General Motors is still in Britain making military vehicles.
    Mr. Channon: My hon. Friend is perfectly right. Of course the company is contending with others for military orders. There is no reason to assume that it will not be considered seriously along with all other serious contenders.
    Mr. Kenneth Hind: On the point about Dunstable, I hope that my right hon. Friend is aware that the Leyland truck division is also keen to acquire part of the order for military vehicles and, through the Ministry of Defence, will compete vigorously for it.
    Mr. Channon: My hon. Friend is right to make that point. I agree with him, too. Luckily, I am not Secretary of State for Defence. Military orders are important to both companies. Both will be considered seriously. There is some movement by Scammell from Watford, which will have some benefits for Leyland, although it is regrettable for Watford. There is some concentration of the truck business in Leyland. I think that that will help meet my hon. Friend's point.
    I shall deal with the automotive industry as a whole. No one can doubt that, with the achievements of the industry in improving its performance and with the better climate for business which we have created in this country, the United Kingdom is once again recognised as a good place in which to manufacture vehicles. Major new investments are taking place or are planned. The multinationals are particularly prominent in this regard.
    Ford, for example, has announced plans to spend nearly £1·5 billion in Britain between 1986 and 1991 on its plants and the development of new vehicles and components. Last year Vauxhall spent £100 million on a new paint plant at Luton. It has already approved a £160 million investment programme between now and 1992,
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    with an additional £40 million to be spent on General Motors' United Kingdom component plants. Other projects are currently under consideration.
    Lotus has recently announced a significant expansion of its operations at Hethel. This will create more than 1,000 jobs over the next five years and involve an investment of £57 million. Peugeot-Talbot chose its Ryton plant as one of the locations for building the Peugeot 309. It is putting further investment into the plant to prepare it for the production of its new mid-range car towards the end of this year. And there is Nissan's decision to advance the start of full production at its Sunderland plant and build engines there £ a sure sign of its long-term commitment to manufacturing in the United Kingdom.
    All this increased competitiveness is reflected in improvement in the local sourcing of cars by the multinationals and by their increased use of British-made components. Ford is at present building more than 70 per cent, of its United Kingdom sales in its United Kingdom plants and these vehicles have a United Kingdom content of more than 80 per cent. Similarly, Vauxhall is now producing 70 per cent, of its United Kingdom sales here— up from only 45 per cent, in 1985. Although its United Kingdom content level is not yet as high as Ford's, it re-sourced over £100 million worth of components to United Kingdom suppliers in 1986 and it anticipates a similar performance this year. Nissan will also be a major customer of the United Kingdom components industry. It has said that at least 85 per cent, of the European Community content of its Sunderland production will come from the United Kingdom. This obviously reflects the increasing competitiveness of the components sector.
    I warmly welcome, as I am sure the House does, all these developments and we will wish to continue to encourage the multinationals to increase their participation and sourcing in the United Kingdom where they play a valued role in the economy not only as vehicle manufacturers but also as component producers. Dagenham is the centre of Ford Europe's diesel engine production. Ford is a major exporter of engines from the United Kingdom. In 1986, Ford produced 666,000 petrol and diesel engines in its British plants, more than two thirds of which were exported.
    More generally, every car built by Ford at any of its European plants will contain some British components. Similarly, General Motors also produces significant numbers of components here. Its AC Sparkplug plant at Southampton will supply catalytic converters for all GM's European assembly plants. Delco Electronics in Liverpool is producing liquid crystal display instrument panels for export to South Korea. The contribution of the multinational companies to the United Kingdom— in particular, their recently enhanced commitment— deserves proper recognition.
    The results of all these changes since 1979 are now starting to show through. Car production has picked up from the low levels of the early 1980s. In 1986, over I million cars were produced for the second year running.
    Import penetration has been stabilised. Last year saw United Kingdom production starting to recapture the home market. The share of the market taken by imports fell by two points to under 56 per cent. So far this year imports have taken less than half the market. This is an encouraging trend and one which should continue with improved local sourcing by the multinationals.

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    Export prospects are also improving, with companies re-entering former markets. Austin Rover's exports last year were 16 per cent, higher than in 1985. The Rover Group has returned to the American market with the Rover Sterling and the Range Rover— both of which have had an enthusiastic reception.
    Mr. Roger King: Is my right hon. Friend aware that, within 12 days of the Rover Sterling having been launched on the United States market, 1,043 cars were sold?
    Mr. Channon: Yes; it has had a very good reception in the United States of America. I hope that that initial success will continue and I see no reason why it should not.
    Peugeot-Talbot became in 1985 the first of the multinationals to restart production of left-hand drive cars for export to Europe. At the top of the range, Rolls-Royce is continuing its excellent export performance. Looking to the future, Nissan plans to export at least a third of its Sunderland production from 1989 onwards. And if Ford's Dagenham and Halewood plants can maintain their recent quality and productivity improvements, exports to the continent of 50,000 vehicles a year could begin in the early 1990s, with a gain of around 1,000 jobs.
    The success of Jaguar is a splendid example of the change in the fortunes of the motor industry. I have noticed that one or two Opposition Members try to ignore Jaguar, for it provides incontrovertible proof that privatisation works. [Interruption.] Yes, they have to heckle Jaguar, because they are jealous.
    The company's recently announced preliminary results show production up by 8,000 vehicles, or 24 per cent, since 1984, the year in which Jaguar was returned to the private sector. Over the same period, exports rose by 29 per cent, and after-tax profits nearly doubled, being up by 96 per cent. Productivity has also risen significantly but the company's success has led to the creation of more jobs. At the end of this year, Jaguar will be employing around 12,000 people as against under 10,000 in 1984. Jaguar's commitment to the British components industry also deserves praise. Its cars have a 90 per cent. United Kingdom content and Jaguar has done much to help improve the competitiveness of its suppliers.
    The problems of the vehicle assemblers in the 1970s have inevitably affected components suppliers. The necessary rationalisation that has taken place has diminished their British customer base. The regeneration of the car industry is therefore good news for the components sector as well. It should provide it with a more solid customer base. Also, components suppliers have begun to look with increasing success to overseas markets.
    When I read the Opposition amendment to the motion in the name of my right hon. Friend I was astonished. It refers to
    "the Government's neglect and indifference towards the motor vehicle industry in the United Kingdom".
    I remind the House that since 1979 this Government will have provided over £2 billion in equity support for the Rover Group. Even accepting the Opposition's irresponsible and profligate attitude to taxpayers' money, it is a curious definition of neglect and indifference.
    The motor industry in the United Kingdom is at last becoming a success story again. Hon. Members will have seen in the press recently the reports of all the companies.
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    The greatest threat that the motor industry could face is the election of a Labour Government. Quite apart from the disastrous effects on competitiveness of a return to the high inflation, high taxation and militant trade unionism which a Labour Government would bring, Labour's policy to switch from vehicle excise duty to an additional tax on petrol would add some 39p to a gallon of petrol, hitting the high mileage business and rural user.
    What do people think would happen to the car industry then? Selective import controls, as proposed by the Opposition, would be met by swift retaliation, just at the very moment when British exports are beginning to take off, while the hostile attitude displayed by some Opposition Members, particularly last year, to multinational manufacturers such as Ford and General Motors would jeopardise future investment in the industry in the United Kingdom.
    Over the past eight years, we have created the conditions which have allowed the motor industry to tackle successfully the fundamental problems which affected it in the 1970s and before. The industry is now in better shape than it has been for many years.
    A recovery is well under way in many sectors and a sound base has been established for the future. Our policies will enable the industry to build on this base and continue to improve its competitiveness. I look forward to the future of the car industry with optimism. With multinationals sourcing more in the United Kingdom, we can expect car production to increase and import penetration to decline further, and we can look for continued progress in recapturing export markets and increasing sales in Europe.
    I invite the House to reject the Opposition's sour and carping amendment, typical of a party in terminal decline, and to support our motion in the Lobby tonight.
    7.28 pm
    Mr. John Smith: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
    "condemns the Government's neglect and indifference towards the motor vehicle industry in the United Kingdom which has led to massive job losses throughout the country, severe damage to the industry and its components suppliers, and a serious deterioration in the balance of trade in manufactured goods; deplores the Government's dogmatic insistence that the Rover Group should be privatised as soon as possible instead of strengthening and expanding its crucial role as the only British-owned volume multi-product vehicle producer; rejects the proposed gift-wrapped surrender of control of Leyland Trucks and Freight Rover to DAF and requires the Government to renegotiate the transaction on the basis of a genuine joint venture with each party having a fifty per cent, interest; and calls on the Government not to proceed with the closure of the engine and foundry plant at Leyland and the closure of Scammell at Watford."
    I agree with the Secretary of State for Trade and Industry that this is a timely debate because important issues affecting the motor vehicle industry are under discussion and up for decision. But there is no blinking the fact that the years since 1979 have been years of retreat and difficulty for the British motor vehicle industry. Just as we have seen manufacturing industry as a whole decline— there is 20 per cent, less manufacturing industry today than in 1979—and just as we have seen our balance of trade in manufactured goods deteriorate so badly that we are for the first time in modern history in deficit, so we have seen the same process reflected in the motor vehicle

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    industry, which is an abosultely crucial part of British manufacturing industry. It is important not only in its own right, but as a source of orders for the British components industry. In more recent years, we have seen the brunt of the decline borne by the truck and bus part of the industry—both once vigorous and prosperous parts. They were so vigorous and prosperous that they took the car industry on their back during its difficult years.
    Despite the Secretary of State's attempt to present the British motor car industry as a type of paradise, the truth is that we have seen the complete end of General Motors heavy truck production at Dunstable. That company is one of the multinational companies, some of whose activities the Secretary of State praised, but I noticed that he did not say anything about it leaving heavy civilian truck manufacturing completely.
    We have seen Bathgate, once an important part of the motor vehicle industry, advertised by the Rover Group as a suitable site for a large retail shopping complex-that is a sign of the times. Of course, we shall discuss in detail the proposals for Leyland in relation to DAF which, as the Opposition state in our amendment to the motion, are a surrender to DAF of control of an important industry.
    The matter of commercial vehicles will be an important part of the debate, but before I deal with it, I shall refer to the Rover corporate plan. The motion asks hon. Members to welcome the Government's acceptance of the corporate plan. Those of us who have studied the corporate plan, which is available in the Library, will have noticed points about it that I wish to bring to the Secretary of State's attention. However, before I raise what I consider to be some problems relating to the Rover Group, or at least to the intentions that are disclosed in the corporate plan, I make it absolutely clear that Opposition Members wish the Rover Group every success in its drive to increase its share of the British domestic market and to reconquer lost domestic markets. I congratulate all those in the company who are involved in expanding sales on the European continent. We all know how important the successful launch of Rover Sterling is in the United States and how important and satisfying it will be for everybody involved in the company, not least those who depend upon it for their livelihood. The consequences of the Rover Group not being successful are horrendous in terms of jobs and the consequences for the motor vehicle industry and its components suppliers.
    Having said that, and wishing every success to the company and those who work for it in their drive towards increasing its share of markets, one is bound to notice some disturbing elements in the corporate plan. The first is the Government's dogmatic insistence that privatisation must be one of the principal objectives of the Rover Group. I should have preferred to see in the corporate plan an assertion that the major objective— indeed the overriding objective—is to strengthen and advance the expansion of the company and the industry. I fear that if privatisation is made the driving force behind the corporate plan, decisions may be taken to push it towards short-term profitability to justify its flotation and privatisation, and that might have long-term adverse consequences for the industry, particularly for its size.
    I refer to page 7 of the edition of the plan that is available in the Library.
    Mr. Steve Norris rose—
    Mr. Smith: I shall deal with two points and then give way to the hon. Gentleman.
    Page 7, item 2, of the corporate plan refers to an evolving product plan, which, over time, will move the business up market and into specialist niches. What does it mean? On the face of such elliptical phrasing, it is not clear what is intended. Is the intention to move out of the volume production of smaller cars and to what is sometimes called the BMW solution—that is, producing a smaller number of higher value cars? If that is the plan, it will cause great concern. It will mean a reduction in the number of cars produced. It v/ill have serious and obvious consequences for the people employed, and even more severe consequences for those who work in the component supplying industry. We are entitled to ask for more clarity about what is meant. Frankly, as it stands, the statement does not mean much at all. It hints at a possible way in which the company might go without saying precisely where.
    Mr. Norris: The right hon. and learned Gentleman stressed that the overriding concern of the corporate plan was privatisation. Of course, he knows that that is not so. Before the paragraph in the corporate plan that deals with privatisation, there is a clear statement that the overriding objective of the company is to restore profitability, and, through such profitability, develop self-sufficiency. Does the right hon. and learned Gentleman deny that the objective of self-sufficiency, regardless of one's views of the company, is of paramount importance?
    Mr. Smith: Of course we want the company to be profitable. Who in his right mind would not wish it to be profitable and successful? There is no denying that privatisation is regarded as such an important objective that, after the business objective on page 3 of the corporate plan, it is underlined as one of the group's objectives. It mentions the Government's commitment to privatisation—which, of course, the company, which is owned by the Government, accepts. It is reasonable to ask whether the wisest course to be followed by the Rover Group at present is to pursue a policy of privatisation. Opposition Members certainly do not think so. The overriding objective should be to strengthen the company, make it as effective as possible and to allow it its share of markets. I leave aside the matter of its ownership until success is achieved by the company.
    I hope that the Minister will answer the question about the so-called evolving product plan. The other matter that causes some concern—at least in the terms in which it is expressed in the corporate plan—is the relationship with Honda. The corporate plan states that there should be an increased recognition of the importance of Honda to ARG. Perhaps I look at words too closely. I am not sure whether that sentence means that we should recognise the obvious importance of it or whether increased importance is to be given to the relationship with Honda. It is certainly not clear from the way in which that sentence is phrased. Everyone could have an increased recognition of that importance without the importance being increased. I suspect that it is hinted that the importance is being increased.
    Opposition Members have always made it clear that we strongly support intelligent collaboration between self-standing equal partners. It makes common sense for the motor vehicle industry. If it is intended that there should

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    be a steady retreat of Austin Rover's influence and a steady increase in Honda's influence, it is quite different, and the House should know about it. On the whole, it would be better if corporate plans that are made available to hon. Members are phrased in a way that makes sense to those who seek to comprehend them. I cannot understand precisely what is meant by that part of the corporate plan. If the trouble is that it has been filleted so much before it has been made available to hon. Members, perhaps now and again we should get a fuller version.
    What has happened to the ARG project? It is not referred to in the plan. Is the Metro to be replaced, or is the project to be dropped? Is there merely to be a reskinning of the Metro? That raises questions about whether the product line will be adequately reinforced in future. I shall be grateful if the Minister will help us on such rather detailed but important matters about Austin Rover.
    Mr. Doug Hoyle: Has my right hon. and learned Friend seen an article in the 2 January edition of The Birmingham Post about the Metro? It states that the Government were so eager to hand over full information to Ford that it states that the
    "Department of Trade ad Industry allowed Ford to see the production costs for every Austin Rover model, showing that the cost of the Metro—which gives Austin Rover almost 40 per cent, of its sales— was £100 higher than the Ford Fiesta, giving Ford the edge in last summer's discount war. Ford was able to push discounting to the point where Austin Rover would have had to sell the Metro at a loss. Jean Denton, who was Director of External Affairs"—[Interruption.]—
    What are hon. Members worried about? Are they frightened by what is coming out? They should just listen. The article states:
    "Jean Denton, who was director of external affairs for Austin Rover, said …'This decision provided the opposition with all the information they would have given their eye teeth for'."
    Is my right hon. and learned Friend aware that the management was instructed to give that information by the previous Secretary of State for Trade and Industry, the right hon. and learned Member for Richmond, Yorks (Mr. Brittan)? Is it not a disgrace that a Government who wrap themselves in the flag are always selling patriotism short and that the previous Secretary of State for Trade and Industry sold the company short? Should he not be here to answer that charge?
    Mr. Smith: My hon. Friend must have anticipated that I was coming to the most important criticism that I have to make of the Government in relation to the Rover Group. How on earth can we trust the stewardship of the Rover Group to a Government who, only a year ago, were prepared to sell the whole operation to its group's principal competitor, Ford? That shows this Government's responsibility towards that important industry.
    The Government profess support for the company as presently constituted, but we must remember that a significant number of Conservative Members and the Government were prepared completely to abandon their responsibility for it. That was stopped because there was a campaign against it. The Government had to turn tail and abandon their plan. However, a great deal of commercial damage was done to Rover Group's profits
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    not only because of the uncertainty that was caused during that period, but because it is not quite clear— that is why the intervention of my hon. Friend the Member for Warrington, North (Mr. Hoyle) was so apposite—that a great deal of commercial information appears to have been given during the takeover discussions with Ford.
    My hon. Friend referred to Jean Denton, the director of external affairs. In The Birmingham Post she said:
    "I have always considered that handing over that information to a major competitor was even more damaging than the insecurity of customers during the merger talks. This decision provided the opposition with all the information they would have given their eye teeth for."
    If, as my hon. Friend suggested, that resulted from a Government instruction that that information should be given to a competitor, an even more serious charge is that the Government not only neglected their responsibilities in relation to the Rover Group, but that they helped one of the Rover Group's principal competitors to gain an advantage over it in the market place. At some stage I should like the Government to provide an answer to the very serious points that have been raised about their conduct during that period.
    I turn to one of the other very important issues that we are discussing—the Government's proposal to surrender control of Leyland to DAF. When the Secretary of State first came to Parliament some months ago, the proposal was that discussions should take place with Paccar on the one hand and DAF on the other. The question of an outright sale to Paccar was specifically mentioned by the Secretary of State, but the reference to DAF was in terms of a collaborative arrangement. Something quite different emerged from the discussions. When the Secretary of State made his statement it was presented as a joint venture. The Secretary of State has told us again this evening about an imaginative new joint venture between Leyland and DAF. From that, one would imagine that it will be a partnership of equals. Indeed, Ministers have appeared on television programmes in which they have drawn parallels between the Leyland-DAF proposal and the Anglo-Dutch Shell company.
    Mr. Norris: Why not?
    Mr. Smith: I shall tell the hon. Gentleman why not. In one case there is a partnership of equals. In this case— with one side having 60 per cent, and the other having 40 per cent.— the situation is quite different. If Conservative Members argue that one can have a 40 per cent, share and still be a real partner in the venture because one still has a significant minority shareholding, why is it that when one looks at the directors of the company one finds that that is not reflected in the same proportion of directors? The Secretary of State was asked several times about this when he made his statement. I asked him how many British directors of the joint company there would be. There was no response, for two possible reasons. Either the Secretary of State did not know, which is bad enough, or—perhaps even worse—he was ashamed to say. That obvious question was put, not once, but several times.
    We now discover that only two of the nine directors on the supervisory board are British and that only one of the eight directors on the management board is British. That is an amazing joint venture of apparently equal partners. It blows the cover and all the public relations puff that accompanied the Government's presentation. The truth is that Leyland Vehicles Ltd. has been handed on a plate to DAF.

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    Another test can be applied: how many job losses will there be in the Netherlands? There will be none. However, there will be considerable job losses in the United Kingdom. It is not, therefore, a 50–50 per cent. partnership. Our motion says that the Government should not renegotiate the partnership and move it towards 50 per cent. Our position has always been that British Leyland should stay British, in public ownership and wholly under British control. However, we have to accept that the Government have entered into an arrangement that will lead to a 60:40 per cent. divide.
    The very least that can be demanded is that the Government must make a reality of their profession of a joint venture arrangement and renegotiate the deal so that there is at least a 50 per cent. British interest. That is the Opposition's concession. It is a reasonable concession. That renegotiation should he in line with the Government's profession and with their future profession about the future sources of components. At the moment all we have from DAF is a bland promise about that question and about the disposition of products as between Dutch and British factories. The British ought to have an equal and an effective say.
    When the Minister of State replies to this debate I should like him to tell us what assurances of a binding character were obtained for the component supplying industries in this country before this deal was entered into. Many of those industries have a long-term commitment to Leyland. Cummins, for example, supplies engines to Leyland. The company is apprehensive that that order is now gone for ever and that its engines will be replaced by DAF engines. That ought to have been a material factor in the negotiations. The Government should not have permitted an arrangement to be entered into under which British components manufacturers would be prejudiced. The time to fix the deal was when the negotiations were entered into. If DAF had been genuine about its promise, it would have had no difficulty about entering into arrangements of a more binding character. However, this Government are prepared to take easily given assurances and bland promises instead of insisting upon the solid commitments that anybody with a sense of stewardship for the industry would demand.
    Why on earth should we give up 100 per cent. control of Freight Rover and include it in the DAF deal? It is a highly profitable and successful company. It is doing well in the market place. However, that 100 per cent. control has gone into the deal as a sweetener for DAF, because DAF would not enter into the arrangement unless it gained control of Freight Rover. It is a one-sided deal that was entered into by a Government who are negligent of British interests. It means that control of the last British owned heavy motor vehicle producer in the United Kingdom has passed to a foreign competitor. That can be seen in the composition of the board of directors.
    Is the Secretary of State honestly able to maintain that it is any sort of a deal when Britain has only one out of the eight directors on the key management board? Part of the sorry saga has been the proposal to close the engine plant and the foundry plant at Leyland. That causes very deep concern to those who work in the engine plant and in the foundry and also in the community that is so closely associated with the enterprise. I understand that concern is already being expressed by Leyland Vehicle customers that in future they may be unable to obtain the 400-series engine. Customers of the foundry are also deeply worried
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    about the future source of their components. Indeed. there is the serious possibility that many customers of Leyland vehicles will go abroad to find the components which used to be supplied by the Leyland plant.
    As the Secretary of State knows, the unions have stated their willingness to enter into discussions with the management. I believe that the Secretary of State had discussions with the trade union representatives on that point. They have suggested that they are prepared to take up any proposals that the management might put forward for putting the engine and foundry plants into the economic position required by the company. They were even prepared to consider quite substantial job losses, voluntarily, to maintain the engine and foundry plants. It will be a sad day when we see those two important plants close.
    The other victim of the Leyland-DAF deal is the Scammell plant at Watford. That closure is a wholly indefensible part of the arrangement. The Secretary of State often discusses the losses that have been made by Leyland Vehicles. However, it is interesting to note that when I asked him earlier what the difference would be following the write off, it was conceded that the losses would be much less after the write off had taken place. I was surprised that we did not receive that figure. We should be given it because it is highly relevant to whether this is a wise decision. As a result of the Government writing off the debt obligation, the losses would be much smaller. In that case, the matter takes on an entirely different light and needs to be reconsidered.
    I remind the House that between 1976 and 1986 there were only three years in which Scammell was in deficit. The largest loss came in 1986 with a loss of £3 million, which is a relatively small amount in the context of the industry. The projected loss for 1987 is only £1 million. Following the DROPS contract which Scammell secured, the company was calculated to have a secure arid profitable future for the period between 1988–95. The company has a superb record of labour relations. Only two and a half days have been lost in industrial disputes during 68 years of industrial activity.
    The loyal, dedicated and committed work force at Scammell supply important specialist vehicles for the Ministry of Defence. If it closes, we shall lose a major design and technical capability in the United Kingdom. To put it no higher, there is controversy as to whether Leyland Vehicles will be able to supply the range of vehicles for the Ministry of Defence, the components for which for many years it has relied upon Scammell to provide for example, tank transporters, crash tenders, RAF refuelling vehicles and other specialist military vehicles.
    Great expertise in military vehicles has been built up over the years at the Scammell plant at Watford and now that is to be thrown aside. Losses will also be sustained by the components suppliers such as Cummins and Perkins which will suffer as a result of the closure at Watford. Those who supply brake equipment, cabs and other parts of the plant will suffer from the closure. The decision to dispense with an effective and well functioning part of the British motor vehicle industry is an act of wanton destruction.
    In our contributions to the debate, we have all stressed the importance of the components sector. The Rover Group alone spends £2·38 billion each year with more than 2,000 British companies. That contribution is enormous.

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    It is of great importance to the question whether the Rover Group remains a large volume producer, producing in excess of 400,000 vehicles at present.
    The engineering director of Rover Group, Mr. Andrew Barr, stated in his evidence to the Select Committee on Trade and Industry on 18 February 1987 that if the group went out of mass production,
    "it would have a dire effect on the components industry."
    That is why the size of the Rover Group and the loss of control of Leyland is so important to the components industry when we are losing not only markets but the capacity to decide who will source the products that the industry produces.
    Instead of the sunshine picture that the Secretary of State sought to portray, we see an industry which is in grave difficulty and in which we are losing important capacity, jobs and market share. That will have a domino effect throughout the component sector.
    There is still time for the Government to make it unequivocally clear that the Rover Group will stay in volume car production, and to make sure that that is written into the corporate plan and that that is an objective of the company's owners—the Government.
    There has been too much retreat in the industry and the notion that the Rover Group should enter into the so-called more profitable niche of the higher value-added car, and abandon or greatly diminish its production of the others, is simply not tolerable. It is difficult to discover the company's plans in that respect. However, it is legitimate for the House of Commons and even more important for the Government to make clear where they stand on that important issue that is so crucial to the future of the group.
    There is still time for the Leyland-DAF deal to be renegotiated and for the Government to insist on a proper 50:50 partnership that would give some reality to the notion of a joint venture. There is still time to negotiate the future of the engine and foundry plants. Especially in the light of customer pressure, there is still time to decide that it will be deleterious to the company to lose those facilities. There is still time to stop before that happens. Co-operation with the work force could bring forward a new survival plan for the engine and foundry plants at Leyland. There is still time to stop the wanton destruction of the Scammell plant at Watford.
    When one considers the realities of the matters that we are discussing today, one can see why the Secretary of Stage painted a wholly one-sided picture of the motor vehicle industry. We are all committed to its success. It is too important for us to take any other position and we are wholeheartedly behind its future success. However, we should like far more care to be given to safeguarding its future and maintaining the British element of an important British industry.
    7.56 pm
    Mr. Robert Atkins: As the hon. Member for Leyland in the constituency of South Ribble, I shall confine my remarks to Leyland Vehicles Ltd. in its twofold role of Leyland Bus and Leyland Trucks.
    There is not time to rehearse again the history endured by Leyland Vehicles in recent years. Many hon. Members take an interest in these matters and will be readily knowledgeable about the problems. Suffice it to say that, as my right hon. Friend the Secretary of State for Trade
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    and Industry has said, through the taxpayer the Government have invested about £2 billion in the company since 1979.
    However, there have been problems of product, market place, industrial relations, productivity and a variety of other difficulties with which we are all too familiar. It must be said that the blame for that has lain as much with the management over the years as with the work force, whether it has been a lack of communication, policy changes or industrial relations. In recent months and years, the employees of Leyland have done their bit to make the company more successful. With cause, they are tired of continuous change, of being the butt of music hall jokes and of an uncertain future.
    I shall deal briefly with Leyland Bus before talking about the main problem of Leyland Trucks. Under the management buy-out that is shortly to be completed, Leyland Bus is making good progress. I supported the management buy-out as the best available option and I continue to do so. I hope that as Ian McKinnon, George Newburn and the others who are running the company get more involved in its operation, they will involve the employees more than perhaps has been the case in the past.
    I am especially delighted to welcome—I gather that it is not yet been absolutely confirmed— the fact that Leyland Bus has obtained a new order from the Kowloon Motor Bus Company in Hong Kong for 110 buses. That is a great tribute to the company's work. Hon. Members, especially my right hon. Friend the Secretary of State, will know how hard we are still working to pull something out of the bag in Thailand and how important that is. The difficulty is that Leyland Bus makes large buses and the market has been increasingly for small buses because of deregulation. However, deregulation has provided what the public has wanted. It is sad for many people in my constituency and elsewhere that Ribble Buses now operates Mercedes buses whereas in the past it operated Leyland buses, but deregulation has saved the ratepayers of Lancashire county council nearly £6 million a year in subsidies, and that must be recognised.
    Under the package that Leyland bus is trying to put together with Lancashire Enterprises for a retraining operation, the European social fund, which matches the money that the Government provide, has said that it will provide substantial sums. I understand that the Government are normally expected to reduce the bids that are submitted for matching funds from the social fund—that is called a policy of linear reduction—because, inevitably, far more companies apply than there is money to go round. Normally the reductions are of 40 per cent. to 50 per cent., and no exceptions are ever made. Therefore, I am particularly delighted that I have been able to meet the deadline of 12 o'clock last night and to persuade my right hon. and learned Friend the Paymaster General to agree to a reduction in the linear reduction from between 40 per cent. and 50 per cent. to only 20 per cent. He has agreed to do that because of the exceptional circumstances confronting Leyland Bus in the town of Leyland. I am delighted at that good news, which is subject only to confirmation by the European Economic Community social fund. It demonstrates that the Government are prepared to listen when a local Member puts a case to Ministers.
    I wish to deal with the particular problems of Leyland Trucks. In recent years Leyland Trucks has achieved more success than for many years. It now has the largest United

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    Kingdom share of the truck market. That is evidence of a good product, a good design, of the fact that the work force has put its back into the job, and of improved productivity. Nevertheless, the problems of falling export markets, substantial losses, over-capacity in the European and world truck market and, above all, the need for reinvestment must be faced.
    I shall look at the facts of the Leyland-DAF deal, first, in terms of over-capacity. My hon. Friend the Member for Bedfordshire, South-West (Mr. Madel) knows only too well the problems that have confronted Bedford Commercial Vehicles Ltd. because of the difficulties of the market. Leyland Trucks has also faced those problems. There are more trucks being made than there are people prepared to buy them. The losses generated in the past few years are familiar to all hon. Members, particularly those who take an interest in these matters. My constituents associated directly with the company, as well as those who are not, understand only too well that these losses cannot be allowed to continue. The company is haemorrhaging cash to the extent of £1·5 million a week and that cannot continue.
    The alternative options to the Leyland-DAF deal are worse than the deal. On the information provided to me, I am convinced that if the Leyland-DAF deal does not go ahead the Rover Group will he forced to reduce further the number of jobs in the short term and to close the company in the long term. I am not prepared to tolerate that.
    Taxpayers—and that means all of us—have invested substantial sums in the company. I know that no matter how committed and understanding my constituents are about the problems of Leyland, even they would be pushed to agree to invest more funds in the company. We may regret that fact of life, but it is, nevertheless, a fact of life.
    DAF is known to Leyland Trucks. All the reports I have suggest that the present operation with DAF is extremely successful. People like DAF, the trucks and the arrangement. Everything is going well. DAF is not unfamiliar. The DAF deal will provide more export outlets both within the EEC and in other parts of the world over and above the existing outlets that Leyland has in the Third world and Africa. DAF will put in £150 million of reinvestment.
    Nevertheless, my overriding anxiety, and I suspect the anxiety of all hon. Members, whatever their view, is that many people will lose their jobs. That is intolerable and frightful under any circumstances. However, the redundancies will take place over a long period and the settlements are exceptionally generous. I know that the Department of Employment, both locally and regionally, is doing all it can to provide facilities on site for retraining, job hunting and all its other undertakings. That will be small help; it is not a substitute, but it will help in some way.
    We shall also see the continuity of the design centre and LAPland as the Leyland assembly plant is known in my part of the world. It is an important, modern, efficient operation. There may be reductions in the work force, but essentially the future for both those areas is as strong as it ever could be.
    Finally, we are being offered the chance of a flotation in two or three years' time on the Dutch and United Kingdom stock markets. I have a commitment from my right hon. Friend that he will encourage DAF and Leyland to ensure that employees get a fair crack of the whip.
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    Those are facts of the deal but several questions must be asked on behalf of my constituents and others. But, first, I pay tribute to my right hon. Friend the Secretary of State, my hon. Friend the Minister of State and his predecessor my hon. Friend the Member for City of Chester (Mr. Morrison) who have been extremely tolerant of the delegations that I have been able to bring. I pay great tribute to the leaders of the trade unions locally who, while understandably frustrated, uncertain and worried on behalf of their members, have on numerous occasions, in rational, reasoned and tolerant ways, put forward their ideas about the future. Their members owe them a great. tribute for what has been done on their behalf.
    Members of the council across the political divide have come to see Ministers and have been heard. That is all to the good. Hon. Members will know that I have asked questions, deposited petitions and made as much noise as I often do about matters relating to my constituency.
    The nub of the problem is the 50:50 split to which the right hon. and learned Member for Monklands, East (M r. Smith) addressed his remarks. It is suggested that I am opposed to such a split and actively favour a 60:40 split. That is not true. Obviously, I would prefer an equal merger and I said so in December when the statement about talks with DAF and Paccar was made. But the company's negotiating position is not strong. My investigations arid discussions with senior management and Ministers show clearly that the original split was more likely to be 75:25 and that the pressure from Ministers and others led to a change in the proportions. In addition, the proportion of the two companies' assets is now 60:40. DAF would not accept anything less. Perhaps in reply my hon. Friend the Minister will confirm that, broadly speaking, that is the position. In those circumstances, I have supported a 60:40 split rather than raise false hopes of anything else. Surely that must be prudent on behalf of one's constituents.
    I agree with the right hon. and learned Gentleman that the two-level board split is unsatisfactory and I invite the Government to press more strongly for a fairer split of the board. If DAF is worried about having a majority, the difference between one, two or three out of nine will not make any difference. Therefore, I hope that it will consider that carefully.
    There is a problem with the engine plant. Where will the DAF engines come from? What will Leyland Bus do, because it uses the TL 11 and wants to continue doing so? I hope the possibility of some sort of limited manufacture of the TL11 engine, to name but one, can be put together in the interests of Leyland Bus and others. I am doing what I can to assist that and it may be possible, but I put it no higher than that.
    I am also worried about the pension fund. In a recent letter I raised the problem about the constitution of the trustees and who was responsible with Mr. Graham Day, the chairman of the company. He wrote back on a number of points, but he concluded his remarks by saying:
    "Details of the structure of and the trust deeds of a new Leyland DAF scheme are not yet available."
    I appreciate that there are problems, but we need to know, as soon as possible, on behalf of those who are involved, that their future, in terms of the pension scheme, are secure.
    Fourthly, there is the problem of communication. Hon. Members will know that I have raised on numerous occasions, privately and publicly, my concern about the poor quality of communications in the company. There is

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    no need to go into the reasons for that; it may be something to do with constant management changes. Trade union leaders and representatives at all levels, no matter what their political or industrial persuasions, say that communication could and must be improved. Therefore, I was delighted to read a report in The Guardian last Thursday in which Mr. Frank Sweens, DAF's director of social policy and a member of the company's executive board, said:
    "DAF … would like to introduce new industrial relations procedures into Britain.
    These could revolutionise some practices and eventually involve several works councils, elected by employees, with guarantees of access to management at regular meetings."
    It must be said, to those who understand these matters, that in Holland the standards of employee-employer relationships are better than almost anywhere in the world. We can learn from that. Mr. Sweens goes on to say:
    "I can understand why workers are still worried—that if things go bad, they fear we would bring production back to Holland. But that is not logical. No company is willing to destroy that capital and we do not have the capacity in Holland. We intend to grow and make profits."
    There is hope. I and my hon. Friend the Member of the European Parliament for Lancashire, Central (Mr. Welsh) share the prospect of going to Eindhoven, seeing the chairman of DAF and discussing some of the points that he raises and that I have raised. I hope that that will go some way towards demonstrating my commitment and concern on behalf of my constituents.
    Fifthly, I keep pressing the Government—I hope that they will react to that pressure— for much more competitive finance for export deals. That is a continuing problem, and something that we need to develop. We talked about the Thailand deal and how much was done, although we do not yet have the order. That demonstrated that we can put a package together. We need to examine whether we can do that more frequently and more effectively. Those are the questions that need to be answered.
    I shall now say a word or two about the Opposition. I resent the suggestion that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) made in the House some months ago, that the General Motors deal was a plot devised by Conservative Members and others to do Leyland down. I must tell him, in his absence, that many of my constituents now feel that the General Motors deal might have solved matters. I recognise the problems that are facing General Motors and my hon. Friend the Member for Bedfordshire, South-West, but that is as a result of things that happened some time ago. The right hon. Gentleman and his allies have a lot to answer for. Many of my constituents feel that most strongly, and they are not all Conservative supporters.
    I object to this inherent talking-down of the north-west. We have a devil of a lot going for us. Leyland, despite what anyone else may say, is not a one-industry town. It is part of the constituency and borough of South Ribble, where there is a devil of a lot going on, whether it be Baxi, which makes fires and is taking on new people, British Aerospace, the most successful aerospace company in the world, or smaller companies such as Norlec, which is expanding and developing all the time. It was announced the other day that British Car Auctions at Walton Summit is about to expand its operations because it is so successful.
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    There is a lot of good news, and talking down the north and north-west does not help other people to understand how important that area is. I could accuse the Opposition— particularly in view of the vast numbers who are present tonight—of being a little two faced. I heard an Opposition Front Bencher say, "Could be better, this deal, but I am not complaining." He would not admit that publicly, but he said it privately. I have a great deal of respect for the right hon. and learned Member for Monklands, East—[Interruption.] It was not he who said it. I shall not deploy that now the hon. Gentleman to whom I refer knows who he is. I have evidence which I will show if necessary.
    The right hon. and learned Member for Monklands, East speaks with authority on these matters in the Labour Party. He should be providing more leadership and guidance to those who need it in this difficult time. Instead of many Opposition Members using cheap slogans, which do not address the problems and which mislead people, we need to talk about and understand the problems and guide the people who, understandably, are angry, frustrated and depressed.
    With regard to the Labour Party, one expects that point of view, but what I object to extremely strongly is the attitude of the Liberal party. It is two faced. The hon. Member for Yeovil (Mr. Ashdown) said in December how keen he was on the DAF deal. The hon. Member for Gordon (Mr. Bruce), in his absence, when my right hon. Friend the Secretary of State made his statement recently, said that he was in favour of the Paccar deal. On a number of matters he was inaccurate. He said that there was a plant in Lancaster. My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) will be delighted to learn that, but there is not one. The hon. Gentleman suggested that there would be 20,000 job losses, and that all the jobs would go to Holland. He was wrong and should have the grace to admit so. He has been inaccurate and his scaremongering has been a discourtesy to my constituents and to the House. However, we have come to expect that of the Liberal party. It will jump on any bandwagon which is going in any direction as long as there is a future in it for it.
    Mr. Malcolm Bruce (Gordon): Will the hon. Member acknowledge that in the early reports of the proposal we were hoping for a joint venture, which was a 50:50 split?. The 60:40 split required some consideration. Will he further acknowledge, therefore, that the consequences of the loss of control to Holland has led to a situation where, according to some people in the trade unions, the Dutch Government have said that there will be no redundancies in Holland, even if there are redundancies in the United Kingdom? Does the hon. Gentleman believe that that is within the spirit or legality of the treaty of Rome, and does that give assurances for the future?
    Mr. Atkins: I shall quote, from Hansard, the words of the hon. Member for Yeovil. He did not mention a 50:50 split. He said:
    "Does the Minister accept that, of the two options before us, the DAF option is preferable?—[Official Report, 2 December 1986; Vol. 106, c.765.]
    I shall need notice of an examination of the treaty of Rome, since I do not pretend to be a constitutional expert, and I am not prepared to make an off-the-cuff judgment. Perhaps I could write to the hon. Gentleman, as Ministers often say.

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    Leyland Trucks has hit rock bottom. Many expert commentators in the industry, and outside it, reckoned that this had to happen. A prominent sales director, the chairman of the Leyland Truck Distributors Association, has described what is happening, in the context of the Leyland-DAF deal, as excellent news. That is someone who knows the market. He understands the problems and he has made it quite clear what his view is. Having said that, for too long the employees have been pushed around, morale has sunk to rock bottom and they are uncertain of the future. This is a lifeline, perhaps the only hope for a brighter future. I do not accept that there is an argument for delay, which has been advanced by some hon. Members. The losses will continue, the market place will not improve, and who will pay?
    Mr. Ken Eastham: I come from the engineering industry and I often hear, from Government Benches, about losses and taxpayers' moneys. I wish, on occasions, that Conservative Members would have the same concern when it comes to farmers and the massive subsidies that they receive from the taxpayers; evidently they can put into storage all kinds of food which cannot be consumed. Will the hon. Gentleman justify that, because he says that we can no longer afford to do that for industries such as engineering? What is the hon. Gentleman's attitude to other industries besides engineering?
    Mr. Atkins: You might draw me to account, Mr. Deputy Speaker, if I were to venture into an agricultural debate.
    Mr. Eastham: Answer the question.
    Mr. Atkins: I take the point. I do not wish to develop this at length, but the hon. Gentleman might be surprised to know that I have some sympathy with his point of view. I know that my right hon. Friend the Minister of Agriculture, Fisheries and Food is seeking to address that problem at this very moment. He is having great difficulty because the farming community is understandably concerned about its future, and we must recognise that as well.
    I recognise the understandable concern, depression, frustration and anger of many of my constituents who work at Leyland Trucks, and it is because of that that I shall support the Government tonight, not because the Government have told me to. I am not so important that one vote matters either way and I am sure that Ministers would understand if I felt that I had to vote against the Government tonight. But the House knows full well that I am not frightened of fighting my corner, and I defer to no one in my support for British industry and for the industry in my constituency. I shall vote for the Government's motion because, having examined all the options to the best of my ability, I believe that the DAF deal holds out the best prospect of survival for the longterm future of the trucks division.
    The most important relationship of a Member of Parliament, after that with his maker and his wife, is that with his electorate. In my party a Member of Parliament is not a delegate, mandated to vote certain ways on difficult issues, but, none the less, we must justify our actions to those who put us here when the election comes. It is very easy to be a populist of Left or Right to take the easy option in the belief that one's constituents will regard
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    one in higher esteem. We are all guilty of that to some degree, but there comes a time when one must make a judgment, take a stance, give some advice. One gives the advice that one thinks is right and one must rest on the consequences. That I have tried to do throughout the past few days, weeks and months. I rest on that, and I am prepared to stand by it now and whenever.
    8.21 pm
    Mr. Ian Wrigglesworth: Three shop stewards from my constituency have visited the House today and we have been involved in discussions in an effort to keep another engineering plant in my constituency from going broke and out of business. Like other hon. Members who represent northern constituencies and who have had a series of such meetings over the past few years, I have sympathy for the constituents of the hon. Member for South Ribble (Mr. Atkins) who will be made redundant. I join in the tribute to the work force at Leyland for the way in which it has succeeded and has improved the operations there over recent times.
    However, when the hon. Gentleman bewails and acknowledges the mismatch between the capacity in the truck industry and the size of the market for trucks, I must tell him that his Government have played a part in bringing that about. One of the reasons for the massive over-capacity in the truck industry, as indeed in many other industries, is that over the past seven or eight years Britain has faced a severe depression brought about directly as a result of the Government's economic policies. If the Government had pursued different economic policies and had been prepared to co-operate internationally much more, we might not have seen such a substantial depression in the truck market which has led to the massive over-capacity to which the hon. Gentleman referred.
    I share with the hon. Gentleman and with the right hon. and learned Member for Monklands, East (Mr. Smith) some of the anxieties and the desire to have answers to some of the questions about the deal with DAF. I too would have prepared a 50:50 deal between Leyland and DAF. I cannot understand why, when there is a 60:40 deal, only two directors are on the board. If there were to be 40 per cent. share ownership, one would have thought that at least 30 per cent.—three of the nine directors—and possibly more, would have been representing Leyland on the board. The Minister must reply to those points and explain why there is such a small representation on the board of directors and the management board.
    I should also like the Minister to respond to questions that have been asked about the position in some of the subsidiaries and other parts of the enterprise, particularly that in Watford, which has been devastated and completely closed down as a result of this proposal. The right hon. and learned Gentleman asked about military vehicles and there is considerable anxiety about that matter. I should like the Minister to tell the House not only whether there were adequate consultations within the company, which the hon. Member for South Ribble has just raised with him, but whether there were any consultations with the Ministry of Defence about the implications of the closure of the Scammell plant before the decisions were taken. How will the vehicles that Scammell has made for years now for the Ministry of

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    Defence be replaced? They are of vital significance and the Minister must tell the House exactly what will happen to those supplies.
    The hon. Gentleman mentioned consultation within the company. I am pleased that he referred to the quotation from the personnel director of DAF. One of the major successes of recent times, which the Secretary of State rightly mentioned in his opening speech, is the improvement in industrial relations within the motor car industry. The Secretary of State referred to the Labour party's amendment to the Government motion, but he did not refer to the amendment in the name of myself and my hon. Friends in which we have retained some of the words in the Government's motion.
    The Government are right to acknowledge and pay tribute to the improved industrial relations, and to recognise the valuable contribution made by the vehicle industry and the component suppliers. They are entirely entitled to that, but it is not sufficient just to say that. Improvements having been made on the industrial relations front, a further step remains to be taken to get to the position outlined by the director of DAF which his company wants to see within the new combine. Those are the sort of industrial relations that we should be importing from Europe. If the hon. Gentleman believes that those are the sort of industrial relations that should exist within British companies, I cannot understand why he supported his Government in opposing modest proposals such as those contained in the Vredeling directive and the fifth directive for the introduction of such industrial relations into British companies.
    One reason for our not being opposed for ever and a day to the Rover Group remaining in the public sector is that we want to go further than that. As well as good industrial relations within the organisation and participation we want to see employee share ownership within the company. That obviously cannot be achieved unless the company is returned to the private sector.
    Mr. Michael Fallon: Before the hon. Gentleman leaves that point, will he clarify it, because I am not sure that I heard him correctly? Is he stating that it is alliance policy that the Rover Group as a whole should be privatised? Is that the alliance position?
    Mr. Wrigglesworth: I will come to the alliance position in a moment. That position is outlined in the amendment that we have tabled to the Government motion. The Government are obsessed by privatisation which is diverting the management and work force of the company from the primary objective. Indeed, the hon. Member for Oxford, East (Mr. Norris) stressed that point when he intervened in the speech of the right hon. and learned Member for Monklands, East. The primary objective is to make the company profitable and successful, to regain market share at home and abroad. When it has been profitable for five years, we can have the luxury of debating how and when the company should be privatised. We must keep the objective firmly in our sights of making the company profitable and ensuring that it is sustained in profit for some time. We can then worry about the ownership of the group.
    Mr. Richard Page: Will the hon. Gentleman give way?
    Mr. Wrigglesworth: No, because many other hon. Members want to speak.
    The alliance has consistently backed the long-term strategy of the company. We have welcomed the collaboration with Honda. I believe that that collaboration with Honda is one of the most important keys to a successful future for the Rover Group. That is so important because it provides the Rover Group with access to the Pacific basin and to the skills and technology available in the Honda group. In the long term, it will provide a firm basis for the Rover Group to continue as a volume car producer.
    It would be difficult for Leyland to sustain that position on its own. Honda is of a size which makes the partnership a partnership of equals, one which I believe can and should be sustained and improved and will grow closer over the years. It is therefore most regrettable that its progress was impeded by the discussions which the Government initiated with Ford over the future of the Rover Group.
    It is not surprising that Honda wonders about the Government's commitment to the future relationship when it finds that the Government have had discussions with Ford about selling the business to that company. Not only did that impede the growing relationship between Honda and the Rover Group; it created great uncertainty in the market place and among the dealer network which is such a key part of the future of the Rover Group.
    The company's achievements in recent years have been considerable. Productivity has now risen to levels comparable with European plants. Quality has improved, with warranty claims being cut by half in the past four years. Absenteeism is now below the industrial average and the industrial relations climate has improved to the extent of a two-year pay deal aimed at harmonising blue and white-collar conditions of work and last year was a strike-free year.
    Last Wednesday I visited the Cowley plant and looked at the technology which has been introduced there, which matches the technology being operated at Longbridge. There is no doubt that the country can be proud of the company. The investment has been very successful and performance is now being achieved in the plants which matches the best in the world. There is still room for further improvement, but remarkable progress has been made.
    For the past three years, until the writing off of the £750 million Leyland Vehicles debt, the company has received no financial assistance in the form of loans or equity. The downside is that the Rover Group's production has fallen to 410,000 vehicles in 1986 from 611,000 in 1978. Its market share fell from 17·9 per cent. in 1978 to 15–8 per cent. in 1986. That figure has now improved and that is very welcome. I congratulate the company on pulling back those figures. Operating losses have occurred in every year since 1981, except 1983. The loss for the whole of 1986 is expected to be about £120 million.
    With the model range begun in the late 1970s now complete, the company badly needs resources to fund a new model range. Clearly the resources are unlikely to come adequately from profits. Instead of rushing to divest the group of many of its activities to speed privatisation, the Government should have backed professional management and a highly skilled work force with a commitment to a future model programme which gave

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    certainty for a long enough period to ensure that the company could build on recent successes and return to substantial profits.
    The decision fully to fund the AR8 and the detailed agreement with Honda on the models being produced with that company are welcome. However, it will be important to monitor the level of United Kingdom content in those models. The company claims that the content at present in the Rover 800 model is 85 per cent. measured by ex-factory prices. It has stated that its aim is to achieve EEC content as close to 100 per cent. as possible. Clearly it is in the interests of this country that the components are sourced as far as possible from suppliers in the United Kingdom.
    The postponement of a clear decision on the Metro replacement—the AR6—is more worrying. Although the Minister referred to the investment of £200 million on the K series engine and related gearbox developments, there is no clear commitment in the corporate plan about the Metro replacement. As the right hon. and learned Member for Monklands, East said, there is a danger and fear that we may see a reskinning of the Metro rather than the development of a new model.
    The Times motor correspondent on 10 February suggested that the company had cut £80 million from the estimated £250 million invested in the new model. If the decision on the small car replacement is taken too late and a mistake is made once again of soldiering on with an outdated small car range, including the reprieve of the Mini, which is now 30 years old, there will be too great a dependence on Honda in the relationship.
    Even with the booming domestic car market, the prospect of the Rover Group achieving an early increase in market share is clearly limited. With Ford increasing production from 380,000 to 450,000 by 1988–89, Vauxhall increasing from 220,000 to 300,000 and Nissan building up to 100,000 by 1991, the Rover Group is clearly operating in a very tough market. Although there is a welcome buildup in the number of British-built cars to be sold in the United Kingdom, the future of Rover remains clouded. I hope that when the Minister replies he will give a commitment to the long-term support of the company's plans so that it can edge back its markets share in the face of that competition and ensure that it becomes profitable for some years to come.
    The decline of the motor industry generally lies in many ways at the heart of the massive deterioration of the manufacturing trade balance which the House of Lords Select Committee on Overseas Trade identified in its report in 1985. Of the turnround of nearly £12 billion between 1978 and 1984, some £3 billion was accounted for by motor vehicles and components. That is a substantial part of the turn-round in the balance of payments deficit in manufactured goods. Clearly, that has been caused, to a considerable extent, by the economic policies pursued by the Government in their early years of office from 1979 to 1981 when there were crippling exchange rates and high interest rates which have been sustained since then. Those are an enormous burden on industry and especially on the motor car industry.
    The Secretary of State rightly paid tribute to the success of Jaguar. However, there is no doubt that one reason why Jaguar has been so successful is the advantage that it has obtained on the exchange rate balance with the United
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    States. The relationship between the dollar and the pound is giving the company an edge in United States markets that has helped it to be successful.
    As well as backing the Rover Group and supporting the industry in the long term, I hope that the Government will provide economic policies to help not only the industry but all manufacturing industry to succeed and grow and to beat the competition from overseas. Central to that are interest rates and the exchange rate. I hope that in the Budget next week the Chancellor of the Exchequer will substantially reduce interest rates, announce that Britain will join the European monetary system to underpin that reduction, and pursue an exchange rate policy to help manufacturing industry to compete in markets abroad and ensure that Rover and the rest of the British motor industry not only keep their market share but increase it in years to come.
    Several Hon. Membersrose—
    Mr. Deputy Speaker (Sir Paul Dean): Order. I repeat Mr. Speaker's appeal for brevity. Many hon. Members with strong constituency interests hope to speak in the debate.
    8.40 pm
    Mr. Roger King: Any debate on the British motor industry should mention one area in which we have been predominantly successful for many years. I refer to the nation's ability to design some of the world's finest formula 1 racing cars. We are without equal in all aspects of motor racing, be it formula 1, formula 3 or formula Ford car racing. Dozens of manufacturers are engaged in producing such cars for a highly discerning market, not just in Britain but throughout the world.
    We have firms such as Lotus, Williams, McLaren, Benetton and Lola, and drivers such as Nigel Mansell who perform in 19 countries in a sport that is watched by more people than any other sport in the world. It also provides a good and successful testing area for new initiatives and designs such as the active suspension system, which forecasts the state of the road in front of the car before it travels over that area. All those items are translated back into the motor industry for use on everyday passenger cars. We should endorse the substantial abilities of our engineers in the competitive world of motor sport.
    It is good news all the way for the motor industry, especially this year. At long last, we are beginning to push back the import penetration that was described by my right hon. Friend the Secretary of State. We are now below 50 per cent. import penetration, and this is reflected by the increased activity of all our car manufacturers. We all know about Jaguar, with its commitment this year to take on another 700 workers. We know about the amazing turnround experienced by Peugeot-Talbot, which is now exporting cars back to Europe. Lotus, under the ownership of General Motors, is ready to invest a substantial sum in a new factory in East Anglia. We should also congratulate Ford, which is No. 1 in the market place. It is a well-known and well-respected British manufacturer which has done much to provide the resources for our manufacturing industry during the past 10 to 15 years—and, of course, the past 75 years. It celebrated its 75th birthday last year. Vauxhall, too, is working hard to reestablish itself as a British manufacturer.
    We are boosted by competitive United Kingdom currency, good productivity and attention to quality and

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    delivery at the right time. Those are all criteria to provide the success that our motor industry is on the verge of turning into a roaring success.
    The Rover Group is doing especially well. In the United States, the new car has been extremely well received, with more than 1,000 cars sold in the first 12 days. The importers forecast that, in the latter part of this decade, and certainly by 1990, about 90,000 Sterling cars will be required each year for the United States market. I need hardly mention what sort of income that is likely to bring to the United Kingdom economy. If those figures are achieved, that one product will earn between £2 billion and £3 billion. The importers in the United States claim that the figures will be achieved.
    Recently, I visited Dallas, and spent an evening with the vendor of the Sterling car in that city. He said, "You build them, and I will sell them." He had already sold the first 13 cars, including his demonstrator. He apologised for driving us round in a Cadillac, which cost $10,000 more than the Sterling and was only half as good, and said that he had 35 Sterlings on back order and had closed his order books, although he insisted that he wanted quality, not quantity.
    Indeed, the Japanese press has been saying how good our Sterling is in Japan, where Honda builds it. The report of a recent road test in Japan said that, except for one or two little niggles— these were not quality faults, but windows that do not wind down electronically in one go at the touch of a button so that the driver can pay his money on the many toll roads in Japan—the Sterling was the finest car currently available on the Japanese market. That says a great deal for the design expertise of Austin Rover engineers, who have built a product similar to the Honda car but have made a better job of it.
    The Austin Rover sales for February were the best for 13 months, showing a 17·14 per cent. share of the United Kingdom market. Exports to Spain— a large growth area for the company— are up by 54 per cent., and exports to France this year are up by 13 per cent. That is encouraging news.
    My constituents in Northfield, where the Longbridge plant is situated, welcome the Government's support for the Rover Group board's corporate plan, because it sets out a sound future for development and prosperity in the city of Birmingham. It has been earned only because of the productivity of the factory and the quality of the product that it is turning out, as the work force consistently gains quality bonus payments as a result of producing goods right first time on the production line.
    We welcome the introduction of the new K series engine, which will give the Rover Group a technological lead over many competitors, as the other manufacturers look at ways of improving engine efficiency with their existing designs before investing, at very high cost, in new ceramic technology in the next century. Austin Rover has a window of opportunity, with a highly efficient and technologically advanced engine in the K series with which to exploit the market place in the United Kingdom and Europe.
    With a new engine, we need a new car. Some hon. Members, including the right hon. and learned Member for Monklands, East (Mr. Smith), have said, "Where is the AR6? We do not want a reskinned Metro." Nor do we in the area, in the company or anywhere else. Any new car
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    will be just that, whether it is the so-called AR6 design, which has been completed in prototype form, or a more advanced design based on the existing Metro size but featuring a new suspension, gearbox, engine and almost everything else. I am convinced that, whatever the company produces, it has a track record, starting with the Mini, the 1100, the 1800 and the present Metro, of providing the best package of its size and type of any car manufacturer. Whatever it produces will be a successful car.
    As to whether the company will remain in volume production, Mr. Day is on record as saying that the company is not coming out of volume production, which is why it has signed a deal with Honda to produce the AR8, which will probably be made at Longbridge. What sort of quantity can we expect? The figures are not forthcoming from the company, but it has been suggested that, all things being equal and with a range of models based on the AR8, a figure of 6,000 units a week is not unrealistic.
    If we add the figures for the AR8 to those for the new super-K Metro, we could have a car plant producing more than 500,000 cars a year by the end of this decade—something that will have an enormous effect on the profitability of the business and on all the component suppliers in the west midlands and the country. That augurs well for the partnership with Honda. It is a partnership of equals so that in the latter part of this century we can develop the automobile in conjunction with one of the most advanced car manufacturers in the world.
    The people of Birmingham warmly welcome the successful negotiations with regard to Freight Rover, for which I have a particular affection. I spent five years of an engineering apprenticeship with its predecessor, Morris Commercial, and I involved myself in the original design of the predecessor to the present Sherpa van, of which the only common panel is the roof panel. This is a breathtaking opportunity for the company. It has the full support of the work force which, on the day after my right hon. Friend announced approval of the corporate plan, was on television saying that it was the best bit of news it had had in years. People were saying how much they were looking forward to working with DAF, which will unlock the key of Europe for that company in producing a much larger range of vehicles.
    Indeed, putting the DAF name on the front of a van or truck is very much like putting the name of Rolls-Royce on the front of a Metro. DAF is well respected throughout Europe as a substantially well engineered truck and if it is putting its name on a Freight Rover van or a Leyland Roadrunner truck, it must enable that product to reach a far wider and more discerning European market then ever before. The deal between Freight Rover and DAF inspires confidence.
    DAF has put it on record that it intends to double output from around 20,000 a year to 40,000. It is providing the investment for the new van, which is currently being drawn up in prototype form at the Washwood Heath plant. It required a substantial investment to bring that into production. Rover Group did not have the money to do it separately, but will now have to do it in conjunction with DAF. It augurs well for Birmingham and the local economy. Birmingham will certainly benefit enormously.
    My right hon. Friend may care to know that the people of Birmingham, my constituents and many others who

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    work in the motor industry within that region fully support the Government's corporate plan and view with confidence the future of the business and will work extremely hard because, in the end, it is up to them to make it the success we all wish for.
    8.52 pm
    Mr. George Park: When Conservative Members have finished posturing, the question of jobs should still be paramount in this debate. It is encouraging that, once again, Britain's car plants are engaging employees, increasing production and productivity and committing themselves to forward investment to continue to raise the quality and quantity of the product. However, recognition should be given to the fact that part of the resurgence is due to currency movements, particularly in the sourcing of components, and we have a long way to go to make any impact on the thousands of jobs that we have lost in the west midlands alone in the previous decade.
    Recently, as the Secretary of State said, over half the cars sold in Britain were actually made here, but we still have the position whereby a car with engine, gearbox, steel body panels, fascia, instruments, steering gear and brake parts all coming from Japan can still claim to have a 50 per cent. local content. It is clear that a new method of assessment is urgently needed, based on 80 per cent. local content, before it qualifies as European in origin and measured in terms of the actual cost of the vehicle. Such a method would encourage British components manufacturers to step up investment in research, development and production and provide more jobs.
    Before hon. Members get too euphoric, they should realise that overall profits are still non-existent—or, at best, thin. In the past three years, the industry has received nothing from the Chancellor, unless one counts the previous Budget when vehicle excise duty was left unchanged. At present the Chancellor takes some £14 billion in road user taxes, including £820 million in car tax, collected by the industry for the Government, and about a further £700 million in unrecoverable VAT paid by companies on car purchase. Yet he refuses to do anything about the unique car tax, although the money lost by its abolition would probably be recovered by increased sales, and that again would lead to an increase in jobs.
    In the words on the Order Paper, the Government recognise the valuable contribution made by the vehicle industry but fail to accept the need for a wholly owned British component in that industry and follow a strategy, if it can be called that, of indecent haste in getting rid of those companies in public ownership, irrespective of the consequences.
    Despite acknowledged over-capacity in the industry, additional competitors are encouraged with grants and green field sites in the car sector, while in the lorry sector, because the Government are not prepared to try to rejuvenate that part of the industry, they hand over majority control to a relatively tiny, marginally profitable Dutch company, far from dominant in world markets. For DAF, the deal that gives it control of Leyland Trucks also provides entry to the van portion of the market. It gives it first class facilities—with the possible exception of the foundry which could have done with some investment in it—and an up-to-date model range. As if that was not enough, the profitable Freight Rover is thrown in to make the deal more tempting, plus a write-off of £750 million of
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    our previous investment. In time the new company can be sold off to private investors, which is the only consistent part of Government policy.
    The immediate effects in Britain are the loss of 2,260 jobs at Leyland Trucks. That will have a domino effect on suppliers such as Cummins in Scotland and CAV, to name but two of the many suppliers, arising from the closure of Scammell, the foundry and the engine shop, plus the danger of further erosion of the 96 per cent. British content of Leyland Trucks by the possible sourcing of cabs from a Spanish company.
    It is unfortunate, to say the least, that the British Government do not have the same confidence in their company as the Dutch Government have in DAF or the French in Renault. If they had, the deal could have been done the other way round or, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) suggested, on a 50:50 basis, particularly as Leyland has 18 per cent. of the United Kingdom market while DAF has only 5 per cent. or 6 per cent. at the heavy end of the market. However, that presumes an industrial strategy which the Government do not have and a real recognition of the motor industry as the core of manufacturing industry, with a substantial contribution to make in the retention of industrial skills and minimising the brain drain.
    The Government could remove obstacles to the success of British hauliers and their capacity to place orders for lorries. They could adjust the balance of the annual vehicle tax, which is £987 on a 38-tonne lorry on average in the Common Market compared with £3,100 in Britain. In Belgium, it is £624, but some hauliers qualify for a 65 per cent. reduction, which cuts it to £218. The tax on diesel fuel in Britain is 31p a gallon more than the average in the Common Market, which costs our hauliers £465 million more than their competitors last year. What sort of incentive is that?
    Massive efforts and acceptance of change by workers and management in BL have led only to the loss or erosion of their jobs as their companies became viable and were sold off or merged with foreign competitors because the Government do not have the commitment to a wholly owned British section of the industry or the belief that we have the skills and ability to break into international markets. All that the Government want to do is wash their hands of the business as quickly as possible. We cannot endorse their policies.
    9 pm
    Mr. Steve Norris: As always, I declare an active financial interest in the retail motor industry. Having worked in it for 20 years, I suggest that that at least enables me to comment with some knowledge in this debate if on no other occasion.
    I wholly endorse the motion of my right hon. Friend the Secretary of State. I thank him and the Minister of State for the constructive way in which they have assisted me in my inquiries on behalf of my constituents in Oxford who are concerned with the Austin Rover plant at Cowley.
    Over the past year the Cowley plant, and Oxford in general, has been awash with rumour and speculation, the vast majority of it ill-founded but real. It was based on real fears and concerns about the future of the company when there was so little hard fact to go on in advance of the

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    corporate plan being produced, and so many wild rumours and assertions were floated, it has to be said, by Opposition Members from time to time, and in the press.
    In recent weeks, since the disclosure of the Ford talks, which I am glad did not come to fruition, but which I was perfectly prepared to see take place, on the ground that I do not believe that it is wise ever to shut one's mind to the opportunity of making progress in the volume car sector, we have had contradictory pieces of news. Within a week of an announcement of 400 white-collar job losses, there was an announcement of 500 job gains on the Montego line. Undoubtedly, people wanted to know whether that was good or bad news or whether there were any straws in the wind that could be picked out.
    We must look at the corporate plan to see where it leads us and at some of the specific questions that arise out of it and affect Cowley. Several were set out by the right hon. and learned Member for Monklands, East (Mr. Smith). I believe that it is possible to answer them, on close examination of the plan.
    The corporate plan made one point that must be made about the lure impetus of privatisation. I believe, and I think that most objective observers know, that only over the past few years has the commitment to self-sufficiency and the concept of denationalisation brought the whole of the British Leyland group—and its new form as the Rover Group—to the state where it has been prepared to look at profitability in the detail and with the commitment that it does now.
    The corporate plan gave Rover everything that it asked for, as the Secretary of State said. It committed the company to a full model range, although it did not say precisely what it was, and it committed it to maintaining volumes, although it did not comment on expanding them. The plan talked about the need for better quality. We have seen that emerging in the Sterling 800 series, made in Cowley. It talked about the need for constructive collaboration with Honda.
    Before I deal specifically with those points, I should like to deal with some outstanding issues raised by the plan as they affect Cowley. There was a great deal of concern in Cowley about the fact that the AR8 was going to Longbridge rather than to Cowley. There was a natural concern, which I expressed when I first heard the news. People said, "As we made the Maestro and Montego at Cowley, why did we not get the AR8?" That is important, and I hope that the House will recognise it.
    We understand that the AR8 is not of itself specifically a replacement for the Maestro/Montego. That marketing and concept decision has yet to be made. I am given to understand that it would have been rather more expensive to have contemplated stopping the Maestro/Montego facility in Cowley and then retooling and commencing the AR8 than will be the case in Longbridge.
    Thirdly, the model splits in recent years show that the Maestro, the Montego and the 800 have all gone to Cowley. It is reasonable to say that in the long-term context the decision to send the AR8 to Longbridge is in no way an adverse reflection on Cowley.
    Did the absence of the AR6 put in doubt volume production and mean that we were no longer committed to a small vehicle? That is not necessarily the case. The right hon. and learned Member for Monklands, East can
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    be reassured, because the clear understanding is that the AR6 was very much at concept stage when it was being discussed.
    The K series engine, the commitment to existing Metro volumes and the philosophy that Mr. Day has publicly expounded of a commitment to model-by-model quality and to the upgrading of each model into market niches fits quite happily into the concept of saying that the AR6—such as it ever was—is not a concept with which we specifically want to proceed at this stage. In no sense does that mean that the company is not still committed, as the corporate plan says, to a full range of products.
    The issue of volume is crucial, because if the company is to continue as a volume producer we must start to put some numbers on the volumes—not least because, if the company has in two plants a theoretical capacity of about 800,000 units and if we are talking about unit volumes that will remain at about 354,000, then the reference by the right hon. and learned Member for Monklands, East to the so-called BMW solution clearly emerges as a practical runner. Whatever else that would do, in all probability it would mean one-plant operation. I say that quite openly, because I have addressed this on behalf of my constituents in Cowley and I am concerned that they should share with me the reassurance, stemming from the present market situation, that we will continue with two-plant production.
    The figures do not show a happy trend. Production has fallen from the 1978 figure of 611,000 to just over 400,000 in 1986. However, there is now conflicting evidence about economic levels of volume production. That evidence emerges when the old-fashioned idea of a single dedicated line which involved the writing off of the entire tooling costs over a very considerable number of units is compared with the modern concept of flexible tooling, where a great deal of the capital cost can be rolled into a subsequent model.
    The best evidence that one can adduce is that because of robotics, the impact of flexible manufacturing and not least the impact of model range—one should look not just at the number of units that a company produces but at the number of units per model—the sort of figure that we have to consider in Austin Rover is larger than the 410,000 to 420,000 figure that we saw in 1986. Any corporate plan has to look at about 500,000 units to be a viable economic proposition. I think that the hon. Member for Stockton, South (Mr. Wrigglesworth) spoke about that. Can we look to that sort of production figure? At the moment, the evidence is rather good.
    I welcome the impetus behind the resurgence of the Mini but I am not so sure that the Secretary of State for Social Services, with his AIDS campaign, would entirely approve of the moral tone adopted in the Christmas advertising campaign for the Mini. However, it certainly had an impact on sales. The important thing about the Mini is that in France, for example, it is still a cult car and leads people into Austin Rover showrooms where the other excellent products are on display. As long as the Mini is there and since its capital cost is effectively written off, Austin Rover might as well keep producing and using it.
    The outlook for Metro is optimistic. However, the one that pleases me most—I am sure that the House agrees—is the performance of the Montego. Since its effective relaunch, it has taken on a new lease of life. Its fleet performance is excellent and everything augurs well for the car. It had a disappointing start, having failed to convince

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    the market either on perceived quality or reliability. It is now beginning to claw back and fleet owners are beginning to buy the car. On the back of that, Maestro is enjoying a resurgence. Earlier this year Maestro entered the list of top ten sellers. I am sure that the House will welcome the fact that British Telecom has placed an order for 5,000 Maestro vans worth £26 million. That is on top of van orders worth £140 million that have already been won by the company. Those orders exceed the 1986 total.
    The 200 and 800 models have also been doing extremely well. The extra volume of sales has been derived not only from the Montego, the resurgent Mini and the Maestro, but from the export potential of the 800 model. The great thing about that is that the 800 is a high-value product and a great number of man hours, productive capacity and profits are involved. I believe that the figure of 500,000 units is not only achievable but likely. It is comforting to he able to look at a forecast and say it is not an optimistic or unreasonable one, but a solidly based forecast.
    Bearing in mind the constraint on the length of speeches, I shall make one last reference to Honda. I do not share for one second the Opposition's fears about Honda. Japanese motor manufacturers want a European base. They do not have to come to Britain. Within the Common Market they may go to France or Germany or to one of the lower-cost economies such as Spain, Portugal or Greece. However, if the Japanese come here it is excellent news for Britain because that means the provision of additional jobs. However, if Honda comes to Britain, I hope that it will not adopt the Nissan solution—I say that advisedly. I accept that the Nissan deal introduced jobs to the British economy, but it also added another 100,000 units to the existing over-capacity in the market. To that extent, I believe that it was marginally counter-productive.
    I believe that the Honda solution, wherein a Japanese manufacturer decides that the way into the European market is through collaboration with an existing manufacturer, using present capacity, is a sensible and productive solution for both companies. We should welcome that decision, because the Japanese skill and management techniques will benefit us and our style, design and ingenuity will benefit them. Between us, we can do well. Incidentally, we can beat Honda with the Sterling in the United Kingdom and in the United States.
    Ironically, some of the trade unions, in their efforts to persuade us how appalling the Government have been in their treatment of British Leyland, have tended to denigrate the company. We need the press and others to leave the company alone for a while. They should stop knocking the company and allow it to get back on its feet and enjoy the position it deserves to hold. We must be constructive and committed both to future collaboration with Honda and to our present product range.
    The present management at Austin Rover is the best and most realistic that we have ever had. That is reassuring news, not just for the plant at Longbridge but also for Cowley. If we have a motivated work force and management, we have no reason to fear the future of the British motor industry.
    9.13 pm
    Mr. Stan Thorne: I am glad to have the opportunity to participate in this debate. I do so primarily because I am chairman of the north-west group of Labour
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    Members who have a considerable interest in the manufacturing industries throughout the north-west, of which, of course, British Leyland is a major part.
    I support the amendment moved by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). I shall refer to that part of the amendment that rejects the proposed
    "gift-wrapped surrender of control of Leyland Trucks and Freight Rover to DAF".
    Leyland is not far from Preston. In fact, some of the Leyland work force live in a variety of constituencies in the Lancashire area. Leyland as a town has suffered from previous factory contractions. Loss of manufacturing has a spin-off effect locally, as it is generally understood. An appraisal of the present makes references to the past virtually inevitable and, within the limited time at my disposal, I shall make this apparent.
    Leyland Trucks has assets of more than £150 million. They are to he given away, if the Government have their way, to a foreign competitor. Leyland Trucks has sustained tens of thousands of families in the Leyland area for more than 50 yars. DAF has everything to gain from the Government's proposals and British Leyland everything to lose. It is against that background that the Opposition, and particularly people in the north-west, reject the Government's proposals.
    It has been said that the Dutch have looked after their interests extremely well in negotiations in recent weeks. There are nine directors on the main board, only two of them from Leyland. Decisions will clearly be taken by DAF, for DAF. As we all know, because it is history, the Government have failed to sell off Rover and Land Rover to General Motors. Following protests from midland Tory Members of Parliament, among others, the Government now believe, and the hon. Member for South Ribble (Mr. Atkins) is convinced, that selling off Leyland Trucks to DAF will not be politically damaging. The future, certainly as far as the hon. Member for South Ribble is concerned, will answer that question.
    Production of trucks involves high technology. It is a high-value, expanding industry. Leyland, with its new truck range, has an increasing share of a lucrative market and a worldwide reputation. DAF is being given Leyland's valuable and comprehensive distribution networks throughout the United Kingdom. More than 70,000 new commercial vehicles, valued at more than £1·5 billion, were registered in the United Kingdom last year. Leyland factories were used, as my right hon. and learned Friend the Member for Monklands, East rightly said, to support loss-making car plants over a decade.
    The Ryder report showed, among other things. that, out of £74 million profits, £70 million was paid out in profit and only £4 million reinvested to replace aging plant and machinery. The £100 million investment came too late at exorbitant interest rate costs. This unjust debt burden forms a major part of the as yet to be proved—in spite of what the hon. Member for South Ribble said—£1·5 million which Leyland Vehicles is said to cost the taxpayer each week. No Conservative Member has produced the complete evidence to establish that point which is stated again and again in the hope, presumably, that people will inevitably accept it as the gospel truth. It is not. It has not been proved by anyone yet.
    Over a decade ago Leyland Bus and Trucks had over 30,000 workers, of whom about 13,000 were at Leyland. Soon the total figure will be under 6,000—a massive 80

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    per cent. cut. Many famous companies were once owned by Leyland—AEC, Park Royal, Eastern Coach, Charles H. Roe, Guy, Bathgate and Bristol. They have all gone for ever. Are they to be followed by Scammell? Clearly they will be if the Government have their way.
    At Leyland we have seen the closure of north works, south works, two engine plants, a tool room and foundry support plants. Now the Government propose that the remaining engine and foundry plants should also be closed. If Farington foundry goes, the manufacture of blocks for the industry will go too. The effect on the truck industry will be catastrophic. Leyland has a 400 engine which is a winner. The 430 engine is ready for operation. Ironically the highly successful DAF engine used in its popular heavy lorries is basically a Leyland 680 engine. To ditch engine manufacture and close the foundry is to rip the heart out of Leyland.
    The work force of highly skilled designers, engineers and workers on the shop floor, with years of specialised knowledge, are to be denied their livelihood, although their commitment to Leyland Vehicles over many years is beyond doubt. There are in the Strangers' Gallery workers who have contributed 30 years each to the industry. The Government are prepared to scrap that involvement and commitment.
    The insensitivity of Leyland management and of the Government reveals yet again, in spite of what has been said by Conservative Members, how much industrial relations have deteriorated since 1979. The Secretary of State for Trade and Industry began the debate with a slander on the trade union movement which has struggled over many years to maintain a reasonable standard of living. He made cheap jibes against active trade unionists in the area. Those who are listening to the debate and those who will read reports of it will not be unduly surprised because that is the Government's belief.
    I have been aware for more than 50 years that labour is just like other commodities within the capitalist system—it can be bought and sold as and when required. Few employers recognise that human labour power must be treated differently from raw materials and machines. It takes a long time for some employers to learn that lesson. Unhappily, many big concerns in this country, aided and abetted by Government legislation, still fail to learn that lesson.
    The complete failure to consult the work force at Leyland about their aspirations and ideas about future manufacturing in Leyland is one of the cardinal sins of Leyland management and the Department of Trade and Industry. Departmental officers and Ministers may pretend that they have met the work force for consultations, but those whom they have met will tell the House, if they have the opportunity, that the consultations were always one-sided. "You will do what we decide", has been and remains the message from the Department of Trade and Industry. Workers who have invested their labour in an industry are entitled to a direct involvement in decisions that affect their future. I am sorry to say that that fact is seldom accepted within our system of production for private profit. To employers, financial gain is more important than human relations.
    The Government refer to a write-off of £750 million, which includes redundancy pay and closure costs. It also includes the debt owed by Leyland factories and factories
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    within the Rover Group. By international comparison, the Leyland Trucks debt is pathetically small. On average, British companies externally borrow 55 per cent. of their assets. In West Germany, the figure is 95 per cent. and in France it is 140 per cent. Japan has a massive 330 per cent. capital gearing.
    The Government can and must insist on a change in the deal with DAF. A 50:50 partnership is a minimum requirement for a final agreement. That can be achieved by the Government making Leyland a financially attractive and equal partner to DAF, together with providing a firm commitment to manufacture engines at Leyland. If a 50:50 deal with DAF cannot be agreed, the Government should threaten to end our generous open-door policy to imports. A 50:50 deal involving equal partnership in decision making, with equal numbers on the board, is absolutely essential to the future of Leyland Vehicles. In the opinion of Opposition Members, nothing less than that will do.
    We can all remember references to Britain being the workshop of the world. As I listen to some debates, I am often reminded that I was brought up within a few minutes' walk of Trafford park. Fifty or 60 years ago, I used to hear people talk about the greatest concentration of industry in Europe being within Trafford park. It could be said that Leyland has had a tremendous history of industrial development. A major decline in our manufacturing base has occurred since 1979—a massive contraction— leaving us with a huge import bill for manufactured goods.
    A supplier to the motor industry, Lucas Industries Ltd., through Girling, produced brake units for the motor industry, but it completely closed its factory in Bromborough solely because it could make such units more cheaply outside the United Kingdom and import them into Britain. Given the Government's proposals for the DAF sell-out, how long will it be before DAF shifts production to Europe in pursuit of similar improvements in profit margins?
    The present Government have allowed billions of pounds to be poured into our overseas competitors. They appear to believe that Britain's economic future lies in massive imports, in the interests of finance capital and the multinational conglomerates. The real interests of the British people, however, will be served by the rebuilding of our manufacturing industries, the control of overseas investment and the direction of major investment into research and development and the public sector—into houses, schools, roads, hospitals and people's welfare.
    Our priorities must be to provide real opportunities for our young people to learn skills, to pursue educational growth and to lay a firm basis for improved standards of living for the underprivileged. The motor industry has a major part to play in that aim. Leyland Trucks, collaborating on equal terms in an equal partnership with DAF, could make a firm contribution to those goals. It is not too late for the Government to act. The next Labour Government will soon plan our economy to ensure a radical improvement in the quality of life for our people, and the sooner the better.
    Several Hon. Members rose—
    Mr. Speaker: Order. Before I call the next speaker, may I remind the House that a large number of hon. Members wish to take part in the debate. If hon. Members limit themselves to 10 minutes each, all will be called.
    9.31 pm
    Mr. Richard Page: I should say at once that my non-political experience has been completely and utterly in the motor industry, both in manufacturing and retailing. It is only right, therefore, that I should declare an interest.
    When I look at the motion I see within it, despite the protestations of the Opposition parties, an example of the Government's commitment to Austin Rover in terms of the billions of pounds that have been spent upon subsidising and supporting that company over the years. Also when I look at the order I experience a moment of pure nostalgia when my eyes light upon the words "National Enterprise Board." The House will remember that the National Enterprise Board was set up when the last Labour Government went out to pick winners. The names Nexos, Twinlock and Inmos float before our eyes.
    The motion is couched in both specific and general terms. I intend to deal with the specific problems that face the Rover Group. I make no apology for doing so. It makes a vital contribution to our economy. Nobody with experience and knowledge of the truck industry would argue that a deal had to be done to try to counter the massive over-capacity of truck production in Europe. If Ford thought that it was necessary to do a deal with Iveco—and I suggest that Ford know a little more about the truck market than Opposition Members— and if Bedford felt that it was necessary to do what they have done because they were unable to do a deal with Leyland, it was only natural, because fewer and fewer partners were available, that Leyland should do a deal with DAF. Indeed, it is most sensible that this should have happened.
    My hon. Friend the Member for South Ribble (Mr. Atkins) made a most thoughtful speech. He outlined the reasons for the deal. I know from personal experience and from talking to my hon. Friend that he spent a long time agonising over the difficulties that face him and his constituency. However, he also gave a little hint—that perhaps it was better that this deal should be done sooner rather than later. In fact, I was left with the impression that a deal with General Motors might have been better, if it had been made a year or so ago.
    I find it amazing that the right hon. and learned Member for Monklands, East (Mr. Smith) laid the blame on the Government because he was a fundamental moving force in scuppering that General Motors deal and he is proud of that. I listened with equal amazement to his criticisms of the possible effects of the closures on Scammell. I remind him that Scammell is in Watford and General Motors, with its military vehicle capacity, is located at Luton and Dunstable. I could see perfectly that a deal might have come forward in which the military contracts of Scammell and Bedford could survive in the same area. However, such a possibility was scuppered by the right hon. and learned Gentleman.
    I am delighted that my hon. Friend the Member for Watford (Mr. Garel-Jones) is in the Chamber because I know that he has considered the effects this deal have on Watford. My hon. Friend is spending a great deal of time and trouble trying to make sure that the effects of the Leyland merger with DAF will have the minimum effect on his constituents.
    I now turn to the car division in which Austin Rover's targets have, in the past, been changed and changed again almost on a monthly basis. From personal experience, I
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    have never known a company to expand out of disaster. It must cut and trim back to a clean core of efficiency and then expand. I must confess th.at I am not a gardener, but those hon. Members who are will know that one has to cut out the dead wood before one can expand.
    Time and time again, the Government have demonstrated their support for the Rover Group. Perhaps today, for the first time for a decade, the Rover Group has a better chance of expansion and growth than ever before. However, there are problems and certain past decisions must be overcome. I refer to decisions such as the choice of new technology and the fact that export markets were given such low priority during the Edwardes' administration. The focus then was on efficiency and labour productivity. No one lifted his eyes to the horizon to see what life would be like in the late 1980s and early 1990s.
    The continuing problems of the Austin Rover Group can no longer be laid at the feet of the work force because, in line with every other car producer in the world, the company cannot sell all the cars that it can build. The remorseless drive towards productivity has been obvious in almost every British plant. With that there has also been a heart-warming commitment by many more manufacturers to source and build more in the United Kingdom. We have heard, for example, that Ford is to raise its investment in this country and to make another 70,000 cars next year, raising its total to about 450,000. Vauxhall is to raise its total from 200,000 to 300,000 over the next three years. My right hon. Friend the Secretary of State has already mentioned what Peugeot-Talbot plans to do at Ryton in relation to the new family saloon.
    Austin Rover has made tremendous strides in efficiency. It estimates that its productivity has increased from about 6 cars per man in 1979 to between 12 and 14 cars per man last year. That compares favourably with our continental competitors. However, we must be cautious about such forms of comparison because those calculations depend on the quantity of bought-in finished components that are included. Nevertheless, for all that, the work force has shrunk in the retreat from design, development and assembly to just assembly from a six figure number to below 50,000.
    The future looks relatively secure because of the Government's vast commitment. However, the options are closing in remorselessly for the company if it is to be the master of its own destiny, free from Government, and from the designs and technology of foreign manufacturers in the future.
    Over the past 10 years the Government have provided more than generously for Austin Rover, but I am apprehensive about the strategy of following the market down in the long term. That will mean an increasingly rapid loss of the ability to develop new models and that we shall become just an assembly platform for Honda in the United Kingdom. In turn that will bring an increasing reliance on Honda with the knock-on problems of loss of value added work, employment and technical capability. That was why I was delighted to hear the Government announce support for the K-series engine. That is an important stride back along the path that I have described.
    We must accept that Austin Rover is now a minnow in the world of mass vehicle production. BMW, ostensibly a maker of quality cars with a small market share in each of the countries to which it exports, produces more cars and retains a larger share of the profit with each one than does Austin Rover. From the sidelines it is difficult to know the

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    required sales for Austin Rover to break even or to generate sufficient funds for the development of a range of new models.
    Over the years we have had a series of different figures which have usually been of a lower and lower order. It seems increasingly difficult to achieve those figures through the growth of the home market alone, which is why the present efforts for exporting must be aggressively pursued. I understand that they have made some inroads into the fleet market, but I would not wish Austin Rover or any hon. Member to pin the future of the company on that sector.
    Mr. Fallon: Does my hon. Friend agree that it is extraordinary that the hon. Member for Stockton, South (Mr. Wrigglesworth), having an hour ago suggested that the whole Rover Group should be privatised, has suddenly lost interest in the debate and the welfare of his constituents and those of my hon. Friend the Member for Watford (Mr. Garel-Jones)?
    Mr. Page: My hon. Friend makes his point in a telling fashion. He will excuse me if I do not try to explain alliance policy. Alliance Members find it hard to explain their policies to themselves, let alone to the nation.
    Bearing in mind your request to be brief, Mr. Speaker, I shall continue along my line. The Government must accept that if Rover is to have a future, an increasing reliance on Honda technology must be used only as a short-term crutch; the company must not depend on it in the long term. In future there must be strict agreement about the value added content of any of the deals carried out with Honda. Other countries insist on an active level of participation and Austin Rover would be wise to do exactly the same.
    Austin Rover has a better chance of survival now than it has had in the past decade. It must continue its drive for quality, which has dramatically improved over the years. However, I must remind the company and hon. Members that its competitors have not stayed still. Austin Rover must attack its foreign market more aggressively and look to occupy a slot in the market, not perhaps so much for quantity, but certainly for quality. It must ensure that its internal design capability does not become located in Japan.
    While the choices are narrowing, with the support and help of the Government the future looks bright.
    9.43 pm
    Mr. Doug Hoyle: I immediately declare an interest as president of the Association of Scientific, Technical and Managerial Staffs which has a large number of people in the motor industry. We are speaking not just about those who manufacture the vehicles, but about the components industry and an industry with high technology. Today we are debating the future prosperity of the United Kingdom. Without a major motor industry, we should be in great difficulty.
    Like many hon. Members, I welcome the fact that the multinational companies will produce more cars in Britain. We must not be complacent about that. We must not think that that is because those companies are becoming more benevolent. The reason for that is the currency changes, particularly the relationship of the deutschmark to the pound. The Secretary of State asked
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    why Opposition Members are often suspicious of multinational companies. It is because their decisions are not taken in this country. As to Ford and General Motors, their deficit in the balance of trade with this country is hundreds of millions of pounds. Even if they concentrate a little more production here, a large gap will still have to be filled. That is why it is important that we have an indigenous motor manufacturer.
    I am concerned about Leyland Trucks, not only as the president of ASTMS, but because the people concerned are my neighbours and friends. It is not easy to regard those people as unemployment statistics. Some 2,200 people will be made redundant in Leyland Trucks by the DAF takeover—that is what it is, a takeover. We are talking about highly skilled people. They were the aristocrats of the engineering industry. They dominated the market in which Leyland Trucks is based. They had a proud record, because they designed vehicles, manufactured the engines and gear boxes, and produced axles—the complete vehicle.
    As my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said, for many years Leyland Trucks carried the whole of the Leyland car industry. The reward for sustaining that is that the employees are being faced with redundancy. That is unnecessary because, as has been said, it has a large share of the British market, 18 per cent., and a good product range. We are told that there is an over-capacity and that Leyland Trucks is a loss maker.
    I cannot imagine that we would be having this debate if this were the French National Assembly. Renault Trucks is an enormous loss maker. Indeed, it could be said that it is pulling down Renault Cars. Nobody is saying that the French Government intend to give up Renault Trucks. They will continue to put money into it. They have not sought a merger deal or allowed DAF to take over Renault Trucks. They would consider it inconceivable to give away what is a jewel in the crown for the future prosperity of France.
    That is the situation with regard to Leyland Trucks. It has been dressed up by the Secretary of State as a joint merger but it is a takeover. It is no good us talking, at this stage, of an equal partnership; it is not there. I am at a loss to understand how this can be termed a joint venture. It could be a joint venture—my hon. Friend the Member for Preston (Mr. Thorne) was right—if it was a 50:50 split. That is why—I am sorry that the hon. Member for South Ribble (Mr. Atkins) has gone—I say to him that there is great concern among the employees in Leyland factories and plants.
    Mr. Roger King: The hon. Gentleman mentioned Leyland and DAF merging and he has also mentioned Renault Trucks, which has a plant in this country. Did not Renault Trucks take over the Commer-Dodge factory? Would not the workers there have welcomed the presence of Renault Trucks, which is expected to be in profit this year?
    Mr. Hoyle: The hon. Gentleman— I shall not give way to him again—is not detracting from what I am saying. I am saying that, despite Renault being in difficulties, the French Government are continuing to put money into it. That is why it can turn the corner. I do not know what is amusing about the fact that the French have pride in their own industry. I do not find it amusing that

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    the French are determined to retain the jewels in their crown. Those who will lose their jobs in Leyland will not find it amusing; nor will the 5,000, perhaps more, who will lose their jobs in the component industries.
    There are many unanswered questions and I hope that the Minister will give us some replies. Why can we now write off £750 million just like that? Why could we not have done it before and retained the company? My right hon. and learned Friend the Member for Monklands, East asked how far writing off that debt would have brought down the losses that Leyland Trucks is supposed to have sustained. We have had no answer. I hope that the Minister will reply to that, because that too could be illuminating. If we could do it for DAF, why could we not do it for Leyland Trucks and allow it to remain independent? Those are the sort of questions that must be answered.
    We have been told by the Secretary of State in the past that Leyland will concentrate on the production of light trucks. Does that mean that DAF will assemble heavy trucks here, or will they be imported? We need to have the answer to that question. The Secretary of State seemed to say that there would be some production of heavy trucks here, but that needs to be confirmed.
    The Secretary of State said that there would be a significant United Kingdom content. What does that mean? Why was that not negotiated? Why was not that figure arrived at before we gave the company away? That is what we have done. We have given the company away to DAF who said, "Thank you very much," and Freight Rover has been thrown in. Why could not a minimum British content have been laid down?
    Leyland produces buses. The bus production unit will be in some difficulty over engines. But DAF also makes buses. Where does that leave the new management takeover bid that has been made for Leyland Bus? We need an answer to that question. Will DAF be bringing buses in in increasing quantities?
    Hon. Members from both sides of the House have asked about military contracts. Apart from ERF, no indigenous lorry company is manufacturing in Britain. Where does that leave us? Conservative Members are always patriotic, or so they tell us, but where does that leave us in relation to defence contracts?
    At the moment, Freight Rover buys in power trains from other Rover Group companies. How will the component sourcing policy be affected? Will that continue? [Interruption.] I am asking the Minister, not Conservative Back Benchers. I know that the hon. Member for Birmingham, Northfield (Mr. King) would like to sit on the Front Bench, but I rather think that he will not be a Member of Parliament for much longer. Meanwhile, he can enjoy himself, but let us have the answers from the Minister.
    Conservative Members are all very happy with the Government and believe that the Government have been able to put enough money into the corporate plan for the future of Austin Rover to be assured. I am not as confident as Conservative Members because Austin Rover is still being run down. Llanelli Radiators is for sale, yet that is a profitable company. ISTEL, the computer services company, is also being sold off. Where will the sell-offs end?
    I referred earlier to the fact that the Government are determined to privatise Austin Rover as soon as possible. Once the general election has passed, will the Government
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    be prepared to accept an offer for the company? So eager were the Government last year for Ford to take over Austin Rover that when the top management of Austin Rover refused—I believe quite rightly—to allow Ford to see the production costs of every Austin Rover model, including the Metro, the Secretary of State's predecessor, the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), ordered them to do so. That really was selling Austin Rover down the river.
    What happened after Ford examined the detailed costs? Ford found that it could underprice the Fiesta in relation. to the Metro by £100. Until then, the Metro was selling better than the Fiesta in the market place. After then. throughout the whole of last year, its market share slumped. The Fiesta's market share rose to 7·5 per cent., while Metro sales slumped. If that is not selling the company short, what is?
    How can the Government talk about the national. interest, with all the investment that has taken place, when the previous Secretary of State, with the Government's backing, told the management to open up the books and show them to a foreign competitor? That does not fill me with any confidence that the Government are prepared to back Austin Rover in future.
    I agree with many of the comments made by Conservative Members tonight. When we come to the new deal with Honda, we want some of the technical know-how and part of the high technology. We do not want all the low technology. Whether we will get that, or whether the determination is there in the Department of Trade and Industry to make such demands, is a different matter. I am not filled with any optimism by the Government's past performance. Nor am I filled with any optimism by the. way in which they have been prepared to give away Leyland Trucks, with the best product range in Europe, to DAF on a plate.
    I hope that the new Sterling is a success. I want the company to go from success to success. Leyland has a very loyal work force which is second to none. The work force and their families deserve the prosperity. I say to the Secretary of State and the Minister who is to reply, for God's sake show a bit of confidence in the home product. They should back the indigenous motor manufacturer in the way that the French back their industry. They should have the pride in their industry which the Italians have in theirs.
    There is no way other countries would give their companies away. It is amazing, when we are lectured in the House about the losses and the over-capacity in the truck industry, to realise that Sweden, with no home market, is the leader in Europe. What the Swedes can do, we can do as well. The Government should not turn the tap on and off. They should turn it on full stream, give the funds to Austin Rover and let us make a success of the British motor industry and particularly the indigenous British motor industry. If they have confidence in it, the workers will show that they can manufacture the best products in the world.
    It being Ten o'clock, MR. SPEAKER proceeded to put forthwith the Question which he was directed by paragraph (4) of Standing Order No. 52 (Consideration of Estimates) to put at that hour.

  SUPPLEMENTARY ESTIMATES 1986–87

    Class VI, Vote I
    Question,
    That a supplementary sum, not exceeding £166,300,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of Energy on assistance to the coal industry including grants to British Coal and payments to redundant workers.
    put and agreed to.

    Motor Vehicle Industry
    Question again proposed, That the amendment be made.
    10 pm
    Mr. David Madel (Bedfordsire, South-West): This is a timely debate that reflects the improvement and optimism in the motor vehicle industry after many years of difficulty. The increased optimism is encapsulated in an article in The Sunday Times last Sunday which, referring to the Geneva motor show, states:
    "British car executives were confirming plans for large increases in output from their British plants."
    I share much of the optimism that has been expressed in the debate. Hon. Members referred to the better industrial relations and the disappearance of bad practices in the industry. I also hope that, once and for all, we have seen the back of violent changes in taxation, which led to layoffs in the 1960s and 1970s at very short notice. One could never get a car work force on one's side, if, from year to year, there were sudden changes in production caused by violent changes in taxation. Stable production and tax rates do much to improve industrial relations, just as much as the many things that have been mentioned in the debate.
    A major constituency worry for me relates to the prospects for Bedford Commercial Vehicles Ltd. in relation to the military contract. We know that 1986 was of great depression and difficulty in Bedfordshire once the General Motors and Leyland Trucks negotiations broke down. In 1986, hundreds of Bedford workers lost their jobs. There has been a bad start to 1987, with Bedfordshire county council— which is not Conservative-led—imposing a rate increase of 23 per cent. That will do industry in Bedfordshire no good whatsover in view of the battle that we are waging to get new industry into the county. It is vital that we retain a military contract at Bedford and keep its many hundreds of employees in work.
    The latest position on the military contract was mentioned in a letter to me from my right hon. Friend the Secretary of State for Defence on 20 January. He said:
    "I am hopeful of reaching our decisions on the new 4 tonne programme and other military truck orders for Bedford Trucks in the near future. In these circumstances, all I can do is to reassure you that we are giving every consideration to Bedford's proposals and will take account of the factors you have mentioned along with all the other relevant aspects before making final decisions."
    There are three relevant aspects. The first is employment in the area. The second is the need to continue Bedford's excellent record of supplying first-class military equipment to the Ministry of Defence in peace and in war. I stress that when America was neutral between September 1939 and December 1941, it made no difference to the fact that General Motors, which owns Bedford, kept pouring
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    out trucks for the use of the British Army in the years when we were on our own. The third relevant aspect is the ancillary industries and suppliers which still depend upon the Bedford plant to maintain employment.
    I mention another consideration which is extremely relevant and that is the position of Renault Trucks, which manufactures on the other side of the road from Bedford in Dunstable. There is a strong case for seeing whether it is possible for the two plants to co-operate on the military contract.
    My hon. Friend the Member for Birmingham, Northfield (Mr. King) mentioned Renault which has 97 per cent. British content in its light trucks and over 60 per cent. British content in its heavy vehicles. It is, therefore, a most welcome European company manufacturing in Dunstable, using British parts and sustaining hundreds of British jobs and, therefore, the welfare of hundreds of British families. I urge the Government to look to Renault to see whether there is some way in which Renault and Bedford could form a partnership for the military contract and, thereby, strengthen our truck manufacturing base in south Bedfordshire and our employment base throughout the county.
    I should like to say one or two things about the national situation. I hope that this will be the year in which my right hon. Friend the Chancellor of the Exchequer finally gets rid of the 10 per cent. car tax. With his tax revenues now extremely buoyant and the proportion of United Kingdom market taken by United Kingdom-sourced motor vehicles now better than 50 per cent., it is an ideal time to build on the improvements in the industry by using the tax system to achieve higher volumes of production in the United Kingdom, which would be of great benefit to the suppliers to the industry as well as to the manufacturers.
    If one adds to that the current favourable exchange rate, Britain is, as has already been said, the ideal prime area for vehicle manufacturing. Let us use the tax system to encourage that further.
    We are, after all, a road based economy and the Government should always be doing things that encourage companies to manufacture cars and trucks here. For years the tax system was used against the motor vehicle industry. Now is the time for the tax system to be used to help the industry.
    I add two points to the overwhelming case to get rid of the 10 per cent. car tax. First, I hope that the Chancellor will change the capital allowance schemes, in a way that will encourage buyers of trucks to change them more frequently. I hope that that would mean more orders for our manufacturing base in Britain.
    Secondly, I would like the Chancellor to look at the question of petrol tax on engines where the engines are being used merely for research and testing. In other words, he should do something further to the tax system which would encourage the multinationals and others to say, "On testing our engines in Britain, the Chancellor does not apply taxes to the fuel we use solely for the testing." That would be another reason for manufacturing in Britain.
    The city technology colleges are now in their infancy but once they get going they should be sited near to areas where we manufacture trucks and cars because, as has already been said, there will be huge changes in technology and training and we want opportunities nearby for young people to learn those new skills by going to a city

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    technology college. I obviously want such a college sited in Bedfordshire and near the plants which my hon. Friends have mentioned.
    By doing those positive things, the Government can build on what I think is a changing and improving situation for many thousands of our people who work in the car and truck industries.
    10.8 pm
    Mr. Den Dover: It gives me great pleasure to have an opportunity to speak about the anxiety and worry of the Leyland workers and the Chorley workers. Some 2,500 or 3,000 people in my constituency work at the Leyland assembly plant, in the engine and foundry production facilities or at Multipart in Chorley.
    We have heard tonight from the Secretary of State that we are talking of a "merged truck venture". I believe that we have changed the terminology from "joint venture", which I accept can be other than 50:50 if it is spelt out. We are talking about a predominant number of United Kingdom companies and only one Dutch company, DAF Trucks.
    In a letter to Members of Parliament the chairman of Rover Group says:
    "Rover Group will take a 40 per cent. shareholding in the company"—
    that is, the merged truck venture—
    "reflecting the assets which they are contributing to it."
    We know from letters that the facilities in the United Kingdom are contributing some £180 million to the joint truck venture. That would mean that £270 million of facilities were donated or given to the joint venture by the Dutch.
    I have no proof of that. I originally thought that the letter that was sent to my workers was talking only about a United Kingdom side of the deal. The letter to the Leyland Trucks and Leyland Parts workers says:
    "This will be done by forming a new joint Anglo-Dutch venture, in which the Rover Group will retain a 40 per cent. shareholding, the UK part of which is to be known as Leyland-DAF."
    The letter does not say that the Rover Group will "obtain" a 40 per cent. share of a joint venture that embraces Europe and elsewhere in the world. I genuinely believed that it would relate only to the United Kingdom.
    I should like to emphasise this. What would happen if the engine and foundry facilities at Leyland were to continue? What would happen if the Scammell works were to continue? What would the balance of ownership and joint venture be then? Surely it would be around 50:50. The write-off of some £680 million of which perhaps some £450 million or £500 million relates to Leyland Trucks, is not all wasted money. It is an investment in know-how, technology and facilities; it is not money down the drain. Therefore, one cannot just take the assets that now lie on the ground. The inbuilt know-how, technology and development and the marketing expertise that have been built up are second to none, and have led to United Kingdom market leadership, from Leyland Trucks.
    Therefore, I believe that we should really be talking about a joint 50:50 venture. Admittedly, the decision making would have to be spelled out. It is common to both sides of the House that nobody is happy with the 40:60 deal that is proposed. Therefore, can the Minister of State give an assurance that the Rover Group will pursue a 50:50 true joint venture? That will meet the wishes of my constituents in Chorley.
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    During the lobby last week, I was delighted to hear from them that they do not pull away from the merged truck venture with DAF. They see in it great possibilities for the better assurance of jobs for them in the future. That is perhaps the best way ahead for the Leyland and Chorley workers and for Leyland Trucks and the parts depot at Chorley. We could see expansion and job gains in the next few years, but we in the United Kingdom will not have a fair share and say in the decisions that will be made by managing boards or by company directors.
    It is essential that the deal be renegotiated. Although I do not agree with much of the Opposition's amendment, I agree that the Government should be required to renegotiate the transaction on the basis of a genuine joint venture, with each party having a 50 per cent. interest. Then and only then will the best interests of our investment as taxpayers in the Rover Group, in Leyland Trucks and Leyland Parts, be served. I welcome DAF merging, but it has to be on the right basis. If I do not have the assurance that the Government will actively pursue a 50:50 deal, I shall be forced to vote against them.
    10.14 pm
    Mr. Michael J. Martin: The only truck-making facility that is now left in Scotland is the Albion works at Scotstoun in Glasgow. We lost the Leyland Trucks factory in Ba.thgate, and some years ago we lost the car-making facility at Linwood.
    I served an apprenticeship as a metal worker, and I know how important it is to many families in the west of Scotland and in the central belt that sons and, nowadays, daughters have the opportunity to go into engineering. It is all very well for the Secretary of State for Scotland to tell us that he is trying to bring service industries north of the border, but it is nonsense to say that such jobs will last, because north of the border we belong to traditional engineering communities and have skills that have taken generations to learn.
    Because of Government policy that is causing the rundown of companies and the activities of multinationals, communities that have served the nation well with their engineering skills are losing out. If we are to retain manufacturing industry in Britain the Government must give every support to engineering companies. That means not only giving grants and subsidies to companies to encourage them, but ensuring that proper and adequate training is given to our young people.
    I know that many people of my generation served apprenticeships and worked in engineering. We thought little about employment other than engineering when we left school and either went into the shipyard or into places like the Albion works or the railway workshops in my constituency. We were pleased to get an apprenticeship. Many of our parents had bitter memories of the depression and they encouraged us to go into engineering.
    It is sad that many young people leaving school today who have far better qualifications than we had, because they have O and A-levels, and who want to go into engineering cannot do so because there are no openings. The Albion works is the only truck-making capacity left in Scotland and its intake of apprentices has gone lower and lower since this Government came to power. The Government claim that they will bring about an upturn in the economy. That means that we shall need skilled men

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    and women. Where shall we get such people unless we are prepared to train them now and to think ahead to the future?
    If enough companies do not exist to provide employment, people should be employed in our excellent colleges of engineering. In my constituency the teachers in the Springburn college of engineering have very low morale because they cannot get apprentices. That should not be the case. All over Britain there are people with teaching expertise and we should use that expertise to get young people involved in training that will turn out engineers, metal workers like me, draughtsmen and metallurgists. The universities should play a part by turning out graduate engineers. If we do not do that we are lost and all the money that previous Governments and this Government have invested will be wasted. More and more we shall find that foreign companies will be in control of our future.
    I admit that I do not know a great deal about the DAF takeover and that many hon. Members will know more than I do. It worries me that foreign companies which in some respects are our competitors have control over the future of a very important section of our industry. If we do not watch out we could go down that road. Within a generation we could have no truck-making facilities worth talking about and what little we had would be in the control of foreigners.
    I am aware that we shall have another opportunity to discuss Caterpillar, but it is important to stress that the work force at Caterpillar is involved in manufacture of a similar nature to car manufacture. Only a few months ago Ministers and hon. Members were told by the American owners of Caterpillar that the work force was safe and that there was a good future for the company. The company stated that it was investing in the plant. Now men and women in the community are involved in a sit-in because the only industry that they have left is disappearing before their eyes. I would not like that to happen throughout the country.
    Although I have highlighted the point that only one area north of the border, Albion, is involved in truck-making, I am aware that the work that takes place in other hon. Members' constituencies has a beneficial effect on companies within my constituency. There are companies within the west of Scotland that, as part of the component industry, are dependent on orders from car manufacturers based in the constituencies of other hon. Members. As such, a healthy car industry will have a beneficial effect on my constituency and other parts of the United Kingdom. Although I would be glad if the manufacturers of cars and trucks came to the west of Scotland, I am aware that the steel industry in Scotland depends on healthy truck-making facilities elsewhere.
    When I go to industrial seminars all too often I listen to industrialists talk about new technology as if everything to do with electronics represents the answer for British industry. They discuss floppy discs, computers, new designs and all the rest of it. Although technology is important let us not forget the traditional heavy engineering industries that we are discussing tonight. Such industries are labour intensive and need a high degree of skill. If they prosper they will go a long way to reducing unemployment in our communities. I trust that the
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    Minister will take on board what I have said. We should be as proud and protective of British companies as are the Americans and Europeans.
    We should think more about training in our universities and colleges. I come from the west of Scotland and when I was at school those who taught me often had contempt for the industries that were close to the schools in my community. That is still the case. Many bright pupils are encouraged to go into law or commerce and somehow or other engineering is still a dirty word.
    Engineers create the wealth of this country. It is engineers that we need for Rolls-Royce and British Leyland. With the greatest respect to accountants and people involved in the law, they do not produce the wealth of the country. We need engineering expertise and such expertise is in demand throughout the country and throughout the world. We must start in the schools to encourage our bright young people to go into engineering and thus get us out of our rut.
    10.25 pm
    Mr. Michael Fallon: I regret that, for the second time in this Parliament, I cannot support the Government motion, and I want to explain why. I fully endorse the corporate plan. It is clear that Leyland's future must be in the private sector. I have long believed that all industries should be in the private sector and should contribute through profits and taxation to the schools, hospitals and public services that we need, instead of drawing resources away from them. God knows, Leyland has drawn enough resources away from those public services over the past 10 to 15 years. Of course, Leyland Bus and Leyland Trucks have to be sorted out, rationalised and restructured. But how are we to do that?
    I oppose this Leyland-DAF deal. It is anti-competitive. The purpose of privatisation is to widen choice and to enhance competition in a particular industry. Leyland Trucks, for all its faults, used a multiplicity of United Kingdom suppliers. Under this Leyland-DAF deal, DAF will be given a virtual monopoly over the supply of engines in the new heavy truck and light truck programmes which are to be developed. In other words, this Leyland-DAF deal will cordon off part of the market which is competitive at the moment and will restrict it solely to one Dutch supplier.
    The deal will cut out the independent suppliers in the market place, which I thought the Government's industrial strategy was supposed to encourage. It will have an immediate and damaging effect on the Cummins engine company, a principal supplier to Leyland Trucks. That company supplies heavy and light engines and the components that go with them from factories at Shotts and Darlington. Through this deal, Cummins' market will be restricted.
    In November, Cummins in Darlington employed 1,100 people. Proposals were announced to make 600 redundant. After a vigorous campaign, including a debate in the House, those proposals were revised and some 230 jobs were saved. All those jobs are now at risk again because the Government— not the company— have decided to restrict Cummins' market.
    I oppose the deal also because it is a producers' deal. The deal may well suit the Rover Group and may well be the best solution for Leyland Trucks, but it has not been struck in the best interests of the other clients of the components suppliers—the customers. It is a deal such

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    as those which so often have been undertaken by successive Govenments in textiles, agriculture and the rest of the motor industry. It is concerned with preserving the primary jobs at Leyland. Of course, my hon. Friend the Member for South Ribble (Mr. Atkins) is right to fight for those jobs, but it ignores the secondary jobs—the jobs downstream which cannot be quantified so easily and which are lost in dribs and drabs over successive years. Because it is a producers' deal, it will inevitably lead to further concentration and integration in the market place instead of more competition and greater diversification. In short, this is a very poor deal.
    I do not suggest that the Paccar option would necessarily have been better. I am prepared to accept that for Leyland Trucks, the Paccar option may not have been as attractive, but equally it would be wrong to suggest that the Government only had this DAF deal or that Paccar option to consider as alternatives. After all, the Government, through their shareholding in the Rover Group in Leyland, held all the cards. It was open to my right hon. and hon. Friends in the Department to modify the DAF proposals which were presented to them through the Rover board.
    As the right hon. and learned Member for Monklands, East (Mr. Smith) pointed out, we have a good deal for DAF. We are handing over to DAF £175 million in public assets; we are scrubbing a debt of some £680 million; we are handing over 7,000 employees and we are taking only three of 17 places on the board. The Dutch have not done as well since Admiral Tromp sailed up the Thames. This is not a joint venture agreement at all. We have agreed to hand over these public assets; we have agreed to wipe off the debt; we have agreed to take only three of the 17 places on the board. Now we come to the nub of the argument. What has DAF been forced to agree? Has it agreed to delay the development of its heavy truck programme; has it agreed to phase it in slowly over five to ten years? We have no guarantee about that.
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    My hon. Friend the Minister of State has written to me this evening, but he can give me the assurance only that
    "such a development programme will take some considerable time to complete."
    I cannot go back and tell my constituents that they may be out of jobs but that it depends on how long DAF takes to get its heavy truck programme going.
    On the light engine side, has DAF agreed to defer the introduction of its light engine family that we read about in Truck magazine last month? Again my hon. Friend in his full and courteous letter says:
    "The new DAF 6·2 litre engine family has already been developed and will be available in DAF's present range of medium trucks. This range is not a replacement for Leyland's medium trucks which will continue until such time as a new joint model range is developed. That will of course take some considerable time".
    Again, I cannot go back and tell my constituents that whether or not they have jobs in five years' time will depend on our being able, through our three out of 17 directors, to get a reasonable restraint of five, seven or 10 years on the development of those programmes.
    Before the heads of agreement were finalised and the deal was signed, why did we not use our 40 per cent. shareholding to insist on 40 per cent. membership of the board, and on specific assurances regarding the heavy engine programme, the light engine programme and the proportion of United Kingdom component sourcing that we expect from this joint venture within a specific number of years? We, who are handing over these assets and wiping off the existing debts, were entitled to ask for such assurances on behalf of the British taxpayers who have put a considerable amount of money into Leyland over the years.
    It is with regret that I have to say that, unless my hon. Friend can convince me on any of those points, and although I do not agree with the rest of the Opposition amendment, I must agree with them that the contract should and could still be renegotiated.
    10.33 pm
    Mr. David Gilroy Bevan: There is a good reason why Birmingham has been referred to as the iron heart of England. It is because of its past and present dependence upon heavy industry and upon the motor car in particular and the manufacture of all its components. Because of the success of the Government's present policies, I support the motion. I thank my right hon. Friend the Secretary of State and my hon. Friend the Minister for taking careful note of what has been said in the midlands and in my constituency. I thank them for coming to the defence of the car industry, Land Rover and Range Rover.
    The hon. Member for Preston (Mr. Thorne) referred to the Tory Members who, earlier this year, prevented the Government from selling Austin Rover and Land Rover. I am not only proud but pleased to admit that I was one of those hon. Members. I am pleased also that we prevailed upon the Government to take such action. We did not like the way in which the operations—if they were operations—to sell the companies had taken place. We did not like the secrecy that surrounded the matter. We did not believe that the £2 billion of investors' money that was put into the Austin Rover Group and into the Land Rover section in 1979 was wasted. We thought that it was just about to bear fruit.
    The fact that that investment has borne fruit, the fact that exports of Austin Rover cars have gone up by about 16 per cent. in the past year, the fact that the Range Rover is being introduced into the United States, the sales of which, in the first year, are expected to exceed the estimated 4,000 models by perhaps double that number, are signs that we were right. Therefore, it is appropriate that, at the time that we have been proved to be correct, those of us who maintain our defence of Land Rover and Range Rover should now speak for the Government and for the wisdom of the policies that they have followed.
    Indeed, I particularly thank the Minister for the courtesy that he showed in discussions and negotiations and the care that he, together with his senior colleagues, evinced in his consideration and almost entire acceptance of the British Leyland corporate plan.
    My hon. Friend the Member for Birmingham, Northfield (Mr. King) made a succinct speech that was well-backed by statistics in every respect. My hon. Friend and I went to Dallas and spoke to the distributor of the Sterling motor car, about which I put down an early day motion many months ago, wishing it great success and stating that it would be a world beater. That distributor made it quite clear that it was a British product that would sweep the States and of which he could not get enough. He wanted to ensure that the model would be delivered.
    My constituency has been denuded of British Leyland factories, apart from one. There were eight factories in my constituency. Land Rover has moved out. It has now resettled over the border in the old SDI factory in Lode lane. I did not object to that move, because I could see that it was a necessary rationalisation. But we are now about to witness the greater development and success sales of the Land Rover. It has gone in great numbers to Germany, France and the United States of America. I am convinced that we shall see a success story that will be backed up even more fully by the success of the new Land Rover 90, which certainly represents a bargain.
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    Within the last day or so we have heard of the success of the Maestro panel van, about 4,000 of which have been sold to British Telecom. We see all around us signs of the investment that the Government have made on behalf of the British taxpayer. They have given nearly £700 million to British Leyland. My constituents, the work force and people in the midlands can have every confidence in the Government's actions over the Austin Rover group.
    The present chairman of the group has decided to retain the Mini, and we compliment him on that decision. We should also compliment the previous chairman of Austin Rover and his team on their introduction of new designs and on insisting that the success of British Leyland could depend on the success of the Rover 800 range.
    We are on the threshold of an exciting future because the Government's policies have paid off. They have listened to those of us who believed that it would be wrong to do other than what they did in the circumstances of a few months ago. Therefore, we must give praise where praise is due.
    I am convinced that Austin Rover is about to make most excellent progress. Home produced vehicles account for over 50 per cent. of the home market. To ensure the continued success of Austin Rover in the export market it is imperative that the home market should also be increased. Whenever British people purchase a new car they should strongly consider a British manufactured product—preferably an Austin Rover product. That would ensure the continuance of its success story.
    Over 60 per cent. of the people in my part of the country own their own homes. The ownership of shares is also increasing. We should also try to ensure the wider ownership of British produced cars, including second cars for each family. Each of us must do everything possible to back British manufactured cars.
    I, too, should like the 10 per cent. special car tax to be removed. The only consumer goods that bear a tax of 24·6 per cent. are cars; all other goods that are sold bear a tax of only 15 per cent. I hope that my right hon. Friend the Chancellor of the Exchequer will rectify that discrepancy and enable the success story to continue.
    10.43 pm
    Mrs. Ann Winterton: I am glad that I have caught your eye, Mr. Deputy Speaker, before the sands of time run out in this most important and wide-ranging debate on the motor vehicle industry. In the interests of brevity, I shall restrict my few remarks to the Leyland Truck sector of the industry.
    When we seek a solution to the problems that face Leyland Trucks we must consider what is the best overall solution in the national interest, not least to relieve the British taxpayer of the burden of the subsidy to Leyland Trucks, amounting to approximately £1·5 million each week, but to retain the maximum number of jobs in this country at Leyland and in companies in the components industry. In other words, although it is inevitable that job losses should occur in the short term whichever solution is adopted—that is a bullet that we must bite—it is vital to maintain the maximum manufacturing capacity in the United Kingdom and not to allow it to die or export it elsewhere, for example to Europe.
    My right hon. Friend the Secretary of State must give some clarification at some stage about what is meant by "significant" in relation to the British content in the new range of trucks in the Anglo-Dutch company. We must

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    have clarification if our suspicions are to be allayed that in future even more components will be sourced in Europe or in Holland. Many hon. Members expressed the view that if this is a genuine partnership, equity in the company should he split 50: 50 between Leyland and DAF, and I agree with them. Certainly we should have greater representation on the boards of directors.
    The other company to bid for Leyland Trucks was Paccar, which is 100 per cent. American-owned. Why should its offer have been considered by many to be preferable to that of DAF? By "many" I include the majority of Leyland's major customers and the majority of Leyland distributors. Paccar took over Foden, which employed more than 3,000 in 1982; now it employes 450 at its plant in Sandbach. But it has brought Foden back into profitability by introducing improved cab design and comfort and by insisting on a high quality vehicle to he delivered on time to the customer's exact specifications. It has also been successful in winning two Ministry of Defence contracts against extremely stiff competition and the component sourcing of those contracts is 95 per cent. British.
    Paccar announced during the negotiations that it would have continued the 90 per cent. British sourcing which is at present in force at Leyland. I suggest that 90 per cent. is, indeed, a "significant" figure and perhaps my hon. Friend the Minister would like to comment on that when he replies.
    It should also be known that Paccar would have offered Leyland Trucks a market in the United States of America for the Roadrunner truck and initially said that it could have offered this market for 3,000 trucks, which is exactly one third of the production of British Leyland. Paccar already has 20 per cent. of the United States' heavy truck market.
    Incidentally, Paccar buys all its drive-line components—engines, gearboxes and axles—from outside suppliers through British subsidiaries of companies, such as Cummins, Rockwell and Eaton. It would have continued to do so, if it had been successful in acquiring Leyland. It made the offer for Leyland from a position of financial strength, having made more than £164 million profit in the past three years. I hasten to add that it made the offer to buy Leyland outright, in good faith and without the sweetener of Freight Rover thrown in.
    Often we talk, wrongly, of Leyland Trucks being the last British truck manufacturer—a statement which makes the blood boil of many hundreds of my constituents in Sandbach who are associated with ERF. ERF was founded in 1933 when there were dozens of commercial vehicle manufacturers in Britain. During the past 20 years there have been many mergers and takeovers—and the total loss of some old names. Throughout that period ERF has remained independent and British. It welcomes the fact that it will not be competing with a British Government subsidised competitor and it is looking forward to the future with a great deal of interest. At present, ERF has its best forward-order book for seven years, and it is building for the future on the success of its new E series and plans to increase production by 50 per cent. in the next three years, which must surely be good news for employment in south-east Cheshire.
    ERF will continue its policy of sourcing components in the United Kingdom wherever possible, and the present level is approximately 85 per cent. It employs 1,000 people in the group, but it is significant that its knock-on effect
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    runs to over 10,000 employees. Those people are indirectly affected through its suppliers and sub-contractors throughout the country.
    Having fought through the worst recession in living memory, ERF can face the future with confidence and build on its 10 per cent. share of the United Kingdom heavy truck market.
    In conclusion, I return to where I began; to whether the solution which is proposed—the DAF-Leyland deal—is in the best national interests in the long-term. On that score, I am not very confident, but I am confident that this deal will bring opportunities to my constituency and that Foden and ERF will be in there fighting to extend their share of this highly competitive market. As both, in their different ways, produce trucks of an extremely high quality, it should be interesting to see how successful they are in the future.
    10.52 pm
    Mr. Kenneth Hind: I am grateful for the opportunity of catching your eye, Mr. Deputy Speaker, and I shall be brief.
    Among my constituents are people who work at the Leyland Trucks factory and in the various operations which are associated with Leyland Bus and Leyland Trucks. My main interest in rising tonight is to seek to maintain the manufacture of heavy goods vehicles in Lancashire for the foreseeable future.
    Constituency Members such as myself and my hon. Friend the Member for South Ribble (Mr. Atkins) are concerned to maintain the best possible manufacturing capacity and deal for those who work at these factories. I must, therefore, express some worries as to the Government's proposals. There was no doubt in the minds of the work force—they put this forward in 1982—that Leyland Trucks had to take in a partner. That is common sense and I fully support that. Therefore, the question is to what degree and in what proportion does that partnership take? The Government propose that there he a 60: 40 partnership. I would be failing in my duty if I did not say to my right hon. Friend and my hon. Friend the Minister that the work force are most concerned, quite rightly, that there has not been a 50: 50 merger with DAF. They have good reasons for thinking that and I hope that the Minister, when winding-up tonight, will answer some of their reservations. Leyland Trucks is bringing £150 million worth of assets and 7,000 workers into this merger. It is also bringing at least 16 per cent. of the British heavy goods vehicle market. Left out of that merger is the foundry, which has been established at Leyland for some time, and the engine factory. If those two items were included, it could be argued strongly that that would make it 50: 50 partnership. I am most concerned about the engine factory. The 400 engine, which has been referred to by many of my colleagues, is a substantial engine. It has good markets and has been developed. It has a future and I am told by those who work for British Leyland that many customers have said that should the 400 engine not be available in the vehicles produced at Leyland they will be looking elsewhere for their vehicles in the future.
    The TL11 engine has also been developed and is capable of further development. That will result in good markets and will provide a good deal of work in the foundry and the engine factory.
    In contrast to that, DAF proposes to produce engines in in Holland and in Germany. But when we scrutinise what

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    it is proposing, 70 per cent. of the engines that are produced for DAF trucks at the moment are produced by other manufacturers, predominantly in Germany, mainly by Fitzwinter. If that production was to be transferred as part of the new company to the engine factory at Leyland it would preserve many more jobs and it would make sense to keep the production of engine components within the company rather than going outside it. It would also preserve more jobs in the north-west in areas where they are greatly needed.
    When we are facing the possibility of inviting Leyland Trucks to tender for one of the biggest Ministry of Defence contracts for vehicles that has ever been purchased by this Government, or by any British Government, it makes no sense to have an engine capacity dependent upon factories in Germany. If there was an East-West war, under any scenario Germany and its factories would be in the centre of the battlefield. It makes much more sense to have the capacity based in the United Kingdom, particularly in central Lancashire.
    For those reasons, there are many questions to be answered tonight. I would press my hon. Friend the Minister to consider that it does not make a lot of sense to have so much of the engine capacity to be built by Fitzwinter when there is capacity in Lancashire to meet those demands.
    On control, I can only press my hon. Friend that for us to have only three directors on two boards with the rest coming from DAF does not make a great deal of sense. It does not even represent 60:40 control and does not give the sort of reassurance for which the work force, whom we are taking from a British company into this new company, are looking. In that respect we have a duty to stand by it and ensure that its interests are properly represented.
    A series of questions needs to be answered. Rightly, the work force is entitled to ask for some job protection. What guarantees does it have from the new company, and DAF in particular, of continued production at Leyland and in Lancashire? What guarantees does it have of the use of British components within the existing Leyland range, and, indeed, within the DAF range? I am told that Leyland takes components from 5,520 suppliers, most of whom are British. Those companies will also depend on the new company and their requirements are important for the British economy.
    I take the point made by my hon. Friend the Member for Darlington (Mr. Fallon) about Cummins engines. As well as using Leyland engines, the present Leyland Trucks range is heavily reliant on Cummins engines produced in Darlington.
    Both the work force and the people of Lancashire think that the idea is imaginative. It is necessary to produce wider markets for the company in the future and to preserve employment in Lancashire. But we must be told this evening why there is not a 50:50 partnership. Why is it 60:40? Will my hon. Friend the Minister seriously consider the representations for a 50:50 partnership?
    Mr. Roger Stott: Will the hon. Gentleman give way?
    Mr. Hind: I apologise, but others wish to speak.
    10.59 pm
    Mr. Terry Davis: In his opening contribution to the debate, the Secretary of State made what I would describe as a "revealing speech". If we put on one side his ritual denunciation of the Labour party, we are left with the corporate plan for the Rover Group and a collation of extracts from press releases from various other motor manufacturers. Nevertheless I pay the Secretary of State the compliment of following, if I may, the thread of his speech.
    Like my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), I want to emphasise that the Labour party welcomes the announcement that the AR8 vehicle and the K series engine are definitely going ahead, but I should like to make two additional points.
    First, there should never have been any doubt about Government support for those projects.
    Second, unlike the hon. Member for Oxford, East (Mr. Norris) and the hon. Member for Birmingham, Northfield (Mr. King), most of that hon. Gentleman's constituents in Birmingham and the Labour party are concerned about the future of AR6. No one in Birmingham except the hon. Member for Northfield believes that the AR6 will survive. Most people believe that it is dead and buried whereas it is absolutely essential for the future of Austin Rover that the AR6 should continue if Austin Rover is itself to continue as a volume producer of motor vehicles. The cancellation of the project is bound to raise the question, as my right hon. and learned Friend the Member for Monklands, East explained, whether the policy of the Government and of Mr. Graham Day is for Austin Rover to withdraw from volume car production and become a specialist car producer with Ford or Honda left to pick up volume production. Our fears are reinforced by the reference in the corporate plan to moving up market and into specialist niches. When the Minister replies, I hope that he will explain what that reference is supposed to mean.
    The Secretary of State, the hon. Member for Oxford, East and the hon. Member for Northfield made no reference to redundancies at Austin Rover. Indeed, the hon. Member for Northfield told us that wherever we look in the motor industry, there is good news. He seems to think that it is good news for the staff at Longbridge who are losing their jobs— an announcement which was made only two or three weeks before the corporate plan was published. There are to be staff redundancies on the scale of 1: 8 of all staff in Austin Rover. Some 1,265 people are to lose their jobs, and 380 will lose their jobs at Longbridge and Drews lane. However, the hon. Member for Northfield told us that there is good news where ever we look.
    Mr. Graham Day and the Government are reducing the staff at Austin Rover to meet a sales level of 450,000 vehicles rather than increasing sales to justify the staff level that the Government and Mr. Day inherited. The Secretary of State took pride today in announcing that in the first two months of this year Austin Rover had a market share of 17 per cent. However, eight years ago its market share was 23 per cent. That is not only a measure of the decline of Austin Rover but shows that the Secretary of State is easily satisfied by temporary success. A market share of 17 per cent. and sales of 450,000 may satisfy the Government and Mr. Graham Day, but that is not good enough for Austin Rover or the Rover Group. The

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    Secretary of State completely ignores and refuses to comment in the House when questioned about the decision to sack 335 engineering and technical people among these staff. They are the people who design the cars and who are responsible for improving the quality of the existing range.
    The Secretary of State told us two weeks ago that it is early days and that the redundancies should be voluntary. The truth is that the Rover Group has had only—as of today—470 firm applications for voluntary redundancy. When the Minister replies, I hope that he will tell us what is the attitude of the Secretary of State and the Conservative Government to the possibility of compulsory redundancies being declared for the staff at Austin Rover.
    The spread of redundancies has not yet ended. There is to be another announcement—which is widely known in Birmingham and Oxford— that there are to be another 250 compulsory redundancies in the Austin Rover Group. That announcement has not yet been made, and the unions have been told that a decision is still under review. However, everyone knows that security firms are advertising for staff to take on the security work at Austin Rover because this work is going to be subcontracted, with another 250 redundancies for staff at Austin Rover.
    The Secretary of State and Mr. Graham Day tell us that there must be redundancies, because Austin Rover sales have declined, but the fact is that Austin Rover sales were so low in 1986 for two reasons: first, the uncertainty created by the Government as a result of the talks with Ford a year ago; secondly, the damage directly caused to Austin Rover by the Government. My hon. Friend the Member for Warrington, North (Mr. Hoyle) told the House how the management of Austin Rover was approached by Ford and asked to provide confidential commercial information. To its credit, the management refused, but then the former Secretary of State, the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), contacted Sir Austin Bide, the chairman of what is now called the Rover Group, as a result of which the board of Rover Group instructed management at Austin Rover to hand over commercial secrets to its main competitor, the Ford Motor Company. That information included the marketing plans and the pricing strategy for the Metro, and it not not surprising that the result was that the Ford Fiesta outsold the Metro last year. It led directly to a loss of market share for Austin Rover. It was an act of industrial sabotage.
    The question that the Minister of State should answer tonight is not whether the right hon. and learned Member for Richmond, Yorks contacted Sir Austin Bide, who then instructed the management to take that action, but whether the right hon. and learned Gentleman got authority from the higher level of the Prime Minister.
    On the proposals for Leyland Trucks and DAF, again we are told by the Secretary of State that there is overcapacity, but he fails to answer the question why overcapacity in Europe leads to redundancies in the United Kingdom. There are no redundancies in Holland or elsewhere, but always job losses in the United Kingdom. First, we had the job losses at Bedford Commercial Vehicles Ltd., with American owners deciding to create British redundancies. That closure led directly to a sales opportunity for Leyland, but the Government's response is to approve further redundancies at Leyland Trucks. The Secretary of State defends it by saying that there is overcapacity and that Leyland Trucks is losing £1·5 million a week or £75 million a year. But how much of that loss is
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    accounted for by the interest on the debt of Leyland Trucks—a debt which the Government will write off to make a present of Leyland Trucks to DAF? My right hon. and learned Friend the Member for Monklands, East asked the Secretary of State that question earlier, and it was clear that he did not know. It was also clear that the Minister of State did not know. We all saw the consultations that took place and the arithmetic being done by people in the Box. The Government had failed to ask the question and had never considered the possibility. Their only concern was to write off at taxpayers' expense the debt of Leyland Trucks in order to get rid of it to DA F. They did not consider writing off the debt to allow Leyland Trucks to remain British.
    Indeed, we have the testimony of the managing director of Leyland Trucks as to why it is being sold. He said publicly:
    "If Leyland had stood alone it was very difficult to see where that investment would come from except from Government and that was clearly not going to be forthcoming."
    The pressure was put on the Rover Group to conclude a 40:60 deal with DAF.
    My hon. Friend the Member for Preston (Mr. Thorne) drew attention to the effects of the closure of the foundry and Leyland engines. What is more, there will be no alternatives for customers. Those customers who take the products from the foundry at present will also be forced to go overseas. The jobs of those who work at Leyland engines will be replaced by Dutch jobs.
    There have been several comments tonight about the effect on Cummins and Perkins. If the criticisms made, even by Conservative Members, are untrue, let the Government explain why, within days of the announcement being made in the House of Commons, DAF approached the manufacturers of machine tools asking them to quote for a 50 per cent. expansion of engine manufacturing capacity in Holland directly to replace the engine capacity that is being closed at Leyland Trucks, jobs will be lost at Leyland Trucks, Cummins and Perkins. To be specific, I shall give the Secretary of State a name. Why was COMAU asked to quote for machine tools to increase the capacity of DAF engines by 50 per cent. so soon after that announcement?
    Many hon. Gentlemen have also mentioned the effect on customers.
    If the treatment of Leyland Trucks by the Government and the Rover Group is appalling, the treatment of the people who work at Scammell in Watford is outrageous. Two months ago that company was told that it had won an order for DROPS vehicles worth £120 million over the next five years. The work force was told that their jobs were secure. Two months later their jobs are going. the factory is being closed. That factory has made a profit in seven of the past 10 years. As my right hon. and learned Friend the Member for Monklands, East said, that factory has lost two and a half days in strikes in 68 years. The reward for loyalty and hard work is the sack.
    The Secretary of State and the hon. Member for Northfield told us that the DAF deal is good for Freight Rover because it will give us distribution in Europe. We already have distribution in Europe. That was last year's announcement. We were told that it was a collaborative deal. The Secretary of State announced it in the House and

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    we were assured that we would be getting all the benefits of DAF selling Sherpa vans on the continent of Europe without it taking over the Freight Rover company.
    The hon. Member for Northfield also said that DAF will provide the investment that is badly needed for Sherpa vans, both for new models and for expansion of manufacturing facilities. He said that the money could not come from the Rover Group. He did not read the corporate plan properly. If he does read it he will see that it says quite clearly that the development of new models and the expansion of facilities are
    "capable of being financed conventionally either by the Group or a subsequent purchaser."
    We know the Government's decision; it must be a purchaser.
    In fact, the company is profitable and that is why it is being sold. It is a success. It has increased sales, improved productivity, increased production and, as a result, has increased its profits and taken on more people. The Government's reward for that is to sell it to DAF. Today the Secretary of State claimed that the success of Jaguar provided, in his words, "incontrovertible proof" that privatisation works. That is the real reason for the Government wanting to sell Freight Rover. It is an embarrassment to them. It is profitable and successful under public ownership, and the Government do not like public ownership. The irony is that even after they have given Freight Rover to DAF, it will still be publicly owned. There will still be a public stake even after the flotation, but the public stake will belong to the Dutch Government who will continue to have a 25 per cent. share of that company. The Dutch Government are not so foolish as to sell success.
    My hon. Friend the Member for Coventry, North-East (Mr. Park) drew attention to the importance of the decisions for component suppliers. Not only will there be job losses at Leyland and Scammell but in component suppliers. How many jobs will be lost at Lucas, Girling, Smiths, Cummins and Perkins? Have the Government even asked that question? The Secretary of State simply told us that what he still persists in calling a "joint venture" with DAF will be "reflected by changes in the component industry". When he was asked directly by one of his supporters to tell us the percentage of British components, he could reply only by saying that it would be significant. He does not know the numbers. Did he even ask? Did it even occur to him to ask?
    There does not seem to be much consultation or consideration by the Government, but there is even less, in fact, none at all, with the work force. Whenever in the past the Secretary of State has been pressed to consult the people who work at Leyland Trucks, Freight Rover or other places, the answer has been that that is a matter for the company. We have seen how much that is worth. There was no consultation whatsoever, infinitely less than there would have been in Holland about any such proposals by DAF affecting Dutch workers.
    We are now going to have a so-called joint venture with DAF; 40 per cent. Leyland and 60 per cent. DAF, but not 40 per cent. British directors. As several hon. Members from both sides have mentioned, that is not a joint venture, it is a takeover. If we are going to have a genuine joint
    402
    venture we should at least have 40 per cent. of the directors instead of three out of 17. What we should have is 50 per cent. of the assets and 50 per cent. of the directors.
    The hon. Member for Chorley (Mr. Dover) told us that, if we do not receive an assurance that the arrangements with DAF will be renegotiated, he will be forced to vote against the Government tonight. I must tell the hon. Gentleman and the hon. Member for Darlington (Mr. Fallon) that I do not think that the threat will have much effect on the Government. To be blunt, there is no point in voting against the Government on Wednesday when everybody knows that they will vote for the Government on Thursday, Friday and the following Monday.
    The hon. Member for South Ribble (Mr. Atkins) told us that the redundancies were "intolerable and frightful". His belief that they are intolerable lasted only to the point when he told us that he would vote for the Government—
    Mr. Robert Atkins: That is not true.
    Mr. Davis: It is. The words "intolerable and frightful" are the hon. Gentleman's words, but he will vote for the Government.
    Redundancies have been emphasised by all my hon. Friends. There were 1,500 at Austin Rover and 2,200 at Leyland and Watford. Of course, there are extra jobs at Jaguar, Lotus and Cowley, and they are all welcome, but the Government and their supporters ignore the fact that extra jobs at Lotus in Norfolk are little use to someone losing a job at Leyland. They ignore the fact that the extra jobs are production jobs whereas the jobs that are being lost at Austin Rover are staff jobs. Are they really suggesting that the redundant manager or clerical worker at Cowley should take a job on the track?
    The fact is that many of the people who will lose their jobs will never work again. That is why my hon. Friends and I are angry. I shall tell the House why I am angry. As my hon. Friends know, I used to work in the motor industry. I worked at a factory called Canley in Coventry. I remember when that factory reverberated with the noise of production. If one goes there today, one walks through vast empty halls where the only sounds are the echo of one's own footsteps. At the end of the week the men and women went home with wage packets—not only with wage packets, but with dignity, self-confidence and self-respect. Today those people do not go to work; they go to jobcentres. They do not clock on; they sign on. They do not receive wage packets; they get giro cheques. That is why Opposition Members are angry. As my hon. Friend the Member for Warrington, North said, they are our neighbours and friends. That is why we are angry.
    When we look a the scale and enormity of the damage to industry that has been done by the Government, we are entitled to be angry. When we vote tonight, we shall be expressing not only our anger, but our belief that there must be a better way to treat industry and the people who work in it. We reject the Tory philosophy that people are expendable and that they are only costs of production. I call on all hon. Members from all parties, and from whatever part of the United Kingdom they come, to join the Labour party in the Lobby in opposing that Tory philosophy.
    11.16 pm
    The Minister of State, Department of Trade and Industry (Mr. Giles Shaw): I do not wish to share the intemperance

    403
    of the hon. Member for Birmingham, Hodge Hill (Mr. Davis). I shall endeavour to respond to the points that have been raised in the debate. I start by saying to him and his right hon. and hon. Friends that there is absolutely no question about the importance of maintaining and maximising the number of people who can work in the vehicle industry, have pride in what they do and return with substantial wages in their pockets. What we have to face, and what the hon. Gentleman did not face, is whether there are substantial numbers of customers to buy the products made by those people and what steps should be taken to secure that people buy the products of the industry.
    The debate was opened by the right hon. and learned Member for Monklands, East (Mr. Smith). I shall deal with one or two of the issues that he raised and return to the significant issues shortly. The debate has been fully informed and extremely effective. The right hon. and learned Gentleman asked some specific questions to which I hope to provide answers.
    The right hon. and learned Gentleman referred to the interest debt in the Rover Group associated with the truck division's losses—about £34 million or £35 million in 1985–86, the last year for which we have full data. The consequence of the debt write-off will be a significant reduction in the interest charges carried by the Rover Group.
    The relationship with Honda, mentioned by the right hon. and learned Gentleman, was also reflected in one or two comments by my hon. Friends. That has been and will continue to be a relationship that is gradually moving in phase. The right hon. and learned Gentleman will be aware that the first arrangement was that of a licence to build the Acclaim car. The second was a joint development of the Rover 200 series. Thirdly, with the Rover 800 series, there was not only joint development but joint manufacture, part in the United Kingdom and part in Japan. There has been a steady progression in that relationship. My right hon. Friend the Secretary of State referred positively to the fact that Honda believes that the relationship with Austin Rover will be ongoing and continue to be of great significance to both parties.
    The right hon. and learned Gentleman and other hon. Members asked about the AR6. It is part of the policy of the chairman of the Rover Group to maximise the opportunity for the sale of small and volume cars. In the corporate plan, from which hon. Members have quoted, there is a firm commitment to that. My hon. Friends spoke about the huge importance of the sales of the Mini and the Metro. Some 30,000 or more Minis and 150,000 or more Metros have been sold in the last full year. We are talking about a large proportion of Austin Rover's sales. The commitment to that underpins the view of the corporate plan.
    The corporate plan is on-going. Although it is set for a five-year period, it contains a lot of the seeds of further development. The right hon. and learned Member for Monklands, East asked where production and investment would come from. If he looks in the Austin Rover section of the plan he will see that it does not set out a complete product plan for the five years. The plan will be subject to review as it proceeds from one year to another. As Graham Day said, that is why the AR6 development has not been cancelled. It is still subject to review according to performance in the market place. The crucial matter about
    404
    the first year of the plan is to see that the group has that development in the market to which we all aspire. All hon. Members will seek to encourage that.
    I shall now turn to the cardinal issues in the debate. As I followed it, there was joint agreement that Austin Rover should develop along the lines that have been laid down in the corporate plan. There are important commitments to the investment in the K-series engine and that is widely welcomed. As my hon. Friend the Member for Oxford, East (Mr. Norris) said, there are important considerations in the case of Cowley which could well produce important developments.
    There is a real possibility of Austin Rover being able to stabilise during the current year and being able to look forward to the future with greater confidence as a volume car producer and, indeed, as a volume car exporter. The export figures for recent years eloquently demonstrate that.
    The Austin Rover part of the debate produced few real anxieties, except for the question of jobs which was raised by the hon. Member for Hodge Hill. He said that further redundancies were to be announced. I can tell him that the letter issued on 19 February by Mr. Wharton, the managing director of Austin Rover, says:
    "Approval also enables me to say that we are not planning at present any plant closure or further redundancies—other than those staff reductions already announced."
    In the other part of the debate about Leyland Trucks and the DAF proposal there was considerable discussion. I shall deal with the main issue—the question of he merger and the request by my hon. Friends and the hon. Member for Hodge Hill that there should not be a proposal for a 60: 40 arrangement, but that 50: 50 should be the preferred option. I have been under pressure from my hon. Friends to see that this is renegotiated.
    I shall explain to the House why the Government feel with cast iron certainty that this is the correct route to follow. The shareholdings are based on the value of the assets which have been brought in by each partner. That is a reasonable view to take. The merged company will have net assets of over £500 million. As the House was told on 26 February, it is envisaged that Rover Group will transfer to the Leyland-DAF joint venture net assets valued at £179 million—considerably less than 50 per cent. As a result of the merger, Leyland will be part of a much bigger operation than before.
    In 1986 DAF produced 15,000 trucks compared with Leyland's production of about 10,000. In 1985, the DAF sales revenue was about £650 million compared with sales revenue by Leyland Trucks of about £400 million. The combined revenue of the group is about £1 billion cash.
    In 1985, before interest and tax, DAF made profits of over £20 million and Leyland Trucks lost more than £20 million. In arriving at the proposed distribution, the size of the asset base has been taken into account as well as the fact that the DAF portion, brought into the merged company, is more profitable, larger and more effective in the competitive market.
    What will be the benefits to Leyland and why are they important? It will mean significant and continued sourcing of components in the United Kingdom. Light trucks will continue to have the majority of their components—suspension units, axles, engines and cabs— sourced in the United Kingdom. The sourcing will be mixed for medium trucks, but DAF intends to increase purchasing

    405
    in the United Kingdom. It has said that its primary desire is to sell trucks and not to maximise its production of components.
    Leyland Will be competing as part of one of the largest companies in the European market and will have a broader base in which to compete. It will have the prospect of real growth and the prospect of being part of a profitable enterprise. It is important to point out that, as a result of the arrangements, Rover Group, with its shareholding of 40 per cent., will be able to retain the profits of the total operation including the total operation of the DAF company as presently constituted. On the assumption that Leyland vehicles and Leyland components can be developed Rover Group will be part of a profitable enterprise. Is that likely to happen?
    The joint venture is already determined to spend £150 million on the development of the Leyland part of the operation. It is determined to see the development of the broadest range of trucks that can compete in Europe—from the lightest vans to the heaviest trucks.
    I appreciate the concern expressed by my hon. Friend the Member for Darlington (Mr. Fallon) that Cummins may not view the proposal with the greatest pleasure. I found my hon. Friend's logic extraordinary when he accused the Government of making an uncompetitive move and sought to suggest that we should have negotiated a tied deal with component suppliers that would not be open to any competition. He appeared to be suggesting that value for money, quality and regularity of delivery should have no part to play. That is not sensible. It is more sensible to judge whether the combination of the two companies and their European prospects will lead to more of less units being sold.
    DAF has already been selling Rover products in Europe—the Sherpa vans—and it is clear that we shall see increased sales. Those Opposition Members who feel that this is a sellout should take note of the fact that, with regard to the light truck sector, instead of the present order of 1,400 units DAF proposes to take 3,400 units within the next 12 months.
    The prospects for the venture, formed in the 60: 40 relationship, are substantial in relation to Leyland Trucks and the employees. The design and technology unit will remain and there will be sourcing from Albion.
    On the question of Scammell at Watford, I assure my hon. Friend the Member for Watford, (Mr. Garel-Jones)—who has been most assiduous in his attention to the issue although unable to take part in the debate—and other hon. Members that the Rover Group has assured us that the Ministry of Defence has been consulted and is satisfied. Moreover, the facilities at Leyland can produce the high and heavy range of special military equipment that Scammell has produced. Therefore, there will be continuity and development of the military range, which is of such importance.
    In relation to the merger I turn to the question of board representation. I understand that hon. Members believe that the proposed distribution—one on the management board and two on the supervisory board—is inadquate. All boards of directors must carry out their duties in the name of the company as a whole and for the benefit of the shareholders. It is certainly not the case, nor should it be
    406
    the case, that the board of directors should be composed on a nationalistic basis. We seek the best technical development of the talents available.
    In view of what my hon. Friend the Member for South Ribble (Mr. Atkins), who made probably the most effective speech in the debate, has asked us to do, we shall, in discussions with the DAF chairman, ascertain whether there is a possibility of changing the number of directors. I understand that those who work in the company might feel—
    It being half-past eleven o'clock, MR. DEPUTY SPEAKER, pursuant to order [10 March], to put forthwith the Questions necessary to dispose of proceedings.
    Questions put, That the amendment be made:—
    The House divided: Ayes 177, Noes 230.

    Division No. 115]

    [11.30 pm

    AYES

    Abse, Leo

    Duffy, A. E. P.

    Adams, Allen (Paisley N)

    Dunwoody, Hon Mrs G.

    Alton, David

    Eastham, Ken

    Anderson, Donald

    Evans, John (St. Helens N)

    Archer, Rt Hon Peter

    Fallon, Michael

    Ashton, Joe

    Faulds, Andrew

    Atkinson, N. (Tottenham)

    Fisher, Mark

    Bagier, Gordon A. T.

    Foot, Rt Hon Michael

    Banks, Tony (Newham NW)

    Forrester, John

    Barron, Kevin

    Foster, Derek

    Beckett, Mrs Margaret

    Foulkes, George

    Bell, Stuart

    Fraser, J. (Norwood)

    Benn, Rt Hon Tony

    Freeson, Rt Hon Reginald

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

    Freud, Clement

    Bermingham, Gerald

    Garrett, W. E.

    Boothroyd, Miss Betty

    Gilbert, Rt Hon Dr John

    Boyes, Roland

    Godman, Dr Norman

    Bray, Dr Jeremy

    Golding, Mrs Llin

    Brown, Hugh D. (Provan)

    Gould, Bryan

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

    Hamilton, James (M'well N)

    Brown, Ron (E'burgh, Leith)

    Harrison, Rt Hon Walter

    Bruce, Malcolm

    Hart, Rt Hon Dame Judith

    Buchan, Norman

    Hattersley, Rt Hon Roy

    Caborn, Richard

    Haynes, Frank

    Callaghan, Jim (Heyw'd & M)

    Healey, Rt Hon Denis

    Campbell, Ian

    Heffer, Eric S.

    Campbell-Savours, Dale

    Hogg, N. (C'nauld & Kilsyth)

    Canavan, Dennis

    Holland, Stuart (Vauxhall)

    Carlile, Alexander (Montg'y)

    Home Robertson, John

    Clark, Dr David (S Shields)

    Howell, Rt Hon D. (S'heath)

    Clarke, Thomas

    Hoyle, Douglas

    Clay, Robert

    Hughes, Robert (Aberdeen N)

    Clelland, David Gordon

    Hughes, Simon (Southwark)

    Clwyd, Mrs Ann

    Janner, Hon Greville

    Cocks, Rt Hon M. (Bristol S)

    John, Brynmor

    Cohen, Harry

    Kaufman, Rt Hon Gerald

    Coleman, Donald

    Kennedy, Charles

    Conlan, Bernard

    Kirkwood, Archy

    Cook, Frank (Stockton North)

    Lamond, James

    Cook, Robin F. (Livingston)

    Leighton, Ronald

    Corbett, Robin

    Litherland, Robert

    Corbyn, Jeremy

    Lloyd, Tony (Stretford)

    Cox, Thomas (Tooting)

    Lofthouse, Geoffrey

    Craigen, J. M.

    Loyden, Edward

    Crowther, Stan

    McCartney, Hugh

    Cunliffe, Lawrence

    McDonald, Dr Oonagh

    Cunningham, Dr John

    McGuire, Michael

    Dalyell, Tam

    MacKenzie, Rt Hon Gregor

    Davies, Rt Hon Denzil (L'lli)

    Maclennan, Robert

    Davies, Ronald (Caerphilly)

    McNamara, Kevin

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

    McTaggart, Robert

    Deakins, Eric

    McWilliam, John

    Dewar, Donald

    Madden, Max

    Dixon, Donald

    Martin, Michael

    Dobson, Frank

    Mason, Rt Hon Roy

    Dormand, Jack

    Maxton, John

    Douglas, Dick

    Maynard, Miss Joan

    Dover, Den

    Meacher, Michael

    Dubs, Alfred

    Meadowcroft, Michael

    407

    Michie, William

    Shore, Rt Hon Peter

    Mikardo, Ian

    Short, Ms Clare (Ladywood)

    Millan, Rt Hon Bruce

    Silkin, Rt Hon J.

    Miller, Dr M. S. (E Kilbride)

    Skinner, Dennis

    Mitchell, Austin (G't Grimsby)

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

    Morris, Rt Hon A. (W'shawe)

    Smith, Cyril (Rochdale)

    Morris, Rt Hon J. (Aberavon)

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

    Nellist, David

    Snape, Peter

    Oakes, Rt Hon Gordon

    Soley, Clive

    O'Brien, William

    Spearing, Nigel

    O'Neill, Martin

    Steel, Rt Hon David

    Orme, Rt Hon Stanley

    Stott, Roger

    Park, George

    Straw, Jack

    Parry, Robert

    Thomas, Dr R. (Carmarthen)

    Pendry, Tom

    Thorne, Stan (Preston)

    Pike, Peter

    Tinn, James

    Powell, Raymond (Ogmore)

    Torney, Tom

    Prescott, John

    Wallace, James

    Randall, Stuart

    Wareing, Robert

    Raynsford, Nick

    Weetch, Ken

    Redmond, Martin

    Welsh, Michael

    Rees, Rt Hon M. (Leeds S)

    White, James

    Richardson, Ms Jo

    Williams, Rt Hon A.

    Roberts, Ernest (Hackney N)

    Winnick, David

    Robertson, George

    Woodall, Alec

    Robinson, G. (Coventry NW)

    Wrigglesworth, Ian

    Rooker, J. W.

    Young, David (Bolton SE)

    Ross, Ernest (Dundee W)

    Rowlands, Ted

    Tellers for the Ayes:

    Sedgemore, Brian

    Mr. Allen McKay and

    Sheerman, Barry

    Mr. Sean Hughes.

    Sheldon, Rt Hon R.

    NOES

    Alexander, Richard

    Clark, Sir W. (Croydon S)

    Ancram, Michael

    Clarke, Rt Hon K. (Rushcliffe)

    Ashby, David

    Cockeram, Eric

    Atkins, Robert (South Ribble)

    Colvin, Michael

    Atkinson, David (B'm'th E)

    Conway, Derek

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

    Coombs, Simon

    Baker, Nicholas (Dorset N)

    Cope, John

    Baldry, Tony

    Couchman, James

    Banks, Robert (Harrogate)

    Cranborne, Viscount

    Batiste, Spencer

    Crouch, David

    Bellingham, Henry

    Dickens, Geoffrey

    Bendall, Vivian

    Dorrell, Stephen

    Benyon, William

    Douglas-Hamilton, Lord J.

    Best, Keith

    Dunn, Robert

    Bevan, David Gilroy

    Dykes, Hugh

    Biffen, Rt Hon John

    Edwards, Rt Hon N. (P'broke)

    Biggs-Davison, Sir John

    Eggar, Tim

    Blackburn, John

    Evennett, David

    Blaker, Rt Hon Sir Peter

    Eyre, Sir Reginald

    Body, Sir Richard

    Fairbairn, Nicholas

    Bonsor, Sir Nicholas

    Fletcher, Sir Alexander

    Boscawen, Hon Robert

    Forman, Nigel

    Bottomley, Peter

    Forsyth, Michael (Stirling)

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

    Forth, Eric

    Boyson, Dr Rhodes

    Franks, Cecil

    Brinton, Tim

    Gale, Roger

    Brittan, Rt Hon Leon

    Garel-Jones, Tristan

    Brooke, Hon Peter

    Gilmour, Rt Hon Sir Ian

    Brown, M. (Brigg & Cl'thpes)

    Grist, Ian

    Browne, John

    Hamilton, Neil (Tatton)

    Bruinvels, Peter

    Hargreaves, Kenneth

    Bryan, Sir Paul

    Hawksley, Warren

    Bulmer, Esmond

    Hind. Kenneth

    Burt, Alistair

    Hirst, Michael

    Butcher, John

    Howard, Michael

    Butler, Rt Hon Sir Adam

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

    Butterfill, John

    Howarth, Gerald (Cannock)

    Carlisle, John (Luton N)

    Jackson, Robert

    Carlisle, Kenneth (Lincoln)

    Jenkin, Rt Hon Patrick

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

    Key, Robert

    Cash, William

    King, Roger (B'ham N'field)

    Channon, Rt Hon Paul

    Knowles, Michael

    Chapman, Sydney

    Knox, David

    Chope, Christopher

    Lamont, Rt Hon Norman

    Churchill, W S.

    Lang, Ian

    Clark, Dr Michael (Rochford)

    Latham, Michael

    408

    Lawler, Geoffrey

    Rumbold, Mrs Angela

    Lawrence, Ivan

    Ryder, Richard

    Lee, John (Pendle)

    Sackville, Hon Thomas

    Leigh, Edward (Gainsbor'gh)

    Sainsbury, Hon Timothy

    Lennox-Boyd, Hon Mark

    Sayeed, Jonathan

    Lilley, Peter

    Scott, Nicholas

    Lloyd, Sir Ian (Havant)

    Shaw, Giles (Pudsey)

    Lloyd, Peter (Fareham)

    Shaw, Sir Michael (Scarb')

    Lord, Michael

    Shelton, William (Streatham)

    Luce, Rt Hon Richard

    Shepherd, Richard (Aldridge)

    Lyell, Nicholas

    Shersby, Michael

    McCurley, Mrs Anna

    Silvester, Fred

    Macfarlane, Neil

    Sims, Roger

    MacGregor, Rt Hon John

    Skeet, Sir Trevor

    Maclean, David John

    Smith, Sir Dudley (Warwick)

    McLoughlin, Patrick

    Smith, Tim (Beaconsfield)

    McNair-Wilson, M. (N'bury)

    Soames, Hon Nicholas

    McQuarrie, Albert

    Speed, Keith

    Madel, David

    Spencer, Derek

    Malins, Humfrey

    Spicer, Jim (Dorset W)

    Maples, John

    Spicer, Michael (S Worcs)

    Marlow, Antony

    Squire, Robin

    Marshall, Michael (Arundel)

    Stanbrook, Ivor

    Mates, Michael

    Stanley, Rt Hon John

    Mather, Sir Carol

    Steen, Anthony

    Maude, Hon Francis

    Stern, Michael

    Maxwell-Hyslop, Robin

    Stevens, Lewis (Nuneaton)

    Mayhew, Sir Patrick

    Stewart, Allan (Eastwood)

    Merchant, Piers

    Stewart, Andrew (Sherwood)

    Meyer, Sir Anthony

    Stewart, Ian (Hertf'dshire N)

    Mills, Iain (Meriden)

    Stradling Thomas, Sir John

    Miscampbell, Norman

    Sumberg, David

    Mitchell, David (Hants NW)

    Tapsell, Sir Peter

    Moate, Roger

    Taylor, John (Solihull)

    Monro, Sir Hector

    Temple-Morris, Peter

    Montgomery, Sir Fergus

    Terlezki, Stefan

    Morris, M. (N'hampton S)

    Thomas, Rt Hon Peter

    Morrison, Hon P. (Chester)

    Thompson, Donald (Calder V)

    Moynihan, Hon C.

    Thompson, Patrick (N'ich N)

    Murphy, Christopher

    Thorne, Neil (llford S)

    Needham, Richard

    Thornton, Malcolm

    Nelson, Anthony

    Thurnham, Peter

    Neubert, Michael

    Townend, John (Bridlington)

    Newton, Tony

    Trippier, David

    Nicholls, Patrick

    Twinn, Dr Ian

    Norris, Steven

    van Straubenzee, Sir W.

    Osborn, Sir John

    Vaughan, Sir Gerard

    Ottaway, Richard

    Waddington, Rt Hon David

    Page, Sir John (Harrow W)

    Wakeham, Rt Hon John

    Page, Richard (Herts SW)

    Waldegrave, Hon William

    Parkinson, Rt Hon Cecil

    Wall, Sir Patrick

    Patten, J. (Oxf W & Abgdn)

    Waller, Gary

    Pawsey, James

    Ward, John

    Peacock, Mrs Elizabeth

    Wardle, C. (Bexhill)

    Porter, Barry

    Warren, Kenneth

    Portillo, Michael

    Watson, John

    Powell, William (Corby)

    Watts, John

    Price, Sir David

    Wells, Bowen (Hertford)

    Proctor, K. Harvey

    Wells, Sir John (Maidstone)

    Raffan, Keith

    Wheeler, John

    Raison, Rt Hon Timothy

    Whitney, Raymond

    Rathbone, Tim

    Wiggin, Jerry

    Rees, Rt Hon Peter (Dover)

    Wilkinson, John

    Renton, Tim

    Wolfson, Mark

    Rhodes James, Robert

    Wood, Timothy

    Rhys Williams, Sir Brandon

    Young, Sir George (Acton)

    Ridley, Rt Hon Nicholas

    Younger, Rt Hon George

    Ridsdale, Sir Julian

    Roe, Mrs Marion

    Tellers for the Noes:

    Rossi, Sir Hugh

    Mr. Gerald Malone and

    Rowe, Andrew

    Mr. David Lightbown.

    Question accordingly negatived.
    Main Question put and agreed to.
    Resolved,
    That this House welcomes the Government's approval of the Rover Group Corporate Plan; recognises the valuable contribution made by the vehicle industry, both United Kingdom and foreign-owned, to the United Kingdom

    409
    economy; notes the important role of the United Kingdom component suppliers; welcomes the encouraging outlook for the future of the industry as a whole; and endorses the Government's policies to create the conditions for the long term success of the industry.

    Motor Vehicle Industry

      INDUSTRIAL DEVELOPMENT
      Motion made, and Question put forthwith, pursuant to Order [10 March],
      That the draft Industry Act 1980 (Increase of Limit) Order 1987, which was laid before this House on 19th February, be approved.—[Mr. Ryder.]
      Question agreed to.

  Local Government Finance Bill (Allocation of Time)
  11.43 pm
  The Minister for Local Government (Dr. Rhodes Boyson): I beg to move,
  That the Order [26th January] be supplemented as follows:
  Lords Amendments
  1.—(1) The proceedings on consideration of Lords Amendments shall be completed at this day's sitting and subject to the provisions of the Order [26th January], those proceedings shall, if not previously brought to a conclusion, be brought to a conclusion two hours after the commencement of the proceedings on the Motion for this Order.
  (2) Paragraph (1) of Standing Order No. 14 (Exempted business) shall apply to the proceedings.
  (3) No dilatory Motion with respect to, or in the course of, the proceedings shall be made except by a member of the Government, and the Question on any such Motion shall be put forthwith.
  (4) If the proceedings are interrupted by a Motion for the Adjournment of the House under Standing Order No. 20 (Adjournment on specific and important matter that should have urgent consideration), a period equal to the duration of the proceedings on the Motion shall be added to the period at the end of which the proceedings are to be brought to a conclusion.
  (5) If the House is adjourned, or the sitting is suspended, on this day before the expiry of the period at the end of which the proceedings are to be brought to a conclusion, no notice shall be required of a Motion made at the next sitting by a member of the Government for varying or supplementing the provisions of this Order.
  2.—(1) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph 1 above—

  (a) Mr. Speaker shall first put forthwith any Question which has already been proposed from the Chair and not yet decided and, if that Question is for the amendment of the Lords Amendment, shall then put forthwith the Question on any further Amendment to the said Lords Amendment, moved by a Minister of the Crown and on any Motion made by a Minister of the Crown, That this House doth agree or disagree with the Lords in the said Lords Amendment or, as the case may be, in the said Lords Amendment as amended;

  (b) Mr. Speaker shall then designate such of the remaining Lords Amendments as appear to him to involve questions of Privilege and shall—

  (i) put forthwith the Question on any Amendment moved by a Minister of the Crown to a Lords Amendment and then put forthwith the Question on any Motion made by a Minister of the Crown, That this House doth agree or disagree with the Lords in their Amendment, or, as the case may be, in their Amendment as amended;

  (ii) put forthwith the Question on any Motion made by a Minister of the Crown, That this House doth disagree with the Lords in a Lords Amendment;

  (iii) put forthwith with respect to the Amendments designated by Mr. Speaker which have not been disposed of the Question, That this House doth agree with the Lords in the said Amendments; and

  (iv) put forthwith the Question, That this House doth agree with the Lords in all the remaining Lords Amendments;

  (c) as soon as the House has agreed or disagreed with the Lords in any of their Amendments Mr. Speaker shall put forthwith a separate Question on any other Amendment moved by a Minister of the Crown relevant to that Lords Amendment.

  (2) Proceedings under sub-paragraph (1) above shall not be interrupted under any Standing Order relating to the sittings of the House.
  Stages subsequent to first consideration of Lords Amendments.
  3. The proceedings on any further Message from the Lords on the Bill shall be brought to a conclusion one hour after the commencement of the proceedings.
  4. For the purpose of bringing those proceedings to a conclusion—

  (a) Mr. Speaker shall first put forthwith any Question which has already been proposed from the Chair and not yet decided, and shall then put forthwith the Question on any Motion made by a Minister of the Crown which is related to the Question already proposed from the Chair;

  (b) Mr. Speaker shall then designate such of the remaining items in the Lords Message as appear to him to involve questions of Privilege and shall—

  (i) put forthwith the Question on any Motion made by a Minister of the Crown on any item;

  (ii) in the case of the remaining items designated by Mr. Speaker, put forthwith the Question, That this House doth agree with the Lords in their said Proposals; and

  (iii) put forthwith the Question, That this House doth agree with the Lords in all the remaining Lords Proposals.

  Supplemental
  5.—(1) In this paragraph 'the procedings' means proceedings on any further Message from the Lords on the Bill, on the appointment and quorum of a Committee to draw up Reasons and the Report of such a Committee.
  (2) Mr. Speaker shall put forthwith the Question on any Motion made by a Minister of the Crown for the consideration forthwith of the Message or, as the case may be, for the appointment and quorum of the Committee.
  (3) A Committee appointed to draw up Reasons shall report before the conclusion of the sitting at which it is appointed.
  (4) Paragraph (1) of Standing Order No. 14 (Exempted business) shall apply to the proceedings.
  (5) No dilatory Motion with respect to, or in the course of, the proceedings shall be made except by a member of the Government, and the Question on any such Motion shall he put forthwith.
  (6) If the proceedings are interrupted by a Motion for the Adjournment of the House under Standing Order No. 20 (Adjournment on specific and important matter that should have urgent consideration) a period equal to the duration of the proceedings on the Motion shall be added to the period at the end of which the proceedings are to be brought to a conclusion.
  I am surprised that it is I, rather than an Opposition Member, who am moving the motion. I had assumed that Opposition Members would have been so fed up seeing me at the Dispatch Box discussing local government finance that they would have queued to support the motion. Clearly they are looking forward with relish to more time in the company of relevant and total expenditure, those old friends who are returning again. I will be brief.
  There has been one overriding urgency in dealing with the Bill—the need to have a rate support grant report approved by the House and in place before the start of the new financial year so that we can pay grant to local authorities. That urgency remains, and we shall not slacken pace at the 11 th hour. [Interruption.] I am corrected by hon. Members—at the 11 th hour and the 30th minute. The Bill has been thoroughly debated. To date, we have had over 47 hours of debate, including 2½ hours on points of order and a procedural motion. We have covered 120 amendments on the Floor of the House. Another place has considered over 100 amendments. That is a substantial expenditure of parliamentary time. During the debates [Interruption.]
  Mr. Deputy Speaker (Mr. Harold Walker): Order. Hon. Members should not hold discussions at the Bar of the House. Will those hon. Members who do not wish to take part in the debate please leave the Chamber?
  Dr. Boyson: I welcome your timely intervention, Mr. Deputy Speaker, on this important matter. I am sure that hon. Members in various parts of the House were discussing local government issues. It is nice when we can keep such matters on a guillotine motion.
  During the debates, I do not believe that anyone seriously challenged the need for a Bill to put on a proper statutory footing the definitions of total and relevant expenditure that local and central Government have accepted since 1981. The definitions are fundamental to the rate support grant and rate limitation systems.
  We have, of course, been asked for a shorter measure that deals only with total expenditure or, at any rate, something simpler. I am sure that we would all have preferred that. Unfortunately, it was not possible. The rate support grant system is highly complex and relevant, and total expenditure is endemic to it. The definitions therefore could not simply be waved into place with a magic wand. Complexity was inevitable. Further, for reasons that have been well rehearsed, we have had to make provision also for the 1987–88 rate and precept limitation process in the Bill.
  Rate limitation may not be a policy that is beloved by Opposition Members, but it is an established policy and a great benefit to ratepayers. It was right that the policy should continue. We have had to ensure that the rate support grant settlement for 1987–88 can be made immediately on Royal Assent.
  The Bill is urgently needed to give local authorities certainty about the operation of the rate support grant and rate limitation systems and to ensure that grant can be paid from the start of the new financial year. The Bill has been fully debated. We should maintain the impetus of that debate. Therefore, I commend the timetable motion to the House.
  11.47 pm
  Mr. Jack Straw: All hon. Members look forward to the occasions on which the Minister speaks in his wonderful Lancashire tones. I only regret that he did not follow his father's advice and join the Opposition. The Haslington Labour party is alive and well and looking forward to a great victory at the general election.
  The Minister said that the Bill and the guillotine motion are necessary to introduce certainty into the law. The Secretary of State used that alibi back on Second Reading on 12 January, when he said:
  "The purpose here is to give authorities the maximum of certainty in setting their budgets and rates over the next two months."—[Official Report, 12 January 1987; Vol. 108, c. 46.]
  The finer issues of local government finance are the subject of conversation in working men's clubs and public houses up and down the land. For those hon. Members who have missed the story that has unfolded, since the Secretary of State made his statement on 12 January there have been about 100 separate amendments to the Bill. There were amendments in Committee and on Report, and there were amendments in the other place in Committee, on Report and on Third Reading. All the amendments that were passed were Government amendments. Uncertainty has been heaped upon uncertainty. The

  413
  Secretary of State has shown great incompetence in the drafting and preparation of the Bill and in the administration of the rate support grant system.
  On 23 February, local authorities were informed by letter that there had been small errors, but in fact there were rather serious errors in the calculation tables that were sent out following the Secretary of State's statement on 13 January. That led to recalculation by the local authorities. On 5 March, the Secretary of State made a further statement on the Greenwich judgment. That led to the issue of further tables, leading to further calculations by the local authorities.
  The need for more time to debate this Bill and the implications of the Lords amendments arises from the Greenwich judgment. I ask the Minister of State to deal with the point that I am about to raise, either now or when we debate the third set of amendments.
  As the Bill contains retrospective provisions, it is right to draw the attention of the House to why the learned judge in the Greenwich case decided in favour of Greenwich and against the Secretary of State. The learned judge took the provisions of the Rate Support Grants Act 1986 which, like this Bill, sought to validate all previous acts of the Secretary of State, and said that the Secretary of State had to adhere to the principles that he had originally set out in the rate support grant order for 1986–87 that favoured Greenwich but disadvantaged Bromley, because the decision set out in that order had been validated by the Secretary of State's retrospective validating legislation. It was because of that that the learned judge said that the Secretary of State had been hoist with his own petard.
  When the Secretary of State came to the House on 5 March, he said that, for the purposes of the rate support grant, he intended to accept the Greenwich judgment, but that he would appeal against it. The local authorities have been informed of their new rate support grant entitlement on the basis of the Secretary of State's acceptance of the Greenwich judgment.
  Mr. Deputy Speaker: Order. I have been waiting very patiently to see how the matters to which the hon. Gentleman refers arise out of the motion, but I fail to see how they do. I hope that the hon. Gentleman will address himself to the motion.
  Mr. Straw: They arise straight out of the guillotine motion. These are major issues that need to be debated. They arise from Lords amendments to clause 7 and from other Lords amendments and there is insufficient time to debate those major issues.
  If the Secretary of State were to win the appeal, what would be the position of local authorities, in particular the position of those authorities that have been rate-capped? Presumably the Secretary of State would then issue revised rate support grant calculations. That would have the effect of reducing rate support grant for some authorities, but others, particularly rate-capped authorities, would be unable to do anything about it by means of the rate. Then they would be in deficit. It is important that all local authorities should know what the position is.
  During these many debates on the Local Government Finance Bill, we have seen the preparation, decision making and drafting of the Bill taken on the hoof. We do not blame the draftsmen or the officials for that; we blame
  414
  the Secretary of State and his ministerial colleagues for reducing the local government finance system to complete uncertainty and chaos. Much more time is needed to debate these key amendments tabled in another place and not previously debated in this House. For those reasons, we oppose the guillotine motion.
  11.55 pm
  Mr. Michael Meadowcroft: This evening we are in a ridiculous position. There was no need to guillotine the Bill; it would have run its course this evening. Its passage through the House has not been held up unduly. We should not take up any more of the two hours debating this motion, but should get this squalid little Bill out of the way.
  11.56 pm
  Mr. David Clelland: Whatever the Government may say and the Minister has said tonight about the need to make progress on the Bill to void chaos in the local government budget-making process, the Bill needs all the close scrutiny it can get. That has been demonstrated by the number of changes and amendments—the Minister mentioned a figure of 300—which have already been made both in this House and the other place since it was drafted. Far from avoiding chaos, the Secretary of State has already thrown local government into considerable turmoil by rushing through complicated legislation and not giving himself or the House sufficient time to consider it.
  There are several examples of costly errors caused by such haste, the latest of which can he amply demonstrated by looking at what has happened to two authorities on Tyneside. On 23 February a letter was posted informing local authorities of a revision to the probable grant entitlement notified to them on 13 January. On 24 February Lord Skelmersdale said that the changes were small and, referring to Tyne and Wear fire and civil defence authority, said that the authority had not issued its precept. Presumably the assumption was that the fact that the precept had not been issued somehow meant that only a simple adjustment was required. What the noble Lord did not appreciate was that the authority, acting on the information received from the Home Office in January, had met on 23 February and set its precept at 10·55p, before the arrival of the Home Office letter informing the authority that its maximum precept was now 10·54p. Therefore, an extraordinary meeting had to be held to change the precept. The authority complained that considerable wasted time and effort was expended on complying with the Secretary of State's corrections and in preparing, typing and printing a further report; and about additional postage, loss of officers' time, and travelling costs and attendance allowances for members to attend a further meeting on 2 March to give effect to the new limits.
  The authorities comment that it is ironic that the rate limitation process, which is supposed to curb public expenditure wastage has created this position. That exposes the ludicrous position into which the Government have plunged local government finance.
  In the same county, the city of Newcastle-upon-Tyne received—
  Mr. Deputy Speaker: Order. I am having difficulty seeing what that has to do with the motion before the House. I hope that the hon. Gentleman will address himself to the motion.
  Mr. Clelland: I am trying to point out that proceeding with such haste on the Bill has already caused considerable chaos. If we proceed in such haste again tonight, it is likely to cause further chaos.
  In doing so I am pointing to the chaos that has already been caused in places, such as Newcastle-upon-Tyne. It received the news that its rate limit had been reduced by 0·05p three hours before the council finance committee planned to agree the rate recommendations to the city council. That change plus the consequential amendments necessary to total expenditure and block grant entitlement to keep within the revised limits necessitated 160 amendments to the city council's budget document.
  The Minister said that the Bill is necessary to simplify and clarify the law and give more certainty to local government. We have heard that in every local government measure—some 43—since the Tory party came to power.
  This bungling and stumbling from one farcical situation to another is a direct result of ill-considered and unwarranted interference in the day-to-day running of democratically elected local authorities. It is a clear demonstration that the real responsibility for the erratic and confusing lurches of local authority rates and finances lies squarely on the shoulders of this autocratic Government and their steamroller mentality, of which this guillotine motion is yet another example.
  12.2 am
  Mr. Stuart Holland: I am opposed to a guillotine on the Bill. I am concerned that amendments tabled in the names of my hon. Friends on the Front Bench may not be reached. I should like to give one example, which I am sure will persuade the House. The Secretary of State has directed the London borough of Lambeth to submit a special report by 18 May on direct labour organisations.
  That matter has already been referred to in the House by the hon. Member for Streatham (Mr. Shelton) on 6 March, when he claimed that the direct labour department of the London borough of Lambeth had lost the borough some £15 million. That pre-empts the decision that will be made by the Secretary of State, but the situation is rendered unclear by the measures that are before us. The London borough of Lambeth is submitting to the Secretary of State figures which will show that over a three-year period the losses on contracts of over £50,000 are £1·4 million and on contracts under £50,000 are £400,000. At best, the claims of the hon. Member for Streatham were a fantasy; at worst they were a fiction; certainly they were malicious.
  It is difficult for boroughs to know for sure where they stand with a Bill such as this. It is not properly amended in the House. In addition, the Secretary of State says that within eight weeks he wants special inquiries and special investigations, into the boroughs. That can only create uncertainty. In reality, the cuts by the Government in local authority housing expenditure of 66 per cent. since 1979 have resulted in a rate of private sector bankruptcy which is double that of 1979. The issues of housing—
  Mr. Deputy Speaker: Order. Interesting though it may be, I do not see how this has anything directly to do with the motion before the House. I hope that the hon. Gentleman will address himself to that.
  Mr. Holland: We need more time to debate the amendments, such as amendment No. 4, amendment No. 7, clauses 6 and 8 and other amendments which will not be taken before the House tonight.
  Mr. Tony Marlow: I wonder whether you can advise the House, Mr. Deputy Speaker, because a most bizarre thing has happened. The hon. Member for Liverpool, Walton (Mr. Heffer) has suddenly decided to expose his braces and lie prone on the bench behind your left ear. Is that a usual function that hon. Members may be expected to perform?
  Mr. Deputy Speaker: Order. What goes on behind me has nothing to do with me, nor, I suggest, with the hon. Gentleman.
  Mr. Holland: I shall not detain the House, given that the allegations made by the hon. Member for Streatham have been countered in the debate. I regret that it is unlikely that we shall get on to the amendments which would enable us to put the case more fully and in more detail.
  Question put:—
  The House divided: Ayes 201, Noes 152.

  Division No. 116]

  [12 midnight

  AYES

  Alexander, Richard

  Coombs, Simon

  Ancram, Michael

  Cope, John

  Ashby, David

  Couchman, James

  Atkins, Robert (South Ribble)

  Cranborne, Viscount

  Atkinson, David (B'm'th E)

  Dickens, Geoffrey

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

  Dorrell, Stephen

  Baker, Nicholas (Dorset N)

  Dover, Den

  Baldry, Tony

  Dunn, Robert

  Banks, Robert (Harrogate)

  Dykes, Hugh

  Batiste, Spencer

  Edwards, Rt Hon N. (P'broke)

  Bellingham, Henry

  Eggar, Tim

  Bendall, Vivian

  Evennett, David

  Benyon, William

  Fairbairn, Nicholas

  Best, Keith

  Fallon, Michael

  Bevan, David Gilroy

  Fookes, Miss Janet

  Biffen, Rt Hon John

  Forman, Nigel

  Biggs-Davison, Sir John

  Forsyth, Michael (Stirling)

  Blackburn, John

  Forth, Eric

  Blaker, Rt Hon Sir Peter

  Franks, Cecil

  Body, Sir Richard

  Gale, Roger

  Bonsor, Sir Nicholas

  Garel-Jones, Tristan

  Boscawen, Hon Robert

  Hamilton, Neil (Tatton)

  Bottomley, Peter

  Hargreaves, Kenneth

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

  Hawksley, Warren

  Boyson, Dr Rhodes

  Hind, Kenneth

  Brinton, Tim

  Howard, Michael

  Brittan, Rt Hon Leon

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

  Brooke, Hon Peter

  Howarth, Gerald (Cannock)

  Brown, M. (Brigg & Cl'thpes)

  Jenkin, Rt Hon Patrick

  Browne, John

  Key, Robert

  Bruinvels, Peter

  Knowles, Michael

  Bulmer, Esmond

  Lamont, Rt Hon Norman

  Burt, Alistair

  Lang, Ian

  Butcher, John

  Latham, Michael

  Butler, Rt Hon Sir Adam

  Lawler, Geoffrey

  Butterfill, John

  Lawrence, Ivan

  Carlisle, John (Luton N)

  Lee, John (Pendle)

  Carlisle, Kenneth (Lincoln)

  Leigh, Edward (Gainsbor'gh)

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

  Lennox-Boyd, Hon Mark

  Cash, William

  Lightbown, David

  Chapman, Sydney

  Lilley, Peter

  Chope, Christopher

  Lloyd, Peter (Fareham)

  Churchill, W. S.

  Lord, Michael

  Clark, Dr Michael (Rochford)

  Lyell, Nicholas

  Clark, Sir W. (Croydon S)

  McCurley, Mrs Anna

  Clarke, Rt Hon K. (Rushcliffe)

  Macfarlane, Neil

  Cockeram, Eric

  Maclean, David John

  Colvin, Michael

  McLoughlin, Patrick

  Conway, Derek

  Madel, David

  417

  Malins, Humfrey

  Skeet, Sir Trevor

  Malone, Gerald

  Smith, Tim (Beaconsfield)

  Marlow, Antony

  Soames, Hon Nicholas

  Mates, Michael

  Speed, Keith

  Mather, Sir Carol

  Spencer, Derek

  Maude, Hon Francis

  Spicer, Jim (Dorset W)

  Maxwell-Hyslop, Robin

  Spicer, Michael (S Worcs)

  Mayhew, Sir Patrick

  Stanbrook, Ivor

  Merchant, Piers

  Stanley, Rt Hon John

  Meyer, Sir Anthony

  Steen, Anthony

  Mills, Iain (Meriden)

  Stern, Michael

  Miscampbell, Norman

  Stevens, Lewis (Nuneaton)

  Moate, Roger

  Stewart, Allan (Eastwood)

  Montgomery, Sir Fergus

  Stewart, Andrew (Sherwood)

  Morris, M. (N'hampton S)

  Stradling Thomas, Sir John

  Morrison, Hon P. (Chester)

  Sumberg, David

  Moynihan, Hon C.

  Taylor, John (Solihull)

  Newton, Tony

  Temple-Morris, Peter

  Nicholls, Patrick

  Terlezki, Stefan

  Osborn, Sir John

  Thomas, Rt Hon Peter

  Ottaway, Richard

  Thompson, Donald (Calder V)

  Page, Sir John (Harrow W)

  Thompson, Patrick (N'ich N)

  Page, Richard (Herts SW)

  Thorne, Neil (Ilford S)

  Parkinson, Rt Hon Cecil

  Thurnham, Peter

  Patten, Christopher (Bath)

  Townend, John (Bridlington)

  Pawsey, James

  Trippier, David

  Peacock, Mrs Elizabeth

  Twinn, Dr Ian

  Porter, Barry

  Vaughan, Sir Gerard

  Powell, William (Corby)

  Waddington, Rt Hon David

  Price, Sir David

  Wakeham, Rt Hon John

  Proctor, K. Harvey

  Waldegrave, Hon William

  Raffan, Keith

  Wall, Sir Patrick

  Raison, Rt Hon Timothy

  Waller, Gary

  Rathbone, Tim

  Ward, John

  Renton, Tim

  Wardle, C. (Bexhill)

  Rhodes James, Robert

  Warren, Kenneth

  Rhys Williams, Sir Brandon

  Watts, John

  Ridley, Rt Hon Nicholas

  Wells, Bowen (Hertford)

  Ridsdale, Sir Julian

  Wells, Sir John (Maidstone)

  Roe, Mrs Marion

  Wheeler, John

  Rossi, Sir Hugh

  Whitfield, John

  Rowe, Andrew

  Whitney, Raymond

  Rumbold, Mrs Angela

  Wiggin, Jerry

  Ryder, Richard

  Wilkinson, John

  Sackville, Hon Thomas

  Winterton, Mrs Ann

  Sainsbury, Hon Timothy

  Wolfson, Mark

  Sayeed, Jonathan

  Wood, Timothy

  Shaw, Giles (Pudsey)

  Young, Sir George (Acton)

  Shaw, Sir Michael (Scarb')

  Younger, Rt Hon George

  Shelton, William (Streatham)

  Shepherd, Richard (Aldridge)

  Tellers for the Ayes:

  Shersby, Michael

  Mr. Michael Portillo and

  Silvester, Fred

  Mr. Michael Neubert.

  Sims, Roger

  NOES

  Adams, Allen (Paisley N)

  Boyes, Roland

  Alton, David

  Brown, Hugh D. (Provan)

  Anderson, Donald

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

  Archer, Rt Hon Peter

  Brown, Ron (E'burgh, Leith)

  Ashton, Joe

  Bruce, Malcolm

  Atkinson, N. (Tottenham)

  Buchan, Norman

  Banks, Tony (Newham NW)

  Caborn, Richard

  Barron, Kevin

  Callaghan, Jim (Heyw'd & M)

  Beckett, Mrs Margaret

  Campbell-Savours, Dale

  Bell, Stuart

  Canavan, Dennis

  Benn, Rt Hon Tony

  Carlile, Alexander (Montg'y)

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

  Clark, Dr David (S Shields)

  Bermingham, Gerald

  Clarke, Thomas

  418

  Clay, Robert

  McNamara, Kevin

  Clelland, David Gordon

  McWilliam, John

  Clwyd, Mrs Ann

  Madden, Max

  Cocks, Rt Hon M. (Bristol S)

  Martin, Michael

  Cohen, Harry

  Maxton, John

  Coleman, Donald

  Maynard, Miss Joan

  Cook, Frank (Stockton North)

  Meacher, Michael

  Cook, Robin F. (Livingston)

  Meadowcroft, Michael

  Corbett, Robin

  Michie, William

  Corbyn, Jeremy

  Mikardo, Ian

  Cox, Thomas (Tooting)

  Millan, Rt Hon Bruce

  Craigen, J. M.

  Miller, Dr M. S. (E Kilbride)

  Cunliffe, Lawrence

  Morris, Rt Hon A. (W'shawe)

  Cunningham, Dr John

  Morris, Rt Hon J. (Aberavon)

  Dalyell, Tam

  Nellist, David

  Davies, Ronald (Caerphilly)

  Oakes, Rt Hon Gordon

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

  O'Brien, William

  Deakins, Eric

  O'Neill, Martin

  Dewar, Donald

  Orme, Rt Hon Stanley

  Dixon, Donald

  Park, George

  Dormand, Jack

  Parry, Robert

  Dubs, Alfred

  Pike, Peter

  Duffy, A. E. P.

  Powell, Raymond (Ogmore)

  Dunwoody, Hon Mrs G.

  Prescott, John

  Eastham, Ken

  Randall, Stuart

  Evans, John (St. Helens N)

  Raynsford, Nick

  Faulds, Andrew

  Redmond, Martin

  Fields, T. (L'pool Broad Gn)

  Rees, Rt Hon M. (Leeds S)

  Fisher, Mark

  Richardson, Ms Jo

  Forrester, John

  Roberts, Ernest (Hackney N)

  Foster, Derek

  Robertson, George

  Foulkes, George

  Robinson, G. (Coventry NW)

  Fraser, J. (Norwood)

  Rooker, J. W.

  Freeson, Rt Hon Reginald

  Rowlands, Ted

  Freud, Clement

  Sedgemore, Brian

  Gilbert, Rt Hon Dr John

  Sheerman, Barry

  Godman, Dr Norman

  Sheldon, Rt Hon R.

  Golding, Mrs Llin

  Shore, Rt Hon Peter

  Gould, Bryan

  Short, Ms Clare (Ladywood)

  Hamilton, James (M'well N)

  Silkin, Rt Hon J.

  Harrison, Rt Hon Walter

  Skinner, Dennis

  Hart, Rt Hon Dame Judith

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

  Hattersley, Rt Hon Roy

  Smith, Cyril (Rochdale)

  Haynes, Frank

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

  Heffer, Eric S.

  Snape, Peter

  Hogg, N. (C'nauld & Kilsyth)

  Soley, Clive

  Holland, Stuart (Vauxhall)

  Spearing, Nigel

  Home Robertson, John

  Steel, Rt Hon David

  Howell, Rt Hon D. (S'heath)

  Stott, Roger

  Hoyle, Douglas

  Straw, Jack

  Hughes, Sean (Knowsley S)

  Thomas, Dr R. (Carmarthen)

  Hughes, Simon (Southwark)

  Thorne, Stan (Preston)

  Janner, Hon Greville

  Tinn, James

  John, Brynmor

  Wareing, Robert

  Kaufman, Rt Hon Gerald

  Weetch, Ken

  Kennedy, Charles

  Welsh, Michael

  Lamond, James

  Williams, Rt Hon A.

  Leighton, Ronald

  Winnick, David

  Litherland, Robert

  Woodall, Alec

  Lofthouse, Geoffrey

  Wrigglesworth, Ian

  Loyden, Edward

  Young, David (Bolton SE)

  McCartney, Hugh

  McDonald, Dr Oonagh

  Tellers for the Noes:

  McGuire, Michael

  Mr. Allen McKay and

  MacKenzie, Rt Hon Gregor

  Mr. Tony Lloyd.

  Question put and agreed to.

Orders of the Day

  Local Government Finance Bill
  Lords amendments considered.
  Mr. Deputy Speaker (Mr. Harold Walker): I have to inform the House that all the Lords amendments involve privilege.

  Local Government Finance Bill
    Clause 2

      RATE FUND REVENUE ACCOUNTS: FURTHER PROVISIONS
      Lords amendment: No. 1, in page 3, line 18, at end insert—
      "(4A) Before making a specification under subsection (4) above the Secretary of State shall consider the practices mentioned in subsection (3) above, but such a specification may override those practices."
      12.15 am
      Mr. Jack Straw: I beg to move, as an amendment to the Lords amendment, amendment (a), in line 4, leave out
      'but such a specification may override those practices'.
      We are told that the Conservative party knows about money, that it has experts on money and that many people on the Conservative Benches are professionals when it comes to accounting for money. Although the amendment may sound technical, it raises a crucial issue of financial probity and accounting practices.
      Under the Bill as drafted, local authorities must follow accounting practices that are laid down. The Secretary of State is taking powers under the Bill to provide for what are described as specifications, which are rules relating to accounting practices. There was much debate in the other place about how those requirements would interact with other requirements of the Bill. Labour and other Peers tabled amendments to require the Secretary of State, in laying down the specifications, to have regard to proper accounting practices. Those amendments were withdrawn after promises were made by the Minister in another place that, later in the proceedings, amendments which encapsulated the principles of the Opposition amendments, but which were better drafted, would be tabled.
      What happened was that, only yesterday—such is the haste with which the Bill has been forced through—the Minister tabled this extraordinary amendment, which reads:
      "Before making a specification under subsection (4) above the Secretary of State shall consider the practices mentioned in subsection (3) above, but such a specification may override those practices."
      The Secretary of State is taking to himself powers to override good accounting practices or, indeed, any accounting practices.
      The Chartered Institute of Public Finance and Accountancy is highly respected by hon. Members on both sides of the House as being completely non-political and concerned wholly with professionals in local authority and public service accountancy. It wrote to our colleagues in the Lords to express serious reservations about that amendment and said:
      "The institute is deeply concerned that the Secretary of State should have such freedom to override proper accounting practices. Although the Secretary of State may not intend to abuse these powers, the wording of the amendment would
      420
      allow the Secretary of State to undermine the integrity of all or any local authority's accounts. Surely it cannot be right that a Secretary of State can direct a public body to do something which he knows to be inconsistent with 'proper practice'. Yet this is exactly what the amendment would enable him to do."
      I hope that Conservative Members who take an interest in these matters are as concerned as many noble Lords were about the implication of the amendments.
      The Minister sought to get himself out of a tight corner. He said:
      "There has been some misunderstanding that the Government amendment would also give my right hon. Friend powers to override proper practices. It is not the Government amendment which provides for this; it is the Bill itself."
      That is extraordinary.
      Mr. Tim Smith: I do not think that that is extraordinary at all. Is that not the effect of clause 2(5)?— [Interruption.] The point is that the Bill already provides what the hon. Member for Blackburn (Mr. Straw) is suggesting that the amendment adds to the Bill. Clause 2(5) already provides an overriding power.— [Interruption.]
      Mr. Straw: I am pleased to see that the hon. Member for Crawley (Mr. Soames) who, like my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), has a nice line in braces, has awoken from his slumbers. He will be wholly familiar with the revisions of clause 2(5) which states:
      "Subsection (1) shall have effect subject to subsection 1(3) above and to any specification under subsection (4) above."
      I can read as well as the hon. Member for Beaconsfield (Mr. Smith).
      The issue is whether it is right that the Bill or the Government amendment should override proper practices. We say that that is wrong. Ministers have to provide a far better explanation of what they are doing before anybody should accept that.
      It was not only Labour Peers who objected to that but those on the Cross Benches and those who have had years of experiences in interpreting the law. For example, the noble and learned Lord, Lord Denning said that the ideas encapsulated in the Government amendment seem
      "to be entirely contrary to principle. In a sense, an auditor is like a judge; He is a judge of accounts in the same way as an ordinary judge is a judge of men. As with a judge, it is the duty of an auditor to be impartial and independent of authorities."
      He also referred to section 15 of the Local Government Finance Act 1982 which expressly refers to proper accounting practices:
      "an auditor shall by examination of the accounts and otherwise satisfy himself … that proper practices have been observed in the compilation of the accounts."— [Official Report, House of Lords, 10 March 1987; Vol. 485, c. 941–42.]
      When the Minister replied on this matter in the other place, he tried to draw a distinction between the responsibilities of the auditor and the accounting practices of the local authority. However, that is a distinction without a difference for these purposes, because the requirement of section 15 is for the auditor to ensure himself that the local authority has observed proper practices in the compilation of the accounts, not that the auditor has observed proper practices.
      Mr. William Cash: Is the hon. Gentleman not raising the point as to whether, in the conduct of their professional practice, auditors have engaged in what has amounted to creative accounting? I described that the

      421
      other day, without disrespect to the chartered body concerned, as practices which have grown up which are inimical to good accounting practices as they apply to local authorities.
      Mr. Straw: The hon. Gentleman is more confused than ever.—[Interruption.] I am glad to see that I have some approbation for that from behind the hon. Gentleman. The auditors have not engaged in any sort of creative accountancy practices. We shall debate that tomorrow morning on clause 1 of the next Local Government Bill. If there has been any creative accountancy, it has been by the local authorities. It has all been lawful. Much of it, as we shall discuss tomorrow, has been undertaken by Conservative authorities.
      The question is whether the accounting practices have been proper. The hon. Gentleman may be alleging that accounting practices have been improper—
      Mr. Cash: I am.
      Mr. Straw: If they are improper, of course, we should be the first to say that no auditors should follow them. We are talking about the observance of proper practices. The hon. Gentleman says that he dislikes improper accounting practices. He had better realise when he votes on our amendment that he will be voting to give any Secretary of State, who may not always be the right hon. Member for Cirencester and Tewksbury (Mr. Ridley), the right to specify improper accounting practices and to have them enshrined in the law. That is the simple but serious issue.
      I cannot for the life of me see why the Government have decided to draft their amendment in the way that they have. So far as we can see, it does not provide them with any needed protection. It appears to put a Secretary of State in a position where he can endorse improper accounting practices. In the words of the Chartered Institute of Public Finance and Accountancy:
      "the wording of the amendment would allow the Secretary of State to undermine the integrity of all or any local authority's accounts."
      That is a serious charge by CIPFA against the Secretary of State and Ministers. Unless there is a convincing answer to that charge, we shall vote for our amendment and against the Lords amendment. I hope that we will be joined in the Lobby by many other hon. Members.
      The Minister for Local Government (Dr. Rhodes Boyson): I beg to move, That this House doth agree with the Lords in the said amendment.
      The hon. Member for Blackburn (Mr. Straw) referred to the debate in the other place. An undertaking was given there, which we believe was carried through to the letter. It was given on Report and the amendment was brought forward on Third Reading. So we fulfilled the obligation that we took on.
      Mr. Straw: The Minister is on the wrong amendment.
      Dr. Boyson: I am not.
      The question has been asked how the provisions permitting specifications to override the requirement of clause 2(1) to observe the proper practices in clause 2(3) interact with the provision in the Local Government Finance Act 1982, which requires a local authority's auditor to satisfy himself that the authority has used
      422
      proper practices in the compilation of its accounts. I welcome the intervention by my hon. Friend the Member for Beaconsfield (Mr. Smith).
      Section 15 of the 1982 Act requires the auditor to satisfy himself not only that proper practices have been observed in the compilation of accounts but that the accounts are prepared in accordance with regulations made under section 23 of the 1982 Act and comply with the requirements of all other statutory provisions applicable to the accounts. In other words, the auditor must satisfy himself that the accounts comply with the law. Once a specification is made, it is the law, and the auditor must satisfy himself that it is complied with.
      As to proper practices, section 15 of the 1982 Act does not refer to any particular practices and describes them as proper. It simply requires auditors to satisfy themselves that proper practices have been observed, but they must also satisfy themselves that the law has been complied with. They would not be able to discharge their duty by ignoring the law and simply looking at proper practices. The proper practices must reflect the law. Something required by law cannot be improper. There is therefore no conflict.
      Mr. Straw: If there is no conflict between proper practices and a specification, why have the Government used the words that appear in the amendment—
      "such a specification may override those practices."?
      That clearly suggests that it is in the minds of Ministers that a specification would be contrary to a proper practice and therefore would override that proper practice.
      Dr. Boyson: It is up to my hon. Friend to say what is proper. That is what I said and it was extrapolated brilliantly by my hon. Friend the Member for Stafford (Mr. Cash) in a way which could be understood throughout the House. I shall repeat the last three sentences. They would not be able to discharge their duty by ignoring the law and simply looking at proper practices. The proper practices must reflect the law. Something required by law cannot be improper. There is therefore no conflict. That seems perfectly clear and I invite the House to accept amendment No. 1 and to reject amendment (a).
      Mr. Michael Meadowcroft: I support amendment (a). What always alarms me about Conservative Members and the Minister is their dismissive attitude to the whole of local government practices which at one time they professed to support. The Government appear to regard local government finance legislation as some kind of political adventure playground in which they can lash out wildly in all directions and encourage parliamentary draftsmen to produce ever more wild catchall phrases in order, somehow, to prevent local government from getting round the legislation.
      In this case the Government seem to be worried that their legislation still has loopholes. Because they are worried about that, they suddenly put in a phrase so that if local government appears to be circumventing what the Government want, they can simply determine by order what the law shall be. The Government do not want local government to be responsible. If they did, they would enhance the role of the Chartered Institute of Public Finance and Accountancy rather than denigrate it in this way.
      I doubt whether anybody would seek to undermine the professionalism and intregrity of the people in the institute

      423
      who have worked hard to produce a code of practice that is acceptable throughout local government. That code has no political bias—it is a professional code of practice. The institute has put it forward for consultation and the Minister has not even told us whether he is passionately in favour of what the institute has produced. I presume that, if he is not, he will be able to suggest improvements and have negotiations with the institute. The institute would be happy to have such negotiations.
      No doubt the Minister knows that the institute has written to hon. Members saying that it is not unduly concerned about the provisions of the Bill because it believes that the code of practice that it has worked on would stand. What happened when the Bill reached the other place? Suddenly, Lord Skelmersdale came along with amendment introducing a catch-all phrase which undermines the work done by the institute. That is not the kind of legislation that this House should ever support, because it is a case of the Government casually setting aside the work carried out by professional bodies.
      The sort of thing that is happening here is precisely what Government Members have always criticised on the Left of the Labour party when in the past Labour has suggested that when in office it will pass an enabling Bill. The Labour party has said that it will introduce an enabling Bill giving powers to correct things by order, and that there would be no possibility thereafter of those things coming back to the House. The Government have rightly criticised that and said that it is undemocratic, but now what do they bring forward, but an enabling Bill?
      The Government say, "Here is the legislation, and if it does not work the Secretary of State can set down anything he wants in order to overturn what is set out in previous legislation." This is a disgrace to the House and is far more significant than some of the proposed legislation that has come before us. The fact that we are debating an amendment to a Lords amendment at 12·30 in the morning is immaterial. We are dealing with a significant constitutional point. The House should not accept the Lords amendment, but should agree to amendment (a).
      Mr. Tim Smith: I come to this legislation rather late in the day, but yesterday I was alerted by a Member of the other place, who is also a chartered accountant, to the fact that the legislation contained a point of concern for the accountancy profession.
      The Government are proposing that a specification should be able to overrule an accountancy practice. I understand how this has come about, but it is an unfortunate development. The clause is designed to determine with more precision what is relevant expenditure and therefore what is eligible for rate support grant. I hope that I have got that right.
      It is unfortunate that we must dictate to local authorities how they go about constructing their accounts to define what is or is not eligible for rate support grant. There should be a better way. In most cases, there will be an agreed practice, but in some cases it will be possible for a particular transaction to be dealt with by one or more practices. I suppose that some local authorities have been irresponsible and have presented a transaction in a way that will enable it to qualify for the maximum of grant.
      Accountants and auditors who work in local government are concerned that we are reaching the point
      424
      where little discretion will be left to professionals and that the content of accounts will be largely dictated by the Department of the Environment.
      Mr. Straw: With permission, Mr. Deputy Speaker.
      The Minister said that the amendment that had been brought forward in the Lords was consistent with undertakings given by the noble Lord Skelmersdale to the Labour and other Peers who supported the amendment in Committee in the Lords.
      I wish to make it clear that the Labour and Cross-Bench Peers who moved the amendment in Committee were horrified when they saw this amendment. Baroness David said:
      "When the Minister said that he would accept the amendment in principle and come back with his own amendment on Report, I thought we would get a real improvement. However, I find the reverse."— [Official Report, House of Lords, 10 March 1987, Vol. 485, c. 941.]
      In no sense is the amendment an improvement on what was sought in Committee in the Lords. As Baroness David said, it is quite the reverse. It increases confusion and puts arbitrary power in the hands of Ministers, and we intend to press the amendment to a vote.
      Question put, That the amendment to the Lords amendment be made:—
      The House divided: Ayes 151, Noes 197.

      Division No. 117]

      [12.40 am

      AYES

      Adams, Allen (Paisley N)

      Dormand, Jack

      Anderson, Donald

      Dubs, Alfred

      Archer, Rt Hon Peter

      Duffy, A. E. P.

      Ashton, Joe

      Dunwoody, Hon Mrs G.

      Atkinson, N. (Tottenham)

      Eastham, Ken

      Banks, Tony (Newham NW)

      Evans, John (St. Helens N)

      Barron, Kevin

      Faulds, Andrew

      Beckett, Mrs Margaret

      Fields, T. (L'pool Broad Gn)

      Bell, Stuart

      Fisher, Mark

      Benn, Rt Hon Tony

      Forrester, John

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

      Foster, Derek

      Bermingham, Gerald

      Foulkes, George

      Boyes, Roland

      Fraser, J. (Norwood)

      Brown, Hugh D. (Provan)

      Freeson, Rt Hon Reginald

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

      Freud, Clement

      Brown, Ron (E'burgh, Leith)

      Gilbert, Rt Hon Dr John

      Bruce, Malcolm

      Godman, Dr Norman

      Buchan, Norman

      Golding, Mrs Llin

      Caborn, Richard

      Gould, Bryan

      Callaghan, Jim (Heyw'd & M)

      Hamilton, James (M'well N)

      Campbell-Savours, Dale

      Harrison, Rt Hon Walter

      Canavan, Dennis

      Hart, Rt Hon Dame Judith

      Carlile, Alexander (Montg'y)

      Haynes, Frank

      Clark, Dr David (S Shields)

      Heffer, Eric S.

      Clarke, Thomas

      Hogg, N. (C'nauld & Kilsyth)

      Clay, Robert

      Holland, Stuart (Vauxhall)

      Clelland, David Gordon

      Home Robertson, John

      Clwyd, Mrs Ann

      Howell, Rt Hon D. (S'heath)

      Cocks, Rt Hon M. (Bristol S)

      Hoyle, Douglas

      Cohen, Harry

      Hughes, Sean (Knowsley S)

      Coleman, Donald

      Hughes, Simon (Southwark)

      Cook, Frank (Stockton North)

      Janner, Hon Greville

      Cook, Robin F. (Livingston)

      John, Brynmor

      Corbett, Robin

      Kaufman, Rt Hon Gerald

      Corbyn, Jeremy

      Kennedy, Charles

      Cox, Thomas (Tooting)

      Lamond, James

      Craigen, J. M.

      Leighton, Ronald

      Crowther, Stan

      Litheirland, Robert

      Cunliffe, Lawrence

      Lofthouse, Geoffrey

      Cunningham, Dr John

      Loyden, Edward

      Dalyell, Tam

      McDonald, Dr Oonagh

      Davies, Ronald (Caerphilly)

      McGuire, Michael

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

      MacKenzie, Rt Hon Gregor

      Deakins, Eric

      McNamara, Kevin

      Dewar, Donald

      McWilliam, John

      Dixon, Donald

      Madden, Max

      425

      Martin, Michael

      Sedgemore, Brian

      Maxton, John

      Sheerman, Barry

      Maynard, Miss Joan

      Sheldon, Rt Hon R.

      Meacher, Michael

      Shore, Rt Hon Peter

      Meadowcroft, Michael

      Short, Ms Clare (Ladywood)

      Michie, William

      Silkin, Rt Hon J.

      Mikardo, Ian

      Skinner, Dennis

      Millan, Rt Hon Bruce

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

      Miller, Dr M. S. (E Kilbhde)

      Smith, Cyril (Rochdale)

      Morris, Rt Hon A. (W'shawe)

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

      Morris, Rt Hon J. (Aberavon)

      Snape, Peter

      Nellist, David

      Soley, Clive

      Oakes, Rt Hon Gordon

      Spearing, Nigel

      O'Brien, William

      Stott, Roger

      O'Neill, Martin

      Straw, Jack

      Orme, Rt Hon Stanley

      Thomas, Dr R. (Carmarthen)

      Park, George

      Thorne, Stan (Preston)

      Parry, Robert

      Tinn, James

      Pendry, Tom

      Wallace, James

      Pike, Peter

      Wareing, Robert

      Powell, Raymond (Ogmore)

      Weetch, Ken

      Prescott, John

      Welsh, Michael

      Randall, Stuart

      Williams, Rt Hon A.

      Raynsford, Nick

      Winnick, David

      Redmond, Martin

      Woodall, Alec

      Rees, Rt Hon M. (Leeds S)

      Wrigglesworth, Ian

      Richardson, Ms Jo

      Young, David (Bolton SE)

      Roberts, Ernest (Hackney N)

      Robertson, George

      Tellers for the Ayes:

      Robinson, G. (Coventry NW)

      Mr. Tony Lloyd and

      Rooker, J. W.

      Mr. Allen McKay.

      Rowlands. Ted

      NOES

      Alexander, Richard

      Colvin, Michael

      Ancram, Michael

      Conway, Derek

      Ashby, David

      Coombs, Simon

      Atkins, Robert (South Ribble)

      Cope,John

      Atkinson, David (B'm'th E)

      Dickens, Geoffrey

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

      Dorrell, Stephen

      Baker, Nicholas (Dorset N)

      Dover, Den

      Baldry, Tony

      Dunn, Robert

      Banks, Robert (Harrogate)

      Dykes, Hugh

      Batiste, Spencer

      Edwards, Rt Hon N. (P'broke)

      Bellingham, Henry

      Eggar, Tim

      Bendall, Vivian

      Evennett, David

      Benyon, William

      Fairbairn, Nicholas

      Best, Keith

      Fallon, Michael

      Bevan, David Gilroy

      Forman, Nigel

      Biffen, Rt Hon John

      Forsyth, Michael (Stirling)

      Biggs-Davison, Sir John

      Forth, Eric

      Blackburn, John

      Franks, Cecil

      Blaker, Rt Hon Sir Peter

      Gale, Roger

      Body, Sir Richard

      Garel-Jones, Tristan

      Bonsor, Sir Nicholas

      Hamilton, Neil (Tatton)

      Boscawen, Hon Robert

      Hargreaves, Kenneth

      Bottomley, Peter

      Hawksley, Warren

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

      Hind, Kenneth

      Boyson, Dr Rhodes

      Howard, Michael

      Brinton, Tim

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

      Brittan, Rt Hon Leon

      Howarth, Gerald (Cannock)

      Brooke, Hon Peter

      Jenkin, Rt Hon Patrick

      Brown, M. (Brigg & Cl'thpes)

      Key, Robert

      Browne, John

      Knowles, Michael

      Bruinvels, Peter

      Lamont, Rt Hon Norman

      Bulmer, Esmond

      Latham, Michael

      Burt, Alistair

      Lawler, Geoffrey

      Butcher, John

      Lawrence, Ivan

      Butler, Rt Hon Sir Adam

      Lee, John (Pendle)

      Butterfill, John

      Leigh, Edward (Gainsbor'gh)

      Carlisle, John (Luton N)

      Lennox-Boyd, Hon Mark

      Carlisle, Kenneth (Lincoln)

      Lilley, Peter

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

      Lloyd, Peter (Fareham)

      Cash, William

      Lord, Michael

      Chapman, Sydney

      Lyell, Nicholas

      Chope, Christopher

      McCurley, Mrs Anna

      Churchill, W. S.

      Macfarlane, Neil

      Clark, Dr Michael (Rochford)

      McLoughlin, Patrick

      Clark, Sir W. (Croydon S)

      Madel, David

      Clarke, Rt Hon K. (Rushcliffe)

      Malins, Humfrey

      426

      Malone, Gerald

      Silvester, Fred

      Maples, John

      Sims, Roger

      Marlow, Antony

      Skeet, Sir Trevor

      Mates, Michael

      Smith, Tim (Beaconsfield)

      Mather, Sir Carol

      Soames, Hon Nicholas

      Maxwell-Hyslop, Robin

      Spencer, Derek

      Mayhew, Sir Patrick

      Spicer, Jim (Dorset W)

      Merchant, Piers

      Spicer, Michael (S Worcs)

      Meyer, Sir Anthony

      Stanbrook, Ivor

      Mills, Iain (Meriden)

      Stanley, Rt Hon John

      Miscampbell, Norman

      Steen, Anthony

      Moate, Roger

      Stern, Michael

      Montgomery, Sir Fergus

      Stevens, Lewis (Nuneaton)

      Morris, M. (N'hampton S)

      Stewart, Allan (Eastwood)

      Morrison, Hon P. (Chester)

      Stewart, Andrew (Sherwood)

      Moynihan, Hon C.

      Stradling Thomas, Sir John

      Nelson, Anthony

      Sumberg, David

      Neubert, Michael

      Taylor, John (Solihull)

      Nicholls, Patrick

      Temple-Morris, Peter

      Norris, Steven

      Terlezki, Stefan

      Osborn, Sir John

      Thomas, Rt Hon Peter

      Ottaway, Richard

      Thompson, Donald (Calder V)

      Page, Sir John (Harrow W)

      Thompson, Patrick (N'ich N)

      Page, Richard (Herts SW)

      Thorne, Neil (Ilford S)

      Parkinson, Rt Hon Cecil

      Thurnham, Peter

      Patten, J. (Oxf W & Abgdn)

      Townend, John (Bridlington)

      Pawsey, James

      Trippier, David

      Peacock, Mrs Elizabeth

      Twinn, Dr Ian

      Porter, Barry

      Vaughan, Sir Gerard

      Portillo, Michael

      Waddington, Rt Hon David

      Powell, William (Corby)

      Wakeham, Rt Hon John

      Price, Sir David

      Waldegrave, Hon William

      Proctor, K. Harvey

      Wall, Sir Patrick

      Raffan, Keith

      Waller, Gary

      Raison, Rt Hon Timothy

      Ward, John

      Rathbone, Tim

      Wardle, C. (Bexhill)

      Renton, Tim

      Warren, Kenneth

      Rhodes James, Robert

      Watts, John

      Rhys Williams, Sir Brandon

      Wells, Bowen (Hertford)

      Ridley, Rt Hon Nicholas

      Wells, Sir John (Maidstone)

      Ridsdale, Sir Julian

      Wheeler, John

      Roe, Mrs Marion

      Whitfield, John

      Rossi, Sir Hugh

      Whitney, Raymond

      Rowe, Andrew

      Wiggin, Jerry

      Rumbold, Mrs Angela

      Wilkinson, John

      Ryder, Richard

      Winterton, Mrs Ann

      Sackville, Hon Thomas

      Wolfson, Mark

      Sainsbury, Hon Timothy

      Wood, Timothy

      Sayeed, Jonathan

      Young, Sir George (Acton)

      Scott, Nicholas

      Younger, Rt Hon George

      Shaw, Giles (Pudsey)

      Shaw, Sir Michael (Scarb')

      Tellers for the Noes:

      Shelton, William (Streatham)

      Mr. David Lightbown and

      Shepherd, Richard (Aldridge)

      Mr. Francis Maude.

      Shersby, Michael

      Question accordingly negatived.
      Lords amendment No. 1 agreed to.

    Clause 4

      VALIDATION FOR PAST AND GENERAL PROVISION FOR FUTURE
      Lords Amendment: No. 2, in page 4, line 40, leave out "Conclusive block grant calculations" and insert "Any basic block grant calculation"
      12.45 pm
      The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker (Sir Paul Dean): With this we are to discuss Lords amendment No. 3.
      Mr. Chope: These are both technical amendments to subsections (3) and (4). They are to make it clear that, when we come to make the conclusive calculations of block grant for 1981–82 and 1982–83 for England and Wales and for 1983–84 for Wales, we can take account of education pooling adjustments in the way we were intending and in the way local authorities expect.
      Mr. Straw: The Opposition are not intending to oppose the amendments—
      Mr. Chope: Very gracious of you.
      Mr. Straw: The Minister says from a sedentary position that that is very gracious of us, and I take that compliment in the spirit in which it was intended.
      The amendments illustrate the difficulties that the Government had in drafting their way out of the legal morass or bog in which they found themselves.
      Question put and agreed to.
      Lords amendment No. 3 agreed to.

    Clause 7

      RESTRICTIONS ON RATING AND PRECEPTING
      Lords Amendment: No. 4, in page 6, line 39, leave out "and".
      Dr. Boyson: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this amendment we are to discuss Lords amendments Nos. 5 and 7 to 15.
      Dr. Boyson: These amendments provide for a new formula for determining rate limits for newly selected authorities, or are drafting amendments to schedule 2 designed to facilitate comprehension of a highly technical text. Everyone will agree with that.
      The effect of the amendments is that newly selected authorities will have headroom to spend up to at least a level equivalent to their grant-related expenditure plus 9 per cent. On the basis of my right hon. Friend's current intentions for the 1987–88 RSG settlement, two authorities are affected by this change in formula—Gateshead and Newham, with increases in their intended rate limits of some 3p and 44p respectively.
      Mr. Ron Leighton: These amendments are of major importance for Newham. I can think of no single issue that I have dealt with in Parliament which has had a greater direct impact on the borough. This flawed Bill, which was introduced in great haste and which is being rushed through both Houses because of the legal mess would, unamended, have had a devastating effect on the borough, robbing it of resources.
      Immediately, a movement was mobilised in Newham to campaign for a better deal and an amendment to the Bill. On 4 February, a great demonstration, complete with meetings and a march of some 7,000 people, took place, followed by a lobby of Parliament. Many who participated must have wondered whether such effort and activity was worth it and would have any effect. I can only say to any doubters, in view of what has transpired:
      "Say not the struggle naught availeth",
      for the very next day the Minister of State's office contacted me to accept my previous invitation and to make arrangements for the Minister to visit Newham to see things for himself.
      428
      In the various debates that we have had on the different stages of the Bill, all three Newham Members have played a full part, as did the noble Lord, Lord Elwyn-Jones, in another place. A proper modesty forbids me from saying too much about their speeches, but I hope it can he said that they were persuasive and informative and laid out the facts in detail and accuracy.
      It would be churlish not to recognise the constructive role of the Minister of State. Above all, he was prepared to listen it is no use speaking if no one is prepared to listen. I for one appreciate the fact that he was prepared to listen and to visit the borough. Hence we have these amendments, which will allow the borough an expenditure limit some £7 million higher than it otherwise would have had—£7 million that is badly needed.
      I do not pretend that the amendments will solve the borough's financial problems, for they will not. For example, we now lose even more block grant and the borough will still have to make many cuts. But the amendments will limit the damage and will avert the catastrophe that threatened us, and we cannot but appreciate that.
      For the future, the three Newham Members will continue vigilantly to watch over the interests of the borough, strive to obtain a fair share of resources and justice for our area, and exert ourselves for the people who sent us here.
      Mr. Cash: I am delighted that the Government have helped Newham. On the other hand, I must say quickly that the comprehension to which the Minister referred completely escapes me. I find the whole formula incredibly complicated, as I am sure does everyone else. But I wish my hon. Friend well, because apparently the formula achieves its objective.
      Mr. Nigel Spearing: May I first associate myself with what my hon. Friend the Member for Newham, North-East (Mr. Leighton) said about these amendments? I do so though with mixed feelings, as I am sure that the Minister of State will understand. It is mainly because we have avoided an unforseen quirk in the formula which was imposed upon newly capped[authorities. It reminds hon. Members of the powers that the Minister is taking. That matter was referred to in regard to the first group of amendments. In fact, the executive is advancing into areas hitherto the responsibility of the courts. Of course, we thought that that was achieved in 1688, but we are going backwards, apparently, into the year 1988. Indeed, the high court of Parliament, in its deliberations in the House and in another place, has at least dealt with a difficulty. For that— I echo the words of my hon. Friend—we are grateful.
      Of course, the amendment only brings us back to the position that the Government intended us to be in before the amendment was accepted. When I moved the original amendment—to give a sum of grant-related expenditure plus about 10 per cent.— the Under-Secretary of State refused it for reasons that he thought were important. He referred to happenings in Newham and produced some figures. When my hon. Friend the Member for Newham, North-West (Mr. Banks) and I wished to intervene, he would not permit us to do so.
      I shall quote but one instance to show the well-known flaws involved in quoting statistics without having background knowledge. For instance, the Under-

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      Secretary of State said that 2,420 empty dwellings were in the possession of Newham council. He said that it was one of the worst, if not the worst, areas in the country. He had forgotten, did not know, or did not find out, that about 1,000 of such dwellings in my constituency were in empty tower blocks of the Ronan Point type. He mentioned other matters, as did Lord Skelmersdale when he replied to an amendment moved by Lord Elwyn-Jones. Since that date, and on the occasion of the Minister's welcome visit, the borough has supplied facts and figures that completely contradict the point made by the Under-Secretary of State. Hon. Members have not referred to the figures tonight. I shall not refer to them at length, but I shall give one example of the use of what I regard as flawed statistics. Unless we hear from the Minister or the Under-Secretary of State, who may reply to the debate, I shall take it that the statistics are broadly accepted.
      The moral is that there seems to be some lack of communication between Newham and Marsham street, where my hon. Friends and I and, indeed, the Minister have done our best to bridge the gap. I do not know whether there has been more than one level of information flow or whether the sources of information on which the Under-Secretary of State and, sometimes, others have relied have perhaps not been as official as they might be. For instance, there has been concern about the speed of council house sales. Obviously, the council does not like it, but there is a legal obligation so to do. On 18 February the policy and resources committee of the London borough of Newham gave authority for private estate agents to speed up such sales. That is an illustration of the fact that sometimes what appears to be in figures is not present in fact or intent.
      My hon. Friend the Member for Newham, North-East said that the Bill is only an amelioration. I understand from the borough that the gap of £33 million in next year's budget has now been reduced to £26 million. In terms of actual cash revenue, what was to be a gap of around £14 million has been reduced to £10 million. A reduction in one year of a needed £10 million is hurtful.
      Newham's expenditure in the current year is £167 million. I understand from the borough that if services are to be held at the same level, taking into account inflation and rising bed and breakfast and other costs to cover matters that require statutory attention, the revenue for the forthcoming year should be about £175 million.
      This amendment will provide for expenditure of £165 million, leaving a gap of£10 million. Painful cuts will therefore have to be made in Newham, the second most deprived borough in the country. There will have to be education and social services cuts and there will also have to be cuts in the services provided for the elderly and infirm who live in their own homes. I do not see how those cruel cuts can be avoided if the borough is to keep within the law.
      Most hon. Members, including Conservative Members, will be glad to know that at its last council meeting the council adopted a budget that falls within the legal constraints of this Bill. However, that legal budget will involve cruel injustices being meted out to the people of Newham. Conservative Members may think that they are penalising those of a different political colour from themselves. That is one way of looking at it. However, they are penalising some of the best but some of the least
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      privileged people in this country, however they may vote—and some of them do not vote. I am not surprised that they get fed up with politicians. Sometimes the difficulties that are caused by the cuts that are imposed by Marsham street are thought to be due to the council. Many people do not distinguish between Members of Parliament and councillors, let alone between those who are in Government and those who are in Opposition. People do not necessarily see where the responsibility for these cuts lies. It lies with the Government—nowhere else.
      The rates figures are also significant. Despite these urgent needs, there is to be a rates reduction of 11 per cent. That will be welcomed by many but, as my hon. Friend the Member for Newham, North-East pointed out, one of the difficulties is that although we are being given an additional £15 million in rate support grant, there is to be an increase of £7·5 million in what the Chartered Institute of Public Finance and Accountancy calls flowback, but which I prefer to call clawback or a rates tax.
      Despite the amelioration that this formula provides, there will be very real problems. I am glad to see that the Secretary of State has arrived in the Chamber. I want to ask him what would happen if the same thing were to happen in Gloucestershire. I have been looking at the figures, and I understand that the equivalent expenditure in Gloucestershire to Newham's £167 million is about £183 million. If Gloucestershire were faced with an £8 million cut in its revenue in the forthcoming year, I wonder how Gloucestershire county council would cope? I wonder, too, how the Secretary of State, the right hon. Member for Cirencester and Tewksbury (Mr. Ridley), would cope. What would people think of him and of the Government? I cannot imagine that the Gloucestershire cuts, if there were to be any at all, would come anywhere near to those in Newham.
      I conclude this mixed speech of thanks by saying something that I believe ought to be said. It has been said on a number of occasions, but now that the Secretary of State is here it ought to be said very clearly indeed. I do not believe that by their actions this Government show that they believe in local government. In bulk financial terms, most of the services that are provided for our people arise from the interface between local government and local people. Yes, there is a DHSS office, Ministry inspectors for this and people in bowler hats, metaphorically speaking, who come from Marsham street and other Ministries. But most community services—50 per cent. as opposed to 60 per cent.—are paid for by taxpayers. The Government are responsible, and how responsible they are now that the Secretary of State has an iron grip on how the money should be used!
      I cannot imagine how any Government who believe in the democratic accountability of services can produce such a succession of debilitating Acts of Parliament, confusions and procrustean activities, yet continue to think that the machine can work. Even if we did not have this last minute recantation there would be terrible strains on local government in Newham and elsewhere.
      People are beginning to doubt whether the Secretary of State and his friends are wedded to local democracy. They ask, "Is this not a plot to give local government a bad name and to make it impossible for it to work, so that central Government powers become greater and local

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      government powers diminish? Does that not fit in with the Government's philosophy of reducing public involvement and centralising democratic accountability?"
      Some hon. Members may think that a Mephistophelean approach, and the way in which the Government have proceeded suggests that that is, indeed, the case. The way in which the Secretary of State has dealt with the Bill, Newham and some of the most needy areas has confirmed that that view, not only has content, but nearly has proof.
      Mr. Tony Banks: I shall be brief because most of the points have been made by my hon. Friends the Members for Newham, North-East (Mr. Leighton) and for Newham, South (Mr. Spearing).
      We must acknowledge that the Minister of State has through his actions, particularly his visit to Newham, granted some of our requests. We proposed a major part of Lords amendment No. 4 in this House, but at that time the Government chose not to concede the point. Clearly, as the facts emerged, the Government realised that a major error was being made. If the amendment is passed— naturally, we shall not vote against it—Newham will be about £7 million better off than it would otherwise have been.
      The amendment will still require Newham to cut its expenditure to a level closer to the GREA than 16 of the 20 rate-capped local authorities and to cut its rates by more than those of 16 of the 20 rate-capped local authorities. We must still find about £10 million-worth of cuts. In a borough such as Newham, that will cause great distress, pressure and hardship, when little more hardship can be borne by the people who live there.
      We shall accept the amendment—naturally, we must take whatever we can possibly get in these straitened times—but it will nevertheless mean that next year Newham will face a disaster rather than a catastrophe.
      Mr. David Clelland: I am grateful to have the opportunity to say a word or two on behalf of the metropolitan borough of Gateshead. Until this moment, this has been a Newham debate. Perhaps that is just, because, as my hon. Friend the Member for Newham, North-East (Mr. Leighton) said, the Bill has major importance for Newham. Unfortunately, it is of minor importance to the metropolitan borough of Gateshead. If Ministers expect the borough to be teeming with gratitude, I must disappoint him.
      Ministers are aware that the metropolitan borough of Gateshead has been badly treated in this exercise. At the council's budget meeting tomorrow, the amendment will make no noticeable difference to the borough's problems.
      The council faces a £12 million reduction on what it would need to stand still on last year's budget. It cannot be described as a high-spender; it is not a profligate council. It is a local authority with needs, which are recognised by the Government through the inner area partnership and the national garden festival, which is to be held in the borough in 1990.
      What the measure means to the metropolitan borough of Gateshead is no extra Government support; indeed, it means a reduction in block grant. It means an increase in an already inadequate expenditure level of some £500,000 from £98 million to £98.5 million. It means that instead of the council being forced to reduce its rate by 9 per cent. next year, it will have to reduce it by about 8 per cent.
      Hundreds of jobs will still be lost and services will still suffer. The analogy as to Gateshead is of a man who was
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      to have 10 fingers amputated and is told that he is to have only nine fingers amputated. I do not think the Ministers can expect such a man to feel much relief from that prospect.
      Mr. Meadowcroft: Looking at the complicated formulae in schedule 2, I am glad to find that the printers have as much problem as hon. Members and that we had to have a correction slip. If I raise questions from an inquiring spirit, wishing to know answers, I hope that the Minister will take that in good part.
      Why, if some help was given to the London borough of Newham, was there not a way of giving some help to the London borough of Tower Hamlets? The London borough of Tower Hamlets has been told by officers that out of its rate-capped sum of £124 million, £24 million, as a net sum, will have to be spent on housing 1,500 homeless families. It has no way of avoiding that.
      The Minister may also be aware that his hon. Friend the Minister for Housing, Urban Affairs and Construction, by his midnight deadline at the appropriate date in February, cut off a scheme which might have been of great help to 600 families. It seems to me monstrously unfair to deal with a problem relating to a London borough nearby— which I welcome—but not with a borough which is affected just as much as Newham.
      As far as I can make out from the formulae, there has been no increase in assistance under that formulae for the problems of the fire service. I told the Under-Secretary of State for the Home Department that I would be happy if the west Yorkshire fire service were able to meet Home Office standards. Unfortunately, because of the limits imposed by the Department of the Environment, it is unable to do so. The Under-Secretary believed that there was enough money under the provisions of the rules of the Department of the Environment for the west Yorkshire fire service to be able to operate effectively. What he may not have known at that time was that the fire service has now announced that it has mothballed a number of fire appliances. It will not be able to run them and, therefore, it will be unable to meet Home Office standards.
      It seems odd that we are faced with a set of Lords amendments, which alter in some detail the complicated formulae yet which do not deal with the precise question that any logical person would find difficult not to accept. There has been a mistake, which should be put right so that the fire service can run effectively.
      1.15 am
      Mr. Straw: This group of amendments makes provision for Newham and Gateshead not to receive additional funds but to spend more of their ratepayers' money at a saving to the Government. In addition, it rewrites the 13ill on rate capping.
      We are glad that the Minister listened carefully to the representations that were made to him and was able to agree to these changes. I say that with no qualification. Like my hon. Friends from Newham and Gateshead I must also say that those authorities will still unfairly be placed in difficulties. It is important that while we thank the Minister for listening we should not give the impression that the Minister has provided any money. Indeed, the Treasury is probably smiling all the way to the bank because it saves on this arrangement.
      Mr. Meadowcroft: The Treasury never smiles.
      Mr. Tony Banks: It smirks.
      Mr. Straw: No doubt it will be pleased. In many ways it will have supported Newham's representations because of the saving of rate support grant. That illustrates one of the many bizarre aspects of the rate support grant system. An apparent Government concession to ease the rate-cap limit saves the Treasury money. The people at a disadvantage are the ratepayers in Newham and Gateshead.
      From the start, my hon. Friends the Members for Copeland (Dr. Cunningham) and for Houghton and Washington (Mr. Boyes) and I were concerned about the situation in Newham and Gateshead which was drawn forcefully to our attention by our hon. Friends the Members for Newham, North-East (Mr. Leighton), for Newham, North-West (Mr. Banks), for Newham, South (Mr. Spearing) and for Tyne Bridge (Mr. Clelland), and I want to pay tribute to them for the way in which they and their authorities ran their campaigns so intelligently to bring the plight of their areas to the Government's attention to ensure that there was a change of mind by Ministers.
      My hon. Friend the Member for Newham, South spoke of the situation in Newham. He knows that I had a family connection with Newham because for many years my mother was a headmistress of a nursery school in a deprived part of Newham. No one can say that at any stage of its existence Newham has been a profligate authority— to use the standard term of abuse. In comparison with adjoining authorities of different political complexions Newham has had a reputation for economy to say the very least. On many occasions I went to see my mother's school— [Interruption.] The maintenance of school buildings in Newham does not compare well with other authorities, nor does the overall level of resources available to that authority.
      It is no good the Secretary of State smiling. None of us has thanked the Secretary of State tonight and none of us intends to. One of the Secretary of State's problems, on which he is no doubt reflecting after yesterday's little episode, is a stupefying degree of insensitivity to problems of which he has no direct experience and a desire not to comprehend the fact that many people in Britain live in conditions in which no hon. Member would wish to live, certainly, not in the high rise or low rise accommodation of Newham that was forced on such areas by the right hon. Member for Leeds, North-East (Sir K. Joseph) when he was the Minister responsible for housing in the early 1960s.
      The amendments raise other problems. They illustrate an arbitrariness in the way in which rate capping has been pursued this year because, it is said, of the problems and defects in previous legislation which require the Bill and because of the rules on hybridity which prevented Ministers from making individual judgments on individual cases. It was the Opposition's contention in amendments that we moved earlier in the proceedings, that it would still have been possible for Ministers without facing the dangers—from their point of view—off hybridity, to apply a re-determination process that took account of individual circumstances, but without the need for extra limbs to the algebraic formulae that appear on pages (2) and (3) of the amendment paper.
      Rate capping was sold to a very sceptical House, and that scepticism was felt on both sides of the House not least on the basis that while the principles would apply to all authorities, individual Ministers would consider the
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      merits of cases of authorities individually, case by case. They have not been able to do that within the framework of this legislation and they have introduced greater arbitrariness into the rate capping system.
      My final point relates to an issue that I raised in the short debate on the guillotine motion.
      Mr. Meadowcroft: The hon. Gentleman referred to the reluctance of the House at the time to accept the principle of rate capping. Does he regret the absence of the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), who has been a formidable opponent of such matters for some time? He said that if the Government believed that they could hurt those in need to benefit those without need, they had another think coming. It is a shame that the hon. Member for Selly Oak is not here to make his case this evening.
      Mr. Straw: I certainly regret that the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) is not present. I dare say that he took part in the earlier debate on the motor industry. However, unlike the Ministers in the Department of the Environment today, the hon. Member for Selly Oak takes the old Conservative view of local government and considers that a local government invested with substantial degrees of independence is an idea that is wholly consistent with, and indeed underpins, the old Conservative tradition. The hon. Member for Selly Oak has sought to defend that against the centralists, the Poujadists, who now occupy most of the Treasury Bench.
      After that short diversion, I want to consider the issue that I raised in the debate on the guillotine motion and I would be grateful if the Minister would reply to this point. My point relates to the Greenwich decision and any appeal by authorities that are rate-capped. I spelt this out in the debate on the guillotine motion, but I want to repeat the point. Greenwich went to court because of an argument with the Secretary of State about the way in which the grant-related expenditure assessment for road maintenance, which had previously been held by the GLC, should be distributed between the various London boroughs. It is quite untrue, as the Department of the Environment press office has tried to dissemble was the case, that Greenwich had been given GREAs for roads that did not exist. That was never the case and no formula—
      Dr. Boyson: Greenwich stole the money.
      Mr. Straw: That is very interesting. From a sedentary position the Minister has just said that Greenwich stole the money from other authorities.
      Dr. Boyson: As I understand the position—and the Opposition often makes great play of moral cases—money either belongs to someone or it does not. If the Government cannot legally give that money to the person who is entitled to it and someone else takes it gratefully, it would not be stealing in the sense of the law, but to the ordinary person it would appear that the latter had money that belonged to someone else. That is my interpretation of the Greenwich case.
      Dr. John Cunningham: But it is not stealing.
      Dr. Boyson: It is keeping money that one knows one should not have.
      Dr. Cunningham: It is not stealing.
      Dr. Boyson: If the hon. Gentleman had listened, he would have heard me say clearly—[Interruption.] If the hon. Gentleman wishes to intervene, he can do so, but it is a limited debate and it will only stop others from talking.
      If someone receives money which, in justice, should go to someone else, and keeps it, many people may not consider that to be stealing in the eyes of the law, but they would say that it was unjust. That is how I see the case. Bromley had the 90 km of roads allocated to it, but the money was not allocated to it as it should have been and it went elsewhere, including to Greenwich and other boroughs. They kept it, legally, but I still believe that the money should have gone to the borough that was allocated the roads. I answered the point in the previous debate. That is my understanding of the case. The interpretation of the courts is a legal, not a moral interpretation.
      Mr. Tony Banks: Let us have another Local Government Bill then.
      Mr. Straw: I am almost at a loss for words after hearing the Minister parodying the position of Greenwich—[Interruption.] I shall give way to the Secretary of State, too, if that is why he is shifting in his seat.
      The Minister sought to parody the position of Greenwich by suggesting that it took money from Bromley. I remind him that Greenwich was in a position to receive money not as a result of any action that it had taken, but as a result of decisions taken by Ministers.
      Dr. Boyson: They knew that it was not their money, but they kept the money. The hon. Gentleman would not have done it, and I would not have done it—or would he?
      Mr. Straw: It may not have been a decision of this Minister, because there have been so many changes at the Department of the Environment that we cannot keep track of them. Let me spell out what happened. First—the Minister was not responsible for this policy— the Government decided to abolish the GLC. Greenwich did not participate willingly in that decision; indeed, it opposed the abolition. The GLC's grant-related expenditure assessments for highway maintenance had to be transferred to the boroughs, and that was done pro rata to the borough's GREA. The GLC's expenditure had to be spread among the boroughs and then a multiplier was set to equalise the cost to each authority. The formula for highway maintenance GREAs was improved as a result of negotiations between the local authority associations and the Department, with Ministers approving the change. Does the Minister deny that Ministers approved that change? I think that the answer is coming from his officials.
      Dr. Boyson: This is a hymn sheet.
      Mr. Straw: I wish it was. Does the Minister deny that Ministers approved that improvement in GREAs?
      Mr. Meadowcroft: Let him read the answer first.
      Dr. Boyson: It does not even answer it.
      Mr. Straw: It is the wrong answer to the wrong question. The Minister had better see his officials afterwards.
      The Minister must understand that the change in the formula took into account not only the length of the roads but the extent to which they were used and the greater intensity of traffic in inner London compared with outer London.
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      The point is simply that it was Ministers who agreed the original change in the GREA formula, which had the affect of benefiting Greenwich. Ministers encapsulated that in decisions which were then validated by the Rate Support Grants Act 1986, retrospectively, and it was the courts which then said that that validation meant that a subsequent change could not be overturned by Ministers. It was for that reason that the judge in the case said that the Minister had been hoist on his own petard.
      1.30 am
      The Secretary of State for the Environment (Mr. Nicholas Ridley): I intervene only to congratulate the hon. Gentleman on having talked for about 10 minutes, without having mentioned the fact that that was the case arising out of the Bromley error. He does not seem to acknowledge that it arose out of an error, rather than any determined judgment.
      Mr. Straw: Of course, it is true that almost every decision that Ministers make on rate support grant is an error and has to be changed.— [Interruption.] I have thick files on the Bromley error. I corresponded with the Minister's predecessor but two on that errror, as his own private office files will show. It is not our fault that Ministers or the Department make errors and then bring forward legislation such as the Rate Support Grants Act 1986, which sets all those errors in concrete—[Interruption.] We shall await the final transcript of the case but I can say only that on the details of the judgment I have received, that is a fact of the case. If the case is as the Secretary of State describes it, it is a matter of surprise that a High Court judge could not only have found for Greenwich, but have said all the things that he did about the Secretary of State.
      However, the Secretary of State, having lost on Greenwich, has now revised the rate support grant tables. If the Secretary of State wins on appeal, what happens to the rate support grants for each authority, particularl) to those authorities which are in tight circumstances and which are rate-capped.
      Dr. Boyson: I shall try not to get bogged down in the debate on any other error anywhere else.
      The hon. Member for Leeds, West (Mr. Meadowcroft) raised the question of help being given to rate-capped authorities, particularly those rate-capped for the first time. We have to have a formula because otherwise we risk hybridity. That is obvious to anybody. The formula we set seemed to be the fairest and most just in so far as GRE is an indication of what should be spent to provide equal services throughout the length and breadth of the country. We came upon the formula, which had been discussed at an earlier stage of the Bill, to put a new piece in the Bill—grant related expenditure plus 9 per cent. If Tower Hamlets had come into that category, the authority would have had the advantage of the formula. However, it did not. The two authorities that did come into the category were Newham and Gateshead.
      Mr. Meadowcroft: Why did the hon. Gentleman not consider—given that it is a legal definition—including the homeless families under the Housing (Homeless Persons) Act 1977 as a factor in setting the limits higher?
      Dr. Boyson: The formula was already so complicated that if we had put all those in one, could have included another 51 and be back to GRE. All the aspects referred to by the hon. Gentleman are part of the GRE formula.
      The hon. Members representing Newham have not been over-gracious this evening and we began to wonder whether we should vote against the amendment. I shall put that gently on the record. When one does something to try honestly to help somebody else, both sides should accept that.
      The hon. Member for Blackburn (Mr. Straw) referred to the Greenwich judgment. An electoral judgment was made in Greenwich as well as the one we are discussing tonight.— [Interruption.] Greenwich was not a Conservative seat. It has been a Labour seat for 50 years. If we had won the seat it would have been even more amazing and a third Greenwich judgment would have had to be taken.
      The rate support grant has to be changed because of the Greenwich judgment, and because we obey the law. What is legally right has been interpreted. If we win on appeal—we hope that we shall— in the first supplementary report we shall have to look at the matter again and put it right, otherwise someone else will object. But the decision has been made. If there is a change, we shall have to meet it, we hope on appeal, in a supplementary report.
      Mr. Straw: If there is such a change and then a supplementary report, and if there is a loss of grant to the ratecapped authorities, those authorities could run into deficit as a result of the loss, through no fault of their own. Will that be taken into account in any subsequent decisions?
      Dr. Boyson: I cannot deal with that now. We shall look at it within the law and the rules that have been laid down in this and other Acts. We cannot go into the details at present.
      The decision on the change of formula was made not by me as Minister of State but by the Secretary of State after we had all discussed it together. The three hon. Members who represent Newham—the hon. Members for Newham, North-West (Mr. Banks), for Newham, North-East (Mr. Leighton) and for Newham, South (Mr. Spearing)—have represented their authority as well as any hon. Members could represent anywhere. I trust that I am not risking their reselection by saying that in the House. That decision was made by the Secretary of State when we met at the time. I thank my right hon. Friend for his co-operation after my visit there. He had to take my work for what was happening in Newham. We now know
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      that Newham will catch up on the sale of houses. There has been a quid pro quo. We look forward to the fulfilment of the sale of houses over the next six months.
      Mr. Spearing: I am grateful to the Minister for his words about the Secretary of State. Indeed, we are glad and grateful that the anomaly in the formula has been rectified. We made that clear during the Minister's visit. The hon. Gentleman will also realise, in case it be misunderstood, that there will still be great difficulties. In due course I shall acquaint the Secretary of State, the
      Minister of State and the Parliamentary Under-Secretary with some of the unfortunate consequences of the Bill, to which this is an amendment, which I am afraid cannot be avoided. Perhaps the Minister will understand the spirit behind the thanks, and the difficulty that characterised my words.
      Question put and agreed to.
      Lords Amendment No. 5 agreed to.

    Clause 12

      INTERPRETATION
      Lords Amendment: No. 6, in page 8, line 29, leave out
      subsection (3) and insert—
      "(3) for the purposes of this Part of this Act as it applies in relation to an intermediate year beginning in 1983, 1984 or 1985—

      (a) "local authority" also includes the Greater London Council and the Inner London Education Authority within the meaning of section 30 of the London Government Act 1963,

      (b) references to the Inner London Education Authority in section 1(1)(c) above, paragraph (c) below and paragraph 2A(10) of Schedule 3 to this Act shall be construed as references to the Inner London Education Authority within the meaning of section 30 of that Act,

      (c) the Greater London Council and the Inner London Education Authority shall be taken to be separate local authorites, and

      (d) "local authority" does not include a joint authority or the Inner London Education Authority established by section 18 of the Local Government Act 1985."

      Mr. Chope: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Straw: We do not oppose the amendment, but it arises, again, as a complication from the abolition of the Greater London council and the fact that there have been three different animals, all known as the Inner London education authority, in the past two years.
      Question put and agreed to.
      Lords Amendments Nos. 7 to 33 agreed to. [Special Entry.]

  Investment Advisers
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]
  1.40 am
  Sir John Page: I am grateful to my hon. Friends for remaining here to listen to the debate. I am pleased to speak on a matter that is of vital importance to a small number of people and of great strategic significance to the Government and to the investing public.
  For three reasons, I have a special interest in licensed financial dealers. First, constituents of mine have lost all or part of their savings because of the failure of licensed financial dealers to whom they had entrusted their money. Secondly, I have an interest as the promoter of the Insurance Brokers (Registration) Act 1977 which enshrines much of the philosophy of self-regulation in the insurance brokers' profession, which has been studied and in some ways followed by those who prepared the details of the Financial Services Act 1986 and in which I have been able to see the setting up and working of a compensation fund.
  Thirdly, I speak as the chairman of the Savers Union. I do not have to declare an interest because this is a wholly honorary position. The union was set up about seven years ago on an all-party basis to be a supporters' club for people, mostly small savers, with money in national avings schemes, building societies and such organisations.
  The chief enemy of the saver is inflation, and we in the Savers Union take a small dram of pride in the success that we have had in informing savers about the virtue of defeating inflation. The Savers Union has done a useful job, with a small and loyal membership. We may have a role in future looking after the interests of the small investor in the same way as the Automobile Association looks after the interests of the private motorist.
  There is definitely a gap in consumer representation that needs to be filled quickly. I shall start the main part of my speech by talking about the problems of the small investor. In the last 10 years, the number of people holding shares has jumped from about 2 million to about 12 million. That is a staggering increase. Interestingly enough, of the present 12 million shareholders, more than half— about 7 million— hold shares in only one category, many of them in British Telecom or British Gas or in share schemes developed by companies for their employees. They are inexperienced investors and potential prey for sharp financial operators.
  I was stung into action when two extremely nice constituents of mine visited me just before Christmas. They told me that they had an investment of £5,000 in Thames Television and that on one Friday they had taken their share certificates to one of the City Investment Centres offices—known in advertisements as CIC asking it to raise money on part of their shares, and to retain the other part for them in share certificates.
  About 10 days later they again went along to the CIC office and found a notice on the door that said that the firm had had its licence to trade withdrawn by the Department of Trade and Industry. My constituents have no idea whether they will suffer a total loss or what percentage of their savings will be saved from the wreck.
  I appreciate the Department's difficulties in having to withdraw a licence or close down a licencsed financial
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  dealer. If the Department closes down a dealer too early, it may be considered that that action has caused loss to investors because the operators have not been given the time needed to get the business going properly. However, if the Department closes down a dealer too late, as many people feel happened with CIC, it means that more people's savings will be put at risk. That problem represents the kernel of the situation that I wish the House and the Minister to address.
  An Adjournment debate on the subject of McDonald Wheeler Fund Management was initiated by the hon. Member for Thurrock (Dr. McDonald) on 17 November 1986. That debate— in common with this one— was answered by my hon. Friend the Under-Secretary of State for Trade and Industry. Therefore, there is no need for me to go over that ground again or the dubious role of Mr Wheeler. I also have constituents who have suffered at the hands of that firm. Another spectacular collapse concerned Prior Harwin shareholders, but as yet, none of my constituents have told me that they are involved in that disaster.
  The good news is that the Government have already taken wise, positive steps in the Financial Services Act 1986 to take care of problems arising from failures similar to those I have mentioned. The most important aspect of that Act has been the establishment of a compensation scheme. Such a scheme also featured in the Insurance Brokers (Registration) Act 1977. In that instance, the scheme is also supported by professional indemnity cover.
  Just as those who deal with registered insurance brokers are covered by a compensation fund, so in future those who deal with registered investment intermediaries will be covered by a compensation fund. However, regrettably, the regulations covering intermediaries will not take effect for about 12 months. Therefore, the compensation provisions and fund will not be effective. We must take steps to deal with the gap between now and when the new Act comes fully into operation.
  I ask the House and my hon. and learned Friend to concentrate their minds on what is to happen next year. The Government and the House must find a way to safeguard investors during that period. We may not be able to lock the stable doors before some of the horses have left, as in the cases which I have mentioned, but we have a duty to put a new padlock on the doors to keep horses in until the new stable block has been built, under the auspices of the Securities and Investments Board, which the Financial Services Act will set up.
  At present, there is a category of intermediary known as a licensed dealer. I regret that the licence appears to be worthless as a protection of the public. It would be better if it did not exist. Under the licensing scheme, there exists the Financial Intermediaries, Managers and Brokers Regulatory Association which admits dealers to membership. The most important part of the name is "Regulatory". When I was first involved in this problem, I was inclined to be extremely critical of FIMBRA, but I now believe that I was wrong. It is trying and has tried desperately hard to do the right thing by investors, but is not yet invested with the necessary powers to enable it to do the job which will be given to it when the Act is fully in place. The great mistake was to put FIMBRA into operation before the whole Act was in place. I am confident that that should not have been done. There is a

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  danger that the public's faith in FIMBRA has been seriously harmed, although, if my outline plan is carried out, the wounds need not necessarily be fatal.
  However, in all seriousness, I have to say that, had it not been for the aura of respectability given to some intermediaries by being able to say in their letters and advertisements, "We are dealers authorised to operate by FIMBRA," my constituents have told me that they, and I believe others, would not have dreamed of giving those dealers that confidence. I therefore challenge the wisdom of operating FIMBRA before its compensation fund has been put in place.
  Taking this background into consideration, what action should the Government take to safeguard the small investor during the vital next 12 months? I suggest that the following steps should be taken. First, FIMBRA should immediately instruct its members, except those such as registered insurance brokers who are already covered by a compensation scheme, not to use its logo until the Act is in place, or there should be a Government financial health warning ensuring that FIMBRA members in their advertisements and correspondence clearly state that there is no compensation fund or insurance unless theirs are specifically in existence. However, I have reluctantly been persuaded that it is not possible for retrospective compensation to be arranged to help those who have already suffered loss, and I deeply regret the loss and distress which they have suffered.
  Secondly, all current investors who are not fully experienced in financial dealing should at once write to their bank managers, or call on them, to ask whether those who are handling their finances are covered by compensation schemes or other insurance policies, as are stockbrokers, registered insurance brokers and other professional advisers. They should then accept their bank managers' recommendations whether to continue or not with their present dealers.
  Thirdly—this is the crux of my argument—I ask the Government to enter into earnest discussions with FIMBRA to persuade it immediately to put a compensation scheme in place such as it will need to do when the Act is fully in operation. The Government should be ready and willing to make a loan to FIMBRA of an appropriate sum—I do not know what that figure might be, but let us say £5 million—to be repaid in full after four or five years, when FIMBRA's own scheme of compensation is in operation. This will mean that the investing public will instantly be given the safeguards which they need and, which I believe they thought they had already. We cannot sit in this place with folded hands and watch calmly while further calamities befall our unsuspecting constituents.
  Finally, I urge my hon. and learned Friend the Minister, who is wise, well informed and sympathetic, to talk to his right hon. Friend the Secretary of State and to FIMBRA about that which I have suggested. By adopting it, he will prove that the Government are determined to protect and encourage the new army of small shareholders whom their policies have rendered willing volunteers in the investment scene.
  1.57 am
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard): I congratulate my
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  hon. Friend the Member for Harrow, West (Sir J. Page) on securing the Adjournment debate, and I am grateful to him for the way in which he has raised an important subject. There is, in my view rightly, a deep concern on both sides of the House that investors should be properly protected, and my hon. Friend has drawn attention to a number of important elements in any system of investor protection. My hon. Friend's record in championing the interestes of investors through the Savers' Union and the promotion of the Act which is colloquially known by his name, the Insurance Brokers (Registration) Act 1977, is one that needs no embellishment.
  I should perhaps start by reminding the House that we are now in something of a transitional phase. The Government recognised some time ago that the existing system of investor protection was inadequate. The Financial Services Act 1986, which received Royal Assent in November, seeks to replace the existing system with a comprehensive new system of investor protection, drawing on the advantages of practitioner-based regulation but giving it firm statutory backing, and introducing also a range of new powers. I am grateful to my hon. Friend for his commendation of the legislation. We are determined to bring the new system into effect as soon as possible, but it will inevitably take a little while.
  The Securities and Investments Board has applied recently to have powers under the Act transferred to it. In support of the application, the board submitted its draft rules and other relevant material, and these documents are being studied to ascertain whether they satisfy the requirements of the Act. My hon. Friend will be aware that the Act lays down a twofold test for the designated agency's rules. They must provide an adequate level of investor protection, but any significant anti-competitive effects must be limited to those that are necessary in the interests of investors.
  If the rules satisfy the requirements of the Act, the next stage will be to lay an order before both Houses transferring powers to the board. I hope that that will be possible in the spring, and it will of course be debated then. Once powers have been transferred, it will be possible for the board to start recognising self-regulating organisations and authorising those applicants who prefer direct authorisation by the board.
  All this is bound to take a little time, especially as the Act will extend the regulatory system to a number of new areas, and practitioners in those areas will need time to apply for and obtain authorisation. Nevertheless, it should be possible to bring into force the central provisions of the Act, including those which will make it an offence to carry on investment business without authorisation, by the end of the year.
  As my hon. Friend has said, one of the most important features of the new regulatory system will be the provision that is made for compensating investors who lose money as a result of the misconduct of investment businesses. A regrettably large number of cases in recent months have highlighted the importance of such a scheme. Like my hon. Friend and many other hon. Members, I, too, have constituents who have suffered at the hands of some of those against whom regulators have taken action. Even though most investment businesses are perfectly reputable, I am sure that everyone would agree that the consequences of this kind of episode are such that there should be proper arrangements for compensation, funded by the industry as a whole.

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  That is why section 54 of the Financial Services Act 1986 allows the designated agency to establish a scheme for compensating investors who have a claim against an investment business which, perhaps because of insolvency, that business cannot meet. The board has published its proposals for such a scheme, which I am considering along with all the other material submitted. The proposed scheme is wide-ranging and will cover all kinds of investment businesses. The proposed limits on compensation are considerably higher than those applying to depositors with a bank or building society, and should ensure that full or at least adequate recompense is made in the most distressing cases involving relatively small investors.
  Of course, I appreciate that the news of a better deal to come will be cold comfort to some of those who have suffered in some recent cases. My hon. Friend has asked whether the new compensation arrangements could be used to compensate these losses as well as any arising in the future. I much regret that the answer must be no. The Act does not make provision for compensation to be payable retrospectively, and there is a natural presumption against retrospective provision of that kind. Moreover, it is difficult to see how a scheme for retrospective compensation could be established on an equitable basis. It would, I suggest, be extremely unfair to penalise those prepared to submit to the new system of regulation by requiring them to pay for compensation for failures which occurred before the system came into force.
  Similarly, I have to say to my hon. Friend that it will not be possible to accelerate the introduction of the compensation scheme independently of the implementation of the rest of the Act. The scheme relies on other provisions of the Act, especially those relating to authorisation, and cannot come into force in advance of them. But once the main provisions come into force there is no reason why the compensation scheme should be long delayed. The Act does not require a fund to be built up before compensation can be paid. Indeed, both the Act and the SIB's proposed rules envisage that a call on the scheme in its early years could be met by borrowing, to be repaid out of a subsequent levy on investment businesses. I think, therefore, that my hon. Friend's fears about the length of time before compensation becomes available may be misplaced.
  My hon. Friend has also suggested that FIMBRA might introduce its own compensation scheme to cover the period between now and the coming into force of the Financial Services Act. There is no requirement under the Prevention of Fraud (Investments) Act 1958 for FIMBRA to have a compensation scheme, but equally there is no bar to it, and indeed the stock exchange has a compensation scheme. FIMBRA already requires its members to take out professional indemnity insurance but this, of course, provides no solution in cases where the principals of the business concerned act dishonestly.
  If FIMBRA wanted to supplement this requirement with a compensation scheme, that would be a matter for it to decide. My hon. Friend also asked whether such a scheme could be financed by a long-term Government loan, and here I fear that I must again disappoint him. The compensation scheme to be established under the Financial Services Act will he financed by the industry itself and not the taxpayer, and I can see no grounds for departing from this
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  principle for any extra-statutory scheme introduced as an interim measure. It is also noteworthy that the stock exchange scheme is not financed by Government.
  In addition to the points that he raised about compensation, my hon. Friend made a number of interesting points about the powers of intervention available to regulators under the present scheme. In particular, he was concerned that existing investors may suffer when a regulator moves to restrict the business of or close down a business which has broken the rules. I fully accept this, and it is always a consideration which ranks high in the minds of regulators when deciding whether to take action. Nobody whose function it is to protect investors is liable to take lightly a step which is likely to damage severely the interests of a particular. group of investors. But in this as in other areas the regulator will have to strike a balance. It may well be damaging to existing investors to move against a business, but the damage that could he done if he were allowed to continue trading could be much greater. The damage caused to existing investors in such a case is regrettable, but it can be justified in the interests of the investing community as a whole.
  None the less, we recognise that investors gain little comfort from the knowledge that their suffering is necessary to protect others from a similar fate. Under the system to be introduced under the Financial Services Act, existing investors will be in a much better position when a regulator takes action. There will be a much wider range of powers of intervention available to the regulator. Those powers are set out in chapter VI of part I of the Act. They include powers to restrict the investment business that a person may carry on, to prohibit a person from disposing of or dealing with specified assets to vest in a trustee assets of the business and assets belonging to investors, and to maintain assets of a specified value in the United Kingdom.
  Such powers may be used in a variety of circumstances, and in particular in any case in which their exercise is desirable for the protection of investors. The effect will allow regulators to protect the interests of existing investors at the same time as taking action to protect potential investors.
  Another protection that the Act will give to existing investors will be the requirement to segregate clients' money into a separate account. Taken with the rules that the Securities and Investments Board proposes to make about safeguarding of other assets, this should ensure that the assets of a business are distinguishable from those of investors.
  I cannot pretend that the provisions will on their own be effective in every case in protecting investors. The clients' money rules, for instance, will protect investors only if they are kept, and the powers to vest assets in a trustee will be effective only if there are assets available to be seized. There is no guarantee in this world that can eliminate once and for all the danger of fraud that can redound to the disadvantage of investors, but standing behind the rules will be the compensation scheme, which will be a considerable protection for any investor who suffers as a result of a regulator's necessary action.
  I conclude by again thanking my hon. Friend for raising these important matters tonight. I share his concern at the tribulations of those who have lost money dealing with unscrupulous investment businesses.

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  I regret that it is not possible, under existing legislation, to do more to help people in their unfortunate position. However, I hope that I have made it clear that the
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  Financial Services Act will greatly improve the protection available to investors in similar circumstances in the future.
  Question put and agreed to.
  Adjourned accordingly at seven minutes past Two o'clock.