Commons Sitting of 7 March 1988

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

  ENERGY
  Mr. Speaker: Before we start on questions to the Secretary of State for Energy, may I say to the House that further court proceedings are still pending in Scotland on the issue of whether the South of Scotland Electricity Board is bound by contracts to purchase coal exclusively from British Coal for certain power stations. This means that that issue cannot be raised in supplementary questions or, indeed, in the debate later today.
  I am, however, prepared to allow questions and speeches to cover the future policy of the electricity boards in Scotland on the use of domestic and imported coal.
  Mr. Douglas: On that point, Mr. Speaker, would you be gracious enough to reflect a little further on how that statement constrains hon. Members with very important constituency interests, and on the debate last week in which this very matter was raised specifically by my hon. Friend the Member for Midlothian (Mr. Eadie) and by me? Will you reflect on how we might be constrained in advocating a position in defence of our constituents' interests, particularly in view of the threat that hangs over 3,000 to 4,000 miners in Scotland?
  Mr. Speaker: When I gave my original ruling, the issue was not sub judice. This week it is. As I have already
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  explained to the hon. Gentleman, discussion of the general proposition on whether domestic or imported coal should be used is perfectly permissible.
  Mr. Salmond: On a point of order, Mr. Speaker. Can you give us further clarification on whether what is sub judice pertains to the point at issue in the court case, namely, whether contracts have been established? Or are you saying that we cannot discuss the entire issue of the buying in of coal by the privatisation?
  Mr. Speaker: That is exactly what my statement said. What is sub-judice is the issue immediately before the court. I am prepared to allow questions and speeches to cover the future policy of the boards.
  Mr. Dalyell: Further to that point of order, Mr. Speaker. Question 6, which refers to this issue, stands in my name. The difference between policy and what is actually about to happen to jobs throughout Scotland is a very grey area indeed. Does this not raise the whole question of the relationship between what Parliament has already accepted on the Order Paper and the courts? On what basis are matters that appear in the courts subsequently allowed to preclude legitimate parliamentary questions?
  Mr. Speaker: Order. The questions were put down before the matter was sub judice. I have nothing to add to the statement that I have already made.

  ENERGY

    Electricity Industry
    Mr. Rost: To ask the Secretary of State for Energy when he proposes to announce his detailed plans for the privatisation of the electricity industry.
    Mr. Favell: To ask the Secretary of State for Energy when he expects to publish his proposals for the privatisation of the electricity supply industry.
    The Secretary of State for Energy (Mr. Cecil Parkinson): I refer my hon. Friends to my statement to the House of 25 February 1988.
    Mr. Rost: Is my right hon. Friend aware that his proposals have been widely welcomed by those who wish

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    to get into the business of electricity production, and that provisional contracts are already being negotiated between private generators and area boards at about 3p per unit of electricity? Is that not evidence that the competitive surge is already beginning and that this will lead to electricity price reductions and a better deal for the consumer and for industry?
    Mr. Parkinson: My hon. Friend is right. There is scope for competition in generation. I believe that that competition will put a downward pressure on costs, and we shall ensure through regulation that the benefit is passed to the customer.
    Mr. Favell: As my right hon. Friend is aware, a large number of CEGB employees live in Stockport. This privatisation differs from others because the employer after privatisation will not necessarily be the same one as before. Can my right hon. Friend say how the change over for employees is to be effected? In particular, will he say something about pension rights and the right to subscribe for shares?
    Mr. Parkinson: This will be a matter for detailed negotiation with the industry, now that we have declared the structure. We made it clear in the White Paper that the negotiating rights would not be interfered with and the machinery would not be disturbed. We also made it clear that one of the scares that are normally run on these occasions—that pensions would be threatened—was without foundation, and that we would ensure for everyone in the industry the right to buy shares on preferential terms.
    Mr. Matthew Taylor: The Secretary of State referred to the detailed plans in the White Paper, but there is nothing in the White Paper about the sort of price protection that there will be for consumers. There are worries in my part of the country that account may be taken in future of reactive losses, the costs of which are currently distributed around the country, and that therefore high price rises may occur in the further-flung regions of the country, to which there are high transmission costs. Can the Secretary of State give any reassurance to my constituents?
    Mr. Parkinson: Yes. If the hon. Gentleman looks again at the White Paper he will find that the regulator will be charged with the duty of making sure that the distribution companies do not abuse their monopolies, that the savings they make in costs of generation should be passed on and that their own prices will be put under pressure.
    Mr. Nicholas Brown: What will the Secretary of State's privatisation proposals mean for the four outstanding orders for coal-fired power stations?
    Mr. Parkinson: We expect those orders to be pursued. We believe that there is an important future for coal and that well into the foreseeable future coal will continue to be the major source of our electricity.
    Sir Anthony Meyer: What can my right hon. Friend say to allay the fears that the form of privatisation that he has chosen will not merely exert pressure on the Coal Board to be efficient, which is acceptable, but will unleash competitive forces which will lead finally to the virtual closure of the British deep mine coal industry?
    Mr. Parkinson: That is pessimistic nonsense. There will be a need for 75 million tonnes of coal a year, and I refuse
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    to believe that the British coal industry, backed by substantial investment and the most modern equipment, cannot meet the challenge of supplying most of that need.
    Mr. Win Griffiths: Can the Minister tell us whether, in his detailed plans, he is prepared to give the regulatory body the power to investigate the comparative value of investment in energy conservation, as opposed to the expansion of energy supply? According to the Prime Minister, £7 billion worth of savings could be made in energy conservation.
    Mr. Parkinson: I do not think that that will be a matter for the regulator. However, the hon. Gentleman has made an important point. Nearly £7 billion a year is wasted in paying for energy, which is subsequently not used properly. We believe that there is tremendous scope for savings for the domestic consumer and for industry. I hope that industry will focus on the scope for reducing its costs by the better use of what it is at present buying.

    British Coal
    Mr. Roger King: To ask the Secretary of State for Energy how much public funding is being provided for British Coal in the current year.
    The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): The Government expect to provide £916 million in grants to British Coal in 1987–88.
    Mr. King: I thank my hon. Friend for that reply. Is he aware of the great and widespread concern among manufacturers at the high cost of investment within the coal industry, which they are having to pay through their taxes? Is he further aware that some companies, such as the Rover Group, have learnt to live within their means and have not borrowed from the public purse, nor will they in future, and that they look upon the cost of providing the coal industry with the resources it wants as a direct burden upon their profitability? When is the coal industry going to pull itself up by its own boot straps?
    Mr. Spicer: My hon. Friend is right to say that we have been backing the coal industry with taxpayers' money as no other Government have done before. It has been provided with £9 billion in the past nine years—an average of £1 billion per year. My hon. Friend is absolutely right to say that the taxpayer naturally expects a return on his money. That is why we deplore any continued disruptive action in the pits, which has so far this year cost British Coal £100 million of operating profit. That happens to be the same as the estimated cost of building Margam.
    Mr. Cummings: Will the Secretary of State join me and the House in congratulating the work force of Murton colliery on breaking all productivity records during the week in which we celebrated our 150th anniversary and the cutting of the first sod? Does the Secretary of State agree that, in order to facilitate an atmosphere for increased productivity greater efficiency and better industrial relations, the dismissed miners who lost their jobs during the 1984–85 dispute should now be offered their jobs back?
    Mr. Spicer: Of course I join the hon. Gentleman in congratulating the workers at Murton colliery—which I know because I was a candidate there for 10 years, opposing various predecessors of the hon. Gentleman—on their productivity record. It is true that British Coal as a whole has been making great strides in productivity.

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    As to the second part of the hon. Gentleman's question, this matter has been gone over heavily. Of all the many miners originally considered, only about 50 of those dismissed have any kind of case. The hon. Gentleman knows that that dispute resulted in a great deal of bad behaviour by many people, which led to an enormous number of court cases. There is no question of our reconsidering the position.
    Mr. Andy Stewart: My hon. Friend may care to know that the miners in Nottinghamshire appreciate the Government's total commitment to investment in the coal industry and that, given the opportunity, they will continue to increase productivity. Does my hon. Friend agree that there has been not only increased productivity but increased safety? Only last year the safety record in Nottinghamshire increased dramatically and, given the conditions there, that record will continue to improve.
    Mr. Spicer: I very much agree that a thriving coal industry, with the backing of modern equipment, will be a much safer industry.
    Mr. Hardy: Does the Minister accept that the Government's case for public investment in the coal industry is imperilled by the enthusiastic shortsighted pursuit of cheaper, uneconomic and often dumped coal imports? Does the hon. Gentleman also accept that not only that investment but the future of the coal industry and the mining engineering and equipment industry may be imperilled if that reckless course is pursued, at enormous cost to Britain's future balance of payments?
    Mr. Spicer: I should rather put my answer the other way round: British Coal, with the backing of the taxpayer in recent years, is in a good position to compete against all corners if it will use the equipment properly. The key question is whether that equipment will be used properly.

    Nuclear Safety
    Mr. Sackville: To ask the Secretary of State for energy when he last met representatives of the International Atomic Energy Agency to discuss nuclear safety.
    Mr. Michael Spicer: My right hon. Friend and I have met representatives of the International Atomic Energy Agency on a number of occasions. The Government are totally committed to ensuring that the British nuclear industry maintains its outstanding safety record.
    Mr. Sackville: Does my hon. Friend agree that those hon. Members who are concerned about the safety of our nuclear installations should arrange to visit the Risley laboratory of the Atomic Energy Authority, where they will find evidence that the British nuclear industry presents a reservoir of expertise and skill in safety matters that is unsurpassed anywhere in the world?
    Mr. Spicer: My hon. Friend is right about the excellent job done on safety matters at Risley. The British nuclear industry's record is second to none on these matters, and we mean to keep it that way.
    Mr. Alan W. Williams: There have been contradictory press reports about the experiment which was supposed to be conducted at the Trawsfynydd nuclear power station. The flow of cooling fluid was to be turned off in a Chernobyl-style experiment. Has that experiment been postponed, or cancelled?
    Mr. Spicer: That is a matter for the CEGB. The experiment has been postponed but, of course, any test would be done under totally different conditions from anything comparable to Chernobyl. It is wrong to raise the Chernobyl matter. As one example of what would have happened, the power station would have been shut down. There was no question of the kind of experimentation and lack of safety systems that existed at Chernobyl being seen here. There is no comparison between the two. At the moment, the CEGB has postponed the experiment.
    Mr. Chapman: Does my hon. Friend agree that the highest standards of international agreements on nuclear safety are vital to this country, not because the British nuclear industry is in any way wanting — it has the highest safety standards of any country — but because there are so many foreign nuclear reactors, and if there were a serious accident the effect on the people of Britain as well as on the people of other European countries would be devastating?
    Mr. Spicer: What my hon. Friend has said is absolutely true, and part of the reason—perhaps the main reason—why we co-operate so greatly on international matters is that we see it as imperative that the kinds of standards that we adopt here are as widespread as possible throughout the world.
    Dr. Thomas: With regard to international co-operation in the nuclear industry, will the Minister ensure that any natural circulation tests that take place in the future at Trawsfynydd, or elsewhere, are subject to inspection by international representatives from the European Community and from the International Atomic Energy Agency?
    Mr. Spicer: If I were to say yes to the hon. Gentleman, which I do not plan to do, that would suppose or presume that we have less than total confidence in our own regulators, which, of course, is not the case. We have total confidence in the Nuclear Installations Inspectorate and in the operators to ensure the continuation of safety in the British nuclear industry.

    Electricity Industry
    Mr. Prescott: To ask the Secretary of State for Energy if, when he last met the Confederation of British Industry, he received a copy of the report it commissioned from the Oxford Economic Research Association on "The Privatisation of the Electricity Supply Industry"; and if he will make a statement on its conclusions.
    Mr. Parkinson: I have received a copy of the report and I shall be discussing it with the Confederation of British Industry shortly.
    Mr. Prescott: Does the Secretary of State accept the conclusion of the reporters, who are convinced supporters of his privatisation programme, that a 15 per cent. price increase is totally unjustified on the ground of an increased rate of return on investment? Does he, therefore, accept their statement that the price increase is concerned only with increasing the value of the assets, which supports the view of the Opposition that the 15 per cent. price increase is totally unjustified and is really a privatisation tax to benefit the Treasury, paid for by the consumer, which will produce higher prices and higher unemployment?
    Mr. Parkinson: No, Sir, we do not accept either the conclusions or the reasoning of the report, and if the hon.

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    Gentleman read it carefully, he would not either. We do not believe that short-run marginal costs are a sensible basis for pricing electricity. We do not think that the fluctuations that would follow from such a policy would be acceptable to the hon. Gentleman or to anybody else in the country.
    Mr. Prescott: That is competition.
    Mr. Parkinson: No, it is not.
    Dr. Michael Clark: Is my right hon. Friend aware that the increase in the subscription rate of the Confederation of British Industry over recent years has been considerably higher than the increase in electricity prices? Is he also aware that during the past five-year period that subscription rate has increased by twice the rate of the increase in electricity prices to industry? Does he consider that that might be one reason why the number of manufacturing companies in the CBI has fallen, and is that not a case of people in glass office blocks?
    Mr. Parkinson: My hon. Friend has put forward an interesting set of facts of which I was not aware until now. The CBI has grossly over-reacted to our proposals, and its assessment of the impact on the overwhelming majority of its members is totally wrong.
    Mr. Heffer: In an interesting article in the Sunday Express yesterday the right hon. Gentleman made the point:
    "We are ending monopoly wherever possible. This won't mean that households will be able to choose between rival electricity"—
    Mr. Speaker: Order. The hon. Gentleman is an old parliamentary hand. He must paraphrase, not quote.
    Mr. Heffer: I am not reading it, Mr. Speaker; I am just referring to it.
    On that basis, how can the right hon. Gentleman say, "We are now introducing competition in the industry," when we already have a good industry giving good electricity prices? How can he argue about competition? We are not buying suits, clothes or shoes, and it will be the same electricity, whoever supplies it. Are not the Government involved in doctrinaire nonsense?
    Mr. Parkinson: I hope that the hon. Gentleman will follow his reading of my article by reading the White Paper, in which I explain that although distribution is a natural monopoly, generation is not, and generation accounts for 80 per cent. of the costs of electricity. It is perfectly possible to introduce competition into that part which represents 80 per cent. of the customers' bills and to regulate the rest.
    Mr. Thurnham: Does my right hon. Friend agree that his proposals will allow more decision-takers to be involved in the industry? The Opposition should recognise that that is healthier for both the suppliers of generation equipment and the consumers of electricity.
    Mr. Parkinson: I believe that our proposals will open up good career opportunities for many people working in the industry. I do not like the present structure, whereby the average area board consists of two people—usually they have come in from outside the board—and about 12 non-executives. I believe that, in future, there will be scope for promotion within the business for people who have devoted their lives to it. I hope that the Opposition will welcome that.

    British Coal—SSEB
    Mr. Eadie: To ask the Secretary of State for Energy if he has had discussions with British Coal regarding its threatened court action against the South of Scotland Electricity Board, announced in the press release of British Coal of 17 February.
    Mr. Dalyell: To ask the Secretary of State for Energy if he will make a statement on his discussions with British Coal and the South of Scotland Electricity Board on the future of the coal industry in Scotland.
    Mr. Michael Spicer: I hope that British Coal and the South of Scotland Electricity Board will reach satisfactory arrangements. This is a commercial matter for the two industries.
    Mr. Eadie: Surely the hon. Gentleman is aware that his Department sponsors the coal industry. Is he trying to tell the House that he and his right hon. Friend did not know that the Secretary of State for Scotland intended to sit on his hands and do nothing about the threat to wipe out the deep mine coal industry in Scotland? We regard the Minister and his right hon. Friend as conspirators in this betrayal of the Scottish miners.
    Mr. Spicer: I thank the hon. Gentleman for reminding me that we sponsor the coal industry. The Government are totally at one on this matter and no one is conspiring against anyone else. In recent years the Government have invested £120 million of taxpayers' money in the Scottish coal industry. Therefore, there is no doubt that we would prefer British Coal and the SSEB to spend more time talking to each other in an effort to resolve this problem than fighting each other in the press and the courts.
    Mr. Dalyell: Does the Minister support the SSEB's short-term marginal costings?
    Mr. Spicer: There are two sides to the issue of costings — the question whether electricity consumers are benefited and employees—
    Mr. Dalyell: Answer the question.
    Mr. Spicer: I will answer the question in my own way. There is also the question whether the consumers or the employees of the coal industry are benefited. The two industries are fighting each other and they each have their own perspective on the issue.
    Sir Ian Lloyd: Does my hon. Friend agree that, although it is invariably appropriate and occasionally necessary for parties to a dispute to settle that dispute and determine their obligations before the courts, it is at best inappropriate and at worst disastrous that energy policy is determined by the courts?
    Mr. Spicer: As I have already said, the Government would infinitely prefer the matter to be settled as a result of discussion between the two industries.
    Mr. McLoughlin: Does my hon. Friend agree that the Scottish coal industry has a bright future, bearing in mind the huge amount of capital invested in the industry by the Government? That future is likely to be blighted only if coal cannot be produced at an effective and efficient price. Bearing that in mind, does my hon. Friend share my surprise that, in the latest ballot held by the National Union of Mineworkers, some 51 per cent. of Scottish

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    miners wanted to continue with the overtime ban, which will do no good whatever for the future of British Coal, but which is no doubt supported by the Labour party?
    Mr. Spicer: My hon. Friend is absolutely right. The continued disruption at the Scottish pits has done no good whatever. At the end of the day, unless the consumer of electricity in Scotland is to be disadvantaged, coal must be produced at a competitive price.
    Mr. Douglas: The Minister has made reference to capital investment in Scotland. How much of that investment was made at the Longannet complex? What return can the nation expect from that investment if the product of the mines in that complex is not used by the SSEB?
    Mr. Spicer: The answer to the first part of the hon. Gentleman's question is £60 million. The answer to the second part of the question is that it depends, as I have already said, on the industry making use of the capital invested. The Government have put the capital behind the industry, but it is up to the industry to make use of it by producing coal at the right price.
    Mr. John Marshall: Does my hon. Friend agree that many more people are employed in energy-using industries in Scotland than are employed in the Scottish coal industry? Does he agree also that if the SSEB were to pay through the nose for electricity employment in energy-using industries would be put substantially at risk? Can he justify the calls by Labour Members that the pensioners of Scotland should be asked to pay more for their electricity in order to subsidise the lackeys of Mr. Scargill?
    Mr. Spicer: My hon. Friend makes a good point. Speaking from memory, I believe that about 4,000 people are employed in the Scottish coal industry, so my hon. Friend is likely to be right about the number of people who would benefit from cheap electricity prices. The Government's position is that the industries must sort the matter out themselves.
    Mr. Salmond: Does the Minister wish to maintain his position of 15 February — that the present impasse between the SSEB and British Coal has
    "nothing to do with privatisation"
    —or does he wish to withdraw or amend that statement?
    Mr. Spicer: No, Sir.
    Mr. Darling: Do the Government have a policy for the future of the Scottish coalfield, or do they intend to sit back and act like disinterested spectators?
    Mr. Spicer: The Government's policy is to provide the most efficient industries for our consumers that it is possible for this country to provide. We put a great deal of money into the Scottish industry in the belief that it would make the best use of that equipment, and now we are concerned about the continued disruption that is preventing that equipment from being used properly.

    Pressurised Water Reactors
    Mr. Hannam: To ask the Secretary of State for Energy if he has recently met the chairman of the National Nuclear Corporation to discuss British involvement in the pressurised water reactor programme.
    Mr. Parkinson: I have met the chairman of the National Nuclear Corporation on various occasions. United Kingdom industry has contributed 93 per cent. of the value of the contracts let for Sizewell B to date.
    Mr. Hannam: Did my right hon. Friend approve the recent decision by the CEGB to prevent the formation of a new PWR construction company by the National Nuclear Corporation and Westinghouse? How does he see the future involvement of the NNC and British contractors in PWR construction in Britain?
    Mr. Parkinson: I regard the NNC as a valuable national asset. At the moment there is a question mark over its future which I am anxious to see removed. I am discussing this with various parties, and as soon as I have more to report to the House I will do so.
    Mr. Frank Cook: Did the Secretary of State discuss the level of insurance cover for liability on PWRs? I thank the Secretary of State for the letter that he kindly sent to me today. In view of the Minister's comments today on how safe and how far ahead of the rest of the world our nuclear industry is, will the Secretary of State explain why the cover that is required is only £20 million, when the cost of any accident could be infinitely greater than that? Why is it that after privatisation the public taxpayer will have to fund any compensation over and above £20 million, whether the accident is at Sizewell or at any other station?
    Mr. Parkinson: The agreement that is incorporated in the Act, which sets the £20 million limit and puts the rest of the cost on to the general body of taxpayers, is an international agreement to which Britain is a signatory, and one that we intend to uphold whether the industry is in the private or the public sector. We do not accept that there will be any change in the standards of safety in the private sector. There will be no relaxation in those standards, and we shall continue to remain a signatory to the international agreement that is embodied in that Act.
    Mr. Neil Hamilton: Does my right hon. Friend agree that the National Nuclear Corporation has a first-class record in the design and project management of nuclear power stations under construction, that Torness and Heysham have been built both to time and to cost, that it is vital for the future of the nuclear industry that power stations continue to be built in a cost-effective way, and that the best way of achieving that is to have an independent contractor constructing these stations after privatisation?
    Mr. Parkinson: Yes. I think that the 3,000 employees of the National Nuclear Corporation have done a good job for Britain and I want those skills maintained and that expertise to remain available. That is why I am in discussion with various parties. I shall report as soon as I have more to say to the House.

    Energy Efficiency
    Mr. John Garrett: To ask the Secretary of State for Energy if he will make it his policy to support the European Commission's proposed directive on energy efficiency surveys of buildings for sale.
    Mr. Michael Spicer: No. Sir. The United Kingdom Government share the view of most other EC member states that it is not appropriate to require the householder to spend between £100 and £200 of his own money on a mandatory home energy audit.
    Mr. Garrett: Is the Minister aware that the former Secretary of State for Energy was an enthusiast for such a scheme, that experience in Denmark is that for every £1 of survey costs there are £4 in private investment, that the European Commission is promoting the scheme and that the British Government alone are resisting its introduction? Given the abysmally low level of domestic energy efficiency in Britain, which the Secretary of State has admitted, why not introduce the scheme? Why is there no reference whatsoever to energy efficiency in the White Paper on electricity privatisation?
    Mr. Spicer: There are two fallacies in the hon. Gentleman's supplementary question. First, it is not true that all other Governments are backing the scheme for mandatory auditing. Nor is it true that the Danish experience has been particularly successful. The scheme is subsidised by the Danish Government and is mandatory, but the take-up rate had been only 50 per cent. We believe that it is much better to deal with the problem through direct grants to those who need the money. We have spent £20 million on household loft insulation in about 500,000 households, and 400,000 houses have been draught-proofed, at a cost of about £45 million. It is much better to do that for those on low incomes.
    Mr. Moss: To ask the Secretary of State for Energy if he has any new proposals to improve national energy efficiency.
    Mr. Parkinson: The Energy Efficiency Office is consulting outside bodies with the aim of developing programmes in the most economically attractive areas. We are also examining how the contribution from companies which benefit from the Department's programmes can be increased. I hope to announce the outcome of this work before the summer recess.
    Mr. Moss: I am grateful to my right hon. Friend for that reply. I know that he is aware of the energy study in the north-west that was undertaken by the March Consulting Group, and I am aware also that he recognises one of the conclusions of the study, namely, that in the north-west industry and commerce could save up to 15 per cent. of energy demand by using known technology. Does he agree that the CBI would be better employed exhorting its members to seek to obtain that saving of 15 per cent. than simply whingeing about electricity prices increasing?
    Mr. Parkinson: It is true, as I said earlier, that there are substantial savings to be made by using energy more efficiently. The Department has been sponsoring a number of projects — I hear Opposition Members making sneering remarks—that have resulted in more than 90 per cent. of lofts in Britain being insulated. By the end of the year we shall have insulated the homes of over 700,000 pensioners. We are making real progress in helping those on low incomes to save energy. It is important that we continue to make progress.
    Mr. Home Robertson: How can the Secretary of State talk about national energy efficiency when the Under-Secretary of State has been talking about the substantial investment that has been made in the Scottish coal industry and the Secretary of State for Scotland is idly standing by and allowing the coal industry and coal-burning power stations in Scotland to be scrapped?
    Mr. Parkinson: I realise that the hon. Gentleman wanted to make his point about the coal industry, but I
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    genuinely think that he has chosen the wrong question on which to do so. This question is to do with the more efficient use of energy in homes and by industry. We are talking about the end user. We believe that there is substantial scope for savings, and so did the March group, whose report I endorse.

    Alternative Energy Sources
    Mr. Boswell: To ask the Secretary of State for Energy how much will be spent by his Department on research into alternative methods of energy in the next five years.
    Mr. Michael Spicer: The public expenditure White Paper, Cm. 288, published in January 1988, envisages that up to 1991 about £50 million will be spent on research into renewable sources of energy. Information for subsequent years is not available.
    Mr. Boswell: Is my hon. Friend aware that the House will welcome the proposal in the White Paper on the privatisation of electricity to put non-renewable sources together with nuclear under a single quota? That is greatly to be welcomed. Will he consider bringing forward his surveys into and studies of renewable energy as soon as possible?
    Mr. Spicer: My hon. Friend is right to say that renewables are included in the quota of non-fossils in the White Paper. That is widely welcomed. We shall produce the survey and report by mid-summer.

    Electricity Exports
    Mr. Pike: To ask the Secretary of State for Energy on how many occasions in the last 12 months electricity has been exported to France via the cross-Channel link.
    Mr. Michael Spicer: None since January 1987. In 1986–87, 188 GW hours were exported to France via the Channel link.
    Mr. Pike: Is it not a fact that for most of the time electricity has been imported from France? Is it not important that when the privatisation of the electricity industry takes place some safeguardss are put into the Bill to ensure that the industry does not continue to import at ever-increasing rates, to the detriment of our own electricity industry?
    Mr. Spicer: The safeguard, if that is the right expression, is that French electricity is interruptible, and cannot therefore be guaranteed. It comes in at a lower price commensurate with that fact. It is highly unlikely that the mainstream of base-load electricity will be imported, but we shall certainly not restrict it.

  THE ARTS

    Musical Instruments
    Mr. Boswell: To ask the Minister for the Arts if he will take steps to ensure that suitable musical instruments are available at reasonable prices to talented young musicians.
    The Minister for the Arts (Mr. Richard Luce): No, Sir. It is not the Government's policy to subsidise the purchase of instruments, but there are several trusts which make loans for the purpose, at nominal rates of interest.
    Mr. Boswell: Does my right hon. Friend agree that our young musicians — teenagers as well as young professionals — need instruments commensurate with their talents? While recognising, as he does, the invaluable contribution made by the loan fund for musical instruments, other trusts and private patrons, may I ask whether he will consider getting together all interested parties, preferably with a number of financial institutions, to ensure that Britain can maintain its musical preeminence?
    Mr. Luce: I acknowledge the fact that musical instruments do, or can, cost a great deal today, and that that can pose a problem for certain people, but, as my hon. Friend said, the loan fund for musical instruments has been set up especially to help professional musicians or potential professional musicians. There are also other grant-making trusts that make loans for this purpose and help other people who are not necessarily professionals. That is the right way to go. I do not think it is right to give taxpayers' money direct to this end, but if my hon. Friend has more specific, detailed ideas, I should like to hear them.
    Mr. Tony Banks: Is the right hon. Gentleman aware of the excellence of the musical education provided by the Inner London education authority, particularly by its special music school? What provisions will he made for safeguarding ILEA's musical education, and particularly its school? What discussions is the Minister having with his colleagues at the Department of Education and Science?
    Mr. Luce: There is no doubt about the importance of the support given by ILEA to the musical side of things, and discussions are taking place between my Department and that of my right hon. Friend the Secretary of State for Education and Science.

    British Film and Television School
    Mr. Greg Knight: To ask the Minister for the Arts what central Government funding has been and will be given to the British Film and Television School in the period 1985–86 to 1990–91.
    Mr. Luce: I provided £3,347,000 over the three years 1985 to 1988. I plan to allocate £4,950,000 over the three years 1988 to 1991, which I hope will be matched, or more than matched, by contributions from the industries.
    Mr. Knight: Is my right hon. Friend aware that most people associated with the film industry will warmly welcome the increases that he has announced? Do the video and advertising industries, which make full use of the graduates from the school, contribute to its running costs? Many of us think that if they do not, they should.
    Mr. Luce: My hon. Friend has a point. They do not contribute at present, but I hope that they will respond to the substantial increase in Government support over the next three years by starting to give their own support. My hon. Friend might like to know that I have injected £300,000 of incentive funding for the school. I hope that that can be used to encourage such industries to join in.
    Mr. Fisher: Is the Minister aware that other countries treat their film schools a great deal more seriously and put in a great deal more investment? The Paris and Berlin film schools, which have costs comparable to ours, receive twice as much central Government investment per student.
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    Is it not time that the Government started recognising the enormous cultural and economic importance of the film industry and began investing in it?
    Mr. Luce: The issues on which the hon. Gentleman tends to intervene never cease to amaze me. I have increased the amount of funding for the school by 42 per cent. in the coming financial year, and by 50 per cent. over three years. That is a strong indication of the importance that I attach to the school. It already has a high international reputation, and it is right that its financing should be based on joint funding between the Government and the television and other industries.

    Indemnity Scheme
    Mr. Yeo: To ask the Minister for the Arts how the Government indemnity scheme assists art in the regions.
    Mr. Luce: By removing the need for commercial insurance of exhibitions mounted for public benefit, the Government indemnity scheme has proved very effective in encouraging loans of works of art between London and the regions as well as between provincial museums and galleries.
    Mr. Yeo: Is my right hon. Friend aware that for a small regional establishment, such as Gainsborough's House in my constituency, this scheme is of considerable importance? Will he assure the House that he will continue to develop the scheme, as it offers a means whereby people living in the regions can have access to art treasures that are all too often available only to those who live in or visit London?
    Mr. Luce: I certainly acknowledge the important role played by Gainsborough's House, and I reinforce yet again the importance that I attach to encouraging more exhibitions of our treasures around the country. The public have a right to see them, and the more that the exhibitions can be encouraged, the better. It might be of interest to my hon. Friend to know that this year there has been an increase over last year of 66 per cent. in the applications for indemnity, amounting to £322 million. In addition, I have established, at the Museums and Galleries Commission, a travel and exhibition unit that is designed to encourage these exhibitions.
    Mr. Boyes: While welcoming the Minister's statement on this matter, may I ask whether, when he visits the Photographers gallery, which I understand will be in Cardiff in the next week or two, and the Side gallery in Newcastle, he will ensure that as we approach the 150th anniversary of photography he will do all that he can to encourage those galleries to take advantage of the scheme so that we can have more exhibitions from London visiting the regions?
    Mr. Luce: I am very happy to do just that. I must stress that these are subject to certain conditions, including security, because if such conditions are not satisfied we cannot go ahead with such schemes. However, subject to that, my answer is yes.

    Redgrave Theatre, Farnham
    Mrs. Virginia Bottomley: To ask the Minister for the Arts whether he plans to visit the Redgrave theatre, Farnham.
    Mr. Luce: I enjoyed my visit to the Redgrave theatre on 27 February this year and I am very impressed by the way that the theatre is run.
    Mrs. Bottomley: My right hon. Friend's visit to the Farnham theatre was greatly appreciated. Is he aware that it is the most active repertory theatre in the country and was open 359 days last year and gave 419 performances? Is he aware that for the second time running it has won an award for new sponsors? What steps is he taking to draw to the attention of other regional arts organisations the example set by the Farnham theatre, particularly in responding to his business incentive scheme?
    Mr. Luce: My hon. Friend is right. The Redgrave theatre is a model. It raised 67 per cent. of all its resources from the private sector, largely through the box office, but also through sponsorship. There is a true partnership there between the public and the private sectors. My hon. Friend is right to say that it is the most prolific in productivity of all the repertory theatres in Britain and that it has received business sponsorship incentive scheme awards over the last two or three years. It is a very fine model for other theatres.

    Business Sponsorship Scheme
    Mr. Butler: To ask the Minister for the Arts if he will make a further statement on the progress of the business sponsorship incentive scheme.
    Mr. Luce: The business sponsorship incentive scheme continues to be successful. It has brought in £16·4 million of new money for the arts and attracted 618 first-time sponsors, many of whom have continued to sponsor the arts. As I announced to the House on 26 January 1988, I have increased the budget for the scheme by 70 per cent., from £1·75 million to £3 million, for 1988–89 and restored the £25,000 maximum award limit.
    Mr. Butler: I thank my right hon. Friend for that excellent news. Will he reassure me that the awards will continue to be given on merit rather than on skin colour?
    Mr. Luce: Yes, I can assure my hon. Friend of that.
    Mr. Pike: Will the Minister take steps to ensure that the regions receive their share of benefit from the scheme, which is good, but at present seems to be giving too much advantage to London and the south-east?
    Mr. Luce: I am very anxious that the scheme should be spread as widely as possible. The hon. Gentleman will be interested to note that, on average, 70 per cent. of the funds over the past three years have been directed outside London. That shows how widespread is the scheme.
    Mr. Andrew Mitchell: To ask the Minister for the Arts how many new corporate sponsors of the arts have been brought in during the last 12 months as a result of the business sponsorship incentive scheme.
    Mr. Luce: The scheme continues to attract new sponsors to the arts. There were 216 first-time sponsors in 1987 and I expect this number to increase considerably in 1988.
    Mr. Mitchell: Can my right hon. Friend say how many first-time corporate sponsors returned to repeat their generosity in subsequent years?
    Mr. Luce: It is interesting to note that a survey has been undertaken by the Association for Business Sponsorship
    16
    of the Arts, which supervises the scheme, which shows that no fewer than 90 per cent. of firms that joined for the first time have either decided to renew, or are in the process of renewing, their sponsorship. That is a clear sign of the value of the hard-headed bargain between the sponsor and the arts organisation.

  CIVIL SERVICE

    Agencies (Civil Service Functions)
    Mr. Allen: To ask the Minister for the Civil Service what represetations he has received from the Civil Service trades unions regarding the proposal to establish agencies to run certain functions of the Civil Service.
    The Minister of State, Privy Council Office (Mr. Richard Luce): None. The Head of the Home Civil Service met leaders of the Civil Service unions on 18 February to explain the Government's proposals, and the project manager is ready to meet them when they have considered these proposals.
    Mr. Allen: Is the Minister aware that when Sir Robin Butler met representatives of the Civil Service trade unions they were not reassured that there is no hidden agenda behind the Government's proposals and feel that disestablishing of the Civil Service may be a prelude to privatising parts of the Civil Service? Will he assure the House that members of the Civil Service will have their wages and conditions maintained under any new arrangement? Will he agree to meet leaders of the Civil Service trade unions to answer their questions direct, as he is responsible for them?
    Mr. Luce: There will be plenty of scope for consultation with unions when we discuss each agency as it is put forward for the establishment of an agency arrangement. We must get it straight. The hon. Gentleman referred to "dis-establishing" the Civil Service. There is no question of that. People who will in future be part of the agency arrangements will still be members of the Civil Service. There will be no change in that policy on privatisation. If a body currently under Government control is thought to be better managed outside the Government, that is a separate matter. On the whole, what we are considering are organisations that remain under Government Departments.
    Mr. Neil Hamilton: To ask the Minister for the Civil Service to what extent managers of Government agencies will be able to recruit, set pay, grade and structure staff under the proposed Civil Service reforms.
    Mr. Luce: This will depend on the framework agreement for each agency. The aim is to give agencies flexibility to manage their own affairs within necessary overall controls.
    Mr. Hamilton: Does my right hon. Friend agree that the public interest would be served by having the maximum flexibility in setting pay, grades and determining the number of staff to be employed in these agencies? Does he further agree that placing a straitjacket around the public services in this country has been one of the biggest curses that we have had to face, as we are now discovering with the National Health Service?
    Mr. Luce: I think that my hon. Friend must be right. We are trying to improve still further the quality of

    17
    management in the Civil Service. To do that it is necessary to delegate inure responsibility to managers. We have been trying to do that over the last few years under the financial management initiative, and the agency arrangement takes that process a stage further. This is a good thing, and I think that it will lead to improved performances and results in the Civil Service. After all, the Civil Service costs £13 billion in gross running costs. The taxpayer is entitled to the best value for money. I believe that flexibility is right, subject to certain conditions about levels of public expenditure and about standards of fair and open competition in the service.
    Dr. Marek: The Minister cannot have it both ways. He cannot tell my hon. Friend he Member for Nottingham, North (Mr. Allen) that the staff will continue to be part of the Civil Service, and at the same time agree with his hon. Friend the Member for Tatton (Mr. Hamilton) that maximum flexibility is to be welcomed.—[Interruption] If not maximum flexibility, he said that he welcomed flexibility. Can the Minister categorically assure the House that the staff of the agencies will continue to be United Kingdom civil servants and be part of the United Kingdom Civil Service? Can he further assure the House that pay and conditions for the staff of the agencies will continue to be negotiated as at present?
    Mr. Luce: I see no conflict at all in this. We seek only to continue a process that has already started. First, we have already started to delegate more responsibility to managers in the Civil Service. Secondly, to come hack to the point raised by my hon. Friend the Member for Tatton (Mr. Hamilton), we have started to have more flexibility of pay and conditions. London weighting is already a variation in the pay system and we are developing other forms of flexibility in pay. We are simply taking the developments a stage further. Broadly speaking, the agencies will remain in Government Departments for the foreseeable Future. If we think that privatisation is the right path, that is a separate issue altogether. Those who work for the agencies will remain civil servants and under those conditions.
    Mr. Rowe: Does my right hon. Friend accept that this is a very valuable initiative? Does he agree that even before the Fulton committee report there was tremendous difficulty in attracting people into the Civil Service for limited terms? Does he envisage the creation of the new agencies as one device for getting over that considerable difficulty?
    Mr. Luce: There are already examples of that. A number of people are recruited from outside the Civil Service for a defined period and under contractual arrangements to undertake particular tasks. I think that from time to time we shall see this develop within the agency system where no existing civil servant is found to be the right chap, for example, to be the chief executive. By and large it is likely that civil servants will be the chief executives, but there may be cases where outsiders come in to serve in the agencies on fixed contracts for short terms.

    Civil Servants (Complaints)
    Mr. Dalyell: To ask the Minister for the Civil Service what proposals he has, in the light of the new
    18
    proposed regime for the Civil Service, to afford protection to those civil servants who allege that they have been misused by Ministers.
    Mr. Luce: Throughout the Civil Service, procedures to deal with complaints about personal matters will continue to exist.
    Mr. Dalyell: In an age when many Conservatives sadly acknowledge that Mr. Bernard Ingham has become the most important man in British politics, who can tell a well-loved Leader of the House that he has become semidetached and then that he will be sacked, is it not important that an ex-civil servant such as Miss Colette Bowe and a civil servant such as Mr. John Mogg should be able to go to an outside body to air their grievances, rather than having to place their accounts of events such as Westland in a bank vault?
    Mr. Luce: The hon. Gentleman does not seem to have taken account of the guidelines issued on 2 December 1987 concerning the duties and responsibilities of civil servants in relation to Ministers. They provide for new procedures, allowing a civil servant to appeal — in cases of conscience and other matters—first to his senior, then to the permanent secretary and, if necessary, to the Head of the Civil Service. Those procedures, which are totally new, are ideal for the Civil Service and provide a perfectly reasonable outlet.
    Mr. Stokes: Does my right hon. Friend agree that the real problem is not so much the misuse of civil servants by Ministers, as the misuse of procedure by the hon. Member for Linlithgow (Mr. Dalyell), with his tedious and repetitive questions, of which we are all sick and tired?
    Mr. Luce: As always. I can agree with my hon. Friend. The hon. Member for Linlithgow (Mr. Dalyell) seems to have an obsession. Experience shows that there has been an extremely good relationship between this Government and the Civil Service.
    Mr. Tony Banks: Has Mr. Bernard Ingham ever complained about being misused by Ministers, or is he happy doing the Prime Minister's dirty work?
    Mr. Luce: I cannot think why the hon. Gentleman is so obsessed with Mr. Ingham, who does an extremely good job.

    Efficiency Unit Report
    Mr. Chapman: To ask the Minister for the Civil Service if he will give a timetable for implementing the four principal recommendations of the Efficiency Unit report "Improving Management in Government: The Next Steps".
    Mr. Luce: One of the recommendations, the appointment of a project manager, has already been implemented. One of his first tasks will be to establish a timetable for implementing the other recommendations, and I hope to publish it at an early date.
    Mr. Chapman: It is less than a month since my right hon. Friend the Prime Minister made the statement in the House in reply to the Efficiency Unit's report. Will my right hon. Friend accept that there has been widespread acclaim for many of the recommendations of that report, both from inside the Civil Service and from many outside? Does he agree that the best way to keep up this momentum

    19
    for change, which is generally accepted, is by setting a timetable for the implementation of the four principal recommendations?
    Mr. Luce: I am grateful to my hon. Friend, and he is right to say that there is widespread support for the reforms and changes that are being proposed. The support
    20
    comes not only from outside the Civil Service, but from managers in the Civil Service. We want to proceed as rapidly as we reasonably can, and I hope to be able to publish before too long a list of those organisations that will be the first to be formed into agencies. We will keep up a relentless drive to identify other organisations that might be suitable for the same treatment.

Shootings (Gibraltar)
3.30 pm
Mr. George Robertson(by private notice): To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the shootings in Gibraltar.
The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): As the House will have heard, three identified terrorists, two men and one woman, were shot dead by security forces in Gibraltar yesterday afternoon. Two of them had a previous criminal record of terrorist activity. The IRA has since admitted that the three were members of an active service unit on active service in Gibraltar. The background and facts are as follows.
Another known IRA terrorist, who was under surveillance by the Spanish authorities, recently crossed into Gibraltar and is thought to have carried out a reconnaissance for an act of terrorism. The activity undertaken suggested that the terrorist act might he in connection with the guard mounting ceremony, carried out on Tuesdays. The Gibraltar police were accordingly placed on high alert, and the police commissioner asked for military assistance in the light of his assessment of the threat.
Shortly before 1 pm yesterday afternoon, one of those subsequently shot brought a white Renault car into Gibraltar and was seen to park it in the area where the band for the guard mounting ceremony assembles. Before leaving the car, he was seen to spend some time making adjustments in the vehicle. An hour and a half later, the two others subsequently shot were seen to enter Gibraltar on foot, and shortly before 3 pm joined the third terrorist in the town. Their presence and actions near the parked Renault car gave rise to strong suspicion that it contained a bomb, which appeared to he corroborated by a rapid technical examination of the car.
About 3.30 pm, all three left the scene and started to walk back towards the border. On their way towads the border, they were challenged by the security forces. When challenged, they made movements which led the military personnel operating in support of the Gibraltar police to conclude that their own lives and the lives of others were under threat. In the light of this response, they were shot. Those killed were subsequently found not to have been carrying arms.
The parked Renault car was subsequently dealt with by a military bomb disposal team. It has now been established that it did not contain an explosive device.
Inquiries carried out by the Spanish authorities have matched keys found on one of the bodies with a Ford Fiesta car, subsequently found on the Spanish side of the border, which contained three false passports and items of equipment including insulating tape, electrical screwdrivers, a number of pairs of gloves, wire and an alarm clock. A key was also found for a third car. The search is continuing for this car and for explosives.
An inquest will be held in Gibraltar.
The suspect white Renault car was parked in the area in which the band of soldiers would have formed for the Tuesday parade. A school and an old people's home were both close by. Had a bomb exploded in the area, not only the 50 soldiers involved in the parade, but a large number
22
of civilians might well have been killed or injured. It is estimated that casualities could well have run into three figures.
There is no doubt whatever that, as a result of yesterday's events, a dreadful terrorist act has been prevented. The three people killed were actively involved in the planning and attempted execution of that act. I am sure that the whole House will share with me the sense of relief and satisfaction that it has been averted.
I am equally confident that the House will wish me to extend our gratitude to the Spanish authorities, without whose invaluable assistance the outcome might have been very different. This co-operation underlines once again the importance of international collaboration in the fight against terrorism.
Mr. Robertson: May I start by congratulating those responsible on what appears to have been a well-planned operation, which must have prevented what would have been a terrible loss of life, involving soldiers of the Royal Anglian Regiment and members of Gibraltar's general public and tourists. Our gratitude is also due to the Spanish authorities for their role in protecting lives in Gibraltar. It is an excellent example of the co-ordinated international action that is required against terrorism.
The very fact that this enormous potential car bomb was placed opposite both an old folks home and a school underlines the cynical hypocrisy of the IRA, that ostensibly apologised after the Enniskillen outrage in November. This House speaks with one voice in condemning unreservedly those in Ireland who seek to massacre and bomb their way to power. These people are evil. They kill and maim and give no heed to the innocents who get in their way. They must be dealt with, if any democratic answer is to be found.
May I ask the Foreign Secretary the following questions. First, is he satisfied that those who were shot represent the total number of those involved in this conspiracy? Secondly, are arrangements being made to protect other potential IRA targets in Europe, and will the cost of such protection be fully funded? Thirdly, is there any evidence available to link Libya to this incident or to gun-running to the IRA in general? Fourthly, is there any evidence linking the Basque terrorist organisation ETA to this particular incident?
Fifthly, since there is still considerable confusion in the reports of what happened yesterday, can the Foreign Secretary confirm that those who were shot were warned before fire was opened, and can he say whether there is to be any inquiry into the circumstances of the shooting? Finally, will he place on record, in order to counter the continuing speculation, whether this operation involved the Metropolitan police special branch or the SAS?
Sir Geoffrey Howe: I thank the hon. Gentleman for his robust and unqualified support. It is of the utmost importance that those who threaten, maim and kill the citizens of this country should know that the actions that we take and are obliged to take against them command the united support of this House of Commons. I thank him also for his tribute to the co-operation of the Spanish authorities and of all those concerned with this matter, and I join him in his forthright condemnation of the cynical hypocrisy of the IRA when one compares what it said after the Enniskillen tragedy with what happened yesterday.
As for the hon. Gentleman's first question, I said in my statement that at least one other known terrorist had been

23
under surveillance ahead of yesterday's events, so it is plainly not possible to say whether all those potentially concerned have been arrested or dealt with. As to the threat to other targets throughout Europe, I can assure the hon. Gentleman that all questions of security affecting potential targets are under constant review in the light of the development of the threat and information about it. Questions of funding have never been allowed to stand in the way of security.
As for the involvement, or possible involvement, of Libya or ETA, I am not in a position to comment on either of those matters, although the hon. Gentleman will be familiar with other examples of the involvement of Libya, notably in connection with the vessel Eksund.
As I have said, the three people concerned were approached by military people operating in support of the Gibraltar police. They were challenged at that time, and the movement that they then made led the military personnel to conclude that their own lives and the lives of others were under threat. The matter, of course, will be subject to further amplification as further evidence becomes available, but I have given the House the full extent of my information at present.
Sir Bernard Braine: As there can be no doubt whatever of the cost in human life both to the men of my county regiment and to the citizens of Gibraltar had the dastardly and cowardly assault been successful, will my right hon. Friend and learned Friend convey on behalf of the entire House of Commons and the people of this country our profound gratitude to the security forces and, indeed, to the Spanish authorities for foiling this murderous design?
Sir Geoffrey Howe: I shall certainly convey the thanks of the entire House to all those concerned with the conclusion of the matter, along the lines expressed by my right hon. Friend.
Mr. David Alton: I should like to identify myself, and my right hon. and hon. Friends, with the statement that the Foreign Secretary has made, and with his forthright condemnation of terrorism and those who seek to take innocent people's lives.
May I press the Foreign Secretary further on the links between the IRA and other international terrorist groups, and ask him whether this active service group was in any way involved in the transportation of arms, including the surface-to-air missiles—the SAM 7s—which are now believed to be in the island of Ireland? Will he say what action is being taken to strengthen international cooperation throughout Europe in defeating terrorism?
Sir Geoffrey Howe: Again, I must respond that I am not able to comment on the particular point that the hon. Gentleman has put to me, although other evidence shows very clearly the existence of links between the Libyan authorities and the IRA terrorist movement. I can make no specific comment at this stage. Certainly, the experience of this case underlines what we have learnt so clearly—that the closest possible international co-operation is necessary against terrorism and the threat of terrorism of all kinds. That is why the House has asked me to express its appreciation of the co-operation offered in this case by the Spanish authorities.
Sir Antony Buck: Does my right hon. and learned Friend agree that it is gratifying that almost the whole House appears able to unite in congratulating the security forces on what they have achieved? Is it not also gratifying that there appears to be substantial international co-operation in seeing that these evil gunmen do not get away with more terrorism? Are there any gaps in this? Are there any nations in which there is not full co-operation, other than the obvious ones such as Libya?
Sir Geoffrey Howe: I am grateful to my hon. and learned Friend for his comments in support of the security services and international co-operation. I hesitate to say that there are no gaps, but, as he knows, it has been the purpose and policy of Her Majesty's Government to do everything possible to secure the greatest possible international co-operation. That remains our objective.
Mr. Harold McCusker (Upper Bann): As the Spanish authorities have their own territorial dispute with this country over Gibraltar, will the Foreign Secretary convey to them the particular thanks of the people I represent for helping to rid us of those extremely dangerous people, who thought as little of the lives of innocent Gibraltarians and Spaniards as they do of those of people in either Northern Ireland or this country?
Can the Foreign Secretary tell us whether those people were travelling as citizens of the Irish Republic, using Irish passports; and, if so, what representations have been made to him this morning by the Government of the Irish Republic?
Finally, does the Foreign Secretary accept that, if a member of the security forces has to produce a weapon and then feels compelled to fire that weapon, he has no alternative but to shoot to kill?
Sir Geoffrey Howe: In answer to the last point, the terrorists in this case were shot. As I have told the House, the military personnel involved concluded that their own lives and the lives of others were under threat, and that there was no other way of protecting life.
As for the hon. Gentleman's question about passports, I am afraid that I cannot give him a comprehensive or detailed answer now. One of the features of such cases is the existence of more than one passport, not always of the same nationality. As I have told the House, three additional passports were found in the second car on the Spanish side of the border, and there may be more discoveries of that kind.
I conclude my answer to the hon. Gentleman by saying that his tribute to the co-operation of the Spanish authorities will certainly be transmitted and I am sure that it will be well received. The incident that was so narrowly averted underlines, as the hon. Gentleman made clear, the reckless willingness of the IRA to disregard human life no matter of what nationality or where it may be found. It is for that reason that international co-operation against terrorism is so vital.
Mr. Michael Colvin: The House strongly supports my right hon. and learned Friend in paying tribute to the security forces, with help from Spain, for the way in which they prevented the murder of hundreds of innocent people in Gibraltar. Will he acknowledge that it shows that terrorism knows no boundaries—that it can strike anyone, anywhere, at any

25
time? The people of Gibraltar may sometimes be irritated by the delays at their frontiers with Spain, but today's action shows that Spain, Britain and the people of Gibraltar stand together in the fight against terrorism.
Sir Geoffrey Howe: I agree entirely with my hon. Friend. We all stand together in the fight against the wicked and continuing threat of terrorism. In that fight we all share a common interest in the freedom of movement across frontiers as far as possible. However, that must always come second to our determination to take whatever action is necessary to prevent terrorism in every way possible.
Mr. Eric S. Heffer: As someone who has always opposed terrorism, whether of the IRA or anyone else, and who still condemns terrorism and who, like everybody else in the House, would have been affronted if people had been killed in Gibraltar, can I ask the Foreign Secretary to explain why those three people who, although accepted as members of an active service unit of the IRA, were shot and killed when it was admitted that they were not carrying guns and had not planted any bombs in Gibraltar? Can the right hon. and learned Gentleman explain why that happened and how that can help us in the fight against terrorism? Will that not help terrorism?
Sir Geoffrey Howe: I am afraid that the hon. Gentleman must stand almost alone in the House in offering that point of view.
Mr. Heffer: Well, I have done that before.
Sir Geoffrey Howe: I have described the circumstances giving rise to suspicion in this case. I have described the circumstances in which the terrorists were shot. I have made plain to the House the statement by the IRA that the three people were members of an active service unit on active service in Gibraltar. It is difficult to see how I could possibly conclude that the security services could have acted other than they did when faced with the events of that day.
Mr. Ian Gow: Is my right hon. and learned Friend able to confirm that the co-operation between Madrid and London and the cross-border cooperation between Spain and Gibraltar could not possibly have been better in this case and that that co-operation took place without the existence of an Anglo-Spanish agreement?
Sir Geoffrey Howe: I acknowledge the generosity of my hon. Friend's tribute to the co-operation that took place in this case. I acknowledge also his ingenuity in pursuing one argument in whatever circumstances he may find it convenient to do so. As a matter of fact, there are a number of Anglo-Spanish agreements, at least two of which I helped to negotiate, which have helped considerably to increase the prospects of co-operation of the sort that took place.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that this is a continuation of Question Time. There is a statement and a busy day ahead, in which a great many right hon. and hon. Members wish to take part.

Member's Letter (Privilege)
3.49 pm
Mr. Speaker: I have a statement to make about the privileges of the House.
I received last week complaints from several hon. Members about the contents of a letter sent by the hon. Member for Liverpool, Mossley Hill (Mr. Alton) to the constituents of certain members of the Standing Committee on the Licensing (Retail Sales) Bill. The letter accused the Members concerned of choosing to filibuster on that Bill as a means of obstructing the Abortion (Amendment) Bill. It went on to urge the recipients of the letter to take action to persuade members to desist from conduct which, it was said,
"would scandalise millions of people".
The letter from the hon. Member was sent before the proceedings on the Licensing (Retail Sales) Bill had begun, and in my opinion its tone and the manner of its distribution amounted to an attempt to bring unacceptable pressure upon Members of this House in the performance of their duties.
The hon. Member for Mossley Hill has written to every Member concerned and to all those to whom his original letter was addressed, withdrawing any suggestion of a filibuster. He has also made this letter public. In these circumstances, I do not propose to use my power to grant precedence to a motion on this matter. I do, however, wish to give a serious warning about the care which those involved with this Bill on both sides must take to avoid committing contempts of the House by seeking to bring improper pressure upon hon. Members.
In considering the present complaints, I have received considerable evidence of unacceptable conduct by bodies outside the House. Efforts appear to have been made to prevent Members from speaking about matters upon which they must be free to speak in this House, and there has been personal harassment of Members in their constituencies. I wish to make it clear that 1 shall take very seriously any continuation of this conduct and I urge hon. Members to use their influence to ensure that the merits of business before Parliament can be discussed calmly and responsibly without threats of intimidation.

Newspaper Article (Privilege)
3.50 pm
Mr. Speaker: I have a further statement to make on a matter of privilege.
I have received a complaint from the hon. Member for Newham, North-West (Mr. Banks) about an article in The Guardian of Wednesday 2 March. The article, in referring to the absence of Members from the House, made reference to a particular Member, and to Members in general, in terms which I was asked to consider could be regarded as being in contempt of the House.
I have considered this complaint, and have decided that it does raise issues which justify me in giving precedence to a motion relating to it. In consequence, if the hon. Member for Newham, North-West tables such a motion, it will be taken as first business tomorrow.

Inner-city Policy
Mr. Nigel Spearing: On a point of order on the statement and the documents relating to it, Mr. Speaker. Earlier today, I made inquiries as to the documents that would be related to the known announcement and was told that they would be available in the Vote Office at 11 am today. Since they were not available at that time, my office made arrangements to collect and deliver them to my town hall, where I was at that time. The only available document in the Vote Office was labelled "City Grant — Simplification of Urban Grants". The press statements and the glossy paper "Action for Cities" were not included.
I understand that the documents were made available in the Vote Office at 3 pm today, but only because I made inquiries about them. I therefore wish to raise the matter of the Prime Minister, who made the statement earlier today in public, not providing Members of Parliament and their borough councils with documents about public announcements, which should be made in the first instance in the House.
Mr. Speaker: I understand that five Departments have supplied documents to the House in connection with the subject matter of this statement, but that the number of copies of at least one proved to be insufficient and has now been supplemented. The House will be aware of the importance that I attach to the timely and adequate supply of papers. I am glad that the earlier deficiency has now been put right.
3.53 pm
The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): With permission, I should like to make a statement about inner-city policy.
The Government have today announced 12 new Government initiatives and commended three major private sector developments aimed at furthering our policy of renewal and regeneration of the inner cities. We have also published a booklet entitled "Action for Cities" which is a clear guide to the Government's inner-city policies and is intended for use by people prepared to make a contribution to a combined public and private sector effort in this area.
The new Government measures add to existing major regeneration programmes.
First, a new urban development corporation is to be established in the lower Don valley, Sheffield, which will cover 2,000 acres to the north-east of the city centre. It will have a budget of about £50 million over seven years.
Secondly, the area of the Merseyside development corporation is to be doubled by adding 800 acres on both sides of the Mersey. The enlarged MDC could spend between £50 million and £90 million over eight to nine years in the new areas.
Thirdly, two new city action teams are to be set up in Leeds and Nottingham. This adds to the five established three years ago, which have successfully pulled together Government support for enterprise and development in their areas.
Fourthly, a new simplified grant to support private sector developments in inner cities is to be introduced from May 1988. It will replace urban development grant and

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urban regeneration grant, which have produced from the private sector over £580 million in investment, providing 28,500 jobs and more than 7,000 homes since 1982.
Fifthly, the drive to bring unused and under-used inner-city land on to the market is to be stepped up by requiring publication of information about land in public ownership.
Sixthly, two new inner-city roads costing £109 million, both of which will directly benefit inner cities—a £59 million improvement of the A13 between Limehouse and Dagenham, and a £50 million spine route through the black country to the M5 and M6—have been added to the Government's roads programme.
Seventhly, a major new initiative to tackle crime and the fear of crime will be introduced in 20 inner cities over the next three years; £2·3 million is being made available in the first year to support the initiative, which has been successfully piloted in five urban areas.
Eighthly, more help for small businesses is to be provided, including new offices for the small firms service, a fund to support local enterprise agency projects helping businesses, an 85 per cent. guarantee on bank loans to firms in task force areas, and help to encourage people into self-employment.
Ninthly, the Manpower Services Commission will give financial and other support to 12 inner-city employer-school compacts, in which groups of employers work with schools to guarantee a job with training for all young people aged 16 to 18 leaving school who meet agreed motivation and achievement standards.
Tenthly, we will be revising our help to unemployed people in inner cities. There will be more MSC and employment service staff working in local communities advising and helping residents, new information points to guide people on training and jobs, and special training in literacy and numeracy and English as a second language. There will be new measures to increase the involvement of employers in training.
Eleventhly, we will be making extra provision of premises for new businesses in rundown inner cities. English Estates, in partnership with private companies, will set up managed workshops. Up to £11 million of public funding will go into the programme in the first year.
Twelfthly, we will be building on our efforts to work with the private sector. The Government are organising a series of break fast presentations to leading business men up and down the country, starting in Newcastle on 13 April. A free telephone link has been set up today so that businesses can find out from a single contact point how they can play their part.
The Government measures announced today build on the programmes and initiatives introduced since 1979 to tackle urban dereliction and inner-city decay, and to raise skills and encourage enterprise. In all, about £3,000 million will go to support urban regeneration in Britain in 1988–89, bringing in several times that total in private investment.
Mr. Bryan Gould: Is it not typical of this tawdry exercise that the right hon. and learned Gentleman's statement should end with the ludicrous assertion that coffee and cornflakes with Ministers will somehow provide the sustenance that the inner cities desperately need?
Why is the right hon. and learned Gentleman making the statement and not the Prime Minister, whose
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responsibility it is? Why was the Prime Minister so keen to spearhead the media hype this morning, yet so reluctant to face the House of Commons this afternoon? Is it because she knows that glossy brochures cannot conceal the simple fact that there is virtually no new money; no new proposals; no White Paper; no legislation; and no involvement of the local communities—in short, that there is almost nothing to offer hope to the people in the inner cities? Is it because after identifying, perhaps unwisely, an electoral problem on election night nine months ago, she now finds that she does not have the faintest idea how to tackle the real social and human problems in the inner cities that have been created by her policies?
Is it because the right hon. Lady knows that the only way to help the inner cities is to abandon the policies that have already caused so much damage and, in particular, to overcome her obsessive antipathy both to local government and to public spending? Is it because she knows that soft words from construction companies, which happen to include many major donors to the Tory party, are no substitute for involving those who really matter — local communities and their elected representatives?
How much longer will the Prime Minister turn her back on the consensus that has now emerged, which includes the Prince of Wales, the Church of England, local government and private developers, to the effect that a partnership that fully involves local government and local communities, as well as private capital, is the only way forward?
When did the right hon. and learned Gentleman first discover the awful truth that his much-touted White Paper had been torn up and that, as the Minister left without any clothes, his simple role was to shelter behind the Prime Minister's skirts? Is it not the case that changes in benefit and the poll tax will have a much greater impact, for the worse, on the inner cities than anything that has been announced today?
When will the Prime Minister, who is surprisingly not present to hear this statement, abandon her ideological prejudices and produce the new resources, new policies and new partnership that alone can help to rescue the people in the inner cities from the poverty, unemployment, disorder, slum housing and despair to which her policies have condemned them?
Mr. Clarke: There is an awful air of sour grapes in the Labour party's reaction to what we have announced. I thought that the hon. Member for Dagenham (Mr. Gould) summed up the right note of pessimism and cynicism, which he and his colleagues tried to whip up over the weekend, but he was unable to put much energy into it.
The hon. Gentleman criticises the booklet that we have produced. I commend it to hint and I believe that he might read it some time with profit—[HON. MEMBERS: "Where is it?"] As Mr. Speaker explained, the copies in the Library this morning went rapidly, but hundreds of copies are now in the Vote Office. I am delighted that there is such demand for it.
If the Opposition parties were asked to set down their policies for the inner cities they could not fill the back of a postage stamp. If they wished to hold a conference to explain those policies to anyone, they would not fill a telephone box. The hon. Gentleman comes out with his usual litany of, "Where is the money? Where are the new proposals?" As I said in my statement, we are spending £3

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billion in the next financial year on urban regeneration. The new programmes announced today come within that total, but they represent about £250 million directed into new policy areas—targeted on the inner cities—that we have not announced before.
I set out a statement explaining the 12 propositions that we have announced today. However, the hon. Gentleman did not ask me a question about one of them.
Mr. Gould: Where are the new proposals?
Mr. Clarke: I will answer the hon. Gentleman's question when he states which of the propositions he is against. Is it simply the fact that he objects to the timing of meetings with business men at breakfast time? Does he object to the Government going to provincial cities and seeking to revive private-sector leadership in urban regeneration?
The hon. Gentleman should read our document. It is not a White Paper, because it is intended to be an action document to be used by those concerned with inner-city revival. When he has read it, he might know more about the subject and will be able to make a better job of questioning our policies the next time round.
Sir Hugh Rossi: May I tell my right hon. and learned Friend that his statement will be widely welcomed on the Conservative Benches and also by the all-party Environment Select Committee? That Committee recommended three things that my right hon. and learned Friend has adopted today—the expansion of the number of UDCs, the simplification of the three types of urban land grant and the greater use of the "domesday book" of property in public ownership. Will the simplified city grant be demand-led, as the Committee requested? Will my right hon. and learned Friend ensure that the "domesday book" is not limited by a minimum size of land to be registered in it?
Mr. Clarke: I thank my hon. Friend for his commendation for what we have done. I recall that the all-party Select Committee, including members such as himself, has been pressing for three of the specific changes that we have made.
The existing UDCs have been hugely successful, and I am sure that the two new UDCs will be welcomed in South Yorkshire and on Merseyside, where they have a great deal to offer. The amounts to be spent on city grant will largely depend on the response that we receive from developers coming forward seeking the grant. We have simplified the various types of grant that we currently have available so that grant can be paid more quickly in response to applications to speed up the process. I am sure that my hon. Friend agrees that more and more developers are acquiring confidence in the ability to invest on inner-city land, and the new simplified grant will help speed up the process.
With regard to the register of land, I shall refer the details to my right hon. Friend the Secretary of State for the Environment, but I believe that no minimum size will be placed upon it. My hon. Friend rightly underlines that all our announcements will receive widespread approval from people seriously interested in the subject. I still wait to hear—I am not sure that I will—any member of the Opposition get up and say that he disagrees with a solitary
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one of the propositions that we have made. All they are doing is sitting there, embittered, because they cannot think of what to say in reply and they are trying to pour general scorn on the whole thing.
Mr. Simon Hughes: Although a sincere interest in the inner cities is welcome, is not the watchword of the Government's announcement "power away from the people"? Does not the best experience from home and abroad demonstrate that one does best for inner cities when local people, local councils, local businesses and the local voluntary sector are involved? Is it not evidence of the Government's dishonesty that they have taken two local schemes—the urban regeneration in Sheffield conducted by the city council and the ILEA education-business compact—and pretended that they are their own? Partnership has been ignored. Surely the truth behind the Government's initiative is that, instead of giving power to the people in the inner cities, they are more determined to advantage their friends and themselves rather than the urban poor and disadvantaged.
Mr. Clarke: First of all, I agree with the broad proposition that policies make best progress when they are conducted in agreement with local people of good will; that is what our inner-city policies do. [Laughter.] Of course it is. Anyone who takes the trouble to involve themselves in the work of our inner-city task forces or the city action teams, or who considers the people who are on the UDCs and the way in which local authorities tend to welcome such things happening in their areas, would agree. Not all local authorities enter into that partnership: that is the difference between our experience and that of the Americans. Obviously it will be greatly to the advantage of the inner-city revival when all local authorities are genuinely business-friendly, prepared to co-operate, keep down the costs they impose on business and join in the effort.
It simply is not the case that we have stolen the credit from other people. The Sheffield UDC will bring to a derelict area in the Don Valley the ability of a UDC to assemble land for grant, to give it positive value and to take decisions quickly. There is no doubt that UDC spending is up.
The idea that compact is an invention of ILEA is an extraordinary proposition. The hon. Member for Southwark and Bermondsey (Mr. Hughes) knows that it came from Boston in the United States—[Interruption.] I am delighted to know that we have people who are keen on the Boston compact, however stridently. It was introduced into this country by the London enterprise agency with support from people in government. It is to ILEA's credit that it has agreed to become party to it.
I should have thought that, with ILEA as a party to it, there would be no one Left-wing enough in the country who would be hostile to the idea of more compacts elsewhere. The new idea today, which comes from my right hon. Friend the Secretary of State for Employment, is that Government money from the MSC will extend the compact idea to 12 other cities. That is a new, positive idea and it should be welcomed.
Several Hon. Members rose—
Mr. Speaker: Order. I draw the attention of the House to the fact that no fewer than 36 right hon. and hon.

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Members wish to speak in the subsequent debate. May I ask hon. Members to direct single questions to the Minister, which will give me the opportunity to call more of them?
Sir George Young: Is my right hon. and learned Friend aware that those Conservative Members who represent city seats will welcome the package of measures that he has announced, as will the thousands of people who live in the areas targeted by the new initiatives? Does he agree that, once the huffing and puffing is out of the way, the Labour party will work happily with urban development corporations and the city action teams, and that Labour Members will be queuing up for the new city grant as long as it is to be spent in their constituencies?
Mr. Clarke: I agree with my hon. Friend. That has been our experience so far, and I am sure that it will be again. The huffing and puffing that we hear from the Labour Benches is strangely out of line with the practice on the ground, even among Labour supporters.
Mr. Ron Leighton: Is the right hon. and learned Gentleman aware that there is a sense of disappointment and let-down, because we were expecting a proper White Paper? All that we have is this mouse of a consultation paper on grants, which shows confusion in the Government, a lack of clarity and no new money.
Is the Minister aware that 96 per cent. of the population of the London borough of Newham live outside the development area, that the borough comprises half the traditional east end of London, that this morning the borough council composed a letter to him about the plight of the borough and that, on Friday, I have an Adjournment debate on this very subject, when I shall ask for co-operation between the Government and the council to tackle the borough's problems? Will the Minister give me a guarantee that he will seriously consider both initiatives—he will receive the letter tomorrow—and respond adequately?
Mr. Clarke: I am delighted to hear that the hon. Gentleman is such an avid reader of White Papers. I did not want a White Paper, because a White Paper is suitable —[Laughter.] Perhaps from the laughter of the Leader of the Opposition we now know what their policy is: they would produce a White Paper. White Papers are almost as unread as Acts of Parliament. It is an extremely suitable document when one is contemplating a change in legislation, but it is usually published, read the next day and never referred to again by anyone.
What we have produced is not a consultation document, as the hon. Gentleman described it. He should obtain a copy—[Interruption.] He has one. He should obtain the full document about which we are talking, a copy of which is being waved by the hon. Member for Liverpool, Walton (Mr. Heifer). It is a full exposition of a complete package of policies, covering a wide range of activities.
In response to the hon. Gentleman's latter point, may I say that I am delighted to hear him lobbying for Newham to be allowed to join in the Government's policies. As my hon. Friend the Member for Ealing, Acton (Sir G. Young) said a moment ago, I expect that that will be the response of most Labour Members the moment this afternoon's session is over. Everyone will be queuing up trying to get similar announcements made for their areas.
Mr. Michael Grylls: Does my right hon. and learned Friend accept that there will be a warm welcome for the provision of more small nursery units for starter firms? For too long, it has been too difficult to find the right premises on the right terms, and what he suggested today will go a long way to meeting that problem, which will then create more new firms and jobs.
Mr. Clarke: I am grateful to my hon. Friend. A variety of such units has been provided so far, and they have been such a success in practice that we thought it important to find a new way of putting extra public finance and a new agency, English Estates, into providing more of them. The present state of the economy makes it easier for small businesses to start up and expand, and we must give special support to that in the inner cities.
Mr. Merlyn Rees: Will the Minister consider a special problem and answer more directly the point made by the hon. Member for Southwark and Bermondsey (Mr. Hughes)? I represent an inner-city area. Like many others in the House, two weekends a month I hold constituency surgeries, and 98 per cent. of the issues discussed are local matters. They include jobs, unemployment—[HON. MEMBERS: "And housing."] And housing. Along come the Minister's officials to Leeds to define an urban development corporation area. No one consults us. I talk to the councillors and ask, "What areas have been designated?" They say, "No one discussed it with us." Along come those civil servants, operating from the middle of Leeds and knowing nothing about the area. Everything is imposed from above. If that is the way the Government intend to set about it, it will just be another glossy magazine that will not work.
Mr. Clarke: The city action team for Leeds comprises the regional officers of the Department, all of whom know the area extremely well and all of whom have constant—almost daily—contact with the local authorities in the area—
Mr. Rees: Action now.
Mr. Clarke: I am sorry if the right hon. Gentleman has not been consulted recently, but he must know the regional officers of the Department in his city. They are riot outsiders. They work in Leeds.
The urban development corporation has been announced and should be welcomed by people in Leeds, because it will speed redevelopment and bring back into active use derelict land in the city. There is a task force on the ground in the middle of Leeds, staffed by people who live and work in Leeds who have the closest contact with many voluntary bodies and with the local authorities. When I visit various bodies in Leeds, I frequently meet the leader of the council and people from the local authority and discuss these matters.
I apologise to the right hon. Gentleman if he has been left out of discussions recently, but he need only contact any of those bodies or me, and we shall happily keep him abreast of what we are doing.
Mr. Anthony Steen: On behalf of the Conservative Back-Bench urban and inner-city committee, may I warmly congratulate my right hon. and learned Friend on doing a magnificent job in promoting urban and inner-city regeneration? Unlike the Opposition, may I offer a constructive suggestion that might help the

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Government to get rid of some of the derelict and vacant land in public ownership? Has my right hon. and learned Friend considered privatising public land, passing it to a private company and giving the value of the land, in the shape of a share certificate, to the public authority so that the private company can market the land and regenerate the inner city?
Mr. Clarke: The proposals that we have announced are designed to ensure that the large amounts of public land that are still derelict and vacant should be brought into productive use more quickly. I shall pass my hon. Friend's commendable suggestion to my right hon. Friend the Secretary of State for the Environment, if it turns out that the latest moves in relation to the register do not have the desired effect of speeding the release of public land for development.
Mr. Frank Field: May I welcome the extension of the Merseyside development corporation to Birkenhead, and ask the Minister for two undertakings? Will he draw the attention of the MDC to the wish of many of my constituents to live in the centre of the town which, at present, having been handed over to the private sector, is an industrial desert? Secondly, when the redevelopment is carried out, will the planning powers be handed back to the local authority?
Mr. Clarke: The hon. Gentleman's reaction to the extension of the urban development corporation into his constituency is in line with that of most local authorities, of all political persuasions, in all the recent extensions. We hope that things can be achieved on his side of the Mersey in line with what has been achieved in the Albert dock and the surrounding area on the other side of the Mersey. I share his desire to see as wide a range as possible of people living in the centres of cities and towns, but we must ensure that those who live in derelict inner-city areas are not people who are there because they have no choice and who would leave the moment they were given an alternative. We need a good mix of development in the centres of towns to get the mix of population that we require. Once the work of the UDCs is over—they will not he timeless organisations—I expect that the planning powers will revert to the local authorities.
Mr. William Shelton: Does my right hon. and learned Friend accept that this is clearly a good day for inner cities? Does he further accept that I am lobbying on behalf of Lambeth? We need a mini UDC at Waterloo, where the new rail terminal of the Channel tunnel debouches, and we need a housing action trust in Brixton. May I visit my right hon. and learned Friend some time and discuss it with him?
Mr. Clarke: Lambeth is already included in the area served by the city action team. Both the points made by my hon. Friend are relevant to the well-being of the people of Lambeth. I suggest that he arranges a meeting with my colleagues at the Department of the Environment, to whom both his questions should be directed, and I am sure that they will take note of what he says. Housing action trusts are an important new development which will be taken further this year, and in due course my right hon. Friend the Secretary of State for the Environment will
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announce where those housing action trusts are to be set up. I shall draw my hon. Friend's suggestion to my right hon. Friend's attention.
Ms. Harriet Harman: Is the Minister aware that, last week, I met officers of the North Peckham task force? Does he understand that people in Peckham are angry because, during the past two years, the Government have removed £20 million from Southwark council, yet they expect to be congratulated on the fact that, during the same two years, they have put in less than £1 million through the task force? Why are the Government prepared to put £700 million of public money into the London Docklands development corporation to attract private capital for luxury housing, yet they are not prepared to give the £18 million that is desperately needed to rebuild the Gloucester Grove estate or the £18 million that is needed to lift the threat of asbestos that hangs over the tenants of the Willowbrook estate? Is not his statement a cynical public relations exercise which shows that the Government are concerned about profit, property and politics, not about people and poverty?
Mr. Clarke: I owe the hon. Lady an apology. At this morning's press conference someone referred to her attacks on the North Peckham task force and I said that for two years she had not bothered to meet it or to discover what it was doing. She has now discovered that it is spending money, organising training and job opportunities, and targeting a great deal of money into north Peckham. I am delighted that the hon. Lady has crossed the threshold. I hope that she does not lose the nomination for her seat as a result of being seen talking to departmental officials. If she follows up these matters, she will find that much good will continue to come from the North Peckham task force.
The hon. Lady mentioned some estates in her constituency that suffer from some of the worst combinations of social and other problems of which I am aware anywhere in the United Kingdom. I am sure that she shares my pleasure that such large grants from Estate Action, for example, are being made available to improve the Gloucester Grove estate. I am delighted also that the hon. Lady is now aware of the existence of the London Docklands development corporation, which has been shunned by most of the politicians in Southwark ever since it was established and began to revive part of their area.
If the hon. Lady continues to learn more about the inner-city policies that are being applied in her constituency, I am sure that we shall be able to welcome her co-operation and support.
Mr. Anthony Beaumont-Dark: Will my right hon. and learned Friend accept that many in Birmingham and the west midlands will welcome action for cities? Regional development grants always acted against our best interests. The city grants are bound to be useful to us.
I ask my right hon. and learned Friend to take a word of advice from those of us in Birmingham and the west midlands. If he could stop my rght hon. Friend the Secretary of State for the Environment from giving one permission after another for incursions into the green belt—all builders want to build on easy ground rather than difficult ground — the tens of thousands of acres of derelict land in the midlands would be taken up more quickly without any cost to the Government. As long as

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my right hon. Friend gives easy work to builders, they will continue to build in Solihull and Meriden rather than in difficult areas in the west midlands.
Mr. Clarke: I am always grateful to my hon. Friend for his advice on Birmingham. I am glad that he welcomes the new city grants. A great deal of effort is going into inner-city Birmingham through the task force in Handsworth and through the support that we are giving to the Birmingham heartlands attempt to rebuild on the derelict land around Saltley. The local authority, central Government and the private sector are working closely together. I shall draw my hon. Friend's opinions on planning policy in the west midlands to the attention of my right hon. Friend the Secretary of State for the Environment.
Ms. Clare Short: Is the Minister aware of the work of Sally Holterman on the nature of urban deprivation and inner-city problems, which shows that all these areas are merely a concentration of poor people? We have a Government who have increased unemployment, poverty, and low pay and worsened the housing stock, and that is why the inner cities have become worse. The gimmicks that have been announced will not address the fundamental problems. We shall use any money that we can get, of course, but it is the Government who are damaging inner cities and making the problem worse. The Government's gimmicks will not put right that which is wrong.
Mr. Clarke: I have not read the work to which the hon. Lady referred and I do not agree with the analysis that has been put forward, if the hon. Lady has described it accurately, as I am sure she has. I do not agree with the proposition that the only problem in inner cities is poverty and that all that we need to do is to alleviate poverty, there being no need for other policies. [HON. MEMBERS: "She did not say that.] I do not accept either the Right-wing proposition that we need only to make the country better off as a whole without making any special effort in the inner cities.
The hon. Lady knows that we are taking positive action in her constituency to bring the unemployed into contact with work experience and training opportunities—
Ms. Short: Just 12 jobs in Broughton road, which the Minister talks about constantly.
Mr. Speaker: Order. The hon. Lady has already put her question to the Minister.
Mr. Clarke: I shall be happy to introduce the hon. Lady to other projects apart from the excellent Broughton road one, of which I am satisfied she has knowledge. A great deal is happening in her constituency, with the result that unemployment is steadily dropping and deprivation is becoming less. I am sure that we can improve the quality of life in her constituency and in other parts of inner-city Birmingham if we increase our efforts.
Mr. Richard Holt: My right hon. and learned Friend will know from his own experience that Teesside has enjoyed an urban development corporation for the past six months, and that as a consequence there has been a complete change in the atmosphere surrounding the economics of the region. We already see new entrepreneurs and new businesses coming into the area. It was significant that on the one o'clock news today
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on Radio Cleveland it was announced that there were no further sites left in north Teesside, in Hartlepool, for a company that wants to build a factory there to expand.
Given the expansion that is taking place in the area, it is disappointing that the Government continue to neglect the north-east by failing to recognise the need for a three-lane motorway from the south to the north along the east coast.
Mr. Clarke: The new Teesside urban development corporation appears to be making the fastest progress. The enterprise zone has been of great benefit there. The task forces in Middlesbrough and. Hartlepool have both been welcomed and they are doing a considerable amount of work. I agree with my hon. Friend that it is a welcome change to read that there are shortages of factory accommodation for the expanding businesses in the region. However, that is a problem and we must ascertain what we can do to tackle it. I shall draw to the attention of my right hon. Friend the Secretary of State for Transport the remarks of my hon. Friend about the need to improve the great north road to take the ever-increasing traffic to the booming north-east.
Mr. Nicholas Brown: If the urban development grant has been the success that the Minister claims, why is it being scrapped? Why is he undermining the work of local authorities such as Newcastle city council, which has a good record of co-operation with the private sector, in favour of extending the powers of the colonial government in the north, the urban development corporation? This will mean that new schemes will be development-led rather than planning-led, which leads many of us to fear the return of old-style corruption to the region.
Mr. Clarke: I think that urban development grant has been a considerable success, as was its short-lived successor, urban regeneration grant. The new city grant is a process of deregulation. We are simplifying the procedures for applying for it and we hope to speed up the payment of grant for desirable development, which should he welcomed.
Urban development corporations should not be seen as the imposition of some sort of penalty on areas. They are seen as such only by a few officers in the local planning department. They have a proven track record of success in hastening the clearance of derelict land and introducing new developments. I am sure that my right hon. Friend has done a favour to the north-east by setting up a regional development corporation in the area and that residents will quickly come to appreciate that.
Sir Peter Hordern: Will my right hon. and learned Friend add to the register of unused building land that is owned by local authorities the unused building land and houses that are owned by the Ministry of Defence? Some of the land has lain empty for many years.
Mr. Clarke: I shall draw my hon. Friend's remarks to the attention of my right hon. Friend the Secretary of State for Defence. I am sure that he and I are agreed that it is wrong for any unused land, housing or other sorts of building to stay in the hands of a public body for more than the essential length of time. All our efforts are designed to ensure that all unused land and buildings are put back into productive use as soon as possible.
Mr. A. E. P. Duffy: Is the Minister aware that the announced budget for Sheffield, which will enable a partnership of public and private bodies to revitalise an important but old industrial area, is extremely important, although it is a budget that might have to be re-examined in future? It could have been welcomed by the Sheffield district council and it is unfortunate that that body has been by-passed.
Why must the right hon. and learned Gentleman introduce the UDC? He is aware of the talks that it has had with his Department in recent years and he knows that the council needs only the budget that he has announced. The council has provided leadership and has set the right example. It is willing to co-operate with the private sector and the evidence shows that that sector is responsive, and might be more responsive to the approaches of the city council than to those of the Minister. What response does he expect his civil servants to get from private bodies in Sheffield when they are not sure whether the council will be in a position to continue to provide leadership in what is supposed to be a democratic community?
Mr. Clarke: Urban development corporations can take decisions more quickly and produce results faster than the processes of local government in the cities where my right hon. and noble Friend the Secretary of State has established UDCs. Once Sheffield city council and responsible people in Sheffield give a few moments' thought to the implications of today's announcement, they will realise that it should be welcomed. I am sure that my right hon. and noble Friend will welcome their co-operation in taking forward the work of the Don Valley UDC.
Mr. Robin Squire: The many thousands who use the Al3 each day will welcome my right hon. and learned Friend's announcement of the improvement between Dagenham and Limehouse—perhaps the hon. Member for Dagenham (Mr. Gould) will welcome it too. When does he expect work to start? If it is to start earlier than 1992, can he extend it a hit further, to Rainham?
Mr. Clarke: I agree with my hon. Friend that the hon. Member for Dagenham (Mr. Gould) should be more enthusiastic about something that eases traffic jams between here and Dagenham. One problem is that the success of the London Docklands development corporation has added considerably to congestion on the roads going out to the east. This is an important follow-up to the improvement of the roads by my right hon. Friend the Secretary of State for Transport.
The timing is a matter for my right hon. Friend, who is confined by the large number of statutory procedures that must be gone through before a road can be built. If the local inhabitants ease the passage of the road and there are not too many pointless objections—there is bound to be a great deal of consultation about the route—it can be built more quickly. I shall draw my right hon. Friend's attention to my hon. Friend's point about the timing.
Mr. Nigel Spearing: In respect of urban development corporations, should not the Chancellor of the Duchy think again? They are unelected centralised quangos.
Is the right hon. and learned Gentleman aware that the London Docklands development corporation, which he
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has mentioned, has suffered a number of spectacular resignations, including that of the chief executive, who resigned after less than a fortnight? Is he aware that the Comptroller and Auditor General is preparing a report for possible presentation to the Public Accounts Committee on the LDDC's accounts? Would it not be wise for him to wait and see what the Public Accounts Committee says before he lays further orders for places such as Sheffield and Leeds?
Mr. Clarke: Like me, the hon. Gentleman remembers what the docklands area of London was like only six or seven years ago, when vast expanses of water lay idle and unused, surrounded by derelict warehouses that were rarely visited by ships and were surrounded by further areas of dereliction. My judgment at the time was that the prospects of rapid progress being made in reviving that area by the combined efforts of the Port of London authority and three local authorities involved were next to nil—
Mr. Spearing: It was being developed.
Mr. Clarke: On a trivial scale.
Of course, the London Docklands development corporation is a public body and must be subject to the PAC. It may have had its administrative difficulties, but if the hon. Gentleman goes to the heart of docklands now and sees how transformed it has been, what a model it is for urban regeneration and what a tribute it is to the work of all those involved, he should perhaps reconsider some of his continual snide criticisms of it.
Mr. Nicholas Bennett: As a former Conservative leader of an inner-London borough, may I congratulate my right hon. Friend on his initiative and assure him that we ignore the ragbag of carping, vacuous comments from the Opposition who have been in power in most of the inner cities for most of the past 50 years? Does my right hon. and learned Friend remember that one of the problems facing the inner cities in the past has been that there has not been enough private housing for those who wish to live there? One of the successes of the LDDC has been the bringing back to the inner city of people who wish to own their homes.
Mr. Clarke: I strongly agree with my hon. Friend. It is desirable that there should be the right mix of housing and population in all the inner cities—of people who have chosen to own their own homes or flats and who have chosen to rent in the private or public sector. That is the tenor of the housing parts of the document that we issued today.
I have already agreed with my hon. Friend's comments about the Opposition. I did not think there would be any specific objections to anything. I am almost tempted to ask my right hon. Friend to take away the urban development corporations from the constituencies of hon. Members who have grumbled—but I do not think I shall do so. They would all change their minds overnight if he did.
Mr. Barry Jones: Will the right hon. and learned Gentleman tell the House of new moneys and measures that will affect Wales and Scotland? I challenge him to name one measure that affects Wales. Where are his right hon. Friend the Secretary of State for Wales and his right hon. and learned Friend the Secretary of State for Scotland? Where is the Governor-General for Wales? Are we to have a statement from him tomorrow?
Mr. Clarke: It is true that the 12 announcements I have made do not include any that were relevant to Wales or Scotland, but there is a page on Wales and Scotland in the document, and a great package of proposals for which my right hon. and right hon. and learned Friends are responsible.
Scotland contains some of the best examples of urban regeneration in this country—particularly in Glasgow. What is being done with the urban development corporation in Cardiff, in Swansea bay, and with my right hon. Friend's proposals for the valleys is equally ambitious. As we have devolved government in this country, those things are the responsibility of my right hon. and right hon. and learned Friends the Secretaries of State for Wales and Scotland.
Mr. Hugo Summerson: Will my right hon. and learned Friend give us his assurance that local authorities will not be permitted to enter into purely artificial schemes with third parties to develop land under which the tenants of the houses subsequently built will not be permitted to exercise their rights to buy under the Housing Act 1980?
Mr. Clarke: My hon. Friend raises a serious point. There is a problem of local authorities seeking to evade the right to buy or the tenants' choice of landlord in future years. I know that my right hon. Friend the Secretary of State for the Environment is anxiously considering this, and I shall refer my hon. Friend's comments to him. No doubt he will consider what proposals to bring forward.
Ms. Diane Abbott: Is the Minister aware that what will cause concern about his statement to those of us who represent and care about the inner cities is what is absent from it? We know only too well that, since 1979, we have lost £7 billion in rate support grant and £8 billion in housing investment programme, which would have built 150,000 houses. This document contains no proposals for any new money, and it insults the people of the inner cities.
Are not large areas of policy that are essential to regenerating the inner city missing from the document? One is transport. What is there in the document to develop and build up public transport?
Finally—
Mr. Speaker: Order. I think the hon. Lady has had a good run. Many other hon. Members wish to ask questions, and I am trying to get them all in.
Mr. Clarke: The hon. Lady is not the first person to produce all those figures about lost rate support grant, housing allocations and so on. Although, fortunately, I do not usually have to face them, I regard them as—on the whole—bogus, based as they are on suppositions about what level of grant would have been paid if certain actions had been taken by local government. We allocate grants to local government according to objective assessment of need. It is true that some local authorities have gone into penalty and lost grant, but that is not a valid comparison to make with the measures announced today.
As for transport, I have mentioned two important roads, but there are other references to transport in the document, which I commend to the hon. Lady. They include references to the London Docklands development corporation's light rapid transit scheme—the railway that goes out to docklands—and to the fact that the
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Government are looking, with Manchester, at a proposal that a similar rail network might be set up in inner Manchester.
Mr. Tony Favell: Does my right hon. and learned Friend's American experience bear out the views of many—that one of the greatest threats to inner cities and to employment in them are out-of-town shopping centres?
Mr. Clarke: In certain circumstances, I have no doubt that that proposition can be argued, but I suspect that my hon. Friend is skilfully trying to draw me into some planning dispute in his locality. I shall draw his views to the attention of my right hon. Friend the Secretary of State for the Environment, who will no doubt consider them carefully, if indeed my hon. Friend has a proposition on hand in the neighbourhood of Stockport.
Mr. Eric S. Heffer: The glossy document "Action For Cities", which I had to get from friends who are journalists because it was not issued to the House of Commons, says that the new Merseyside development corporation will cover the north docks and Parliament street in Liverpool. What does that mean? Parliament street is a residential area of council houses, which are now about to be pulled down by the present Labour authority in that city and replaced with good council houses. Does it mean that the Labour authority, elected by the people, will now receive enough money from the Government to help it carry out its programme; or does it mean that that land will be taken over by an unelected authority and handed over to private enterprise, which will do a great deal of damage to local people?
Can the right hon. and learned Gentleman also explain what he means when he says that the north docks will also be taken over by this authority because of the great work that has been done by the authority up to now? We are talking about an unelected authority. What great work has it done? It has done some work, but how many jobs and how much industry has it produced, and what has it clone to rehabilitate industry in Merseyside?
Mr. Clarke: I concede that the hon. Gentleman knows more about the exact geography of Parliament street, Liverpool than I do. I shall refer his detailed inquiry to my right hon. Friend the Secretary of State for the Environment, who will no doubt give the hon. Gentleman a specific answer. The hon. Gentleman attacked what he called an unelected urban development corporation for Liverpool's docks. His comments were wide of the mark. The redevelopment that has already been done in Liverpool docks by the Merseyside urban development corporation is one of the best things that has happened in Liverpool in many years.
Mr. John Redwood: While I welcome the summary of the Government's actions so far, may I ask my right hon. and learned Friend to look urgently at the question of the supply of industrial space in the north-east? Could he not use the powers that he already has to organise a public auction of land to bring forward suitable factory space? Would it not be more sensible for Factory space to be made available in the north-east at about a third or a half of the rental level in the south-east, given that a much higher proportion of the work force are unemployed in the north-east?
Mr. Clarke: We have not cut at all the activities of English Estates in helping to produce factory accommodation in the north-east. There has not until recently been a shortage of industrial land in the north-east. Obviously, one hopes that as quickly as possible there will be a reaction to the growing demand and that we shall see the necessary factory and office buildings coming on to the market. It is a problem that needs to be tackled by the private and public sectors. I can only reflect that it is a novel problem for the north-east that industrial expansion there is going on so quickly that we are beginning to get the first shortages of land and buildings.
Mr. Robert N. Wareing: Does the Minister realise that his statement will be taken as a sick joke on Merseyside, given that this Government abolished Merseyside county council which did more for private business than the Government have ever done and that the Government robbed the city of over £300 million in rate support grant? Can he say when the Government will enter into real partnership with the real people of Merseyside—its elected councillors? Can he tell us how many disabled people looking for a telephone or adaptations to their homes, people seeking housing repairs and those looking for real jobs will be happy with his statement?
Mr. Clarke: I am interested in what the hon. Gentleman says. People will just have to judge the respective contributions to well-being on Merseyside made on the one hand by Merseyside urban development corporation, and on the other hand by Liverpool city council under its recent Militant control. The announcement I made today, that my right hon. Friend the Secretary of State for the Environment is about to extend the urban development corporation on both sides of the Mersey, should be welcomed by most people in that area. If what the hon. Gentleman says is any sign of a mellowing on the part of Liverpool Labour party towards the private sector and the attracting of new enterprise, it is a welcome sign. If the council could make itself more business-friendly and help redress the bad reputation that it has given to the city in the last few years, that would do a great deal of good.
Mr. Tony Marlow: As the mould of Socialism is dependent for its growth on the feedstock of dereliction and decay, is not the hostility and ill-humour of the party opposite explained by the fact that my right hon. and learned Friend's statement today is a very grave threat to their few remaining strongholds?
Mr. Clarke: There is a mixed bag of motives on the Opposition side, and a mixed bag of responses. I entirely agree with my hon. Friend that, at its worst, when one finds real extremists inside the Labour party in some of our cities, they are people who have a personal commitment to making sure that nothing works and who feel that their political base lies in dereliction and decay. At its worst, that becomes quite a serious problem.
Mrs. Rosie Barnes: Does the Minister agree that more and more young people doing valuable and essential jobs — nurses, electricians, postmen, teachers—are being driven out of London because of a lack of affordable housing? Does he further agree that, unless this problem is tackled, inner London will never be regenerated and, sadly, its work force will be depleted? Does he think that his proposals will address that fundamental problem?
Mr. Clarke: I agree with the hon. Lady's assertion. This is an extremely serious problem. That is why we are proposing reforms in housing legislation so as to make sure that there is a variety of housing in London and that the number of organisations and landlords providing private rented accommodation should be greatly extended. We also need to tackle the question of the payment of people in London who perform some of these essential public services compared with payments in other parts of the country.
I am glad to see that the idea of more regional differentiation in the pay of people in these great public services is again a live issue. Today's proposals will make a further contribution, and in all we do we must pay attention to the points that the hon. Lady has made. We need a good mix of housing in London, offering the right choice in order to attract a variety of employed and self-employed people to the city.
Mr. John Marshall: Does my right hon. and learned Friend agree that the inner cities have been the major victim of the doctrinaire policies of extremist local authorities, which have frustrated development by hoarding land, which have destroyed jobs through high rates and whose education policies have failed a whole generation? Does he further agree that the only hope for inner cities lies not in the nostrums of Opposition Members but in the proposals that he has announced, in the uniform business rate and in the Education Reform Bill?
Mr. Clarke: I agree with my hon. Friend. Certainly, some councils deserve all the strictures that he has applied. Our policies are based on the proposition that we need to bring the enterprise economy into the inner cities. That has been successful in reviving the national economy as a whole. It can be a success in the inner cities if the same principles are applied consistently by the Government and by leading people in business throughtout Britain. Following my hon. Friend's analysis, it is obvious that many Opposition Members still have to be converted to his view and need to realise that many of their friends in local government have done far more damage than good.
Ms. Mildred Gordon: Will the Minister allow a public inquiry into improvements on the A13 and, in particular, the proposed docklands highway spine road? Is he aware of the considerable opposition in my constituency to the proposed docklands highway, which will destroy badly needed houses and cause misery to people who will continue to live along the route? My constituents consider that this will be a gift of a huge amount of public money to Olympia and York to bring people into the area from outside to work in the new offices. That money should be used to provide jobs for local people and much-needed houses. Is he aware that my constituents think that the Government's proposals will bring as much benefit to the east end as a plague?
Mr. Clarke: Of course the choice of route for a new road in an urban area is an extremely sensitive matter. My right hon. Friend the Secretary of State for Transport will go through all the processes of consultation and the statutory procedures as this road is promoted and brought near to being built. I hope that the hon. Lady will play a constructive part in all this. There is a danger that sometimes some of the community activists in the east of

45
London and elsewhere are very clear about what they are against: they are against most things that involve any change in their neighbourhood. There needs to be a positive surge to find solutions to the traffic problems that urban regeneration in east London is causing.
Ms. Gordon: My constituents know what they want. They want houses and jobs.
Mr. Speaker: Order.
Mr. John Fraser: One significant difference between urban development grant and urban regeneration grant is that the latter bypasses local authorities. Will the new grant bypass local authorities? Secondly, much of the bias of the Minister's policy is directed at the development of vacant and derelict land and does not help boroughs such as Lambeth, which have very little such land left.
What specifically is in it for Lambeth? Will there be any compensation for the 13 per cent. cut in the urban development assistance that we had last year, for the doubling of the burden that will come as a result of the poll tax, or for the shocking housing conditions that we have as a result of cuts in housing investment programmes over the last nine years?
Mr. Clarke: Obviously the new city grant will be administered by the Department of the Environment in consultation with local authorities when it considers possible suitable sites for development. It is true that, unlike urban development grant, it will not require local authority consent before it can be given. As the hon. Gentleman is aware, a few local authorities still simply refuse to put forward applications for urban development grant because they are against the Government giving any help to redevelopment in their areas. The hon. Gentleman asked, "What's in it for Lambeth?" There is a great deal of empty and derelict housing stock in Lambeth. I am sure that the Government's proposals on housing policy will have a beneficial effect on that borough.
Mr. Tony Banks: I do not need glossy publications with soft-lighted pictures of "Mama Doc" on page two to inform me about the inner-city problems in Newham. I have to live with those problems daily. They arise directly from Government policies. Newham has lost £127 million in rate support grant since 1979. Poverty and unemployment have doubled since 1979. Those are the root causes of the problems in inner city areas. Why does the Minister not just come clean and tell us that the statement is part of the process of dismantling Labour-controlled local authorities in the inner cities—[HON. MEMBERS: "Hear, Hear."] Exactly—and turning them over to Tory business men to take decisions behind closed doors? What is more, they will even get free breakfasts for doing that.
Mr. Clarke: I am sorry that the hon. Gentleman is so upset by the pictures. May I commend the words to him? If he reads the words between the pictures, he will discover that his description of the document is something of a parody.
Mr. Max Madden: Is the Chancellor of the Duchy of Lancaster aware that the official unemployment figures show that 16 out of every 100 of my constituents of working age are unemployed and that many of those in work have low-paid, part-time jobs involving night and weekend working and that they include a group of men and women who — it was
46
revealed last week — are earning 12p for every kilo of onions that they peel? Whether they are men and women desperately looking for work or people peeling onions for 12p a kilo, they understand that the city of Bradford has declined as a result of the millions of pounds that have been taken from the local economy through cuts in rate support grant, housing benefit and social security payments. Is he aware that they will not take seriously the Government's promise to regenerate the inner cities until and unless substantial amounts of new money are pumped into Bradford to create new, better paid jobs that offer some promise to the people who have them?
Mr. Clarke: I simply do not agree with the proposition put forward by the hon. Member for Bradford, West (Mr. Madden), and by others, that somehow the inner-city problems have been created by cuts in rate support grant by the Government. The inner-city problems are longstanding and are a reflection of a long-standing industrial and commercial decline in some places. The Member does not do justice to the city of Bradford, which has mainly been affected by the industrial recession and the decline of the textile industry in west Yorkshire, upon which in the past it was too dependent. It is now bouncing hack very well. It has done much to help itself and it will receive added support from the Government through the new city action team that I have announced today, which will he based in Leeds and will serve both Leeds and Bradford.
Mr. Neil Kinnock: On a point of order, Mr. Speaker. As we heard earlier, the Prime Minister chaired a press conference at which she presided over at least six of her Cabinet Ministers, one of whom has just provided us with a statement during which, in his replies to questions, he referred to no fewer than 11 of his colleagues to whom he said that he would refer matters raised by hon. Members on both sides of the House.
In anticipation of that kind of problem, efforts were made, as you know, Mr. Speaker, to ensure that the Prime Minister would come to the Dispatch Box to answer the variety of questions about a matter which she is supposed to be co-ordinating. Those efforts were not productive.
However, I read shortly after midday today on the Press Association tapes:
"Later today the Prime Minister faces an emergency Commons question about the initiative".
I know that there is a well-established and entirely understandable convention that you, Mr. Speaker, do riot comment on any possible applications for private notice questions. However, given the completely unsatisfactory nature of the Minister's responses this afternoon and the number of references that he has been forced to make to his right hon. Friends, and the fact that the person who chaired the press conference this morning could not be here to answer questions this afternoon, will you give your view on the advisability of multideparimental press conferences and the failure subsequently to provide the House of Commons with at least the facility offered to the press and broadcasting media?
Mr. Speaker: I had not anticipated that the right hon. Gentleman would raise a point of order. I thought that he was going to put a question to the Minister. I believe that those questions are for the Minister rather than for me.
Mr. Marlow: On a point of order, Mr. Speaker. Hopefully it will be a more helpful point of order than the one that we have just had. It concerns the hon. Member

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for Dagenham (Mr. Gould). Obviously you are concerned that the rules of the House should not change by precedent. You are well aware, Sir, that page 428 of "Erskine May" states:
"Her Majesty cannot be supposed to have a private opinion, apart from that of her responsible advisers; and any attempt to use her name in debate to influence the judgment of Parliament is immediately checked and censured. This rule extends also to other members of the Royal Family."
Mr. Speaker, you will have heard the hon. Member for Dagenham, in his original question to my right hon. and learned Friend the Chancellor of the Duchy of Lancaster —probably inadvertently and he would probably like to put it right in the circumstances—state that the Prince of Wales had a point of view which was in conflict with that of the Government. In other words, he was ascribing to the Prince of Wales a private point of view. Further, he was bringing that private point of view or supposed private point of view forward in order to influence debate. I feel that the hon. Member for Dagenham will realise that what he has done is inappropriate, and he may wish to put the record straight.
Several Hon. Members rose—
Mr. Speaker: Order.
Mr. Gould: On that matter—
Mr. Speaker: Order. Allow me to rule. I can answer the points made by the hon. Member for Northampton, North (Mr. Marlow). It is not in order to use alleged private opinions of members of the royal family to influence a debate. However, where a member of the royal family has expressed opinions publicly on a matter, it is in order to refer to those opinions without, of course, reflecting adversely on the member of the royal family concerned. Nothing out of order has occurred today.
Mr. Graham Allen: Further to the former point of order, Mr. Speaker. Given that the Government have abolished the metropolitan counties and the Greater London council and are now taking more powers away from local democracy, is there not yet more reason to support and defend the parliamentary accountability of the Prime Minister and other Ministers who give press conferences in preference to coming to the House to explain their positions?
Mr. Speaker: I am not responsible for who makes statements from the Front Bench.

Customs and Excise (South Armagh)
4.57 pm
Mr. Harold McCusker: 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 complete withdrawal of all British customs and excise services in South Armagh on Saturday 5 March 1988."
The matter is specific because it refers to the complete shutdown of Newry customs clearance station and the 10 customs clearance agencies that operate there. It is important because the Newry customs station is by far the largest and most important customs post on the frontier with the Irish Republic and is responsible for processing the bulk of legitimate trade between Northern Ireland and the Irish Republic and for controlling other movements across the border, and for reducing the massive swindles involving smuggling and other EEC procedures. The Newry customs station is normally open every Saturday until 5.30 pm.
The matter is urgent because the withdrawal of customs service occurred as a result of a single telephone call, allegedly from a terrorist or terrorist sympathiser. That telephone call did not contain any identifying code and was not accompanied by any public threat from the IRA, yet it resulted in not one member of the customs service turning up for work last Saturday, the day on which two terrorists were buried who had blown themselves up with their own bomb.
Within the next few days, the bodies of three more terrorists will return to Northern Ireland for burial. Will a number of telephone calls be allowed to bring chaos to Northern Ireland again, or will the Government take a stand against such intimidation? That matter requires to be debated urgently in the Chamber today.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of considering a specific and important matter that should have urgent consideration, namely,
"the complete withdrawal of all British customs and excise services in South Armagh on Saturday 5 March."
I have listened with care and concern to what the hon. Gentleman said. He knows that in Standing Order No. 20 applications I have to decide whether to give the matter precedence over the business set down for today or for tomorrow. I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 20, and I therefore cannot submit his application to the House.

Electricity (Privatisation)
5 pm
The Secretary of State for Energy (Mr. Cecil Parkinson): I beg to move,
That this House, recognising the importance of introducing competition into the electricity supply industry, the advantages of new rights for customers, and the benefits of privatisation, approves the proposals set out in the Government's White Papers on the privatisation of the electricity supply industry in England and Wales, and Scotland, Cm. 322 and 327.
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition. In view of the late start to this debate, may I appeal for brief speeches, both from the Front Benches and the Back Benches.
Mr. Parkinson: The motion refers to Scotland as well as to England and Wales. I shall cover Scotland in part of my speech, but in the main I shall concentrate on my responsibilities, which are for England and Wales. My right hon. and learned Friend the Secretary of State for Scotland will deal with Scotland in detail if he is fortunate enough to catch your eye, Mr. Speaker.
I am glad that the House has this early opportunity to debate our proposals. The subject is important and the issues are complex. It is obviously right for the House to comment now that we have taken our decisions on the structure of the industry, but there is much detailed work to be done before legislation can be introduced. The debate will set the scene for our consultations with the industry. In our legislation we can then build on what is said by the House and the industry. The Select Committee report will be an important part of that process. In bringing forward our proposals, we have already consulted widely. We have listened to many people and many views. We shall continue to consult as we develop the detailed legislation. The day after I had made my statement to the House, a copy of the White Paper was delivered to every employee in the industry—all 131,000 of them. We intended that each employee should have a chance to read the proposals, as they will greatly affect his or her future.
I ask the House to approve the White Papers for three reasons. First, our proposals will mean a better deal for the customer; secondly, they will provide wider opportunities and new freedoms for employees; and, thirdly, they will be of real benefit to the economy.
Our proposals are radical in their objectives, but they are also evolutionary. We are not in the business of transforming the electricity industry over night. That would not be possible or desirable. We have at least two years from now to put in place the new structure, and it will preserve what is best about the industry. The new structure will be just the start. It will create a framework in which a modern, competitive industry will develop. It will create a customer-led industry, with the 15 distribution companies free to find the cheapest sources of power for their 22 million customers. A new industry will evolve and will be shaped by the needs of its customers.
Since my statement last week there has been much ill-informed comment from Opposition Members, who talk about a continuing monopoly, rising prices and a bleak future for British coal. One thing is clear about these myths. They are the Labour party's vision of the future; they are certainly not ours. They describe a future for the
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industry under state control, not the prospects after privatisation. The facts are that our proposals will introduce competition into the generation of electricity, give new rights to customers, regulate the monopolies that remain, protect the rights of the employees and allow management to use its initiative.
I have always made it clear that we cannot have two competing light switches on the wall, or two sets of wires in the streets. However, it is nonsense to suggest that there cannot be competition to supply the cheapest electricity into those wires. The fact that there is only one shop in the village does not mean that there has to be only one supplier to that shop. We do not need a monopoly in the power stations just because there is only one set of wires to the customer. Opposition Members do not agree with that. They say, "Pile monopoly on monopoly." That is characteristic of the Labour party, and characteristically nonsensical. At the Conservative party conference last year I pointed out that nine months after the hon. Member for Kingston upon Hull, East (Mr. Prescott) took on his present responsibilities he suddenly started to become aware of a few of the problems. It came to him as a great enlightenment that there would be a monopoly in distribution. If he did not know that, he should have given up his job months ago, yet he portrayed it as something that had only recently been discovered.
Mr. Eric S. Heffer: The Secretary of State has just said that there will be only one supplier because one cannot have two wires coming into a house. That means that there will be a monopoly supplier for each area. At the moment the people are getting a good deal. Why do we need a change? The change is being made purely for doctrinaire reasons and has nothing to do with the needs of the people.
Mr. Parkinson: Not for the first time this afternoon, the hon. Gentleman is wrong. As I shall explain, there is a natural monopoly in distribution, and no one has over denied that, but 80 per cent. of the costs of electricity come from generation, and there is nothing natural about a monopoly in generation.
As I was saying, Opposition Members' arguments on this matter are characteristically nonsensical and, when one considers the costs, irresponsible. Last year the Central Electricity Generating Board handed a bill for roughly £7,000 million to its 12 customers, the area boards. That made up about three-quarters of the bill that the area boards passed on to their 22 million customers. Several times that figure of £7 billion could be spent on building the new power stations needed by the end of the century. We have to introduce competition into the power stations to keep the costs clown. Parliament agreed that when it passed the Energy Act 1983, which was meant to encourage competition in generation. It has not worked, because it left the CEGB in control as the dominant monopoly supplier. Our proposals will work because that monopoly will be ended. Companies can compete to build and operate power stations more efficiently.
The distribution companies will be the key to change. With a turnover of between £500 million and £1,500 million each last year, they will be among the largest private sector companies in their region. They will have a strong local identity and a real incentive to strike the best deal for their customers. Our proposals will give them the freedom to use that initiative. They will become a force for

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development in their local economies. They will become real independent companies looking after local interests, not just the distributors of the CEGB's electricity.
Because the CEGB's monopoly will be ended, and because its obligation to supply will be removed, the distribution companies will no longer be obliged to take all their electricity from one supplier. Because the companies will own the grid, they will be able to bring new suppliers on to the system. They will be able to buy in the cheapest electricity and will have plenty of choice. The customer cannot have more than one switch, but the distribution companies can and will have more than one supplier. They will be able to contract for local sources of power supply into their own distribution networks. They will be able to contract from Scotland or France, from the two large generating companies or from the new private generators. A framework will have been created in which a modern competitive industry can develop. Already a number of private sector concerns have expressed interest in generating electricity. The area boards are interested in developing their own local generation. The industry already recognises the need to strengthen the link with Scotland.
Mr. Geoffrey Lofthouse: The Secretary of State referred to Labour party fears about the effect that privatisation might have on the coal mining industry. Does he not realise that he could allay the fears by instructing both the coal industry and the electricity industry to enter into a formal binding contract on supplies to the electricity industry before privatisation takes place?
Mr. Parkinson: The Government did not impose the present arrangement on the industry. The CEGB and the National Coal Board entered into it because they believed that it was in their mutual interests. I have no doubt, as I hope to explain later, that a substantial part of the remaining huge demand for coal will continue to be met from the British industry, subject to certain qualifications.
I was talking about strengthening the link with Scotland. The Scottish industry will be a real force in the English market. It has a large surplus of modern and efficient power stations. The Scottish boards will be important competitors in supplying the 12 distribution companies and the generators south of the border, who will also be able to compete in Scotland. My right hon. and learned Friend the Secretary of State for Scotland will wind up the debate and answer points on his proposals for the Scottish industry. These were clearly set out in his White Paper. They recognise the different circumstances in Scotland. The industry has, for some time, been structured differently in Scotland, and the structure will remain different. The competition between the industry north and south of the border can only benefit the customer.
Mr. George Foulkes: The Secretary of State will be aware that, in preparation for privatisation, a big struggle is taking place between the South of Scotland electricity board and British Coal in Scotland. So far, the Secretary of State for Scotland has refused to intervene. Because of the huge investment of taxpayers' money in British Coal in Scotland, because of the importance of security of coal
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supplies, and because of his responsibility for employment and industry in Scotland, the Secretary of State for Energy has a locus in this matter. Therefore, will he encourage his right hon. and learned Friend the Secretary of State for Scotland to intervene and take some action, and at the very least knock the heads of the two parties together and get them round a table so that they can come to some kind of agreement before the coal industry in Scotland is decimated?
Mr. Parkinson: Both my right hon. and learned Friend and I have made it clear that we would like to see agreement between the SSEB and British Coal, but we cannot force that agreement on them. The chairman of the SSEB has another important statutory duty, and that is to supply electricity at the most competitive price. Therefore, we want to see these two industries get together and work out a deal. This is not a by-product or a part of privatisation. The chairman of the SSEB believes that he is fulfilling his statutory duties, and we can only make sure that a modern coal industry is available. We can encourage the parties, but, at the end of the day, this must be a commercial arrangement between them.
Mr. Alexander Eadie: In reply to my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) the right hon. Gentleman made great play of the statutory duties of the SSEB. Has he read the agreement on those duties? I counsel him to do so, because he will see from it that the Secretary of State for Scotland has the power to direct and to intervene if he deems it to be in the national interest. I submit that a Scottish deep-mined coal industry is in the national interest.
Mr. Parkinson: I am sure that my right hon. and learned Friend has heard everything that has been said, and I am sure also that he will deal with this subject. It is important to us all, but I recognise that it is particularly important to Scotland, and it is appropriate that my right hon. and learned Friend should deal with it.
I have heard Opposition Members say that there cannot he competition because there will be regulation. Again, there is confusion. There will be competition in the power stations. Regulation will ensure that the benefits of that competition are passed on to the customer in electricity prices. There will be a clear and effective regulatory system, and the White Paper sets out the principles on which it will be based. The emphasis will be on regulating the prices charged by the distribution companies. This will prevent monopoly profits being taken by any part of the industry. The initial contract put in place for the supplies from existing power stations will also have to be regulated. Detailed proposals can be put to the House only after consultations with the industry. The Government's principal aim is clear, and that will be to promote competition.
The regulatory system will reinforce the distribution companies' incentives to seek the cheapest supplies, but we shall also put competitive pressures on the distribution companies themselves. Neighbouring companies will be free to compete for large customers on their borders, and large customers will be free to buy electricity direct from the generators. The regulatory system will ensure that they can use the grid and distribution systems to do that. It will improve the existing provisions on common carriage in the Energy Act 1983. It will ensure that distribution

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companies do not develop local monopolies in generating electricity themselves. It will prevent them subsidising their high street shops with income from electricity sales.
Mr. Tam Dalyell: A number of us were the guests of the CEGB in the control room in Southwark. What does the Secretary of State say to controllers, such as Edgar McCarthy, who say that if, for example, in the Sundon incident in 1986, they had not had the authority to exercise control, the whole of London would have been in great difficulty within two minutes? The technical arguments of Mr. McCarthy and his colleagues weighed heavily with some of us. What is the Secretary of State's reply to that?
Mr. Parkinson: I noted that the hon. Gentleman asked this question earlier. We believe that the grid control will have the same ability to deal with emergencies under our arrangements as it does under the present ones. At present those arrangements depend upon common ownership, and we believe, on the basis of the contracts struck between the parties, that exactly the same reaction will be possible in a similar emergency.
Let me take it a stage further. In the recent hurricane, although the CEGB suffered some damage, by 11 o'clock that morning it was able to offer supplies to all the regions. The real problems were incurred by the area boards, and they had to sort out the massive job of restoring the low voltage distribution system. They did it extremely well, cooperating with one another and swapping personnel and equipment. That was a good example of how a diverse industry—not an integrated one; once again the hon. Member for Linlithgow (Mr. Dalyell) misses the point—with 12 separate companies can work together for the common good.
Dr. Michael Clark: Will there not be the same continuity of supply whether the information for the merit order comes from internal information, in-house within a massive CEGB, or externally, from several generators, all of whom are supplying useful information to help sustain contracts and get contracts the next time they are for offer?
Mr. Parkinson: As I said earlier, the emergency arrangements will work just as well under this system as they have done in the past.
Mr. Peter Hardy: Will the right hon. Gentleman give way?
Mr. Parkinson: This must he the last time for some time.
Mr. Hardy: The Secretary of State overlooks the fact that the various bodies will be commercial undertakings devoted to profit. After the hurricane, constituents from my area went to the south of England where they gave assistance to ensure that electricity supplies were restored as rapidly as possible. In many cases they were restored in a matter of hours. Does the Secretary of State seriously believe that commercial companies will rush to aid one another, thereby diminishing their profits?
Mr. Parkinson: That is just a measure of the hon. Gentleman's basic prejudice against the private enterprise on which this country depends for its prosperity.
Competition in generation will provide the best protection for the consumer, because it will put pressure on three quarters of the cost of electricity. Price regulation
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of the 12 distribution companies will put pressure on the remainder. Customers will not just benefit from competition and regulation. They will be given new rights, too.
Guaranteed levels of service will be set by the regulator, in consultation with the industry. For example, the distribution companies could be required to meet all agreed appointments, to provide new supplies within a reasonable period, to replace meters by an agreed deadline, and so on. When they fail to meet these levels of service, the customer will receive compensation. Where the industry has a monopoly, the consumer will have a right of redress. This will be a novel feature of our privatisation of electricity. We are determined to ensure that the customer benefits from privatisation, not just in price, but in quality of service.
I believe that this scheme will be welcomed by the industry. It builds on a scheme that was introduced by the East Midlands electricity board. It will not just help customers. It will give management useful information on failures of service and an incentive to make improvements. It will be feasible and it will be effective.
Arrangements will also be made to represent consumer interests in the new structure of the industry. The advantages of the existing consumer and consultative councils will be preserved. Employees will also benefit. They will have the right to acquire a direct stake in the industry. There will be attractive provisions to help them to acquire shares. Their national negotiating and consultation machinery will be unaffected by the legislation. Their pension rights will be safeguarded.
Most important, the new structure of the industry will provide more diverse career opportunities. More companies will enter the market, and they will be looking for people with experience. There will be fair competition for the highest positions in the industry. Boards will no longer be chosen by Ministers. They will be filled by those with ability from within the industry, and with a minority of non-executives.
The majority of the employees work for the area boards, which are enthusiastic about the new structure. They are confident that it will provide real benefits for their customers. The chairman of the Electricity Council, the head of the industry, supports our proposals. So, too, does the Electricity Consumers Council. If the Labour party is concerned about the customer, it should listen to those who deal with the industry's customers and to those who represent them. It should not just listen, as it always does, to the producer.
I do not expect the CEGB to welcome the reorganisation. Proposals for change are often taken as criticism, but that is not the case here. The Government have the highest regard for the CEGB and its employees. We are confident that the CEGB will make a success of the new structure. It builds on its strengths. It will preserve the integrity of the grid and the operation of the power stations in merit order. It will preserve the CEGB's nuclear resources intact, ensuring continuity and high standards in managing the nuclear programme. As competition develops, there will be a developing market for the skills of those who know about electricity generation. Those are the facts about privatisation.
I should now like to deal with a few of the myths that the hon. Member for Kingston upon Hull, East seems to spend most of his time pursuing. The first of these myths is that privatisation will increase prices. That is not the

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case. My proposals will introduce competition, which will put pressure on costs. The Opposition seem to think that competition is impossible. They argue that the customer is best served by a monopoly. I find that surprising. It is not what their spokesman said last October, when he claimed to understand the theory that a monopoly was
"more inefficient, takes more profit and exploits by charging higher prices."
He also said:
"The industry is also not consumer-sensitive."
That followed his statement that
"The concentration of power in one huge corporation is a questionable aspect."—[Official Report, 21 October 1987; Vol. 120, c. 816.]
The hon. Gentleman now appears to remember that his party has always believed in nationalised monopolies. He has therefore changed his ground.
The industry is facing a substantial investment programme. For years it has had surplus capacity. It has not had to order power stations. Those days are over. Demand is growing. More than 70 per cent. of the CEGB's plant is 15 years old, or more. The CEGB forecasts the need for 13 GW of new capacity by the end of the century — equivalent to about 10 large power stations. Inevitably, that will have an impact on prices. That is why it is important to introduce competition into the industry.
We need competition to make sure that the stations are built efficiently, to time and to cost. If the hon. Member for Kingston upon Hull, East is really concerned about prices, he should argue for competition, which is what I think he believes in, rather than monopolies, for which the unions tell him he must argue.
Another myth about privatisation is that the Government have abandoned the coal industry. That is nonsense. Last year the CEGB spent almost £3,500 million on coal. It bought about 75 million tonnes of coal from British Coal and accounted for three quarters of British Coal's sales to the United Kingdom market. Coal is the major source of fuel for our power stations and will remain so for years to come. About 60 per cent.of our electricity last year came from just a dozen coal-fired power stations. In total, about three quarters of our electricity comes from coal. The existence of those stations provides a solid guarantee of a market for coal.
The Government's commitment to the future of British Coal is not in doubt. More than £6 billion has been invested by the taxpayer since we took office, and about £2 million of taxpayers' money each working day is still being invested to make British Coal a modern industry. Those plans stretch through for the next three years.
The miners can help to make it a modern, competitive industry. They know that strikes and stoppages cost jobs. My hon. Friend the Under-Secretary of State for Energy said earlier that the loss from the recent overtime ban was about £100 million, the same as the likely investment in Margam—a brand new pit offering 800 new jobs. If British Coal can invest in new pits and adopt modern working practices, it can become a competitive supplier.
The Labour party talks continuously as though British Coal is a no-hope industry. It makes it sound as though the House is being invited to breathe life into a corpse—a most unrewarding occupation. We do not accept that view of British Coal. We believe that if the Labour party worked with us, by encouraging modern working practices to go with modern investment, British Coal
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would have a secure future. I have listened to what Mr. Scargill had to say this morning, and I have to tell the House that I believe he has learnt nothing from his recent experiences and that he has nothing that he really wishes to talk to British Coal about. What he looks forward to is finding yet another excuse for holding yet another ballot about more industrial action. It makes one wonder whether, with friends like Mr. Scargill, the coal industry needs any enemies.
Mr. Alex Salmond: If the Secretary of State is so concerned about the future of British Coal, why is he not prepared to provide a guaranteed market for coal in the same way as he is prepared to provide a guaranteed market to the nuclear industry?
Mr. Parkinson: A proportion of our electricity will be supplied from nuclear power stations, but I have just told the House that three and a half times that amount will continue to be supplied by the coal industry. Three quarters of our electricity will come from coal-fired power stations, way into the future. The amount of electricity supplied by nuclear power stations will remain fairly constant. Whether it is British coal that is used is in the hands of the British miner and British Coal. It is not in the hands of the Government. We are doing our bit, and it is about time that Opposition Members did theirs.
The Opposition have also complained about our policy on nuclear power, but our proposals are an insurance policy for the customer. There are no alternatives to electricity in many of its uses, so security of supply is important. If the Opposition were really concerned about customers, they would realise the folly of relying only on finite fossil fuel resources to generate all our electricity. It takes a long time to build power stations. We cannot wait until the next jump in fossil fuel prices and then decide to build nuclear power stations or large-scale projects for the use of renewable resources. We need diversity if we are to have a secure energy supply.
Our commitment to nuclear power is only one part of that strategy. The obligation that will be placed on the distribution companies is not to ensure that the nuclear proportion grows—that will be up to the market. It is simply to ensure that nuclear or other non-fossil fuels continue to form part of a balanced portfolio. That proportion will be roughly equal to present levels, and the nuclear programme will itself be subject to new competitive pressures.
Mr. Rhodri Morgan: Why cannot nuclear power stand on its own two feet?
Mr. Parkinson: The hon. Member for Cardiff, West (Mr. Morgan) asks why nuclear power cannot stand on its own two feet. It is doing so. It is British Coal that has not stood on its own two feet for years. Earlier this afternoon my hon. Friend the Parliamentary Under-Secretary mentioned the figure of £916 million in deficit grant in a single year. There is a big market for coal, but we need other fuels as well. All sensible people who think about energy recognise that. The 18 per cent. of our electricity that comes from nuclear power now should he maintained at about that level in the future. That is no threat to coal. It offers security of supply, as I have said over and over again.
The Opposition may claim that the privatised industry will cut corners on safety and environment, but there can

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be no question of that. Whether the industry is in the public or the private sector, it will still have to meet the same safety and environmental standards. I am sure that the hon. Member for Kingston upon Hull, East has not forgotten that Chernobyl was a state-owned power station. Private ownership will not lower the standards that the industry has to meet.
Opposition Members will go on believing in their myths, because they still believe that public ownership is necessary to provide a public service. However, 3 million new shareholders and more than 1 million new freeholders say that they are wrong. I expect many more new shareholders when the industry is privatised, and I expect many of them to be members of trade unions. The industry will then be properly accountable to the public. I expect more of the employees to take up shares. They will then have a real stake in their performance and in the future of their companies. The industry will be free to raise finance in the private sector, and its investment plans will be subject to commercial tests.
Public ownership means state control. It means monopoly. Privatisation will be of benefit by itself, and this will be the biggest privatisation of them all. In England and Wales it will create 15 new private sector companies, with more than 130,000 employees and a combined income of more than £10,000 million. In Scotland, it will create two new companies, with more than 15,000 employees, and an income of 1,200 million. There will be competition and choice. There will be a new force for deployment in the regions. There will be new, wider share ownership. There will be individual initiative, where there was state-controlled monopoly. There will be new rights for customers. There will be new opportunities for employees. There will be a better deal for the taxpayer, and for Britain.
5.33 pm
Mr. John Prescott: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
'rejects the White Papers Cm. 322 and 327 which seek, in the name of a doctrinaire concept of competition, to dismantle a successful publicly-owned and integrated system of electricity supply which has produced a reliable and efficient supply of electricity at a price amongst the lowest of any developed economy; which will create a series of lightly regulated private monopolies and a less secure system, producing high profits for shareholders and high prices for consumers; which will have detrimental consequences for employment in the coal, power plant and other dependent industries; and which ignore the crucial strategic importance of a long-term integrated energy policy, aimed at sensible utilisation of the country's various indigenous fuel resources.'.
The Secretary of State's speech really proved the first criticism that I made of the White Paper—that it was a triumph of ideology over common sense. It was thin on detail, and it told us little about how the right hon. Gentleman's proposals were to be achieved. The White Paper is a statement of intent, a fraudulent prospectus high on promises and low on detail. It is a statement of blind faith that competition equals efficiency and is always beneficial to the consumer, which a good deal of evidence shows not to be so.
This is an unjustifiable, reckless experiment with a very successful public utility. It makes no attempt, as the White Paper makes no attempt, to justify the Government's aim to break up the electricity supply industry, and to replace the present certainty of supply with greater instability and uncertainty in this most important provision.
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The White Paper is full of contradictions. For instance, it suggests that it is possible to abolish the present structure, but retain the advantages that that structure has provided over the past 30 years. The Secretary of State has made clear, in both his speech and the White Paper, that the electricity supply industry has a successful record; he has not gone on to explain why he believes that it has failed the country. That should be the first step in any White Paper.
The White Paper is bereft of detail. It smacks of haste and a lack of thought. I do not know whether the Secretary of State has chosen to read the report of the Plowden committee on the electricity supply industry in 1976. He nods; he will therefore know the difference between the quality and quantity of the analysis engaged in by the Plowden committee, and that of the shabby report that he has presented to the House. The Plowden report at least attempted to examine the different options that are available if the electricity supply industry is to he broken up. The Secretary of State has said that Plowden got it wrong, but at least it is possible to look at the reasons that he gave in the report's recommendations.
The White Paper contains no such substance or detail. It presents no alternative strategies. It is not a real White Paper; it is purely the kind of propaganda that we have learnt to expect from the present Government, masked as a White Paper. It has no contribution to make on the important and radical change that is being proposed—for I fully agree that it is a radical change. That is why it is all the more important that the Government try to justify giving up what we know to be a successful way of supplying electricity.
Mr. John Redwood: If the CEGB and the current industry are so successful, why are they being so slow to bring forward combined heat and power, combined cycle gas turbines and reuse of redundant power stations, which could be so much better at generating cheap power at little fossil fuel cost? Does the hon. Gentleman agree that the private sector might do that job rather better?
Mr. Prescott: The hon. Gentleman has proved that he should wait to hear my criticism before he rises to speak. I shall come to that point later in my speech. I appreciate that he may not know what I am going to say.
The Secretary of State has referred to a point that I made in my speech on the Public Utility Transfers and Water Charges Bill. I made it clear then that ours is the most integrated and secure electricity supply industry in any developed economy. It has not only achieved but exceeded all the profit targets that Parliament gave it. It has trebled its productivity in 30 years and, in the last 50 years, has increased prices by a factor of nine—a sixth of the increase in fuel costs and half that in the cost of living. Can any other private or public industry claim that record? I shall sit down if any hon. Member can cite one.
Mr. Redwood: The private sector computer industry could more than match that record.
Mr. Prescott: That is only over a period of five, six or 10 years during which it has been in existence. I am talking about 50 years of success by a public industry.
The fairest thing would be to compare the industry with other electricity supply industries in the rest of the world. An analysis has been done by the Electricity Council,

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which shows that on prices alone Britain is producing one of the cheapest forms of electricity when compared with the 20 developed countries in the OECD. That is a considerable record.
In the Sunday press, the Secretary of State is quoted as saying that his plans for electricity will cut bills. It does not say that in the article. Is the Secretary of State predicting that his plans will improve the record of the industry? Will they do better than make us the sixth cheapest electricity supplier in the OECD? Will he do better than that? Will he cut the bills?
Mr. Parkinson: I am grateful to the hon. Gentleman for proving that even after our price increases British electricity will remain competitive. He has spent the past few months saying that that is not the case.
Mr. Prescott: I shall deal with the price increases shortly. However, will the Secretary of State predict that the prices will come down as a result of the changes announced in the White Paper?
Mr. Parkinson: I spent quite a bit of time in my speech pointing out that competition will put pressure on costs, which will force prices down. Therefore, prices will be lower in the private sector than in the public sector.
Mr. Prescott: That is another example of a statement of faith. We are asking the electorate to accept the Secretary of State's belief that competitive forces will do better than the proven record of the past 30 years which, as I have said, has made us the sixth cheapest electricity supplier in the OECD.
We should bear in mind that the industry has carried the burden of the Treasury putting its hand in the till over the past few years. The Treasury has taken £2 billion from the industry in the external financing limits. It has now calculated that it will take another £1 billion in next year's accounts. Therefore, £3 billion will have been taken since the Tories took office, and that will have been financed out of the present price structure. The industry has had considerable money taken away from it by the Tory Government, but still it has a considerable price record.
I pray in aid the work of the Monopolies and Mergers Commission, which was set up by the Government. It looked into the operation of the electricity industry and examined transmission and generation. It has made legitimate criticisms, but, in the main, it said that the industry had operated in the best interests of the country. That is a good argument to put for the retention of a publicly owned electricity supply industry.
Of course, there are criticisms of the industry. The Labour party does not stand for the status quo. We want a change and we want improvements. However, we believe that a public sector electricity industry does the job far better than the private sector could, and the record shows that. I shall list some of the criticisms. The generation side of the industry is too powerful. I have suspicions of power when it is concentrated in that form, whether in public or private ownership. The industry has been obsessed with nuclear power and has had too little to do with combined heat and power schemes. It is not sensitive enough to consumer demands and it needs tighter control in the construction of nuclear plants—which, by the way, is done by the private sector—and in its demand forecasts.
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The industry has shown insufficient consideration for conservation and the environment. Nevertheless, it is still one of the most successful electricity supply industries of the developed economies. It has a proven record as a public industry and utility. That is why I restate the Labour party's commitment to retaining such an industry in public control and ownership. It has been of direct benefit to the country, to consumers and to industry. It is worthy of the title of a successful publicly-owned industry.
Our criticism of the White Paper is that it has a confused logic and blind faith. That is shown in the six principles set out on the first page. It says:
"Competition is the best guarantee of the consumers' interests."
That is precisely what the Secretary of State keeps saying.
The right hon. Gentleman made it clear at Question Time today that when he says "consumer" we should read "distribution boards." The distribution boards will receive the advantages of the reduced costs, in which he so blindly believes. How can the Secretary of State be sure that the distribution boards will pass on those advantages—if they take place—to the consumer? It will not be by the operation of supply and demand, but by a regulator; somebody who will intervene in the market. The Secretary of State has discovered that it will be a monopoly, and I am glad that he has discovered that. I happen to believe that this monopoly has worked in our interest by producing electricity more cheaply. That is contained in the report of the Monopolies and Mergers Commission. The assumption must not be that monopoly industries cannot achieve economies of scale. One of the advantages is that current prices have been achieved through economies of scale. That is one of the comparisons between the private and public sectors. One must ask whether it is necessary to have that sort of structure in order to achieve those benefits.
It is clear that we are talking about regulation. The Secretary of State seems to be suggesting that by breaking up the CEGB into a big part and a little part—70 per cent. and 30 per cent.—with some piddling little bits on the side, the two parts will be competitive. There are many examples of two or three big companies getting together with all the characteristics of a monopoly. They agree prices. Why does the Secretary of State think that there would be competition? He said that it will be because of contracts between them. All the evidence we have seen from abroad shows that contracts are usually negotiated over long periods of time. Nobody will invest in generation unless a contract is guaranteed. All private and public utilities in the United States want guarantees of long-term supply. It is called a market condition of supply.
Mr. Parkinson: The hon. Gentleman has been carved up by the Leader and deputy leader of the Opposition. Therefore, I can well understand why the hon. Gentleman firmly believes in collusive duopolies. However, we will not have a collusive duopoly in the electricity industry.
Mr. Prescott: The Secretary of State has a justifiable reputation for cheap and nasty comments. I wish he would address himself to the argument. I may have it wrong; he may have it wrong. We are debating the White Paper and a difference of view about the operation of an industry and the experience we have seen in other parts of the world. The Secretary of State has totally failed to take that experience into account in the White Paper. Before arriving at his conclusions, he should have seen how

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privatised electricity industries operate in other parts of the world. If he had done that he might not have had to say, as he did at the beginning of his speech, that a lot more detail has to be faced yet and that there is a lot more to he worked out. Apparently, the Secretary of State arrives at his conclusions without thinking of the details and without looking at other experiences.
Mr. Quentin Davies: Will the hon. Gentleman give way?
Mr. Prescott: I will not give way because I do not have much time.
Mr. Davies rose—
Mr. Prescott: Sit down. The Secretary of State faced the same problem. We have to achieve a balance as to how many people we allow to intervene. Many people want to contribute to the debate. We were asked by Mr. Speaker to try to cut the length of speeches. That is the problem.
Consumers of the regional distribution boards will not have two switches. As the Secretary of State said, they are natural monopolies. He said in the White Paper that the privatised electricity industry will be a consumer-driven organisation. Presumably, the consumer cannot choose between different switches in order to make a choice between electricity hoard A and electricity board B. Therefore, the consumer has to depend on the distributors, in one form or another, passing on any advantage that the Secretary of State's competitive model—that is what he calls it — has achieved. Any advantages in generation will be passed on to the distributors.
How can we be sure that those advantages will be passed on? The Secretary of State said that it would be done by the regulator. Presumably, many of the distribution companies will begin their own generation. Why should they not begin to emulate what has happened in Scotland where they are both generators and distributors? Will they not then become regional monopolies of generation and distribution? The Secretary of State is shaking his head. It does not mention that in the White Paper. Perhaps that is something else that he is thinking about, but about which he has not told us. That shows the difference between the Plowden approach and the shabby White Paper of the Secretary of State.
We are talking about the possibility of the market producing a regional monopoly in generation and distribution. Presumably, even if the regulator wants to intervene, he will have to take account of the fact that the regional boards may have diversified into other investment interests. Those boards will not necessarily remain involved in the production of electricity. The market logic is to diversify. How will the regulator begin to find out how to deal with the cross-subsidisation in a joint company? There is no mention of that in the White Paper. There may be gold-plating of the assets, as happens in America, instead of the advantage being passed on to the consumer. There may he an answer to these points, but they were not even addressed as a problem by the Secretary of State. The board would be the link between the saving on the generator and the consumer, yet the distributor, in desiring to maximise profit, could do all sorts of other things in the private market system. The regulator would have no control over that. There are many questions involved, including the problem of cross-subsidisation.
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The White Paper states that the obligation to supply is to be given to 12 distribution companies. We have an excellent integrated national grid, as the Secretary of State has said, and no one disputes it. Spain is the only country whose national grid is owned by the distributors, and no one is experimenting with that way forward. Because power stations in Britain are owned by the generators, they can be directed, in order of merit, to come on line. The proposal is that contracts will be negotiated and within the terms of those contracts the generators can be brought on line.
In view of the dispute on COAC contracts in Scotland, would anyone believe that was one way of bringing greater security into a grid contract system? What happens if there is an emergency resulting in a blackout and some generators do not comply with their contracts? That happened in a blackout in New York because the contractors supplying the power did not co-operate. Presumably, if that happens here, it will be a point of issue between the generating board or company and the network. That will become sub judice, so hon. Members will not be able to discuss it. What a prospect to face! We have an integrated national network based on merit and efficiency but now contracts are to be introduced. Even if people believe that the new system is good, they must accept that it introduces uncertainty into a system in which certainty is needed. Under the present publicly-owned system, certainty is guaranteed. Competition by contract will bring about greater uncertainty on essential conditions of the market.
The Secretary of State has said in his statements that it will cost quite a lot to break the national grid away from the generators. The people who now operate it say that it will cost £1 billion. I do not know what the costs are, although they have been highlighted in a number of board statements. Presumably, the Secretary of State has accepted that it will cost something, but he says that it will be balanced against the savings which will he made in the industry. We know that it will certainly have a cost in money and uncertainty.
There was no mention in the White Paper or in the statements of the Secretary of State of the savings likely to come from the new system. The logic of the argument is that we cannot tell what those savings are because the market economy determines them. That is supply and demand. The Secretary of State assumes that savings arc guaranteed. I do not accept that or believe that there is a great deal of evidence to support it. There will be greater uncertainty.
Who will manage all the areas and make the system better? How will the Government ensure that the public interest is observed? Apparently the answer is to have some form of regulator. We know that a regulator is required in all privatised systems in order to intervene, but this approach has not been successful in some industries and countries. There are doubts about the system, with its many side effects, in America. There is no one who would argue that the examples of regulators for British Gas and British Telecom are good examples — indeed, the Secretary of State distances himself from that method and calls for a more powerful form of regulation. I should be interested to hear the right hon. Gentleman's comments on that. The Secretary of State will face considerable difficulties, as we know from experiences abroad and from British Gas and British Telecom.

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I had hoped that the Secretary of State would tell us about the extra powers for the regulator. I believe that, even with a publicly-owned facility, there is a role for the regulator to act on the consumer's behalf, to intervene and call on people to justify their actions. That is nothing to do with ownership as such. It is about accountability in one form or another. Although I pay credit to the excellent work of the Select Committee on Energy, its efforts are not sufficient to provide the necessary accountability in the day-to-day running of an industry. In its report on the gas industry, the Energy Committee said that it did not accept the formula for the price controls imposed by the regulator in the gas industry. It appears that the Committee was right. Anyone can read of the factors. The Secretary of State has ignored the fact that the Committee asked for a White Paper, but one that would tell us how the energy market would be dealt with in regulations before any further privatisation. The Committee wanted to know how the regulator would operate. The Secretary of State has totally ignored that request. There is no mention of it in the White Paper. He ignored that justifiable recommendation by a Committee, the observations of which in these matters have been far more useful than the Government's.
The regulator's role is a problem, and I draw in support of that comment a statement from a meeting on 29 February of the Bow Group energy committee, which the Parliamentary Under-Secretary of State for Energy attended. After the White Paper was published, the hon. Gentleman reported that he was concerned about the safety of nuclear installations, about consumers having to fund the massive industrial investment through price rises, about the effects on the coal industry and about whether private sector competition would be encouraged to enter the market. I liked his statement that he was concerned about
"how the new regulators can sort this out".
The hon. Gentleman asked for comments to be sent to him, since he has to publish a paper on the subject.
Mr. Peter Rost: Will the hon. Gentleman give way?
Mr. Prescott: I shall give way to the hon. Gentleman, because he was present at that meeting
Mr. Rost: In fact, I chaired that meeting. I am not clear where those supposed minutes came from. They certainly have not been approved by me yet and, from what I have heard of the hon. Gentleman's presentation of them, that is a gross misrepresentation of what took place.
Mr. Prescott: I shall accept from the hon. Member who chaired the meeting of the Bow Group energy committee that this is a gross misrepresentation of what went on. There is nothing in the statements of the Secretary of State or the answers of the Under-Secretary of State during Question Time that gives us an inkling that they understand what a regulator has to do. If my information from the meeting is wrong, I shall give the Secretary of State and the Under-Secretary of State a chance to show that they know precisely how the regulator will work in respect of the critical matters of price and control.
Mr. Parkinson: I made it clear in my speech that we were debating the structure. I then said that there was an enormous amount of detailed work to do. I said that we
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looked forward to the views of the Select Committee on Energy. There is no secret about this matter. I have discussed it with the unions and the management. I explained the outline of our regulation policy in the White Paper and in my remarks today. There is much detailed work to be done now that the structure is out in the open.
Mr. Prescott: That rather confirms my view about the operation of the regulator. That aspect is critical to the question whether the Government can get the kind of competitive industry about which the Secretary of State talks. This system has not worked before for British Gas and British Telecom. It is not working successfully in America. The Secretary of State is merely confirming the report of the Bow Group energy committee—that if anyone has any ideas, they should be sent to him and his Minister. At least that point must be correct, because the right hon. Gentleman has confirmed it. This confirms that the Secretary of State speaks about the ideology but does not know how it is to be achieved. That is all that the White Paper has presented to us.
Mr. Morgan: This is not so much a White Paper as a suggestions box in which everyone may put ideas.
Mr. Prescott: That is a very good point. It is a pity that the Government did not have the suggestion box out before. They could have taken account of the sound advice that was available before they reached these conclusions. But I do not think that that has anything to do with it. The Secretary of State told the Tory party conference that this is what the people would get. The members at that conference gave him a cheer, and it was a triumph again for him. Frankly, I presume that we are faced with the consequences. We all know the importance of this change. The Prime Minister came in at statement time to hold the hand of the Secretary of State. She must be convinced that the right hon. Gentleman is OK, as he is on his own tonight.
It is a bit rich for the Secretary of State to say that he wants to privatise the industry to stop Government interference because they are for ever pinching money from the electricity supply industry to fund their financial programmes — £3 billion during the past four to six years. The Secretary of State has said, "Please protect me from putting my hand in the till." If that is why we have this White Paper, it is not a justifiable reason.
The Secretary of State also referred to his opposition to Government interference. But he is imposing a 15 per cent. price increase on the industry against all the judgments about whether such an increase is necessary. He has also referred to regulated profits, and whether they will be fair, and to future investment programmes. The Secretary of State did not say anything about the golden share. We heard in the statement a fortnight ago that there will be a golden share in the industry. If there is, I hope that it will be more effective than that of Britoil's which the Secretary of State admitted did not work. The Secretary of State is interfering in nuclear power. He has agreed that strategically we want a nuclear industry and that the electricity supply industry will be forced to buy some nuclear supply. That is considerable Government interference. It is agreed that the Government constantly interfere in oil taxation policies and in cheap gas imports from Norway. Therefore, to assume that there is no Government interference, whether the industry is in the old or new form, is nonsense.

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The only rule of the market will be for the coal industry, which will have to face massive imports and which will be encouraged to do that. Indeed, we can see what is happening in Scotland at present. That is the only area in which the Secretary of State says that we can make savings of about £500 million—[Interruption.] No, I acquit the Secretary of State of that; he does not give us such details. The industry has assessed that it can save £500 million or £700 million costs. What will be the effect on the balance of payments and on prices? Is the future of the coal industry to be determined on the short-run effects of international coal prices? That seems to be the coal industry's future. That will have an effect on many thousands of miners, on pit closures, and on the railways and shipping industries. It has been estimated that it will affect about 100,000 jobs.
I wish that the Secretary of State had given us an indication of what he thinks the effects will be on jobs, instead of lecturing us about how to work harder, especially those in the mining industry, which produces the cheapest deep mine coal in Europe, when he knows that its record in the past few years has shown a considerable changeabout—[Interruption.] For whatever reason, the changeabout has been considerable. We cannot assume that it is just the status quo because there have been considerable changes.
The Secretary of State should he telling us what the coal industry's future is—there must be a future for the coal industry — instead of saying that its future will be determined by price, the results of that, limitations on the balance of payments and imports. Why does the Secretary of State not say, "I am going to ensure a future for nuclear power, so I shall ensure one for coal; I shall develop a plan for coal just as I have for nuclear"? That is precisely what he is doing, but for one reason or another—for the Government's own political prejudices—he wants to sort out the miners, and that will have consequences for their jobs and major costs to the community and the taxpayer.
If the Secretary of State reads his White Paper, he will see that most of the benefits that he claims will be the result of the structural changes could come about whether the industry is owned publicly or privately. The grid could be separated under public ownership. The CEGB could be broken up into the forms that the Secretary of State is talking about with the industry still in public ownership. There could be the competitive yardstick that the Secretary of State says replaces competition; there could be consumer benefits and regulated powers — all under public ownership. More powers could be given to the regulators in line with the Monopolies and Mergers Commission—again, under public ownership.
The reality is that the only difference under the changes in the White Paper is that the Goverment need to sell the industry to get the money. That is an ideological requirement, which has nothing to do with efficiency or the consumer. It is about maximising money for the Treasury so that it can utilise it for tax cuts. If one considers the fattening-up prices—the 15 per cent. price increase — which the CBI has rejected in its Oxford report — [Interruption.] When the Secretary of State argues the case of short-run costs and long-run costs, he should look in detail—
Mr. Quentin Davies: Will the hon. Gentleman give way?
Mr. Prescott: No; I do not have the time.
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The Secretary of State should look in detail at the report. As an accountant, he will see that it makes clear that that price increase is not necessary to justify investment or to increase the rate of return—it increases the value of the assets. By running off capital debts so that the industry is free from capital debt by the end of the decade, the Secretary of State is guaranteeing the maximisation of resources and prices for the selling off of the electricity industry. This is what it is all about — maximising the price to the Government.
When the Secretary of State, at Question Time, said, "The hon. Gentleman" — that is, myself—"apparently realises that money goes to the Treasury and therefore to the benefit of the taxpayers," he missed out two essential points. First, money may go to the Treasury, but, if it is used for tax cuts, it is hardly of benefit to all the people of this country. Secondly, all the people will pay that price because they all pay for electricity. The consumer will pay a privatisation tax for a benefit that will be given to the City, the Treasury and the 3 million shareholders he hopes will invest in the industry. However, there are already over 40 million shareholders in the industry at present, when it is in public ownership, and they are concerned to maintain cheap electricity supplies.
We are faced with an electricity supply industry that, when privatised, requires higher profits and higher finances to attract investment and equity. It is a price far higher than the public sector has to provide because a low-risk industry can provide all the investment and produce lower prices at about half the level of the rate of return, which apparently is 2·5 per cent. at present. The only reason that we are increasing that rate of return—it is why a Labour Government recommended it and increased the rate of return—is primarily to get money for long-term investment. However, as has been pointed out, the Electricity Council, in its report for the industry, says tat all the extra prices that came from those changes in the Labour Government's White Paper are already embodied in the price structure, and investment requirements up to the year 2000, under the Electricity Council, have been catered for.
Therefore, the only reason for these resources is to provide cash for the Treasury. All the organisational changes that the Secretary of State talks about— the benefits to the consumer and the competition that is to come from a regulated monopoly system—are a sham. There is no advantage to the consumer. This measure will not introduce competition into the industry in the form in which the Secretary of State desires it. It will result in greater uncertainty of supply, less integration, higher prices, higher profits, and higher unemployment. The public sector has done far better than that. We shall ensure that the industry is returned to public control if the Secretary of State is successful in privatising it.
6.6 pm
Mr. Mick Buchanan-Smith: The hon. Member for Kingston upon Hull, East (Mr. Prescott) accused my right hon. Friend the Secretary of State of indulging in rhetoric, but having listened to the hon. Gentleman I should say that I have rarely listened to so much empty rhetoric as in the past half hour. It was rhetoric without content. I might have a little more respect for the hon. Gentleman if he had addressed the right questions. My right hon. Friend never criticised the record or achievements of the CEGB. What he is seeking to do,

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and what all of us are seeking to do, is to make the industry even more successful in the future than it has been in the past.
It is a bit rich for the hon. Gentleman to accuse the Conservative party and a Conservative Chancellor of the Exchequer of taking money out of the industry in higher prices. Does he not remember that probably the most predatory Chancellor of the Exchequer in regard to the energy industry was his right hon. Friend the Member for Leeds, East (Mr. Healey), because when he was Chancellor of the Exchequer we saw one of the biggest energy price rises at any one time? The hon. Gentleman would have done better to do his research a little more thoroughly than to come up with such arguments.
I strongly support the privatisation of the electricity industry, specifically on the grounds that the hon. Member for Kingston upon Hull, East rejected—the grounds of interference by Government. I served for four years in the Department of Energy. Before entering that Department, which was my first departmental experience of a nationalised industry, I would not have believed the degree of interference with the industry, not only through the Department itself, but through the Treasury and its oversight. Sometimes it made me wonder how anybody with any commercial ability would ever want to serve in high executive office in such industries, given the degree of interference that he would experience.
Having said that I support the privatisation of this important industry, I believe it is critical that we get the privatisation process right. This is important for the Government's policies as a whole—for the policies that we have carried through already, and for the future. It is no use simply legislating now and regretting later if the practicalities of the privatisation do not work out in the way in which many of us would like.
I am glad to note that my right hon. and learned Friend the Secretary of State for Scotland is present. I believe that the structure plan that he has proposed for Scotland is good. It makes sense and it is extremely welcome to my area and the area served by the North of Scotland hydroelectric board. I hope that the discussions on items still to be decided upon will be carried through vigorously. There is still work to be done on the exchange of generating capacity. Will there be an exchange of territory to try to get a better balance between the two boards? Assurances are also necessary with regard to how — as a result of contracts or otherwise — we will maximise export opportunities for Scottish-generated electricity south of the border.
Mr. Hardy rose—
Mr. Lofthouse rose—
Mr. Buchanan-Smith: I shall not give way, because I wish to be brief as many hon. Members wish to speak.
As a result of examining the issues involved, I am well aware of the difficult questions that my right hon. Friend has had to address with regard to England and Wales. I understand that my right hon. Friend must comply with a fairly tight flotation timetable. Given the split that he is seeking within the CEGB, and between the CEGB and the grid, I wonder whether there will be sufficient time for the track record of the new companies to be established to meet the flotation timetable, which I believe my right hon.
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Friend has set for this Parliament. If the timetable extends beyond this Parliament, I hope that my right hon. Friend will inform us of that when he replies.
I have reservations about the merits of the split of the CEGB and about ownership of the grid. My right hon. Friend was right to pay a lot of attention to the need for competition, but the House must ask whether the competition that is to be introduced will be real or illusory. We must be certain about that. I believe that the only true competition is from Scotland, from France and from other energies, especially gas. My right hon. Friend has acknowledged that.
I acknowledge and understand the political attraction of breaking up the CEGB. However, I believe that it is questionable whether there can be real competition in the generating sector of the industry. For there to be competition there must be surplus capacity. Without that, I do not believe that competition can exist. My right hon. Friend has acknowledged that at present there is no surplus capacity within the CEGB. I believe that there will be no true competition until the least efficient capacity has been phased out and new investment has taken place.
I cannot quite understand, nor has my right hon. Friend explained, how the proposed split at 70:30 has been arrived at. I believe that as a result of such a split certain economies of scale and the attendant benefits to the consumer will be lost. I also question whether the 70 per cent. share left with the CEGB will be big enough to attract the investment that is needed, especially for nuclear power and for the new conventional capacity required. I believe that there is an alternative to that split. My right hon. Friend has said that the evolutionary process is the right one, and I believe that there is a certain evolutionary process that would enable competition to build the new, necessary generation capacity. Such competition could be introduced on the basis of giving opportunity to those who can build new statons most economically and, equally, by encouraging better access to the grid.
I do not undertstand what is achieved by the grid structure proposed by my right hon. Friend. We must realise that, basically, the grid is a utility. Simply to split it does not necessarily achieve the sorts of things that my right hon. Friend has claimed. We must also realise that the grid is not just about transferring megawatts from one part of the country to another. The transmission system is basically unstable because of the nature of electricity, that is, alternating current and voltage. The transmission system is not simply a matter of transferring power. Voltage and frequency must also be kept within acceptable limits to ensure the continued integrity of the supply. Therefore, the system is much more difficult and complex than the simple operation of a merit order system as proposed by my right hon. Friend.
I am concerned that, under the structure proposed by my right hon. Friend, there could be conflicts, inefficiency and also, of critical importance, instability of supply. I agree that there must be access to the grid, but I believe that it is unnecessary to separate the grid from the generating end of the industry to achieve that access. I believe that my right hon. Friend may pay too high a price to achieve it. Access to the grid can be better insured through the use of the regulator, or as a result of the shared ownership of the grid under integrated managment from the generating side. That alternative commends itself to me.

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I know that many hon. Members wish to participate in this debate, and the final subject to which I wish to address my remarks is coal. I believe that coal is of equal importance to this debate. A week ago, when my right hon. Friend made his statement on privatisation, my hon. Friend the Member for Sherwood (Mr. Stewart) asked about coal, and I believe that its importance is highlighted by the current dispute in Scotland.
In the White Paper my right hon. Friend has singled out nuclear power as requiring special circumstances and considerations. I do not understand why coal has not been singled out to receive similar attention. My right hon. Friend paid tribute to the need for the security of supply and the variety of supply, the merits of which are underlined in the White Paper, particularly in paragraph 46. He was correct to underline those considerations.
We had an analogous situation — not an exact parallel—with the privatisation of British Gas and the import and export of gas. Hon. Members who served on the Committee on that Bill will remember that the Government, as a result of pressure, gave undertakings about the considerations that they would apply to the import and export of gas because it was a natural resource that required such special consideration.
I accept that British Coal must be competitive against imported coal, but the enormous progress that has been made by British Coal must also be considered. In Scotland I am concerned by the somewhat hysterical, emotional outbursts from one individual head of a nationalised board. In such instances, I wonder whether the long-term considerations are taken into account. I believe that it is dangerous to set short-term profit against long-term stability and predictability.
Some facts must be borne in mind. About 4 per cent. of the total steam coal production in the world is seaborne. If the CEGB or its successor enters the world market, it may destabilise that market, which is relatively small in relation to its requirements. Equally, prices on the world market are highly volatile and they follow oil prices.
Mr. Neil Hamilton rose—
Mr. Buchanan-Smith: I would rather not give way at this stage.
The spot availability of coal is uncertain. Examples of that are the current shipping problems from China and the problems in Colombia, one of the major sources in the world market, which appears to have oversold.
The most important matter from the national point of view is that once a deep mine is closed it will not reopen. That worries me, because we risk the loss of an indigenous energy source and, in the longer term, the higher cost in foreign exchange of having to import coal.
I ask my right hon. Friend the Secretary of State to reconsider this before he brings legislation before the House. I was encouraged by the statements that emanated from the Scottish Office at the weekend to believe that more interest is being taken by Ministers in the present position, and I hope that recognition will be given to the longer term as well. I wish my right hon. and learned Friend the Secretary of State for Scotland well in trying to preserve the position in Scotland, and I hope we can ensure that our indigenous energy resources play a proper and full role in the future.
6.20 pm
Mr. Bruce Milian: The right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith) started by giving a general welcome to the Government's proposals, but it was a pretty tepid welcome by the end of his speech. Almost everything that he said contained either explicit or implicit criticism of the Government's proposals. The Opposition welcome his remarks about the future and importance of the coal industry, especially in relation to the present crisis in Scotland.
I shall relate my remarks exclusively to Scotland. Last week, the Secretary of State for Energy gave no convincing argument for upsetting the present arrangements and introducing privatisation, but we were at least promised two companies in Scotland. In view of the behaviour of the South of Scotland electricity board during the past few weeks, I am happy that there will be more than one company in Scotland. I would not trust the present SSEB and its leadership with anything.
But we have heard no details. There will be adjustments in generating capacity between the northern and southern companies. The right hon. Member for Kincardine and Deeside mentioned adjustments of geographical areas. That was not discussed in the White Paper, and we do not know whether it will form part of the Government's proposals. There was an odd proposal for the joint ownership of the nuclear industry in Scotland, but the implications of passing the nuclear industry into private hands have not been properly explained by the Government. Indeed, it may pass into foreign ownership, because we have heard nothing about the protection of the national interest.
We have heard completely unconvincing arguments about competition, and the new concept in Scotland of competition by comparison. The ordinary domestic consumer in Glasgow can compare the accounts of the two companies to see which is more efficient, but he will still have to take his electricity from the southern company because of where he lives. What will be the good of his having all that information—which, incidentally, he can obtain now?
Private generation in Scotland would be a non-starter because we have such an excess capacity. The argument that the major industrial users can choose between the two competing companies does not bear serious examination. In Scotland, we shall have an arrangement different from that south of the border. We shall have two private monopolies set up with little regard for the public interest and an undefined role for the regulator on prices and other matters.
The present problem of excess capacity in Scotland will be worsened when Torness comes on stream later this year. In 1978, when I was Secretary of State for Scotland, I gave permission in principle for the building of Torness, although the decision to go ahead with the construction was not made until April 1980 by the former Secretary of State for Scotland, now the Secretary of State for Defence. At that time, there was a good case for deferring its construction for several years, but I shall not make too much of that point, because I have always supported nuclear power as part of our generating capacity. Now that I am outside Government, I shall not change the views

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that I held then, although there are now more public worries about the nuclear generating industry, in the light of Chernobyl and other incidents.
The problem of excess generating capacity in a publicly owned system, with the possibility of selling excess capacity to England, is entirely different from the problems that will arise under these proposals, when we shall have to sell electricity not to the CEGB but to a distribution company south of the border. That will be much more complicated, and I believe that it forms part of the background to the recent extraordinary behaviour of the SSEB. When the industry is privately owned, it will be landed with the problem of excess generating capacity, which is not a problem now, given the fact that there is no excess capacity in England and Wales.
This afternoon, the Secretary of State for Energy had the impertinence to say that it was a myth that the privatisation proposals pose any dangers to the Scottish coal industry. In view of the present crisis in the industry, he would be lynched if he made such a statement at a public meeting in Scotland. Here we have two nationalised industries in a public dispute that has gone to the courts. The SSEB denies that it has received a tender offer from British Coal at the price which British Coal says it has tendered. British Coal accuses the SSEB of telling lies. Last week, Lord Prosser, granting an interdict to British Coal in relation to coal supplies for Longannet and Cockenzie, said that if the SSEB went ahead with its present intention to buy all its coal from abroad, it would be catastrophic and irreversible for the Scottish coal industry.
The chairman of the SSEB, Mr. Donald Miller, says that he will abide by the court decision—that is very generous of him—but that he will evade it as much as he can. Despite what the court has said, he will buy no more coal from British Coal. If necessary, he will use Kincardine power station to its full capacity, burning foreign coal. He will use the maximum amount of oil generating capacity. Indeed, he will do anything rather than use the produce of the Scottish coal industry.
The head of a nationalised industry in Scotland is behaving outrageously, and the Secretary of State for Scotland has stood by and done nothing about it. In this case, standing by is an act of deliberate treachery to the Scottish coal industry. We learn from statements made on Sunday that the Secretary of State is now worried about the matter. When he made his statement in the House last week, and during Scottish Question Time, he was pressed many times to take action to bring the two parties together, find out what was happening and do something to resolve their differences.
Mr. Dick Douglas: The Secretary of State for Scotland should wipe the smile off his face.
Mr. Millan: As my hon. Friend says, the Secretary of State is smiling.
There have been problems before between the SSEB and the coal industry. Difficulties arose in 1977 and the then Labour Government intervened. I was personally involved in negotiations with the SSEB and the National Coal Board in Scotland. The problem was resolved, and long-term agreements resulted from our negotiations and discussions. The contrast between those events and those that are taking place now is that the Secretary of State is standing back and saying that he cannot intervene in a
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commercial agreement between two nationalised boards. He has done nothing. He has made many excuses for doing nothing, and now we are told in a Scottish Office statement—we are supposed to admire him for this—that he is concerned about the demise of the Scottish coal industry. He has behaved abominably, and he should be ashamed of himself.
It is a lie to suggest that these issues have nothing to do with privatisation, that they would have arisen anyway. This is all to do with privatisation. The SSEB is adopting a tough attitude because it is anticipating privatisation under the Government's proposals. It is a scandal and an outrage that this should have been allowed to happen in Scotland. It is a foretaste of what we shall have in Scotland and the rest of the United Kingdom under the Government's privatisation proposals, and it is one of the reasons why we shall be voting against them tonight.
6.33 pm
Mr. John Hannam: First, I wish to congratulate my right hon. Friend the Secretary of State and the Department of Energy on producing a White Paper that is clear and understandable, and on getting absolutely right the proposals that are set out within it. Having been involved in energy matters since the early 1970s, I know of the problems that faced my right hon. Friend when he began to study the means of arriving at the declared 1987 general election commitment of a privatised electricity industry.
It is easy to say that we should privatise the industry and introduce competition but not so easy to implement that policy. My right hon. deserves admiration for producing the programme that is set out in the White Paper. It was obvious from the start that the various vested interests — the unions, the CEGB and the Electricity Council—would all have an axe to grind and would be advancing different arguments. It was important to find a method that achieved three basic objectives: first, to create competition; secondly, to protect consumer interests; thirdly, to maintain security and safety of supply.
For many years, the industry has been a huge monopoly involved in the generation and distribution of electricity with the national grid linking the Central Electricity Generating Board and the area boards. I have always believed that transmission and distribution form a natural monopoly because of the impracticability of laying competing cables under the streets of our cities and towns. The generation of electricity is not a natural monopoly. As it represents over 80 per cent. of the costs of electricity to consumers, it was vital to try to find ways of bringing true competition into this massive industry.
With the grid as the common carrier, it should always be possible to generate power in any one place in the United Kingdom and to sell it in any other place. It is obvious that the further that electricity is transmitted the greater the loss and the greater the cost. The 1983 legislation was intended to create opportunities for independent generators to supply through the grid. With the CEGB's restrictive policies of buying-in rates and conditions, and with it being limited by existing statutory tariff and supply requirements, very little progress has been made.
Alternative forms of energy have never been given a real chance. Major industries such as chemicals and oil refining, which already generate for their own needs, should be able to dispose of surpluses to neighbouring

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industries or towns. I welcome the decision to separate the grid and to put it truly into our distribution system with availability to it being open to a wide and new range of small and large generators of electricity.
The argument advanced that the use of the grid as a merit order system will offer better safeguards for the consumer is, I believe, wrong. There is no money or financial risk involved, and therefore no real competition. We find ourselves now with a system that is dependent on huge and expensive power stations that are buying high-cost fuel and using it less efficiently than anywhere else in Europe. These large stations sell only 31 per cent. of the energy that they burn. They waste the other 69 per cent. and deposit huge amounts of pollution throughout the countryside both here and abroad. The energy that is thrown away from our power stations is greater than the whole output of British Gas. The energy that is wasted would heat every home in Britain.
The cost emphasis on large power stations has meant that combined heat and power has not been developed in Britain, unlike other countries. Our most efficient station just about reaches 38 per cent. efficiency, whereas in Holland, Germany, Denmark, Sweden and Finland there are hundreds of stations reaching 80 per cent. efficiency through CHP and heating over 160 towns. Although we had 150 potential CHP schemes projected in about 50 towns, none was really promoted by the CEGB and we now have a bare five city schemes that are struggling for survival. There were more than 20 in 1981.
In the process of rigid large power station ordering, the wide variety of small and more flexible power generators were squeezed out. Since 1971, 146 power stations have been closed by the CEGB. Their size ranged from 30 MW to 400 MW. Their total capacity was about 20,000 MW, nearly double the replacement programme that we are talking about now. These power stations were replaced by the still uncompleted and not terribly successful AGR programme.
I am not saying that the CEGB has been grossly inefficient and has failed the country. It is the monopolistic structure that has failed the country, by not allowing greater diversity of supply. I believe that, given the constraints that are inherent in a huge nationalised industry, which itself is bound by the huge nationalised coal industry, the CEGB has performed well. To give credit where it is due, it has recently shown a more flexible approach to private generators. It is strange that this has happened shortly before privatisation. The House will recall all the new telephones that appeared shortly before British Telecom was privatised. Unfortunately, we did not create enough competition in that privatisation, and we failed similarly with the privatisation of British Gas. I am pleased to say that in the White Paper we are creating real generating competition, and that is certain to be good for the consumer.
Electricity energy is fast becoming an international commodity like oil and gas. The European electricity grid is developing fast as French nuclear surpluses build up. The Nordic grid has proved to be an efficient trading system, and now Britain will be providing competitive electricity. First, there will be a power pool for generating utilities — two Scottish, two English and 12 area companies. Secondly, there will be the entry of a host of
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industrial and CHP schemes, renovated coal stations, gas-turbine combined cycle generators, fluidised bed schemes and tidal, wind and other alternatives. Thirdly, we shall have competition from abroad.
I have mentioned the diverse methods that are available for the generation of electricity, and I must raise an important query for my right hon. Friend the Secretary of State to consider that is related to the unfair local rating discrimination that is applied to independent electricity producers. I met some of these producers last week arid I was given details of the various methods of producing cheap electricity that are now being submitted to area boards. Successful waste tip generators are in operation and they could provide substantial amounts of generated electricity for nearby towns. A Meriden firm has completed trials at a landfill site where a waste turbine that is fuelled by waste tip gas is capable of producing 3·7 MW of electricity, which would be enough for 5,000 homes, or a town the size of Warwick.
However, the CEGB as a national industry has a special formula rating which does not apply to private generators, with the result that they face rate bills three times as high as those of the rival CEGB stations. These producers urge that, after privatisation, power stations should be rated on the same basis as any other buildings or manufacturers. There should be parity across the generating industry, from Sizewell B at the top down to the 250 KW wind and water generators. I ask my right hon. Friend to take that on board, as it is vital that there sould be no impediments to the smaller alternative electricity producers.
My hon. Friend the Member for Erewash (Mr. Rost) and I have urged for years that this country could produce its electricity far more efficiently and cheaply if we had a system that encouraged a greater diversity of power generation. He and I have been involved in launching various small local CHP schemes in which the diesel or gas-powered engine provides heat and electricity for the hotel, leisure centre, swimming pool or factory, and sell the surplus back to the local grid. They operate at more than 90 per cent. energy efficiency.
On a larger scale, firms such as Hawker Siddeley are building, and can build within 18 months, 300 MW generators, producing much cheaper energy than the huge stations that we are used to. Coal, gas, diesel, wind and wave could all contribute to our future needs and help reduce our dependence on large stations.
We now face increases in electricity prices, which are needed not, as the Opposition say, to fatten the calf for privatisation, but to provide the capital for the generating investment that will be needed in the coming decade to replace older stations that are now coming to the end of their working lives; it will also be needed because of the increased capacity in our expanding economy. Whether that capacity comes from large stations or from a wide range of small and large generators, it will still have to be found. After a decade and a half of no ordering of new power stations, it was obvious that a higher return was needed to finance this building programme.
I should have preferred — I argued this at the time with my right hon. Friend—a three-year phasing in of the higher prices, especially as in the south-west we face a 12 per cent. hike of prices in April. That appears to be due to a larger than average reduction in prices in 1986–87 in the south-west, but even after the forthcoming increase we shall still be at a lower real price level than in 1985. Nevertheless, that sort of increase is a blow to an area with

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lower than average incomes and with more elderly people than elsewhere. I hope that the electricity board can be persuaded to achieve its target return on capital more equitably.
I raise now another problem with which I think my right hon. Friend should deal. Last year, during the Sizewell B pressurised water reactor debates, a general commitment was given for the inclusion of at least two coal-fired stations to be built in the forthcoming programme. West Burton, Fawley and possibly Kingsnorth were those mentioned. These are key orders for our construction companies. While I accept that they must be subjected to all the usual planning procedures, I must point out that companies such as Babcocks and NEI are anxiously awaiting confirmation of orders so that their already depleted work forces can be retained.
Given that there are three or four years before the privatisation of the generating companies, what will happen to those orders in the meantime? I hope that the CEGB will be empowered to proceed as planned with its applications for PWRs at Sizewell and Hinkley Point and also for the two coal-fired stations, provided that it is assured of their place in our new competitive industry—
Mr. Hardy rose—
Mr. Hannam: The hon. Gentleman will forgive me if I continue, as many hon. Members wish to speak.
I ask my right hon. Friend to give details about the position of these orders during the pre-privatisation period. That is necessary to remove the uncertainties which have once again fallen on these large construction firms.
If we look ahead to this time next century, we shall find that the world has come to depend upon safe, nonpolluting nuclear power for its electricity. Fossil fuels will be running out, oil will be replaced by coal as the main industrial feedstock and natural gas will have been replaced by coal gas. Coal will have become too valuable and expensive a commodity to burn wastefully in electricity generation. We have large coal reserves — enough to last into the 22nd century, but that coal will be increasingly expensive and difficult to extract, and the trend in output will continue downwards in the short term.
At the beginning of this century, United Kingdom coal output was 287 million tonnes and we reached a post-war peak of 226 million tonnes in 1952. We are now down to 100 million tonnes, large amounts of which are still wholly uncompetitive with world supplies. We are now a net importer of coal, as compared with pre-1914, when we exported more than one third of our coal output. Since then, rising costs and declining coal markets have put double pressure on the industry. Output could be increased again to meet future rising demand, but only when that demand outstrips the cheaper coal from countries such as the United States, Colombia, South Africa, Australia and Poland.
In the meantime, coal must compete in a fiercely competitive market, as we can see in the current debate in Scotland, where the SSEB is trying to force a more competitive price from British Coal. That has already happened in the CEGB, and it is inevitable, privatisation or no. It is inevitable that British Coal will have to continue on its declared path of reducing production costs and closing uneconomic pits. It is heartening that the
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miners recognise these facts of life—hence their ending of the overtime ban and their spreading acceptance of flexible working hours over six days.
In the longer term, it is to nuclear power that the world will turn, and it is right that the Government are keeping the nuclear option open in the White Paper. Contrary to the views of many, I do not wholly accept that nuclear generation represents some sort of market fudge in the division into the 70 per cent. "Big G" company. I welcome the use of the term "non-fossil fuel generating" because that implies that nuclear power will have to compete with all other alternative systems, such as tidal barrages, wind power, and so on.
It may be a surprise to learn that only three OECD countries have state-owned electricity supply organisations with a monopoly in nuclear power production—Italy, France and the United Kingdom. In the other countries of Europe in which nuclear power has been developed, power stations are owned and operated by a mix of private, private-industrial-municipal groups and the state. In Finland and Sweden, state-owned and private companies own and operate nuclear power stations. In Switzerland, where 40 per cent. of electricity is nuclear, the five operating stations are owned by partnerships in which local electricity supply companies, Swiss Federal Railways and a variety of industrial companies participate.
There are plenty of precedents for privately owned operated nuclear plant. It is the safety and regulatory framework which is important, and ours, which is the best in the world, would apply in any event. Our capital markets are perfectly capable of making a financial risk judgment on price and return, and the Channel tunnel, which is equal to four new Sizewell PWRs, is a good example of what they can do.
I am confident that in this new competitive world of generation, nuclear power will play its full role as a baseload supplier of about 15 or 20 per cent. of our output. With the opening up to private generators, electricity prices will come down as those of gas and oil rise.
I welcome the freedom being given to the new distribution companies to seek competitive electricity contracts as well as to generate themselves. Obviously the detail of the new regulatory system will be all-important, so that all these interests can be interwoven with those of the consumer. The employees in the industry, of whom the bulk are on the distribution rather than the generating side, will benefit from direct share ownership and better career opportunities. Even those well-known employees at the top of the various industries will have no difficulty in accepting the challenges of heading up the companies, which will all rank in the top lists of world industries. The 70 per cent. "Big G" company will be the third largest generating company in the world — I understand — so perhaps Lord Marshall can continue his excellent work in the electricity supply industry heading that company.
I welcome the White Paper and congratulate my right hon. Friend on his skilful and imaginative proposals, and I look forward with great enthusiasm to the new era of electricity supply.
6.49 pm
Mr. Matthew Taylor: When the Secretary of State presented his White Paper, he suggested that it would be of great benefit to the customer and a massive step forward for the industry as a whole. He hails the virtues of privatisation and says it will mean that the customer

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comes first, that benefits are enhanced, opportunities more exploited and the industry made more vital and dynamic. Given that kind of build-up, it seems legitimate to look at the specifics and start to question how those things will happen area by area, stage by stage.
Above all, the Government harp on privatisation. They say that it will increase competition and that benefits will result from that competition. However, 70 per cent. is surely still a monopoly by any schoolchild's textbook of economics. The power of monopoly will still be there in that child of the Central Electricity Generating Board. The White Paper states:
"All who work in the industry should be offered … the freedom to manage their commercial affairs without interference from Government."
If the Government really believe that, they should open up the industry not in a 70:30 split, but by creating many different generators who could be in continuing competition. That would give small-scale producers some kind of opportunity.
For example, if we in Cornwall were to have a 50MW power station, how would it be possible in realistic terms for it to compete on an even keel with 70 per cent. or even 30 per cent. held by the CEGB? Will the small-scale producer who invests in CHP or renewables benefit? I doubt whether such small producers will ever get a look in, because the base load will already be fully catered for and the non-fossil fuel element, about which the Government boast, will already be provided. There will not he the opportunities that the Government predict.
Will the Secretary of State demonstrate his commitment to competition by decreasing the prohibitive rates currently imposed on the small private generator? I suspect it is more likely that he will extend the rates burden to the son and daughter of the CEGB, and yet another price increase will face the consumer. What will be the nature of the contracts between the generators and the suppliers? The 70 per cent. and 30 per cent. son and daughter of the CEGB will demand long-term contracts to allow for forward planning and to ensure a return on investment.
What other producer is likely to benefit from such arrangements? Small competitive producers will be offered only the possibly remote prize of going into the grid when there is a shortfall. The base load will be supplied by the nuclear generators and the big brothers that the Government are creating in the industry. Until we have assurances on those matters there is no doubt that competition cannot be the benefit to be derived from this White Paper. Even if competition were to exist, we can query whether it will have cost benefits. Even if there is competition it can only be on the basis of an increase in capacity. The Electrical Power Engineers' Association says:
"For there to be real competition there will have to be significant excess capacity. This will have to be rather greater than the 22% spare capacity now built into the system … this will he a straightforward cost burden to the system which the consumer will have to bear."
If it is not competition, perhaps the employees will benefit. We were also told that by the Government. However, the overwhelming response so far from the employees is that they will not benefit. Even the employees of British Coal do not look to benefit from these proposals.
My hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) said last week that the coal industry has improved its efficiency. People in his constituency want to know why the Government intend to subsidise the nuclear
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industry when they are not prepared to so the same for the coal industry. If the Secretary of State intends to continue with his scheme of placing the obligation on the distribution boards to supply a minimum level of non-fossil fuel electricity, will he now make a commitment that there will be no stipulation for a certain amount of nuclear generation? Will the Minister stand by what the Secretary of State appeared to say earlier—that there will be an obligation to provide by way of nuclear power the 18 per cent. of generation that is currently provided? Is that the position, or will it be genuine, free competition in the non-fossil fuel sector? If the Secretary of State will not give that commitment, it is quite clear that the Government's policies of attempting to combine the nuclear industry with a competitive industry have completely failed. That cannot happen and we can see that in the way that the White Paper has been created.
The creation of that 70 per cent. big brother of the CEGB owes its existence entirely to the Government's recognition that the nuclear industry cannot stand on its own feet and can only exist as long as it is feather-bedded by a large industrial monopoly of the sort that the Government are planning to create. The Electrical Power Engineers' Association is not against nuclear power. It says:
"The now widely held view of all informed opinion, which we share, is that private generators will not wish to take on the hassle of new nuclear power generation when coupled with the very high initial capital cost and the long pay back period involved."
There are many worrying questions even beyond looking to the benefits of the privatisation of nuclear power, and they remain unanswered. Who will take responsibility for the decommissioning of these power stations? Last week it was announced that the CEGB had pulled out of its multi-million pound research programme into decommissioning nuclear reactors. It is quite clear that the CEGB does not reckon that its successors will have to take on those costs. Who will take the responsibility for that research which is so necessary for public safety?
Another unanswered question is about insurance in the nuclear industry. There is no reference in the White Paper about where that would come from. In the United States no one will provide insurance for the nuclear industry. Will the Government put in the money? If they do, that will it be another hidden subsidy for the nuclear industry, even though the Government will not help the coal industry. Is that another hidden subsidy, or is there something else about which the Government have not told us?
Will the environment benefit from the White Paper proposals? Is there anything there that we can latch on to in the White Paper that the Secretary of State so eagerly presented? It is almost unbelievable that throughout the White Paper the Secretary of State makes no reference to that. That area is crucial to the workings of the electricity supply industry and of the Department of Energy. The electricity supply industry is responsible for over half the acid emissions in the United Kingdom and the majority of nuclear waste, and it produces about 16 million tonnes of fly ash per year, much of which is dumped. By ensuring that there is no protection for our coal industry, the Government take the risk that Britain will import substantial quantities of shallow-mined and surface-mined coal with a much higher sulphur content than the coal that we currently burn in our power stations.

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We all know the cost to the environment of acid rain. It is appalling that the Secretary of State should tell us nothing about what will happen in future. Who will be responsible? Will the Government or the industry be responsible? Who will pay for desulphurisation equipment? If smaller coal-fired power stations are reopened or started up as a result of new competition in the industry, will they be obliged to fit desulphurisation controls in their power stations when they are opened? What are the effects on the environment of the White Paper? Nothing in the White Paper gives us the answer to that and we can only go on the Government's record, which has been wholly inadequate in the past. They are now ducking the issue even more.
Perhaps, if there is no benefit there, we can look to energy efficiency benefits. The Government have often boasted about that, and they came up with Monergy. That was a failure because we used more power in Monergy year than we used the year before. In spite of various recommendations that energy efficiency would massively decrease the need for new power stations, the Secretary of State has nothing to say about that in the White Paper. Hon. Members need not take my word for it. They can look at what the executive vice-president of the world's largest integrated private sector utility, Pacific Gas and Electric, had to say on the subject. They will see in that the benefit of a Government who were more adequately committed to efficiency. He said:
"Conservation programmes are considerably less expensive than the cost of adding new capacity, and are clearly less risky from an investment perspective."
It would cost about £20 billion to build 10 Sizewell B nuclear power stations. However, it is estimated that an investment of only £8 billion or £9 billion would achieve potential energy savings equal to that figure. Of course, a private generator has absolutely no interest in energy conservation. Private generators are interested in selling more and more energy. Indeed, they are interested in less energy conservation. Will the Government maintain their commitment to energy conservation? What obligations will be placed on the industry? Indeed, it has been rumoured that the Department of Energy may cease to exist. That possibility was floated in the Watt report recommendations. If that is the case, who will take the obligations on board?
Similar criticisms can be made about research and development. Anyone who was present last week during the debate on the problems in British science will be aware of the difficulties facing this country over research and development. I have already said that the CEGB has withdrawn its research and decommissioning. Private generators are unlikely to make similar research efforts because they cannot afford to do that. After all, as the Secretary of State continues to tell us, they are subject to competition and the pressures of a competitive industry. They are hardly likely to invest the same level of resources.
Private generators will have to be backed if research is to continue. Perhaps that will be another form of subsidy. Will there be basic Government funding from the Department of Education and Science? Natural Environment Research Council budgets are already being pushed to the nuclear side and are being lost to other areas. Will research and development be left to private companies? Will there be a levy on private companies, as
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exists in America, to fund a research programme? The White Paper contains no answers to those questions. All that we can be certain of is that, without precise answers to those questions, a private, competitive industry is likely to do less than is done at the moment.
Mr. Norman Hogg: Is the hon. Gentleman aware that the North of Scotland hydroelectric board supplies 2·5 per cent. of the nation's consumers, covers 25 per cent. of the land mass and returns five Social and Liberal Democrat Members of Parliament? What are his party's views on the proposals for the North of Scotland hydro-electric board?
Mr. Taylor: I was just about to consider Scotland in my remarks. Obviously, Scotland is a very different area and perhaps there will be special benefits for Scotland which the rest of us will not experience. As I represent a constituency at the other end of the country, I am not sure whether I believe that that is a good idea. After all, there is a separate White Paper on the matter, and I am sure the hon. Member for Cumbernauld and Kilsyth (Mr. Hogg) will join me in regretting the fact that we have not had the opportunity of a separate debate on the subject of Scottish privatisation. However, looking at the Conservative Benches, I can understand why we have not had a separate debate.
Mr. Neil Hamilton: Will the hon. Gentleman give way?
Mr. Taylor: I will not give way, because I want to make some more points.
The absurdity of competition by comparison highlights the lack of logic or reason for this privatisation. The Secretary of State admits that Scotland has an efficient, well managed and successful electricity industry, and he can produce no real argument for privatisation. He is bowing to the Prime Minister's ideology and the Chancellor of the Exchequer's purse strings. The Scottish consumer will simply make a contribution to future tax cuts.
We are not considering a Scottish solution. Far from it. There are no safeguards that the Scottish industry will remain in Scottish hands. Nothing of that kind has been presented. There is no recognition of the hydro-electric board's unique social commitment. The proposals are a catalyst and will threaten thousands of jobs in Scotland. I believe that the hydro-electric board represents a model that the Government should consider. There is no need for privatisation — we can argue whether that is really needed. The hydro-electric board's example may be applied to other areas of rural need, and my constituency is such an area.
Doubtless the SSEB's decision to put its coal supplies out to tender is a direct consequence of the need to reduce costs and increase profitability as a result of the Government's aim to privatise the industry. Building the Torness nuclear power station meant a £2 billion debt and £240 million of the SSEB's £286 million profits last year went on interest payments. Some 3,000 jobs and the livelihoods of whole communities are threatened by the Government's twin pursuits of uneconomic nuclear power and privatisation. If the Government are looking for savings in those directions, they need not have chosen privatisation. They could have stated openly that they were interested in savings in the state-controlled industry as it exists at the moment.

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The Government claim that consumers will benefit directly. The Secretary of States constant references to the customer are as conspicuous as the absence in the White Paper of any reference to the environmental impact or conservation. It is equally hard to believe that the consumer will benefit directly from the proposed privatisation. With the exception of large customers on the boundaries between one distribution board company and another, the customer will have no choice over the personal supply of electricity.
The Secretary of State has rightly said again and again that electricity supply is a natural monopoly. Will the Secretary of State explain how the individual consumer can make a choice anywhere along the line? Of course he cannot. He has to say that choice will be found through the boards. If the distribution companies are to be forced to choose a minimum level of nuclear power, will the costs incurred in the safe disposal of waste and decommissioning force uneconomic price rises on customers? The total decommissioning costs of more than £2 billion represent an enormous liability for the private sector, yet those costs are essential for public safety.
We have been promised new rights for the customer. Yet those rights could be incorporated by a Government who believe in making the state sector more responsive to the consumer. We advocated all those new rights when Ofgas and Oftel were created and the Government miserably failed to implement them then.
According to a Financial Times editorial:
"The nature of the regulatory system is the biggest question left unanswered by yesterday's White Paper."
Privatisation is supposed to bring the promise of lower prices, but the only tangible impact that we have seen so far from the proposals is a sharp rise in prices—15 per cent. over the next two years. Tariffs are increasing by an average of 9 per cent. in April and 6 per cent. next year. The Government's oft-repeated comments state that the average return is 10 per cent., not 5 per cent., and we may yet see larger increases once the boards enter private hands.
The Financial Times editorial also stated:
"A new entrant building a coal-fired power station will have costs far higher than the average costs of the two CEGB successor companies with their mix of old and new stations."
There is no hope for real competition, for an industry more responsive to the consumer, or that the White Paper will produce any of the glorious promises that the Secretary of State has claimed for it. There will be massive upheaval in the industry, a less efficient system to the detriment of the old and the cold and those who have to pay electricity bills. There will be no benefits of true competition because the White Paper contains no proposals for that. It is high time that the Secretary of State and his colleagues rethought their proposals.
Mr. Deputy Speaker (Mr. Harold Walker): I remind the House of the need for brief speeches.
7.7 pm
Sir Trevor Skeet: There are three reasons why I intend to support the Government tonight: privatisation will lead to a commercial approach; it will lead the industry to access to the market; and it will involve freedom from political intervention. Those points far outweigh anything else I might say. However, I have some reservations.
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The merit order system ensures that, whenever the level of demand for electricity rises, it will be met by a combination of generating plants with the lowest total costs. Technically, that requires a close relationship to be maintained between the transmission and production of electricity. That may be complex and the directions arbitrary. That process is now to be split. How will generators respond to a national emergency if they have no statutory obligations to supply? There are powerful arguments for the retention of an integrated power generation and transmission system. After all, the present system evolved as it did following the Weir committee report in 1925, which led to a nationally co-ordinated system in 1947.
Vertical integration has been secured for all the distributors, so why has it not been secured for the CEGB? That must be recognised as an anomaly. The distributors have the right to produce and the right to distribute, while the CEGB has the right to produce but has limited marketing power, and no power over the transmission system. With public utilities, it is not so much corn petition that counts—one only has to consider the situation in the United States — as collaboration, with cross-links between all the companies concerned in a very complex chain. In the United Kingdom, that will require a dispensation under the Restrictive Trade Practices Act 1976. That will have to be provided by parallel legislation, if not by a clause in the Bill that emerges from the proposals.
If the distribution companies own the grid and produce their own electricity, what is to prevent them from ensuring preference for their own generating capacity or so maintaining costs of local generation by cross-subsidisation? It will be more difficult to maintain a merit order system with a fragmented industry. Will the voice of the grid triumvirate be heard in the provinces?
To ensure a better balance, it would surely be preferable to permit the grid to be owned by an independent agency. An independent agency would not be controlled by anybody and would therefore not be obligated to anybody. It would perform its task as it saw fit. Alternatively, would it not be preferable to vest the equity of the transmission company 40 per cent. in the CEGB, 40 per cent. in the distribution companies and 20 per cent. in the other participants? When we discussed the Bill dealing with the privatisation of the gas industry, I tabled an amendment providing for an independent transmission company to cover major trunk pipelines. The Government rejected that suggestion, although it would have been very much better had the amendment been accepted. I now recommend exactly the same arrangement for the electricity industry to enable the CEGB to have an interest and to maintain equilibrium.
I further recommend to the Secretary of State for Scotland that the transmission agency cover the 400 and 275 kV lines. The area boards now control 132, 66 and 33 kV lines respectively. Would it not be more prudent to extend the grid to cover the whole system? There would be considerable advantage in that.
I do not see how the interconnectors with Scotland and France can operate if the distribution companies desire to satisfy part of their paragraph 49 commitment by drawing nuclear electricity from France. Will the grid be subject to an overriding strategic guidance when economic logic is likely to supersede the requirements of the coal industry?

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First, the selection of cheaper French nuclear electricity through further cables to France might be economically advantageous. The use of natural gas from the continental shelf on coastal sites with the use of gas turbines might also be attractive, and with the price of oil dropping to $14 a barrel, oil-fired power stations may be at a great advantage in relation to coal-fired power stations. Will the regulator provide a golden card, indicating a strategically important concept laid down by the Government?
I have referred to the reserve capacity of the electricity supply industry which is normally supplied by the CEGB. I dare say that that will now be handed down to all producers of electricity. There will be checks and balances but competition in the market place is unlikely to be the crucial factor. The regulator will himself determine the level of prices.
The hon. Member for Truro (Mr. Taylor) referred to nuclear research — a complicated matter, with which I shall deal in a moment. First, I refer to the coal industry. Coal and electricity should have been considered together, because the industries are interdependent. I should not be at all surprised if British Coal entered the production of electricity, supplying its own coal. That is certainly one reason for treating them as one industry.
The problems of the electricity industry, however, will continue if the Government's policy is to ban coal imports and if that ban is likely to remain. I suspect that the newly founded allowance for imports will be confined to textbook instructions and will be permitted only for minor tonnages required for smaller generators. There may be significant changes in 1992, when all the barriers come down within the Community.
Let me make some suggestions. We could follow the West German example. West Germany has a mix of imports and indigenous coal; the obligation is placed upon the burner of the coal to utilise both indigenous production and a proportion from abroad if he desires it. If the French and Germans can import coal, there is no reason why we should not. There is also the possibility of a reduction in coal production in the United Kingdom of between 80 million and 90 million tonnes. Furthermore, there may be a shift in emphasis away from deep-mined coal to opencast coal, in the range of between 12 and 20 million tonnes. That is another possibility that the industry should face.
Mr. Lofthouse rose—
Sir Trevor Skeet: I see the hon. Gentleman springing up, but I shall not give way.
The leasing of selected coal mines to named generators might also be considered, although the ownership of facilities would remain with British Coal. In determining prices for the consumer, more is likely to be gained by the industry and the public through a rational import policy on coal at international rates and the retention of comparable rates of fuel oil tax than through competition.
Finally, I refer to nuclear electricity. I have a feeling that the arrangements could lead to a scaling down of nuclear power projects in England, although not in Scotland. The historical approach has not been of advantage. Over the past eight years, there have been very few orders. The chief executive of the British Oxygen Company said:
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"We see a real danger that fragmentation will mark the demise of Britain's nuclear programme. We believe this programme is essential for strategic diversity of fuel sources and will for all plausible levels of fossil fuel prices over the life of the plant prove to be commercially correct."
The CEGB has about 3,460 MW of Magnox power, most of which is to be retired by the end of the 1990s. The advanced gas-cooled reactor programme is 4,720 MW. That is considerable, but, in turn, it will have to be retired later. Unless we have new buildings and the engineering facilities of the CEGB are maintained at the scale that has been achieved, it will be extremely difficult for a nuclear programme to continue in the United Kingdom.
The nuclear research and development programme is already in jeopardy. I noticed in The Independent of 3 March a report saying that the research programme for decommissioning has been abandoned. I have also noticed that the CEGB has abruptly withdrawn from building an £18 million new laboratory for microscopic examination of material bombarded by radiation. Why could these programmes not have been continued? Would this proposal have been an incentive for the CEGB to go ahead with its projects, or would it regard itself, because it is to be cut in size, as not having the same incentive to go ahead with its obligations, bearing in mind that its statutory commitment to supply has been taken away?
The paragraph 49 statutory obligation imposed on distribution companies is avoidable. They will have to take nuclear power, but they can take it from Scotland, where there is a heavy preponderance of nuclear power, or from France. They could get together and have a second cable from the continent to draw this power, or they could take it by other means.
The hon. Member for Truro mentioned compensation for nuclear acidents. We have learnt, through questions today, that this is covered by a convention, of which the total liability is £20 million. Then it is over to the taxpayer if any further sums have to be paid. I remind my right hon. Friend the Secretary of State of Chernobyl. The compensation for that great state calamity in 1986 has worked out at £7·56 billion, and that is beyond the capacity of either a large company or a minor country to bear. There is no cash fund to make provision for decommissioning, so there will be a charge on Her Majesty's Government.
With those reservations, I support what has been proposed. It is important that I should make those reservations, while I intend to support the Government, hoping that they will bear in mind the points that I and others have made, and will decide to make modifications. I know that they cannot chop and change too much at this stage, but it is important to keep the grid as one unit, and keep it independent or divided between the CEGB and the distribution organisations. It should be either completely independent or they should all have a share in it. If that happened, it would be more satisfactory as a commercial operation than under the suggested arrangements.
7.23 pm
Mr. Peter Hardy: The hon. Member for Bedfordshire, North (Sir T. Skeet) is an experienced Member, and many of us will have observed that he is attempting to ensure that the Government do not put him on the Standing Committee. If, by some mischance, he is there, we shall table amendments which no doubt will secure his support. We shall have opportunities to follow

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some of the points that he has made, so I shall not attempt to do that now. I shall try to make a short speech, as we have already had far too many long ones.
A number of serious points need to be made, of which Chernobyl is one. It was foolish of the Secretary of State to embark on that, as the principle that he seemed to be enshrining is that nuclear power is all right provided that it is privately owned. One has only to think of what nuclear power would be like in Papa Doc's Haiti or Idi Amin's Uganda to realise that the arguments should be a little more mature and sophisticated.
I sometimes distanced myself from some of the arguments used in criticising nuclear power. There are powerful arguments, and they should be used powerfully and maturely, rather than emotionally. There are both emotional and mature arguments against a system that protects nuclear power while allowing even the most shortsighted operation to bring in imported coal and destroy the mining industry. The Government are destroying that industry, despite enormous public investment in it, and despite all the records being set. This is happening for shortsighted reasons, so that some people can please the Government and secure a decent job in the privatised electricity industry, just as people sought to placate the Government to secure a decent job when the gas industry was privatised.
Lip-service has been paid to the quality and the record of achievement in the electricity supply industry. I hope that Government Members, particularly those from the remote rural areas, recognise that Britain was lit and powered by the electricity industry because it was in public ownership because no private interest would have gone into the thinly populated glens of Scotland or the valleys of the south-west of England. I see that the hon. Member for Truro (Mr. Taylor) has now gone, having inflicted a long speech on us, and there is now not one representative of the alliance parties in the Chamber. We are not unused to seeing that practice.
The record of achievement was made possible by a large public enterprise, and it is now being imperilled. It may not have dawned on some of my hon. Friends that the Government's smokescreen has so far been effective. Why, do my hon. Friends imagine, are there to be 12 separate distribution boards? Why is the CEGB to be split on a 70:30 basis? It is simply because the Government know full well, in the light of the BP fiasco, that they would have the devil's own job to sell off, as a single company, the electricity supply industry, with about £55 billion of net asset value. It is not being sold as one company because the Government would have difficulty in launching it in that way. It is being sold as 12 area boards, and the Government hope to be able to drum up such regional loyalty as will enable them to sell the company for the sum that they have in mind.
I have an idea of the sum that the Government have in mind. If they offer the electricity boards for much more than £22 billion, I shall be surprised. That represents the share in the asset value applied in other privatisations. However, the immensity of this privatisation means that they will be prepared to accept a smaller sum as a proportion of the value of the company that they are selling.
Mr. Douglas: On a point of order, Mr. Deputy Speaker. I apologise to my hon. Friend for interrupting him. However, the House should notice the discourtesty of the
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two Secretaries of State, who are not attending this debate. Furthermore, it is disgraceful that there is not one Minister from the Department of Energy to hear this important debate.
Mr. Deputy Speaker: That is not a matter for the Chair.
Mr. Hardy: I shall not follow my hon. Friend's point, although I am delighted that he made it, even though it may make my speech look slightly longer than I had planned.
Privatisation will disfigure the industry. It has a good record of achievement and service—the sort of service that I noticed when I visited High Marnham power station not long ago. These people are being sold down the river. I understand that one of the things of which the Government are afraid is that people who work in the electricity supply industry are in a much more powerful position than the Government would like them to believe.
The Secretary of State has promised that there will be no redundancies. He does not want reference to be made to the Henney report, but when the Minister winds up the debate I hope that he will refer to it and say whether the manning figures that are contained in that report will affect the size of the labour force in the privatised electricity supply industry. The Government want the people who are working in the electricity supply industry to be lulled into a sense of complacency, so I do not believe that Ministers and Conservative Members will mention the Henney report. If Conservative Members were to refer to it, the Government Whips might frown in their direction.
The Secretary of State said today that workers in the industry will enjoy exactly the same conditions and pension rights as they now enjoy. That was said about British Steel, but when British Steel workers in my constituency were subjected to privatisation not long ago, at the River Don works — or at the very profitable special steels section of British Steel, which became United Engineering Steels—they round that their conditions of employment and pension rights were not maintained. Those who have been involved in earlier privatisations have not necessarily enjoyed the same conditions and pension rights as they enjoyed in the nationalised industry.
The Government know that if the electricity supply workers were to sabotage their foolish and entirely partisan approach they could threaten the size and the value of the privatisation. The Government also know that since most of the public sector has already been sold off they will have to depend on the £20 billion, £21 billion or £22 billion that they will receive from the sale. When that has gone, the Government will be scratching around perhaps selling off parish clocks.
The Government will not worry unduly about annoying their Back Benchers, most of whom are eager to join in the sale of foreign coal to this country. There are Conservative Members who are involved commercially in that kind of venture. There is a fairly powerful lobby for opencast mining. The hon. Member for Bedfordshire, North told us that he would like there to be much more opencast mining.
In my area pits have been closed, which means that our country's industrial heritage is to be destroyed so that Conservative Members can make a profit. That is what they are after. They are not concerned with rewarding the workers or serving the people. They are not concerned

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about ensuring that there is a guaranteed supply of coal. They want to ensure that some people make a profit. It would be regrettable if the body that illuminated and powered Britain in a way that commands public respect and esteem should be sold off to allow some hon. Members and their foreign friends to make a great deal of money.
Mr. Lofthouse: Is my hon. Friend aware that at a meeting last week, chaired by hon. Member for Bedfordshire, North (Sir T. Skeet), British Coal said that opencast mining could be down to about 7 million tonnes by 1992 unless the planning regulations were relaxed? Does he agree that relaxing the planning regulations for opencast mining would have a disastrous effect on the countryside?
Mr. Hardy: It would have a disastrous effect on the quality of life in areas such as that which I am proud to represent. Furthermore, if the planning regulations were to be relaxed the clamour for opencast mining would grow from the business interests that are represented by Conservative Members. The Government are not concerned about the workers or the national interest. They are not concerned about ensuring that British industry enjoys energy at competitive prices. Their only concern is to ensure that they have enough money to bribe voters and to reward some of their friends, no matter what their nationality.
7.34 pm
Mr. Tony Speller: On behalf of all those who support alternative energy, I warmly welcome the White Paper. Paragraph 32 says:
"The new structure … will give the distribution companies:
The incentive to promote competition in generation.
The ability to connect competing generators to the system.
A wide choice of generators."
The CEGB has given little assistance to alternative energy sources, and until recently that was true of every Government, whatsoever their colour. It is excellent news for those who believe that alternative energy resources—the winds, the waves, solar power and the geothermal "hot rocks" — can come economically to the market place. The hon. Member for Wentworth (Mr. Hardy) complained bitterly about the Government caring only for profit. There is nothing wrong with a profitable enterprise, especially if it is a clean, profitable enterprise.
Two great industries in this country are in dire danger. One is represented more by the Opposition — the coal industry — while the other, agriculture, is represented more by the Government. Both suffer from the same danger. People say that coal can be bought more cheaply elsewhere or that food can be bought more cheaply elsewhere. However, if we follow that line watch how prices rocket up when our own indigenous industries have been destroyed.
We must support our coal industry. It is agreed by all that 75 to 80 per cent. of our future energy supplies will come from the coal industry. It would be unwise to allow all our pits to close, not because there was no coal there or because there were no men to dig the coal but on some short-term whim.
As for alternative energy sources, until now almost all research and development money has been devoted to
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nuclear research. I am not anti-nuclear as such, but why must all the research money be spent on something that will be of no actual value to us, or to our children or probably our grandchildren? We should conduct research into all forms of energy. It is madness not to conduct research into resources that do not pollute and that are infinitely renewable. If only for that reason, I give a warm welcome to the White Paper.
Recently I have visited Norway and seen wonderful work being done there through the use of tidal power. But here the Norwegians are using British-based technology. Australia and New Zealand both have hydro-electric and solar power schemes. Again, they are doing wonderful work, but it was often pioneered in this country. Many of the wind generators that are used in California were manufactured in this country. At long last the White Paper refers to the generation of power allowing use of alternative energy sources. I do not deride coal or nuclear power, but the CEGB has been unwilling to accept energy from small generating plants, and the price paid has been derisory. Her Majesty's Government give no encouragement to installing a generating plant for one's own home, imposing rates on these home improvements. Even now there are no direct connections to the grid in parts of Exmoor, but at last the time is coming when some heed will be paid to alternative energy sources in areas like my constituency.
If privatisation allows economic non-pollutant, renewable fuel to be supplied to the grid, that will not require billions of pounds' worth of investment and that will be to the benefit of this country. One of the greatest things about alternative sources of energy is that they are clean and renewable. There is no pollution and there is certainly no problem about decommissioning. One just turns the thing off. There would be no spoil heaps, and no nuclear waste dumps. All that is necessary is to harness those elements of the world that have been with us since the world began, and will be with us long after nuclear power is dead and gone—and, I suspect, long after all the fossil fuels have gone.
At long last, this White Paper pushes open a door that has been firmly closed under the monopoly control of generation in this country. That must be a good thing. Whatever our feeling about the preferred kind of generation, we must have choice. With our ability to invent and to improvise, we have everything to gain from going out into the world and saying, "Let us build it for you." There are firms like the Howden Group working on wind power, and many big contracters working on wave energy. We can produce it. The ridiculous thing is that we have been producing it around the world, but have not been allowed to do so here.
On behalf of all the alternative, renewable energies, I welcome this White Paper, and give it my full support.
7.40 pm
Mr. Chris Mullin: The White Paper represents the latest stage in a programme of looting of public assets in which the proceeds are being used to purchase the support of the public through tax cuts without regard to the national interest. It must be folly for a nation sitting on 200 years of coal to go for an energy policy based on coal imports. It is a further example of the merciless application of market forces without regard for the disastrous economic and social consequences.

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The CEGB, in its comments on the White Paper, has been a little restrained, but its advice was rejected. It refers coyly to the present plans as
"not having been attempted anywhere else in the world."
That is putting rather generously what the CEGB must really be feeling. It says:
"Fragmentation of ownership of existing power stations would increase the cost of electricity"—
that contrasts with what the Secretary of State and others have told us — and adds, in my view understating the position, that privatisation
"will throw up some major challenges and problems".
I should like briefly to examine some of those problems. One is the problem of where the investment is to come from. I do not believe that private capital will be willing to invest on the necessary scale. One consistent theme of our financial institutions, and, indeed, of our industrial history, has been the reluctance—nay, the downright refusal—of those who control finance to invest it in socially useful activity, and I shall be very surprised if they are forthcoming with the money in this instance. The other consistent thread has been the remorseless pursuit of the short term, whether it be office blocks, oil paintings or gold candlesticks. Whatever may be said about the electricity industry, there is nothing short term about it, and I do not believe that it will prove of interest to those who control investment funds.
I wonder, in passing, whether the day will come when we have to bail out one or two of these companies that obtain franchises. I note that when it comes to nuclear power not even the Government have confidence in market forces. They have made some special arrangements, because they know as well as everyone else that if market forces were ever let loose on nuclear power it would sink like a stone. That contrasts with their attitude to coal, where market forces have been invited to do their worst.
Another problem that will undoubtedly arise is the effect on the balance of trade. We are now suffering from one of the most adverse trade balances in manufacturing industry that we have ever experienced. Yet we are proposing to spend millions of pounds, perhaps hundreds of millions, of foreign exchange on importing coal and French electricity. I wonder where that will end, particularly as in due course we shall have to go back to the world market to purchase oil.
There is also the problem—other hon. Members have referred to it, so I shall not dwell on it — of foreign investors: what we might call the Kuwaiti factor. Will we wake up one morning and find that our electricity industry has been taken over by some foreign Government or multinational?
What primarily concerns me, as I am sure hon. Members will understand, is the impact on the people of Sunderland, a town which I, among others, have the honour to represent. Paragraph 33 of the White Paper says:
"in future, generating companies will be free to purchase coal and other fuels from the most competitive sources."
Those words spell doom for thousands in my constituency, not only in mining, but in related industries. Sunderland has male unemployment of well over 20 per cent. Hon. Members may have read in the past few days that the Government are planning to pull the plug on the other big industry, shipbuilding. Three days later, here we are discussing pulling the plug on a large part of the coal industry.
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About 2,000 miners work at the Wearmouth pit in Sunderland. They are working 14 miles under the sea in very difficult conditions. Many other miners work at neighbouring pits in Herrington, Eppleton and Westoe. Many, if not all, can in due course expect to find themselves with their livelihood threatened, and with no serious visible alternative available. They are continually exhorted to work harder and to adopt flexible rostering and longer shifts. They have co-operated in great measure, and the result has been a large increase in productivity. But they are not daft. They know as well as anyone that if there is no market, more productivity leads to the dole queue.
In addition, there has been a huge public investment. Mining coal 14 miles under the sea requires such investment. As the right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith) said, deep mines, once closed, cannot be opened again. They certainly cannot be reopened 14 miles under the sea. As recently as January this year, there was an announcement of new investment of £25 million in local pits. Is all that to be wasted?
The market is already being undermined, deliberately and systematically, by coal imports, which have increased by leaps and bounds. Some is even coming into the port of Sunderland. Everyone knows the phrase about bringing coals to Newcastle, but it is just as ludicrous to bring coals to Sunderland. About 250,000 tonnes were brought into our town last year—a town where, as I have said, many thousands of people work in the mines.
It is now proposed to remove the biggest single market for British coal, with coal from China, the Soviet Union and perhaps—no one really knows—from South Africa and Colombia, and to bring in opencast coal, with which no deep mine can possibly compete. A new coal-fired power station is being built at Fawley, near Southampton. What is the point of building a coal-fired power station near Southampton? It cannot be because it is close to the coalfields. It must be for some other reason. Could it possibly be because Southampton has a deep port that can take imported coal in ships up to 150,000 tonnes deadweight? If that is not a cynical exercise, I do not know what is.
Finally, let me mention an aspect which, I believe, has already been touched upon, and which will affect thousands of my constituents. If this privatisation has anything in common with previous ones, it will lead to many more disconnections. There will be an increase in the ruthlessness with which poor people who cannot afford to pay their bills find themselves cut off.
There is an element of revenge in all this. It is targeted against the coal industry. I do not think that anybody is under any illusion about that. It is all being done without regard to the social or economic consequences. My hon. Friend the Member for Wentworth (Mr. Hardy) asked what will happen when there is nothing left to sell. That is a question that I have often asked myself. One thing of which the Government cannot be accused is not thinking long term. However, I have never heard any Minister explain to us in serious detail what will happen when everything has been sold off.
My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), our Front-Bench spokesman, said—I saw the Secretary of State agree with him — that £1 billion has been taken out of the electricity industry by the Treasury and that a further £1 billion is likely to be taken out. Presumably, that money helps fund the Health Service and education. What happens when that revenue is no

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longer available? I should like to hear, now or at some other time, a Conservative Member address those questions. What is the Government's long-term plan? Is it that they think they will not be in office when the time comes to clear up the mess? Is it that they think that they will be in the Bahamas or the south of France, or is there some plan of which we have not yet been told?
7.50 pm
Dr. Michael Clark: I should like to say to my right hon. Friend the Secretary of State, in his absence, that I welcome the proposals in the White Paper. Most people have spoken about generation but I should like to speak about the area boards. Currently, there are 12 area boards and they have the interface with the customer. Between them they have 22 million customers. Each one of these boards is, more or less, the size of a foreign electrical utility. Therefore, they are sizeable entities in their own right. My right hon. Friend the Secretary of State said in the White Paper that he will ensure that there are 12 area boards for distribution when the electricity supply industry is privatised. I support that proposal.
We know that the supply of electricity into the home is a natural monopoly. That has been agreed by my right hon. Friend the Secretary of State and by Opposition Members. However, it is strange that the Opposition, who are against breaking up the monopoly of the CEGB, criticise the fact that we have to concede that the two wires into a home are a natural monopoly. It seems that the Opposition would like that to be broken up into competitive suppliers, even though they do not want the CEGB broken up. That seems rather ironic.
If the 12 area boards remain, we can have control of prices and service by comparison between the boards across the country. Is 12 the correct number of area hoards? If we had more than 12, there would be far too many and they would be too small. However, if we had fewer than 12 boards, they would be too large and there would be a massive amount of disruption in terms of assets and people employed within the area boards. Therefore, no number is absolutely right. Perhaps nine area boards would be right or perhaps 15. However, since we have 12, it seems appropriate to stick with that in order to minimise disruption.
It may be that my right hon. Friend the Secretary of State will propose to float all 12 area boards in one company and break the shares down at a later date. I hope that he will not do that. I hope that he will sell each board separately so that it can be judged on its merits in the market. I hope that service will be taken into account. It is just as important to set up a structure that enables us to compare the service given by each area board as it is to set up a structure that enables us to compare the price charged by each board. Service is as important as price in the electricity supply industry. If we jeopardise service by trying to obtain minimum prices, we shall not be assisting the consumers.
Before the White Paper was published, a debate obviously took place as to how many area boards there should be and whether they should be merged. I dare say that during that debate people said that some of the area boards are not viable, some had boundaries that were unfair or inefficient, some had insufficient assets to make them capable of floating as separate companies and some
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had returns on the capital employed that would make them difficult to sell. It is true that the returns on capital employed vary from 3 per cent. to 4·75 per cent. That is a large variation in percentage terms.
Of course, the area boards will be sold not on the basis of return on assets employed but on the yield on the buying price. If an area board is not producing as good a return on assets as would be liked, the selling price of the board will be lower, and thus the yield could be made to be the same as the yield on other area boards that may be doing better due to features such as geographical size, population density or the amount of industry or number of consumers in its marketing area. There will be problems with selling the boards separately, but I believe that the problems should be overcome rather than brushed aside or pushed under the carpet through merger.
The electricity board in my constituency is the Eastern electricity board. It happens to be the biggest, and perhaps it benefits to some extent by its size. However, it is only marginally the biggest, and it is a credit to the Eastern electricity board that on "added operating costs per customer" it is the lowest. It has the lowest "administration cost per customer" and it has the second highest "net return on capital employed". However, it does not necessarily follow that the biggest area board will have the best figures. The South Eastern electricity board is only the eighth biggest. However, its results are almost as good as those of the Eastern electricity board. The London electricity board, the seventh biggest, has poor results in terms of cost control, although it does not do too badly in terms of profits on assets employed.
I hope that those factors will be taken into account and that the area boards will be encouraged to emulate the best rather than to merge away their difficulties by forming liaisons with other boards.
Mr. Lofthouse: Like myself, the hon. Gentleman is a member of the Select Committee on Energy, which is at present taking evidence on the privatisation of the electricity industry. What influence does the hon. Gentleman think the Select Committee report has on the debate? Does he not think that the debate is useless in advance of the report from the Select Committee? Does he not find it embarrassing to put his views tonight when we are privileged to have such expertise at our disposal and so many eminent people giving evidence? We are only in the early days. Does he not think that the debate is premature, or are the Government cocking a snook at the Select Committee procedure?
Dr. Clark: The hon. Member for Pontefract and Castleford (Mr. Lofthouse) knows my view on that. He was present in the Committee when I voted against the proposal that the Select Committee should look into ways in which the electricity industry should be privatised. I did that because I felt that it would be far better for the White Paper to be prepared and for the Select Committee to look into the White Paper proposals. I understand the hon. Gentleman's point, but he will not be surprised at my answer because I voted that way two or three months ago and I am being consistent with that vote.
There is a need for technical co-operation and for the area boards to have a co-ordinated research effort so that the technical features of electricity supply in this country will move forward in unison. There will also be a need for co-ordination on safety standards, and all boards should

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work to the same high standards. Therefore, it could be proposed that there should be an industry establishment, similar to the Motor Industry Research Association or the Paper Industry Research Association — MIRA and PIRA. It could be known as the Electricity Industry Research Association. There could be a role in that for the rump of the Electricity Council that will be left after privatisation. The expertise in that council could be used to co-ordinate research, technical effort and safety standards.
Will the 12 district boards have any bargaining strength against the mammoth generators? The answer is yes, because there will be several generators—"Big G" and "Little G", France and Scotland and the private generators. The area boards will negotiate on behalf of the customers and will have direct access to the customers. If the area boards decide to generate themselves, as I hope they will—it will mean more power to their elbow—they will have more strength, even if they generate only 10 to 15 per cent. of their needs. I should have thought that the hon. Member for Kingston upon Hull, East (Mr. Prescott) would agree that, if they generate 10 to 15 per cent. of their needs, while being capable of increasing generation to 20 or 25 per cent. if "Big G" or Little G" does not give them the right price, that would be to their advantage. I hope that the majority of the area boards will consider generating, because that is another way of ensuring that they get the best possible prices and thereby serve their consumers.
If the area boards are to generate, they will need proper access to the grid. I hope that, when my right hon. Friend the Secretary of State publishes the terms of access, he will ensure that all area boards and private generators can get ready access to the grid and that there are not terms that make it difficult for small firms to have an input. I hope that the small boards will he encouraged in as many ways as possible to generate electricity, by entering consortia with other area boards or by entering consortia with private capital. I concede that I would not want the area boards to enter into consortia with "Big G" or "Little G", because that would be a return to monopoly.
The smaller boards could give careful thought to small-scale generation of about 300 MW and then transmit straight into their 132 kV transmission lines without having to go into the national grid. My right hon. Friend the Secretary of State says in his White Paper that there will be regulation for the distributing boards. I hope that, when he brings about this regulation, he will ensure that there are clauses to make sure that there are comparisons between the 12 area boards on such aspects as controllable and fixed costs, administration costs—bearing in mind differing population densities and geographical areas—and the relationship of manpower efficiency and the effective use of the assets employed. I hope also that there is a comparison of that all-important item, service.
One aspect at present of area boards which will remain as it is unless there is a change through this legislation is the electricity showroom. The service in many showrooms is poor. The prices of many goods are high, and I often wonder why people buy from them. Many of my friends and I who visit showrooms do so to find out what goods are available from a wide range, and then buy more cheaply elsewhere. One must wonder, even though those prices are high, whether the goods are subsidised.
Whether they are subsidised now or not, we must worry about the possibility of cross-subsidisation under
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privatisation. It would be wrong for the white goods in electricity showrooms to be cross-subsidised by the sale of electricity. I invite my right hon. and learned Friend the Secretary of State for Scotland to say what regulations he will introduce to ensure that the costs and accounts of showrooms are transparent, so that we can be certain that there is no such cross-subsidisation. With 12 area boards, it is essential that they do not become monopolistic in supplying electrical goods and that, if they supply them, they do so at proper commercial prices.
My points are all for the consumer's benefit. The legislation and the White Paper are of benefit to the consumer. I hope, therefore, that my right hon. Friend the Secretary of State for Energy will take my points into account, bearing in mind that we have the same objectives.
8.4 pm
Mr. Dick Douglas: I have made the point before about the great disrespect to the House caused by the fact that neither of the Secretaries of State responsible for the White Paper — the Secretaries of State for Energy and for Scotland—has seen fit for the past hour to be present in the House. Conservative Members should note the disrespect paid to the whole House by that action. I have been a Member since 1970, with a break between 1974 and 1979. I have always believed in trying to apply the force of argument and to influence the Government of the day by argument. If the people responsible for the greatest piece of privatisation ever, as the Secretary of State for Energy said, do not see fit to attend these debates, how can hon. Members have any faith — it is now a diminishing faith — that our arguments will have any influence on the process of legislation or on Government policy?
I shall not talk about the White Paper for England and Wales, but just comment tangentially on the opening remarks of the Secretary of State for Energy. I challenge the two underlings on the Government Front Bench, supposedly representing Scottish Departments—the hon. Members for Stirling (Mr. Forsyth) and for Galloway arid Upper Nithsdale (Mr. Lang)— because, to the best of my knowledge, they did not hear the speech made by the Secretary of State in opening the debate. I shall give way if they can name one argument deployed by the right hon. Gentleman in support of his policy for England and Wales that applied to Scotland.
The Secretary of State for Energy introduced a phrase which applies to Scotland—"collusive duopoly". That high-flown phrase describes what the two Scottish boards will do if the ideas and concepts in the White Paper for Scotland are carried into practice. There will be no competition in Scotland because the two boards are being joined to form some form of company which will jointly own the nuclear supply. When Torness comes on stream, that nuclear supply will be a growing part of the Scottish total supply but will be a preponderant part of the base supply. I estimate that it will account for 60 per cent. of the base load.
Where is the competition in Scotland? The Minister has the opportunity to tell Scottish consumers from where the competition will come. He may have to have recourse to the Government's great flowery phrase "competition by comparison." Comparison with what? Will it mean comparing the North board's output and supply with those of the South board? How will that be done? The two will be joined in this nuclear holding organisation which

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both will own, although we are not sure in what proportions. We are told that in Scotland there must be some geographical changes—we are not sure which—and some changes in the apportionment of power supplies between the two new companies. This is a hotchpotch.
Part of the industry is of great concern to me. I represent the largest coal-fired power station in Europe — Longannet, and, along the road from it, the Kincardine power station. Earlier today, in answer to an energy question we heard that the Coal Board had invested £60 million in the Castlebridge operation. In terms of production, that £60 million could go nowhere else than Longannet power station. If we pursue what is happening in Scotland now, is it the Government's intention to write off that investment? That is a fair question. Because of the so-called "arm's length" approach, is it the Government's intention to wipe off that capacity and investment for which the consumers will get a zero return?
Those are fair questions and we in Scotland expect answers from the Secretary of State. I am not very hopeful that we will get them but we expect answers from him this evening because we have been told through the press—I believe the Scottish press now and again — that the Secretary of State will answer those questions when he replies to the debate tonight.
Let us consider what has happended to the coal burned from Scottish mines since 1979. In 1979–80, there were 7·58 million tonnes; in 1986–87 that amount had been reduced to 4·5 million tonnes. I submit that all that had been done on an extremely efficient basis. I plead in aid the last report and accounts that are available from the South of Scotland electricity board. Page 8 stated:
"This took into account the need to ensure the longer-term prospects for the Scottish coal mining industry, which will continue to supply the board with a major part of their fuel requirements."
That was what Mr. Donald Miller said in the last balance sheet. In attracting new industry to Scotland the Government praise the new pulp and paper mill at Irvine. I refer again to the report and accounts, which stated:
"The board acknowledge the part played by British Coal and the private mines industry in helping to control costs and thus ensure that adequate and secure supplies of electricity will be available to the mill at competitive cost."
That was a year ago. What has altered Donald Miller's mind? In a word, "privatisation". I do not like criticising someone who cannot reply on the Floor of the House, but if Mr. Miller wants to reply outside, I will repeat this outside. I believe that he has been bought and sold for the expectation of a job in the private enterprise company that will come into being. There is no other explanation.
I shall conclude, because I know that many hon. Members want to participate in the debate. We plead that the two Government Departments—the Scottish Office and the Department of Energy—should get together to solve this problem. It is not good enough for the Secretary of State for Scotland to sit back and say that he has nothing to do with it. I do not necessarily ask Conservative Members to accept my argument, but they should read the editorial of Saturday's edition of The Scotsman. It is not a Labour paper and is not necessarily friendly to Labour's outlook. However, it stated:
"Though the reasons for Mr. Miller's extraordinary behaviour are, on the information available, difficult to discern there can be small doubt that he is acting with the knowledge, if not the sanction, of the Scottish Office."
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Conservative Members, and Ministers, should either contradict and refute that tonight or substantiate it. I believe that Donald Miller would not be acting in that way if he did not have the support of the Scottish Office. That Scottish Office support means the destruction of capital assets that the public have paid for. It means the destruction of 4,000, and more, jobs in Scotland. If hon. Members want to support the Government's policy, they should come to Oakley tomorrow night, to a miners' meeting there, and say that they are the custodians of the Scottish economy. I know what answer they will get from that meeting. The Scottish Office has tried to manipulate the press. It has media and photo-calls every week. Ministers should come to Oakley tomorrow night for a photo-call. I know what they would get if they came.
If Conservative Members had any guts, they would intervene to save jobs. We are arguing not about an old declining industry; we are arguing on the basis of a case that was stated a year ago in a balance sheet. We are arguing on behalf of men who have moved out of pits such as Comrie, Bogside and Seafield into a complex that they thought would give them secure employment for a long time. Scottish Office Ministers cannot and will not intervene, so let them bear the repercussions in Scotland.
I know where I shall be if one lump of foreign coal is burnt in a power station in Scotland. If that happens, every man, woman and child in Scotland should be in uproar against it. Responsibility for that will not rest with the Opposition. It will be because the Scottish Office and Ministers refused to listen to the righteous cries and the clarion call from all the people of Scotland.
8.16 pm
Mr. Mike Woodcock: I join those who have congratulated my right hon. Friend the Secretary of State on his ambitious and far-reaching proposals, which will change the industry from being producer-orientated to consumer-driven and ensure a better deal for the consumer. I congratulate him on ensuring that as far as possible competition will be the guiding force of the new industry. I congratulate him also on ensuring diversity of fuels. How prudent he is in ensuring that never again will electricity supplies in this country be threatened by militancy in the coalfields; nor will we be at the mercy of OPEC.
While welcoming the proposals warmly, like many other hon. Members I want to offer some thoughts on the effects of the privatisation of electricity on the coal and nuclear industries. We have heard a great deal from Opposition Members about the so-called threats to the coal industry. Those threats apparently stem from British Coal having to compete on the same terms as many of our other industries. I have listened to those arguments and advise my right hon. Friend that he will do well to ignore them because they are ill-founded and unrealistic. For far too long the taxpayer has paid the price of outdated working practices and inept management in the coal industry. For too long the taxpayer has poured money into the industry at the rate of £2 million per day, and has guaranteed markets for British Coal in the mistaken belief that that will bring forward a more realistic approach to working practices in the industry. However, we have seen a monopoly power abused for economic and political ends. The privatisation of electricity will perhaps do more

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good in bringing home economic realities to the mining industry than anything hitherto, and it should be welcomed for that.
I have quite a lot of sympathy for the domestic and industrial consumers of coal and for those who service and market the coal. The Opposition have shown a great deal of concern for those who work in the industry, but little for domestic consumers, who are probably paying £10 to £15 per tonne more than they need to for their supplies of coal. Domestic consumers pay excessive prices for electricity because of the costs of British Coal. Consumers suffer from the non-availability of some domestic grades of fuel.
Similarly, I have sympathy for industrial consumers who pay too high a price for electricity, partly because of the cost of British coal and partly because the coal lobby in this country has prevented the development of our nuclear industry to its full potential. I also have sympathy for coal traders who, shackled by a producer-dominated industry, are forced to turn more and more, against their will, to imported coal because British Coal cannot come up with the goods in terms of price and availability.
Last week I was in Scotland, and I also listened to representatives from the Scottish coal trade. Understandably, there is great concern about the current disagreement over the supply of British coal for power generation. However, until there is a more realistic approach to working practices within the coal industry it is difficult to have sympathy for the Scottish miners. Nevertheless, I am concerned about the effects on coal merchants and consumers of pit closures in Scotland. It is clear that, unless the major user of coal in Scotland and the major producer of coal in Scotland can agree, the inevitable consequence will be the diminished availability of competitively priced domestic coal.
The question that we have heard repeated so many times is, "Will British Coal be able to meet the threat of the privatised electricity industry?" Another question that we must consider is whether British Coal will be able to continue to supply the domestic market. While the coal industry remains nationalised, without the stimulus of domestic competition, without sensible working practices and without concern for the market and the consumer, it is unlikely to be able to meet that threat or to supply the domestic market fully.
There is one logical conclusion. If the privatisation of electricity is likely to benefit the consumer and the employee as I believe it will, I believe also that the ability of the coal industry to respond to competition in the electricity industry, and through that to continue to meet the demand for domestic fuel, will be enhanced if it is transferred to the private sector. In due time I urge my right hon. Friend to consider the privatisation of the coal industry. That privatisation would offer the best future for the industry's employees and the best future for the domestic and industrial consumers of coal. It would also offer the best deal for the consumer of electricity.
It is right that the Government are seeking to ensure a balance in fuel supply. It is also right that the nuclear industry should have a definite place in the generation of electricity. However, it is sad that our nuclear industry is not more highly developed. We did lead, and should still be leading, the world in nuclear technology. The reason why we are not doing so is largely that the coal lobby is far too powerful. Therefore, I welcome the Government's commitment to the future of the nuclear industry.
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There is a need for those who take investment decisions in the electricity industry to take a long-term view as well as ensuring that the industry does not suffer from any unfair dumping—to a limited extent it is suffering from that practice at the moment. There is also a need for the Government to help in attacking protectionism within the nuclear industry worldwide. Nevertheless, in the long term the best interests of the nuclear industry will be served by free and fair competition with other fuels.
Last week, when my right hon. Friend made his statement about the privatisation of electricity, the hon. Member for Workington (Mr. Campbell-Savours)—he is not in the Chamber at present—sought an assurance about the continuing public ownership of British Nuclear Fuels plc. Presumably the implication of the question is that BNFL should remain within the public sector. However, the interests of BNFL would be best served in the private sector. As the Government move nuclear generation into the private sector, I urge that they should also consider selling the Government's stake in BNFL, itself a generator and alternative supplier of nuclear power. I believe that such a move would be greatly welcomed by the work force and by the management within that industry.
My comments in no way detract from my general support for the Government's proposals. Those proposals are good for the domestic and industrial consumer of coal, good for consumers of electricity and good for the employees. My plea is that those proposals are taken even further by implementing similar principles within the coal and nuclear industries.
8.24 pm
Mr. Alan W. Williams: I disagree with the hon. Member for Ellesmere Port and Neston (Mr. Woodcock) more than any other speaker in this debate. Britain produces the cheapest coal in Europe. The hon. Gentleman spoke about free and fair competition within the nuclear industry, but the White Paper is all about feather-bedding that industry and exposing the coal industry to the vagaries of the world market. The price of coal in that market can go up just as fast as it has come down in the past two years.
In common with others of my hon. Friends, the theme of my speech is Government standards. The nuclear industry is treated in a highly-protected fashion, but the policy for the coal industry is short-term. The White Paper states that there will be a minimum requirement for non-fossil fuel electricity. I agree with some Conservative Members about renewable sources of energy, but, unfortunately, the White Paper will make no difference to those sources. The White Paper is a straightforward case of coal or nuclear power. The Government expect 25 per cent. of electricity to be generated from nuclear power, regardless of the cost.
Over the decades nuclear power has proved to be far more expensive than coal. A privatised electricity industry would never build nuclear power stations. There is no economic case for the Sizewell PWR — it has been destroyed. However, the Government do not appear to have conceded the economic cost of nuclear power and they have made it a requirement of privatisation.
I am concerned about what privatisation will mean for safety standards within the nuclear industry. This weekend was the anniversary of the Herald of Free Enterprise ferry disaster. That disaster, and the subsequent inquiries,

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showed how the company had cut corners. Of course, the courts found the company not guilty — "They would, wouldn't they?" The courts blamed the captain and other individuals and put the disaster down to human error. However, profit was the dominating factor in the company's operations. The company sought to cut corners, and I believe that the same would apply in a privatised nuclear power station. If fuel rods started to leak, as they do—burst cans, and so on—would they be taken out immediately as is now the requirement? I fear that they would be allowed to stay in place for a few more weeks, as a result the coolant streams would become radioactive, and they would be pumped out into the atmosphere.
How will staffing affect safety requirements? There are dozens of reactor incidents almost every year. At the moment, such an incident would cause a nuclear power station to be shut down. Obviously when the industry is privatised and profit is all-important, such a shutdown would be the last resort because a few weeks of lost operation would mean the loss of many millions of pounds. I fear that safety standards will be compromised throughout.
The Government want a lot of nuclear power to be generated in the future. Earlier, one hon. Member said that, by the next century, we would be all-nuclear, but I believe that he is wrong. If that were to be the case, we would be dependent on plutonium in the next century. The logic of some Conservatives' argument is that, eventually, we would be exporting plutonium to Japan, France, Germany, Idi Amin and Colonel Gaddafi. What would that mean in terms of nuclear proliferation?
Very conveniently, during the past few months the Government have decided that nuclear power stations will not be decommissioned. Trawsfynydd, Hinkley Point and Bradwell will be allowed to remain as they are for the next 100 years. They will be nuclear graveyards. We shall have to protect them and provide high security, not just so that children cannot get into them but because they could become terrorist targets. There is the sinister prospect, in 10 or 20 years' time, of a terrorist car bomb exploding outside one of those disused power stations. The fact that we do not know how to decommission nuclear power stations is another argument against this unsafe source of energy. But the Government insist on going ahead. It is a case of compromising safety and the economics of nuclear power going out of the window.
In sharp contrast is what is likely to happen to coal. The Government are willing for British coal, which is the cheapest deep-mined coal in the world, to compete against coal from South Africa, Colombia and Australia. We know why South African and Colombia coal is cheap—non-existent or repressed trade unions and child labour—but such morality does not apply to the Government. Provided that the price is right, they will ask no questions.
The world coal market is a very unsafe market on which to depend for our future energy supply. World trade in coal accounts for only 4 per cent. of world coal consumption, so very little coal is traded. If, in five years' time, when many of the pits are closed, oil prices start to climb again as oil becomes scarce, coal prices will follow rapidly and we shall become dependent upon imports. Another problem with Government policy is the short-termism which threatens the future of the industry. If we
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were planning now for the year 2000—that is what the Japanese do — we would want British coal to be the basis of our electricity production, because it is economic compared with other coal produced in the world.
We heard a great deal from the Secretary of State for Energy in opening this debate and in the statement on the White Paper about competition in generation. He accepts that there is no competition in distribution and that that is a natural monopoly, but he tries to argue that there is competition in generation. We know that that is nonsense. In generation, the 70 per cent. company and the 30 per cent. company will share the market. They will not build surplus power stations to introduce competition because power stations are far too expensive. They will spend £1 billion on the construction of a power station only if they are guaranteed a market.
I believe that the privatisation will be a flop anyway. The stock market collapse last October means that people will not have the same taste for privatisation, and we should not forget the BP fiasco. The distribution companies may be saleable because they will be able to name their price for electricity. The 30 per cent. company, "Little G", may be saleable because it does not have the handicap of nuclear power, but the 70 per cent. company, "Big G", is saddled with the albatross of nuclear power. Let us consider what it will inherit: first, the clapped-out Magnox reactors, which no one in his right mind would want; secondly, the advanced gas-cooled reactors, which were a bigger economic disaster than Concorde; and, thirdly, the pressurised water reactor programme with which the Government insist on lumbering the industry.
My feeling is that the "Big G" will not take off and that the proposed privatisation could be the biggest flop of all. It is not in the national interest, nor is it in the consumers' interest. The Government will be able to make the proposal saleable by fattening up the industry before privatisation, but that will lead to a terrible 15 per cent. increase in electricity prices. The proposed legislation is immoral and dangerous and would go against the national interest.
8.40 pm
Mr. Malcolm Moss: My right hon. Friend the Secretary of State outlined as strongly as possible in his opening remarks that decisions about the supply of electricity should be driven by the needs of customers. We have not heard much from Opposition Members about the needs of customers.
I took the trouble to read some of the submissions made by consumer councils on privatisation. The National Consumer Council put forward seven conditions for what it considered to be an ideal solution and structure for maximising competition and simplifying regulation: first, there should be a split into three major operating activities—local distribution, bulk transmission and generation; secondly, there should be more than one major distribution company; thirdly, there should be more than one major generating company, fourthly, there should be one bulk transmission company; fifthly, the generating market should be open and there should be nondiscriminatory access to consumers for all participants. Every one of those submissions has been incorporated in the proposals outlined in the White Paper. We have not yet agreed with the sixth and seventh submissions in terms of priorities, but the first five major priorities of the consumer councils have been fulfilled.

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The Electricity Consumers Council has said that the
"present structure of the electricity supply industry is unsatisfactory. The CEGB not only has a monopoly over generation but also over decision-making in a sector which affects and/or accounts for 80 per cent. of electricity prices."
It continued:
"The main advantage from privatisation is that unhelpful Government intrusion into the industry should cease."
In the council's view, it is essential that management is strengthened. The public's expectations of a privatised industry are increased and accountability to shareholders is a very different regime — and one completely misunderstood by Opposition Members—from accountability to Government.
Anyone would think that Opposition Members were spokespersons for the CEGB. They tell us how wonderful it has been over the past 40 years, but the electricity supply industry did not grow up as one unit, despite the claims of Labour Members and the CEGB. Before nationalisation the grid served independent generating enterprises, and served them well. Compared with overseas industries, the CEGB's capital costs have been unduly high. Its forecasting has been woefully inadequate. Its coordinating role, by which it sets such store, is really unnecessary, hearing in mind what is taking place in the rest of Europe and America. The CEGB's argument that competition raises prices and that monopolies lower them is a view that is no longer shared in the Kremlin, let alone on the Opposition Benches. It was the CEGB's monopolist symbiosis that laid the basis for the NUM monopoly. National security of supply requires the breaking up of this cosy and convenient relationship.
The issue of security of supply has been raised during this debate. Under normal demand patterns there is no real problem in producing contracts between the grid and the generators, but questions have been asked about the new privatised enterprise coping with abnormal conditions. It is said that if the grid-generation system cannot he optimised it could lead to increased costs and a reduction in security of supply. But the grid must take on the financial risks of operation and we must introduce an arbitration mechanism to settle disputes about compensation. There is no reason why we should not have a consumer compensation or protection fund.
Much has been said about economies of scale, and the merit order system has been portrayed as the saviour of the present security of supply. The variable costs of generation will determine that merit order. The technical criteria for merit order could be replaced with some form of a financial order. Least-cost plant, yes, but also least-cost mix of plant which will come in time. There is no apparent reason why contracts between the grid and generators cannot accommodate price competition in both the areas that I have outlined. That would result in both merit order working and price pressure to optimise the mix of power station types.
The Opposition and the CEGB say that there is a danger of losing security of supply in a fragmented structure of generation. The CEGB has said that the fragmentation will cost about £1 billion a year—about a 10 per cent. increase in costs—but I see nothing in the CEGB's case to justify that figure; nor have we any evidence in the debate to show where those figures come from.
The Energy Act 1983 has patently failed to encourage any competition in electricity generation. It is still only one quarter of 1 per cent. On present trends there is no
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evidence that the potential identified by Sir Frank Layfield in the Sizewell inquiry—the equivalent of five Sizewells by the year 2000—is anywhere near to being achieved. There are two reasons for failure. The CEGB is asked tor a 3 per cent. return on its assets, but the independent producers need a return of at least 10 to 15 per cent. The Act made the electricity boards the judge and jury in setting prices for their competitors. That price decreased further this year, and it is still between 20 per cent. and 38 per cent. less than the price at which the boards sold their electricity.
The 1987 price reduction resulted from making a major change in the bulk supply tariff. Since 1983 the CEGB has twice raised the fixed charge proportion of its hulk supply tariff. The hoards do not include that proportion in the price that they pay to independent producers. This has meant a decrease of about 25 per cent. in the price paid to independent producers.
In April last year, when the CEGB announced a new structure in its 1987–88 review, the Department of Energy suggested that the Electricity Council should commission a report on those charges, and it called in Price Waterhouse. The report was published at the end of 1987, but it has not yet seen the light of day. In the Select Committee hearings the chairman of the Electricity Council refused to make it available. Perhaps it has not come to light because it suggested that the pricing structure to the independent producers was contrary to the 1983 Act.
Mr. Rost: My hon. Friend should know that today the Electricity Council has made available a summary report to the Select Committee on Energy, but it was given to us in confidence. Although I have read it and would love to talk about it, I am under an obligation of confidentiality.
Mr. Moss: I think that my argument is still valid that the report being under wraps since the end of 1987 suggests that it goes against the interests of the independent producers.
In December the CEGB announced further changes in its bulk supply tariff for 1988–89, and, although it restored some of the cuts that it had announced before, no consultation was entered into consultation which is required by statute—with either the Electricity Council, the Electricity Consumers Council or the Department of Energy. Why, at the end of 1987, was there a sudden change of heart as the privatisation proposals began to be firmed up? By shielding its full cost structure from the competition the CEGB is insulating itself from the full discipline of market forces, to the disadvantage of consumers.
For area boards to be saleable they need to have long-term contracts. The 70 per cent. CEGB and its 30 per cent. competitor will have the advantage of operational generating plant, and if they are allowed to establish bulk supply tariff agreements with high fixed cost elements in the immediate period after privatisation this will keep out independents for a long time to come. Therefore, it is vital that a regulatory authority is brought into being before privatisation to oversee pricing and terms of trade in electricity.
Rates have already been mentioned in the debate. The rates for independent producers are up to 40 times as high as those for the CEGB. In 1986 the Government promised

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to bring the rating of independents in line with that of the CEGB. This is long overdue and vital for real and fair competition in future.
I turn next to conservation, which was mentioned by the hon. Member for Truro (Mr. Taylor). In the present nationalised monopoly there has been a conflict between the coal industry, which has wanted more coal mines, and the CEGB, which has wanted more generating plant, and the campaign to save on energy costs. Under the Government's Monergy campaign, a target of 20 per cent. savings was set. Only 2 to 4 per cent. has been achieved so far, so there is a great deal to do. The target saving of £7 billion is equivalent to six Sizewell B plants. We need to press forward with these conservation measures.
Once the distribution companies are able to purchase electricity free from the CEGB's monopoly they may change their attitude to measuring success in terms not of how much electricity they can sell but how they can serve the best interests of their customers. They could enter into advice on energy savings, insulation schemes and cheaper long-term tariffs, and enter into contract energy management schemes to reduce wastage and share resulting benefits.
Finally, I turn to the recent report on energy conservation in the north-west region, which the March Consultation Group brought out at the end of 1987. Much has been said about imminent prices increases in electricity for industrial users, but the Opposition do not take into account findings that are set out in reports such as that produced by the March Consultation Group. It states that in the industrial and commercial sector there is scope to save 15 per cent. of final energy demand from measures that would use existing technology, with paybacks in two years or less. This is worth £250 million a year to the northwest regional economy. It would provide a welcome boost to profits and to employment. Secondly, it concluded that in many instances top management was not convinced that energy efficiency was worth while. Either energy costs are not a major area of concern for them—and that would drive a coach and horses through the argument advanced by Opposition Members—or the case for investment has been badly presented.
The electricity supply industry, unlike most other industries, but like many other utilities, is faced with a situation where all its shareholders will be its customers. These people will have a focal point. There will be an occasion at which they will be able to make known their views, and that is the annual general meeting. Shareholders will, as a result, have higher than normal expectation of performance. Profit at the expense of service will not be acceptable in future.
8.49 pm
Mr. Alex Salmond: I want to address some of the arguments put forward in the reasoned amendment tabled in the names of my hon. Friends and myself. Of the two amendments on the Order Paper this is the one that addresses not only the principles involved in electricity privatisation but the distinct and individual issues raised by privatisation in Wales and England on the one hand and Scotland on the other.
First, I shall discuss privatisation in England and Wales. The great challenge facing anyone proposing such a foolhardy policy would have been to find a structure
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which, by introducing competition, would have outweighed the technical disadvantages and extra cost of breaking up the CEGB's hold on generation and transmission. Those costs were estimated by the CEGB as being about £1 billion, or 10 per cent. on electricity prices. Has the Secretary of State found such a competitive structure? The answer is an unambiguous no. He has entirely given up trying to introduce competition for distribution. He said on 25 February:
"The distribution and transmission of electricity are largely natural monopolies.—[Official Report, 25 February 1988; Vol. 128, c. 454.]
The right hon. Gentleman said something similar when opening the debate this evening.
What about generation? The Secretary of State for Energy betrays a complete lack of understanding of the central difficulty in introducing a competitive structure into electricity generation in England and Wales, where there is undercapacity in the system. One cannot have effective competition in a structure in which there is undercapacity. If there is undercapacity, any generator, "Big G," "Little G" or one of the PGs, can generate safe in the knowledge that its electricity will be used, and that it can price it, regardless of generation costs, at the cost of the marginal producer of electricity.
This basic problem of introducing competition into generation has been well aired in the evidence before the Select Committee on Energy. It is a great pity that the Secretary of State for Energy did not allow that evidence to run its full course before producing his White Paper. He was faced with a choice — to produce a technically efficient structure with no competition or a pseudo-competitive structure that was technically inefficient. He chose the second, the chic solution. That is hardly surprising — he could hardly have done anything else. Having told the Conservative party conference that he was going to introduce the privatisation of electricity, he could hardly have gone back to a future conference and announced that he was not going forward with that policy. But if the problem had been looked at with an unjaundiced eye, the inescapable conclusion would have been that the industry in England and Wales belonged to the public sector because no effective competition could be introduced.
If the Secretary of State for Energy produced a botched job for the electricity privatisation for England and Wales, it was as nothing compared with the pig's breakfast produced by the Secretary of State for Scotland. He is dealing with, arguably, the most efficient electricity generation industry in western Europe. It is significant that, in the illustrations and comparisons produced by the Central Electricity Generating Board before the Select Committee on Energy, the only international comparison with which it did not compare favourably was the Scottish example.
The one failing of the Scottish system has been the incredible build-up of over-capacity — 6,000 MWs of demand at peak load but with generating capacity, after Torness, of about double that. When Torness comes on stream, 60 per cent. of Scottish electricity generation could be met by nuclear baseload—a ridiculous percentage in a country with such diversified potential from oil, gas, hydropower and wind and wave renewables.
Mr. Morgan: I believe that that gives the lie to the justification given by the Secretary of State for the 15 per cent. price rises in England and Wales compared with the

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much smaller rise in Scotland. The justification given for increasing electricity prices by 9 per cent. this year and 6 per cent. next year in England and Wales is to increase the rate of return above the 2·75 per cent. — or to take money off the electricity consumer in order to buy nuclear power stations that he does not want, which is even worse. The idea is to increase the rate of return. It should apply more strongly than in Scotland, where prices will rise by only 2 per cent.
Mr. Salmond: The hon. Gentleman is right in that many and various reasons will he given in electricity price rises over the next few years if these proposals go through.
The weakness in the Scottish system has been the buildup of over-capacity. There is nothing endemic to a publicly controlled system which produces over-capacity. The build-up has been because of specific and foolish decisions made by successive Governments.
There are five major failings in the White Paper proposals for electricity privatisation in Scotland. It was an enormous job to boil down, given the incredible lack of specific proposals in the White Paper, to only five major problems. The first major failing is that, having arrived at the privatisation of the Scottish electricity industry, with its enormously valuable assets, where should the proceeds go? Paragraph 42 of the Scottish White Paper says:
"all of Scotland's electricity consumers have contributed to these assets".
Instead of going on to make the obvious point that all Scotlands electricity consumers should therefore benefit from the sale of these assets if privatisation goes ahead by having the benefits distributed by way of a free share issue, the White Paper arrives at the incredible conclusion that somehow Hydro board investors are desperately anxious to obtain a share of the nuclear capacity of the SSEB, which is to be jointly owned. If Scotland's electricity consumers have paid, through their bills, for the build-up of this capacity, why are they not receiving the benefit from the sell-off? Why is the Treasury receiving the benefit? Why are Scottish customers being mugged by the Treasury?
Consumers will also he mugged by the privatisated boards; this represents the second problem. The Hydro board already concedes that, in the private sector, it will see a doubling of the effective rate of return from 5 per cent. to 10 per cent. in real terms. That can only come from the bills of the Scottish electricity consumer who, after paying to build up the assets of the Scottish electricity consumer, who, after paying to build up the assets of the Scottish electricity system, will now have to pay dear for the prices charged in the private sector.
The third major weakness is that the Secretary of State made no commitment last Wednesday to the ownership structure of the Scottish electricity system, in marked contrast to the Secretary of State for Energy who, on 25 February, was able to say that something more effective than a golden share would be introduced to the system to ensure that the various elements of English and Welsh privatisation remained autonomous. No such guarantee was given by the Secretary of State for Scotland. Why the difference? Perhaps it is a case of the ringmaster, in the form of the Secretary of State for Energy, and the performing horse, in the form of the Secretary of State for Scotland.
The fourth major disadvantage is that there is no attempt to introduce competition into the Scottish
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electricity system. The only competitive element in the Scottish proposals is not to introduce competition in Scotland but to introduce it in England and Wales. The rejigging of assets in the Scottish system is designed in such a way that the two Scottish boards will compete to sell electricity in cut-throat competition to the English distribution boards. They will not face a market from individual distribution boards. We already know that from evidence given to the Select Committee. The English distribution boards will combine to make the Scottish boards sell to the grid, and the Scottish boards will face a monopsony buyer.
The Secretary of State for Scotland (Mr. Malcolm Rifkind): The hon. Gentleman's argument is somewhat confusing. Could he say whether it is his view and the view of his party that if privatisation takes place there should be a single Scottish company rather than the two companies that the Government propose?
Mr. Salmond: The Secretary of State should have contained himself. I was coming to the fifth failing in his proposals. The competition introduced into the Scottish system will not be for the benefit of the Scottish consumer, but to benefit competition in the English and Welsh systems. That is the sole element of competition in the Secretary of State's proposals. Failing No. 5 deals specifically with the point that the Secretary of State makes. If he had bothered to read the reasoned amendment tabled by myself and my colleagues he would have seen the answer to his question.
We welcome the fact that the Hydro board will remain independent. However, what kind of Hydro board will it be if it is stripped of its social clause and the obligation to perform for the economic welfare of the Highlands and Islands and the rural areas of Scotland? The only guarantee that Hydro board consumers are being given is that there will not be differential tariffs and prices. What about reconnections and repairs to lines in the rural areas? Will the rural areas eventually face the same problems that they already face from British Gas, which treats them quite disgracefully? What guarantees will Hydro board consumers have in the private sector and what guarantee will they have that the Hydro board will remain independent?
My final point underlines the central difficulty in these proposals. It is about whether these privatised boards will operate in the public interest. Just now we have in Scotland a working example in the dispute between the SSEB and British Coal that illustrates these problems. We can explore the policy issues involved in the current dispute. The Government position was expressed on 15 February by the Minister of State for Energy. It was repeated today and it is that the impasse
"has nothing to do with … privatisation —[Official Report, 15 February 1988; Vol. 127, c. 694.]
I have here a letter written by Donald Miller, the chairman of the South of Scotland electricity board. It is a letter to British Coal and is dated 6 January. In the letter, he makes a point about why he is rejecting British Coal's price offer. The letter says:
"One difficulty that I find in reconciling your statement, that you expect to match world long term coal prices … from the Scottish coalfield by the time we are privatised in some two years or so, with your refusal to make any significant move towards these prices at the present time. I am sure that you will appreciate that, to have any credibility with

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investors, we must be able to demonstrate these cost trends in a convincing way and that can only be done with a significant price movement in the 1988/89 financial year."
It is quite clear from that letter that the nub of the disagreement, the reason for the impasse, is that the SSEB is looking towards privatisation. In the face of the evidence contained in that letter, would the Secretary of State like to repeat his claim that the impasse, the breakdown in relationships, has nothing whatever to do with his policy of privatisation? Let him get to his feet and say how he can deny the evidence of that letter. On the one hand, the SSEB is scared stiff of privatisation and is looking to its role in the private sector. On the other hand, British Coal, as was made clear in the evidence to the Select Committee on Energy, is looking over its shoulder to see what will happen with the CEGB if British Coal concedes anything to the SSEB.
It is inescapably clear that the Government's policy of privatisation has produced the present chaos in the Scottish industry and is threatening the entire future of deep-mined coal in Scotland. I will not accept a tentative intervention by the Secretary of State for Scotland. If he is to do his job at all, he will need to make a definite and full intervention in order to knock heads together and save the Scottish coalfield.
This is an example of a privatisation which is without principle. It is deficient in theory and will be disastrous in practice. In England, Wales and Scotland we have utilities that by international comparison, by "emulation" and by "yardstick competition" are the best in the world. They are the birthright of us all and should not be sent into the private sector.
9.3 pm
Mr. Peter Rost: In welcoming the White Paper I want to confine my remarks to dealing with the main and persistent criticism by the Opposition. They say that there will not be any competition in generation and that, even if there is, it is unlikely to benefit the consumer. I have news for the Opposition and for the critics of our privatisation programme. Competition is already happening.
Mr. David Lambie: Where is it?
Mr. Rost: If the hon. Gentleman will contain himself I shall tell him. Offers from private generators are already coming forward to the area boards. Contracts are already being negotiated at prices per unit of electricity that are lower than the prices that the area boards presently pay to the CEGB. There is evidence not only that competition is coming forward, but that the prices at which electricity is offered to the boards are lower than the boards pay at the moment.
Competition is building up from many sources, and hon. Members have referred to some of those already. New capacity is coming from independent producers, some of whom are buying old power stations which the CEGB no longer wants. They are refurbishing those power stations and using coal as fuel. Major companies are also producing new capacity. For example, Hawker Siddeley has been waiting to market its combined-cycle technology in this country, but the CEGB was not interested. Therefore, Hawker Siddeley had to rely on the export market. The company will now have an opportunity to
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prove that it can generate cheaper electricity by its method than the CEGB can produce in its traditional large power stations.
Opposition Members have consistently tried to remind us this evening that British Coal is down and out or about to go under. However, British Coal has announced that it intends to enter the business of electricity production to prove its fluidised bed technology, in which the nationalised electricity monopoly was not interested. That technology is well established in other countries which are in competition with us. Of course, it is our technology, but it has not been established in this country because the monopoly ignored it.
My hon. Friend the Member for Devon, North (Mr. Speller) spoke elaborately about the opportunities that would arise for renewables if they can compete. They will be able to plug into the grid because it will be open. Combined heat and power production is being developed and much more will be developed. I understand that the Department of Energy is undertaking a study that is likely to reveal that the equivalent electricity production of three major power stations is waiting to be used from stand-by generators in hospitals, Government offices and even in this place. Those generators simply need a little conversion so that heat can be used and they will also produce surplus electricity far cheaper than the construction of a 1,000 MW power station.
Probably the most important source of new and cheaper electricity is industry itself. Industry will generate more of its own electricity. British industry is bottom of the European league for industry generating its own power. No wonder the Confederation of British Industry whinges about high energy prices. It has not had the opportunity to generate its own electricity in the way that German industry and industry elsewhere generates its own energy.
Mr. Morgan: Will the hon. Gentleman give way?
Mr. Rost: I hope that the hon. Gentleman will forgive me, but I have only a few minutes left.
Industry in other countries generates far more of its own energy. I have seen an interesting memoranda from ICI which proves this point. At the moment ICI uses about 650 MW of electricity. It produces half itself in cooperation producing processed heat and electricity. It must import the other half — in fact, about 350 MW are imported. It has carried out feasibility studies on its plants, which show that it could have converted them to cogeneration and produced cheaper processed heat and electricity if it had been offered a fair price for the export of that electricity. It would have done that if the nationalised monopoly had not abused its powers by not offering a fair price for the surplus. The ICI study showed that it is likely to turn its present level of imports into exports of about 700 MW. In other words, one company could swing from being a major electricity importer to being a major electricity exporter. That electricity could be offered at a lower price than area boards now pay for electricity from the national grid.
Mr. Redwood: Does my hon. Friend agree that the Government should also take an interest in the terms and conditions of the sale of redundant power stations as there have been problems over the speed and conditions of sale and many more power stations could be used profitably?
Mr. Rost: My hon. Friend is absolutely right.

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There are one or two other ways in which privatisation will allow the private sector to prove that it can generate electricity more cheaply. One of them is the use of municipal refuse as a fuel. We are bottom of the European league in using our refuse. We still dump it in holes.
Mr. Lambie: What about Scotland?
Mr. Rost: I wish the hon. Gentleman would belt up so that we can get on with the debate.
We are bottom of the league in using our municipal refuse. We prefer to dump it in holes rather than put it into power stations, produce electricity and heat cities with it. A very good scheme in Edmonton uses some of London's refuse to produce electricity. There is also a very good scheme in Nottingham to produce district heating and electricity. However, we have not tapped the huge potential that exists for producing cheaper electricity and heating, simply because the nationalised industry—the CEGB—has not wanted to develop the technology.
As my hon. Friend the Member for Exeter (Mr. Hannam) said, there is enormous potential for producing far more cheap electricity by developing city district heating. Electricity from city district heating is a byproduct and is therefore much cheaper. The reason why Denmark, Sweden and Finland have the cheapest electricity in Europe—it is much cheaper than ours—is that much of their electricity is a by-product of heating. They have combined heat and power city district heating. Thanks to the enterprise of a private consortium and the East Midlands electricity hoard, a scheme is under way in Leicester. A similar scheme in Sheffield is supported by the Yorkshire board and the Eastern area board is also likely to develop schemes. Each of the schemes will produce only 100 or 200 MW of electricity but, as a by-product, that electricity will be very cheap—certainly cheaper than the electricity that the boards buy from the grid at present. If we develop more city district heating, we shall top up our electricity capacity as well as getting rid of our fuel poverty.
Other hon. Members may wish to contribute, and I therefore conclude by reminding the House that evidence is now coming forward to show that electricity can be produced more cheaply from all sorts of sources. We are now to give ourselves the opportunity to prove that by allowing competition. Because the area boards will now have the opportunity to shop around for their power supplies, instead of having to buy from one captive supplier, the CEGB, all sorts of exciting things will happen. Undoubtedly, the competition that will result will lead to a surge of new capacity, to lower-priced electricity and to a better deal for the consumer.
9.13 pm
Mr. Graham Allen: I agree with one thing that the Secretary of State has said today—that his announcement will be widely welcomed, and it will. In Poland, General Jaruzelski cracked open a bottle of vodka to celebrate when he realised that he would be able to export yet more coal to this country. No doubt, the Broederbond and president Botha started to jump up and down when they realised that the coal produced on slave labour wages in South Africa will soon have a market in this country. The child exploiters in South America will also he happy about the announcement made by the Secretary of State. I am sure that the Secretary of State can
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suggest even more people who will be delighted about this announcement, including those who run the French nuclear industry. Those nuclear power stations on the other side of the Channel sit like a row of Roman candles waiting for 5 November.
This announcement will be welcomed worldwide. The only place it will not be welcomed is in this country, and particularly in Scotland, which is acting as a guinea pig for something that will happen to the rest of us soon after. Not only is the Government's proposal morally wrong, but it does not work in terms of their own economics. No risk-taking or entrepreneurial thrust is necessary to make a success of this. It has been gifted. Our electricity industry is being handed over to friends of the Tories without the necessity for those people to take risks.
The Opposition's responsibility is to make sure that our people realise that they will be paying for privatisation. The taxpayers and all people who pay electricity bills have paid for previous investment. That investment is now to be confiscated for the Tories and their friends in the City. We shall pay further because tax revenue, which used to be relatively easy to come by, will no longer be milked from the CEGB. That revenue will have to come from other sources.
A 15 per cent. increase in the price of electricity is in the pipeline, and people will have to pay that as well. There will be the usual debt write-off that we see before any privatisation to make sure that people are prepared to take on the new company. People will have to pay further so that the Tories can make a better job of floating this company than they have with others for which the price has been so low that a massive killing has been made by the City rather than by the taxpayer and the Treasury.
Every way we look at it, taxpayers and individuals will pay. I hope that the Secretary of State will come clean and say how much money the Government will be asking for the electricity industry when they put it on the market. Perhaps he will again leave it to his permanent secretary to explain the matter to the Public Accounts Committee, where he will certainly be cross-examined when this matter comes before it.
Furthermore, there are balance of payments implications. If we import cheap coal, another £1 billion will be added to the £14 billion deficit that we are now running. The heaviest price will be paid by those who make a direct living from the coalfields, not least those in Nottinghamshire. Again, I ask for an absolute guarantee that the planned coal-fired power stations will go ahead. That must include the West Burton coal-fired station.
The economic theory that all this demand can be met from the international coal market flies out of the window, because stock market prices will be changed as soon as demand from this side of the water increases. The major problem will be that the social effects of this proposal will be met by miners, by their families and by people who depend upon the mining industry. Privatisation has come about partly because of the Government's obsession with the mining industry and in particular with breaking the National Union of Mineworkers.
The Secretary of State said that one of the reasons for diversity of supply is the abuse of monopoly power that certain elements of the coal industry have demonstrated that they enjoy using. Those are the politics of personality. Arthur Scargill is the butt of this privatisation proposal. It is not governed by economic or social sense; it is merely a desire to get back at the miners and break their power.

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That is evident from the leaked Cabinet minutes of 1979. The long-term planning of this Government is a lesson for my right hon. and hon. Friends when we are returned to power.
The Opposition need to say to the people of Britain that they will have to pay for the City's bonanza, but that we shall return the industry to public ownership, though not in the old form and not with the old faces, as when we first nationalised the coal industry. Nevertheless, the Opposition will ensure that the people of this country are never again robbed of assets that are theirs.
9.20 pm
Mr. Donald Dewar: When the Secretary of State for Scotland introduced his White Paper on privatisation he proclaimed that the electricity industry was efficient, well managed and successful. I do not dissent from that statement, but the question arises as to why we are about to plunge it into a period of unprecedented uncertainty because of the Government's crazy scheme. I can think of a number of reasons, none of which is entirely honourable.
There is the possibility of political calculation—the rather insulting suggestion that anybody who owns shares automatically votes Tory. There is also the cash temptation. It has been said that £27 billion may be raised by the sale of these assets. However, the nation will be flogging off its future to finance tax cuts. There is also the argument that the sale will earn brownie points for the Secretary of State for Scotland who has been trying of late—with some success, I am afraid—to live down his past. None of these arguments holds water in terms of the industry, the consumer and the national interest.
The Opposition are opposed to privatisation. There is no case for replacing a public utility with private monopolies. The Secretary of State for Energy told us in his statement that it is unacceptable to create a single monopoly, but I do not follow the logic of the argument that it is all right to create two monopolies that are harnessed in tandem. We in Scotland do not even have the split between generation and distribution that perhaps gives a figment of respectability to the competition argument south of the border. In Scotland, not even that argument, for what it is worth, stands up. Each board in Scotland will be a monopoly for the vast majority of consumers in its area. To talk about competition by comparison is a mockery. The argument was greeted with derision in the House and in the country; nobody takes it seriously.
The consumer is entitled to be very sceptical about this scheme, which appears to be founded on the market principle. It hands over a basic utility to profit-driven companies whose legal duty is to maximise the return on their capital for their shareholders. Then, desperately, the Government try to regulate the process and prevent companies from acting according to the logic of the scheme. It is an unhappy marriage; it is not in the public interest; and I do not believe that it will work.
There is a cautionary tale to which I shall draw the attention of the Secretary of State for Energy. An analysis of gas disconnections was carried out recently by the Gas Consumers Council. I do not have time to go into it at great length, but the simple tale is that disconnections of gas consumers increased by 35 per cent. in the first nine
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months of 1987. It reminds us that there is very little room for social conscience when a company with commercial priorities looks at bad debt control and the need to encourage its cash flow.
People are entitled to say that they do not want the same painful experience with electricity. It is because we are conscious of that fact that I have a great deal of sympathy for and will support the proposal that we should retain the traditions of the hydro-electric board and, if necessary, on the basis of a separate and distinct company. I want to stress that our opposition to the whole scheme is total, and that we are merely commenting on what seems the best way of minimising the damage that will result from a very bad option.
Even if the hydro-electric board survives, it is important that it survives in a workable framework. The Opposition are not yet convinced that all the details have been worked out in a way that establishes the practicality test. After all, we heard talk about population transfers in the Secretary of State's statement, and there is also talk of the possibility of plants being transferred. There is a rumour, for example, that Kincardine will go, to the North board to give it some share of the coalburn—although that seems almost a fanciful suggestion, in view of the scenario now developing in Scotland.
We must also consider the question of the joint nuclear capacity. We do not know whether this will he a wholly-owned company, shared by the two boards. We know, however, that the Secretary of State, for reasons that are not yet clear, has decided to go to considerable lengths to avoid what has happened in England, where, on the generating side, there is a "green option". Of course, at present there is a pooling of costs between the SSEB and the hydro-electric board on roughly a 25:75 per cent. basis. That kind of co-operation can work well in the public sector, but in my judgment—which I am sure is widely shared — there will be problems when the commercial interests of two separate companies begin to diverge.
For instance, there are the decommissioning costs and the problem of the accumulated capital debts—over £2·5 billion between the two companies. We shall want to hear what the Secretary of State proposes in that regard. There is also the potential problem, probably towards the end of the century, of new plant. There may be disagreement, for instance, about whether it uses PWR or AGR. The elements of conflict when there are different priorities, different needs and two independent commercial companies are self-evident.
The solution begins to look curiouser and curiouser. It is a mish-mash of prejudice and expediency, and I do not believe that it is good for anyone. It is interesting to note that even the Government, looking at what they are creating, have begun to have doubts about the market theory. We know that the Secretary of State has decided that there should be special protection for the nuclear industry south of the border. That, I should have thought, is an implicit recognition that commercial judgment might well kill the nuclear dream if given an unfettered opportunity. But, although the dangers are now all too evident, there has been no such consideration for the coal industry in Scotland.
The Scottish coalfield is fighting for its very life, but decisions are now being taken that threaten thousands of jobs and the future of entire communities. The substitution of imported coal has far-reaching implications for national

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policy, and for security of supply in the electricity industry. It is extraordinary that the Scottish Office has remained a passive spectator as the drama has unfolded.
Judging by press speculation, heavily trailed over the weekend, the Secretary of State for Scotland is to break his silence in a few minutes' time. The Secretary of State smiles. I hope that my optimism is not unfounded. The reports speak of the Minister's grave concern and of his reluctance to go down in history as the man who supervised the demise of the coal industry in Scotland. The Secretary of State, it is said, is intervening to urge the parties to get round the negotiating table and thrash out a solution. We shall know in a minute or two exactly what the right hon. and learned Gentleman is going to propose. I must tell him that any sign of conscience in Dover house is welcome, but pious hopes of resumed negotiations are not enough.
It is clear that, sadly, there has been a total breakdown of trust between British Coal and the SSEB. The SSEB has abided by the letter of the Court of Session judgment and the interdict, but it seems to have set out to breach it in spirit. The board will not buy foreign coal for Cockenzie and Longannet, but neither will it burn Scottish coal. The trick seems to be to substitute oil and to use coal imports in other plants such as Kincardine. As reported in the daily press, Lord Prosser has talked in his judgment of the catastrophic and irreversible effects of buying foreign coal, but the SSEB is clearly not paying any attention to that. In those circumstances the Secretary of State for Scotland must do more than eloquently mouth expressions of concern.
The key issue is the SSEB's claim that imported foreign coal will result in savings of £50 million or a 5 per cent. cut in electricity tariffs. It is a calculation that British Coal regards as incredible, in the full meaning of the word. It is something that simply cannot be believed. The Scottish Office has a duty to examine and evaluate those competing claims.
We know that the price of coal has come down by 25 per cent. in real terms since 1985. We know that a deal has been offered through to the year 2000 which will mean further cuts in prices over the next one or two years. I am told that the cuts will be 5 or 6 per cent. in cash terms and close on 10 per cent. in real terms. We recognise that there are enormous arguments about security of supply and the likely impact of shopping around for temporary advantage in the spot market to find the cheapest form of coal. Spot markets, by definition, can come under pressure and price rises will appear with demand. Recent history is littered with miscalculations and misjudgments by management about energy prices. Calculations of temporary advantage are no sure or sensible foundation for long-term strategy.
If the SSEB's figures do not stand up to careful and impartial scrutiny by the Scottish Office, the case for saving Scottish coal is immeasurably strengthened. If the Secretary of State evaluates the figures and finds that there are savings of the sort about which the SSEB has spoken, presumably he will be able to give us assurances that the equivalent of the 5 per cent. saving in tariff will be passed on in price cuts to the consumers. If he accepts the figures, he owes us that at least.
The important thing is that the impression left with us by the Minister of State at our recent meeting was that the Scottish Office was a spectator and was not involving itself in the argument. It is essential that we get from the
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Secretary of State a retreat from that hands-off position and an agreement that he will at least look at the figures and decide what is in the public interest.
I understand that the Secretary of State for Scotland said on Radio Forth this morning that he could not interfere with the price to be paid for coal.
Mr. Neil Hamilton rose—
Mr. Dewar: 1 will not give way. Some Conservative Members might have a valuable contribution to make to the debate.
As I have said, the Secretary of State argued on Radio Forth that he could not interfere with the price to be paid for coal. He suggested that the Government have no more right to oblige the SSEB to buy Scottish coal than they have to force individuals to buy a British car if it is more expensive than one made abroad. It is quite wrong to liken a private citizen's right to consumer choice when buying one unit in a mass market with a Government decision, or non-decision, that may decide the fate of a strategic industry.
Unless moderated, the SSEB's policy will, in effect, sack 3,500 Coal Board employees at a cost of nearly £60 million in redundancy payments. In effect, it will write off the £60 million spent in the past two or three years at Castlebridge, which was referred to by my hon. Friend the Member for Dunfermline, West (Mr. Douglas). It will write off the £60 million development planned for Bilston Glen and, despite what the Secretary of State for Energy said in his opening remarks, it will greatly restrict the activities of private sector contractors in opencast mining. My hon. Friend the Member for East Lothian (Mr. Home Robertson) knows that from his constituency experience. The stakes are high and the Secretary of State cannot walk away from his responsibilities.
In 1987 the SSEB, in reply to the Monopolies and Mergers Commission report, argued that the purchase of foreign coal was not in the interests of its consumers. I have its reply with me. It said:
"Although the Board will continue to monitor the price of imported coal it is not considered to be in the long term interests of the Board's customers to import foreign coals in present circumstances."
That was only one year ago. The single decisive change is the advance of privatisation, which inevitably invites the board to put profit before public interest. The Secretary of State and his policy are responsible for that position.
On 25 February, the Secretary of State for Energy told the House that a principal condition for maintaining security of supply in the electricity supply industry was use of a diversity of fuels to generate electricity. He gave an assurance that coal will still be the biggest single source of power south of the border. He boasted—that is not too strong a word—that this safeguard was "built into the system". If that is so, why should the Scottish Office allow the coal industry in Scotland to be murdered? Do not the same sensible priorities apply? The Secretary of State will not be forgiven if he ducks his self-evident responsibilities. His policies have done much to create the present problem. His duty is to act now before imminent catastrophe becomes reality and social and economic damage are made irreversible.
It is ludicrous to pretend that these events are unconnected with privatisation. The South of Scotland electricity board has a profit margin that is eaten by interest charges. It has a substantial debt as a result of

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building Torness. If it is to be successfully fattened for the market, the kind of policies which we are now seeing are, no doubt, thought to be essential, but they are not in the public interest.
The right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith), in what was in many ways a courageous and persuasive speech, talked about the "hysterical and emotional" approach—I think that those were his words, although I did not write them down exactly — in relation to the policies of the South of Scotland electricity board. I beg to differ. I wish that I could agree, but I do not think that they are hysterical and emotional. They are probably totally defensible if the chairman of a public board decides to act as the chief executive of a private company with the new priorities—profit oriented and profit driven — which are then involved. Because that will happen increasingly, the story of Scottish coal over the past few months is a cauutionary one, a tale for our times, and a powerful case against the White Paper and all that it stands for.
There are many unanswered questions. I do not apologise to the House for the amount of time that I have spent on talking about the coal crisis because it is central to the concerns of all of us in Scotland. There are many unanswered questions. Doubtful half-truths litter the Government's case. I mention only two. One is the problem of nuclear safety. Of course I understand the case that the Government argue — that the Nuclear Installations Inspectorate will still be in place—but we must think about the public reaction. Even those who are totally committed to the proliferating family of PWRs must be concerned about the public's deep anxiety over nuclear safety and what is likely to happen if it becomes the charge of a group of directors of private companies who have forgotten the priorities that I have discussed. It is fundamentally misconceived to move in that direction, and that is a major argument against the proposals.
There is also the point, which was made most recently by the hon. Member for Banff and Buchan (Mr. Salmond), about the independence of these companies, and again I think especially in Scottish terms. The Secretary of State for Scotland shook his head vigorously when that point was made. It is true, and there is no denying it, that the independence will be hard to defend when privatisation comes. I am not clear how we can withstand a determined predator, what guarantees can be given and what those guarantees would be worth after the Britoil fiasco. On 25 February, the Secretary of State for Energy said:
"Yes, Britoil has shown that there are weaknesses in that arrangement"—
the golden share—
"but there are other versions that can be put in place just as easily."—[Official Report, 25 February 1988; Vol. 128, c. 459.]
I hope that the Secretary of State will give us an insight into what those other arrangements
"that can be put in place just as easily"
are likely to be. I hope that he will fill the startling void to which the hon. Member for Banff and Buchan referred. There is no assurance from the Secretary of State for Scotland of action in this way.
This is a fundamental debate, and I return to the point made by the right hon. Member for Kincardine and Deeside. He complained about political interference and said that he was surprised that senior executives in the
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electricity industry put up with it. I suppose that they are one group that is likely to benefit from the Government's plans. Indeed, I do not think that there is any doubt about it. However, they are a narrow group and do not command my sympathy.
The important thing—the right hon. Gentleman drew attention to this by implication — is that Government after Government have accepted that there is a public interest in the supply of energy and in the fuels that our generating capacity burns. Whether by the gas levy—a tax to depress the demand for that particular form of heating — or the regulatory machinery built into this White Paper, successive Governments have accepted the need for security of supply on a broad base of fuel consumption, which is an essential prerequisite of that security of supply.
There is growing resentment and fury, mixed at times with dismay and despair, about the way in which the coal industry in Scotland has been dealt with and the likely hazards and dangers that lie ahead because of privatisation. Those points were made by my right hon. Friend the Member for Glasgow, Govan (Mr. Millan) and by my hon. Friend the Member for Dunfermline, West. There is an edge of anger to our rejection because this is not an academic matter. This is not a parliamentary or economic equivalent of war games at staff college; this is for real. This is about jobs and people, and the fate of communities. They should not be sacrificed to what I fear is no more than the dogma of this Government.
9.40 pm
The Secretary of State for Scotland (Mr. Malcolm Rifkind): This debate, as was perhaps inevitable in any debate on privatisation, has been conducted at two levels: at the level of principle — about the principle of privatisation — and at the level of the detailed and technical questions as they relate to the electricity industry.
So far as the principle is concerned, we have heard the traditional view from the Labour party, that industries—especially the great industries of this country—should be controlled by the state and that ultimately it is the Government who can best take the decisions on fundamental questions of investment and other matters that are relevant to the industries. Clearly, the Government's view—it has been the Government's view for many years—is that while Governments of whatever political complexion may be good at governing, they are rarely good at running industry. It is infinitely to the national interest, and to the interest of the general public as consumers, that an industry should he run and administered by those within the industry itself.
We have been asked to state what benefits will flow from privatisation. The first point that I should make to the hon. Members for Glasgow, Garscadden (Mr. Dewar)—it has been made by some of my hon. Friends already during the debate; indeed, my right hon. Friend the Member for Kincardine and Deeside (Mr. Buchanan-Smith) began his speech with this—is that inevitably any industry controlled by Government is subject to interference from Government. We know that the electricity industry, whether under this Government or the previous Labour Government, has had its major investment decisions changed on the basis of the general economic strategy of the Government of the day. Each year when public expenditure is being surveyed and when the public sector borrowing requirement is being

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considered, the Chief Secretary of the day, whether Labour or Conservative, takes a detailed interest in matters that properly should be the affair of the industry.
I advise the hon. Member for Garscadden and his hon. Friends that it must be in the interest of the electricity industry, north and south of the border, that the crucial decisions affecting its investment and other such matters should be determined by the industry itself. If that is true of manufacturing industry and the rest of British industry, there is no good reason why it should not be true of the electricity industry as well.
Mr. Nigel Griffiths rose—
Mr. Rifkind: No, I shall not give way.
The second point that I should make to the hon. Member for Garscadden is that he and his hon. Friends have sought to make a mockery of the arguments used about competition. I must advise those hon. Members that they start from a false premise, so it is not surprising that they reach a wrong conclusion. They start from the false premise that the Government are somehow maintaining that it is possible to achieve classical standards of competition in the electricity industry. The Government have never maintained that. Indeed, my right hon. Friend the Secretary of State for Energy made it clear that, in transmission and distribution, we are dealing with natural monopolies.
Opposition Members fail to understand the real world because they seem to argue that, because it is not possible to achieve perfect competition, we should therefore make no attempt to introduce into the electricity industry such competition as is possible and attainable. [Interruption.] My hon. Friend pointed out that—[Interruption.]
Mr. Speaker: Order. The House heard the hon. Member for Glasgow, Garscadden (Mr. Dewar) in silence. I ask the House to give a fair hearing to the Secretary of State.
Mr. Rifkind: My hon. Friends the Members for Bedfordshire, North (Sir T. Skeet) and for Erewash (Mr. Rost) mentioned the extent to which we are already seeing the benefits of the Government's privatisation policy with regard to the sale of electricity to other areas of the country. When they said that, the hon. Member for Cunninghame, South (Mr. Lambie) said, "What about Scotland?" Such sales are relevant to Scotland because, only last week, BNFL reached an agreement with the Chapelcross power station in the constituency of my hon. Friend the Member for Dumfries (Sir H. Monro). In the past, that station supplied the SSEB, but it no longer has the same need for that power. Therefore, in future, that power will be sold to the North West authority in England. That is an excellent example of how the export of Scottish power to those parts of England that need it is in the interest of the consumer, the public and the industry.
It is significant that if I give a specific, concrete example to Opposition Members, they do not like it because it conflicts with their prejudices. [Interruption.]
Mr. Speaker: Order. It is intolerable that the Secretary of State is being shouted down in this fashion.
Mr. Rifkind rose—
Mr. Harry Ewing: On a point of order Mr. Speaker. [Interruption.]
Mr. Speaker: Order. I cannot even hear the point of order.
Mr. Ewing: The important point is that 4,000 mining jobs and another 10,000 ancillary jobs are at stake in Scotland, The Secretary of State for Scotland is simply refusing to acknowledge that some 14,000 jobs are at stake and is refusing to answer that charge.
Mr. Speaker: I ask the House to give the Secretary of State the opportunity to do so.
Mr. Rifkind: I shall come to that matter, but I shall come to it in my time and not in the hon. Gentleman's time.
The hon. Member for Garscadden, in his usual indirect way, complimented the Government on one decision. He and his hon. Friends have made it clear that if privatisation is to take place, they applaud the Government's proposal that, in Scotland, there should be two separate boards and that a single company representing the electricity industry in Scotland should riot be created. We are delighted that, in addition to that support, the hon. Member for Garscadden and his hon. Friends have made it clear that when shares in the electricity industry are offered to the public in Scotland they will respond well. I thank the hon. Member for Garscadden for making that point.
Mr. Dewar: I did not say that.
Mr. Rifkind: Well, the hon. Gentleman may say that, but I had the benefit of listening to him when he was interviewed on Radio Scotland on Friday morning. [Interruption.] I could not believe my ears and so, to be certain, I got a transcript of what he said. When the hon. Member for Garscadden was asked about the privatisation, he replied:
"Well, I think initially a lot of Scots will buy and if we're going down the privatisation road, then clearly I would prefer to see a widely spread share ownership very strongly based in Scotland".
Well, better a sinner that repenteth. I thank the hon. Gentleman for the endorsement that he has given.
Let us now consider the other matter which dominated the speech of the hon. Member for Garscadden, and which is, I accept, a matter of genuine concern in Scotland and throughout the country. First, let me deal with the question whether the current dispute between the SSEB and British Coal is a consequence of the Government's privatisation proposals. They hon. Gentleman and the House will be aware that the SSEB is under a statutory obligation to ensure the lowest tariffs for its consumers. It would have to face that responsibility even if the Government had no proposals for privatisation. The SSEB maintains that it must pay much more for the coal that it acquires from British Coal than it would for coal that it could obtain on the world market. Labour Members will appreciate that that creates problems that cannot be summed up in the somewhat emotional response that we have heard from some quarters.
The outcome of the dispute will determine the price of electricity that will have to be paid by Scottish consumers, including Scottish industry, during the next few years. The current gap between the price of British Coal's product and the prices obtainable on the world market is said to represent at least 4 per cent. on electricity tariffs. Scottish industry needs to pay as little as possible for its electricity if it is to enjoy growth, export potential and a continuing reduction in unemployment.
Of course, I acknowledge that there are implications for the deep pits and the jobs that they provide in the Scottish

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coalfield. Those pits are important, although they do not represent the entire coal industry in Scotland, as is often suggested. Half the coal mined in Scotland is opencast, and there has been a major expansion of opencast coal production during the past 10 years.
In recent days, the SSEB and British Coal have expressed a willingness to resume negotiations to try to bridge their remaining differences. I encourage them to do so. Agreement is less likely to be reached if either side refuses to show any flexibility. However, if the SSEB and British Coal approach the matters in a genuine constructive desire to reach agreement, there is no reason to believe that agreement will not be achieved. The next stage is for the SSEB and British Coal to get round the table again and explore how much or how little they must move to realise a satisfactory outcome. I trust that they will do so.
Mr. Dewar: The Secretary of State appears to be saying that he hopes that negotiations will reach a successful conclusion, but that he will do nothing to achieve that result. Is he simply watching again from the sidelines? If so, is that not a shameless abdication of his responsibility?
Mr. Rifkind: If the hon. Gentleman is suggesting that the Government of the day should determine the price that an electricity board pays for the coal that it receives from British Coal, I must tell him that that standard is not applied in any other feature of our industrial structure; nor is it an approach that makes any sense.
Mr. Salmond: Given the contents of the letter from Donald Miller to British Coal rejecting its offer on the basis of credibility with his investors, does the Secretary of State seriously maintain that the breakdown between the SSEB and British Coal has nothing to do with the Government's privatisation policy?
Mr. Rifkind: The difference of view between the two boards is that, for understandable reasons, the SSEB wants to pay as little as possible and, for equally understandable reasons, British Coal wants to charge as much as possible for the coal that it supplies. If the boards would approach these matters constructively, there is no reason why agreement could not be reached.
Mr. Millan: The Opposition want to know what the Secretary of State is going to do about it. So far, he has done nothing and he has told us nothing this evening. We know that the SSEB is already placing orders for foreign coal. What is the Secretary of State going to do about the collapse of the Scottish coal mining industry?
Mr. Rifkind: The right hon. Gentleman appears to be more concerned about the deep pits in Scotland than he is about the health of the steel industry in Scotland. [Interruption] As he rightly knows—
Mr. Dewar: Will the Secretary of State give way?
Mr. Rifkind: As the right hon. Gentleman knows—
Mr. Dewar rose—
Mr. Speaker: Order. If the Secretary of State does not give way, the hon. Gentleman must resume his seat.
Mr. Rifkind: The right hon. Member for Glasgow, Govan (Mr. Millan) knows—[Interruption.] Opposition
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Members do not like to listen. Barracking does not impress the people of Scotland any more than people in other parts of the United Kingdom. [Interruption.]
Mr. Speaker: Order. These are important matters of great concern to the country and the Secretary of State must have a chance to respond to the debate.
Mr. Rifkind: I shall try to answer the questions that have been asked if I am enabled to do so.
The right hon. Member for Govan knows that Ravenscraig is the largest individual purchaser of electricity from the SSEB. Is he seriously suggesting that the Government should intervene to ensure that Ravenscraig and other industrial users of Scottish electricity should pay more than can be properly negotiated between the SSEB and British Coal? We have a responsibility to the whole of Scottish industry, and we intend to adhere to it.
Mr. Dewar: I want to understand the Secretary of State's position. Anyone who has had contact with either side in the dispute knows that the chances of a settlement seem now to be remote. Is the right hon. and learned Gentleman saying that, even if his hopes are unfounded and no settlement is coming, he will see the pits close, the loss of about 4,000 jobs and all the social dislocation and problems to which that will give rise, and ignore his clear statutory responsibility under the 1979 legislation?
Mr. Rifkind: I repeat that, if there is flexibility on the part of both British Coal and the SSEB, I have every reason to believe that an agreement can be reached. If the hon. Gentleman and his hon. Friends spent as much of their time impressing upon the SSEB and British Coal the need for flexibility in the manner that I have just done, they would be making a constructive contribution.
This debate—[Interruption.]
Mr. Speaker: Order. The Secretary of State must be given a fair hearing.
Mr. Rifkind: This debate about the privatisation of the electricity industry has arisen because the Government firmly believe that throughout the United Kingdom there are enormous benefits to be achieved for the consumer, for industry and for all those who depend upon electricity for their prosperity. It is—[Interruption.]
Mr. Speaker: Order. It is intolerable for the Secretary of State—[Interruption] Order!
Mr. Rifkind: I am well aware that the Opposition have a deep-seated hostility to any attempt to return the electricity industry to the British public. I am well aware also—[Interruption.] We see now a substitute for reason on the part of the Opposition. They resort to barracking —[Interruption]
Mr. Speaker: Order. This is not the way to behave in the House of Commons.
Mr. Rifkind: It is the only way that they know how to behave, Mr. Speaker.
Mr. Harry Ewing: On a point of order, Mr. Speaker. It is understandable that you, Mr. Speaker, and the Secretary of State for Scotland — it is especially understandable that you should be in this state of mind, Mr. Speaker, because your job is reasonably secure—should be calm, but it would not be understandable if about 50,000—[Interruption.] The Secretary of State is deliberately betraying—[Interruption.]
Mr. Speaker: Order. This is a place in which we all give each other a fair hearing.
Mr. Rifkind: It is on this basis that I invite the House to give its verdict on the principle of privatisation and on the benefits of what we are doing for the Scottish people and the people of the United Kingdom as a whole.
Question put, That the amendment be made:—
The House divided: Ayes 219, Noes 329.

Division 203]

[10.00 pm

AYES

Abbott, Ms Diane

Fearn, Ronald

Adams, Allen (Paisley N)

Field, Frank (Birkenhead)

Allen, Graham

Fields, Terry (L'pool B G'n)

Anderson, Donald

Fisher, Mark

Archer, Rt Hon Peter

Flannery, Martin

Armstrong, Hilary

Flynn, Paul

Ashdown, Paddy

Foot, Rt Hon Michael

Ashley, Rt Hon Jack

Foster, Derek

Banks, Tony (Newham NW)

Foulkes, George

Barnes, Harry (Derbyshire NE)

Fyfe, Maria

Battle, John

Galbraith, Sam

Beckett, Margaret

Galloway, George

Benn, Rt Hon Tony

Garrett, John (Norwich South)

Bennett, A. F. (D'nt'n & R'dish)

Garrett, Ted (Wallsend)

Bermingham, Gerald

George, Bruce

Bidwell, Sydney

Godman, Dr Norman A.

Blair, Tony

Golding, Mrs Llin

Blunkett, David

Gordon, Mildred

Boateng, Paul

Graham, Thomas

Boyes. Roland

Griffiths, Nigel (Edinburgh S)

Bradley, Keith

Griffiths, Win (Bridgend)

Bray, Dr Jeremy

Grocott, Bruce

Brown, Gordon (D'mline E)

Hardy, Peter

Brown, Nicholas (Newcastle E)

Harman, Ms Harriet

Brown, Ron (Edinburgh Leith)

Hattersley, Rt Hon Roy

Buchan, Norman

Healey, Rt Hon Denis

Buckley, George J.

Heffer, Eric S.

Caborn, Richard

Henderson, Doug

Campbell, Menzies (Fife NE)

Hinchliffe, David

Campbell, Ron (Blyth Valley)

Hogg, N. (C'nauld & Kilsyth)

Campbell-Savours, D. N.

Holland, Stuart

Clark, Dr David (S Shields)

Home Robertson, John

Clarke, Tom (Monklands W)

Hood, Jimmy

Clay, Bob

Howarth, George (Knowsley N)

Clelland, David

Howell, Rt Hon D. (S'heath)

Clwyd, Mrs Ann

Hughes, John (Coventry NE)

Cohen, Harry

Hughes, Robert (Aberdeen N)

Coleman, Donald

Hughes, Roy (Newport E)

Cook, Frank (Stockton N)

Hughes, Sean (Knowsley S)

Cook, Robin (Livingston)

Illsley, Eric

Corbett, Robin

Ingram, Adam

Corbyn, Jeremy

Janner, Greville

Cousins, Jim

John, Brynmor

Cox, Tom

Jones, Barry (Alyn & Deeside)

Cryer, Bob

Jones, Ieuan (Ynys Môn)

Cummings, John

Jones, Martyn (Clwyd S W)

Cunningham, Dr John

Kennedy, Charles

Dalyell, Tam

Kilfedder, James

Darling, Alistair

Kinnock, Rt Hon Neil

Davies, Rt Hon Denzil (Llanelli)

Lambie, David

Davies, Ron (Caerphilly)

Lamond, James

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

Leadbitter, Ted

Dewar, Donald

Leighton, Ron

Dixon, Don

Lestor, Joan (Eccles)

Dobson, Frank

Lewis, Terry

Doran, Frank

Litherland, Robert

Douglas, Dick

Livingstone, Ken

Duffy, A. E. P.

Livsey, Richard

Dunnachie, Jimmy

Lofthouse, Geoffrey

Eadie, Alexander

Loyden, Eddie

Eastham, Ken

McAllion, John

Evans, John (St Helens N)

McAvoy, Thomas

Ewing, Harry (Falkirk E)

McCartney, Ian

Ewing, Mrs Margaret (Moray)

McCusker, Harold

Fatchett, Derek

Macdonald, Calum A.

Faulds, Andrew

McFall, John

122

McGrady, Eddie

Robertson, George

McKelvey, William

Robinson, Geoffrey

McLeish, Henry

Rogers, Allan

McNamara, Kevin

Rooker, Jeff

McTaggart, Bob

Ross, Ernie (Dundee W)

McWilliam, John

Ruddock, Joan

Madden, Max

Salmond, Alex

Mahon, Mrs Alice

Sedgemore, Brian

Mallon, Seamus

Sheerman, Barry

Marek, Dr John

Sheldon, Rt Hon Robert

Marshall, Jim (Leicester S)

Short, Clare

Martin, Michael J. (Springburn)

Skinner, Dennis

Martlew, Eric

Smith, Andrew (Oxford E)

Maxton, John

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

Meacher, Michael

Snape, Peter

Meale, Alan

Spearing, Nigel

Michael, Alun

Steinberg, Gerry

Michie, Bill (Sheffield Heeley)

Stott, Roger

Michie, Mrs Ray (Arg'l & Bute)

Strang, Gavin

Milian, Rt Hon Bruce

Straw, Jack

Mitchell, Austin (G't Grimsby)

Taylor, Mrs Ann (Dewsbury)

Moonie, Dr Lewis

Taylor, Matthew (Truro)

Morgan, Rhodri

Thomas, Dr Dafydd Elis

Morley, Elliott

Thompson, Jack (Wansbeck)

Morris, Rt Hon J. (Aberavon)

Turner, Dennis

Mowlam, Marjorie

Vaz, Keith

Mullin, Chris

Wall, Pat

Murphy, Paul

Wallace, James

Nellist, Dave

Walley, Joan

Oakes, Rt Hon Gordon

Wardell, Gareth (Gower)

O'Brien, William

Wareing, Robert N.

O'Neill, Martin

Welsh, Andrew (Angus E)

Parry, Robert

Welsh, Michael (Doncaster N)

Patchett, Terry

Wigley, Dafydd

Pendry, Tom

Williams, Rt Hon Alan

Pike, Peter L.

Williams, Alan W. (Carm'then)

Powell, Ray (Ogmore)

Wilson, Brian

Prescott, John

Wise, Mrs Audrey

Quin, Ms Joyce

Worthington, Tony

Radice, Giles

Wray, Jimmy

Randall, Stuart

Young, David (Bolton SE)

Redmond, Martin

Rees, Rt Hon Merlyn

Tellers for the Ayes:

Reid, Dr John

Mr. Frank Haynes and

Richardson, Jo

Mr. Allen McKay

Roberts, Allan (Bootle)

NOES

Adley, Robert

Bowden, A (Brighton K'pto'n)

Aitken, Jonathan

Bowden, Gerald (Dulwich)

Alexander, Richard

Bowis, John

Alison, Rt Hon Michael

Boyson, Rt Hon Dr Sir Rhodes

Allason, Rupert

Braine, Rt Hon Sir Bernard

Amery, Rt Hon Julian

Brandon-Bravo, Martin

Amess, David

Brazier, Julian

Amos, Alan

Bright, Graham

Arbuthnot, James

Brooke, Rt Hon Peter

Arnold, Jacques (Gravesham)

Brown, Michael (Brigg & Cl't's)

Arnold, Tom (Hazel Grove)

Bruce, Ian (Dorset South)

Ashby, David

Buchanan-Smith, Rt Hon Alick

Aspinwall, Jack

Buck, Sir Antony

Atkins, Robert

Budgen, Nicholas

Baker, Rt Hon K. (Mole Valley)

Burns, Simon

Baker, Nicholas (Dorset N)

Burt, Alistair

Baldry, Tony

Butcher, John

Banks, Robert (Harrogate)

Butler, Chris

Barnes, Mrs Rosie (Greenwich)

Butterfill, John

Batiste, Spencer

Carlisle, John, (Luton N)

Beaumont-Dark, Anthony

Carlisle, Kenneth (Lincoln)

Bellingham, Henry

Carrington, Matthew

Bendall, Vivian

Carttiss, Michael

Bennett, Nicholas (Pembroke)

Cartwright, John

Benyon, W.

Cash, William

Biffen, Rt Hon John

Chalker, Rt Hon Mrs Lynda

Blackburn, Dr John G.

Channon, Rt Hon Paul

Blaker, Rt Hon Sir Peter

Chapman, Sydney

Bonsor, Sir Nicholas

Chope, Christopher

Boswell, Tim

Churchill, Mr

Bottomley, Peter

Clark, Hon Alan (Plym'th S'n)

Bottomley, Mrs Virginia

Clark, Dr Michael (Rochford)

123

Clark, Sir W. (Croydon S)

Hogg, Hon Douglas (Gr'th'm)

Colvin, Michael

Holt, Richard

Conway, Derek

Hordern, Sir Peter

Coombs, Anthony (Wyre F'rest)

Howard, Michael

Coombs, Simon (Swindon)

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

Cope, John

Howarth, G. (Cannock & B'wd)

Cormack, Patrick

Howe, Rt Hon Sir Geoffrey

Couchman, James

Howell, Ralph (North Norfolk)

Cran, James

Hughes, Robert G. (Harrow W)

Critchley, Julian

Hunt, David (Wirral W)

Currie, Mrs Edwina

Hunt, John (Ravensbourne)

Davies, Q. (Stamf'd & Spald'g)

Hunter, Andrew

Davis, David (Boothferry)

Hurd, Rt Hon Douglas

Day, Stephen

Irvine, Michael

Devlin, Tim

Irving, Charles

Dickens, Geoffrey

Jack, Michael

Dorrell, Stephen

Jackson, Robert

Douglas-Hamilton, Lord James

Janman, Tim

Dover, Den

Jessel, Toby

Dunn, Bob

Johnson Smith, Sir Geoffrey

Durant, Tony

Jones, Gwilym (Cardiff N)

Eggar, Tim

Jones, Robert B (Herts W)

Evans, David (Welwyn Hatf'd)

Kellett-Bowman, Dame Elaine

Evennett, David

Key, Robert

Fairbairn, Nicholas

King, Roger (B'ham N'thfield)

Fallon, Michael

Kirkhope, Timothy

Farr, Sir John

Knapman, Roger

Favell, Tony

Knight, Greg (Derby North)

Fenner, Dame Peggy

Knight, Dame Jill (Edgbaston)

Field, Barry (Isle of Wight)

Knowles, Michael

Finsberg, Sir Geoffrey

Knox, David

Fookes, Miss Janet

Lamont, Rt Hon Norman

Forman, Nigel

Lang, Ian

Forsyth, Michael (Stirling)

Latham, Michael

Forth, Eric

Lawson, Rt Hon Nigel

Fowler, Rt Hon Norman

Lee, John (Pendle)

Fox, Sir Marcus

Leigh, Edward (Gainsbor'gh)

Franks, Cecil

Lennox-Boyd, Hon Mark

Freeman, Roger

Lightbown, David

French, Douglas

Lilley, Peter

Gale, Roger

Lloyd, Sir Ian (Havant)

Gardiner, George

Lord, Michael

Garel-Jones, Tristan

Luce, Rt Hon Richard

Gill, Christopher

Lyell, Sir Nicholas

Gilmour, Rt Hon Sir Ian

McCrindle, Robert

Glyn, Dr Alan

Macfarlane, Sir Neil

Goodhart, Sir Philip

MacKay, Andrew (E Berkshire)

Goodlad, Alastair

Maclean, David

Goodson-Wickes, Dr Charles

McLoughlin, Patrick

Gorman, Mrs Teresa

McNair-Wilson, M. (Newbury)

Gorst, John

McNair-Wilson, P. (New Forest)

Gow, Ian

Major, Rt Hon John

Gower, Sir Raymond

Malins, Humfrey

Greenway, Harry (Ealing N)

Mans, Keith

Greenway, John (Ryedale)

Marland, Paul

Gregory, Conal

Marlow, Tony

Griffiths, Sir Eldon (Bury St E')

Marshall, John (Hendon S)

Griffiths, Peter (Portsmouth N)

Marshall, Michael (Arundel)

Grist, Ian

Martin, David (Portsmouth S)

Ground, Patrick

Mates, Michael

Grylls, Michael

Maude, Hon Francis

Hamilton, Hon Archie (Epsom)

Mawhinney, Dr Brian

Hamilton, Neil (Tatton)

Mayhew, Rt Hon Sir Patrick

Hanley, Jeremy

Mellor, David

Hannam, John

Miller, Hal

Hargreaves, A. (B'ham H'll Gr')

Mills, Iain

Hargreaves, Ken (Hyndburn)

Miscampbell, Norman

Harris, David

Mitchell, Andrew (Gedling)

Haselhurst, Alan

Moate, Roger

Hawkins, Christopher

Monro, Sir Hector

Hayes, Jerry

Montgomery, Sir Fergus

Hayhoe, Rt Hon Sir Barney

Moore, Rt Hon John

Hayward, Robert

Morris, M (N'hampton S)

Heathcoat-Amory, David

Morrison, Hon Sir Charles

Heddle, John

Moss, Malcolm

Heseltine, Rt Hon Michael

Moynihan, Hon Colin

Hicks, Mrs Maureen (Wolv' NE)

Neale, Gerrard

Hicks, Robert (Cornwall SE)

Neubert, Michael

Higgins, Rt Hon Terence L.

Newton, Rt Hon Tony

Hill, James

Nicholls, Patrick

124

Nicholson, David (Taunton)

Stanbrook, Ivor

Nicholson, Emma (Devon West)

Steen, Anthony

Onslow, Rt Hon Cranley

Stern, Michael

Oppenheim, Phillip

Stevens, Lewis

Owen, Rt Hon Dr David

Stewart, Allan (Eastwood)

Page, Richard

Stewart, Andy (Sherwood)

Paice, James

Stewart, Ian (Hertfordshire N)

Parkinson, Rt Hon Cecil

Stokes, John

Patnick, Irvine

Stradling Thomas, Sir John

Patten, Chris (Bath)

Sumberg, David

Patten, John (Oxford W)

Summerson, Hugo

Pattie, Rt Hon Sir Geoffrey

Tapsell, Sir Peter

Pawsey, James

Taylor, John M (Solihull)

Peacock, Mrs Elizabeth

Tebbit, Rt Hon Norman

Porter, David (Waveney)

Thatcher, Rt Hon Margaret

Portillo, Michael

Thompson, D. (Calder Valley)

Price, Sir David

Thompson, Patrick (Norwich N)

Raffan, Keith

Thorne, Neil

Raison, Rt Hon Timothy

Thornton, Malcolm

Rathbone, Tim

Thurnham, Peter

Redwood, John

Townend, John (Bridlington)

Renton, Tim

Townsend, Cyril D. (B'heath)

Rhodes James, Robert

Tracey, Richard

Rhys Williams, Sir Brandon

Tredinnick, David

Riddick, Graham

Trippier, David

Ridley, Rt Hon Nicholas

Vaughan, Sir Gerard

Ridsdale, Sir Julian

Viggers, Peter

Rifkind, Rt Hon Malcolm

Waddington, Rt Hon David

Roberts, Wyn (Conwy)

Wakeham, Rt Hon John

Roe, Mrs Marion

Walker, Bill (T'side North)

Rossi, Sir Hugh

Walker, Rt Hon P. (W'cester)

Rost, Peter

Waller, Gary

Rowe, Andrew

Walters, Dennis

Rumbold, Mrs Angela

Ward, John

Ryder, Richard

Wardle, Charles (Bexhill)

Sackville, Hon Tom

Wells, Bowen

Sainsbury, Hon Tim

Wheeler, John

Sayeed, Jonathan

Whitney, Ray

Scott, Nicholas

Widdecombe, Ann

Shaw, David (Dover)

Wiggin, Jerry

Shaw, Sir Giles (Pudsey)

Wilkinson, John

Shaw, Sir Michael (Scarb')

Wilshire, David

Shelton, William (Streatham)

Winterton, Mrs Ann

Shephard, Mrs G. (Norfolk SW)

Winterton, Nicholas

Shepherd, Colin (Hereford)

Wolfson, Mark

Shepherd, Richard (Aldridge)

Wood, Timothy

Shersby, Michael

Woodcock, Mike

Sims, Roger

Yeo, Tim

Skeet, Sir Trevor

Young, Sir George (Acton)

Smith, Sir Dudley (Warwick)

Younger, Rt Hon George

Soames, Hon Nicholas

Speed, Keith

Tellers for the Noes:

Spicer, Sir Jim (Dorset W)

Mr. Robert Boscawen and

Spicer, Michael (S Worcs)

Mr. Peter Lloyd.

Squire, Robin

Question accordingly negatived.
Main Question put:—
The House divided: Ayes 326, Noes 218.

Division No. 204]

[10.17 pm

AYES

Adley, Robert

Banks, Robert (Harrogate)

Aitken, Jonathan

Batiste, Spencer

Alexander, Richard

Beaumont-Dark, Anthony

Alison, Rt Hon Michael

Bellingham, Henry

Allason, Rupert

Bendall, Vivian

Amery, Rt Hon Julian

Bennett, Nicholas (Pembroke)

Amess, David

Benyon, W.

Amos, Alan

Biffen, Rt Hon John

Arbuthnot, James

Blackburn, Dr John G.

Arnold, Jacques (Gravesham)

Blaker, Rt Hon Sir Peter

Arnold, Tom (Hazel Grove)

Bonsor, Sir Nicholas

Ashby, David

Boswell, Tim

Aspinwall, Jack

Bottomley, Peter

Atkins, Robert

Bottomley, Mrs Virginia

Baker, Rt Hon K. (Mole Valley)

Bowden, A (Brighton K'pto'n)

Baker, Nicholas (Dorset N)

Bowden, Gerald (Dulwich)

Baldry, Tony

Bowis, John

125

Boyson, Rt Hon Dr Sir Rhodes

Greenway, Harry (Ealing N)

Braine, Rt Hon Sir Bernard

Greenway, John (Ryedale)

Brandon-Bravo, Martin

Gregory, Conal

Brazier, Julian

Griffiths, Sir Eldon (Bury St E')

Bright, Graham

Griffiths, Peter (Portsmouth N)

Brooke, Rt Hon Peter

Grist, Ian

Brown, Michael (Brigg & Cl't's)

Ground, Patrick

Bruce, Ian (Dorset South)

Grylls, Michael

Buchanan-Smith, Rt Hon Alick

Hamilton, Hon Archie (Epsom)

Buck, Sir Antony

Hamilton, Neil (Tatton)

Budgen, Nicholas

Hanley, Jeremy

Burns, Simon

Hannam, John

Burt, Alistair

Hargreaves, A. (B'ham H'll Gr')

Butcher, John

Hargreaves, Ken (Hyndburn)

Butler, Chris

Harris, David

Butterfill, John

Haselhurst, Alan

Carlisle, John, (Luton N)

Hawkins, Christopher

Carlisle, Kenneth (Lincoln)

Hayes, Jerry

Carrington, Matthew

Hayhoe, Rt Hon Sir Barney

Carttiss, Michael

Hayward, Robert

Cash, William

Heathcoat-Amory, David

Chalker, Rt Hon Mrs Lynda

Heddle, John

Channon, Rt Hon Paul

Heseltine, Rt Hon Michael

Chapman, Sydney

Hicks, Mrs Maureen (Wolv' NE)

Chope, Christopher

Hicks, Robert (Cornwall SE)

Churchill, Mr

Higgins, Rt Hon Terence L.

Clark, Hon Alan (Plym'th S'n)

Hill, James

Clark, Dr Michael (Rochford)

Hogg, Hon Douglas (Gr'th'm)

Clark, Sir W. (Croydon S)

Holt, Richard

Clarke, Rt Hon K. (Rushcliffe)

Hordern, Sir Peter

Colvin, Michael

Howard, Michael

Conway, Derek

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

Coombs, Anthony (Wyre F'rest)

Howarth, G. (Cannock & B'wd)

Coombs, Simon (Swindon)

Howe, Rt Hon Sir Geoffrey

Cope, John

Howell, Ralph (North Norfolk)

Couchman, James

Hughes, Robert G. (Harrow W)

Cran, James

Hunt, David (Wirral W)

Critchley, Julian

Hunt, John (Ravensbourne)

Currie, Mrs Edwina

Hunter, Andrew

Davies, Q. (Staml'd & Spald'g)

Hurd, Rt Hon Douglas

Davis, David (Boothferry)

Irvine, Michael

Day, Stephen

Irving, Charles

Devlin, Tim

Jack, Michael

Dickens, Geoffrey

Jackson, Robert

Dorrell, Stephen

Janman, Tim

Douglas-Hamilton, Lord James

Jessel, Toby

Dover, Den

Johnson Smith, Sir Geoffrey

Dunn, Bob

Jones, Gwilym (Cardiff N)

Durant, Tony

Jones, Robert B (Herts W)

Eggar, Tim

Kellett-Bowman, Dame Elaine

Evans, David (Welwyn Hatf'd)

Key, Robert

Evennett, David

King, Roger (B'ham N'thfield)

Fairbairn, Nicholas

Kirkhope, Timothy

Fallon, Michael

Knapman, Roger

Farr, Sir John

Knight, Greg (Derby North)

Favell, Tony

Knight, Dame Jill (Edgbaston)

Fenner, Dame Peggy

Knowles, Michael

Field, Barry (Isle of Wight)

Knox, David

Finsberg, Sir Geoffrey

Lamont, Rt Hon Norman

Fookes, Miss Janet

Lang, Ian

Forman, Nigel

Latham, Michael

Forsyth, Michael (Stirling)

Lawson, Rt Hon Nigel

Forth, Eric

Lee, John (Pendle)

Fowler, Rt Hon Norman

Leigh, Edward (Gainsbor'gh)

Fox, Sir Marcus

Lennox-Boyd, Hon Mark

Franks, Cecil

Lightbown, David

Freeman, Roger

Lloyd, Sir Ian (Havant)

French, Douglas

Lloyd, Peter (Fareham)

Gale, Roger

Lord, Michael

Gardiner, George

Luce, Rt Hon Richard

Gill, Christopher

Lyell, Sir Nicholas

Gilmour, Rt Hon Sir Ian

McCrindle, Robert

Glyn, Dr Alan

Macfarlane, Sir Neil

Goodhart, Sir Philip

MacKay, Andrew (E Berkshire)

Goodlad, Alastair

Maclean, David

Goodson-Wickes, Dr Charles

McLoughlin, Patrick

Gorman, Mrs Teresa

McNair-Wilson, M. (Newbury)

Gorst, John

McNair-Wilson, P. (New Forest)

Gow, Ian

Major, Rt Hon John

Gower, Sir Raymond

Malins, Humfrey

126

Mans, Keith

Shelton, William (Streatham)

Marland, Paul

Shephard, Mrs G. (Norfolk SW)

Marlow, Tony

Shepherd, Colin (Hereford)

Marshall, John (Hendon S)

Shepherd, Richard (Aldridge)

Marshall, Michael (Arundel)

Shersby, Michael

Martin, David (Portsmouth S)

Sims, Roger

Mates, Michael

Skeet, Sir Trevor

Maude, Hon Francis

Smith, Sir Dudley (Warwick)

Mawhinney, Dr Brian

Soames, Hon Nicholas

Mayhew, Rt Hon Sir Patrick

Speed, Keith

Mellor, David

Spicer, Sir Jim (Dorset W)

Miller, Hal

Spicer, Michael (S Worcs)

Mills, Iain

Squire, Robin

Miscampbell, Norman

Stanbrook, Ivor

Mitchell, Andrew (Gedling)

Steen, Anthony

Moate, Roger

Stern, Michael

Monro, Sir Hector

Stevens, Lewis

Montgomery, Sir Fergus

Stewart, Allan (Eastwood)

Moore, Rt Hon John

Stewart, Andy (Sherwood)

Morris, M (N'hampton S)

Stewart, Ian (Hertfordshire N)

Morrison, Hon Sir Charles

Stokes, John

Moss, Malcolm

Stradling Thomas, Sir John

Moynihan, Hon Colin

Sumberg, David

Neale, Gerrard

Summerson, Hugo

Neubert, Michael

Tapsell, Sir Peter

Newton, Rt Hon Tony

Taylor, John M (Solihull)

Nicholls, Patrick

Tebbit, Rt Hon Norman

Nicholson, David (Taunton)

Thatcher, Rt Hon Margaret

Nicholson, Emma (Devon West)

Thompson, D. (Calder Valley)

Onslow, Rt Hon Cranley

Thompson, Patrick (Norwich N)

Oppenheim, Phillip

Thorne, Neil

Page, Richard

Thornton, Malcolm

Paice, James

Thurnham, Peter

Parkinson, Rt Hon Cecil

Townend, John (Bridlington)

Patnick, Irvine

Townsend, Cyril D. (B'heath)

Patten, Chris (Bath)

Tracey, Richard

Patten, John (Oxford W)

Tredinnick, David

Pattie, Rt Hon Sir Geoffrey

Trippier, David

Pawsey, James

Vaughan, Sir Gerard

Peacock, Mrs Elizabeth

Viggers, Peter

Porter, David (Waveney)

Waddington, Rt Hon David

Portillo, Michael

Wakeham, Rt Hon John

Price, Sir David

Waldegrave, Hon William

Raffan, Keith

Walker, Bill (T'side North)

Raison, Rt Hon Timothy

Walker, Rt Hon P. (W'cester)

Rathbone, Tim

Waller, Gary

Redwood, John

Walters, Dennis

Renton, Tim

Ward, John

Rhodes James, Robert

Wardle, Charles (Bexhill)

Rhys Williams, Sir Brandon

Wells, Bowen

Riddick, Graham

Wheeler, John

Ridley, Rt Hon Nicholas

Whitney, Ray

Ridsdale, Sir Julian

Widdecombe, Ann

Rifkind, Rt Hon Malcolm

Wiggin, Jerry

Roberts, Wyn (Conwy)

Wilkinson, John

Roe, Mrs Marion

Wilshire, David

Rossi, Sir Hugh

Winterton, Mrs Ann

Rost, Peter

Winterton, Nicholas

Rowe, Andrew

Wolfson, Mark

Rumbold, Mrs Angela

Wood, Timothy

Ryder, Richard

Woodcock, Mike

Sackville, Hon Tom

Yeo, Tim

Sainsbury, Hon Tim

Young, Sir George (Acton)

Sayeed, Jonathan

Younger, Rt Hon George

Scott, Nicholas

Shaw, David (Dover)

Tellers for the Ayes:

Shaw, Sir Giles (Pudsey)

Mr. Robert Boscawen and

Shaw, Sir Michael (Scarb')

Mr. Tristan Garel-Jones.

NOES

Abbott, Ms Diane

Battle, John

Adams, Allen (Paisley N)

Beckett, Margaret

Allen, Graham

Benn, Rt Hon Tony

Anderson, Donald

Bennett, A. F. (D'nt'n & R'dish)

Archer, Rt Hon Peter

Bermingham, Gerald

Armstrong, Hilary

Bidwell, Sydney

Ashdown, Paddy

Blair, Tony

Ashley, Rt Hon Jack

Blunkett, David

Banks, Tony (Newham NW)

Boateng, Paul

Barnes, Harry (Derbyshire NE)

Boyes, Roland

127

Bradley, Keith

Galbraith, Sam

Bray, Dr Jeremy

Galloway, George

Brown, Gordon (D'mline E)

Garrett, John (Norwich South)

Brown, Nicholas (Newcastle E)

George, Bruce

Brown, Ron (Edinburgh Leith)

Godman, Dr Norman A.

Buchan, Norman

Golding, Mrs Llin

Buckley, George J.

Gordon, Mildred

Caborn, Richard

Graham, Thomas

Campbell, Menzies (Fife NE)

Griffiths, Nigel (Edinburgh S)

Campbell, Ron (Blyth Valley)

Griffiths, Win (Bridgend)

Campbell-Savours, D. N.

Grocott, Bruce

Clark, Dr David (S Shields)

Hardy, Peter

Clarke, Tom (Monklands W)

Harman, Ms Harriet

Clay, Bob

Hattersley, Rt Hon Roy

Clelland, David

Healey, Rt Hon Denis

Clwyd, Mrs Ann

Heffer, Eric S.

Cohen, Harry

Henderson, Doug

Coleman, Donald

Hinchliffe, David

Cook, Frank (Stockton N)

Hogg, N. (C'nauld & Kilsyth)

Cook, Robin (Livingston)

Holland, Stuart

Corbett, Robin

Home Robertson, John

Corbyn, Jeremy

Hood, Jimmy

Cousins, Jim

Howarth, George (Knowsley N)

Cox, Tom

Howell, Rt Hon D. (S'heath)

Cryer, Bob

Hughes, John (Coventry NE)

Cummings, John

Hughes, Robert (Aberdeen N)

Cunningham, Dr John

Hughes, Roy (Newport E)

Dalyell, Tam

Hughes, Sean (Knowsley S)

Darling, Alistair

Hughes, Simon (Southwark)

Davies, Rt Hon Denzil (Llanelli)

Illsley, Eric

Davies, Ron (Caerphilly)

Ingram, Adam

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

Janner, Greville

Dewar, Donald

John, Brynmor

Dixon, Don

Jones, Barry (Alyn & Deeside)

Dobson, Frank

Jones, Ieuan (Ynys Môn)

Doran, Frank

Jones, Martyn (Clwyd S W)

Douglas, Dick

Kennedy, Charles

Duffy, A. E. P.

Kilfedder, James

Dunnachie, Jimmy

Kinnock, Rt Hon Neil

Eadie, Alexander

Lambie, David

Eastham, Ken

Lamond, James

Evans, John (St Helens N)

Leadbitter, Ted

Ewing, Harry (Falkirk E)

Leighton, Ron

Ewing, Mrs Margaret (Moray)

Lestor, Joan (Eccles)

Fatchett, Derek

Lewis, Terry

Faulds, Andrew

Litherland, Robert

Fearn, Ronald

Livingstone, Ken

Field, Frank (Birkenhead)

Livsey, Richard

Fields, Terry (L'pool B G'n)

Lofthouse, Geoffrey

Fisher, Mark

Loyden, Eddie

Flannery, Martin

McAllion, John

Flynn, Paul

McAvoy, Thomas

Foot, Rt Hon Michael

McCartney, Ian

Foster, Derek

McCusker, Harold

Foulkes, George

Macdonald, Calum A.

Fyfe, Maria

McFall, John

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McGrady, Eddie

Robertson, George

McKelvey, William

Robinson, Geoffrey

McLeish, Henry

Rogers, Allan

McNamara, Kevin

Rooker, Jeff

McTaggart, Bob

Ross, Ernie (Dundee W)

McWilliam, John

Ruddock, Joan

Madden, Max

Salmond, Alex

Mahon, Mrs Alice

Sedgemore, Brian

Mallon, Seamus

Sheerman, Barry

Marek, Dr John

Sheldon, Rt Hon Robert

Marshall, Jim (Leicester S)

Short, Clare

Martin, Michael J. (Springburn)

Skinner, Dennis

Martlew, Eric

Smith, Andrew (Oxford E)

Maxton, John

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

Meacher, Michael

Snape, Peter

Meale, Alan

Spearing, Nigel

Michael, Alun

Steinberg, Gerry

Michie, Bill (Sheffield Heeley)

Stott, Roger

Michie, Mrs Ray (Arg'l & Bute)

Strang, Gavin

Millan, Rt Hon Bruce

Straw, Jack

Mitchell, Austin (G't Grimsby)

Taylor, Mrs Ann (Dewsbury)

Moonie, Dr Lewis

Taylor, Matthew (Truro)

Morgan, Rhodri

Thomas, Dr Dafydd Elis

Morley, Elliott

Thompson, Jack (Wansbeck)

Morris, Rt Hon J. (Aberavon)

Turner, Dennis

Mowlam, Marjorie

Vaz, Keith

Mullin, Chris

Wall, Pat

Murphy, Paul

Wallace, James

Nellist, Dave

Walley, Joan

Oakes, Rt Hon Gordon

Wardell, Gareth (Gower)

O'Brien, William

Wareing, Robert N.

O'Neill, Martin

Welsh, Andrew (Angus E)

Parry, Robert

Welsh, Michael (Doncaster N)

Patchett, Terry

Wigley, Dafydd

Pendry, Tom

Williams, Rt Hon Alan

Pike, Peter L.

Williams, Alan W. (Carm'then)

Powell, Ray (Ogmore)

Wise, Mrs Audrey

Prescott, John

Worthington, Tony

Quin, Ms Joyce

Wray, Jimmy

Randall, Stuart

Young, David (Bolton SE)

Redmond, Martin

Rees, Rt Hon Merlyn

Tellers for the Noes:

Reid, Dr John

Mr. Frank Haynes and

Richardson, Jo

Mr. Allen McKay.

Roberts, Allan (Bootle)

Question accordingly agreed to.
Resolved,
That this House, recognising the importance of introducing competition into the electricity supply industry, the advantages of new rights for customers, and the benefits of privatization, approves the proposals set out in the Government's White Paper on the privatisation of the electricity suppy industry in England and Wales, and Scotland, Cm. 322 and 327.

Wages (Northern Ireland)
10.29 pm
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Peter Viggers): I beg to move,
That the draft Wages (Northern Ireland) Order 1988, which was laid before this House on 10th December, be approved.
The Order, which was laid under the Northern Ireland Act 1974, sweeps away a mass of complex and outdated legislation and replaces it with modern provisions. If I may borrow a simile that the late Lord Diplock used in a different context, the present law is a maze, not a motorway. It emanates from the days when the terms "master" and "servant" were commonly used, and when horse and cart or hansom cab were the means of transport. Now that we are in the age of the motorway, it is surely time that our legislation was correspondingly modernised.
The order contains provisions analogous to those enacted in Great Britain by the Wages Act 1986, except that it does not deal with changes to redundancy rebates, where equivalent Northern Ireland legislation is already in place. The central purpose of the Wages Act and the order is to reduce burdens on business and to help to promote employment, especially for young people. The order will not only help employment prospects and encourage industrial efficiency, but will give all workers rights to ensure that they receive the wages due to them. It will also help to break down lingering barriers of status and conditions between manual and non-manual workers, and will contribute to a reduction in opportunities for crime.
Mr. Dave Nellist: The Minister has just said that one of the prime aims of the order is to increase employment among young people. Does he recall the answer that he gave me two weeks ago, on 25 February, when I asked him what estimate he had made of the effect of the order on employment levels in the north? He told me that he was
"not aware of any studies which quantify the number of jobs which will arise from the specific reforms which are proposed".—[Official Report, 25 February 1988; Vol. 128, c. 321.]
How can the Minister say tonight that there will be more jobs for young people if the under-21 rate is abolished, with the wages councils going, when two weeks ago in a written answer he said that he had no evidence for making that assertion?
Mr. Viggers: In Northern Ireland we took the view taken in Great Britain, which was that it would not be sensible or productive to carry out extensive studies of the promotion of job opportunities among younger people because of the abolition of the wages councils. Clearly, however, if young people under the age of 21 are restricted to a minimum requiring them to be paid the same as adults, removing that restriction and enabling them to be employed at lower rates can only improve their job prospects.
Northern Ireland has its own separate legislative and administrative framework for the regulation of wages, but in general we have followed closely the law of Great Britain. Currently, the legislation falls under two heads: the Truck Acts (Northern Ireland) 1831 to 1940, and the Wages Councils (Northern Ireland) Order 1982.
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The main Truck Acts, those of 1831 and 1896, date back to the last century, but their antecedents are more ancient. The Truck Act 1831 was a general Act that repealed and replaced some 18 earlier Truck Acts dating back to 1465, relating to specific trades.
Mr. Eric S. Heffer: As so many Acts are being repealed by the order, and as it contains 27 articles and six schedules, can the Minister explain why not one sentence in it can be changed? Why was it riot presented in the form of a Bill, so that we could discuss and amend it, and obtain opinions before reaching this stage?
Mr. Viggers: The hon. Gentleman knows perfectly well that the legislative procedures for Northern Ireland allow for orders to be placed before the House and debated For one and a half hours. The Government are scrupulous in ensuring that proper consultations take place before this stage is reached. The hon. Gentleman knows as well as I do that if Bills were placed before the House to replicate every order placed before it, that would impose an intolerable burden on the House. These matters have been — and frequently are — discussed whenever orders relating to Northern Ireland are placed before the House. The hon. Gentleman knows the answer as well as I do.
It is amazing that we still have in place legislation designed to deal with abuses that were prevalent not just in 1831, but four centuries earlier. Those abuses no longer exist, but the Truck Acts are still a barrier to the use of modern non-cash methods of payment.
Of course, there is the security aspect. In large factories there is the needless expense of arranging for a security vehicle to bring cash to the site. In smaller establishments the money has to be collected from the bank by someone from the wages office at some personal risk. Workers on their way home with large pay packets also run a risk. Exceptions to the 1831 Act consist of certain benefits for which deductions can be made by the employer. However, the 1831 Act did not forbid deductions from wages by way of fines or misconduct and bad workmanship. With the aim, therefore, of bringing order into the operation of deductions, the Act of 1896 was passed.
It is surely right, and many would say long overdue, that the order which we are considering should repeal he old provisions in the Truck Acts relating to deductions and introduce modern controls. The Truck Acts apply only to manual workers, apart from section 1 of the 1896 Act, which also applies to shop assistants. In contrast, the new provisions relating to deductions would apply to all employees and give special protection to those in retail employment such as supermarket till operators, petrol station forecourt attendants and others of that kind.
The order will also bring reforms to the wages council system. The Wages Councils (Northern Ireland) Order 1982, which was a consolidation of previous wages council legislation, provided for minimum wages, holidays and holiday pay in certain industries to be fixed by wages councils and enforced by a wages inspectorate. Again, until the reforms introduced in Great Britain by the Wages Act 1986, there were no significant differences between wages councils legislation in Great Britain and Northern Ireland.
However, the wages council legislation was also introduced in, and designed for, another era. For its origins I have to refer the House back to before the first world war, indeed to the House of Lords Select Committee

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of 1888–90. It reported on the "sweating system" and enumerated three outstanding features of the so-called "sweated trades"—unduly low rates of wages, excessive hours of labour and the insanitary state of the workplace.
However, it was not until trade boards, subsequently termed wages councils, were established by the Trade Boards Act 1909 that statutory relief was provided. The boards were empowered to fix minimum rates of wages, in selected trades, which became enforceable when ratified by the Minister. Separate boards were established for Ireland, but, following the Government of Ireland Act 1920, the legislation applied to and was administered from Northern Ireland. Thus, while Northern Ireland has its own separate body of legislation, it has followed closely Great Britain law in this transferred area of legislation.
Against that common background, it is not altogether surprising that the present draft order reflects the same consideration which informed the Wages Act and consequently has similar provisions. As is customary, and as I told the hon. Member for Liverpool, Walton (Mr. Helfer), we fully consulted interested parties in Northern Ireland.
Consultations in respect of truck legislation and its possible replacement by more modern provisions produced no local peculiarities warranting special consideration. The majority of those consulted welcomed the proposals, although the trade union movement expressed opposition to change. There was separate consultation on wages councils when the options of abolition or reform, in terms of a simplification of wages orders and the removal of young people from the scope of wages councils, were canvassed. The majority of respondents favoured retention, albeit with various suggestions for reform.
Having considered the views expressed, the Government are satisfied that parity in wages regulation should be preserved. Accordingly, part II of the draft order deals with the abrogation of the Truck Acts 1831 to 1940, and associated legislation, and its replacement by modern provisions for the protection of workers in relation to the payment of wages. Part III effects considerable reforms to the wages councils system and removes young people under 21 from the scope of their operation.
Part II will replace Truck Acts legislation, which requires manual workers to be paid in cash, with new provisions applying to all employees. It is the Government's belief that with a very limited exception the Truck Acts are archaic and obsolete. The exception is the control of deductions by employers from employees' wages. As I have mentioned, those Acts, which date back to 1831, were passed to protect manual workers from abuses which no longer exist and are unlikely to reappear. The legislation is not only outdated but a positive obstacle to desirable change towards cashless pay and runs counter to the well-established principle that terms and conditions of employment, including the mode of payment of wages, are essentially matters to be determined contractually rather than by legislation.
Cashless methods of paying wages, such as automated credit transfer and cheques, bring important benefits to employers, employees and the community as a whole. Employers gain directly from reduced costs and hence improved competitiveness, which in turn improves job
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prospects. Employees benefit through the reduced risk of theft or loss of the cash in pay packets, while the community benefits by a reduction in the scope for robbery and theft, which can often involve arms and other forms of violence.
In Northern Ireland this is an important dimension, given the risk of armed robbery by paramilitary organisations. A move towards greater use of wage systems based on non-cash payments would make an important contribution to reducing this risk. It is important, however, to emphasise here that this part of the order does not take away any existing contractual right to payment in cash; nor does it force an employer to change to non-cash payment systems if he does not wish to do so.
The Truck Acts also include statutory control of deductions from wages. The Government have concluded that this aspect should be brought up to date. The new system set out in the order contains three basic elements: first, deductions are unlawful unless provided for by statute, by the employment contract or by written agreement of the worker; secondly, there are special controls on deductions related to cash shortages and stock deficiencies; and, thirdly, a worker can appeal to an industrial tribunal if he or she thinks that an unlawful deduction has been made.
Consultations on the proposals revealed little evidence in Northern Ireland that deductions from wages are a cause of general difficulty. However, the order introduces a special provision to meet a particular problem—that is, where deductions are related to cash shortages and stock deficiencies experienced by certain workers in retail employment, such as petrol station forecourt attendants, where deductions must not exceed 10 per cent. of their wages.
Mr. Bob Cryer: What protection exists for a worker who is safeguarded against unauthorised deductions only by his employment contract? An employee usually does not receive an employment contract until several weeks after he starts work. The employer may make deductions —statutory deductions being one of the three alternatives mentioned by the Minister—but they are not authorised in the contract. The worker may find out about that only when he gets the contract two or three months later. What can he do about it?
Mr. Viggers: I think it would be dangerous for a Minister standing at the Dispatch Box to speculate on the exact legal circumstances that apply in an individual case. I suspect that if the worker had reason to know the terms on which his contract would be awarded, if it were the same for other workers in exactly the same circumstances, the conditions applying generally in that firm would apply. However, the hon. Gentleman raises a specific point and I shall seek to get him a specific answer during the debate.
Part III effects reforms to the wages council system. Northern Ireland has less distance to go to limit the bureaucratic impact of wages councils than had Great Britain prior to the enactment of the Wages Act 1986. The number of wages councils in Northern Ireland is more restricted, with only nine wages councils, compared to 26 in Great Britain. Their coverage extends to only 7 per cent. of the labour force, compared to the 11 per cent. then applying in Great Britain. The reforms which will be effected by part III are aimed at simplifying the

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requirements that wages councils impose on industry and are consistent with the Government's policy of deregulation which we think will be of benefit to the industry as a whole and to jobs.
Part III will exclude young people under 21 from the scope of the wages councils; here I come to the point raised by the hon. Member for Coventry, South-East (Mr. Nellist).
Mr. James Kilfedder: What industrialised countries in the Western world have removed the legal minimum wages for persons under 21?
Mr. Viggers: Again, 1 would rather give the hon. Gentleman a detailed reply, which I shall certainly do.
Mr. Nellist rose—
Mr. Kilfedder rose—
Mr. Viggers: I give way to the hon. Member for North Down (Mr. Kilfedder).
Mr. Kilfedder: I am grateful to the Minister for giving way again. I and my colleagues are in an extremely difficult position. We have a very limited amount of time in which to debate the order and expect the Minister to give answers. He must have arrived at his decision on the basis of arguments before he produced the order. If he does not know the answer to that important question, I ask him to take the order away and let us debate it on another occasion.
Mr. Nellist rose—
Mr. Viggers: The hon. Gentleman knows that there were wide consultations before this order and before the Bill which became the Wages Act were placed before the House of Commons.
Mr. Nellist rose—
Mr. Michael Foot rose—
Mr. Viggers: I give way to the right hon. Gentleman.
Mr. Foot: The answers that the Minister has given illustrate that this is a hopeless way in which to put through an order of this kind. This is an elaborate piece of legislation and it is unfair of the Minister to say that he had consultations with particular bodies and that that is a substitute for a proper examination of a major piece of legislation.
Surely the fact that the hon. Gentleman, perhaps through no fault of his own, is incapable of answering any questions means that the only way to deal with the order is for him to take it away and for the Government to consider how they should properly bring major legislation on Northern Ireland before the House, so that all Members of the House can debate and discuss the way in which it will operate in Northern Ireland and how it will affect this country.
Mr. Viggers: The right hon. Gentleman is known to all hon. Members as a great parliamentarian, a man to whom one is delighted to listen, but the tune that he sings when sitting on the Government Benches is different from the tune he sings when sitting on the Opposition Benches. After all, the right hon. Gentleman is the great parliamentarian who although when in opposition opposes guillotine measures, came to the House of Commons and put five guillotine motions before the House in one day—
Mr. Nellist rose—
Mr. Foot rose—
Mr. Viggers: If I may complete my point, I put it to the right hon. Gentleman that he and other right hon. and hon. Members know that for many years the way in which Northern Ireland business has been carried through the House has been by way of order. One takes care to consult in advance of the order, and the manner in which the orders are carried through is well known to the right hon. Gentleman and other hon. Members.
Mr. Nellist rose—
Mr. Foot rose—
Mr. Viggers: I give way to the right hon. Gentleman.
Mr. Foot: I thank the Minister for giving way again, I should like to illustrate the point that I put to him. I am fully aware of the way in which Northern Ireland legislation and business is dealt with, but I also know that hon. Members representing Northern Ireland constituencies complain about it all the time, saying that it should be dealt with in a different way.
I defy the hon. Gentleman to produce any measure of such an elaborate character as this being put through as one order, because it is a major piece of legislation, affecting a whole range of people in Northern Ireland. It is an order to which it is necessary to table amendments. The hon. Gentleman cannot produce any precedent for trying to push through a measure of this elaborate nature that will affect so many people in Northern Ireland. If he could produce such a precedent, he might have an excuse, but he cannot do so.
Mr. Viggers: As to the enormous number of individuals who are affected, I am totally unrepentant about the Truck Acts, because I believe that we are sweeping away archaic legislation that well deserved to be put into the knackers' yard of parliamentary archives.
With regard to the wages councils—we were talking specifically about the wages councils when the right hon. Gentleman intervened—we are talking about 7 per cent. of workers in Northern Ireland, comprising about 37,000 workers, and one fifth of those would be a comparatively small number. I do not believe that this is sweeping legislation that would justify a Bill.
Mr. Nellist rose —
Mr. Viggers: With respect to the hon. Gentleman, I have given way to him already, and to all other hon. Members who have sought to intervene, and it might be more appropriate if the hon. Gentleman seeks to make his point later in the debate.
Mr. Nellist: Of 94 countries, none, except the United Kingdom, have withdrawn from ILO convention 26.
Mr. Viggers: The hon. Gentleman chooses to ignore parliamentary convention and make his contribution from a sedentary position.
Mr. Nellist: I have tried to make it from a standing position, but the hon. Gentleman will not give way.
Mr. Viggers: I am advised that a number of countries are contemplating such a measure, and that would, indeed, be consistent with the way in which legislation and proposals for privatisation in the United Kingdom have been taken as a model throughout the world as the way in which to develop industry.

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Part III will exclude young people under the age of 21 from the scope of wages councils. The high minimum rates set by councils for young people in relation to often more experienced adult workers prejudice their employment prospects. This reform will assist young people in getting their first foothold in employment. This is important, in that it will enable employers to offer employment at rates that they can afford. Employers should not be expected to offer employment at wages unrelated to the economic value that the young worker can contribute to the business.
This part of the order also reforms and simplifies the wages council system, requires wages councils to take into account the employment consequences of decisions they take, and streamlines the procedures for abolishing a council or for varying its scope. This will provide a more flexible system capable of adapting more readily to changes in the industries affected, as the need arises.
The reforms introduced by this order are a further step in this Government's well-established policy of deregulation and the stimulation of enterprise and employment. It is our intention to help young people find their first employment, thus enabling them to gain the experience and skills required to become productive and valued members of the workplace. This order will help to realise this objective. It will also reduce rigidities and red tape in the labour market and thus help to promote employment for people of all ages. It provides new protections against deductions from pay where there is known abuse, to ensure that workers receive what is rightly due to them without a large proportion of their pay packets disappearing in deductions.
The order affords an excellent vehicle for employers to agree with their workers a system of wage payments that suits everyone. This is good legislation for employment, especially for young people seeking work. It is particularly good for small businesses, which are so vital to the Northern Ireland economy.
10.51 pm
Mr. Kevin McNamara: The proposals in the order are not new. They have been the subject of some, and in our view inadequate, consultation by the Government and they follow similar legislation dealt with in the House in relation to this island. They are not new in what they reveal about the Government and their philosophy: to screw out of the desperately poor greater wealth for the already rich.
We opposed the Wages Act 1986 in the strongest terms. Having seen the Act in operation, we feel justified in that opposition and we can only oppose, equally strongly, the proposed legislation before us tonight.
The draft order has two main objectives: the repeal of the Northern Ireland Truck Acts, which have governed the payment of wages since 1831, and the restriction of the operation of wages councils in Northern Ireland. The measures expose—again not for the first time—the hypocrisy that has characterised Conservative rule since 1979. The Government claim to support the family and call for a return to Victorian values. The legislation will force young people in Northern Ireland back into sweated labour, poverty wages and unsafe and unhealthy working conditions.
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The Opposition refuse to recognise the dream world of the Victorian era as set out by the Government. However, we recognise that one of the great achievements of the Victorians was to begin to control the unbridled capitalism of their time—a capitalism that regarded workers as commodities, as beasts of burden, out of which life, energy and health were squeezed before being tossed aside on to the industrial scrap heap.
Tonight the Government seek to take another piece out of the framework of our laws, so carefully constructed by the Victorians to protect working people and, in the end, capitalists too, from the results of unbridled exploitation. This Government of Victorian values want to take one more step towards toppling one of the most valuable of all the edifices that we inherited from our Victorian forebears.
The Government would have us believe that they care about equality of opportunity and are opposed to the unequal treatment of and discrimination against women. However, after young working people, it is working women who will suffer most if the draft order becomes law. Some 62 per cent. of workers currently protected by wages councils in Northern Ireland are women. Women in Northern Ireland are already more likely to be found in the lowest paid, least organised and most stressful sectors of employment. Quite how reducing incomes, increasing stress and worsening conditions for women workers in Northern Ireland will help the family is beyond us.
The restriction of wages councils is the most controversial part of the draft order, but the abolition of the Truck Acts will contribute to the further impoverishment and reduced protection from ruthless employers of the most vulnerable workers in Northern Ireland. Under the guise of removing supposedly unnecessary restrictions on capital and building a free market, the Government are shifting the expense and dangers associated with pay day on to workers instead of employers. Workers will now pay bank charges instead of employers paying them, and none of this has been done as a result of any great outcry by employers. My hon. Friend the Member for Leicester, South (Mr. Marshall) will deal with those matters in more detail later, Mr. Deputy Speaker, if he catches your eye. Our general proposition is that we deplore what is happening.
The Government have used the weapon of deflation to squeeze unprecedented numbers of people out of jobs. Now, under the guise of recreating some of the jobs that they destroyed, they propose to use unemployment to force down the already inadequate incomes of those at the bottom of the incomes league. That is the purpose of part III of the draft order.
Before I deal with that, I wish to make some general points about the way in which the Government have introduced this legislation. They have done no more than go through the forms of consultation. It is wrong for the Minister to say that they have consulted in any meaningful way in Northern Ireland. Consultation on the two substantive parts of the order was carried out separately, and the Northern Ireland Committee of the Irish Congress of Trade Unions was highly critical, in both cases, of the half-hearted way in which the Department of Economic Development carried out the process.
I shall quote what the Northern Ireland committee had to say about the so-called consultation on the wages system:
"The Department of Economic Development have circulated for comment a copy of the consultative paper on

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Wages Councils prepared by the Department of Employment in Britain, together with a brief covering note. The latter note fails to provide the relevant detailed information in respect of Northern Ireland which is available in the Department of Employment document as regards the situation in Britain. A few examples will serve to illustrate the point.
The Northern Ireland document does not give a breakdown between full-time and part-time employees, whereas the Department of Employment document indicates that two-thirds of the Wages Councils' labour force are part-time workers compared with one fifth of the economy generally.
The appendix to the GB document lists the number of establishments and the number of workers covered by each of the Wages Councils, whereas this information is not given for Northern Ireland.
The arrangements for monitoring and enforcement are spelt out for Britain, whereas the DED's paper merely summarises this information in a mere couple of sentences.
Even where the information is provided, which shows that there arc significant differences between the situation in Northern Ireland and that in Britain, no comment is made nor any explanation offered."
So much for consultation.
The committee went on:
"In Britain, the Trades Union Congress are critical of the Department of Employment's paper. It is their view, and that of the Northern Ireland Committee, that the Department's main intention is to go through the motions of consultation so that it will then be procedurally in order to denounce ILO Convention No. 26."
That was the point made by my hon. Friend the Member for Coventry, South-East (Mr. Nellist).
"The fact the DED have not made any serious attempt in their paper to analyse the situation in Northern Ireland strongly reinforces the view of the consultative paper."
So much for consultation by the Minister and his Department.
Some months ago, I questioned the commitment of the Department of Economic Development in Northern Ireland to religious equality of opportunity. I was roundly told off by the Secretary of State and the Minister concerned, who stood by their civil servants, as they should. I said that I looked forward to be proven wrong. I still do so. But, as that quotation shows, I am not alone in having queried the bona fides of the Department of Economic Development.
It is time that Ministers responsible for the Department began working to persuade people that when they ask for views on legislative plans they genuinely want them and will genuinely take them into account instead of going through a charade. The solution to Northern Ireland's problems requires greater confidence in Government, not greater cynicism about it. The latter is what has happened in the trade union movement in Northern Ireland in relation to the Government and these proposals.
I shall now discuss some of the specific measures contained in part III of the draft order. Article 13, after repealing the Wages Council (Northern Ireland) Order 1982, provides that henceforth the functions of wages councils shall not be exercised in relation to workers under 21 years of age. The consultative paper termed this
"pricing young people into jobs."
The paper admitted that even among employers a substantial number believed that deregulation could be harmful. How right they were. For small employers especially, wages councils have provided forums for wage negotiations, hut, above all, they have provided protection against competitors seeking to undercut them by paying even lower wages.
It is clear that the wage levels that the Government seek to reduce to price young people into jobs are already at
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poverty level. In 1984, in the sectors covered by the nine wages councils in Northern Ireland, the minima set ranged from £62 a week for laundry workers to £85·81 a week for road haulage workers. Those are hardly princely sums.
Both the Northern Ireland committee of ICTU, and the Irish region of my union, the Amalgamated Transport and General Workers Union, challenged the Government's argument that lower wages would lead to more jobs in their response to the consultation document. As the submission of the Amalgamated Transport and General Workers Union observed, male and female manual rates in Northern Ireland were respectively 7 per cent. and 3 per cent. below prevailing rates in the next worse region on the mainland of the United Kingdom. Unemployment was the highest of any region in the United Kingdom. If there were any validity in the contention that lower wages automatically lead to more jobs, as the Northern Ireland committee of the ICTU said, Northern Ireland should have the lowest level of unemployment, not the highest.
For unemployment to increase in the non-export sectors covered by wages councils, there would have to be an increase in domestic demand. Would shoes need replacing sooner because there was a marginal decrease in the cost of cobbling? The likelihood is that there would be a slightly lower increase.
In 1985 the Financial Times reported that Department of Employment research showed that where wages councils had already been abolished there was no evidence of any increase in the total number of jobs in industry. At the same time, there was significant evidence of an extension of low pay. The studies of the independent Low Pay Unit as long ago as 1983 convincingly refuted the correction between low pay and an increase in unemployment. A more specific study cited in my union's response found that the relative earnings of young people had little to do with variations in young unemployment.
Between 1979 and 1984, when wages for the under-18s decreased from 39·7 per cent. to 34·9 per cent. of adult wages for men, and from 56 per cent. to 48·3 per cent. for women, we saw the most dramatic rise ever in youth unemployment in Northern Ireland. According to the Government's arguments, we should have seen increases in employment, not in unemployment.
Article 14 of the draft order gives the Department of Economic Development the power to abolish or vary the scope of wages councils. Article 24 provides for this to be done by negative resolution, except where a wages council is abolished and none of the workers previously within its scope is transferred to another council, in which case an affirmative resolution is required in both Houses. We do not think that this is adequate. We regard as highly contentious the present proposal to remove workers under 21 years of age from the provisions of the legislation, and would regard as equally contentious any further restrictions on wages councils.
Only where a wages council is abolished altogether are the Government prepared to have the affirmative order procedure. Wages councils in Northern Ireland cover nine sectors and 31,000 workers—7 per cent. of the work force — compared with 26 sectors and 2·75 million workers in Britain. Trade unions in Northern Ireland have been calling for the extension rather than the curtailment of the wages council system to cover further low-wage sectors. They want to see more councils, as do many employers, such as hairdressers.

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It is interesting that the most recent edition of Industrial Relations Review and Report states that where wages councils have been abolished in the United Kingdom, the unions and employers have come together to replace them. They recognise the necessity of them.
Among the Government's original proposals for Northern Ireland was one for the complete abolition of wages councils. We are pleased that, in the face of strong opposition, it was not pursued directly. However, we believe that there will be creeping abolition.
We are suspicious of the powers contained in articles 14 and 24 for the further curtailment of wages councils. Article 14 provides for abolition and the restriction or variation of the scope of existing councils. It does not confer powers for the extension of the wages council system as called for by the trade unions. We are suspicious that, having concluded that it would be too contentious merely to sweep away the councils in one piece of legislation, the Government intend a process of creeping abolition through a series of negative orders which they hope will either not be noticed or not be sufficiently broad in scope to attract great opposition.
I have drawn the attention of right hon. and hon. Members to the likely effect of this draft order on workers generally, and on young workers in particular. But there are other groups on whom it would have a disproportionate impact. Women constitute 62 per cent. of the 31,000 workers covered by wages orders in Northern Ireland and are already. as I have said, over-represented in the worst jobs. In some industries covered by wages councils, almost all employees are female; 93·6 per cent. of shirt makers, for instance, are women.
What is the point of having equal opportunities legislation if what the Government give with one hand they take away with the other? The proposed Sex Discrimination (Northern Ireland) Order 1988 would seriously undermine the position of many women workers, removing a range of statutory protections. If, in addition to that, the Government weaken the wages councils, that will constitute a double blow to the position of the most vulnerable women in the worst-paid jobs.
In the light of the likely impact of the draft order on women, the Equal Opportunities Commission (Northern Ireland) has made known its views on what would be most in the interests of women in Northern Ireland. They are remarkably close to those of the trade unions. It calls for the extension of the numbers and scope of wages councils, rather than their restriction, to protect women. It rejects the exclusion of the under-21s, particularly to protect women. It calls for increased protection for the largely non-unionised home workers and for most part-time workers—again, mostly women. It expresses a particular concern about article 15(6)(a) and (b), which it fears could he interpreted in such a way that women employees end up being paid less than men. That would, of course, be in conflict with the Equal Pay Act 1970.
Exclusion of under-21s from the wages set by wages orders, in so far as that had any impact on youth unemployment, would do so at the cost of increased adult unemployment. The Department of Employment calculated that in Britain eight out of 10 new jobs created for young people were at the expense of older workers.
Finally, the Government have argued that wages councils are unnecessary because
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"there is extensive legislation to protect the rights of individual employees."
That is incorrect and misleading. Eighty per cent. of employers covered by wages orders in Northern Ireland run small enterprises to which such employment protection legislation does not apply. Four thousand establishments, for instance, have fewer than 10 employees, the cut-off point proposed for the Government's new measures on religious equality of opportunity in employment.
Both NIC-ICTU and the ATGWU have accused the Government of seeking to denounce ILO convention 26, and have pointed out that by doing so they are moving against the trend in Europe and the world. It was interesting that, when challenged, the Minister could not mention one Government proposing to follow the same route as ours. The vast majority of Western Governments are among the 95 which had ratified the convention by 1985. Eight member states of the European Community had done so. The Government cannot argue that they need to renege on the convention because their competitors have done so. There is no excuse for their attempts to remove protections which have been enjoyed by workers for generations.
Instead of this punitive order, designed to penalise young people, women and, in the end, all of the most vulnerable workers in Northern Ireland, the Government should heed the calls for the extension of the wages council system in Northern Ireland and for the establishment of minimum wage legislation. As NIC-ICTU has argued, existing councils should be retained to protect those low-paid workers, including the under-21s, who are currently covered. New councils should be created to cover those low-wage sectors that are currently excluded in Northern Ireland. The powers and scope should be increased to bring them in line with best practices outside Northern Ireland. The available resources and staffing for the wages inspectorate should be increased. There should be vigorous enforcement of the law, and stiffer penalties for employers who break it.
On Second Reading of the 1986 Wages Bill, my hon. Friend, and neighbour, the Member for Kingston upon Hull, East (Mr. Prescott), on behalf of her Majesty's Opposition, said:
"We will oppose this Bill without hesitation. It is a piece of Tory legislation which talks about the rhetoric of rights and the increase of jobs. It is concerned with reducing those rights and reducing employment opportunities … The Bill will reduce the rights of employees and tilt the balance in favour of the employer."—[Official Report, 11 February 1986; Vol. 91, c. 807.]
The operation of the Wages Act 1986, as we have seen it, has upheld the assessment made by my hon. Friend two years ago. It is argued that the order will produce a moonlighting, risk-taking, health-damaging and poverty-enhancing economy. Those who suffer will be the most poorly paid and the most vulnerable in Northern Ireland society. The profit margins of the very small employer will be further reduced and overall demand curtailed.
The Draft Wages (Northern Ireland) Order 1988 will lead to worse conditions for all workers in Northern Ireland. It will damage particularly the interests of young people and of women. It will lead to lower wages and will not create a significant number of new jobs. It will penalise people in Northern Ireland simply to gratify the appetite

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of the Government for further deregulation. It is an iniquitous piece of legislation to which we are utterly opposed. That is why we have applied a three-line Whip.
11.10 pm
Mr. Harold McCusker: There is now much less than an hour for hon. Members to comment on the order. That is itself is a serious commentary on the way in which Northern Ireland is governed. This is a lengthy and complex order. The two Front-Bench spokesmen will sum up and other hon. Members will have 30 or 40 minutes to comment on the order. Therefore, I shall not take too long.
My time for participating in this charade is over. In a few days it will be 16 years since this House accepted the responsibility for governing Northern Ireland. Under the Northern Ireland Act 1974 the House consolidated this procedure for governing Northern Ireland. For many of the years since then, my colleagues and I have done our best to improve the system. We have discussed orders such as this for two and half hours in Committee and then discussed them in the House for an hour and a half. We have convinced the Government to produce a step before the draft order—proposals for a draft order. We have discussed the proposals and then discussed the order for an hour and a half on the Floor of the House.
In all that time, we seldom changed one dot or comma in the orders, let alone any of the intentions. All we did was pull the wool over the eyes of the people and somehow convince them that was a democratic way to deal with their affairs in the House. Therefore, we are guilty of perpetuating this fraud on our supporters. It would not be so bad if the Minister or his colleagues had sought a mandate from the people of Northern Ireland for governing in this fashion or for introducing legislation such as this. However, I cannot make too much of that, because an Englishman is now governing Wales. At least his party sought a mandate there to govern the Welsh people in the way that the Government are doing. The Conservatives did not seek a mandate in Northern Ireland for what they are doing.
Let no one accuse me of being an integrationist or someone who wants to cast his lot totally with this House. I have learnt enough in the past 14 years to know that the only place that I or the people that I represent will get a fair deal is in a Parliament of our own in Northern Ireland. I am in favour of having a Parliament back in Northern Ireland, but until that day comes I am in favour of a democratic process for dealing with Northern Ireland affairs.
So successful have we been in working this system that when the Minister is challenged on the essentially undemocratic nature of the order and the procedure in Council, he says that that is the way that it has always been done—as if the way in which it has always been done somehow or other justifies it. Of course, he might have used the other excuse, that we must maintain the integrity of the Northern Ireland statute book. It contains statutes from before 1920, statutes that were passed in the Northern Ireland Parliament between 1920 and 1972 and statutes passed in this Parliament between 1920 and 1972. It contains orders, Orders in Council and Acts passed in the House since 1972.
I notice that the Opposition spokesman, the hon. Member for Kingston upon Hull, North (Mr. McNamara) is not totally opposed to Bills for dealing with Northern
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Ireland business, because when we dealt with the new fair employment legislation, I think that the hon. Gentleman went on record as demanding a Bill to deal with that very important legislation. If he were consistent, he would demand Bills to deal with all the legislation of this type.
As I have said, my days of perpetuating this fraud are finished. When the Minister began, he said that the order swept away legislation that came from an age when "master" and "servant" were terms in daily use. There is a part of this kingdom where those terms are still in daily use. The Minister and his Front Bench colleagues are the "masters" and my colleagues and I and the people whom we represent are still the "servants". The Minister was most offensive when he chastised the hon. Member for Coventry, South-East (Mr. Nellist). He accused the hon. Gentleman of abusing parliamentary convention. How in the name of heaven could anyone defend the order as being parliamentary convention?
We are here to con and fool the people of Northern Ireland. The Minister's press statement has already been issued to the Northern Ireland media. There will be telling reports in the press tomorrow morning and afternoon about what happened in the Chamber. The Minister's actions will be publicised as if they are right. That is no longer right for me; it is no longer right for my colleagues, and I hope that it is no longer right for the people of Northern Ireland.
11.15 pm
Mr. Seamus Mallon: I offer the hon. Member for Upper Bann (Mr. McCusker) the opportunity of not having to endure the kind of humiliation to which he referred. He rightly gave vent to his anger. I want to offer him the opportunity to shake the dust of this place off his feet and ours. After the events of the past month and of today, I find it difficult to restrain my frustration and anger. I look forward to the day when the traditional enemies, those hon. Members who occupy the Official Unionist Bench in the House, and myself will be able to show the confidence and courage to walk out of this place and build a new future for ourselves.
I agree with the hon. Member for Upper Bann that there is no future for the North of Ireland on the Floor of the House of Commons. We will remain optional extras, no matter which party is in government, and whatever the political complexion of the House. Listening to the hon. Member for Upper Bann, I felt for the first time the stirrings within Unionism for the kind of wish that is deeply held by my constituents and the people my party represents — to take ourselves with dignity from this place and rule and organise our lives in such a way that we can make our own mistakes and go through the teething pains. At least Unionists and Nationalists would not have to live with the humiliating circumstances that the British connection gives us on a constant, almost daily, basis.
It is impossible to discuss this order unless it is placed in the Northern Ireland context. We have the highest level of unemployment in Great Britain, if not within Europe. We certainly have the lowest wages in Great Britain. Without a doubt we have the highest cost of living; we pay more for food, coal and electricity, and we have no gas left. We have the highest social security dependence of arty region in Great Britain and, significantly in terms of the

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order, we have the highest number of young people in Europe. We must consider the enormity of this terrible piece of legislation.
This is part of a twin-track approach. The order should be considered only in conjunction with the Social Security Bill. The twin-track approach involves a terribly flawed premise—that if we can force people into work by reducing social security benefits and then reduce wages to such an extent that more jobs are created, somehow or other the employment position will be improved.
That is brutal nonsense. As the hon. Member for Kingston upon Hull, North (Mr. McNamara) pointed out, we have disproved that theory. We have had low social security payments and the lowest spending power imaginable and we have the lowest wages. Has that done anything to ease unemployment? Of course not. Once created by artificial means, such as this, unemployment will simply snowball, and the order will not have the desired effect.
I shall not call this a policy, because it is not a policy. It is not even a strategy. It is a cynical and brutal attempt to recycle poverty—to take people out of one poverty trap and put them into another. It will take away the lowest social security benefit and give people instead the lowest form of employment with the lowest wages.
The order is an attempt at job creation by social oppression. As I said, the Northern Ireland experience has proved conclusively that such tactics do not work. We have experienced low benefits, low spending power and low wages, and we still have the highest unemployment in Great Britain.
The effects of the order will be felt deeply. As has been clearly pointed out, it will affect mainly young people and married women, who are often the only breadwinners in their families — I should amend that to crust-winners, which is what they will be if the order is passed. Those are the people that the order will hurt — the most vulnerable, those least able to help themselves. Look at the scandal of the wages that are already being paid to young people in the catering industry and in the retail industry. The situation has already been abused. Look at the way in which young people in part-time and full-time employment are treated. Look at how vulnerable the married woman—the part-time worker—becomes when legislation such as this prevents any protection of her wage structure.
Can the House imagine what will happen in areas where the area boards are being told by the Government to cut social services and education? Where will the boards start? It will not be with higher, middle or lower management but with part-time school cleaners and the ladies working in the school kitchens. That is where the Government's policy will hurt. The order represents a flawed tactic based on a flawed philosophy.
Inherent in the order, too, is a cruel paradox. There is a complete contradiction in the Government's approach. Incentive after incentive—in taxes and in grants — is provided for wealth creation, but no such incentives are to be provided for poorly paid workers. By contrast they are offered low benefits, low wages and a low quality of life.
Surely the Government will eventually understand that their position is contradictory and realise that, especially in the Northern Irish context, the order cannot be considered an experiment; it is something for which the
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people of Northern Ireland will pay dearly. We have already watched the cruel paradox working in Great Britain. During the last Session of Parliament we had a debate on the divided nation. I remarked then that it was not a divided but an ill-divided nation. That is just as appropriate to this legislation, which will affect a Northern Ireland already affected by depression.
What will this legislation do to young people and women in part-time jobs? It will force them into the new poverty trap of the lace-curtain poor, even though they may be in employment. It may artificially create a few more jobs, which I doubt. Once they get into that trap, they will not benefit from social security or from the wages they are paid, because the legislation opens the door to a low-wage structure.
The legislation is an attempt to divide the spoils. Instead of one poor person, there will be two poor people. In my constituency, £21 million was allocated under the social fund for an area where, in 1986, £38 million was required even to get by. In Newry, in 1988–89, we shall have 58 per cent. of what was required in 1986. In Armagh, we shall have 54 per cent. Strabane, with the highest unemployment in the whole of Europe, will have 38 per cent. of what was required to keep bread on the table in 1986.
This tactic, when allied to the new social security arrangements, is a blueprint for emigration, because young people will not stay under these circumstances. It is a blueprint for exploitation, because young people and the vulnerable will be exploited. It is a blueprint for the cynical recycling of poverty, for the creation of poorly paid jobs by social and economic depression at a time, during the latter part of this century, when one would have hoped that there was some hope and visionary thinking, rather than going back to the practices of the past. I regret this legislation. The Government, and those who support them, will come to regret it too.
11.27 pm
Mr. James Kilfedder: I do not intend to take very long, because I know that the hon. Member for Coventry, South-East (Mr. Nellist), who has a special grasp of this subject, wishes to speak, and I am anxious that he should have a say.
The Minister said that there had been consultation in this matter, but it has been limited consultation, as was pointed out by the hon. Member for Kingston upon Hull, North (Mr. McNamara). I do not accept the Minister's suggestion that that limited consultation was in any way an alternative to full and close examination of the order by Parliament.
We live in a parliamentary democracy, but what democracy is being offered to the people of Northern Ireland? This is complex legislation, and it would probably take an hour and a half to read it. Yet we are limited to one and a half hour's debate. The right hon. Member for Blaenau Gwent (Mr. Foot) has been described by the Minister, and is accepted by everyone, as a distinguished parliamentarian. As he said, Parliament cannot amend the order. That is an affront to democracy. It is no use the Minister saying that this is the way that we have been doing these things for years. On that basis, the Truck Acts would be maintained. We do not accept the present system. We want a full and proper parliamentary system for all legislation that affects Northern Ireland.

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When I intervened during the Minister's speech, I asked him to take away the order to enable us to have a further debate and close and proper examination of the legislation. I repeat that request to him. This order is being introduced against the background in Northern Ireland of ever-increasing unemployment among school leavers and other young persons. That creates great frustration among the young. Wherever there is frustration there is always the danger that young people will go astray in one way or another.
If the Minister is right, the order may create more jobs, but at what cost to the young persons involved? It may provide more part-time jobs, or jobs at wage levels that create great difficulties for young employees. When the Minister replies to the debate, I should like him to tell the House how rates of pay for young people in Northern Ireland compare with those of young people in other countries in the Western world.
This order will have an adverse effect on many women workers who may be further exploited by their employers. I am worried about the effect that the order will have on those who work in the catering industry and in the licensed and hotel trades. It may put greater pressure on workers, with lower rates of pay and worse conditions for young workers. That would run counter to the need to improve living and working standards in Northern Ireland and throughout the United Kingdom as a whole.
The order will limit the activities of those wages councils that survive to the setting of a single minimum hourly rate in respect of basic hours and a single overtime rate. That simplistic approach is extraordinary at a time of complexity in wage negotiations.
I fear that the order, which the House has had no opportunity to digest, will drive down wages for women and young people. The wages of school leavers have dropped in real terms over the past few years while youth unemployment in the Province has increased. The order will result in more young people being forced to leave Northern Ireland to seek work and a life elsewhere, perhaps in the United Kingdom or abroad. The hon. Member for Newry and Armagh (Mr. Mallon) said that Unionists should shun London, but more than half the young unemployed from the Irish Republic, where conditions are terrible, have sought sanctuary in London.
I fear that the order will have an adverse effect on the living standards of the poorest workers in Northern Ireland. I cannot support it, and I intend to vote against it.
11.33 pm
Mr. Dave Nellist: Other hon. Members have mentioned that for the Government to allocate one and half hours to this order, which will have such a great impact on young workers in Northern Ireland, shows their contempt for democratic values and democratic discussion.
I was a member of the Standing Committee that considered the Wages Bill in 1986. That Bill covered England, Scotland and Wales. We could not discuss Northern Ireland because the Bill did not extend to Northern Ireland. For the last three months I have been a member of the Standing Committee discussing the Social Security Bill, which does not extend to Northern Ireland. Clause 17 precludes any discussion of Northern Ireland. However, in the weeks and months ahead, the Minister will no doubt bring before the House orders under what
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will become the the Social Security Act that can be discussed for only one and a half hours, in just the same way as he has moved this order.
I have no time to deal with parts I, II or IV, except to say that the Minister has been extremely glib in passing off the impact of the abolition of the Truck Acts and the deduction from workers' wages. Nor have I time to deal with the effect of part III on adult workers, although it extends beyond the single hourly rate that will be left after the order is passed and abolishes all rights to minimum holidays, shift pay, weekend pay, premium rates and so on. Time allows me to comment only on how it will affect young workers.
The principle of the legislation has nothing to do with the Minister's arguments about increasing jobs, helping young people into work and the rest of the claptrap that he came out with half an hour ago. It is about cutting the wages of 6,000 young people so that the benchmark drops in Northern Ireland and forces down the wages of other young workers in sectors not now covered by wages council orders.
I asked the Minister in an intervention for the evidence that new jobs would come. He had no answer. There are two possibilities: either he does not know, or he does not care. A third possibility is a combination of the first two. When I asked him a parliamentary question two weeks ago, he admitted that there was no evidence, and that, of course, is the case.
We have heard a good deal about the matter in the past three years. The present Secretary of State for Northern Ireland, when he was Secretary of State for Employment in 1985, spoke of 50,000 to 100,000 jobs being created in Britain and Ireland by measures such as this. Three years before that, in 1982, he said — it was quoted in the Lords — that the abolition of wages council rates for young people would only result in
"a very marginal increase in jobs … largely at the expense of full-time adult jobs."—[Official Report, House of Lords, 6 June 1986; Vol. 475, c. 1212.]
That is where the change will come. It will not be in the increase in net new jobs for young people. Even the Department of Employment's own research paper No. 42, by Mr. Wells, admitted that, according to the Department's research, eight out of every 10 jobs that stand a chance of being affected by the legislation will be substitutions — older workers losing their jobs, and younger people coming in because they are cheaper labour.
Even if 300 new jobs are created in Northern Ireland and even if every statistic produced by the Treasury and the Department of Employment comes true—there is no evidence that that has happened in Britain so far—it will be at the expense of workers. Workers of 55 and older will be told, "The age spectrum for unemployment is being shifted. To buy a bit of social peace among the youth, we are chucking out some of the older workers." That will be the effect of the order, if it has any effect on the number of jobs in Northern Ireland.
According to the Minister, youth wages in the wages councils sector are too high—£55 for a 16-year-old, and £62 for a 17-year-old. If the order goes through, there will still be a legal minimum wage in Northern Ireland— £28·50, under the youth training programme. By freezing that allowance and not properly increasing it in nine years, the Government have prevented it reaching the level that it would have reached if the Labour Government's

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introductory rate of 1978 had kept pace with earnings or inflation. It should be over £50 today. The Government are robbing youngsters in Northern Ireland of £21·50 a week. Of course, this is the same Government who intend to cut the top rate of tax for the top 5 per cent., probably from 60 to 40 per cent.
I shall make a prediction. In a week's time the Minister will see a response from the youth of Northern Ireland, as in the streets of this country, against these plans and the cuts in supplementary benefit to all 16 to 17-year-olds in Britain. My hon. Friend the Member for Bradford, South (Mr. Cryer) mentioned a recruiting ground for sectarianism and paramilitaries in the North. This will emerge from the twin tracks of repression and the poverty that is exacerbated by the present Government.
What will also be seen in the weeks ahead, particularly around Monday 14 March, is a recognition by young people in this country and Northern Ireland that what really divides working people in a capitalist society under a Tory Government is not so much race or religion, as poverty and wealth. A Government who have created 17,000 new millionaires since 1979 are telling youngsters on £50 and £60 a week that they are pricing themselves out of work.
We should expect that from a Minister who is Commodore of the House of Commons yacht club. He knows a lot about living on fifty quid a week. This is a man who cannot live on one job: he has had about 12 in the past five years. He is an underwriter at Lloyd's. People need £60 a week for the fees to get into Lloyd's, and £100,000 liquid assests in the bank before they can be let through the door. Obviously, the Minister is an expert on what it is like on £50 or £60 a week as a youngster, or £80 or £90 a week as an adult worker.
The DHSS admits that the single most common cause of poverty among non-pensioner households in this country is low pay. That is doubly true in Northern Ireland. The order exacerbates those conditions of poverty. To answer the Minister, no country but Britain pulled out of International Labour Organisation convention 26, which was signed by 95 countries. That is how extreme the Tory Government are. They talk about extremism in Northern Ireland, but when it comes to economic measures, poverty and repression, many lessone can be learnt from the extremism of the Tory Government.
The order cannot be taken in isolation. Young people in Northern Ireland already have to undergo two years on youth training programmes. If the order is passed there will be a further three years, with no legal minimum wage. A conveyor belt of young people in the north are being given no future by the Government. There will be no net new jobs for the youth of the north as a result of the order. There will be an increase in the exploitation of the young by unscrupulous employers the day after the order is passed. We have seen it in Britain in pubs, clubs, bars, restaurants and in clothing and catering establishments where, after the Wages Act 1986, employer after employer told workers that their £2 an hour was no longer a legal requirement and put their wages down to £1·50 or £1·25 an hour. That is what will happen in Northern Ireland.
The Minister and his Government will reap the harvest of the seeds that they are sowing tonight among the young. It will not be only the paramilitaries who will go to the disaffected young and try to argue their poison case about
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taking a certain form of action. The labour and trade union movement will do what Winston Churchill feared in the pre-war days when the wages councils were set up in this country. He said that unless we had wages councils the unions would argue for national minimum wages and the unions would organise workers.
The Irish Congress of Trade Unions in Northern Ireland has a great task on its hands. When the order is passed, 37,000 workers will no longer have the full legal protection of wages councils. There should be a major recruitment campaign, aimed particularly at the young. Instead of letting the paramilitaries get hold of the young, the labour and trade union movement should get hold of what will undoubtedly be a new generation of class fighters in Northern Ireland when they see the extremes to which the Tory Government are prepared to go.
11.42 pm
Mr. Eddie McCrady: I rise to add my voice in protest against the manner in which such complex legislation is put before us. The time of day and the limited amount of time for speeches does not allow one to make any real in-depth comment on such a complex Order in Council.
Part II of the order is entitled "Protection of Workers", but that is a misnomer. In fact, it is an employers' charter in whatever sector one cares to look. It speaks of employees' rights when shortages have been deducted in either cash or kind. How many employees in Northern Ireland will ever know of those rights? Every employer will be fully aware of what is in the legislation, and it will be a non-starter in terms of the protection of workers.
On the matter of wages for young people, I do not think that anyone here really knows what happens in Northern Ireland among our young people or about the abuses that already exist on many Government-sponsored schemes. For young people the wages are well below an average living wage. Young people are being exploited, even when training under Government sponsorship. We should consider how great that exploitation will be when the employers are not under any control. This is a policy for creating a low wage structure in Northern Ireland and that policy is starting from a point of low wages anyway.
There is the "magnanimous" section dealing with the fact that an employer may not deduct more than 10 per cent. from an employee's wages to cover cash or stock shortages. A 10 per cent. deduction would mean a difference between being able to live and not being able to live. There is no chapter asking the employer to prove that the employee is responsible for cash or stock shortages. This is a charter for employers. It in no way protects Northern Ireland's young employees, as has been mentioned by many more prominent and eloquent speakers than me, or women and others in low-paid jobs. It is they who will suffer.
The timing of the legislation is significant. It must be on the Northern Ireland statute book before 1 April, before the new Social Security Bill comes into operation. If it is not, the actions of the right hand will make nonsense of the actions of the left hand. Between the social security depression and the low-wage depression which will occur if this legislation is passed, people will be living well below poverty level. The conditions in Northern Ireland will deteriorate further. Young people will not be able to emigrate, because there will be nowhere for them to go, They will be unemployed or, if they are lucky enough to

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be employed, they will bring home a derisory wage. They will be at the mercy of the various paramilitaries, who can put an extra tax-free tenner or £30 in their hands at the end of the week for doing a deed that is illegal and that will bring them into conflict with the criminal law. This is the legislation that will put more of our young people into the already bursting gaols of Northern Ireland.
11.46 pm
Mr. Jim Marshall: Although this has been only a one-and-a-half-hour debate, no one can deny that, given its constraints, it has been wide-ranging. The unanimity on both sides of the House on the uselessness of the order for the Northern Ireland economy has been significant. The hon. Member for South Down (Mr. McGrady) summed up the order correctly by referring to it as an employer's charter which shows the desire to have even lower wages in the Province. That point was made also by my hon. Friend the Member for Coventry, South-East (Mr. Nellist).
There is a danger for youngsters on both sides of the divide in the Province. As my hon. Friend the Member for Coventry, South-East pointed out, the order offers no hope to young people. It diminishes their hope by the pursuit of some miracle concept of economics called Thatcherism—a concept which has patently not worked in curing the problem of low pay in Great Britain and is obviously doomed to failure in the north of Ireland.
The hon. Member for Newry and Armagh (Mr. Mallon) painted a picture of the background in Northern Ireland — the highest unemployment, the greatest poverty and the lowest wages in the United Kingdom. The Government's only answer to the declining economy is to seek to drive wages even lower in the pursuit of further employment. The Opposition believe that that is a recipe for further economic decline in the north of Ireland and further disappointment and lack of hope among all people seeking a job.
The hon. Members for Upper Bann (Mr. McCusker), who is no longer present, for South Down and for North Down (Mr. Kilfedder) referred to the lack of time in which to debate these complex pieces of legislation. We share that concern, but remind them that the remedy lies in their own hands. If they were prepared to accept a consensus over a devolved assembly in the north of Ireland, sufficient and adequate time could be found in the Province to discuss such legislation. That is the course of action that we would urge on the hon. Members for North Down, for South Down and for Upper Bann.
Mr. Mallon rose—
Mr. Marshall: I am sure that the hon. Gentleman will agree that, as I have only two or three more minutes left, and both he and his hon. Friend the Member for South Down have had a decent innings this evening, I should continue.
I should like to refer briefly to the Minister's opening remarks. I found it patronising when he referred to replacing complex and outdated legislation, which he says needs to be updated. It is patronising because he is talking about a euphemism for removing existing workers' rights in the north of Ireland. He referred in passing to the Truck Acts. However, what he forgot to mention is that 40 per cent. of the work force in the north of Ireland is still paid in cash.
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The order seeks to impose on that work force a unilateral decision, made by management, to replace the present cash payment system with a cashless system. In a society in which there is a trend towards more bank accounts and where, inevitably, with the passage of time, more and more people will accept a cashless payment, such changes should be brought about by negotiation, not by the unilateral action of managers of industry.
The Minister also referred to the wages councils. However, he failed to mention that low pay is endemic in the north of Ireland, and the order is likely to make that situation worse.
We shall vote against the order because, in our view, the Government have failed to advance any convincing arguments for the need for this draft order. It is a continuation of the Government's policy of undermining the existing rights of workers. Part III, which deals with wages councils, is an attempt to cut further the wages of the poorest workers in the north of Ireland, who also happen to be the poorest workers in the United Kingdom. It will not create more jobs; it will simply create more poverty. It is a mean-minded measure that is based on dogma. For those reasons, and for the reasons outlined by all my hon. Friends, we shall oppose the order in the Lobby this evening.
11.52 pm
Mr. Viggers: With your leave, Mr. Deputy Speaker, I shall seek to deal with as many as possible of the points that have been raised during the debate. This is the kind of debate in which there is a clear philosophical divide and on which the House will not agree. On the one hand, there have been several speeches— o doubt deeply felt—urging controls which hon. Members feel will assist workers. On the other hand, the Government are urging deregulation, flexibility and competition leading to growth, prosperity and, we believe, more jobs.
One constitutional point with which I should like to deal has been raised by several hon. Members, notably by the hon. Member for Upper Bann (Mr. McCusker). Of course we recognise the concerns expressed in the debate from hon. Members of different parties, that legislation for Northern Ireland by Order in Council is unsatisfactory.
We do not pretend that that method of legislation is perfect, and it is for that reason that our existing procedures provide for extensive consultation in Northern Ireland, which has taken place on this occasion. We appreciate the difficulties posed by unamendable Orders in Council. I totally agree with the hon. Member for Leicester, South (Mr. Marshall) that the problem may best be addressed in the context of discussions about the future government of Northern Ireland. We are willing to talk about the issues to all interested parties, and to consider constructive suggestions.
The hon. Member for Bradford, South (Mr. Cryer) raised a particular point about a worker who joins a company but fails to receive a contract of employment. The answer to his question is that, when such a worker learns of the deductions from his pay, he can appeal to an industrial tribunal. It is obviously important for workers to know their conditions. The right that is now introduced is a new right for employees, in that all workers, not just manual workers, can now appeal to an industrial tribunal, instead of having to take civil action in tort.
The hon. Member for Kingston upon Hull, North (Mr. McNamara) asked about the protection of female

151
workers. We refute any suggestion that the proposed reform of wages councils could indirectly discriminate against women, who constitute the majority of wages council workers. If wages council protection currently favours women in preference to men, any reduction in that inequality of protection cannot possibly be discrimination. There will also be separate legislation dealing with sex discrimination. The Equal Opportunities Commission in Northern Ireland is funded proportionately higher than that in Britain.
The hon. Gentleman also asked about consultation on the order. There were preliminary consultations, which were followed by publication of a proposal for a draft order that set out the Government's plans in detail. The consultative document was fully considered and reported by the then Northern Ireland Assembly. The hon. Member for North Down (Mr. Kilfedder) asked about consultations. I am sure that he will remember that the consultations took place under his Speakership of the Northern Ireland Assembly.
There is clear evidence from studies in the United Kingdom and internationally that there is a link between pay and jobs, especially for the young. Several studies of the employment effect of the wages council system contain evidence that those councils inhibit employment.
The hon. Member for Newry and Armagh (Mr. Mallon) raised a number of points about social security legislation. The House must realise that the proposals in the wages order apply only to 7 per cent. of workers in employment and are quite distinct from the social security implications. Some 5,000 young workers will be taken out of the scope of the wages councils, compared with 40,000 employees under the age of 21 who are not subject to a statutory minimum wage and therefore will not be affected.
The hon. Member for Coventry, South-East (Mr. Nellist) asked about the recent studies. I refer him to a question that he asked in the debate in February 1986 when my right hon. and learned Friend the Chancellor of the Duchy of Lancaster pointed out that the effect of wages councils was to set a 16-year-old's wage rate at 65 per cent. or more of the adult rate and that that compared with about half of 16-year-olds who received in excess of the 60 per cent. of the adult rate where wages councils did not apply. That clearly suggested that wages councils set wages that tend to increase the wages of younger people, and that is why we believe that it is important that such a restriction should be removed.
Mr. Nellist: Will the Minister give way?
Mr. Viggers: The hon. Gentleman has made more than one intervention, and I have two minutes in which to answer a number of other points. I hope that the hon. Gentleman will forgive me, but I must continue.
The answer to the hon. Member for South Down (Mr. McGrady) is that there is not the slightest evidence that employers have seized on the reforms as a method of indulging in mass exploitation.
The order brings the law up to date. It recognises that we are now in the computer age and light years away from the tommy-shop and other abuses that necessitated the passing of the Truck Acts in the Victorian era to ensure that manual workers were paid in cash.
152
We need to accommodate the modern, electronic age and to encourage workers to receive their wages in cashless forms. We need to encourage the use of automated credit transfers and other methods of pay that are quite commonplace elsewhere in the United Kingdom and, indeed, on the continent. The hon. Member for Leicester, South was correct to point out that a high proportion of workers in Northern Ireland receive their pay in cash, and it is important that we do what we can to encourage them to move to cashless pay.
The legislation deals with the wages councils and the Truck Acts. It is a matter of great pride to me that, on 16 February 1983, I introduced a ten-minute Bill entitled the Truck Acts (Abolition) Bill. That Bill pointed out that the Acts were archaic and anachronistic and needed to be replaced.
Mr. Nellist rose—
Mr. Viggers: It is a source of great pride that I can now stand at the Dispatch Box and urge the House to do exactly that in Northern Ireland.
Question put:
The House divided: Ayes 258, Noes 195.

Division No. 205]

[11.59 pm

AYES

Adley, Robert

Carttiss, Michael

Aitken, Jonathan

Cash, William

Alexander, Richard

Chalker, Rt Hon Mrs Lynda

Alison, Rt Hon Michael

Channon, Rt Hon Paul

Allason, Rupert

Chapman, Sydney

Amess, David

Chope, Christopher

Amos, Alan

Clark, Hon Alan (Plym'th S'n)

Arbuthnot, James

Clark, Dr Michael (Rochford)

Arnold, Jacques (Gravesham)

Clark, Sir W. (Croydon S)

Arnold, Tom (Hazel Grove)

Clarke, Rt Hon K. (Rushcliffe)

Ashby, David

Colvin, Michael

Aspinwall, Jack

Conway, Derek

Atkins, Robert

Coombs, Anthony (Wyre F'rest)

Baker, Nicholas (Dorset N)

Coombs, Simon (Swindon)

Baldry, Tony

Cope, John

Banks, Robert (Harrogate)

Couchman, James

Beaumont-Dark, Anthony

Cran, James

Bellingham, Henry

Currie, Mrs Edwina

Bendall, Vivian

Davis, David (Boothferry)

Bennett, Nicholas (Pembroke)

Day, Stephen

Benyon, W.

Devlin, Tim

Biffen, Rt Hon John

Dickens, Geoffrey

Blackburn, Dr John G.

Dorrell, Stephen

Blaker, Rt Hon Sir Peter

Douglas-Hamilton, Lord James

Bonsor, Sir Nicholas

Dover, Den

Boscawen, Hon Robert

Dunn, Bob

Boswell, Tim

Durant, Tony

Bottomley, Peter

Evans, David (Welwyn Hatf'd)

Bottomley, Mrs Virginia

Evennett, David

Bowden, A (Brighton K'pto'n)

Fairbairn, Nicholas

Bowden, Gerald (Dulwich)

Fallon, Michael

Bowis, John

Farr, Sir John

Boyson, Rt Hon Dr Sir Rhodes

Favell, Tony

Brandon-Bravo, Martin

Fenner, Dame Peggy

Brazier, Julian

Field, Barry (Isle of Wight)

Bright, Graham

Finsberg, Sir Geoffrey

Brittan, Rt Hon Leon

Fookes, Miss Janet

Brooke, Rt Hon Peter

Forman, Nigel

Brown, Michael (Brigg & Cl't's)

Forsyth, Michael (Stirling)

Bruce, Ian (Dorset South)

Forth, Eric

Buck, Sir Antony

Fox, Sir Marcus

Budgen, Nicholas

Franks, Cecil

Burns, Simon

Freeman, Roger

Burt, Alistair

French, Douglas

Butcher, John

Gale, Roger

Butler, Chris

Gardiner, George

Butterfill, John

Garel-Jones, Tristan

Carlisle, John, (Luton N)

Gill, Christopher

Carrington, Matthew

Goodhart, Sir Philip

153

Goodlad, Alastair

Patmck, Irvine

Goodson-Wickes, Dr Charles

Patten, Chris (Bath)

Gorman, Mrs Teresa

Patten, John (Oxford W)

Gow, Ian

Pawsey, James

Gower, Sir Raymond

Peacock, Mrs Elizabeth

Greenway, Harry (Ealing N)

Porter, David (Waveney)

Greenway, John (Ryedale)

Portillo, Michael

Gregory, Conal

Price, Sir David

Griffiths, Sir Eldon (Bury St E')

Raffan, Keith

Griffiths, Peter (Portsmouth N)

Raison, Rt Hon Timothy

Grist, Ian

Redwood, John

Ground, Patrick

Renton, Tim

Grylls, Michael

Rhodes James, Robert

Hamilton, Hon Archie (Epsom)

Rhys Williams, Sir Brandon

Hamilton, Neil (Tatton)

Riddick, Graham

Hanley, Jeremy

Ridsdale, Sir Julian

Hannam, John

Roberts, Wyn (Conwy)

Hargreaves, A. (B'ham H'll Gr')

Roe, Mrs Marion

Hargreaves, Ken (Hyndburn)

Rossi, Sir Hugh

Harris, David

Rowe, Andrew

Hayes, Jerry

Sackville, Hon Tom

Hayhoe, Rt Hon Sir Barney

Sainsbury, Hon Tim

Hayward, Robert

Sayeed, Jonathan

Heathcoat-Amory, David

Scott, Nicholas

Heddle, John

Shaw, David (Dover)

Heseltine, Rt Hon Michael

Shaw, Sir Giles (Pudsey)

Hicks, Mrs Maureen (Wolv' NE)

Shaw, Sir Michael (Scarb')

Hicks, Robert (Cornwall SE)

Shelton, William (Streatham)

Higgins, Rt Hon Terence L.

Shephard, Mrs G. (Norfolk SW)

Hill, James

Shepherd, Colin (Hereford)

Holt, Richard

Shepherd, Richard (Aldridge)

Hordern, Sir Peter

Shersby, Michael

Howard, Michael

Sims, Roger

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

Skeet, Sir Trevor

Howarth, G. (Cannock & B'wd)

Smith, Sir Dudley (Warwick)

Howell, Ralph (North Norfolk)

Soames, Hon Nicholas

Hughes, Robert G. (Harrow W)

Speed, Keith

Hunt, David (Wirral W)

Spicer, Sir Jim (Dorset W)

Hunt, John (Ravensbourne)

Spicer, Michael (S Worcs)

Hunter, Andrew

Stanbrook, Ivor

Hurd, Rt Hon Douglas

Steen, Anthony

Irvine, Michael

Stern, Michael

Jack, Michael

Stevens, Lewis

Jackson, Robert

Stewart, Allan (Eastwood)

Janman, Tim

Stewart, Andy (Sherwood)

Jessel, Toby

Stewart, Ian (Hertfordshire N)

Johnson Smith, Sir Geoffrey

Stokes, John

Jones, Gwilym (Cardiff N)

Sumberg, David

Jones, Robert B (Herts W)

Summerson, Hugo

Kellett-Bowman, Dame Elaine

Tapsell, Sir Peter

Key, Robert

Taylor, John M (Solihull)

Knight, Greg (Derby North)

Tebbit, Rt Hon Norman

Knight, Dame Jill (Edgbaston)

Thompson, D. (Calder Valley)

Knox, David

Thompson, Patrick (Norwich N)

Lamont, Rt Hon Norman

Thorne, Neil

Latham, Michael

Thurnham, Peter

Lennox-Boyd, Hon Mark

Townend, John (Bridlington)

Lightbown, David

Tracey, Richard

Lloyd, Peter (Fareham)

Tredinnick, David

Lord, Michael

Trippier, David

Maclean, David

Vaughan, Sir Gerard

McNair-Wilson, M. (Newbury)

Viggers, Peter

McNair-Wilson, P. (New Forest)

Waddington, Rt Hon David

Major, Rt Hon John

Waldegrave, Hon William

Marshall, Michael (Arundel)

Walker, Bill (T'side North)

Mates, Michael

Waller, Gary

Mayhew, Rt Hon Sir Patrick

Ward, John

Miscampbell, Norman

Wardle, Charles (Bexhill)

Morris, M (N'hampton S)

Wells, Bowen

Neale, Gerrard

Wheeler, John

Neubert, Michael

Whitney, Ray

Newton, Rt Hon Tony

Widdecombe, Ann

Nicholls, Patrick

Wiggin, Jerry

Nicholson, David (Taunton)

Wilshire, David

Nicholson, Emma (Devon West)

Winterton, Mrs Ann

Onslow, Rt Hon Cranley

Winterton, Nicholas

Oppenheim, Phillip

Wolfson, Mark

Page, Richard

Wood, Timothy

Paice, James

Woodcock, Mike

154

Yeo, Tim

Tellers for the Ayes:

Young, Sir George (Acton)

Mr. Richard Ryder and

Mr. Kenneth Carlisle.

NOES

Abbott, Ms Diane

Griffiths, Nigel (Edinburgh S)

Allen, Graham

Griffiths, Win (Bridgend)

Anderson, Donald

Grocott, Bruce

Archer, Rt Hon Peter

Hardy, Peter

Armstrong, Hilary

Harman, Ms Harriet

Ashley, Rt Hon Jack

Haynes, Frank

Banks, Tony (Newham NW)

Healey, Rt Hon Denis

Barnes, Harry (Derbyshire NE)

Heffer, Eric S.

Battle, John

Henderson, Doug

Beckett, Margaret

Hinchliffe, David

Benn, Rt Hon Tony

Hogg, N. (C'nauld & Kilsyth)

Bennett, A. F. (D'nt'n & R'dish)

Holland, Stuart

Bermingham, Gerald

Home Robertson, John

Bidwell, Sydney

Hood, Jimmy

Blunkett, David

Howarth, George (Knowsley Nj

Boateng, Paul

Howell, Rt Hon D. (S'heath)

Boyes, Roland

Hughes, John (Coventry NE)

Bradley, Keith

Hughes, Robert (Aberdeen N)

Bray, Dr Jeremy

Hughes, Roy (Newport E)

Brown, Gordon (D'mline E)

Hughes, Sean (Knowsley S)

Brown, Nicholas (Newcastle E)

Illsley, Eric

Brown, Ron (Edinburgh Leith)

Ingram, Adam

Buchan, Norman

Janner, Greville

Buckley, George J.

John, Brynmor

Caborn, Richard

Jones, Barry (Alyn & Deeside)

Campbell, Menzies (Fife NE)

Jones, Martyn (Clwyd S W)

Campbell, Ron (Blyth Valley)

Kilfedder, James

Campbell-Savours, D. N.

Lamond, James

Clark, Dr David (S Shields)

Leadbitter, Ted

Clarke, Tom (Monklands W)

Leighton, Ron

Clay, Bob

Lestor, Joan (Eccles)

Clelland, David

Lewis, Terry

Clwyd, Mrs Ann

Litherland, Robert

Cohen, Harry

Livingstone, Ken

Coleman, Donald

Lofthouse, Geoffrey

Cook, Robin (Livingston)

Loyden, Eddie

Corbett, Robin

McAllion, John

Corbyn, Jeremy

McAvoy, Thomas

Cousins, Jim

McCartney, Ian

Cox, Tom

McCusker, Harold

Cryer, Bob

Macdonald, Calum A.

Cummings, John

McFall, John

Cunningham, Dr John

McGrady, Eddie

Darling, Alistair

McKay, Allen (Barnsley West)

Davies, Rt Hon Denzil (Llanelli)

McKelvey, William

Davies, Ron (Caerphilly)

McLeish, Henry

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

McNamara, Kevin

Dewar, Donald

McTaggart, Bob

Doran, Frank

McWilliam, John

Duffy, A. E. P.

Madden, Max

Dunnachie, Jimmy

Mahon, Mrs Alice

Eadie, Alexander

Mallon, Seamus

Eastham, Ken

Marek, Dr John

Evans, John (St Helens N)

Marshall, Jim (Leicester S)

Ewing, Harry (Falkirk E)

Martin, Michael J. (Springburn)

Fatchett, Derek

Martlew, Eric

Faulds, Andrew

Maxton, John

Field, Frank (Birkenhead)

Meacher, Michael

Fields, Terry (L'pool B G'n)

Michael, Alun

Fisher, Mark

Michie, Bill (Sheffield Heeley)

Flannery, Martin

Millan, Rt Hon Bruce

Flynn, Paul

Mitchell, Austin (G't Grimsby)

Foot, Rt Hon Michael

Moonie, Dr Lewis

Foster, Derek

Morgan, Rhodri

Foulkes, George

Morley, Elliott

Fyfe, Maria

Morris, Rt Hon J. (Aberavon)

Galbraith, Sam

Mowlam, Marjorie

Galloway, George

Mullin, Chris

Garrett, John (Norwich South)

Murphy, Paul

Garrett, Ted (Wallsend)

Nellist, Dave

George, Bruce

Oakes, Rt Hon Gordon

Godman, Dr Norman A.

O'Brien, William

Golding, Mrs Llin

Parry, Robert

Gordon, Mildred

Patchett, Terry

Graham, Thomas

Pendry, Tom

155

Pike, Peter L.

Snape, Peter

Powell, Ray (Ogmore)

Spearing, Nigel

Prescott, John

Steinberg, Gerry

Quin, Ms Joyce

Stott, Roger

Radice, Giles

Strang, Gavin

Randall, Stuart

Taylor, Mrs Ann (Dewsbury)

Redmond, Martin

Thompson, Jack (Wansbeck)

Rees, Rt Hon Merlyn

Turner, Dennis

Reid, Dr John

Wall, Pat

Richardson, Jo

Walley, Joan

Roberts, Allan (Bootle)

Warden, Gareth (Gower)

Robertson, George

Wareing, Robert N.

Robinson, Geoffrey

Welsh, Michael (Doncaster N)

Rogers, Allan

Williams, Rt Hon Alan

Ross, Ernie (Dundee W)

Williams, Alan W. (Carm'then)

Ross, William (Londonderry E)

Wilson, Brian

Ruddock, Joan

Wise, Mrs Audrey

Salmond, Alex

Worthington, Tony

Sedgemore, Brian

Wray, Jimmy

Sheerman, Barry

Young, David (Bolton SE)

Sheldon, Rt Hon Robert

Short, Clare

Tellers for the Noes:

Skinner, Dennis

Mr. Don Dixon and

Smith, Andrew (Oxford E)

Mr. Allen Adams.

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

Question accordingly agreed to.
Resolved,
That the draft Wages (Northern Ireland) Order 1988, which was laid before this House on 10th December, be approved.

Customs Duties
12.9 am
The Minister for Trade (Mr. Alan Clark): I beg to move,
That the Customs Duties (ECSC) (Quota and Other Reliefs) (Amendment) Order 1988 (S.I., 1988, No. 185), dated 10th February 1988, a copy of which was laid before this House on 12th February, be approved.
The purpose of this order is to amend the Customs Duties (ECSC) (Quota and Other Reliefs) Order 1987, so that certain iron and steel products originating in the Republic of Korea will no longer benefit from exemption from customs duties. I propose briefly to review the background to this issue.
The decision by the European Community to suspend Korea's benefits under the generalised scheme of preferences came in response to the Korean Government's refusal to extend to member states concessions already given to the United States on intellectual property matters.
New Korean legislation took effect from 1 July 1987 which provided improved protection of intellectual property rights in copyright and patent protection. That, together with Korea's accession to international conventions such as the universal copyright convention and the Geneva phonogram convention, was welcomed by the United Kingdom and other member states. However, the Korean Government had already entered, in July 1986, a separate bilateral arrangement with the United States, which gave United States patent and copyright holders certain special concessions on retroactive protection, as well as allowing them to convert pending applications for process patents for chemical and pharmaceutical products to the more secure product patents.
When it became clear that the Korean Government had no intention of extending these same concessions to their other trading partners, the United Kingdom and the European Community made it clear that such discriminatory action, and the resultant material disadvantage to our firms, was wholly unacceptable. The matter was raised repeatedly with the Korean Government. At the high-level talks in April last year between the Community and the Korean Government, the Koreans declared that
"equal, if not identical, treatment"
to that accorded to the United States would be extended to the Community. Clarification of exactly what that meant was promised later in the year.
Following the Anglo-Korean trade talks held in London in September and a visit to Seoul by senior officials from the Commission in November, the Korean Government confirmed that, although they were prepared to extend to European firms the concessions on retroactive protection, they could offer no such equality on the conversion of pending process parients.
Continued discrimination in this area in favour of the United States will have a substantial adverse effect on Community exports of chemicals and pharmaceuticals. The United Kingdom industry estimates that it could cost it $100 million in terms of lost sales in the Korean market alone, and three to four times that amount in sales to third markets. Given such material disadvantage, as well as the fact that an important principle was being contravened, we were left with no option but to carry through the proposal, of which the Koreans were first warned in April 1987, to suspend Korea's benefits under GSP until a satisfactory conclusion was reached.

157
In our view, failure to take positive action at this stage would have undermined the credibility of the Community and left the door open for more bilateral arrangements of a similar kind, to our further disadvantage. The suspension was approved by the Council of Ministers on 18 December and came into effect from 1 January 1988. The Government's support for this measure took into account the likely effect of suspension both on British manufacturers and on British consumers, importers and distributors.
As the House is aware, the overall purpose of GSP is to help developing countries through promotion of their export earnings, industrialisation, and rate of economic growth. It is, however, a totally autonomous instrument, and we are fully entitled to withdraw privileges from a beneficiary country if that country is applying discriminatory treatment that runs counter to our and the Community's interests. Under the scheme, it is estimated that Korean goods to the value of £172 million per annum enter the United Kingdom duty free.
The current position is that we await an indication from the new Korean Government that they are prepared to return to the negotiating table in order to reach a satisfactory resolution of this issue. We hope that the removal of discrimination on intellectual property matters and the subsequent restoration of Korea's EC GSP benefits will be examined urgently by the new Administration. I am confident that the House will agree with the review, and I invite it to support the motion.
12.16 am
Mr. Austin Mitchell: When the Minister talks of suspending South Korea's benefits, he makes it sound as if we are dealing with some kind of international workfare. However, we are dealing with a basic matter of industrial policy; with an order which is unimportant in itself but which involves important principles. We have the full attention of this packed and tumultuous House, and the presence of a Minister who was a protectionist until he entered the Department of Trade and Industry and, therefore, went into the advertising industry. We still have hopes of the Minister, because when people in the Department ask to see the beef, they see the Minister. When they ask, "Where is the bull?" they are directed to his senior Minister, the noble Lord Young of Graffham, Saatchi and Saatchi and J. Walter Thompson and Co. Ltd. The Minister for Trade is the beef because he has a concern for all industry.
The problem is that South Korea has a rapidly growing steel industry that is a potential threat to our industry and to the industries of others. The figures are quite alarming. In contrast to the steel industries of most European countries, which have cut production in the last few years, South Korea has gone from the production of 8,558,000 tonnes in 1980 to 16,780,000 tonnes in 1987. That is an estimate, but the figures show an increase of 96 per cent. in steel output. That can be compared to a fall in production in Britain and, indeed, in every other country in the European Community. The South Korean steel industry is becoming extremely powerful.
The most important of the six major producers in South Korea is Pohang Iron and Steel, or Posco. It is Government-controlled and has 67 per cent. of the total crude steel output. It has plans for a rapid and substantial expansion, and its new plant on the south coast, which I visited, is alarmingly efficient. The ore in vessels comes in
158
at one end of the plant, goes round the bay in a circular process and finished steel is taken out in vessels at the other end. It is an extremely efficient, integrated unit of production that added 2·7 million tonnes to the company's overall capacity. It has plans to take production to 20 million tonnes as early as 1993, and that in an industry whose wage rates are about one third less than the average rate in the EEC. It will be an extremely competitive industry.
We are now withdrawing developing country status from that industry because of what the Minister described as something that cannot help but seem a somewhat silly but fortuitous row. In other words, we are using the excuse of an argument over intellectual properties to do something that we should have done anyway to protect our steel industry and steel industries in the rest of Europe, where there is over-production of about 20 million tonnes.
The removal of a generalised system of preference status is a small bite. The cost to Korean exporters in extra duties will be only about £34 million in higher EEC customs duties. That is an extra cost on the deficit in trade with South Korea that is rising very rapidly. In 1986, there was a deficit of £815 million, and it is estimated that the 1987 figure will reach $2 billion. The deficit is big, and it is growing, and the order will not have much impact on that.
It is crucial that we stop the rapid drive to major steel production status. Korea's output is now only slightly smaller than that of the British steel industry. That is inevitable. A developing, newly industrialising country will build up a steel industry as the basis for its manufacturing sector. The steel industry, along with car manufacturing —the plants are close to each other—will be the basic drive motor of expansion in South Korea. This expansion is occurring at a time when there is world over-capacity in steel of nearly 100 million tonnes.
There will be a major challenge. It is unrealistic to argue, as some people do, that South Korean steel is of inferior quality. I have heard steel importers in this country say that Korean steel is cheap but the quality is not as consistent or as good as ours. That may have been true some years ago. It is true that Korea is weak in special steels, but the quality is improving all the time.
Why should the EEC not operate a concerted policy of denying hope to the expanding market? So long as there is the prospect of sending those exports to Europe or the United States — the United States is taking action through quotas and voluntary restrictions—the Koreans will continue to invest in their steel industry and expand it. They will continue to build up capacity in a world in which there is over-capacity.
We shall face a challenge unless we take action not to close the market, but to deny the easy prospect that our market has been offering the Koreans to continue to invest and build up their steel industry. I do not like restrictions, but we must think about British industry and jobs. I wish that the Government would think more seriously and more continually about British industry and the effects of this type of international agreement on jobs in this country.
Did our Government urge the withdrawal of the system of preferences from South Korea? We know that the French Government were strenuous in their attempts to urge the EEC to seize the opportunity of the argument over intellectual properties to withdraw GSP status. It is alarming that it took that row to achieve the necessary

159
withdrawal that is an important protection for our industry and for Europe, where there is such overcapacity.
The one thing that characterises the EEC facing this type of threat from developing countries is that we must realise that today's developing country is tomorrow's newly industrialising country and the day after tomorrow's Japan. The rate of development is very rapid, nowhere more so than in South Korea.
In July 1986 Sir Robert Scholey reported to the Select Committee on Trade and Industry:
"It seems that the future is going to be very competitive still for steel. We were recently told by Mr. Narjes, Vice President, who is in charge, as you know, of industrial matters in the Commission, that we could not really look for much, if any, peripheral protection for European steelmakers from Third World penetration; whatever protection there might be afforded to it would have to be found under the Tokyo Round of the GATT negotiations. That, in a way, is rather cold comfort. He then goes along"—
Mr. Narjes, that is—
"and says, 'Well, of course, these Third World countries all are owing the Western wealthier countries a lot of money. How are you expecting them ever to pay off their debts if you don't help them to sell in your market whatever they're making?' Again, that is rather cold comfort."
It is cold comfort indeed for a European industry that has over-capacity.
A nation is building up a powerful industrial economy predicated on continued access to European market and growing competition with European steel producers, and we need a policy to deal with that. We need a measure of protection for basic industries such as steel. It is ludicrous not to be able to expand the European economies collectively because of the danger that imports will come pouring in. If the Government will not co-operate with industry—if their stance is "Hands off"—we need EEC protection even more, because it is right that jobs should come first.
The measure provides slight protection from a competitor that is growing more powerful and efficient all the time and will very shortly out-distance our steel industry in capacity. However, it is ludicrous that that has been arrived at by this back-door process. This happy accident is result of a somewhat trumped-up row rather than a matter of considered policy. It makes it look as though Europe staggers into change by accident —indeed, as though it staggers from accident to accident: some of them, including this one, benign but many of them malign.
We would like the Minister to declare in ringing terms that the Government will push for a policy of considered protection for basic industries such as steel, so that developing countries are not offered the prospect of limitless access to our markets to threaten our industry. We would like that to be a basic strategy, whereas we have arrived at this order by accident. If we had that, the Common Market would be doing something useful for Britain instead of bleeding this country white.
12.27 am
Mr. Ian Gow: I hope that my hon. Friend the Minister will not think it presumptuous of me if I congratulate him on a characteristically lucid and excellent speech. This important debate takes place in the absence of a single member of the Social and Liberal Democrats
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—a fact that was noted by the hon. Member for Great Grimsby (Mr. Mitchell). I hope that my hon. Friend will be able to confirm in his reply that in this case—if not with other recent events in the European Economic Community — it remains for this House to decide whether to act on recommendations and decisions made in Brussels. It will come as a relief to many of my hon. Friends if my hon. Friend can assure the House that we are not acting under instruction from Lord Cockfield or anyone in the Commission.
I warmly welcome the order, because it is putting right what was a manifest injustice. We are debating the order because of the wrongdoing of the Government of the Republic of Korea. To put right something that is wrong is characteristic of my hon. Friend the Minister for Trade.
I have a couple of short points to put to my hon. Friend. Why is it that in the heading, although we are clearly talking about a single statutory instrument, the wording is in the plural? That will be misleading to those who are students of our proceedings.
Secondly, my hon. Friend and I are both deeply suspicious—and my right hon. Friend the Patronage Secretary will no doubt think that we are suspicious with good reason—of retrospective legislation. What do we find in the preamble of the order commended to the House? Is not today 8 March, and are we not told that it comes into force on 15 February? Is that not retrospective legislation, and have not my hon. Friend and I, in days gone by, spoken out strongly against such legislation?
Mr. Austin Mitchell: Vote against the order.
Mr. Gow: No. I have said that I approve of the order, and I have only a couple of modest points to make to my hon. Friend about the drafting of the document.
I have to confess to a sin on my part. Here we find the initials ECSC. I think that I can work out the first two, although my hon. Friend may say that I have got this wrong. I assume that they stand for European Community. I will give way if I have got this wrong.
Mr. George Foulkes: I believe that the initials stand for European Coal and Steel Community, but I might be wrong.
Mr. Gow: I am grateful for that information. I just want to assist those who are students of the European Community. Would it not be easier for those who will be studying this document in every classroom and public library in the land, after it has been issued, no doubt with the Conservative briefing papers with our weekly issue on Thursday or Friday, if we had a full stop after each of the initials? I commend that thought to my hon. Friend for when he brings forward his next order.
This has been an illuminating debate. We have been enriched by the eloquence and elegance of my hon. Friend the Minister for Trade.
12.33 am
Mr. Alan Clark: I shall answer to the best of my ability the closely detailed questions raised by my hon. Friend the Member for Eastbourne (Mr. Gow). There was one point, before the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) came to my help, when I was reminded of a singularly disagreeable experience that I once had in a Committee, when I was challenged as to the identity of the initials in the acronym GM BATU, while we were debating some employment legislation. I made

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several attempts to suggest what they might stand for, and made one or two slight errors. That will not he repeated this evening because the hon. Gentleman has already enlightened the House. "E" stands for European, "C" stands for Community.
Mr. David Harris: No, for coal.
Mr. Clark: No, I will brook no argument. "E" stands for Europe. "C" can stand for both Community and coal. My hon. Friend the Member for St. Ives (Mr. Harris) is arguing with me. Is my hon. Friend saying that "C" does not stand for Community? "C" can stand for both Community and coal, and "S" can stand for steel.
Mr. Foulkes: Is there not a common misunderstanding in the United Kingdom that there is one European Community, whereas there are a number of European Communities? One is the European Coal and Steel Community; another is Euratom; the third is the Economic Community. Together they are known as the European Community. If all hon. Members understood that fact, they would not fall into the trap into which the hon. Member for Eastbourne fell during this debate.
Mr. Clark: I do not think that my hon. Friend fell into a trap, because he, like me, is steadfastly convinced that the word Community begins with a "C"—
Mr. John Maxton: So does coal.
Mr. Clark: Yes, so does coal.
The dispute to which the hon. Member for Great Grimsby (Mr. Mitchell) referred was not trivial. It was a fundamental matter of principle and it led to the drafting of this order. The Koreans conducted a separate deal with the United States. Bilateral deals of that kind are deeply destructive of the General Agreement on Tariffs and Trade, and it was perfectly proper for the Community to respond as it did.
The hon. Gentleman's wider question regarding Korea's eligibility for the general scheme of preference, and the damage that that may continue to do to our economy, if it persists, is central to the GATT round that is under way. It is described as the integration and graduation of the newly industrialised countries, but many people believe that Korea has already reached the point, in terms of both its income per capita and its industrial development, at which it is no longer eligible for the GSP. Korea's eligibility for the GSP, as well as that of Taiwan and Singapore, has already been removed by the United States. It is also a strong candidate for removal during the current negotiations on the General Agreement on Tariffs and Trade.
The House appears to be very much of the same mind, and I am sure that it will approve the order.
Question put and agreed to.
Resolved,
That the Customs Duties (ECSC) (Quota and Other Reliefs) (Amendment) Order 1988 (S.I., 1988, No. 185), dated 10th February 1988, a copy of which was laid before this House on 12th February, be approved.

Bypasses (Ayrshire)
12.37 am
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen]
Mr. George Foulkes: I am grateful for the opportunity to debate this matter. When I met the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) face to face, it was like coming up against a brick wall. I mean that in no personal pejorative sense, but that was his response to the points that were put to him. I hope that I shall receive a more constructive response from him tonight.
The start of this sorry saga was on 19 May 1987, when Tory fortunes were flagging in the general election campaign. The Secretary of State for Scotland was desperate to make one specific pledge which he hoped would hit the headlines and rescue those flagging fortunes. The scheme that he hit on was to upgrade the main highway to England, the A74. It certainly hit the headlines, but the general election result showed that his party's fortunes in Scotland were beyond saving. The number of Tory seats was reduced by half.
On 20 May, the Glasgow Herald recorded the pledge to upgrade the A74 without any qualification whatsoever and welcomed it in its leader column, as we all did. Such a commitment to additional public expenditure by the Conservatives is very rare and, when it comes, it must certainly be welcomed. Everybody assumed that the Secretary of State meant that additional money would be provided for the A74, otherwise why make a statement about this new, great project? Without the pledge of additional funds it would have been a very hollow pledge indeed if the rest of a vital trunk road programme had to suffer as a result.
It now looks as though there was double talk and deceit when that promise was made. I invite the Under-Secretary of State and his adviser, the other Under-Secretary of State for Scotland, the hon. Member for Stirling (Mr. Forsyth) —who has slunk in, as usual—to explain the position. It appears that no extra money had then been secured by the Secretary of State for the upgrading of the A74 and that, to say the least, the Secretary of State was being economical with the truth in his election promises. Alternatively, any hope or expectation that he had of extra money at the time was one of the main victims of subsequent cuts that the Scottish Office had to make.
Whatever the explanation, the sad truth began to become evident by December 1987, when officials of Strathclyde region were given details of postponements to a catalogue of road improvements. When I met the Under-Secretary of State we had one of the most barren dialogues, that it has ever been my misfortune to experience. On that occasion, and in his subsequent statement, he contended that the A74 upgrading would not be achieved at the expense of other programmes.
The hon. Gentleman based that statement on one simple argument. He said in his letter of 3 February that they were never more than the earliest possible starting dates. I understand and accept why he said that, but according to my understanding and that of Cumnock and Doon Valley district council and its officers, of Kyle and Carrick district council, and councillors of both political persuasions and none — although they seem to be

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drifting back to one—and, above all, of the chairperson of the Strathclyde regional council roads committee and all the officers concerned in the region, the dates given for Auchinleck and Cumnock, New Cumnock and Maybole were definite. In the case of the Girvan bypass, it was understood that the start merely awaited the beginning of the detailed feasibility study—like the feasibility study that the Minister tells me is now under way for the A74.
The Minister should know better than anyone. On 18 February Mr. Howitt, the deputy chief executive of Strathclyde regional council, wrote to the secretary of the Scottish Development Department listing delays to no fewer than 34 road schemes within the region. I am sure that the Minister will confirm that. Mr. Howitt said in his letter:
"arising out of discussions in the Trunk Road Programme which officials of the Department of Roads had with your officials during December 1987, the enclosed list showing previously understood start dates compared with what the new start dates are likely to be"—
they are not provisional; there is no qualification; they are previously understood starting dates—
"was prepared and submitted to the Committee on 4 February."
Mr. Howitt continued:
"At that meeting the Committee expressed its concern about any delay to the schemes and agreed to seek a response as a matter of urgency".
In the list attached to the letter, which included the 34 schemes, the Cumnock-Auchinleck bypass was shown as due to start in May 1988—a definite start—and was then postponed until June 1991. The new Cumnock bypass is shown as delayed from August 1988 to May 1991, Maybole is shown as delayed from April 1990 to September 1992 and Girvan from September 1991 to September 1993. In addition, other vital schemes in south Ayrshire on the A77 south of Ballantrae and at Bennane Hill are also postponed for three and two years respectively.
One wonders what can cause such a wholesale postponement of road programmes, which were presumably carefully planned and designed to fit in with the cash available. What happened between June and December 1987? I know that in the case of the schemes in my constituency there have been no delays in statutory or other procedures. Indeed, Strathclyde region confirmed that the Cumnock-Auchinleck bypass was ready to go to tender. I hope that the Minister will confirm that that is the case. Therefore, that cannot be the reason for the delay. There is no delay in the statutory procedures in my constituency, and I suspect that that is the case with the other 34 schemes.
Has there been a sudden and unexpected reduction in the total money available for road construction? To get the answer I looked to the 1988 commentary on expenditure from 1990 to 1991. That confirms that, although the provision for 1988–89 for motorway and trunk roads was £129 million—about 6 per cent. below the previously planned level—the provision for 1989–90 and 1990–91 is planned to be £140 million in each year. That does not seem to warrant such a sudden and dramatic postponement of so many schemes already in the pipeline. Indeed, it should mean the reverse. That modest increase should
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allow one or two more schemes to go ahead, or it should allow an advancement of schemes rather than postponement.
Mr. Allan Stewart: Does the hon. Gentleman agree that, north of the schemes that have been mentioned, the A77 Ayr road route is crucial, not only to his constituents, but to mine and to the constituents of the hon. Members for Glasgow, Rutherglen (Mr. McAvoy) and for Glasgow, Cathcart (Mr. Maxton), who are in the Chamber? Would it not be helpful if the Minister gave the House an indication of the position on the A77?
Mr. Foulkes: I should welcome that statement from the Minister. The Strathclyde list shows that the A77 Ayr route has been postponed from February 1990 to January 1991. That is not as big a postponement as some of the other schemes, particularly the Ayrshire bypasses, but it is an unfortunate postponement. I agree with the hon. Member for Eastwood (Mr. Stewart) that the Ayr road route is important for access to Ayrshire, from Ayrshire to the motorway system, and for access to Prestwick airport. I know that the hon. Gentleman would want to do everything he can to improve access to that airport.
I have given two possible reasons for postponement, but neither seems to have any validity. Therefore, the inescapable conclusion is that the schemes are being delayed to prepare for the A74 upgrading so that that can be paid for out of the normal roads programme. If other schemes were to be started now, they would be in progress when the A74 upgrading is due to start. Those schemes would have taken up too much of the available funds to allow the A74 upgrading to go ahead.
We know that the A74 improvement will cost about £200 million over 10 years. If any credence is to be given to pledges by the current Secretary of State at the election which we know will be held about three years from now, the A74 upgrading will have to be under way by then. If it is not, people will say, "You promised and nothing has happened."
I should make it clear—I think that I am speaking on behalf of all my hon. Friends — that we do not oppose the improvements to the A74. Indeed, we all welcome the Secretary of State's promise. However, we welcome it on the understanding that extra funds will he provided to pay for it, and not that the existing roads programme will be slashed.
On 6 February, in its main leader, the Glasgow Herald said:
"Our welcome last year was predicated on the belief that the upgrading of the A74 would be funded by new money".
The leader added:
"Mr. Rifkind should come clean on his intentions. Will the M74 project attract additional funding or not?"
That is my key question to the Minister. We shall all study his answer carefully. As the same leader said:
"No one forced Mr. Rifkind to make his promise about the A74. He should redeem it without dipping into the rest of the roads budget. To do otherwise would devalue the currency in which politicians trade."
At my meeting with the Minister I advanced the argument for the Ayrshire bypasses on the ground of road safety. His answer showed that there were more serious accidents and deaths on the A77—which bears out the point made by the hon. Member for Eastwood (Mr. Stewart)—than on the so-called killer road, the A74.
I also advanced the argument for environmental improvements in the towns concerned. I recently received

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additional evidence to support my case from Mr. Sievwright from Maybole. He has been corresponding with Strathclyde regional council about the juggernauts that go through the centre of Maybole. He has received confirmation that the recommended distance between the edge of a pavement and the wall of houses or shops should be at least 2 m to allow wheelchairs and prams to be pushed along. In one area of Maybole the pavement is 25 in wide, so people have to put prams and wheelchairs on the road to get up through the main street.
I also advanced the argument for the bypasses on the ground of improving the infrastructure of industrial development in an area which has the highest unemployment in Britain. I advanced all those arguments to support the need for the bypasses to be constructed on schedule, as promised. I understood from the Minister's comments that he readily accepted those arguments. Since then, the two district region have condemned the M councils in my area—I include Conservative councillors—and the inister for the delay. They all support me in the campaign to get him to stick to his promises. I have had letters and telephone calls from people in Girvan, Maybole, Cumnock, New Cumnock, and Auchinleck, including candidates in the district election, such as Helen Kelly and Ian Picken, in Girvan, who will be councillors after the next election. They have strongly argued for the Girvan bypass. Many people have asked me to press the Minister on this matter.
It is still not too late for the Minister and his boss to restore credibility to the Government. I sometimes wonder whether the boss is the Secretary of State or whether it is the wee Under-Secretary of State—the hon. Member for Stirling—who has been whispering in the ear of the hon. Member for Edinburgh, West. The interesting question is who runs matters in the Scottish Office. It is still not too late for a Scottish Office Minister to restore some credibility to the Government.
I understand that the 1988–89 programme is not yet finalised. I hope that tonight the Minister will take some responsibility into his hands and confirm that the Ayrshire bypasses will go ahead as planned. If that does not happen, the whole House, like the leader in the Glasgow Herald —I am sorry if I quote from it regularly; I know that some people do not like it, but it was an exceptionally good leader—will smell a rat scurrying across the tarmac for cover. I hope that the Minister has some guts and courage and that he will bring back some credibility to the Government by restoring their pledges and bringing the Ayrshire bypasses into their proper place in the roads programme.
12.54 am
The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): A public local inquiry into the A77 road project will be held, starting on 23 March, and progress will depend on the inquiry's outcome.
I congratulate the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) on securing this Adjournment debate and on the spirited way in which he has put forward the interests of his constituents. The hon. Gentleman's representations on behalf of his constituents will be kept in mind when we consider the possible scheme starts in each financial year.
Strathclyde regional council is the Secretary of State's agent authority for trunk roads in Ayrshire, and its
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officials must, as a matter of necessity, be given broad indications of timing of trunk road schemes to enable them to schedule the preparatory work. These dates change from time to time; for example, because of difficulties over statutory procedures or following the kind of periodical review carried out at the end of last year. Given that Strathclyde and its predecessor county councils have acted as agents for many years, they well understand the qualifications that apply to any dates quoted and the variety of factors which can cause delays.
Mr. Foulkes rose —
Lord James Douglas-Hamilton: If I may, I should like to continue because I have a great deal to answer in my speech.
As the hon. Gentleman has suggested, there may have been correspondence between professionals that did not mention all the conditions arid caveats, but the fact that the dates were never more than the earliest possible dates is well understood.
Mr. Foulkes: Will the Minister confirm that there have been no delays in the statutory or other procedures so far as the four Ayrshire bypasses are concerned?
Lord James Douglas-Hamilton: I accept that those procedures have gone forward, but I should also make clear to the hon. Gentleman precisely what I have already said—that the dates were never more than the earliest possible dates.
I have listened carefully to what the hon. Gentleman said and have noted the points he has made in favour of advancing proposed trunk road bypasses in Ayrshire. The hon. Gentleman's problem is that he sees the trunk road programme in a very narrow context, whereas I, as the Minister responsible for trunk roads in Scotland, must of necessity consider the trunk road network in a wide national context. I do not for a moment criticise the hon. Gentleman for fighting for the interests of his constituents. Indeed, he would be derelict in his duty if he did not. What I do criticise is his refusal to get such matters in their proper perspective.
The hon. Gentleman well knows that the trunk road network is a network of national—I emphasise the word "national" — through routes. These are the routes for longer distance traffic and are therefore of more than regional importance. Important though local needs often are, there can be no argument that national interests must come first. Therefore, decisions on priorities for action on the trunk road network have to be taken on a wider than regional basis and it is beside the point to seek to make distinctions as to how well one region or sub-region compares with another in terms of the money spent on improving trunk roads.
Within the national context there is also the important matter of route priorities. Although the country has trunk roads traversing it in all directions, there is no doubt that some perform a more important function than others. Perhaps the most obvious of the various criteria which might together determine route priorities are traffic volumes. While I accept that some local sections of routes —for example, around large towns and cities—might be congested, again the situation must be seen in the context of the route as a whole rather than of a particular small part of it. The trunk routes through Ayrshire do not carry particularly high traffic volumes.

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The hon. Gentleman made the point that the A77 through his constituency has an unusually high accident record, but the fact is that when fatal and serious injury figures are broken down between north and south Ayrshire, it becomes clear that the concentration of accidents—some 70 per cent. or more of the total— occurs north of Ayr towards Glasgow, not in the area of the towns which the hon. Gentleman seeks to have bypassed. While it is true that accidents on the A77 are more numerous than might be expected from the traffic flows, there does not appear to be a great problem on the part of the road which runs through the hon. Gentleman's constituency. This is not to say that I am unconcerned about accidents. On the contrary, they are an important part of the equation in determining priorities.
As I have said earlier, the other criteria that go to determine route priority include, in terms of industrial and economic strategy, for example, the north-east of Scotland, to which assumed priority has been given in recent years, and that will continue to be so because of considerations relating to the oil and fishing industries. The A75 is given a measure of priority because it is a designated Euroroute, part of a national and international network of through routes, and links to Ireland.
Tonight and in the past the hon. Gentleman has mentioned—and has made great play about it — the proposed upgrading of the A74 to motorway standard. That will connect the motorway network of central Scotland to the English motorway network. There is no doubt that the A74 is a strategic route, and that is why the Government have attached priority to its upgrading.
Mr. Foulkes: Where is the money coming from?
Lord James Douglas-Hamilton: I will deal with that in a moment.
The hon. Gentleman will be aware that the A74 is the main trunk route between England and Scotland. The hon. Gentleman likes to appear to discredit the initiative of the Secretary of State, even when my right hon. and learned Friend has the strongest support of the Scottish travelling public. The hon. Gentleman seeks to suggest that the upgrading of the A74 is the reason for changes in "earliest possible start dates"—that is his suggestion— for other proposed trunk road schemes in Scotland. I can understand his disappointment that bypass schemes in south Ayrshire have been put back. However, I would strongly emphasise that that has nothing to do with the upgrading of the A74 to motorway standards.
Mr. Foulkes: Will the Minister give way?
Lord James Douglas-Hamilton: No. Let me answer the argument.
It will not be until I get the results of three major feasibility studies covering the 60 miles or so to be upgraded—I expect those results around the end of the year—that I shall be able to plan the upgrading. The onset of the M74 schemes and their consequences for the Scottish forward programmes will be assessed in the light of the circumstances pertaining at the appropriate time. The regular reviews of the forward programmes that will take place will provide adequate scope for such assessment. Whether there will be extra funds for the M74 is a consideration that will be taken in the context of the annual public expenditure surveys.
Mr. Foulkes: If the Minister is seriously wanting us to believe that it is not the result of money being diverted to the A74 that the other bypasses are postponed, could he give the House precise reasons why they have been postponed, given that the Minister was aware of the capital programme available earlier in the year?
Lord James Douglas-Hamilton: The capital programme for this year is given on page 57 of the Scottish public expenditure paper and the hon. Gentleman can look that up.
Mr. Foulkes: I know; I quoted it.
Lord James Douglas-Hamilton: The hon. Gentleman quoted it wrong. He should look up that page to learn the correct figures.
The hon. Gentleman has had protracted correspondence with Scottish Office Ministers for many years. The dates that were given for the timing of proposed schemes were never more than the earliest possible dates — I emphasise the word "possible". Those dates have always been subject to the availability of finance, to the satisfactory completion of statutory procedures, which must provide for public consultation, and to the relative priority of the particular schemes against competing claims from the rest of the Scottish trunk road network.
The recent date changes that have upset the hon. Gentleman do not emanate from the influence of the M74 schemes, which are no more than vague shapes on the horizon.
In his letter to my right hon. and learned Friend on 29 December, the hon. Gentleman said:
"It is for Ministers to decide priorities within the overall programme."
Before departing from a meeting with me, the hon. Gentleman put it to me that our priorities had surely not changed between about six months ago and the present time. I acknowledge that, as regards overall route priorities, that is correct. However, I point out the difficulty that comes about when so many of the road schemes that have been proposed across the country turn out, on close appraisal, to be worth while on economic, environmental or road safety grounds—sometimes on all three. Quite simply, we had far more schemes in the programme than could be accommodated in a short period of time.
Schemes have been postponed in many other regions of Scotland, and the hon. Gentleman should not imagine that his constituency is the only one that has suffered. The effects are felt across the length and breadth of Scotland. Schemes have had to be adjusted in as fair a manner as possible.
Mr. Foulkes: Why?
Lord James Douglas-Hamilton: If the hon. Gentleman will allow me, I will answer him. I have only four minutes left.
Let us consider finance. The hon. Gentleman may not think that element of the equation important. I agree that it would be wonderful if we could wave a magic wand and bypass every trunk road community in the country. That would be Utopia. However, from time immemorial demand has outstripped capacity, so difficult choices have had to be made within the resources available.
It has been suggested that the postponement of schemes in Strathclyde results from cuts in Government funds

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available for trunk roads. I am happy to have the opportunity to set the record straight tonight. It is a fact that, in this financial year, funds for trunk roads have grown to their highest level in real terms for many years. That has enabled a record number of new projects to start in this financial year, but the hon. Gentleman must remember that that creates an especially large commitment in forward years. I should still caution that trunk road funds are necessarily finite. More might have been available had it not been for the generous settlement last June on local authority current expenditure.
As the hon. Gentleman will have seen from our commentary, it has been necessary to hold trunk road spending for 1988–89 at its current level. That can be seen from page 57.
On south Ayrshire, I repeat the position stated in correspondence about the four bypasses. For New Cumnock and Cumnock-Auchinleck on the A76, draft line of road and side road orders have been published and the objections received have been resolved. Draft compulsory purchase orders for both schemes have yet to be published. The earliest possible start dates envisaged for both schemes is May 1991. As for the Maybole bypass, no draft orders have yet been published, but it is hoped to publish the draft road orders during the year. The earliest possible start date envisaged is August 1992. Finally, a feasibility study on a possible Girvan bypass is in preparation, and I do not wish to comment on it until it has been completed.
As the hon. Gentleman will be aware, the A77 Balsalloch to Balcreuchan scheme is seen as having priority in view of the slope stability problems adjacent to the A77. My Department has been making considerable efforts to resolve the sole outstanding objection to the scheme. It is hoped that the objection will be withdrawn shortly to allow the making of the statutory orders,
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negotiation of entry to land and preparation of the works contract, with a view to starting work by the autumn on this £4·2 million scheme.
With regard to the A76 Mauchlinc bypass, work on preliminary site investigation will start soon, and Strathclyde region, as agent, has been asked to prepare material for the draft statutory orders. Subject to the usual qualifications about availability of funds, completion of statutory procedures and relative priority in the network, the earliest possible start date envisaged is November 1992. In relation to the A77 Ayr road route, I have said that the inquiry will begin on 23 March.
In conclusion, I should report that, before this short debate, trunk road bypasses in Ayrshire have been the subject of prolonged exchanges with the hon. Member for Carrick, Cumnock and Doon Valley. I give him credit for being a persistent Member on behalf of his constituents. I echo his disappointment that the commencement dates have had to be put back, but I urge him to try to see the matter in national perspective. The needs of his constituents have not been forgotten. All the points that he has made about schemes in his constituency and about trunk roads generally will be fully borne in mind as we come to consider the possible scheme starts in each financial year.
But, of course, there are other schemes in Ayrshire. The Government have accepted the case for a bypass of Ardrossan, Saltcoats and Stevenston and included the project in the forward trunk road programme. It is proposed to provide 6·4 km of dual carriageway at an estimated cost of about £15 million to relieve traffic congestion and improve the flow of trunk road—
The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at seven minutes past One o'clock.