Commons Sitting of 4 May 1988

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

    ASSOCIATED BRITISH PORTS (BARROW) BILL [Lords]
    Order for Second Reading read.
    To he read a Second time Tomorrow.

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Bophuthatswana
    Mr. Watts: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the consequences of his policy of non-recognition of Bophuthatswana for those who live within its boundaries.
    The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): Bophuthatswana is part of the Republic of South Africa and we treat those who live within its boundaries accordingly.
    Mr. Watts: Why does my right hon. Friend persist in treating Bophuthatswana as an integral part of South Africa? Bearing in mind this country's historical responsibility for the absorption of Southern Botswana into South Africa, why does she refuse to assist the development of a democratic, free enterprise, multi-racial and apartheid-free society in Bophuthatswana?
    Mrs. Chalker: We do not refuse to help those from Bophuthatswana. They are helped by the schemes that go to all black South Africans. Bophuthatswana's claim to independence is hardly borne out by the recent coup and the South African Government's response. The words of the South African President are particularly apt. After that coup he said:
    "We are back in charge. I mean, the President of Bophuthatswana is back in charge."
    Rev. Martin Smyth: Does the Minister agree that the present policy, which allows discrimination against a school for deaf children in Kutlwanong and permits the students to go to the Silent Games as spectators rather than participants, is not in keeping with a caring community and the world at large?
    Mrs. Chalker: I regret to say that the hon. Gentleman is right, but that is part of apartheid. It was under the system of grand apartheid that the homelands were set up.
    Mr. Andy Stewart: Is my right hon. Friend aware that after five years of drought Bophuthatswana has been able to feed its population every year? With a little aid the
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    people of Bophuthatswana could expand their irrigation system and feed the people of Mozambique, who are starving.
    Mrs. Chalker: Food is growing well in Mozambique, but it is part of the policy of the Government of South Africa, as they have clearly revealed, to keep Bophuthatswana part of the South African Republic. On that basis, I hope that the people of Bophuthatswana will feed themselves, but there is no question at the present time of the South African Republic sending food to Mozambique.
    Mr. Anderson: Will the Minister accept that we agree with her—[HON. MEMBERS: "The hon. Gentleman would."]—that any claim to Bophuthatswana being independent and sovereign has been wholly exposed and exploded by the military intervention by Pretoria? Does the right hon. Lady agree that it would be wrong to give any hint of recognition to this gerrymandered creation of President Verwoerd's Bantustan policy?
    Mrs. Chalker: It is clear from everything that has occurred in recent months that the South African Republic regards Bophuthatswana and the other homelands as part of its territory. Although it may not be particularly appealing to my colleagues on the Conservative Back Benches that the hon. Gentleman agrees with me, I am going on the basis of what the South African Government say, the way in which the homelands were set up and the way in which people may mix in the homelands, but those black people from the homelands do not have the same rights to mix in the Republic of South Africa outside the homelands.

    Kuwait
    Mr. Gerald Howarth: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current state of Anglo-Kuwaiti relations.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): Our relations with Kuwait are long established and very good.
    Mr. Howarth: Does my right hon. and learned Friend agree that the Kuwaiti Government showed commendable courage in standing up to the terrorists who hijacked their 747? Will he say what success the Kuwaitis and his Department have had in bringing those despicable terrorists to justice? Do the Government know whether Iran was involved in that outrageous attack on civil liberties?
    Sir Geoffrey Howe: I agree entirely with my hon. Friend in commending the firm line taken by the Kuwaiti Government throughout the hijacking. The House would commend in particular the magnificently courageous conduct of the captain of the aircraft.
    The House will share my concern that the hijackers appear to have been allowed to go free, which is why we are putting forward a series of proposals to tighten international co-operation against hijacking. There has been much speculation about the degree and nature of Iranian involvement. We continue to examine that evidence closely, because it gives rise to grave concern.
    Mr. Campbell-Savours: I raise a question that I have repeatedly raised on the Floor of the House. Does the

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    Secretary of State recall the undertaking given by the Kuwaiti Investment Office in London, when its holding in BP was but 14 per cent., that it would not increase it? Is it not clear that it has breached undertakings given to the Government? What do the Government intend to do? Will they ignore those breaches and allow the Kuwaiti Investment Office to secure a takeover, perhaps into hostile hands, of a major British company?
    Sir Geoffrey Howe: The hon. Gentleman will realise that, essentially, that is a matter for my right hon. and noble Friend the Secretary of State for Trade and Industry.
    Mr. Campbell-Savours: And the right hon. and learned Gentleman, as it affects foreign affairs.
    Sir Geoffrey Howe: Wait for it. My right hon. and noble Friend has decided to refer the Kuwaiti shareholding in BP to the Monopolies and Mergers Commission. That was announced by the Office of Fair Trading at 9 am today.
    Mr. Pawsey: Notwithstanding the previous question and answer, will my right hon. and learned Friend bear in mind that the friendly relations to which he referred between the United Kingdom and Kuwait are being undermined by the referral of the Kuwaiti stake to the Monopolies and Mergers Commission? Does he agree that the calling in of the planning application for London Bridge City, despite the fact that it had been approved by the London Docklands Development Corporation, is also to some extent undermining his efforts?
    Sir Geoffrey Howe: I am afraid that at such short notice I am not qualified to comment on activities affecting a planning application, even in relation to one of my favourite statutory corporations, the London Docklands Development Corporation. As to the more substantial point understandably raised by my hon. Friend, we see no reason why the decision taken by my right hon. and noble Friend should affect Anglo-Kuwaiti relations, which have always been very close. That was clearly demonstrated during the Kuwaiti hijacking, and we hope that they will remain so.

    Guatemala
    Mr. Patchett: To ask the Secretary of State for Foreign and Commonwealth Affairs what instructions were sent to the British embassy in Guatemala in connection with the return of the Guatemalan exiles on Monday 18 April.
    Mr. Ron Davies: To ask the Secretary of State for Foreign and Commonwealth Affairs what instructions were sent to the British embassy in Guatemala in connection with the return of the Guatemalan exiles on Monday 18 April.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar): Her Majesty's ambassador was requested to monitor the situation carefully and to keep us informed of developments.
    Mr. Patchett: Is the Minister satisfied that the right action was taken on 18 April with regard to the Guatemalan exiles, bearing in mind the Guatemalan Government's shocking human rights record?
    Mr. Eggar: Yes, I am entirely satisfied that the right action was taken. Two of the returning exiles were arrested, examined and released by the examining magistrate.
    Mr. Ron Davies: I am surprised that the Minister did not have the courtesy to notify me before Question Time that my question was being linked with question No. 3. I am sure that it was an oversight.
    When the exiles returned they were under the impression that human rights had not improved in Guatemala. Inasmuch as the Arias peace plan puts emphasis on human rights as well as other matters, does the Minister not think that he should make strenuous representations to the Guatemalan Government to ensure that the peace plan, particularly the part relating to human rights, is implemented?
    Mr. Eggar: I apologise unreservedly to the hon. Gentleman. I remember being annoyed when I was in a similar position, and I shall look into the matter.
    The question of human rights in Guatemala is raised regularly at ministerial level with our Guatemalan counterparts. Human rights violations decreased sharply in 1986, but there has been a regrettable increase in murders and kidnappings over the past 15 months. It is not clear how far these incidents are politically motivated, but we pay considerable attention to the United Nations special expert who reported in March that there had been an improvement in the human rights situation and noted that the present Guatemalan Government do not sanction violations of human rights.
    Mr. Jacques Arnold: Would it not be rather unfortunate if the House took a partisan opinion on the internal politics of Guatemala, particularly when the democratic Government of Guatemala, under President Cerezo, is having to take a delicate line between the military on the one hand and the Left wing on the other?
    Mr. Eggar: My hon. Friend draws attention to some of the complexities that have to be taken into account when one is considering events in Guatemala. None the less, I know he will agree with me that we have the right, under the various UN conventions, to comment on human rights abuses.
    Mr. Colin Shepherd: Will my hon. Friend outline to the House the measures that Her Majesty's Government are taking to promote the survival of democracy in Guatemala?
    Mr. Eggar: My hon. Friend is aware that there were democratic elections, and since that time we have been able to resume diplomatic relations with Guatemala for the first time in 24 years. We have had regular contacts with Guatemalan Ministers and with the ambassador here.
    Mr. Tony Lloyd: The Minister may be aware that I went to Guatemala with those returning exiles. Does he accept that there is a considerable body of opinion inside Guatemala, not from those who have a political bias but from those such as Church groups who operate on the ground, which says that the human rights situation and the atrocities and murders, once one is outside the urban areas and into the rural areas, are just as bad as ever, and that those atrocities are committed by the forces of the state, particularly the army? Will he make sure that the British Government note that fact, because the Minister has given

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    the impression that he wants to distance himself from the view that the violence is Government-inspired? The reality is that agencies of the Guatemalan Government are still actively involved in the atrocities.
    Mr. Eggar: I recognise that the hon. Gentleman has the advantage of having visited Guatemala, and I trust that he did so with an open mind and talked to a number of people right across the spectrum. I would expect no less from him. I must ask him to take account of the United Nations' special expert's report on human rights in Guatemala. He reported to the United Nation's Commission on Human Rights in Geneva and, as I have already made clear, he noted some improvement in the human rights situation and stated that the present Government do not sanction violations. If we believe in furthering the cause of human rights through the United Nation's machinery, we must pay attention to reports from its experts.

    Hanover Summit
    Mr. Gow: To ask the Secretary of State for Foreign and Commonwealth Affairs what issues are expected to arise at the forthcoming Hanover summit.
    Sir Geoffrey Howe: The agenda for the European Council meeting in Hanover will be set by the German presidency. No formal proposals have yet been made, but completion of the single market is expected to be the main item of discussion.
    Mr. Gow: Is my right hon. and learned Friend aware that many hon. Members on both sides of the House view with dismay the prospective replacement of the British passport with the European Community passport? Is he also aware that the day of the nation state is not yet over, and that some hon. Members view with equal dismay the prospect of the submersion of our country into a European superstate? Will he raise those matters at the Hanover summit?
    Sir Geoffrey Howe: I am aware that there is a wide range of feeling about the different pace and pattern that can be followed in the development of the European Community. My hon. Friend will know that the original agreement that there should be a common format passport was made as long ago as 1975 by the then Labour Prime Minister. The common format was agreed as long ago as 1981.
    The idea of having a common format, machine-readable passport is that it will substantially speed up movement across frontiers. No fewer than 25 million British citizens travel abroad every year now—about five times as many as 20 years ago. The new machine-readable British passport is a national passport. It will continue to be issued under the royal prerogative. I think that it would be undesirable to try to operate the old and new systems together, as that would greatly increase costs and reduce efficiency.
    Mr. Benn: Will defence questions come up at the Hanover summit and will the Foreign Secretary clarify the view of Her Majesty's Government on whether Denmark's policy of refusing to allow ships with nuclear weapons into its ports is compatible with membership of NATO?
    Sir Geoffrey Howe: It is quite possible that questions affecting European security will he discussed between
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    heads of state at the European summit, because such questions form part of the agenda of the European political co-operation agreement. There is even closer interest in Denmark because of our common membership of NATO, and we have made it plain that any policy adopted by the Danish, or any other, Government that makes it impossible to maintain our "not confirm—not deny" policy on Royal Navy vessels would result in serious consequences for possible further co-operation within NATO.
    Mr. Aitken: Is my right hon. and learned Friend aware that his first answer will give considerable disquiet in the House and the country, because it is a long time since we heard a British Conservative Foreign Secretary sheltering behind the combination of Sir Harold Wilson's coat tails and pure Eurowaffle? Will he reconsider the whole question of the loss of the British passport, which will strike a chord far wider than EEC enthusiasts may recognise?
    Sir Geoffrey Howe: I really must invite my hon. Friend to consider the matter in a rather wider perspective. There is no question of my sheltering behind anyone's coat tails —least of all Sir Harold Wilson's.
    Mr. Robertson: Lord Wilson.
    Sir Geoffrey Howe: I am sorry. I mean Lord Wilson of Rievaulx—the right hon. and noble Lord.
    The matter has been part of the agreed agenda of the EC for 12 years, and work has been proceeding on it for seven years. It will lead to a very substantial advantage, and the passport will remain a British passport issued under the royal prerogative.
    Mr. Kaufman: Will the right hon. and learned Gentleman ensure that consideration is given at the Hanover summit to the Community programme for assistance to victims of apartheid, to which 25 million eon has been allocated for this year and which would be vitiated by the orderly internal politics Bill now before the South African Parliament? That Bill would allow the South African Government to declare organisations to which the Community provides money to be restricted organisations and to seize Community money. Does the right hon. and learned Gentleman agree that it is essential that such a measure be opposed by the Community? Does he also agree that if the measure goes through, thus vitiating a peaceful Community programme of assistance to the anti-apartheid movement, the only alternative—even for him—will be mandatory economic sanctions?
    Sir Geoffrey Howe: It is a pity that the right hon. Gentleman spoilt an otherwise quite sensible questions by his irresistible urge to advocate sanctions in his last phrase. That matter has nothing to do with the substance or merit of his argument. I entirely agree that if legislation came into effect in South Africa that would vitiate positive measures initiated under the Community programme or any other, it would be a result much to be deplored. As soon as the matter became known to us—some weeks ago —the Foreign Ministers of the Community did, indeed, discuss it, and we have been engaged in close consultations ever since, with a view to making representations to the South African Government to prevent the outcome that the right hon. Gentleman fears. We shall continue to do that.

    Air Piracy
    Mr. Nicholas Bennett: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next intends to meet the Foreign Ministers of the European Community, the United States of America and other countries to discuss measures to combat air piracy.
    The Minister of State, Foreign and Commonwealth Office (Mr. David Mellor): My right hon. and learned Friend raised the question of the Kuwait airlines hijack and its aftermath with his European Community colleagues in Luxembourg on 25 April. We shall also be discussing this in the Summit Seven machinery. The British delegation to the International Civil Aviation Organisation raised the issue there on 26 April.
    Mr. Bennett: I thank my hon. and learned Friend for that reply. Does he agree that one of the problems facing the international community is the lack of an international force such as our own SAS, the GSG9 or Delta Force, that could tackle piracies when they occur? It is vital that either such a force is set up under the control of the United Nations or that such a force could be called upon by the UN to deal with piracies.
    Mr. Mellor: I understand why my hon. Friend suggests that, but our view is that such a force would not be a practical proposition. My right hon. and learned Friend put forward a number of ideas in the five-point plan and one development that we are working towards is the establishment of a group of experts who would be able to advise a Government who find themselves in a situation such as that which confronted the Government of Cyprus on the best practice to handle a hijacking. We do not believe that the international force that my hon. Friend advocates is a practical proposition at this time.
    Mr. Corbett: Given that the talks are likely to consider other aspects of terrorism, will the Minister explain to his colleagues why his right hon. and learned Friend is today trying to lean on the chairman of the BBC to try to stop BBC Ulster Television showing a programme about events in Gibraltar which involved Irish terrorists, which follows the heavy-handed—
    Mr. Speaker: Order. The question is about air piracy.
    Mr. Cyril D. Townsend: Will my hon. and learned Friend give serious consideration to making available to the public the recordings that the British authorities presumably took in Cyprus of conversations between the air pirates and the authorities in Iran?
    Mr. Mellor: I shall think about what my hon. Friend has said.
    Mr. Robertson: We welcome the initiative that has been taken, especially on the possibility of a specialised negotiating force. When the Minister has the opportunity to discuss air piracy and terrorism with his colleagues, will he also ponder the effect on controlling terrorism in Europe of any wholesale abolition of frontier controls in the 1992 package? Should we not re-examine any such impossibilist idea? Why on earth should we seek to make it easier for terrorists to float around from country to country and escape any form of justice?
    Mr. Mellor: I agree with the hon. Gentleman. Indeed, I recall being extremely troubled about the similar issue of
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    the flow of drugs through the European Community, given that, unfortunately, one or two of our neighbouring states have not had the same success in controlling the warehousing of drugs in their countries as we have had. I am glad to say that we retain complete power to intervene at our frontiers, and after 1992 we will continue to have the power to check for imports of drugs or terrorism or for anything that is a criminal offence in this country.

    Middle East
    Mr. Dykes: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet the Secretary of State of the United States of America to discuss middle east problems.
    Sir Geoffrey Howe: We keep in very close touch with the United States Administration on middle east affairs. I next expect to meet Mr. Shultz at the North Atlantic Council meeting on 9–10 June.
    Mr. Dykes: I thank my right hon. and learned Friend for that answer. Will he confirm that the Shultz initiative for Israel and the Palestinians is very much on the table and alive? Despite the recent depressing developments on both sides the best opportunities lie in those initiatives, supported by the European powers, because the choice for Israel and the Palestinians remains starkly between the dead end myopic tunnel of Mr. Shamir's outlook and the possibilities and ideas of Mr. Weizman, Secretary Shultz and others for a real breakthrough and a real, durable peace and negotiations with the Palestinians.
    Sir Geoffrey Howe: I entirely agree with my hon. Friend that the status quo holds no answers for either side in a dispute which has lasted for so long. It is important to accelerate progress towards a just, durable, negotiated settlement. United Nations Security Council resolution 242, which embodies the "land for peace" principle, is an essential element. I discussed these matters briefly with Mr. Shultz when I met him in Brussels on 25 April. We fully support his vigorous efforts to inject new impetus into the peace process.
    Mr. Ernie Ross: The Foreign Secretary knew, because I made the point clear during Foreign Affairs Question Time in March, that the mission of Secretary of State Shultz would grind to a halt because he and the Foreign Secretary refused to speak directly to the Palestine Liberation Organisation. There is no way that the peace talks can move forward unless Her Majesty's Government and, more important, the United States Government, are prepared to talk to one of the main parties involved in the dispute. Instead of referring continually to a resolution that does not mention the Palestinians, the Foreign Secretary and Secretary of State Shultz should speak direct to the Palestinians and their representatives, the Palestine Liberation Organisation.
    Sir Geoffrey Howe: Our position on this matter is clear. There is regular dialogue at official level with the PLO. The PLO is aware of those aspects of its policy which make renewed ministerial contact difficult. We do not accept that the PLO will be the sole representative of the Palestinians. We accept its right to be associated with the peace process and have taken a number of steps to bring that about.
    Mr. Walters: Is not the position in the Lebanon extraordinary? Does Israel have some unique dispensation to invade and maraud in the lands of its neighbours, to slaughter civilians in the territories that it occupies, and to assassinate its opponents in sovereign countries, such as Tunisia? Is it not time that this behaviour was brought to a halt? Given that the Shultz initiative appears to have failed, will my right hon. and learned Friend look sympathetically at Signor Craxi's suggested European initiative to see how it could be advanced?
    Sir Geoffrey Howe: I think that it is premature to conclude that the injection of new energy into the peace process initiated by the United States Administration has run its course. I share my hon. Friend's anxiety that it should be maintained. I agree with his judgment that the latest Israeli raid into Lebanon should be condemned. So, too, should the Palestinian incursions into Israel which preceded that raid. Violence offers no solution. It is essential that both sides address themselves to the matter on the basis of the well-known principles.
    We share the widespread sense of horror at the senseless act of terrorism that led to the death of Abu Jihad in Tunis on 26 April. The Israeli Government have offered no comment on who was responsible for that act.
    Mr. Kaufman: Will the Foreign Secretary, together with Mr. Shultz, make it clear to the Israeli Government that the current incursion into the Lebanon will have no greater success than the three-year ill-fated Israeli invasion of the Lebanon in ending Palestinian action against the Israelis? The only way in which Palestinian action against the Israelis can be ended is through a peaceful settlement involving the Palestinians. The only way to achieve that is by the Israelis having the good sense to follow the advice of their Foreign Minister, Mr. Peres, who wants an international conference. As has been put to me strongly, a conference is also wanted by King Hussein of Jordan, the President of Egypt, the Secretary General of the Arab League and all the other Arabs to whom I have spoken. Is it not about time that Mr. Shamir was told that the secure future of Israel can be obtained only by his stepping aside from his policy and agreeing to an international conference?
    Sir Geoffrey Howe: I am glad to agree with all that the right hon. Gentleman has said. It is important that there should be complete realisation that the Israeli military presence in the Lebanon is provocative and wholly contrary to Israel's long term interests. It is necessary for Israel to withdraw completely from south Lebanon and allow UNIFIL to deploy to the international border in accordance with Security Council resolution 425. Beyond that, it is of the utmost importance that Israel, together with the other participants, should seek a settlement of this long-running tragic conflict on the basis of the principles that have been endorsed time after time by the international community. I say that as a staunch friend of Israel throughout the 40 years of her history and as someone who wants nothing better than to see the survival of Israel in prosperity and security within borders that are universally respected. That can be achieved only if Israel, applying the same principles, is ready to extend similar recognition to the rights of the Palestinian people.

    Ethiopia
    Mr. Andrew Mitchell: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent ministerial contact there has been with the Ethiopian Government.
    Mrs. Chalker: The most recent occasions were when I visited Ethiopia in April 1987 and when my hon. Friend the Minister for Overseas Development did so in January this year. At the request of the Ethiopian Government, his return visit this month has been postponed.
    Mr. Mitchell: When my right hon. Friend next meets representatives of the Ethiopian Government, will she make clear the widespread concern in the House and country about the escalation of the civil war in Ethiopia? In particular, will she express our deep concern about the way in which aid and relief agencies are being treated, particularly the United Nations and the Red Cross, the latter of which has been banned from doing the valuable work that it was previously undertaking in that country?
    Mrs. Chalker: We greatly regret the escalation in fighting. It is truly a tragic situation. As the hon. Gentleman rightly said, there are serious implications for the famine relief operations. We have urged the Ethiopian Government to reconsider their decision. Other donors have made similar representations, and, following the visit to Ethiopia last week of the United Nations Secretary General's envoy, Mr. Ahtisaari, we understand that some expatriate staff of the United Nations world trucking operation in Ethiopia are to be permitted to return to Eritrea to restart operations. We hope that the Ethiopian Government will soon permit a full resumption of relief activities, including those by Red Cross officials. We must remember that half the 7 million people who are at risk from famine are in Eritrea and Tigré.
    Mr. Menzies Campbell: Will the Minister confirm that the Ethiopian Government are in possession of the nerve gas Tabun and that Her Majesty's Government will make representations to the Ethiopian Government that it should not be used or deployed against the Eritrean People's Liberation Front in any circumstances?
    Mrs. Chalker: I am interested to hear what the hon. and learned Gentleman says, and I shall look into it further, but we have no evidence that the Ethiopian Government have used or intend to use the weapons. The United Kingdom would unreservedly condemn the use of chemical weapons. I am pleased to say that my hon. and learned Friend was assured by the Soviet ambassador last week that his Government will not supply chemical weapons to Ethiopia, or, we hope, other similar weapons.
    Sir Bernard Braine: My right hon. Friend will be aware that, for 13 long years, 10 members of the former imperial family of Ethiopia—seven of them women and most of them in bad health—have been held without trial. So far the military regime has been deaf to pleas from Heads of State and Governments, including our own. Will my right hon. Friend give the House an assurance that every step will be taken, in conjunction with other Governments, to bring home to the military regime the iniquity and cruelty of what is being done and not hesitate to bring every pressure to bear to end this gross injustice?
    Mrs. Chalker: I congratulate my right hon. Friend on all his efforts to secure the release of the royal prisoners in Ethiopia. He has made many humanitarian efforts, now with the Addis relief campaign, to focus attention on the prisoners. We have made, and we continue to make, repeated representations. That has been going on throughout the years. We very much regret that, in spite of official Ethiopian indications that the royal prisoners would be released last year, they still remain in prison. I can give my right hon. Friend a full assurance that we shall continue to take up the plight of these unfortunate royal prisoners at every suitable opportunity and in conjunction with other Governments.

    Sharpeville Six
    Mr. Pike: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations Her Majesty's Government have made to the Republic of South Africa with regard to the case of the Sharpeville Six.
    Mrs. Chalker: A defence application for a retrial is currently under consideration. We continue to follow the progress of the case closely and with great concern.
    Mr. Pike: As only two of the Sharpeville Six cases hinge on the evidence, which is now suspect, of one witness, will the Government continue to make it clear to the South African Government, and especially their President, that the execution of any of the six will be condemned in the strongest possible terms by the British Government? Will that also be accompanied by a plea for mercy to be shown by the President of South Africa?
    Mrs. Chalker: I think that it would be helpful to the House if I stated where we now stand on this issue. The legal process has been reopened. The Transvaal district attorney has stated his intention to oppose. The stay of execution has been extended indefinitely. I do not rule out further representations, but I believe that we should await the outcome of the current legal process, which I understand is proceeding.
    Mr. John Townend: Will my right hon. Friend tell the House when the Government will apply the same standards and principles to their relations with other African countries, most of which are non-democratic, one-party states, as those to which they seem to apply in their relationship with South Africa?
    Mrs. Chalker: I have described the situation of the Sharpeville Six on many previous occasions. We believe that the Government of a nation—we recognise states, not Governments—should bring about humanitarian rule. We protest when non-humanitarian actions are taken by the Governments of any countries. Executions in South Africa have meant that we were prepared to consider joining appeals for clemency, but only in cases which were clearly political and in which there were strong humanitarian grounds. That is why we have pursued this path with the Sharpeville Six. I have said this before, and it may be that I shall have to say it again. Matters that come before the courts of South Africa are for the South African Government, but where there are strong humanitarian grounds we have a right to make our views known.
    Mr. Tony Banks: Will the Minister explain why there are so many Conservative Back Benchers who seem not to
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    care whether the Sharpeville Six hang or do not hang? Will the right hon. Lady explain why this is the position of so many Conservative Back Benchers?
    Mrs. Chalker: I am not responsible at the Dispatch Box for Government policy on these issues. It may be that some of my hon. Friends have their own views, which have been formed as a result of their visits to various parts of southern Africa. In trying to make a judgment on these most difficult issues, I shall continue to try to base all my comments and answers on the facts that are before me.
    Mr. Forth: Has my right hon. Friend congratulated the South Africans on the patent independence of their judiciary? In the light of her previous comments, has she made a list of all the states and Governments which execute people for political reasons? Has she led the Foreign and Commonwealth Office in making vigorous representations to all those countries along the same lines as those that she has described in the context of the Government's relationship with South Africa?
    Mrs. Chalker: When a country has a legal process, we expect it to be followed. That applies to South Africa and to any other African or other country in the world. I am glad that the South African Government followed the due legal processes of their country, but the issue has not yet been fully resolved. I say to my hon. Friend that it is easy to stand on the sidelines and to criticise; but it is much more difficult to form a view on the facts of a case and the situation that exists in individual countries, which vary so much. These are matters that warrant much more careful study than some Members of this place sometimes give them.

    Israel
    Mr. McTaggart: To ask the Secretary of State for Foreign and Commonwealth Affairs if he has given consideration to applying economic sanctions against Israel; and if he will make a statement.
    Mr. Mellor: Economic sanctions would not help to bring about a solution of the problems of the region.
    Mr. McTaggart: Given the increasingly dangerous position for civilians in that troubled part of the world, does the Minister agree that Britain, as a member of the European Economic Community, should follow the EEC example and consider introducing economic sanctions against Israel in order to put pressure on Prime Minister Shamir to attend an international conference to try to find a peaceful solution of the problems of that area?
    Mr. Mellor: There is no disagreement between the Government and the hon. Gentleman on what we want to see coming out of this, but we certainly disagree with the method that he proposes. We believe that we should try to influence events in the area by working in partnership with fellow members of the European Community. That is why repeated statements have been made by the Foreign Ministers of the European Community condemning the quite indefensible methods that the Israeli defence forces are using in the occupied territories and calling for a political solution based on a recognition of the right of the Palestinians to self-determination as well as a recognition of the right of Israel to exist behind secure boundaries. Statements have also been made to try to promote and

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    enhance the economic well-being of the people in the occupied territories by allowing their produce access to the European Community on favoured terms, which, I am sad to say, the Israeli Government, in breach of undertakings given to the Community in December, continue to block.
    Mr. Lawrence: Apart from the manifest absurdity of taking economic sanctions against a friendly democratic nation, is not the economic sanction of the Arab boycott a substantial obstacle to the settlement of the Arab-Israeli problem?
    Mr. Mellor: That is a further manifestation of the regrettable situation and one that we would like to see changed. That can be changed only if there is a sensible recognition on the part of all states in the region that, sooner or later, they will have to coexist as good neighbours.
    Ms. Short: Does the Minister agree that we all have a duty to use our influence to stop the immoral and terrorist behaviour of the Israeli Government in the occupied territories, which distresses hon. Members on both sides of the House? The European market is of great importance to the Israeli state. Israel is currently breaching Europe's request that produce from the occupied territories should have access to the European market. Should we not therefore tighten the screw and use our economic pressure to force the Israeli Government to behave more reasonably?
    Mr. Mellor: The hon. Lady was quite right in one thing that she said. I do not know of any hon. Members, no matter what they disagree about on other issues, who have visited the occupied territories and not returned with precisely the same point of view as the hon. Lady. That says something about the lamentable situation.
    I have already set out the action that we think it proper to take with regard to the European Community. We do not agree that economic sanctions would be appropriate. However, we take very seriously the fact that the Israeli Government are apparently flouting the undertakings that were given to allow produce from the occupied territories to enter Europe unhindered. It was agreed by the Council of Ministers that the new protocols favouring Israeli produce should go forward, but the European Parliament continues to block that, presumably because of the Israelis' failure to keep their side of the bargain. I doubt whether that position will be resolved until there is some movement on the introduction of produce from the occupied territories into the European Community on those proper terms.
    Sir Ian Gilmour: I appreciate my hon. and learned Friend's attitude towards sanctions, but there is nothing democratic about Israel's occupation of the West Bank and Gaza or about her behaviour there. In view of America's proven uselessness in this matter, how will my hon. and learned Friend ensure that the views of the Government and of the European Community have some influence on events in the occupied territories?
    Mr. Mellor: We have no basis on which to command attention. We can only continue to make our views known in the forums open to us, and we do that. I believe that an increasing number of people in Israel are only too well aware of the grave and, I fear, lasting damage that is being done to Israel's international reputation—not least the
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    lasting damage caused to the prospects for young people in Israel to live a full span in peace—as a result of the shortsighted policies pursued by Mr. Shamir and others.

    Nicaragua
    Mr. Galbraith: To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the Government of the United States of America concerning the Nicaraguan Government's negotiations with the Contras.
    Mr. Eggar: We have regular discussions with the United States Government on a whole range of issues, including the situation in Central America. They are well aware of our support for a negotiated solution to the problems of the region.
    Mr. Galbraith: In his discussions with the American Administration, does the Minister impress on them always that the Contras are terrorists? Has he asked the American Administration to use their influence with the Contras to settle with the Nicaraguan Government and not hang on in the hope that there will be a change in the Administration, so that the Contras may continue their murderous activities?
    Mr. Eggar: The hon. Gentleman is not a regular attender at Foreign Affairs Question Time— [Interruption.] I am sorry if I have offended the hon. Gentleman. If what I have said is not right, obviously he cannot have listened very carefully to the explanations that we have given of our policy towards Central America. We have consistently advocated a peaceful, negotiated solution to the region's problems, and we have made our views very clear to the United States Government.
    Sir Peter Blaker: Has my hon. Friend seen recent reports that a large number of political prisoners—up to 1,000—have been released by the Nicaraguan Government? If they are such a paragon of democracy, why were there so many political prisoners to release, and how many are still in prison?
    Mr. Eggar: As usual, my right hon. Friend makes a very good point. The Nicaraguan Government have not always lived up to the Guatemalan accord, which they signed. We are heartened by the progress that has been made and look to the Nicaraguan Government to make even more rapid progress.
    Mr. Foulkes: I am astonished that the Minister is unaware that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) is not only a regular attender at Foreign Affairs Question Time but is an expert on Nicaraguan affairs. He has personally given medical aid in Nicaragua, which is more than any Conservative Member can say.
    Will the Minister acknowledge that the progress of the dialogue with the Nicaraguan Government is being blocked by extremists among the Contras, egged on by extremists in the United States—including the President? As the Minister has repeatedly said at the Dispatch Box that the problems of Central America cannot be solved by force but only by peaceful means, will he say what the British Government are doing to help the peace process?
    Mr. Eggar: I fully recognise the hon. Gentleman's need to maintain good diplomatic relations with his Scottish colleagues, and I congratulate him on the elegant way in which he has done that.
    I say to the hon. Gentleman that it does not do him, the Labour party or the House any good to describe the United States President in the way that he did. I hope that on reflection he will withdraw the words that he used.
    The hon. Gentleman should take a more balanced view of the problems of Nicaragua. He might, for example, have criticised instead President Ortega's statement on 13 December that the Sandanistas would not hand over power if they were defeated in an election.

    Human Rights
    Mr. Ian Taylor: To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is being made on human rights at the CSCE.
    Mr Mellor: So far, advances have been distinctly modest. When I addressed the Vienna CSCE meeting on 15 April I made it clear that we would not conclude business without much more progress on human rights issues.
    Mr. Taylor: Will my hon. and learned Friend convey to Mr. Gorbachev that it is all very well talking about glasnost and perestroika, but that if he wishes to make progress on conventional arms stability talks and on nuclear arms reductions he had better pay attention to the human rights issues at the Vienna review conference and instruct his negotiators to make distinct progress? We are holding ourselves armed against the Soviet Union because we distrust that country's callous disregard for human liberties.
    Mr. Mellor: I agree with my hon. Friend. That was the burden of what I said. In particular, there is a gap between what Mr. Gorbachev has said—much of which is very welcome—and what has been carried into law. We look to him to deliver on what he has said he wants to do, and he will have every support from the West in so doing. What we cannot accept is an unbalanced outcome at Vienna. That would sell short all the reasonable aspirations of people in the East who were given such hope by the Helsinki accord.
    Mr. James Lamond: Is it not a fact, however, that the Soviet Union has done its very best to make progress on humanitarian affairs by suggesting that the Soviets themselves host a special international conference on the matter? Has not the West dragged its feet and answered that request by suggesting that every non-governmental organisation that wishes to go along should have the right to go to such a conference—and even that the Voice of Free Europe should be allowed to participate?
    Mr. Mellor: The hon. Gentleman is an astonishingly tolerant observer of the Soviet scene. I can only say that if he really thinks that it is an answer to the sustained and continuing human rights abuses in the Soviet Union for people to go to Moscow and just talk about it, his tolerance does him little credit.

    Ethiopia
    Mr. John M. Taylor: To ask the Secretary of State for Foreign and Commonwealth Affairs what advice he is giving to British citizens intending to visit Ethiopia in the light of the information available to him about the internal conflict in that country; and if he will make a statement.
    Mrs. Chalker: We advise British citizens not to visit the rural areas of Tigré and Eritrea, where hostilities continue.
    Mr. Taylor: I thank my right hon. Friend for her reply. Do not those who would excite Western liberal guilt about Ethiopia miss the point that the principal scourge of its rural people is the Ethiopian Government?
    Mrs. Chalker: My hon. Friend is absolutely right. That has been a serious problem in Ethiopia, particularly for those who have tried to make a way of life for themselves and been prevented from doing so. At present, while some areas are indeed safe, others are suffering from attacks by the Ethiopian Government on their liberation fronts. I believe that the continued military position, with sporadic fighting in places all over the country, but mainly in the north, can do no good for the people of Ethiopia, and certainly will not advance the cause of the Ethiopian Government one iota.

    Afghanistan
    Mr. Harry Greenway: To ask the Secretary of State for Foreign and Commonwealth Affairs what are the implications for Her Majesty's Government's policy towards relations with Afghanistan after the Afghanistan settlement; and if he will make a statement.
    Sir Geoffrey Howe: We welcome the Geneva agreement of 14 April and the prospect of withdrawal of Soviet troops from Afghanistan, but the regime in Kabul remains a Soviet client. We therefore have no plans to raise the level of our dealings with it.
    Mr. Greenway: Does my right hon. and learned Friend agree that the remarkable generosity and steadfastness of the Pakistani Government in giving homes to no fewer than 5 million Afghan refugees should now be recognised? What can he do to establish the reintegration of those people into Afghanistan, as they wish to be integrated, but on their own terms as practising Muslims, not as Communist sympathisers? What account will he take of Amnesty International's serious condemnation of the present dealings of the Afghan and Soviet Governments with Afghans seeking to leave Afghanistan in recent years?
    Sir Geoffrey Howe: I agree that we must admire the generosity and steadfastness of the Pakistani Government in providing homes for the millions of refugees who fled the brutal war that resulted from the Soviet invasion.
    I have, of course, seen the reports of the latest allegations by Amnesty International, and it must be said that they echo the reports of the United Nations special rapporteur in 1988. He portrayed a betrayal of basic human rights on a dramatic scale, with over 14,000 civilian deaths last year, 3,000 political prisoners admitted by the regime, and torture still being used in interrogations. The Soviet withdrawal is directed towards bringing an end to that. Plainly, that withdrawal must be followed by the best

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    possible way of enabling the Afghan people—including the refugees—to exercise their right of self-determination and of establishing a Government acceptable to them all.

    EC Internal Market
    Mr. Wigley: To ask the Secretary of State for Foreign and Commonwealth Affairs what measures his Department intends to take in the near future to increase the awareness among the general public of the implications of the completion of the European Community internal market in 1992.
    Mrs. Chalker: We are playing a full and active part in the single market awareness campaign, launched on 18 April. We shall continue to make the single market a major theme of speeches both at home and abroad and to raise this in regular contacts with business men.
    Mr. Wigley: Is the Minister aware of the considerable worry among milk producers in Wales, and, indeed, in south-west England and Scotland, about the effect of the single market in 1992? Are any discussions taking place between herself and the three Agriculture Ministers for
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    England, Wales and Scotland about transitional arrangements? Is her Department, the Ministry of Agriculture, Fisheries and Food, the Welsh Office or the Scottish Office responsible for arranging consultations, seminars and conferences in the United Kingdom on that matter?
    Mrs. Chalker: That is really a question for my right hon. Friend the Minister of Agriculture, Fisheries and Food. Guided by him and the Secretaries of State for Scotland and for Wales, we are doing our very best to ensure that excess production comes down and that there is a sensible move towards the new funding of agriculture which the Community needs.

  BILL PRESENTED
    CEMETERIES (CONTROL OF SALE ETC.)
    Mr. Harry Greenway, supported by Mr. Robert G. Hughes and Mr. Tony Banks, presented a Bill to control the sale or disposal by local authorities of any land consecrated or used for burials and to terminate the practice of burying more than one person in a single grave: And the same was read the First time; and ordered to be read a Second time upon Friday 8 July and to be printed. [Bill 158.]

Right to Live
3.31 pm
Mr. Denis Howell: I beg to move,
That leave be given to bring in a Bill to provide that where two consultants employed within the National Health Service declare that a patient's life will be in grave danger or seriously impaired unless admitted and treated in hospital it shall be the duty of the appropriate Regional Health Authority to immediately provide for the admission to hospital and for the treatment of the said patient; and to make it an offence not so to provide the necessary hospital admission and treatment.
The proposed Bill is concerned with the sanctity of human life—the sanctity of every human life. It seeks to assert in law the ethical proposition that the medical needs of every citizen should be the only criterion for hospital care. In so doing it reverses the existing situation within the NHS where the needs of the patient are secondary to considerations of financial stringency, administrative convenience or Government policy.
It also reverses what I believe to be the uncivilised judgments of the courts that patients who would otherwise die or whose health would be seriously impaired have no right of demand on hospital services because of finite resources. That is not an Act of Parliament passed in this place; it is a judicial precept which I seek to correct.
The need for such an Act of Parliament became apparent in Birmingham when a hospital chairman was instructing consultants not to admit to hospital or to operate upon hole-in-the-heart babies and kidney dialysis patients. That situation still persists in the west midlands, not provoked by direction of hospital chairmen but continued by the imposition of financial rationing. In fact, it is happening all over the country. People are being left to die or to suffer agony while doctors and surgeons are not allowed to work, hospital beds remain empty although they are ready for patients and nursing care is available.
I can give the House some examples from Birmingham and from the west midlands, but I am told that they apply nationwide. At the Queen Elizabeth hospital in Birmingham, 80 operations per year for heart bypasses and valve replacements are being postponed. Patients are being discharged prematurely from intensive care units, with very serious consequences. For example, four weeks ago a lady, who was discharged from the intensive care unit had to be readmitted, and I am told that she is now suffering from permanent brain damage.
Every morning in the Queen Elizabeth hospital in Birmingham the five consultants in charge of the intensive care unit meet at 8 o'clock and have to decide which patients to discharge prematurely from their unit so as to make room for other seriously ill patients. That is a scandal. No consultant should be placed in that position. I am told that one patient suffering from cancer of the gullet was prepared four times for an operation and on each occasion the operation was postponed. The cancer is now incurable.
All surgeons in the Queen Elizabeth hospital are, by official decree, forced to down tools for one week in seven while 146 beds remain empty. That is the most massive Government-imposed lock-out we have seen in this country for a long time. Surgeons and nurses are being prevented from working on patients who are desperately ill.
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At the Sandwell hospital 32 orthopaedic beds have been closed and elderly patients have been left in great pain. The surgeons cannot work but 32 beds are left empty and operating theatres and nursing staff are available. The reason for that is that the hospital cannot afford the cost of the artificial hip joints. That is unforgivable.
In the central district in Birmingham there is an eight-week waiting list for radiotherapy, which is so vital for cancer patients. The Birmingham Daily News reported this morning that Dr. Alan Bond, one of the specialists at the Queen Elizabeth hospital, has started to tabulate cases that cannot be dealt with in intensive care. In April alone in that one hospital 15 life-saving operations were cancelled—seven open heart operations, two liver transplants, one kidney transplant, two major vascular operations and three major abdominal operations.
It is reported that one patient was kept waiting for two and a half hours for admission to the intensive care unit. During that time the patient had to be ventilated by hand by the anaesthetist using a pumping bag. That is a condemnation of conditions in the NHS in 1988 under this Government.
As I have said, in the central district there is an eight-week waiting list for radiotherapy. In the North Birmingham and Sutton Coldfield Good Hope hospital it takes 75 weeks before an orthopaedic case is even seen by a doctor before they start waiting for treatment. In the West Birmingham Dudley Road hospital, of which I used to be chairman, the closure of services is intended to achieve contemptible savings. For example, there has been a 20 per cent. reduction in physiotherapy treatment in order to save £13,000. The cervical cytology programme, so much the baby of the Under-Secretary of State for Health and Social Security, has been severely reduced in order to save £5,000. How contemptible can we be in this day and age?
I am told that the Dudley Road hospital has had to inform the region that it has stopped all cancer therapy until further funds are available. I can disclose to the House that one consultant has told me that things are so bad that a consultant received a letter from a solicitor asking for treatment for his client and when the matter was taken up with the chairman of the regional hospital authority he was told, "I shouldn't worry about that. I have 1,000 letters or more from solicitors acting on behalf of their clients demanding attention in the west midlands area hospitals." Those letters show how people are plumbing the depths of despair when they require serious treatment.
I have to tell the House that we have a new word in the vocabulary of the west midlands. I had not come across it before. The word is "triage". I am told that it comes from the battlefields of Europe. It is now in common currency among doctors in the west midlands. Triage means looking at the wounded and the ill and putting them into three categories: immediate treatment, to be deferred, or not worth treating. That is the atrocious system now being operated in the west midlands. It means in practice that people over 65—pensioners—are put at the bottom of the queue.
We all sympathise with the dilemma facing the consultants; we do not blame them, but we assert in this measure that every citizen, pensioner and child has a right to equal treatment in the Health Service and in law. The triage system is the classic case of the doctors' dilemma

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which I thought had been outlawed since the time of George Bernard Shaw, but it is now, apparently, hallowed practice in our hospitals.
The purpose of this Bill is to assert that when any patient is desperately ill or suffering serious physical pain, be he parent or grandparent, he is of equal worth under the law. The Bill seeks to assert that every citizen is equal in the sight of God and must therefore be declared to be of equal worth in the National Health Service. I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Denis Howell, Mr. Roy Hattersley, Mr. Barrymore John, Mr. Tam Dalyell, Mr. Giles Radice, Mr. Joseph Ashton and Mr. Terry Davis.

RIGHT TO LIVE
Mr. Denis Howell accordingly presented a Bill to provide that where two consultants employed within the National Health Service declare that a patient's life will be in grave danger or seriously impaired unless admitted and treated in hospital it shall be the duty of the appropriate Regional Health Authority to immediately provide for the admission to hospital and for the treatment of the said patient; and to make it an offence not to provide the necessary hospital admission and treatment: And the same was read the First time; and ordered to be read a Second time upon Friday 13 May and to be printed. [Bill 159.]

Anglo-Irish Conference (Meeting)
Mr. James Molyneaux: On a point of order, Mr. Speaker. You will be aware that there is today a meeting of the Anglo-Irish conference and that the agenda is such that the discussions and decisions taken will affect the constituents of every hon. Member. Do you, Sir, know whether it is the intention of the Secretary of State for Northern Ireland to make a statement as soon as possible; or, if not, is it possible for that request to be conveyed to the Leader of the House?
Mr. Speaker: I am sure that the Leader of the House, who is present, will have heard what has been said.

Legal Aid Bill [Lords]
Order for Second Reading read.
3.44 pm
The Solicitor-General (Sir Nicholas Lyell): I beg to move, That the Bill be now read a Second time.
The legal aid White Paper, published in March 1987, began with the words:
"The purpose of legal aid is to ensure that people of small or moderate means receive access to proper legal advice, and to justice."
The Bill gives legislative effect to the main decisions announced in the legal aid White Paper. Its central objective is to improve the arrangements for making legal aid and legal advice and assistance available. Efficiency, effectiveness and value for money are the key concepts which underlie the Bill.
Legal aid in England and Wales is one of the fastest growing areas of Government expenditure. The legal aid scheme is now approaching its 40th year. For the first 20 years expenditure never exceeded £10 million a year and help was provided for a maximum of about 150,000 people. Expenditure on legal aid in England and Wales today is running at an annual rate of about £450 million a year, compared with only £100 million just nine years ago in 1979–80, an increase which far outstrips anything attributable to inflation. In the past year, about 2 million people have received help under the civil or criminal legal aid schemes, or the advice and assistance scheme. That is a measure of the growing importance of the legal aid scheme, and a measure of the importance of the Bill.
The scheme as it exists in England and Wales has developed considerably since its beginnings in the report of the Rushcliffe committee in May 1945 and the Legal Aid and Advice Act 1949, which established the scheme. In 1972, the legal advice and assistance scheme was introduced. In 1974, the legal aid legislation was consolidated, and it is the Legal Aid Act 1974 which the present Bill replaces. Since then, the Legal Aid Act 1979 has established the extension of advice and assistance to cover representation—the system known as ABWOR—and the Legal Aid Act 1982 has made some important changes in the criminal legal aid system, including the establishment of statutory magistrates court duty solicit or schemes, which were joined in 1986 by the 24-hour scheme to give assistance to those held in police stations.
The Bill is intended to replace and consolidate all the existing legal aid legislation. In many ways, it also improves on the drafting and presentation of the existing legislation. There is, however, much more to the Bill than that. The aim of the Bill is to provide the litigant who might not otherwise be able to afford it because of his means—and the taxpayer—with a system that is efficient and effective and gives not only the best possible service but the best possible value for money. It must also be a system which is able to evolve to meet changing needs and new methods of giving advice as they develop.
Mr. Keith Vaz: Has the hon. and learned Gentleman seen the results of the Law Society's survey which was published on Monday this week and which showed that, since 1983, 40 per cent. of the solicitors doing legal aid work either have decided to give up the work because of the remuneration, or are considering giving it up? What effect will the Bill have on those solicitors who are left administering the legal aid system?
The Solicitor-General: I read the survey with some care and we shall continue to study it. Nearly two thirds of solicitors did not even bother to reply to the questionnaire. The number of solicitors carrying out legal aid services has increased pretty steadily over the past five years, from about 9,700 to 11,500. That is not to dismiss the points made in the questionnaire. They deserve careful study.
The principal new feature of the Bill is the establishment of the legal aid board. The Government believe that the legal aid scheme has outgrown the structure which was appropriate for it in the early 1950s and which has remained the same ever since. What we now consider is needed is one central body, including among its membership a whole range of expertise—not only barristers and solicitors but experts in management, finance, personnel, administration and the broader forms of advice giving. The aim is to provide a central body which can co-ordinate and manage all aspects of the legal aid scheme with a proper sense of order and strategic direction.
This decision to establish the board is not in any way a criticism of the existing administration. In particular, I wish to place on record in this House the Government's appreciation of the role played over the past 37 years by the Law Society. The close involvement of the legal profession has been one of the strengths of the legal aid scheme in the past, and it is the Government's wish that it should continue to be so in the future. The decision to establish the board is rather a reflection of the different needs of the future. If legal aid is to develop properly in response to the challenges of the 1990s and beyond, it must have the right legislative and administrative framework.
The key to this will be the board, assuming a central role in all aspects of the adminstration of legal aid. Before that can happen, there is a great deal of work to be done, and the sooner it can begin the better. Last December the Lord Chancellor announced that he intended to set up what is known as a shadow board to begin preparatory work as soon as possible. Today he will announce to Parliament the name of the new chairman of the board and of its initial membership. The objective is that the shadow board will begin work straightaway, preparing itself to take over from the Law Society, and planning for the future. It is the Lord Chancellor's hope that the board will be able to take over from the Law Society early in 1989.
The Government are determined that the changeover to the board should be conducted with the minimum disruption. The board will, therefore, initially do no more than take over those functions currently performed by the Law Society's legal aid administration. However, the Governmant's longer term aim is that the board should have overall responsibility for all aspects of legal aid, unless there are strong arguments to the contrary. It will, therefore, be invited to look also at aspects of the scheme not currently administered by the Law Society, such as means assessment for civil legal aid, consideration of applications for criminal legal aid and the determination of all legal aid bills.
There are problems involved and the Government are fully alert to them. For that reason, no decision has yet been taken to transfer any of those functions to the board. Responsibility for civil legal aid means assessment, criminal legal aid grant and any other functions will be given to the board only if it appears to the board and the
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Government that that is a sensible way of proceeding and that it is in the best interests of the legal aid scheme as a whole.
Some concern has been expressed that the legal aid board will not be independent of Government. I believe that the names that the Lord Chancellor is announcing today will go far to meet those concerns. However, the concept of independence must be put into context. The present legal aid administration is not simply free to do what it likes, and nor will be the new board. The Government will continue to set the broad framework of the legal aid arrangements and will retain their present role over such matters as financial eligibility limits. The Government have responsibility to the taxpayer and to Parliament to ensure that money is spent wisely and for the purposes for which it was voted. It is a responsibility that no Government can abdicate. But within the overall constraints set by Parliament the board will have considerable freedom to manage its affairs in the way that it considers best.
Mr. Paul Boateng: It would considerably allay the fears that have been expressed by the professional associations and the public in relation to the independence of the board if the hon. and learned Gentleman would be prepared to give an unequivocal assurance that the legal aid advisory committee, which over the years has done such sterling work protecting the public interest, will be retained. Will the hon. and learned Gentleman give that unequivocal assurance?
The Solicitor-General: I am grateful to the hon. Gentleman for his kind remarks about the legal aid advisory committee. The Bill provides and the proposal is that the legal aid advisory committee should remain in being for at least a year but that its position should then be reviewed. The hon. Gentleman has anticipated remarks that I proposed to make later in my speech. It will be reviewed with an entirely open mind by the Lord Chancellor.
Mrs. Gwyneth Dunwoody: The Solicitor-General appears to be trying hard to help. Does he realise that many people are concerned about the position of women, who will continue to need legal aid for cases of domestic violence? There is considerable worry that this change, if any attempt is made to restrict applications for legal assistance, will make matters very difficult for people.
The Solicitor-General: I quite understand the hon. Lady's anxiety, but I hope that I shall be able to set her mind at rest. I have seen nothing in the new structure to give her cause for concern. I know from my own not all that distant experience in the courts that many women make use of legal aid for that purpose. I foresee no reason why they should not continue to do so.
A further sector that the board will be invited to consider at an early stage is the provision of advice and assistance. This has grown enormously over the past nine years. Since 1979, expenditure on advice and assistance—which is usually referred to as the green form scheme —has risen from £12 million to £60 million per year, and the number of people receiving help has likewise increased from 300,000 to 1·2 million. Such growth looks set to continue.

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Both the range of problems for which help is provided has widened and the kind of agency providing such advice has developed greatly. Such bodies as law centres, welfare rights centres, and the invaluable nationwide network of citizens advice bureaux—bodies partly voluntary, partly funded, largely by local government and partly by central Government, have all developed in the field. Many provide high standards of expertise available to clients in accessible and attractive ways. The initial recommendations of the efficiency scrutiny which preceded the legal aid White Paper made radical suggestions which we have rejected, but we see real potential benefit to the consumer in the idea of making greater use of advice agencies in these sectors and it is one of the important areas that the new board will be invited to examine. This Bill provides the powers to enable that to be done.
In legislative terms, the provisions are relatively simple. Part II of the Bill provides that the board shall have the power to make arrangements for the provision of advice and assistance by means of contracts with, or grants or loans to, individuals, organisations or groups.
We contemplate that when the board invites tenders it will specify what is to be provided, by whom and on what terms. The standards which will have to be met will be an important part of the requirements. It will be open to solicitors themselves to submit tenders to do the work, as it will to advice agencies and others. It will be open to the board to make different arrangements in different parts of the country. It follows, of course, that once new arrangements have been made for handling particular categories of case, these will be excluded from the existing green form scheme. Otherwise there would be duplication.
I emphasise two points. First, the Government fully recognise the importance of the level of service to the client. Secondly, the Government have taken no firm decisions on the extent to which these powers should be used nor the areas of work in which they would be appropriate. The Government will await the board's advice. The board will, in any event, be able to exercise its powers by means of contracts only if the Lord Chancellor so directs and only in accordance with his directions.
Mr. Alex Carlile: In assessing the impact of competitive tendering and where it should apply, will the hon. and learned Gentleman look at the impact of competitive tendering upon small towns and rural areas and at the services available to the population in sparsely populated areas? Much free legal advice and basic legal advice is given by small firms of solicitors which fear these provisions.
The Solicitor-General: I am sure that the board will look carefully at the hon. and learned Gentleman's point and keep it carefully in mind in weighing up whether or not to accept the contract, to proceed in that method or to continue with the existing method, or with a combination of the two.
In addition to the power to award contracts, the board is given the power to make grants. This is relevant to the position of law centres. The Government's view of law centres remains as it has been since 1979. Law centres may well provide a valuable service to their local communities, but they are essentially a local service, and as such it is more appropriate that they should receive local, rather than central, funding. There is an exception to this. The Lord Chancellor's Department provides funds to seven
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law centres. The Lord Chancellor now proposes to invite the new legal aid board to take over responsibility for the grants to the seven centres he currently funds. The Department will need to be satisfied that the services provided by those seven centres fit into the general pattern of its plans for advice and assistance. Provided, however, that it is so satisfied, and subject to the Lord Chancellor's agreement, it will be open to it to continue to pay the grants under the powers in part II of the Bill. It will, of course, also be open to those and other law centres to submit proposals for contracts or grants in the general context of the board's plans for advice and assistance.
I should now like to say a word about a class of case that has caused widespread public interest—the type of multi-party action which has recently involved some drugs companies, for example. During the Bill's passage through the other place the Lord Chancellor put forward important amendments which will allow the board to enter into contracts with firms of solicitors for the provision of representation in specified categories of civil proceedings. We envisage that the board would identify particular groups of cases. such as multi-party actions, raising common issues and in which there was no risk of conflict of interest, for which representation might advantageously be provided by particular solicitors. Assisted persons with cases falling within a prescribed category would then be directed to a solicitor under contract to the board, thus securing proper co-ordination of all such cases. That process would involve some restriction on the freedom of choice of solicitor by individuals involved in those cases, but we believe that that price must be paid for greater co-ordination of multi-party actions anyway.
There will obviously be a great deal of work for the legal aid board to do to flesh out the arrangements for the contracting system. For instance, special arrangements for eligibility and means-testing may need to be made for some or all of the litigants falling within the prescribed group. Modifications may be required to the merits test, and separate provision may be appropriate for the statutory charge to be taken from the total sum recovered by all the plaintiffs in a class action. Much detailed work remains to be clone by the board on these and other matters. Nevertheless, I believe that the proposals, which have been widely welcomed, represent a useful way forward for multi-party actions, and perhaps also for other categories of civil legal aid work where the system may be appropriate and cost effective and where it would bring real benefit to the legally aided person.
I have concentrated so far on the provisions in the Bill relating to the legal aid board, to advice and assistance, and to the making of contracts for civil legal aid. because those are the crucial aspects in which the Bill departs from the existing legislation. It may help, however, if I now go briefly through the Bill and outline its main provisions.
Part I begins with a clear statement of the purpose of the Bill, and goes on to provide basic definitions of the terms used throughout the Bill.
Part II contains the provisions relating to the establishment of the board and the power to award contracts and make grants. In part II, the board is given its general power to do such as it considers necessary to provide or secure the provisions of services under the Bill.
Mr. Bob Cryer: Will the Minister confirm that he has today issued a press release on the composition of the board? If so, has he placed it on the

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Table for all hon. Members to see? As the matter is relevant to part II of the Bill, it should be widely available, rather than being given a narrow circulation.
The Solicitor-General: The hon. Gentleman is absolutely right. My right hon. and noble Friend the Lord Chancellor has today answered a parliamentary question —and I have answered a question in this House—giving the names of the new chairman and members of the board. I hope that the House will agree with my right hon. and noble Friend that it is for the convenience of the House to have the information available today rather than waiting until tomorrow when this debate will be over. I confess that I have not yet placed a copy on the Table, but I shall be happy to make amends as soon as I can.
Mr. Vaz: Will the Solicitor-General tell the House how many members of the board are lawyers and how many are former or present consumers of the legal aid system? In other words, how many of them have actually applied for legal aid in the past?
Mr. Boateng: While he is about it, will the Minister tell us how many of the board are black and how many are women?
The Solicitor-General: I shall do my best to oblige. I do not know whether any members of the board have been consumers of legal aid in the past. As to the professions, the board includes two barristers and two solicitors out of a total membership of 11. It also includes people with experience of personnel, a number with experience as justices of the peace and a founder member of the legal aid practitioners group, who should bring to the workings of the board some experience from pretty close to the ground. The board's members include people with management experience and a representative—she is also a member in her own right—of the council of the National Association of Citizens Advice Bureaux. The chairman has long management experience in ICI, and until fairly recently was the chief executive of a large public limited company.
Mr. Cryer: Would it not have been more convenient for the House had the Minister made the press release available in the Vote Office? The business of arranging a planted parliamentary question and answer is not for the convenience of the House as the question will not be published in Hansard until tomorrow. As the Minister pointed out, the debate will be over by then. At 7 o'clock or thereabouts we shall be reaching a conclusion on the matter. I urge the Minister not to trample on the rights of Parliament. He should make sure that information deliberately published by his Department in conjunction with a Bill is properly made available.
The Solicitor-General: I acknowledge what the hon. Gentleman says, but I think that I should make a little progress.
Mr. Vaz: On this last point—
The Solicitor-General: If I may, I shall make a little progress and then give way if the hon. Gentleman's question is still pertinent.
Part III sets out the provisions for advice and assistance provided by solicitors. This is intended as a restatement of the existing provisions regarding green form and advice by
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way of representation. The terms of the legislation differ from the 1974 Act in a number of respects, but the overall effect is the same.
The Government intend to retain in broadly its present form the current structure of regulations for assessing financial eligibility for all forms of legal aid, at least for the foreseeable future. Even when the board is established, the Lord Chancellor will, of course, as now, retain full control over eligibility levels, subject to the consent of Parliament. It would not be appropriate to delegate such an important factor in access to justice.
Part IV deals with civil legal aid. The proceedings for which that is, and is not, available are listed in schedule 2. This largely reproduces the current position.
Part V deals with criminal legal aid. Once again, the scope of criminal legal aid and the financial conditions will remain as they are now. Part V, however, contains powers that mirror those in part II to transfer functions currently performed by the courts to the new board. The Lord Chancellor will, of course, have to be fully satisfied that this is wise before he agrees to such a transfer, which will be made by regulations subject to the affirmative procedure.
Part VI makes special arrangements for legal aid in care proceedings and contempt proceedings. There has long been criticism that care proceedings were entangled with criminal proceedings in the 1974 Act and the Bill puts that right.
Part VII deals with a number of miscellaneous points, and sets out the regulation-making powers. The only one of those to which I would specifically draw the House's attention is that relating to the remuneration of the legal profession. The White Paper made it clear that the Government will continue to have regard to the principle of fair remuneration for work actually and reasonably done. It is, however, necessary for the Government also to have regard to the other claims on public funds. The Government must be fair to the taxpayer as well as to the practitioner. The aim is to produce a result that is fair overall; but fairness is inevitably a somewhat imprecise concept. Clauses 34(2) and 34(7) help to clarify the approach that will be adopted by setting out the factors, which include time and skill, earnings, overheads, and number and general level of barristers and solicitors available, to which the Lord Chancellor shall have regard when setting rates. The aim of that list, which is not exhaustive, is to ensure that all relevant factors are taken into account.
Part VII also deals with the future of the legal aid advisory committee. As the legal aid White Paper made clear, once the legal aid board has been established, the role and function of the committee will inevitably change. However, the Government believe that the committee will continue to have a useful role to play, at least during the period of transition to the legal aid board, and in the early days of the board's existence. The Bill, therefore, contains power to retain the advisory committee.
As circumstances may well alter once the board has settled into its new role, the Bill also includes a power to allow the committee to be disbanded by regulations if this should seem appropriate. The Lord Chancellor intends to review with an open mind the committee's continuing role 12 months after the board has taken over its responsibilities.
Mr. Vaz: The hon. and learned Gentleman has not answered the question about how many members of the new legal aid board are black and how many are women.
Mr. Humfrey Matins: How many are homosexual?
Mr. Vaz: Indeed, as the hon. Member for Coward Chance asks, how many are homosexual?
The Solicitor-General: I shall have to make inquiries as I am afraid that that information is not immediately apparent from the names of the members. I shall let the hon. Gentleman have an answer as soon as I reasonably can.
Finally, I should mention that, although the majority of the Bill relates only to England and Wales, schedule 4 contains certain amendments to Scottish legal aid legislation.
It is the Government's view that the Bill represents an important step forward in ensuring the future strength and vitality of the legal aid scheme. The legal aid board will have a challenging job to do, but the Government are confident that the end result will be a legal aid scheme that is healthier, more efficient and more effective in the service it provides, to the consumer and to the country.
4.11pm
Mr. John Morris: My sympathies go out to the Lord Chancellor who had to introduce the Bill. It is not a legal aid Bill; it is a money Bill, and the dead hand of the Treasury is seen all over it. It is said that it will consolidate the £10 million savings contemplated in the legal aid White Paper. Its aim is to do much more than that. Its aim is to ensure a firm Treasury rein on growth, to curb any independence and to stifle any additional innovation or expansion that may embarrass the Treasury.
There is much in the Bill that we welcome, especially the setting up of a new legal aid hoard. Although in recent years there has been considerable criticism of some of the Law Society's machinery, especially in some areas of London—basically because of underfunding—it is right for me to join in thanking those who have administered the scheme over the years.
Will the new board be independent? Today the Solicitor-General said that the board will have considerable freedom to manage its affairs. The Lord Chancellor said:
"The stature of those who will be appointed …will ensure that they are independent."—[Official Report, House of Lords, 29 February 1988; Vol. 494, c. 26.]
My hon. Friends and I will study the list of the members to the new board, which we have just received. However, the Lord Chancellor also said:
"The Legal Aid Board is not going to be free to do what it likes, when it likes and how it likes"—[Official Report, House of Lords, 15 December 1987; Vol. 491, c. 608.]
That is a measure of the considerable independence to which the Solicitor-General referred.
The board has wide powers under clause 4, but the key powers to make contracts, grants or loans for the provision of legal services are subject to tight control by the Lord Chancellor. The powers are there, but in practice their operation is held under tight rein.
One of the key tests of the virility of the board will be its desire to carry out research. The record of the Lord Chancellor's Department is lamentable. I need only quote the unhappy predictions of the effect of the cuts in
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dependant allowances in 1986. If we are to start a new era, despite the Treasury clamp, and if the transfer of responsibilities is to mean anything more than a tidying up operation and an abdication to firm Treasury control, the board must be seen to be innovative in thought and ideas. It must be able to test its thoughts and decisions in practice and to evaluate properly the results of its actions.
We would be a great deal happier if the legal aid advisory committee were to be retained for at least five years until we see how the board proves itself. We would be a great deal happier if there was a firm commitment to retain and extend such bodies as the north-west legal services committee. That committee should extend its services to areas such as south Wales, which has demanded them. Other areas may also need such services. It is to the north and west of Watford that we can see fed in the needs and gaps in legal provision.
I was most interested to hear the Solicitor-General's remarks regarding the aims of the Bill. The curious feature of the Bill, as presented to the Lords, was that it was a Bill without a stated purpose for the legal aid scheme. It was only in the other place, after a hard fought struggle and more than one suggested amendment, that the new part I was included in the Bill. Part I states:
"The purpose of this Act is to establish a framework"—
that does not seem particularly encouraging—
"for the provision under Parts II, III, IV, V and VI of advice, assistance and representation which is publicly funded with a view to helping persons who might otherwise be unable to obtain advice, assistance or representation on account of their means."
I can only surmise that the draftsman was a classical scholar and that he used those words "with a view" to reminding himself of the Greek fable of Tantalus. That is what the words amount to. The words are not especially effective or conclusive. Today, the Solicitor-General used, without attribution, the opening sentence of the White Paper, which states:
"The purpose of Legal Aid is to ensure that people of small or moderate means receive access to proper legal advice and to justice."
Why on earth were those words not inserted in the Bill? Perhaps here again the Treasury wanted no hostages to fortune.
We should also consider the original draft of the Bill as regards the remuneration of the profession. In the original draft it was said that the Lord Chancellor, in determining the remuneration of the profession,
"shall be entitled to have regard to a number of factors".
In other words, he may have regard to such factors; equally he can ignore them. The catalogue of matters set out in the original Bill have no greater significance than Webbs catalogue of seeds.
The Bill is now much improved. It is now mandatory that the Lord Chancellor shall have regard to a number of factors—I shall not weary the House by detailing them. We shall return to those factors and examine them in much greater detail in Committee.
It has been suggested that one of the purposes of the draftsman, working on his Treasury brief, was to remove the danger of the Lord Chancellor, in common with his predecessor, being taken to court on an application for judicial review. That suggestion has been hotly denied by the Lord Chancellor. We accept, of course, that that was not the Lord Chancellor's intention. My regard for parliamentary draftsmen is such that that must have been

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a conclusion that they could not miss, given the way that they drafted the original Bill. Be that as it may, a conversion, even on a deathbed, is always welcome.
Of equal if not of greater importance is the failure to retain the principle of
"fair remuneration for work actually and reasonably done".
Why should that hallowed phrase be consigned to the dustbin?
Our judicial system requires the legal profession to be independent, competent and industrious and to have the highest standards of integrity. This is not a plea for more money for lawyers. I suspect that if such a plea were made in this House it would fall on deaf ears. A legal aid service poorly paid will inevitably become a poor service. The result will be two classes of justice: one for those who can afford to pay, and a substantially inadequate one for those who cannot.
Our basic objection to the Bill is that the Government, when setting up new machinery for the administration of legal aid, have failed to will the means. Further, they have sought to limit the opportunity for testing the amount of the means to be provided. Legal aid will become more and more a second-class service.
Under-remuneration over the years has severely pruned the rewards to legal aid practitioners. The Govermment talk of value for money. It is about time that money for value was willed.
Mr. Tony Baldry: Has the right hon. and learned Gentleman read the speech of Lord Denning in the other place? If he has, how does he reconcile his somewhat Doomsday approach to the Bill with the warm welcome that Lord Denning gave to it, when he said that the present legal aid system needed restructuring, which is what the Bill does? There can be few greater champions of the law litigant in history than Lord Denning.
Mr. Morris: I have the highest respect for Lord Denning. He has unique views on many subjects. Perhaps it would have been better if the hon. Member had completed his studies and read also the views of Lord Ackner, Lord Griffiths and every other Member of the House of Lords who deprecated the position that the legal aid service had reached. If the hon. Member reflects on the debates in the Lords—I have read each of them—he will find, not for the first time, that Lord Denning is fairly unique in his views.
It was unfortunate that the former Lord Chancellor but one, Lord Hailsham—they seem to move at an increasing pace in their number and tenure of office—had to be taken to court by the profession. He was the unfortunate puppet who had to dance to the tune of the Treasury. Despite what amounted to victory and the increases in remuneration since, I have no doubt that recruitment to the profession has suffered. We have lost many of the best lawyers who would have headed the profession. They have gone instead to the City and to industry.
Perhaps it is the answer to the hon. Gentleman's endorsement of Lord Denning, but almost on the eve of this debate the Law Society produced evidence on that sector of the profession doing legal aid work. It states, first, that about 40 per cent. of solicitors' offices doing criminal legal aid work are either dropping out of it or considering dropping it altogether. Secondly, in January and February
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41 solicitors' offices gave up criminal legal aid work. If the rate continues, as many as 700 solicitors' offices might have dropped the work by the end of the year. The Law Society further states that it needs a 38 per cent. rise in fees for criminal legal aid work to restore it to the level of remuneration of 1981. This year the increase in London has been 7·4 per cent. When the Solicitor-General replies, will he say how far the Government contest those figures?
The third point made by the Law Society is that 27 per cent. of offices have given up or are seriously thinking of giving up matrimonial legal aid work. Matrimonial legal aid is of the utmost importance to the weakest in the community, who are frequently women. Women will need help more than anyone from legal aid, although thousands of males may be involved, too.
Mr. Kenneth Hind: Will the right hon. and learned Gentleman give way?
Mr. Morris: It is a very short debate, but I am always willing to give way.
Mr. Hind: The right hon. and learned Gentleman says that many solicitors have given up legal aid work. Does he agree that in relation to crime that is understandable as many members of the profession tend to look down on criminal work? As a member of the Criminal Bar Association, I believe that they do so quite wrongly. This is an important matter to those who represent all interests. What view would the right hon. and learned Gentleman take of funding the legal aid scheme if he were in the position of my hon. and learned Friend the Solicitor-General?
Mr. Morris: I am not the steward for the legal aid scheme. The stewardship of the Government is being challenged. I will give the figures later of what has happened since 1979. I put them before the House to find out whether the Solicitor-General accepts them. If he cannot tell us today, I hope that he will do so in Committee. I am worried that more and more people are leaving the profession. The view of the profession is that they are leaving because of poor remuneration.
Whether or not the predictions are right—there is an element of Doomsday involved—it is for the Government to disprove it. For the Government to suggest that all is well is not good enough. Although I cannot vouch for those predictions, there has been so much cumulative aggravation over the years that the profession is becoming conditioned to stopping or cutting down on legal aid work.
I suppose that the production line of newly trained lawyers will keep the system going for some time yet. However, it will be kept going by the young and the inexperienced—until they, too, find something better to do. I repeat that it will become more and more a second-class system. Salary earners, such as the Treasury mandarins, have a blind spot when it comes to considering fee earners.
Several distinguished industrialists have been appointed to the legal aid board, and I would have more confidence in them fixing remuneration than the Lord Chancellor's Department, acting, as it has, as the Treasury's ventriloquist. There should be an independent body to recommend the awards.
Our other anxiety is the steady drip of cutting eligibility for legal aid. The Law Society believes that the number of those eligible for legal aid is declining. Since 1979 a quarter

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of the population have lost their right to legal aid. Is that accepted or challenged by the Government? Is it the Government's policy to whittle down legal aid year by year, or do they intend to arrest the decline and, if so, how? That goes to the very heart of my observations. A clear statement on this would be helpful before we started our Committee discussions.
The information provided by the Law Society is a serious challenge to the Government's stewardship of the legal aid system. It is because of that stewardship that we are profoundly dissatisfied with the Bill. Legal aid needs to he expanded and not restricted. We shall return to the concern of the Law Society about the proposal to remove wills and conveyancing from the scope of the legal aid green form, but many cases of hardship will be caused.
There is a need for legal aid to cover representation in coroners' courts, applications to the European Court—such applications are frequently made against the Government and are, more often than not, successful—statutory tribunals and industrial, immigration and social security tribunals. In many instances, there is a tremendous imbalance in a tribunal, with one party being represented by experienced and expensive advisers fighting against an unrepresented individual. Proceedings at such tribunals may involve complex questions of the law and consideration of both oral and documentary evidence. It is not true to say that tribunal procedure and practice is straightforward or that it permits the layman to represent himself.
Trade unions perform an invaluable task. In my younger days at the Bar in south Wales, one of the most eminent of the National Union of Mineworkers' experts was known as Dai Common Law because of his expertise. He performed a wonderful task. However, when our constituents come to our surgeries on matters such as mobility and constant care allowances and a whole host of other allowances which involve the claims of hundreds, if not thousands, of pounds over the years, when no legal aid is available, we can only look at their papers and know that they will be going alone and unrepresented the following day before a tribunal.
When I see that legal aid is available for comparatively small claims in our county courts, yet thousands of pounds over the years are involved in those tribunals, I regard it as manifestly unjust that our constituents are not represented in litigation of the utmost importance to them. It has also been argued, although it is not of the highest priority, that defamation cases should be covered.
The Bill has important proposals for contracting out to which the Solicitor-General referred. Before we go down that road, we must be satisfied that it does not lead to a worse service and does not restrict the freedom of choice. If a monopoly is created in any area, be it in subject matter or regarding geography, that will be a retrograde step. It was my impression from the Solicitor-General's remarks that, if there was contracting-out in that area, the green form would he excluded. That would be a diminution of the right to freedom of choice.
We need a great deal of clarification. What is the Government's thinking on the matter? I presume that it does not include representation as well as advice. Have the Government satisfied themselves that there is no danger of inadequate advice leading to greater cost when litigation may follow? When contracting-out is determined for a particular area, what happens when the subject is raised ancillary to other matters when there is green form advice?
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Will the cheapest tenderer win the contract? What additional funding is envisaged for the agencies that will do the work? How will they ensure a proper geographical spread for contracting-out?
The citizens advice bureau in my area, which does invaluable work, is already having to close a valuable part of its service. Law centres are under constant threat. What is the Government's policy on the funding of law centres, and what will be the statutory basis for the funding of those centres still funded by the Lord Chancellor? Is there to be no change, or are we to see any advance?
Great concern has been expressed about some aspects of the Bill's proposals for civil legal aid contributions and we shall return to that matter in Committee. The power to spread the cost of legal aid contributions throughout a case is of particular concern. The bottom line of the amount of contributions will depend not on the depth of the pocket, but on the length of the case, and opposing parties will have an interest to delay so as to increase financial pressure on the legal aid litigant. In any event, the litigant will not be able to know at the outset what his commitments will be. He will be at the mercy of procedural delays and of his well-funded opponent.
There is much dissatisfaction with many aspects of civil legal aid and the Bill, without curing some problems, may aggravate others. Against that background, we believe that this is both a Bill of missed opportunities and a means of tying the Lord Chancellor hand and foot to the Treasury. In the last century, the jurisdiction of equity was criticised as being dependent on the length of the Lord Chancellor's foot. In the latter part of this century, access to justice for people of small or moderate means will depend upon how the Lord Chancellor's feet are made to dance to the tune of the Treasury. The Bill is the poisoned chalice that he has inherited, his damnosa hereditas, his cursed inheritance. It will cut expenditure in legal aid. It is an enabling Bill with still far too many regulation-making powers subject only to negative resolution.
The Bill has been much improved in the other place in that respect, but, in the absence of an indication of the Government's thinking on so many parts of the Bill, that aspect could have been corrected if the Government had furnished us with draft regulations when the Bill was presented or even at this late stage. At least we would have been able to debate the appropriate clauses, not in a vacuum but with a clear understanding of the Government's thinking. It is not too late for the Law Officers to go back to the Lord Chancellor and ask whether we can have such clarification for the Commons, which, after all, wills the means, so that we can examine how those means are to be spent and ensure that draft regulations are presented to us so that we can properly discuss the Bill.
The future operation of the legal aid board is unknown. We know that the future shape and content will be even more subject to the clammy hands of the Treasury. Although it is an enabling Bill, we do not know what the Government really want to do, except to cut costs. We wish the Lord Chancellor well. His task has been made more difficult by the Bill. He will want to use his discretionary powers in the best way possible, but he may not be allowed to do so. We oppose the Bill because of its uncertainty and the shackling effect of the Treasury and because, having been given valuable legislative time, it is a Bill of lost opportunities.
4.40 pm
Mr. Ivan Lawrence: I declare an interest, because when I can find a spare moment I am a practising lawyer at the criminal Bar, which means that I could well be affected by the provisions of the Bill. I am also the chairman of the joint all-party parliamentary barristers' group.
The right hon. and learned Member for Aberavon (Mr. Morris) has said that this is a money Bill that has the dead hand of the Treasury all over it. The dead hand of the Treasury needs to be all over it. The philosophy of financial freedom in Government affairs died with the previous Labour Government. The secret of the success of the present Government, apart from sound leadership, has been financial control. There is nothing wrong with the principle of financial control provided that the operation of the legal aid scheme is independent of the Government.
There is no doubt that the tender plant of free legal advice and assistance for those who could not otherwise obtain such advice has grown over 40 years into a large and unruly tree. The tree has now to be trimmed, as any plant needs to be trimmed. It has to be attended to and made more productive. The Bill is therefore timely and the Government's main proposals are sensible and necessary.
It is alarming that there should be so much opposition to the Bill from those who are most intimately concerned with the issues that it raises—for example, the Bar, the Law Society and assistance agencies such as the National Association of Citizens Advice Bureaux. Have the Government got it all wrong or have they got it more or less right, the experts having misunderstood it and got it all wrong? The Government cannot be accused of malice towards the legal profession, still less to those who need legal services. The Government are advised by those who have day-to-day knowledge of the working of the system and its needs, people whose very purpose is to analyse the working and to improve the operation of the legal system.
It is possible for men and women of good will to start by fearing the worst and then to find elements that confirm their fears and thereby to come to wrong conclusions. We know how that human process works from our experience in this place.
Two things emerge thus far from the Bill. First, it contains a number of provisions that understandably alarm those who are looking to be alarmed. Everything is to become more centrally controlled with future action left largely to regulations. From Ministers' speeches it is clear that the Government are worried about the lack of proper financial control of spending on legal aid. This issue was brought out clearly in the 1986 interdepartmental scrutiny of the efficiency of legal aid. Such worry usually presages cuts—that is the experience of parliamentarians—and that would be at a time of greatly expanded activity due to the avalanche of legislation that the Government have perpetrated.
Who will suffer if there are cuts? The very poorest may not suffer, but what about those who are not desperately poor? What about the legal profession? The circumstances are certainly there for lawyers to fear the worst.
That leads me to the second conclusion that the passage of the Bill draws from me. The legal profession and those who are concerned with legal advice require reassurance on the likely effect of the Bill on their work and upon the sort of service that it will do so much to provide for those who will need to use it. There is a need also for reassurance
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about the independence of the scheme from the Government. My hon. and learned Friend the Solicitor-General has given some reassurance this afternoon, but I think that more needs to be given. It is not unreasonable to expect that further reassurance to be forthcoming.
I shall draw attention to issues that I know are concerning the Bar, some of which have been alluded to already by the right hon. and learned Member for Aberavon, who is a vice-chairman of the joint all-party parliamentary barristers' group and who has a close understanding of the legal professions.
First, at a time when welfare state activity is proliferating and people's rights are increasing and expanding, it is no longer good enough for tribunals dealing with social security and employment, for example, to be outside the legal aid scheme, so that poor or poorer people do not get the advice or support that they need to guarantee their civil rights. If we are to overcome this shortcoming, of course, there will be a need for more expenditure. But there is no point in giving individuals rights that cannot be protected or ensured.
Secondly, if there are to be enough lawyers to do the job that is required, the work must be attractively enough paid to make their work worth while. It may be that there have never been so many lawyers and that lawyers have never been so well paid, but if the removal of the principle of "fair remuneration for work actually and reasonably done" means that the result will be a reduction in the payments that are made, we shall soon see fewer lawyers and a worsening service. There are doubts partly because the White Paper made no recommendation to remove the phrase "fair remuneration for work actually and reasonably done," nor was ther any consultation between the Government and the Law Society or the Bar Council. It is easy to understand why the worst is feared.
If my hon. and learned Friend the Solicitor-General says that there is no intention to reduce the service or the pay, we will be driven to ask why it is necessary to remove something which has always been perceived as a safeguard against any Administration's change of mind. No one doubts for a moment the bona fides of the distinguished and eminent individuals who represent the legal profession as members of the Government, but what if the spokesmen change? It is precisely to remove that sort of fear that I say that it is unnecessary to interfere with the existing provisions and to tamper with words that provide reassurance.
Thirdly, why is it necessary to change the method of introducing changes in civil legal aid by secondary legislation from the existing method of affirmative resolution to one of negative resolution, which weakens parliamentary control over such changes? What is the point of that? How can the professions be reassured? How can the advice industry be reassured if such adverse changes are made without any obvious purpose?
Fourthly, why is it necessary to give the Lord Chancellor the power under clause 20(9) to remove the control of the courts to grant legal aid in criminal matters? The court has the evidence before it and sees the applicant. It has dealt traditionally and speedily with applications for criminal legal aid in a way that has caused the minimum of delay before trial. Is not the court the best judge of whether legal aid is necessary and the extent of it?

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Fifthly, should not a defendant have the right of appeal if he is refused legal aid? Sometimes a decision is manifestly unjust and cries out for a reverse decision. It appears that such an appeal is no longer to be allowed.
I have highlighted five matters—perhaps there are others—that cause concern and upon which reassurance is necessary. However, I thank the Government for the assistance that they have given so far as the Bill proceeds through Parliament. First, it has offered the opportunity for two barristers to serve on the legal aid board, which is what the Bar Council requested. Secondly, there is the inclusion of the five Widgery criteria in clause 22(2) by which tests representation should be granted in criminal trials. Thirdly, there is the promise to enable groups of litigants to obtain legal aid to bring class actions, which will help alleged victims of drugs such as Opren to obtain justice. Fourthly, the legal aid advisory committee will remain in place for at least a year, and then it may well continue if it is seen to be useful after a full review has been completed. I might also add my thanks for the general good nature and helpful attitude adopted by my right hon. and hon. Friends when approached by intended groups about various worries.
The publication of the Bill was greeted with shrieks of horror in many quarters. With the Bill's passage through another place, there has been some reassurance and the shrieks have largely become little more than loud grumbles. Concessions have been made and hopefully more will be made. The use of the citizens advice bureaux as a filter for legal action provided by those who best know about the way in which the benefit system works has grown on everyone provided that there will be adequate resources for those organisations to do their job properly. I hope that my hon. and learned Friend the Solicitor-General will give that assurance clearly today as he was not able to give it in his opening remarks.
At the end of the day, the Government have established their bona fides in the matter. My hon. and learned Friend the Solicitor-General has reminded us that legal aid represents one of the fastest growing areas of Government expenditure. The number of people helped has risen from 150,000 some 25 years ago to more than 2 million today, with a fourfold increase in spending since 1979. That greatly exceeds the rise in the cost of living.
But the Government still have work to do on the Bill. They must still continue to reassure its critics. They can do that by helping with further amendments in answer to the anxieties that will be expressed. It is important that the Government do that so that lawyers will want to join the scheme. The service will remain of a high standard only if that happens and only then will my hon. and learned Friend's statement of the aims of the legal aid scheme—to ensure that people with small or moderate means obtain access to legal advice and justice—continue to be fulfilled.
4.51 pm
Mr. Peter Archer: When the hon. and learned Member for Burton (Mr. Lawrence) began to speak, I thought that he was making a bid for succession to the portfolio of his hon. and learned Friend the Solicitor-General. However, as he warmed to his theme, I fear that he fouled his prospects. Perhaps he did not really relish the thought of introducing Bills such as this.
There are many aspects of the Bill that should have been debated if the Government's business managers had
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afforded adequate time for this debate. One particular aspect was mentioned by my right hon. and learned Friend the Member for Aberavon (Mr. Morris), who expressed concern about the future funding of law centres. I would have liked to pursue that, if only because the first proposal for law centres in this country came from the Society of Labour Lawyers of which I have the honour to be chairman. I remember attending the conference 20 years ago which resulted in the production of the pamphlet entitled "Justice for All". That is how it all began.
I would also have liked to tempt my right hon. and learned Friend the Member for Aberavon to embark on a discussion of Labour's Charter for Legal Rights which also originated from the Society of Labour Lawyers and the Law Centres Federation. But I refrain from embarking on that course, because other hon. Members want to take part in the debate. If I may borrow a forensic expression, I am content to adopt the arguments of my right hon. and learned Friend the Member for Aberavon. Who knows, at a later stage in the proceedings on the Bill, I might have an opportunity to add something of my own.
I want to confine my contribution to the matter which has occasioned the greatest anxiety and which has already been a subject in every contribution to the debate. I want to consider the Bill's effect on levels of remuneration in legal aid cases. Anxiety on that issue has been expressed very cogently already by hon. Members on both sides of the House. Indeed, it was expressed very cogently in another place by many noble Lords and in particular by Lord Ackner, Lord Griffiths and Lord Templeman. They were concerned that the principle of fair remuneration is not expressed in the Bill. It is not simply absent from the Bill, it has not simply been ignored, it has been dispatched. As the Solicitor-General reminded us, the existing legislation is the Legal Aid Act 1974. Section 39(3) of the 1974 Act—which is still the relevant legislation —contains those words.
Until now the Government have not expressed any doubt about the principle of fair remuneration. Command 9077 issued in 1983, which was the Government's first considered reaction to the Benson report after four years of reflection, staled:
"The Government accepts that legally aided work should be reasonably remunerated."
There was no suggestion that the existing statutory formula was in question. Now those words are not in the Bill.
As the Solicitor-General reminded us, clause 34(7) of this Bill lists the matters to which the Lord Chancellor originally "may" and, as my right hon. and learned Friend the Member for, Aberavon reminded us, now "must" have regard in making provision for remuneration. Of course those are all relevant considerations. The Lord Chancellor said in another place, and the Solicitor-General repeated here today, that the word "fair" is vague. I am not sure whether I accept that, but I will let it pass for the moment. The courts deal with words like "fair" every day of the week, but the Solicitor-General said that the list is more specific. What I do not understand is why it is not possible to write in the principle of fairness as an objective, yet still retain that list as relevant considerations in achieving that objective.
That would have a number of advantages. In the admittedly unlikely event of the courts being troubled again about the levels of remuneration, there would be a statutory standard to which they could have regard,

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whether that was intended or not. It would also remove public anxiety, which is not really surprising in an atmosphere in which the Government have cut the funding of all public services. And, as my right hon. and learned Friend explained, it would provide the Lord Chancellor with a provision to which he could have reference in arguing with the Treasury. He can now point out that he must have regard to the considerations in the list. But the Treasury may reply that he must also have regard to the availability of resources. If the obligation was to provide for fair remuneration, the availability of resources would be a relevant consideration when considering for what purposes to make provision for legal aid, but not relevant when deciding a fair rate of remuneration for specific work. That is as it should be.
If a private company arranges for the supply of some commodity, it will consider the availability of resources when it decides how much to word order. But when the invoice is delivered, it cannot be heard to say that it will pay less than the appropriate price because it does not have adequate resources.
I want to explain why some of us feel so passionately about this. The Legal Aid and Advice Act 1949 was a great step towards the realisation of the principle of equality before the law. That is a fundamental constitutional principle. It has never been questioned as a major objective even though it has not always been attained in practice. It is the nearest that we have approached in this country to a general recognition of the social contract. It is the basis for saying that the law is equally available to us all and we are all therefore under an obligation to respect it.
So it is important that we should be clear what the principle means. The principle does not mean that we all have the same right. Judges, policemen, and tax collectors have rights that are not shared by the rest of us. The principle does not mean that all our rights have the same content. Someone who owns 30,000 acres has rights the content of which are so different from the content of your rights, Madam Deputy Speaker, or mine, that we cannot begin to call them the same rights.
People's respective rights are a matter for political debate. Whether it is fair that some people's rights should be limited to living on £26·05 a week while the managing director of the Burton group has an unfettered right to live on 60 per cent. of £1·3 million a year is a political question. It has nothing to do with legal theory. It shocks the sense of fairness of any decent person, but it does not infringe the principle of equality before the law—[Interruption.] There seems to be some agreement across the Chamber on that and we are obviously making progress.
The principle means that the legal system accords us all equally an opportunity to enforce such rights as we have. Just as the rich family can defend the integrity of its mansion, so the poor family can expect the law to uphold its right to occupy its council house or its bedsit. If we are not all equally afforded the protection of the law in that sense, every new right for which the House legislates will merely widen the inequalities.
One major source of inequality is that some people cannot afford to engage the services of lawyers when they need them. There are other causes. Some people, because of inequalities of education, find it more difficult than others to understand complicated official documents.
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Some, because of social inequalities, can telephone their solicitor at home or invite their accountant to dinner, or can consult a legal friend on the golf course. Others think of seeking legal advice in the same way that many of us regard a visit to the dentist. Some, because of economic inequalities, can drive to their solicitor's office in a few minutes, while others have to travel by public transport, perhaps changing buses three times in the process.
There will be other opportunities to address those questions. Today, we are concerned with eliminating inequalities that derive from an inability to pay. When the Legal Aid and Advice Act 1949 was introduced, the principle was that in matters covered by its provisions someone who needed legal aid should have available to him the same standard of services as someone who could afford to pay privately. So far as I know, that principle has never been expressly challenged.
One consequence was that the lawyer who acted or appeared for a legal aid client would receive the same remuneration as a lawyer who was privately instructed. True, as Lord Hailsham pointed out in another place, some of us are old enough to remember when the Bar suffered a reduction in its fees of 10 per cent. That was the Bar's agreed contribution to the funding of legal aid, perhaps in order to make it possible in the first instance. But the baseline of remuneration was the same, whether or not the lawyer's client received legal aid. And that arrangement was later considered unfair and was abolished.
But over the past few years, two levels of remuneration have been developing, according to whether or not the client receives legal aid—which has meant that lawyers with enough private work to keep them occupied have not wanted to take legally aided cases. That is confirmed by the results of the Law Society survey published on Monday, to which reference was made by my hon. Friend the Member for Leicester, East (Mr. Vaz).
There are beginning to be two kinds of lawyers—those available for legal aid work and those whose expertise and experience make it possible for them to confine their services to privately funded clients. In another place, the Lord Chancellor referred to idealism in the legal profession. I am sure he did not mean to imply that if someone is motivated by a social conscience it is right to take advantage of him, in the knowledge that such a person would not withdraw his services—that was the argument applied by the Government in respect of nurses.
It is true that many legal practitioners have been prepared to accept legal aid work if they could afford to do so, by way of taking the rough with the smooth. There are some who want the majority of their work to be from aided clients, because then they feel that they are meeting a social need. However, the number of solicitors' firms working on that basis which find that they cannot meet their overheads has been increasing. Some have ceased to practise while others are having to cut corners to survive. The principle that legal aid clients should receive the same standard of advice and representation as those who can afford to pay privately is no longer realised. In many areas, people find that they cannot obtain any legal advice or representation at all. All that has taken place while the words "fair remuneration" are in the Legal Aid Act.
I accept that the Lord Chancellor would like to remedy the situation—I do not dispute that for a moment. But it will not encourage the profession to hope for better things

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now that those words have been removed, and it will not facilitate the Lord Chancellor's task in his discussions with the Treasury.
Other issues in the Bill also cry out for debate. I have never found it easy to understand why someone who suffers physical injury as the consequence of another's wrong doing should be entitled to legal aid in pursuing a remedy, whereas someone whose reputation is destroyed by a libel should be denied redress, unless he happens to be rich. I have never understood either why someone whose remedy lies in a tribunal hearing should be in a different position from someone whose redress lies in the courts. I endorse what was said by my right hon. and learned Friend the Member for Aberavon.
I am not clear why eligibility for legal aid should be defined by a single, rigid cut-off point, while there are many who could afford to fund a county court action or a day in the High Court—but who would be ruined if they found themselves involved in a series of appeals. In the Law Society's Gazette for 9 March, Mr. Cyril Glasser asked how the Government can be satisfied with a situation where between 1979 and 1986 something like one quarter of households in England and Wales ceased to be eligible for legal aid.
Mr. Alex Carlile: I agree with what the right hon. and learned Gentleman has said, but perhaps he should also address the question that exercises me. Why did the Labour Government, of which he was a member, not make the necessary changes to allow people to be represented at tribunals? Is it not also correct to say that the number of people eligible for legal aid fell dramatically during the period of the last Labour Government?
Mr. Archer: No. I do not know where the hon. and learned Gentleman obtained that information, but it is totally false. I say that from my own experience, because I was the Minister who introduced the 1979 Bill into the House. It was that legislation which restored levels of legal aid to those which existed initially.
Mr. Carlile: What about between 1976 and 1979?
Mr. Archer: It is true that a number of steps had to be taken to adjust for that situation. There was, for example, a change in the way in which undefended divorces were dealt with, as I am sure the hon. and learned Gentleman will remember. I am happy to defend the record of the Labour Government. We would like to have done a number of other things. Perhaps I should not divulge to the hon. and learned Gentleman the contents of my private diaries—I shall publish those later!—but they record a number of discussions aimed at redressing certain problems. However, I have one eye on the clock and I know that other right hon. and hon. Members wish to contribute. If the hon. and learned Gentleman will forgive me, I am content to deal with those other arguments in Committee.
They are all matters which should be raised, and which we ought to have debated today had we had more time. However, I can promise the Solicitor-General a lively time when we come to the Committee stage.
5.7 pm
Mr. Humfrey Matins: I am grateful for this chance to contribute briefly to the debate. I begin by declaring an interest as a solicitor in private
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practice. None of us doubts that the pressures on the legal aid system have increased dramatically in recent years. The amount spent on the system has also dramatically increased, though little of that is reflected in the fees paid to lawyers. That increase is a reflection of the larger number of people eligible for legal aid, the increased volume of crime, the higher number of divorces, and so on. The cost of providing legal aid has risen alarmingly and the Government are right to concern themselves with that development. The machinery is badly overburdened and without doubt restructuring is needed. Therefore, I broadly welcome the Bill.
I look at the question of legal aid, first, from the applicant's point of view. The position varies depending on whether the applicant applies to a magistrates court in connection with a crime with which he has been charged, or makes an application in respect of an action in a civil court or for divorce. As to the first, the present system appears to work very well, with magistrates' clerks able to grant or refuse applications for legal aid within a few days, or even quicker. At Dorking court, at which I have practised, the clerk, Mr. Kimnell, and his deputy, Mr. Hall, deal with applications within a matter of hours, and never take more than a day. That is good news for the applicant, who is given a decision quickly.
One may contrast that situation with applications for legal aid in a civil action or in respect of divorce. The legal aid office at Brighton, which works very hard and is greatly overburdened, currently takes upwards of three months to determine an application for legal aid. That is bad news for the whole system and is very bad news for the applicant, whose position may often be prejudiced as a result of such unreasonable delays. I do not criticise the staff. Far from it. They work terribly hard. The system, however, is in need of a major overhaul. That is the position of the applicant.
But, at the end of the day, the solicitor needs to get his costs taxed. Here again, the system, in both criminal and civil law, is out of date and in need of reform. The forms which must be filled up for criminal costs to be taxed are becoming more difficult to understand. The duty solicitor forms are almost impossible. In civil law, the bill of costs is prepared by a costs draftsman. The laborious process of taxation takes time and is old-fashioned, involving the allocator, for instance. It is a difficult system and it costs money itself, because there is no remuneration for all the work involved in sorting out the costs.
Three problems that I see in the Bill have been dealt with in earlier speeches. First, I am a little concerned about the possible cutback on the green form scheme. The green form has been a great blessing for many people who have been in need of legal advice in the past few years. A good deal of money has been spent on it, but perhaps we should blame ourselves. We pass so much legislation that the poor chap in the street has a bewildering sense of rights and remedies, and he needs to be looked after.
Let me give an example. A poor man on social security found himself tempted to send for a book advertised in a magazine. It was one of those offers involving "no obligation", and he sent off a couple of pounds. He then found that the company had him by the throat, so to speak: book after book and bill after bill turned up.
That man could go to a solicitor and take advice under the green form scheme. He did so, and the solicitor was able to put him on the same level as the rich company, writing a hard solicitor's letter and getting the company off

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his back. If that remedy is taken from the poor man—for a solicitor's letter does help—he will be put at a disadvantage compared with the big battalions, and I do not believe that any of us wants that to happen.
The second point that concerns me slightly is the proposal to put out parts of the law to competitive tendering. Will that mean a continuing high quality of service, or will the standard drop? I rather fear it will be the latter.
There is also the question of fair remuneration. Lawyers are often the subject of much ridicule for earning vast fees, but most of us in practice know that legal aid itself does not pay very well, and the rates have not risen substantially in past years. Without a system of fair and proper remuneration, there is a danger that solicitors will stop doing legal aid work. If they do not stop outright, they may not see the client; they will arrange for secretaries and junior clerks to do so. I have already seen that operating in firms in Surrey. The junior people see the clients, who do not receive the necessary advice because the solicitors' practices cannot afford to arrange for a partner or qualified person to deal with them.
I ask my hon. and learned Friend the Solicitor-General to take on board the question of remuneration. I congratulate him on the way in which he has put over the points in the Bill. I know that he will consider what I have said, but I feel that the profession has a right to be slightly concerned.
We could all offer advice on how the legal aid system could save money. Undoubtedly much money is wasted. There is a tendency for some solicitors—and, dare I say, some members of the Bar—to encourage those on criminal charges always to go for trial. That, of course, is not a good thing. Some solicitors, frightened to take a case in the magistrates court, say, "Go for trial. We will sort out the plea later." That means double pay. My hon. and learned Friend says, quite rightly, that barristers would never do such a thing, but solicitors sometimes do, which is a pity. I do not know whether we should consider limiting the right to jury trial, but I feel that we must concern ourselves with the amount spent on duplication by the profession.
Sir Nicholas Bonsor: I feel that the Government should be extremely careful before taking the course suggested by my hon. Friend. In the days when I used to practise at the Bar, I fear that it was true that anyone who was convicted of shoplifting and appeared before a stipendiary magistrate stood absolutely no chance of acquittal. It was like a sausage machine. One after the other, the same excuses were trotted out, and one after another they went down. We must be very careful about taking the right of jury trial away from such defendants.
Mr. Matins: My hon. Friend is absolutely right to mention the importance of jury trial, particularly for those charged with offences of dishonesty. I recognise that right, but I express my concern about the costs.
We must also reform the system in the civil courts. Civil legal aid bills get bigger and bigger. For instance, in the present state of divorce law, practitioners end up with files 12 in thick before they ever get into court. If the parties in a divorce action could be brought to court more quickly or
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brought before the registrar for a conciliation appointment, the correspondence could be shortened and the enormous costs cut down.
Mr. William Cash: My hon. Friend has not referred to public inquiries. Such a case may involve a local authority or water authority with immense resources, QCs galore and considerable administrative back-up. The issue may be one of major regional or national importance. Yet the people on the other side—the objectors—are more or less on their own, as they cannot afford to do much, although there is a legitimate public interest.
Has my hon. Friend any sympathy with the idea of a certificate of public interest being issued by a Minister or a judge in chambers to enable legal aid to be granted to an amenity group? We could then be satisfied, in cases such as the Sizewell inquiry, that a proper and fair hearing had been provided by the opportunity given to the objectors to be represented with the help of legal aid.
Mr. Matins: Typically, my hon. Friend makes an excellent point, which I am sure my hon. and learned Friend will have taken on board.
We have twin aims. One is to ensure that spending on the legal aid system does not get out of hand. There are signs at present that it is going up too fast. Secondly, a vital part of our democracy is that the poor are not disadvantaged and can start on an equal footing with the rich.
I shall support the Bill, because I think that the Government are right to tackle the problem and they have done so in a sensible way. However, a number of us will watch the position with great interest in the months and years ahead in the hope that those twin aims will be achieved.
5.18 pm
Mr. Alex Carlile: I start by welcoming the good parts of the Bill. Without repeating the list of four specific items enumerated by the hon. and learned Member for Burton (Mr. Lawrence), with which I agree—
Mr. Lawrence: There were five.
Mr. Carlile: I think that there were four, but we can consider that later.
The right hon. and learned Member for Aberavon (Mr. Morris) listed some of the deficiencies in the existing legal aid scheme. I agree that those deficiencies exist, and have become starker as the years have passed. On the whole, however, it can be said that the legal system has been available over the years to the very poor and to the very rich. It has been available to the very poor because generally they have been able to obtain legal aid. It has been available to the very rich because generally they have been able to buy their legal advice without its causing them too much anxiety. Generally speaking, it has not been available readily to those in the large middle income group which predominates, because they cannot afford to undertake the burden of lengthy litigation.
It seems to me that the Bill highlights a difference of philosophy, a difference between two strongly held opinions. The first, to which I would adhere, is that all citizens should have equality before the law. That means having a widespread legal aid system which enables individuals who are wronged to have their wrongs righted. The alternative view, to which the Bill seems to adhere, is

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that legal aid should become less available and eventually should be reduced to the level of a safety valve for the poorest in society and in respect of only some aspects of our law. That is the philosophy behind the Bill and I regret it very much.
I should state my professional interest in this matter as a practising barrister working in the criminal and civil common law with which we are principally concerned and also as one of the secretaries of the joint all-party barristers group. Having said that, I should like, as it were, to remove my wig and look at the Bill from the viewpoint of the consumer.
The Bill sets up a legal aid board. From the consumer's point of view there is nothing wrong with a legal aid board. It would be fine if what was being set up was an independent board which was able to consider the merits across the law and what legal aid was required to deal with which items of legislation. That is not what the Bill provides. In my view, it is quite likely that the independent members of the legal aid board will find that they are part of a paper tiger. It will be a paper tiger for one clearly identifiable reason which I would suggest was more or less confessed to by the Solicitor-General; and if he did not confess, his denial was distinctly muted.
The reason is that legal aid is now, for the first time, to be cash limited by the Treasury; for the Bill is principally about the cash limitation of legal aid by the Treasury. That is bound to affect the performance and effectiveness of the legal aid board. This cannot be satisfactory for the consumer or for the organisations representing consumers.
Mr. David Martin: Is the hon. and learned Gentleman suggesting that no cash limits should be applied to legal aid?
Mr. Carlile: I shall answer the hon. Gentleman by asking him if he thinks it is right that legal aid should be available to enable those who cannot afford to go to the law to enforce the law in their interests whatever the legislation with which they are concerned. If he believes that to be the case, the answer to his question is yes, and I am not ashamed of saying so. It seems to me to be the equitable and correct answer to the question.
A further matter which will concern the consumer very greatly if he considers the Bill is that the Bill merely sets out a legislative framework. Most of the legislation on legal aid will be made by statutory instrument. It will be made on the drip. That will enable the Treasury to tighten its grip on the tap from which such money as is available for legal aid flows. That seems to me to be profoundly unsatisfactory.
The hon. Member for Croydon, North-West (Mr. Marlins), who is a very experienced solicitor, dealing with everyday legal problems, spoke about the green form scheme. The green form scheme throughout England and Wales has provided all citizens with ready access to straightforward legal advice on simple issues which a lawyer can solve easily but which a citizen may find extremely baffling. The dismantling of the green form scheme will mean that expert advice provided for the citizen will be less readily available.
I believe that with the best will in the world some of the agencies that will be required to provide first-step advice may not be able to-give the same level of expertise. In the long run, the removal of the green form scheme will not reduce significantly the cost of legal aid.
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In an intervention I raised the problems which many rural and small town solicitors feel that they will face as a result of the changes in contracting-out and tendering. In my constituency in mid-Wales, solicitors provide an immense range of services for the public, and when they do not know the answers they obtain counsel's opinion. Despite popular myth, one can obtain an opinion from a competent junior counsel at very little cost and present it to the client. The client will know or at least will believe that the advice is right. I hope that the legal aid board, the Lord Chancellor's Department, the Solicitor-General and the Attorney-General will not allow anything to happen which will dismantle the fundamentals of the legal system throughout the shire counties of England and Wales.
The Solicitor-General spoke about fair remuneration as an acceptable principle and I accept his belief in that view. He then went on to describe his understanding, and the Government's expression, of the meaning of parts of the Bill dealing with the remuneration of lawyers. It is clear that, although the Government undoubtedly believe in giving lawyers fair remuneration, as the right hon. and learned Member for Warley, West (Mr. Archer) said, they have decided deliberately to reject that principle and give them a little bit less than a fair remuneration.
If the Government start a scheme with this new piece of legislation with a little bit less than fair remuneration, and the Treasury gets its mucky paws on the scheme—as it will, sure as eggs is eggs—one can guarantee that a little bit less will turn into a fair amount less and a fair amount less will turn into a lot less than fair remuneration.
From the consumer's viewpoint, the consequence of that will be very serious. Under the existing system someone may apply through his solicitor for legal aid and if the case becomes more complicated he can apply on an objective basis for the extension of legal aid. Under the existing legal aid scheme he has been able to obtain legal advice of an equal quality compared with the other side.
Despite the 10 per cent., and later the 5 per cent. reduction, the lawyers have been pretty fairly remunerated, and in civil disputes for which legal aid has been available there has been broad equality of representation. That will no longer be the case because the principle of fair remuneration will be removed, and because of one further reason. The new regime for cash contributions to legal aid will penalise those whose cases are complex. I shall give an example. If a man is brain damaged in a road traffic accident, it can take years, however hard the solicitors work for him, for the case to be resolved. It can take years for all sorts of reasons, such as listing difficulties in London, tracing witnesses, but, above all, because of the time it takes to obtain a certain medical prognosis of the injury. In my experience, that can often take five or more years in a case where serious personal injury has been caused.
If cash contributions are to be made throughout the period for which the case continues, it will mean that the plaintiff will be less able to afford to make the contributions. Those of us who have appeared for and against insurance companies in personal injuries cases know that insurance companies understand litigation at least as well as anybody else. This proposal will encourage insurance companies to be dilatory and to deny liability until the last possible moment. They will not pay money into court and will put up every possible obstruction. Some insurance companies do that already and those of us in practice know who they are and so do they. The others

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will join them. The settlers will join the delayers because of the fact that a plaintiff has legal aid. The rules governing that legal aid are important considerations in the minds of insurance company general managers dealing with personal injury litigation.
There is not time to address the other deficiencies in the Bill. This is far too short a debate on such a major subject. However, I cannot let this opportunity pass without re-emphasising the fact that I believe that it is wrong that people are not able to obtain legal aid for tribunals or defamation actions. I look forward at some future date to the right hon. and learned Member for Warley, West answering the first question that I asked in my earlier intervention.
As the Bill stands I am afraid that it falls far short of satisfying the standard that I hope all hon. Members will set for it. It should provide for equality before the law for everyone; rich or poor, confident or lacking in confidence, whether they understand the law or whether, as is more often the case, it is a complete and baffling mystery to them.
5.32 pm
Mr. Tony Baldry: The hon. and learned Member for Montgomery (Mr. Carlile) complained about the time for the debate. I imagine that it was agreed between the usual channels. When this day was chosen I assumed that it was because large numbers of Opposition Members wished to be away to campaign in the local government elections. However, having heard the speech from the Opposition Front Bench, I now appreciate that it is because hon. Members for constituencies such as Bolsover (Mr. Skinner) and Bradford, South (Mr. Cryer) could not have stomached hearing their Front Bench spokesman make elegant pleas for more money for lawyers. In fact, all the speeches from Opposition Members could be summed up by the two words, "More money." We have not heard anything about cost effectiveness or efficiency in the system, other than in speeches from my hon. and learned Friend the Member for Burton (Mr. Lawrence) and my hon. Friend the Member for Croydon, North-West (Mr. Malins). We have not heard any suggestion about how in matrimonial legal aid—
Mr. Ieuan Wyn Jones (Ynys Môn): Will the hon. Gentleman give way?
Mr. Baldry: With respect, I have only just started my speech, and this is a short debate.
As I was saying, we have not heard any suggestion about how we can make matrimonial legal aid more efficient. Lawyers are still remunerated on the basis of time spent and unit items, regardless of how many letters are sent and the value of those letters. Members of the Bar, who sometimes have to plough through bundles of solicitor-to-solicitor correspondence, wish that they could take them individually to the taxing master and say, "Large chunks of this are totally irrelevant." There is no discipline in the system and there is no incentive to make the system more effective or efficient.
My hon. Friend the Member for Croydon, North-West mentioned the way in which civil legal aid is administered. There has been no debate this afternoon as to how we can
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make that more efficient. I have grave doubts whether any of the court listing officers have ever seen a computer. It seems that everything is still hand written, and there is no sign of word processors being introduced. Those are areas—
Mr. Ieuan Wyn Jones: Has the hon. Gentleman ever been to a solicitor's office?
Mr. Baldry: Perhaps I should declare an interest. The Chamber now seems to be completely full of lawyers. I am a practising barrister. I have trudged through many far-flung and distant Crown and county courts in the past few months and seen how solicitors operate.
There has been a fourfold increase in legal aid costs since 1979—it has increased from £100 million to £400 million. There has been no suggestion as to how we can ensure that the consumers—it is they for whom we are concerned—receive good value. The poor individual who goes to see a solicitor on matrimonial legal aid does not always appreciate the full meaning of the Law Society's statutory charge. It is only when they come to sell their house that that begins to bite. If they understood that a bit more, we might see more efficiency and more determination to resolve disputes, not by confrontation and litigation but by conciliation. Again, it is only from Conservative Members that suggestions have been made as to how we may more properly conciliate.
It is sad that the only suggestions we have heard this week from the Law Society's professional body could also be summed up in the words, "More money." It mentions that some solicitors have given up doing legal aid work. That has been going on for a number of years, for very good reasons. Some firms of solicitors have set up to do criminal legal aid work and are operating a lot more effectively and efficiently than a generality of common law firms dabbling in and doing a little legal aid work here and there. Some firms specialise in criminal legal aid work. In practically every town on the circuit on which I practise there are now one or two firms of solicitors which are, and have been for the past few years, specialising in criminal legal aid work. That is not a reflection of the fact that they are badly remunerated, but simply that market forces exist in law just as anywhere else and it makes more sense for the service to be concentrated and for them to be able to deliver a service in the magistrates courts and Crown courts. Again, we have had no debate this afternoon about how that system could be improved.
Those of us who are practising barristers or solicitors know that there are areas of the law in which few members of the Bar and few solicitors are competent. Such areas include some aspects of welfare law where citizens advice bureaux have been set up for over a decade and are becoming much more professional. I welcome the fact that the Bill will extend the opportunities given to such agencies to provide a decent service and to ensure that people have the benefit of that advice. We have a variety of responsibilities in the House. We have a responsibility to see that people receive justice. We have a responsibility to see that the consumer is well served. We also have a responsibility to the taxpayer. A simple cry of "More money" is inadequate to meet the requirements of a society that is becoming more complex, where the rights and needs of the individual are becoming more complicated and where the tribunals at which they can appear are becoming more numerous.

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I welcome the Bill because the present structure of legal aid, which has existed for many years, while being worth while, is not watertight. It is time to overhaul that system and introduce different disciplines and elements into the way in which the law is administered. I welcome the fact that on the new legal aid board there will be people with experience of management disciplines. I suspect that that will be a welcome introduction. The presence of people who have experience in personnel management will also be a welcome introduction to the way in which legal aid is administered.
May we, once and for all—although I suspect that it will detain the Standing Committee—hit on the head the debate about fair remuneration? It is, after all, not merely fair remuneration. One should always put it in its full context. It is fair remuneration for work actually and reasonably done. It is always historic; it always assumes a whole host of value judgments. What I might consider fair for a plea at Reading Crown court may well be very different from what the taxing master at Reading Crown court considers fair. There is always argument about value judgments. Under this proposal, such value judgments will be more accurately set out and there will be a greater understanding on the part of all involved of how people will be remunerated, and why.
A simple cry of "More money," without discussion of how we can make the system more cost effective and efficient, how to ensure that county and Crown courts operate more effectively and that time is used to better effect, and how listing officers—I am sure that they work hard—can be better served, with better technology with which to do their work, will mean that we are failing in our duty to ensure that people get justice and failing in our duty to the consumer and the taxpayer.
5.41 pm
Mr. Brynmor John: I shall not follow the hon. Member for Banbury (Mr. Baldry), except to say that he made great play of the issue of failing to ensure that the consumer was well satisfied. I declare an interest as a non-practising solicitor. None of us who has dealt with legal aid cases has had complaints from the consumers of legal aid, except of the normal variety—"I should have won." The complaint behind and genesis of the Bill come from the Treasury because of the amount of money it spends. So some of the cant and sourness that we heard from the hon. Member for Banbury can be safely ignored.
I speak in the debate for two reasons. First, Andrew Roth described me as having the immoderate enthusiasm for the welfare state of a poor man's lawyer, to which I plead guilty. Any just society must provide for equal opportunity for redress of individual grievances, as well as grievances in the mass. The legal aid and advice schemes which have always tried to do that have been not the least significant pillar of the welfare state which, after all, was the historical foundation of the Legal Aid Acts. They aided 2 million people in the past year at a cost of £450 million. We are used to spending billions of pounds in the House without turning a hair, so it is ironic that the Government should cavil at the expense of £450 million to relieve the social tensions that are inherent in an increasingly complex society.
We must accept that it is the welfare aspect of the Legal Aid Acts which has incurred the disfavour of the Government. The Law Society and the noble Lords who
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debated the Bill in another place made a fundamental error in regarding the argument about the Bill as being one about the means chosen to achieve a set number of ends. It is not a debate about means; it is about ends. For all the smoothness and urbanity of the Lord Chancellor, the Government dislike the legal aid and advice scheme and want to destroy it step by step. They will do that not frontally, but with their well-known salami-slicing tactics, in which the Treasury will play an ever greater part. Why else would the Government include in the Bill such wide enabling powers, which enable all the details to be filled in by secondary legislation, much of which will go unconsidered by the House? Even if we consider it under the affirmative resolution procedure it will be unamendable. Either we take it as a whole or we leave it as a whole, but we cannot apply our collective wisdom to what is suggested.
The second reason why I speak is that my relevant experience derives from the area in which I live, in which I was born and which I represent. I have also practised there all my life. It is part of a county which, according to the current Government publication "Economic Trends", is the poorest in England and Wales. It has a GDP per head of £3,200, which is less than half the GDP per head in Greater London. How can there be any notion of justice in such an area without a substantial legal aid scheme? Without such a scheme the notion of justice would be as hollow as it was in the old legal joke, "Justice is open to all, like the Ritz hotel."
The Lord Chancellor, with his commercial and revenue practice, cannot possibly understand the way in which poor areas such as mine must depend on the legal aid scheme for justice in their legal dealings. Even less can the desiccated Brahmins who inhabit the upper reaches of the Lord Chancellor's Department understand that. Yet they are given substantial discretion by the Bill, of which one example will suffice.
No one who has acted in a personal injury case or who has practised in the provinces can think that the length of a case should determine a person's contribution to legal aid. There are three possible reasons why a case can be delayed. First, it can be delayed by the defendants and their insurance companies' solicitors and so on. Secondly, there can be delays because the medical position is not sufficiently clear for the specialist to give a prognosis that is enough to settle the case. The third reason is that the solicitor may be acting for a man who is himself at fault. The only common feature to all three is that they are not the fault of the assisted person. Why then should he be asked to pay more? Are we really to accept the patronising view that underlies this—that little people have little grievances? By making the legal aid contribution so large, the Government are ensuring that people cannot undertake legal action in long complicated cases.
We have already heard how the legal aid criteria have become less generous as time has gone on, and how fewer people are now eligible for aid than the numbers of whom previous Governments proudly boasted. It is the scientific expertise of the last Lord Chancellor that informs this debate. On a previous occasion when he tightened the limit he said that only 1,000 legal aid applications would be affected each year. It turned out that 4 per cent. of all applications were disqualified. That is the sort of scientific basis on which the White Paper rests and which is miserably embodied here in statutory form.

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We should be extending the notion of legal aid, not contracting it. First, we should do so for administrative tribunals. There is a sort of grim humour in the fact that the House is being asked to take welfare rights away from the green form scheme and from legal advice on the day after The Times reported the case of McQuorquadale v. the chief commissioner, in which a lady had to fight her case to the Court of Appeal on legal interpretation to stop the deduction of past maintenance payments from her benefit. That is how legalistic some of the framework of welfare rights is, and why it would be wholly disastrous for it to be detracted from, or for access to legal advice or other advice to be denied. We are, under the bland assumption of informality, doing a grave injustice to the people who have to go before welfare tribunals.
I am sorry to see that the hon. and learned Member for Montgomery (Mr. Carlile) has gone. I argued in Government, as well as in Opposition, that the country should seek a system of administrative law to replace the present chaotic jungle of different procedures and tribunals, and that we should have a proper administrative court. Legal aid will have to be available for that sort of justice.
There should also be legal aid in libel cases. The tabloid newspapers have longer rakes for their muck these days; they travel down into different spheres of society. It is a scandal when television believes that it has the right to try and to condemn people on programmes and legal aid is not available in cases of serious defamation. It means that a person's reputation is sacred only if he has the money to defend it.
I make a plea for the legal services committees. There has been one in the north-west of England for a long time and others have been proposed or started in south Wales and the north-east of England. Professional lawyers and many other people who are interested in the law, including welfare workers, get together to ensure that legal services are accessible to the consumers. The chief weakness in extending the legal services committees is the lack of assurance about funding. I do not mean accessibility of funds for a particular purpose but core funding which enables these committees to exist. Assurance of funding has made the north-west committee successful. I hope that even this Government will commit themselves to funding legal services committees of the south Wales and north-east England variety to secure the future.
Whatever the Government say, my view is that the Bill aims to cut legal aid expenditure significantly. The hon. Member for Banbury told us that all that the Opposition have done is to cry for more remuneration for lawyers. We do that because we want a comprehensive system of legal aid advice.
The new buzz word for activity in the law is commercial law, when one is not quite a business man and, in my view, not quite a lawyer either. These practices are set up around the cities. In my area of Pontypridd and the Rhondda, legal firms are not moving wholesale to commercial law, to advise on company flotations in areas in which sometimes there is up to 25 per cent. male unemployment. These firms are heavily dependent on legal aid but, in the past year, six solicitors—some of partner status—have left firms in the Rhonnda to go to firms elsewhere for higher remuneration and more fashionable work. They will not be replaced
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because of the current remuneration available in areas such as mine. Therefore, the legal aid service to people in my area—I am concerned with this rather than with professional remuneration—who have been injured or suffered matrimonial or other problems will be that much less. I find it offensive to say to my people—the accused, the victims of accidents and the matrimonial casualties —that they are not worthy of the same legal protection as the Ernest Saunders and Jeffrey Archers of this world.
When I decided to become a solicitor, professional status and remuneration were obviously important, but we also had a desire to serve our communities. These days, private practice is more at the whim of the accountants' stopwatch, and the legal profession is less caring. The Bill will signal to many that equality before the law is a hollow sham, a concept not backed up by the means to make it effective and a reality. Only by having a doctrine that is a reality can we have a society that will remain civilised and settle its disputes without regular and increasingly severe explosions of violence. No Government should imperil that concept of justice and equality before the law. Beneath all the fine words, smooth evasions and the bland formulae of the Bill, and the way in which it has been introduced in both Houses, is the underlying concept that the Government do not want to continue universal legal aid and equality before the law. I hope, therefore, that the Bill is denied a Second Reading.
5.45 pm
Mr. David Martin: I speak as what might be described as a lapsed practising barrister. Therefore, I can be one of the few in the Chamber to plead disinterest rather than interest in what comes to the legal profession in remuneration or work. I practised chiefly in the criminal courts, mainly defending and doing legal aid work. I did criminal cases but also civil cases. I felt a sense of déjà vu on hearing today's comments on the lack of remuneration for the legal profession and on the second-class service that one always gets from legal aid cases compared with private funding. That was all said when I was called to the Bar in 1969. When I began practising, there was a Labour Government, followed by a Conservative Government and, in the 1970s, another Labour Government. There were still all the difficulties about remuneration of lawyers and the difference in pay between legally aided cases and those paid for privately.
I was interested to hear the comment of the right hon. and learned Member for Warley, West (Mr. Archer) that the original intention was that there should be the same money for private litigants as for those who were legally aided. That was a myth when I practised, and I suspect that it always will be a myth. That is not to say that there should not be the same standards. I did not consider myself to be a second-class lawyer in the standards and service that I gave. Certainly I was young and not as well paid as many who were hitting the highlights, but by no means did I give a reduced standard of service to those whom I did my best to represent.
I was badly paid. I took dock briefs, which continued even during the so-called generous period of legal aid. I took the advice of Lord Keeper Guildford's grandfather, who said, "If you will be contented to be a great while getting a little, you will be a little while getting a great deal." Unfortunately, I did not stay at the Bar long enough to get the great deal. Since my experience, I have always

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been an agnostic in the face of lawyers' claims that they suffer parsimony in their income, whether from legal aid or not.
Legal aid was in crisis in 1976 when I ceased practising at the Bar. One received far less because of the inflation in the early 1970s. Instead of earning a pound for a pound's work just before 1971 one got 10 shillings, and this became 50p for a pound's work by the time there had been two years of Labour Government. I left the Bar wondering when it would ever be sensibly remunerated. I saw the rebellion against the Lord Chancellor, to which, I regret, he gave way years later. We hear that the Bar is still badly remunerated. According to the practising lawyers, the legal profession is badly remunerated, yet lawyers get more and more and the number of practising lawyers, both solicitors and barristers, increases. It happens all over the country.
We have heard in this debate that some lawyers will cease to do the work. I like the idea of the 40 per cent. — not 40 per cent. who have given up the work but 40 per cent. who have either given it up or are considering doing so. Remember all the fuss—I am sure that you do, Madam Deputy Speaker, because you have a long memory—about how all the sharks and cowboys would take over conveyancing and the lawyers would withdraw from the scene and about how all the Elusian mysteries attached to conveyancing would not he understood by anyone who was not a lawyer. However, even solicitors have gone from strength to strength in conveyancing when competition and, dare I say it, market forces have been introduced. The professional approach of lawyers has been used in the same way, which has been welcome. I welcome the Bill because it carries forward those reforms.
Conveyancing introduced an element of business into the practices of solicitors and barristers, which they very much needed, and a recognition of trade and business, which in their view was not necessarily consistent with the professionalism for which, in my opinion, they overcharged. They now provide a better conveyancing service. We should not listen to the pleas of lawyers that this is the end of the world as they know it. We have heard it all before.
I agree with Opposition Members about the issue of equality before the law. Of course everybody should have equality before the law, but it is difficult to define who should receive legal aid and whether there should be cash limits. The hon. and learned Member for Montgomery (Mr. Carlile) avoided answering my question about cash limits. At first he said that there should not be cash limits, but then agreed that there should be. Whatever service one provides there will always be cash limits. Cash limits should be made while ensuring that there is as much equality before the law as possible. However, there will never be a perfect system because there will always be those who feel hard done by and that they should have had their case heard before a court.
Every Government since 1949 have done their best, but only recently under this Government has legal aid increased in leaps and bounds. The number of people who enjoy legal services through legal aid and the amount spent on them have increased.
Much has changed since 1949; hon. Members' surgeries have changed very much over that period. Reference was made earlier to Dai Common Law. I am a Dai Common Law in my surgery as, I suspect, are other hon. Members. I spend much of my time not referring my constituents to lawyers. They are the last people to whom I refer them
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because I want them to live happy lives free of worry and conflict. People with grievances are often not happy people. I say to them, "For goodness sake, do not pursue this case. Do not feel aggrieved, but try to understand that life is tough. If you can swallow what you feel is a wrong, you will feel much happier. Once you get into the clutches of lawyers, you will never get out of them." I speak from a great deal of experience—perhaps I am the poacher turned gamekeeper. Having fallen, as an honest man, among lawyers many years ago, I speak with some experience.
Where do I send my constituents? I send them to the agencies in my constituency, such as the excellent citizens advice bureau. I want more money to be provided to citizens advice bureaux, and l think that that will happen as a result of the Bill. I send them to other specialist agencies that defend a particular interest. The ordinary people who staff those agencies are committed, as I am and other hon. Members, to helping ordinary people.
We have been hearing for many years that legal aid should be granted for tribunal cases. The problem is that tribunals were established in the 1940s to avoid the need to go to a lawyer. The original intention was to keep matters out of the hands of lawyers. There were to be tribunals where people spoke ordinary English, not Latin—we have heard only one Latin quotation today, thank goodness—that would be understood by all, and there would be no lawyers to make matters difficult. But the moment that legal matters are introduced into any tribunal, lawyers become involved.
Mr. John: Although the hon. Gentleman is speaking eloquently about informality, does he not think that the introduction into tribunals of the doctrine of precedent of commissioners' decisions blows his argument out of the water? The claimant does not have access to reports, but the insurance office and the tribunal do. It is like appearing before a secret society.
Mr. Martin: I am arguing that we should get rid of many tribunals and bring them into the mainstream of the courts. I do not understand why county courts are unable to do much of the work that is done by tribunals. I have much sympathy with what the hon. Member for Pontypridd (Mr. John) said about an administrative law system. At some stage there will have to be a complete reform of the court system so that much of the work done by tribunals is returned to the mainstream of the legal system rather than put into separate compartments.
I hardly dare to suggest a programme for the Government as we have been crowding so much into the first parliamentary year, but perhaps we should be thinking of measures to take over the next three years. Perhaps we should undertake the sort of reforms that took place in the 19th century. We should be bringing more work into the mainstream of the legal system rather than, as we have been ever since 1949, creating ad hoc tribunals to deal with particular matters. Trying to obtain legal redress without involving lawyers is like trying to found a new hell without imps or, dare I say it, a new Parliament without Whips. It cannot be done because there must be one if there is the other.
As to the important matter of costs, I understand that under the Bill, if an unassisted party is sued by an applicant funded by the legal aid board and wins. he has no right to costs. It is a gross injustice that one can win

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case and pay the lawyers, but still find that, even though one's rights have been vindicated, one is left with costs to pay. The only way in which one can obtain costs from the legal aid board is if it can be shown that severe hardship has been suffered or it is considered just and equitable to be paid out of public funds. That is no more acceptable than the present system, under which the costs recovered by a successful party, whether assisted or unassisted, are not in practice fair.
I end with a quotation from Bacon, who likened the law courts to a bush to which a sheep runs for protection in a storm and is bound to lose some of his fleece.
6.7 pm
Mr Gordon Oakes: I shall be brief because a number of my hon. Friends want to take part in the debate.
The hon. Member for Portsmouth, South (Mr. Martin) used a peculiar expression at the beginning of his speech. He said that he was a lapsed barrister. Having listened to his speech and heard the advice that he gives to his constituents, I understand why he used the term "lapsed barrister". One of my great fortunes is that I am not one of his constituents. Surely if a constituent comes to us about a legal matter, as they frequently do, we should send him to a solicitor, not an agency.
My right hon. and learned Friend the Member for Aberavon (Mr. Morris) said that this was a Treasury Bill and a money Bill. I do not believe that. Money is always part of everything and it is a part of the Bill, but the matter goes much deeper than that. We have seen the Government attack local authorities, trade unions, the media and the BBC, but this is an attack on justice. The Bill creates a two-tier justice system, which is something that Britain has never known.
Let us consider some of the fundamental parts of the proposed scheme. Hon. Members have talked about the green form scheme. When I practised as a solicitor people frequently came to see me for advice under the green form scheme. That is the entry point for the legal profession. People do not know whether they have a case, so they come to solicitors for advice. Frequently, they do not have a case and they are advised on the green form scheme that that is so.
The Government scheme will do what the hon. Member for Portsmouth, South already does, which is send people to an agency, presumably something like the citizens advice bureau. I am second to no other hon. Member in my admiration for what the citizens advice bureaux do. Their offices are staffed by dedicated voluntary workers who attend courses to improve their efficiency in advising the public, and they do that without remuneration or financial reward. Another excellent organisation which helps at times of emergency is the medical profession. Do we feel that we do not need doctors? Do we say that they are not the people to deal with medical problems?
At the point of entry, one needs first-class advice. Hitherto we have had that. One can go to virtually any solicitor for advice. However, 40 per cent. of solicitors have decided that they will not be part of the scheme, and that was before this Bill. When the Bill, which excludes fair remuneration, goes through, that number will rise to 80 per cent., not because solicitors are uncaring, but because
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they will not be able to afford to do the work. They have their staffs to pay and their own remuneration to take, and they cannot afford to do legal aid work.
The hon. and learned Member for Montgomery (Mr. Carlile) made an excellent point about fair remuneration. Of course the insurance companies, with their enormous resources and vast experience, will put every possible obstacle in the way if they know that the plaintiff in a case is legally aided. They will wear the solicitor out. It will be like pulling in a fish in a fishing match. So many obstacles will be put in his way that the solicitor will pull out because he cannot afford to go on. He will know that as there will no longer be the fair remuneration clause, although he can say that the defence has put so much in his way, and he has had to deal with all the nonsense that they have introduced, the legal aid board will still be able to tell him that he can have only a fixed fee and that he should have done all the work for less. In a civil defence case, the defence solicitors will know that perfectly well and will use it.
The ordinary citizen will be denied justice at the point of access, and there will be a two-tier system of justice. One will have advice from an unqualified, however devoted, person, as against that from a qualified person such as a solicitor who is accepted among the professions, and who has passed one of the hardest examinations to get into his profession. It is rightly difficult to get into that profession because one has to deal with a person's liberties and rights, so one must be properly qualified. Instead of such a qualified person, a volunteer may make the decision. The volunteer may be in the citizens advice bureau, but if he gives the wrong advice, can the citizen sue? He could sue a solicitor for wrong advice, but he cannot sue an agency. There is no way out. That is two-tier justice.
I deplore the fact that we are debating the Bill for such a short time. I have much to say, but I want my hon. Friends to have an opportunity to speak. This is one of the major Bills of the Session, and it is wrong to have only a three-hour debate on it. This is two-tier justice, which hitherto has been unknown in Britain. The Government are introducing it not merely for financial, but for political and philosophical reasons.
The Bill attacks the poor litigant rather than the rich insurance company which contributes to Conservative party funds. The Bill will attack the immigrant, who tends to be poor and who needs legal advice even more than citizens born here. It is a bad Bill and I hope that Conservative Members, many of whom respect the law, have been part of the law and believe—as I passionately do —in British justice, do not want to live in a country with a two-tier system of justice, with one law for the rich and another for the poor.
6.15 pm
Mr. Michael Irvine: A great deal of the anxiety felt in the legal profession about this Bill stems from the disappearance of the words that were to be found in the previous legislation. They were:
"fair remuneration according to work actually and reasonably done."
The omission of those words causes worry. Solicitors, and my fellow barristers, see matters listed in clause 34(7) which the Lord Chancellor has to take into account. They see nothing particularly exceptionable in them but they ask themselves whether the omission of those words means that the principle of fair remuneration has been

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abandoned. They then look at subsection (8) and see that the Lord Chancellor must consult the general council of the Bar and the Law Society and feel somewhat relieved. However, any such relief is dissipated when they look over the page and see that subsection (11) provides:
"No regulations shall be made under this section which include provision for the purposes mentioned in sub-section (2)(c) or (e) above except with the consent of the Treasury."
The anxiety stems from that.
I concede that inadequate remuneration can all too easily lead to inadequate performance and a fall in standards, but I ask my fellow members of the Bar and solicitors to have regard to the substantial increase in Government money and resources which have been devoted to the legal aid scheme in recent years. In 1978–79, it was running at about £100 million a year. This year, the figure will he close on £450 million. By any standard, that is a substantial increase. It is true that costs have also risen markedly during that period, but both branches of the profession have benefited substantially and it is right that I, as a practising barrister, should mention that I have shared in that benefit.
The trouble is that the demand for legal services, rather like the demand for the National Health Service, is virtually infinite. If demand is unleashed without proper regard to the costs of providing services, it will grow uncontrolled and will increasingly become a burden on the Exchequer. It will lead to the courts becoming clogged and to an increasingly severe strain being put on their operation.
I hope that the new legal aid board will ensure that members of the legal profession doing legal aid work are properly remunerated, and that lack of means does not cut anyone off from legal advice and representation when it is needed. However, it should maintain a far more careful scrutiny than has previously been the case as regards waste and abuse. The vast majority of practitioners are competent and scrupulous in ensuring that abuse does not occur. All of us who have practised in the courts know that some abuse and quite a lot of waste occurs nevertheless. I was glad that my hon. Friend the Member for Croydon, North-West (Mr. Malins) mentioned the question of matters that should be dealt with in the magistrates court finding their way at considerably increased expense to the Crown court. That is an example of how costs could and should be saved.
All of us who practise know that in some cases people obtain legal aid who should not have obtained legal aid. We know that in far too many cases, through delay and inefficiency, proceedings meander on, causing frustration to litigants and unnecessary expense to the legal aid fund. The Legal Aid (General) Regulations 1980 already provide for sanctions in that regard. Regulation 104(1) provides:
"…on any taxation of an assisted person's costs in connection with proceedings (except authorised summary proceedings and proceedings in the Crown Court) any costs wasted by failure to conduct the proceedings with reasonable competence and expedition shall be disallowed or reduced….
I believe and hope that the new legal aid board will make sure that such powers are used more rigorously. It is no good the professions calling for fair and reasonable remuneration unless we are prepared to allow the legal aid board to ensure that the waste and abuse, which to some extent exist, are kept under very tight control and eliminated as far as possible.
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In general, I support the Bill's provisions wholeheartedly, but one important criticism that I have of it is that it leaves untouched the restrictions on the power of the courts to order payment of successful unassisted litigants' costs out of the legal aid fund. That matter was rightly raised by my hon. Friend the Member for Portsmouth, South (Mr. Martin). The grant of legal aid puts the recipient in a very powerful position indeed. I listened with some astonishment to the right hon. and learned Member for Aberavon (Mr. Morris), who spoke of legally aided litigants being subjected to procedural delays and being left at the mercy of well-funded opponents who are privately financed. Far too often the boot is on the other foot, and the legally aided litigant is faced with a not particularly well-off litigant without legal aid. When that happens, the person without legal aid is virtually completely at the mercy of the legally aided litigant.
It is intolerably unfair that a litigant financing proceedings out of his own resources should not only face the disadvantage of conducting a case against a legally aided opponent but in all too many cases should find himself having to bear his own costs, even if he is successful. I am disappointed to discover that in clause 18 the old mistakes are repeated. Subsection (4) provides:
"An order under this section in respect of any costs may only he made if—
(a) an order for costs would be made in the proceedings apart from this Act."
That is obviously fair enough. The sting comes in subsection (4)(b):
"as respects the costs incurred in a court of first instance. those proceedings were instituted by the assisted party and the court is satisfied that the unassisted party will suffer severe financial hardship unless the order is made".
So a successful non-legally aided litigant in a court of first instance has no hope of obtaining an order for costs against a legally aided opponent unless the other party instituted the proceedings and, in addition, he can show that he, the non-legally aided litigant, would suffer severe financial hardship unless such an order was made.
If ever a case demonstrated the unfairness of that provision it was the case of Kelly v. London Transport Executive (1982), 1 WLR, 1055. In that case the plaintiff suffered a very minor accident indeed and concocted a vastly inflated amount of injury and damage flowing from it. The defendants paid £750 into court. The plaintiff did not take it. The defendants made an offer of £4,000 in desperation, to avoid the mounting costs, and he still did not take it. Eventually, he pressed the matter to a conclusion. The judge who heard the case found him to be an unscrupulous liar. His story was shown to be absolutely untrue. He was awarded just £75 in damages. Because the defendants were unable to bring themselves within the ambit of the provisions now contained in clause 18(4)(b), they received no costs at all, in spite of the fact that long before the hearing they had paid £750 into court and had later made an offer of £4,000. That is a grievous injustice.
It may be argued that such a reform would result in a very substantial amount of extra costs being incurred. I acknowledge that that is a risk and that that argument is important. However, it is a reform which should be considered. If the legal aid fund were at risk for costs, it would concentrate powerfully the minds of the legal aid board and of those acting for the legally aided party. That of itself could well lead to a saving in costs that would

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counterbalance to some extent any extra expenditure that would have to be met if the reform that I suggest were made.
I strongly believe that the principle of fair and reasonable remuneration should be retained. However, we lawyers do ourselves no service if we think that by a wave of the hand we can rid ourselves of Treasury control. It is not right that we should do so. It is right that the Treasury should be there and that the legal aid board should bring its forces powerfully to bear on the problem of saving costs and making our legal system more efficient.
6.28 pm
Mrs. Llin Golding: First, let me declare an interest. Unlike all the other hon. Members who have spoken, I am not, and never have been, a member of the legal profession. In the distant past, I was a consumer, and it is as a consumer that I want to speak to the Bill.
Like many hon. Members, I have received representations from many groups of people and many individuals who are worried about the effects of the Bill. They are concerned predominantly about the withdrawal of legal aid and advice from people who are often not able to fight for themselves. There is considerable concern, too, about the wide-ranging powers that the Bill gives to the Lord Chancellor to alter the scheme as and when he thinks fit.
The legal profession has expressed its misgivings at the removal of the administration of legal aid from the Law Society to the legal aid board, which is proposed in part II of the Bill. Incidentally, I do not see a proposal in the Bill for the postal ballot of all solicitors to elect the two solicitor representatives to the new board. Perhaps such ballots apply only to groups of workers in unions who are not allowed to have closed shops.
As a consumer I am greatly interested in the question, "Does the present system of control by the Law Society work and, if not, will the proposed system of a legal aid board be any better?" In what way should the Law Society keep control of the administration of public funds? The basic need is for a list of solicitors who hold practising certificates. As many hon. Members will be aware, subject to certain exceptions, a solicitor is not qualified to act as a solicitor unless he has a certificate issued by the Law Society authorising him to practise. He cannot recover his costs in respect of anything done if he does not hold a practising certificate. Indeed, on 25 November 1987 the Master of the Rolls said:
"A solicitor who practises without a certificate first of all commits a criminal offence and secondly is uninsured."
It should not be too difficult for a practising solicitor to remember to register by 31 October each year. However, it is surprising how many fail to do so and how few seem to be brought to account for that failure. Even when they are brought to account, the action taken is not known to the consumer.
Let us consider the case of a firm of solicitors, Messrs Blair Allison. One of my constituents notified the Solicitors Complaints Bureau that that firm had been practising uncertificated from 1 November 1986 to 28 January 1987. I wrote to the bureau on her behalf and received the following reply:
"practising certificates were only issued with effect from 28 January 1987 (and accordingly they had been practising
922
uncertificated since 1 November 1986). An investigation was undertaken by the Bureau and these matters were considered by the Adjudication Committee at their meeting on 21 October last. Action was taken against the partners but I am afraid I am not in a position to let you know the Committee's decisions in respect thereof."
I asked what had happened about my constituent's complaint, what had happened to the money that the firm had made, and what had happened to any costs that may have been paid out in public money. The answer from the Solicitors Complaints Bureau was that we, the consumers, are not allowed to know.
I tabled a series of written questions to the Attorney-General on 25 January. I asked
"if he will take steps to establish a method of complaints against uncertificated solicitors which is more open to scrutiny than that of the Solicitors Complaints Bureau."
The answer was no. I also tabled a question to ask:
"if he will set up an inquiry into the manner in which the Solicitors Complaints Bureau conducts investigations, with respect to its standards of impartiality."
The answer again was no. I also asked
"what steps he will take to prevent the payment of legal aid moneys to uncertificated solicitors; and whether he will make a statement."
The Attorney-General replied:
"When the legal aid administration of the Law Society receives information that a solicitor has undertaken legal aid work whilst uncertificated, no payment is made for the work concerned. Action is taken to recoup any moneys already paid in respect of the appropriate period.
The next question I tabled asked:
"what was the amount of legal aid moneys recovered in 1983, 1984, 1985, 1986 and 1987 and paid in respect of a solicitor who at the relevant time did not hold a current practising certificate; and whether he will make a statement."
The reply was:
"The information requested is not available, but the practice of the legal aid head office is to recover all legal aid moneys paid in respect of a solicitor who at the relevant time did not hold a current practising certificate."—[Official Report, 1 February 1988; Vol. 126, c. 449–50.]
I studied the legal aid fund accounts for 1983 to 1986 and I could find no identifiable entry of money recovered from uncertificated solicitors. Therefore, how do we know the size of the problem? Indeed, in a written question to the Attorney-General on 5 February I asked:
"under which heading in the legal aid accounts for 1985–1986 are to be found sums recovered from solicitors who at the relevant time did not hold a current practising certificate."
The answer was:
"Sums are recovered by deduction from subsequent payments to the solicitors concerned. Recoupments thus lead to the amount recorded in the legal aid accounts as 'solicitors' charges and counsel's fees being lower than would otherwise have been the case."
What kind of answer is that from an Attorney-General who discovers that solicitors have been acting uncertificated and claiming money from public funds. That was a little out of tune with his reply to my question on 5 February, which asked
"whether he will seek to strengthen the criminal law with the intention of reducing the number of uncertificated solicitors who are acting improperly."
The reply stated:
"I see no reason to do so. Criminal sanctions for an offence under section 20 of the Solicitors Act 1974 are already severe; penalties of imprisonment for not more than two years, a fine, or both may be imposed. Specific offences relating to the commission of certain prohibited acts attract other penalties under the Solicitors Act 1974."—[Official Report, 5 February 1988; Vol 126, c. 772.]
Let us consider claims for payment from the legal aid fund—the so-called green form claims submitted by the

923
legal profession. Is the House aware that green form claims are retained for only 12 months after the end of the financial year in which payment of the claim was authorised? Even if a solicitor was found to have been practising uncertificated, the green form giving the detail of the claim would have been destroyed. Unless the case was considered quickly—the Law Society is not known for its speed—there would be no evidence.
How does one prevent the forms from being destroyed on 31 March each year? How does an ordinary citizen, who wishes the Solicitors Complaints Bureau to investigate a complaint, prevent the destruction of such forms? The answer is to take the matter to the High Court, as did Mrs. Peasgood, one of my constituents who prepared and presented her case. She made an application for an order against the secretary general of the Law Society, last year's president of the Law Society, the current president of the Law Society, the director of the legal aid head office, the regional director of legal aid head office, the Chester area director of the legal aid office, two assistant directors at Chester, the director of the Solicitors Complaints Bureau, a solicitor who dealt with complaints at that bureau and the Law Society.
Mrs. Peasgood asked for an order under section 51 of the Solicitors Act 1974 to require the defendants to answer allegations contained in her affidavit of conduct unbefiting solicitors. Two of those allegations were:
"Conspiracy to conceal illegal conduct and to conceal dishonesty … cheating the public revenue."
My constituent was refused legal aid. She took that action not in an attempt to discredit the system or the individuals named, but to make them answerable to ordinary people whose money they are spending. In the course of her action she considered some of the part-time chairmen of the social security tribunal who are practising solicitors. She discovered that some of them seemed to have been practising uncertificated. Thus there appear to be solicitors sitting in judgment on others while acting criminally themselves.
Are the Law Society and the Solicitors Complaints Bureau the correct bodies to run the legal aid scheme? Surely the answer must be no. Will the new legal aid board under the control of the Lord Chancellor do any better, given that he moves with the wind in whatever direction it sends him? The answer must be no.
The Bill has been presented by a Government who are dedicated to control the trade unions by crippling them and by making unnecessary laws against the workers. They have presented this Bill for their predominantly middle-class solicitor friends, and it offers little control over the distribution of millions of pounds of taxpayers' money. It allows hundreds of solicitors to continue to practise illegally, indeed criminally. The Bill demonstrates that, yet again, the Government are ignoring the needs of those in our society who most need help. We should oppose it.
6.39 pm
Mr. John Fraser: One of the fundamental duties of Parliament is to sustain and support the fair and efficient administration of justice and the exercise of individual civil rights. When a Legal Aid Bill comes before the House, it should be an occasion on which we can celebrate the strengthening of our system of justice and equality before the law—a phrase to which many right hon. and hon. Members have attached importance. It
924
should be an occasion when we push forward the frontiers of representation, for example, before coroners, before tribunals and in serious defamation cases.
The numbers of tribunals and their importance have multiplied immensely since the modern legal aid system was introduced. The judgment of an immigration appeals tribunal can often be a matter of life and death. Tribunal awards in unfair dismissal cases often exceed amounts within the county court jurisdiction. Class actions are becoming increasingly important, not just for the consumers of drugs but for the residential occupants of estates, whether privately or publicly owned. The Bill should be an occasion to reverse the tendency towards a first and second-class standard of legal representation, which has worried hon. Members. The Bill should reinforce the proposition that legal rights are valueless unless the means to be aware of them exist.
Unfortunately, the Bill does not rise to those occasions. Instead, it is a vehicle mainly to enable the Treasury to hack £10 million off legal aid expenditure and to cash-limit the money that is available for legal aid purposes. As has been the case with other social legislation—health, housing, pensions and social security—it is a device to get people to pay more but receive less. The Bill will not reverse the trend towards a smaller proportion of people of moderate means having access to the courts for the redress of legitimate grievances.
The definition of legal aid by the Rushcliffe committee —repeated by the Solicitor-General—was that the real test of "small and moderate means" should be a test of those means in relation to the probable cost of the proceedings, without unreasonable deprivation of the litigant. In many European jurisdictions the test for moderate means is based on the amount to be expended. An example of how the system operates in this country is that if any person has a disposable income exceeding £110 per week, which is not a great deal of money, or capital exceeding £5,000, no legal aid is available for representation no matter the size or cost of the case, although some advice may be given.
I offer as an example the case of an elderly couple with more than £5,000 in the bank. They find that their retirement home is falling apart because of alleged negligence by a well-known firm of builders or an architect. That couple must gamble their life savings on the result of a court case. In those circumstances, no one could argue that their means are not small and moderate in relation to the issue involved. The Bill does nothing to meet the case where an elderly couple are expected to exhaust their saved capital before receiving any assistance from the state. In a case where the defendant is affluent or is protected by an insurance company and the couple have spent all their savings on the fees of expert witnesses and counsel, they should then qualify for legal aid because their disposable income is less than £110 a week. The new law will make it less likely that they will pursue their case or succeed, because their period of contribution will go beyond one year. That will make it more difficult for them to obtain justice. The existing system falls short of equal or adequate access.
The National Consumer Council provided me with several examples. Although about 2 million rented homes are in serious disrepair, last year only about 1,500 housing cases came before the courts. Only 8 per cent. of defendants who risk losing their homes because of possession proceedings are legally represented. About 85

925
per cent. of people who are injured at work and are off work for more than two weeks do not take the first step to obtain civil redress for the injury which they have suffered.
Despite what the Solicitor-General said about increased expenditure on legal aid, a smaller and smaller proportion of the population is now eligible for legal aid. Of course, the Government had to extend criminal legal aid and advice to prisoners at police stations as a price for obtaining the Police and Criminal Evidence Act 1984. Having paid that price, they are now trying to penalise the legal aid system by attempting to get back some of the money lost as a consequence of that Act.
I am grateful to Mr. Cyril Glasser, who wrote an article in the Law Society's Gazette on 9 March 1988. He describes in that article the extent to which the cover of legal aid in general has decreased. He said in that article:
"During the period of 1979–86, an estimated 13 million people, representing over 25 per cent. of the population, went out of scope for eligibility on income grounds alone. These figures may well have substantially increased over the last two years, so that only just over half the population now qualifies, compared with well over 80 per cent. in 1979."
Because of lack of time, I shall not give the other statistics that he has usefully stated there. However, it is clear that, whatever the pattern of expenditure on legal aid might be, the number of people—the number of two-parent households in particular—who qualify for legal aid has reduced substantially since 1979.
In the words of my right hon. and learned Friend the Member for Aberavon (Mr. Morris), the Bill is a missed opportunity. The script for the Bill may have been written by the Lord Chancellor, but the real plot has been devised by the Treasury. The real face behind the mask is found in the penultimate paragraph of the explanatory memorandum to the Bill, which talks about a consolidated saving in public expenditure. In the words of the National Consumer Council, we do not believe that the Bill will improve access to justice
In the time available, I cannot deal with the many and detailed points which have been raised. However, I endorse the views of many hon. Members about the preservation of the legal aid advisory committee. At the beginning of a new scheme, there should be no time limit on how long that advisory committee runs. In many of our national industries and in other areas, for example, in health administration, it is not unknown to have one system of administration for executing a scheme and to have a consumer representative body, rather like the legal aid advisory committee and the social security advisory committee, to comment on what is happening. I endorse the comments of many of my hon. Friends and many Conservative Members on the preservation of the independence of the new legal aid board.
I hope that the Government will not remove from criminal courts the ability to award criminal legal aid on the spot, particularly when the defendant is in custody. The criminal court deals with the urgent question of whether a person should be at liberty and the level of assistance which he should have when before the court. No one is in a better position to judge the eligibility for legal aid on merit. I am not now talking about legal aid on the basis of income.
We agree with many commentators that contracting-out means obtaining advice on the cheap. In the words of
926
the National Association of Citizens Advice Bureaux, they will not accept advice on the cheap or arrangements which will damage their relationship with other agencies or with the legal profession. There is a great danger, particularly in the less populous parts of the country, of creating a monopoly of advice which is given by people who may not be subject to professional codes of ethics. That may put them into conflict with those to whom they will subsequently have to refer cases.
The professions will have to negotiate remuneration with the Treasury. That has always been the case, but I can see no justification for taking out of the wording of the existing legislation the provision for remuneration for
"work actually and reasonably done."
Of course, the professions will always be accused of special pleading, but the Attorney-General is aware of the problems in the magistrates courts in London, the difficulties of obtaining clerks and running our systems of justice properly because the rate for the job is not being paid to magistrates' clerks. He is also aware of the problems with the Crown Prosecution Service because the right rate for the job is not being paid. He knows that the system of justice continues to break down because there is not fair remuneration for
"work actually and reasonably done."
There are plenty of examples outside the legal aid scheme of the difficulties that will be encountered if the Lord Chancellor intends to impose upon the profession a system of remuneration that does not bear fair comparison with salaries elsewhere.
When the Lord Chancellor introduced the Bill in the other place, he described it as
"the framework for the legal aid scheme through into the next century."—[Official Report, House of Lords, 15 December 1987; Vol. 491, c. 605.]
The trouble is that it is not so much a framework as a frame without a picture. The picture will have to be painted in by 53 regulation-making powers that the Lord Chancellor assumes in the Bill. It will have to be painted in through the guidance that he is entitled to give to the legal aid board. It will have to be painted in by the partly hidden hand of the Treasury. The Bill, by its history, letter or spirit, does not seek to reinforce or extend the legal aid service.
One of the Government's principles is give and take. Yesterday, they gave in the debate on one of the clauses of the Finance Bill; today, they take. The Bill represents not the open hand of justice, but the tight fist of the Treasury. For those reasons, and because of the hidden agenda behind the Bill, we shall vote against it.
6.52 pm
The Solicitor-General: This has been an interesting debate with three themes. First, there is a wide welcome for the new framework set by the Bill, but there were some major misapprehensions in the speeches of hon. Members, particularly of Labour Members, and some reassurances were sought.
The first major misapprehension concerns funding. I want to state as firmly as possible that it is nonsense to talk of cuts or a second-class service. The legal aid system is demand led today and it will continue to be demand led under the new system.
The right hon. and learned Member for Aberavon (Mr. Morris), with the Welsh hwyl steaming in particularly fine form, sought to depict my noble and learned Friend the

927
Lord Chancellor as someone who might easily be seen as dancing to the Treasury's tune, clutching a poisoned chalice. Those hon. Members who know my noble and learned Friend will find that difficult to believe.
We spent rather a long time on the question of fair remuneration for the legal profession. I wish to draw the House's attention to the criteria set out in clause 34(7). The Law Society, for example, has said that its overheads will not be covered. It has been suggested that there will not be sufficient barristers and solicitors to provide the service required. However, one finds in that clause those specfic matters that the Lord Chancellor must take into account. That is a much firmer and better safeguard than the inevitably imprecise concept of fairness. The Lord Chancellor made it clear that we shall be fair and the Bill enshrines the sensible criteria to achieve that.
Mr. Michael Jack rose—
Mr. Vaz rose—
The Solicitor-General: No, I shall not give way. I have already given way to the hon. Gentleman several times and I want to try to answer the points raised in the debate. However, I shall give way to my hon. Friend as he has been here throughout the debate.
Mr. Jack: Will my hon. and learned Friend take the opportunity to review the speed of payments to solicitors undertaking such work? That point has been drawn to my attention by solicitors in my constituency who believe that the present system is slow. Will he also, either now or later by letter, answer the point about the Bill's treatment of conveyancing and wills, particularly in respect of testamentary guardianship?
The Solicitor-General: I promise my hon. Friend that we shall consider those points carefully. Other aspects regarding speed of payment have already been carefully considered in recent months and I well understand my hon. Friend's point. Although my hon. Friend the Under-Secretary of State for the Home Department has been heavily engaged elsewhere, he will know that we are considering that aspect.
I was asked directly by the right hon. and learned Member for Aberavon whether I accepted the figures in the Law Society's briefing. We shall listen carefully to the Law Society's comments, but that briefing does not come up to the standard that we might have expected from the Law Society. It argues that 27 per cent. of solicitors are ceasing to do matrimonial work, but I have studied that briefing and I see that the hard facts show that, over the past five years, almost double the number of solicitors have come into matrimonial work as have left it. That does not appear to be a sound basis for that statistic.
We also regard as ill-founded the Law Society's claim that 25 per cent. of people have ceased to be eligible for legal aid over the past few years. It is a difficult matter to work out and Mr. Glasser, whose article I have read, makes that clear. However, one can obtain legal aid in many circumstances with an income well above the national average. As the country becomes richer, that may lead to some change in the proportions, but the figure is not to be accepted.
In the time left to me I shall seek to give reassurance on a few important points. The right hon. and learned Member for Aberavon, the hon. and learned Member for Montgomery (Mr. Carlile) and my hon. and learned
928
Friend the Member for Burton (Mr. Lawrence), among others, asked about tribunal representations. The Lord Chancellor is carrying out research on that matter and, when it has been completed, we shall consider it, particularly in relation to one of our priorities, social security commissioners. That is a particularly complex issue, but we shall take no lectures from Opposition Members because, in all the years that they were in government, they did nothing about Strasbourg, defamation, industrial tribunals, social security tribunals and coroners. It is rich for them to suggest that we should have put all those matters right at a time when legal aid expenditure has been increasing at an exponential rate, precisely because the service is demand led. It is nonsense to suggest that we are proposing to dismantle the green form scheme. Many advice agencies do a pretty good job in giving advice on specialised matters, such as welfare benefits. Nothing will be forced upon them, but they will have the opportunity to enter into freely agreed contracts to provide that advice in limited areas and only then will the green form scheme be withdrawn.
High standards of service are part of our priority. The opportunity for appeals on criminal legal aid will remain. I give that assurance to my hon. and learned Friend the Member for Burton. The board will be able to fund legal services committees if it thinks right. That is my response to the remarks of the hon. Member for Pontypridd (Mr. John). The legal aid advisory committee can continue if that be thought right and if the Lord Chancellor and the board think that helpful. Decisions on criminal legal aid will remain with the courts unless and until it seems wise and sensible to do anything different.
The aim of the Bill is to provide the litigant, who would otherwise be unable on account of his means to obtain advice, assistance or representation, with a legal aid system that is efficient and effective and gives value for money both for him and for the taxpayer. We wish to create a system that is capable of evolving to meet the challenges of the decades ahead.
Question put, That the Bill be now read a Second time:-
The House divided: Ayes 242, Noes 147.

Division No. 285]

[7pm

AYES

Adley, Robert

Brandon-Bravo, Martin

Aitken, Jonathan

Brazier, Julian

Alexander, Richard

Bright, Graham

Alison, Rt Hon Michael

Brittan, Rt Hon Leon

Allason, Rupert

Brooke, Rt Hon Peter

Amess, David

Browne, John (Winchester)

Amos, Alan

Bruce, Ian (Dorset South)

Arnold, Jacques (Gravesham)

Buchanan-Smith, Rt Hon Alick

Arnold, Tom (Hazel Grove)

Buck, Sir Antony

Aspinwall, Jack

Budgen, Nicholas

Atkins, Robert

Burns, Simon

Baker, Nicholas (Dorset N)

Butler, Chris

Batiste, Spencer

Butterfill, John

Beggs, Roy

Carrington, Matthew

Bennett, Nicholas (Pembroke)

Carttiss, Michael

Bevan, David Gilroy

Cash, William

Biffen, Rt Hon John

Chapman, Sydney

Biggs-Davison, Sir John

Chope, Christopher

Blackburn, Dr John G.

Clark, Sir W. (Croydon S)

Blaker, Rt Hon Sir Peter

Clarke, Rt Hon K. (Rushcliffe)

Bonsor, Sir Nicholas

Coombs, Anthony (Wyre F'rest)

Boscawen, Hon Robert

Coombs, Simon (Swindon)

Boswell, Tim

Critchley, Julian

Bottomley, Peter

Davis, David (Boothferry)

Bottomley, Mrs Virginia

Day, Stephen

Bowden, Gerald (Dulwich)

Dorrell, Stephen

Bowis, John

Douglas-Hamilton, Lord James

929

Durant, Tony

Marshall, John (Hendon S)

Dykes, Hugh

Marshall, Michael (Arundel)

Emery, Sir Peter

Martin, David (Portsmouth S)

Fookes, Miss Janet

Mates, Michael

Forman, Nigel

Maude, Hon Francis

Garel-Jones, Tristan

Maxwell-Hyslop, Robin

Gill, Christopher

Mayhew, Rt Hon Sir Patrick

Gilmour, Rt Hon Sir Ian

Meyer, Sir Anthony

Goodhart, Sir Philip

Miller, Hal

Gorman, Mrs Teresa

Mills, Iain

Gorst, John

Miscampbell, Norman

Gow, Ian

Mitchell, Andrew (Gedling)

Gower, Sir Raymond

Mitchell, David (Hants NW)

Greenway, Harry (Ealing N)

Moate, Roger

Greenway, John (Ryedale)

Molyneaux, Rt Hon James

Gregory, Conal

Monro, Sir Hector

Griffiths, Sir Eldon (Bury St E')

Montgomery, Sir Fergus

Griffiths, Peter (Portsmouth N)

Moore, Rt Hon John

Ground, Patrick

Moss, Malcolm

Grylls, Michael

Moynihan, Hon Colin

Hamilton, Hon Archie (Epsom)

Neale, Gerrard

Hamilton, Neil (Tatton)

Needham, Richard

Hanley, Jeremy

Nelson, Anthony

Hannam, John

Neubert, Michael

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

Newton, Rt Hon Tony

Hargreaves, Ken (Hyndburn)

Nicholls, Patrick

Harris, David

Nicholson, David (Taunton)

Haselhurst, Alan

Onslow, Rt Hon Cranley

Hawkins, Christopher

Page, Richard

Hayes, Jerry

Paice, James

Hayhoe, Rt Hon Sir Barney

Patnick, Irvine

Hayward, Robert

Pawsey, James

Heathcoat-Amory, David

Peacock, Mrs Elizabeth

Heseltine, Rt Hon Michael

Porter, David (Waveney)

Hicks, Mrs Maureen (Wolv' NE)

Powell, William (Corby)

Hicks, Robert (Cornwall SE)

Price, Sir David

Hind, Kenneth

Raffan, Keith

Hogg, Hon Douglas (Gr'th'm)

Raison, Rt Hon Timothy

Holt, Richard

Redwood, John

Hordern, Sir Peter

Renton, Tim

Howard, Michael

Rhodes James, Robert

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

Ridsdale, Sir Julian

Howarth, G. (Cannock & B'wd)

Rifkind, Rt Hon Malcolm

Howell, Ralph (North Norfolk)

Roe, Mrs Marion

Hughes, Robert G. (Harrow W)

Ross, William (Londonderry E)

Hunt, David (Wirral W)

Rossi, Sir Hugh

Hunter, Andrew

Rowe, Andrew

Irvine, Michael

Rumbold, Mrs Angela

Jack, Michael

Ryder, Richard

Janman, Tim

Sackville, Hon Tom

Johnson Smith, Sir Geoffrey

Sainsbury, Hon Tim

Jones, Gwilym (Cardiff N)

Shaw, David (Dover)

Jones, Robert B (Herts W)

Shaw, Sir Giles (Pudsey)

Jopling, Rt Hon Michael

Shaw, Sir Michael (Scarb')

Kellett-Bowman, Dame Elaine

Shephard, Mrs G. (Norfolk SW)

Kilfedder, James

Shepherd, Colin (Hereford)

King, Roger (B'ham N'thfield)

Shepherd, Richard (Aldridge)

Kirkhope, Timothy

Shersby, Michael

Knight, Greg (Derby North)

Sims, Roger

Knight, Dame Jill (Edgbaston)

Skeet, Sir Trevor

Knowles, Michael

Smith, Tim (Beaconsfield)

Knox, David

Soames, Hon Nicholas

Lamont, Rt Hon Norman

Speller, Tony

Lang, Ian

Spicer, Sir Jim (Dorset W)

Lawrence, Ivan

Squire, Robin

Lennox-Boyd, Hon Mark

Stanbrook, Ivor

Lester, Jim (Broxtowe)

Steen, Anthony

Lilley, Peter

Stern, Michael

Lloyd, Sir Ian (Havant)

Stevens, Lewis

Lloyd, Peter (Fareham)

Stewart, Andy (Sherwood)

Lyell, Sir Nicholas

Stradling Thomas, Sir John

McCrindle, Robert

Sumberg, David

MacGregor, Rt Hon John

Summerson, Hugo

Maclean, David

Tapsell, Sir Peter

McLoughlin, Patrick

Taylor, Ian (Esher)

McNair-Wilson, M. (Newbury)

Taylor, John M (Solihull)

McNair-Wilson, P. (New Forest)

Taylor, Teddy (S'end E)

Malins, Humfrey

Tebbit, Rt Hon Norman

Mans, Keith

Thompson, D. (Calder Valley)

Maples, John

Thompson, Patrick (Norwich N)

930

Thorne, Neil

Wells, Bowen

Thurnham, Peter

Wheeler, John

Tracey, Richard

Whitney, Ray

Tredinnick, David

Widdecombe, Ann

Trippier, David

Wiggin, Jerry

Trotter, Neville

Wilshire, David

Twinn, Dr Ian

Winterton, Mrs Ann

Vaughan, Sir Gerard

Winterton, Nicholas

Waddington, Rt Hon David

Wood, Timothy

Wakeham, Rt Hon John

Woodcock, Mike

Waldegrave, Hon William

Yeo, Tim

Walters, Dennis

Young, Sir George (Acton)

Ward, John

Wardle, Charles (Bexhill)

Tellers for the Ayes:

Warren, Kenneth

Mr. David Lightbown and

Watts, John

Mr. Kenneth Carlisle.

NOES

Abbott, Ms Diane

Griffiths, Win (Bridgend)

Allen, Graham

Hattersley, Rt Hon Roy

Alton, David

Heffer, Eric S.

Anderson, Donald

Hinchliffe, David

Archer, Rt Hon Peter

Holland, Stuart

Armstrong, Hilary

Howells, Geraint

Ashton, Joe

Hoyle, Doug

Banks, Tony (Newham NW)

Hughes, John (Coventry NE)

Barnes, Harry (Derbyshire NE)

Hughes, Robert (Aberdeen N)

Barron, Kevin

Hughes, Roy (Newport E)

Battle, John

Hughes, Sean (Knowsley S)

Beith, A. J.

Hughes, Simon (Southwark)

Benn, Rt Hon Tony

Illsley, Eric

Bermingham, Gerald

Janner, Greville

Bidwell, Sydney

John, Brynmor

Blair, Tony

Jones, Ieuan (Ynys Môn)

Boateng, Paul

Jones, Martyn (Clwyd S W)

Boyes, Roland

Kaufman, Rt Hon Gerald

Bray, Dr Jeremy

Kennedy, Charles

Buckley, George J.

Kirkwood, Archy

Caborn, Richard

Lamond, James

Callaghan, Jim

Leadbitter, Ted

Campbell, Menzies (Fife NE)

Leighton, Ron

Campbell, Ron (Blyth Valley)

Lloyd, Tony (Stretford)

Campbell-Savours, D. N.

McAllion, John

Carlile, Alex (Mont'g)

Macdonald, Calum A.

Clark, Dr David (S Shields)

McFall, John

Clay, Bob

McNamara, Kevin

Clelland, David

McWilliam, John

Clwyd, Mrs Ann

Madden, Max

Cohen, Harry

Mahon, Mrs Alice

Cook, Robin (Livingston)

Marek, Dr John

Corbett, Robin

Martlew, Eric

Corbyn, Jeremy

Michael, Alun

Cousins, Jim

Michie, Bill (Sheffield Heeley)

Crowther, Stan

Michie, Mrs Ray (Arg'l & Bute)

Cryer, Bob

Millan, Rt Hon Bruce

Cummings, John

Mitchell, Austin (G't Grimsby)

Dalyell, Tam

Morgan, Rhodri

Davies, Ron (Caerphilly)

Morris, Rt Hon A. (W'shawe)

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

Morris, Rt Hon J. (Aberavon)

Dixon, Don

Mowlam, Marjorie

Dobson, Frank

Mullin, Chris

Duffy, A. E. P.

Murphy, Paul

Dunwoody, Hon Mrs Gwyneth

Nellist, Dave

Eastham, Ken

Oakes, Rt Hon Gordon

Ewing, Mrs Margaret (Moray)

Orme, Rt Hon Stanley

Fatchett, Derek

Patchett, Terry

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

Pendry, Tom

Fisher, Mark

Pike, Peter L.

Flannery, Martin

Powell, Ray (Ogmore)

Flynn, Paul

Prescott, John

Foot, Rt Hon Michael

Primarolo, Dawn

Foster, Derek

Quin, Ms Joyce

Fraser, John

Radice, Giles

Fyfe, Maria

Randall. Stuart

Garrett, John (Norwich South)

Rees, Rt Hon Merlyn

George, Bruce

Reid, Dr John

Golding, Mrs Llin

Richardson, Jo

Gordon, Mildred

Robertson, George

Gould, Bryan

Rogers, Allan

Grant, Bernie (Tottenham)

Ross, Ernie (Dundee W)

931

Shore, Rt Hon Peter

Wardell, Gareth (Gower)

Short, Clare

Welsh, Michael (Doncaster N)

Skinner, Dennis

Wigley, Dafydd

Smith, Andrew (Oxford E)

Williams, Alan W. (Carm'then)

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

Winnick, David

Soley, Clive

Wise, Mrs Audrey

Spearing, Nigel

Worthington, Tony

Steel, Rt Hon David

Wray, Jimmy

Taylor, Mrs Ann (Dewsbury)

Young, David (Bolton SE)

Taylor, Matthew (Truro)

Vaz, Keith

Tellers for the Noes:

Wall, Pat

Mr. Frank Haynes and

Wallace, James

Mr. Frank Cook.

Walley, Joan

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

LEGAL AID BILL [LORDS] [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purpose of any Act resulting from the Legal Aid Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of—

(a) any sums required for payments by the Lord Chancellor to the Legal Aid Board established by the Act;

(b) any other expenses of the Lord Chancellor under the Act; and

(c) any increase in the expenses of any other Minister of the Crown attributable to the discharge of functions under the Act.—[The Solicitor-General.]

Rover Group
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]
7.14 pm
The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): The Government and the board of Rover Group have always looked forward to the day when the businesses of the Rover Group could be returned to full private ownership. That became a firm political commitment for the Government in the 1983 Conservative manifesto for the general election. We believe that a huge manufacturing business of this kind performs best under commercial management and subject to the normal demands of the market place. The interests of employees, suppliers and dealers are best served when the company is able to raise its capital, to invest and to make strategic decisions without the direct supervision and intervention of Ministers, Whitehall or Westminster.
Indeed as evidence of that claim I want to stress that privatisation has already brought benefits to the former parts of the group that have been liberated from state ownership. Jaguar has increased both production and employment since its flotation in 1984 and its excellent products are sought after across the world. Employees in Unipart have seen the value of their shares rise as that firm's profitability has grown since privatisation. The same applies to Istel, the information technology group. Leyland-DAF, in which Rover Group holds a 40 per cent. stake, has seen recent announcements of increased United Kingdom productivity and production. Jaguar Rover Australia is also trading profitably. Indeed all the privatised businesses where the Rover Group has maintained a minority stake are now contributing to the group's profitability.
Mr. Dave Nellist: While the Minister is recounting the list of former Rover Group businesses, especially those from Coventry, would he like to complete the list and add Alvis, the tank manufacturers in Coventry which is proposing to close its city centre site and which has shed hundreds of jobs since privatisation, Self-Changing Gears, the gearbox manufacturers, which, within six weeks of privatisation, sacked 20 per cent. of the work force, and, primarily, Coventry Climax—the factory which I live next door to and which is 10 yards from my back gate—which, after privatisation in 1981 when it had a work force of 3,000, shed 80 per cent. of that work force in five years? In Coventry we do not believe the Government when they argue for the supposed benefits of privatisation. Our experience in Coventry, Jaguar notwithstanding, is not what the Minister claims.
Mr. Clarke: Neither nationalisation nor privatisation can guarantee commercial success or sustained employment. I suppose that we have seen the biggest drops in employment in some of the great nationalised industries such as steel, ship building and others. Where the products can be sold successfully and the industry is not overmanned, the companies have a secure future.
The companies that I have mentioned have been enabled to take advantage of their position in the market place. The hon. Member for Coventry, South-East (Mr. Nellist) is perfectly aware of the background to the

933
companies to which he referred. He is also aware that the overmanning in some of those businesses was bound to be reduced, no matter who owned the company.
My examples show that the best parts of the Rover Group, when privatised, have thrived under privatisation, and employees and customers have benefited.
Mr. Bryan Gould: We are of course accustomed to the Minister's traditional introduction to this type of debate. Where is the evidence that privatisation and a change of ownership have made a difference? Surely all the evidence, even according to the Minister's statements, shows that ownership, in itself, makes very little difference.
Mr. Clarke: I always make this traditional opening to my speeches on privatisation because, having debated nationalisation and privatisation so often over the past six or seven years, I hope that the argument is now won. The general public must be aware that the climate has changed with regard to state ownership of manufacturing.
I concede that, in itself, the change of ownership does not produce the change. The management of the company is freed from the constraints of the Treasury, Ministers like myself, the officials who support me and the attempts of the House to interfere politically in what are essentially management and commercial decisions. That gives the best companies the prospect of thriving more than they otherwise would have thrived so long as they are not nationalised and are returned to the private sector. That is our belief and we are now at the stage where the Rover Group has made steady progress and has reached the point where privatisation on acceptable terms is not just a prospect but a reality.
I pay tribute to Graham Day's two years at the helm. It is a tribute to his performance that Rover should just have reported its best trading performance for nine years. At the operating level, performance was turned round from a loss of nearly £0·25 billion in 1986 to a positive result. That has been achieved on the back of record exports. At home, the group has improved the reputation of its products and is paying greater attention to the needs of its customers.
Mr. Gould rose—
Mr. Clarke: If the hon. Gentleman wishes to pay tribute to Red Robbo and to his contribution in the past, I shall happily give way.
Mr. Gould: It is simply that I must have misheard the Minister. He surely did not use the words "record exports", did he?
Mr. Clarke: I did, and I shall repeat them—based, as they are, on what I regard as excellent briefing. The hon. Gentleman will correct me if I have been misled. I believe that a record export performance has been achieved for the Rover Group's present companies.
As the House may have inferred from my opening remarks, I do not anticipate a great deal of controversy in the debate about the principle of privatisation. I take it almost for granted that for the world at large the argument is won. I shall find out in due course whether this is one of the days when the hon. Member for Dagenham (Mr. Gould) is in favour of renationalising the company—no
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doubt we shall come to that later. I believe that the House is mostly interested today in the way in which we have chosen to privatise the group and the terms of the proposed sale. I shall seek to satisfy the House that that method and those terms are fair, sensible and a good bargain for the taxpayer and for the company.
The Rover Group has the kind of business which cannot easily sustain uncertainty about its future. The House will recall that, when there were rumours that various bidders were in the field in 1986, they had a very adverse effect on the state of the company. During that period of speculation, the group lost £250 million worth of sales and 2 per cent. of its market share, which it has never since recovered.
It is for that reason that when British Aerospace, having talked to Rover Group in the first place, made its approach to the Government, we were determined to handle the situation in a way that would not risk damaging the group. There are those who argue that we should have thrown open the question of purchasing the Rover Group to a variety of bidders. I can only say that I believe that such a prospect would have been grossly irresponsible in respect of a business occupying such an important role in this major industry. The strong advice that we received, particularly from Graham Day and the board of Rover Group, was that we should accept British Aerospace's request that sale negotiations should be on an exclusive basis for a limited period. In my opinion, it would have been reckless to ignore that advice.
In considering the proposals from British Aerospace, we first satisfied ourselves that such a solution would give Rover Group the opportunity to develop its independent role in the vehicle industry. British Aerospace is strongly committed to the future development and growth of Rover Group and is looking to build on the strategy and progress made by the existing Rover Group management. We underlined that commitment in the negotiations which took place between the Government and British Aerospace through the conditions we introduced— particularly those intended to control on-sale.
The deal we concluded ensures that were British Aerospace to decide for some reason to relinquish control within five years the principal subsidiaries of Rover Group, their principal registered trade marks or any substantial part of the undertakings of those subsidiaries, British Aerospace could be required to repay any net economic benefit. That means that it could be not worth while financially for British Aerospace to contemplate any of those steps, which it is not contemplating in any event. That provision is in no way meant to inhibit the commercial freedom of management to run those businesses or to exploit opportunities as they see fit. What it will do, I believe, is contribute to a period of stability in which the Rover Group may operate.
Mr. Andrew Smith: Will the Minister tell the House his definition of a "substantial part" of the undertakings of the subsidiaries? Will he also make clear to the House whether British Aerospace will actually be required to forgo any of the advantages it has enjoyed? The Minister significantly used the phrase "could be required". Will he clarify that point?
Mr. Clarke: We have not defined that aspect in any substantial or quantified terms—it will be a matter for judgment at the time. Plainly, one can consider extremes.

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A small site or particular building might be shed without the terms I have mentioned being relevant. On the other hand, the sale of a substantial part of the business, if it were a significant part of the business, would certainly mean that the conditions would apply. As to the hon. Gentleman's second point, he is quite right, in that we have not made the conditions inflexible. It is not necessarily the case that they will be insisted upon by the Government. That provides for the possibility that there could be favourable circumstances in which the Government decide that it is in the public interest, as well as in the interests of the company, that such permission should be given. There might be some perfectly desirable commercial reason, raising no controversy on either side of the House, why that should be done.
Circumstances might arise in which British Aerospace wished to dispose of a subsidiary company. Therefore, we leave open the possibility that the Government might waive the condition. For the moment, British Aerospace has no intention of doing any of the things I have talked about, which I believe is why it accepted that condition. We do not foresee any circumstances in which we would want to see an on-sale of the kind I have described. However, we would expect the conditions to bite if British Aerospace suddenly decided to sell for reasons that were not readily accepted as being in the public interest.
Mr. Terry Davis: Does the Minister accept that when his Conservative predecessors were willing 20 years ago to give similar assurances in good faith about Chrysler, those pieces of paper were worth nothing in the end? My hon. Friends and I are entitled to press the Minister about what would happen if the events which the Minister does not envisage happening did happen. Suppose that there was a disagreement about what is a significant or substantial part of the business. How would that dispute be settled? Would the Government have the last word in defining what is significant or substantial, in their judgment? What if the management and directors of British Aerospace disagreed? Will there eventually be legal wrangles and court cases?
Mr. Clarke: Any contract can give rise to the possibility of litigation, but the parties to any sensible contract do not contemplate engaging in litigation. I cannot enter into discussion about what might happen if a dispute arose between the Government and British Aerospace about what comprised a "substantial part" of the business. I do not believe that anyone could put forward a tight, quantitative definition of what is meant by "substantial". It is one of those words that most people would find no difficulty in applying to a set situation.
I described those terms to the House because I believe they give a valuable assurance that the group will enjoy a period of stability. They reinforce the stated commitment of British Aerospace to acquire the businesses as going concerns and to develop them. I do not expect that the conditions will give rise to difficulties, and it is not fruitful to speculate what might happen if they did. Those conditions are not inflexible because circumstances might arise in which, for example, the hon. Member for Birmingham, Hodge Hill (Mr. Davis) might press on Ministers the case for permitting British Aerospace without penalty to sell a subsidiary to another purchaser,
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when that was thought to be desirable by everybody. It is right that we should not make the terms bite automatically when one of the interested parties wishes them to do so.
In negotiating terms with British Aerospace, the Government were aware mainly of the burden of debt borne by the Rover Group, which had been built up through years of accumulated losses. The banks had been willing to finance that debt only on the strength of the Government's involvement. We faced the situation—and we face it now—that whatever route was adopted for the company's return to full private ownership, and whatever sale was considered to any purchaser, it would be necessary to tackle the debt problem. Those losses were historic and irrecoverable. The bank indebtedness had to be taken off the back of the new owners—as it would have to be taken off the back of any new owners who might be interested in the group.
Therefore, the Government agreed that it was right to make a cash injection of £800 million to deal with that indebtedness. That was our calculation and reasonable judgment of the level of the indebtedness likely to exist at the time of the sale. With that slate wiped clean, we were able to conclude an agreement for the sale of the Government shareholding for £150 million. That purchase price reflects of course a balance between the prospects and the risks now in the business. However, in judging that deal—which is, I believe, the principal point of interest in the debate—it is necessary to appreciate all the elements of the agreement.
In addition to the £800 million historic debts that the Government are wiping clean and the £150 million being received for the Government shareholding, the taxpayer will benefit from the fact that some £1·1 billion of Rover Group's trading tax losses will effectively be eliminated. That reduces by about two thirds the amount that would otherwise be available to offset against future Rover Group profits. The hon. Member for Dagenham laughs, but that is worth about £400 million to the British taxpayer.
Moreover, BAe and the Government have agreed that the other currently available tax reliefs within the Rover Group will be applicable only within Rover's businesses. It is also an immense relief to most hon. Members—as it certainly should be to taxpayers—to see the prospective extinction of the contingent liability represented by the Varley-Marshall assurances on the group's obligations—a potential liability that now stands at about £1·6 billion.
Taking into account those features of the deal, I hope that hon. Members will see why, viewed as a whole, it is a good, sensible, realistic bargain for the Government and the company.
Mr. Gould: I am sorry to intervene again, but I am fearful that the right hon. and learned Gentleman is about to leave the subject of financial arrangements. Let me say in passing that it is a novel doctrine that wiping off a debt owed to the taxpayer is somehow to the taxpayer's advantage.
I want to ask about the £800 million that the Minister described, in a somewhat confusing way, in two different parts of his speech. As I understand it, it is—as he described it initially—a cash injection. Will he tell the House how much of that £800 million is needed to eliminate debts, and how much is properly to be regarded as simply a cash gift to the new proprietors of Rover if the deal goes through?
Mr. Clarke: The hon. Gentleman ought to have a look at the position of tax losses. Accumulated tax losses of the kind that I am talking about are a potential asset of a company such as this, because it is possible to offset future profits against them. By wiping off all but £500 million of the tax losses, the taxpayer frees himself from £400 million worth of potential cost in the future. This is genuine indebtedness. It is not a cash injection into the company.
Mr. Gould: All of it?
Mr. Clarke: Yes, all of it. It is a reasonable calculation of the level of indebtedness at the time of completion of sale. It is arrived at by a combination of the present indebtedness, the likely accumulation of further indebtedness by the time of conclusion of sale and some outstanding liabilities still to be incurred, which relate to the restructuring of Leyland-DAF last year. The figure was arrived at on that calculation and no other basis.
Mr. Gould: I am grateful for that information. For the sake of completeness and accuracy, will the Minister now quantify the various elements that he has described as making up the £800 million?
Mr. Clarke: Certainly—if you, Mr. Deputy Speaker, will forgive me for giving way so often in such a short debate. I had prepared a reasonably short speech. I shall have to stop giving way soon.
The debt position at the end of 1987 comprised short-term borrowings of £400·1 million, and amounts falling due after more than one year of £228·7 million. From those figures, cash and short-term investments of £42 million must be deducted. That leaves a total immediate debt at the end of 1987 of £585·8 million. To that figure must be added the part of the money provided in March 1987 for announced future restructuring in the commercial vehicle businesses, which has yet to be spent. The remainder of the £800 million takes account of changes that we estimate will take place in the group's indebtedness between the end of 1987 and completion of the sale in the summer. It is important that hon. Members and the European Commission understand how we arrived at that figure.
As I have said, the deal is a sensible and realistic bargain, satisfying the genuine interests of both parties. The Government were concerned that the merger of these two major manufacturing groups should move forward only on a firm financial footing, and I believe that the House should share that desire. BAe has expressed its confidence that the enlarged group will be able to support development programmes in the combined businesses.
As I explained to the House on 29 March, the proposed cash injection is subject to the completion of the normal European Community procedures. The Community applies rules which we accept and support. It must be ensured that the cash injections are legitimate and in accordance with the Community rules before they are allowed to proceed.
Following the meetings between my right hon. and noble Friend the Secretary of State and Commissioner Sutherland in March, we have continued to assist the Commission to reach a full understanding of the Government's objectives and proposals. Following its usual practice, the Commission has also invited comments from other member states and interested parties on the state aid proposal. I hope that the House will understand
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that it would be wrong of me to pre-empt the Commission by making any further comment on the progress of its studies. I am glad to say that the Commission is acting with expedition, and I am confident that it realises the need, in the interests of the business, to reach a conclusion and will—within the necessary confines of its procedures —seek to achieve a speedy resolution of its examination.
I expect some hon. Members to attack the terms on the basis that they are too favourable to BAe and Rover Group. That, indeed, was the implication of some of the murmurings a few moments ago. Some people attacked the terms on that basis when I made my original statement on the deal. I hope that the European Commission will not be influenced by such claims, because, when made in the House, they will probably be made on a political rather than a well-informed basis.
I also hope that hon. Members who are tempted to make such criticisms will ask themselves what is their aim and purpose in doing so. Do they want to threaten the deal with BAe, so that we return to uncertainty over privatisation and the Rover Group can be bid for again by all corners? Do they want BAe and the Rover Group to trade in a more cash-constrained way, and with a burden of debt? When I made the statement, I thought that some Opposition Members who attacked the terms had no idea of the point of the criticisms that they put forward, although I realise that some contemplate permanent nationalisation as the only future for the group.
Mr. Dennis Skinner: Perhaps I can help the Minister. Let me explain why I feel that the matter is a subject for inquiry. When BAe was privatised, having received a cash injection of £400 million, eyebrows were naturally raised outside the House, as well as on the Opposition Benches. The right hon. Member for Chingford (Mr. Tebbit) leaves the Cabinet and the chairmanship of the Tory party to become adviser to the chairman of BAe. Then, hey presto! Out of the blue along comes this whippersnapper Minister, acting on behalf of Lord Young—who has previously had a row with the right hon. Member for Chingford—and wanting to settle the argument. He gives in and acknowledges that there is a prospect of getting some deal through. To appease the right hon. Member for Chingford, he says, "Here is £800 million of taxpayers' money. If you give us £150 million back, that will be all right. It will cloud the issue. By the way, we are writing off another £1,100 million."
All in all, the right hon. Member for Chingford did not do badly for his friends at BAe. In my opinion, there ought to be a public inquiry into the affair.
Mr. Clarke: I came to the House at the same time as the hon. Member for Bolsover (Mr. Skinner), and I think that my age and political experience are about the same as his. Speaking as one whippersnapper to another, let me tell him that my right hon. Friend the Member for Chingford (Mr. Tebbit) is a considerable expert on the aerospace industry, which is no doubt why he gives unpaid advice to the chairman of BAe.
If the hon. Gentleman reflects on what I have said, I trust that he will be persuaded of the wisdom of the deal. His intervention did not reveal what he is aiming at by seeking to undermine it. If he is saying that it is too generous to British Aerospace, is he seeking to undermine the position of the business as it proceeds? If he is saying that it stinks, he will have to give a slightly less tortuous

939
explanation the next time that he goes through the deal, and try to explain where he thinks that any money that is changing hands is first not properly accounted for, and second is not passed for the purpose of sustaining the industry on a fair basis for the future. The fact is that the hon. Gentleman's advice on aeroplanes, paid or unpaid, is of even less use than his advice on the coal industry, although he has slightly more knowledge of that industry.
Mr. Skinner: I do not muddle up the taxpayers' money.
Mr. Clarke: The hon. Gentleman frequently muddles up the taxpayers' money in his own mind. I trust that he is not about to suggest that my right hon. Friend or anyone else has muddled up the taxpayers' money in this particular case. I have given the most detailed exposition of it to the hon. Member for Dagenham who understands these matters rather better than the hon. Member for Bolsover does, and does not resort to vague, unsubstantiated smears which the hon. Member does not understand when he repeats them.
If we can get back to the serious business in hand, I ask the more responsible hon. Members to consider exactly what, from the point of view of the British motor industry, British Aerospace or anyone else, they are driving at when they seek to criticise the deal and to suggest that we have arrived at our conclusion after anything other than a sensible appraisal of the need to get rid of past debts and to put the company on a sensible footing for the future.
Mr. Doug Hoyle: The Minister referred to experience in industry. Could he tell me of any experience that he has had in any industry?
Mr. Clarke: I have never worked in industry. I was talking about the experience of my right hon. Friend the Member for Chingford in the aerospace industry. However I have considerable experience of privatising industry, I am glad to say, and experience of facing criticism from Opposition Members. As this privatisation goes through they will find that their criticisms are ill-founded.
I have described the deal, I believe that it is sustainable and I trust that the Commission will approve it with expedition. Completion of the agreement between British Aerospace and the Government announced on 29 March is of course subject to the approval of British Aerospace shareholders and completion of the European Community procedures. The Government firmly believe that the best interests of the business will be served by speedy implementation of the deal that we have negotiated. The company needs to be removed at long last from the spotlight of political debate and the political battlefield, and should he allowed to get on with the business of making and selling passenger vehicles.
I believe that that view is shared by the vast majority of Rover Group employees who are delighted to see the company passing out of the political arena at last. I certainly believe that that view is shared by all the suppliers who make a vital contribution to the United Kingdom economy, particularly in the west midlands, and all those whose livelihoods are dependent on the distribution chain.
I am very conscious—as no doubt are many hon. Members from constituency correspondence—of the support of the 1,000-strong Austin Rover dealer network for the deal that the Government are proposing. My right hon. and noble Friend has also discussed the deal with Honda whose operational partnership with the Rover
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Group has already generated the flagship Rover 800 range and is being taken forward with a new mid-range model. The Government were particularly mindful of the importance that Honda placed on the continuity of the Rover Group management. Honda was reassured by British Aerospace's ownership of the company. The Government very much welcome the prospect that the relationship with Honda should continue to develop satisfactorily on the basis that we are proposing.
I gave a list of the people who have broadly welcomed the deal. I believe that the only basis on which any hon. Member can be opposed to the deal is on some continuing doctrinaire commitment to nationalisation of this car company. The Labour party has never extended its desire for nationalisation to the whole of the vehicle industry. Fortunately, the Labour party has never yet threatened to nationalise Ford or Nissan in this country—although it has devised other means of driving away investment in Dundee, but that is not relevant to this debate. The Labour party appears to retain a lasting yearning to intervene in the management of what was British Leyland.
Mr. Andrew Smith: Will the Minister give way?
Mr. Clarke: No, I cannot give way; I must conclude.
In this short debate I have described the terms again. There is nothing new to be said about them. I do not think that much can be said by either side. One thing that can be resolved today and would be of wider interest outside is whether the Labour party's attitude has in some way changed towards the public ownership of the Rover Group. I have the pleasure of being shadowed by the great revisionist in the Labour party. I hope that he will not avoid the only interesting topic of this debate: is the Labour party still committed to nationalisation of the commanding heights of the economy? I hope that the hon. Member for Dagenham will not avoid the question as he did last time by arguing the industrial logic of the proposal. If people are interested in logic I ask them to choose between the judgment of Professor Roland Smith, Sir Raymond Lygo, Graham Day and the management of both these great companies and that of Labour politicians.
Has the Labour party yet acquired the courage to abandon the idea of state-owned manufacturing? If it has, now is the time to declare it. If it has decided to abandon the principle of nationalised manufacturing I hope that Opposition Members will give backing to a deal which is extremely good for the taxpayer, the company, the company's employees, the company's dealers and for everyone who wishes a good future for those dependent on the Rover Group.
7.46 pm
Mr. Bryan Gould: Opposition Members recognise that what is at stake in the issues that we are debating this evening is the survival of an indigenous British volume car manufacturer—indeed, the last indigenous volume car manufacturer.
We believe that the car industry is of great importance to our economy in terms of employment, overseas earnings, wealth creation and the whole hinterland of economic activity that depends on it. That is true not only of our economy but of all major advanced economies which have at the heart of their industrial capacity a powerful and successful car industry. It is significant—and perhaps in microcosm an indication of our industrial

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decline—that we are at the bottom of the list of the G7 countries in terms of car manufacture. The Minister looks somewhat puzzled. I can assure him that we have now been overtaken by Spain, which is not a G7 country.
For all those reasons, we are concerned to preserve an expanding and prosperous car industry. We approach the matter with great seriousness and a sense of responsibility. We are not going to make cheap party points from the Dispatch Box or engage in debates about various forms of ownership, although I shall attempt to answer some of the Minister's questions. We do not want by any statement, doubt or point that we make this evening to jeopardise what we believe is the very fragile future of the industry.
Given that that is our basic purpose, we are entitled to express to the Government our grave disquiet. I shall try to explain in detail our grave disquiet—which is not unknown to Conservative Members—at what the deal will mean for the future of the indigenous British volume car industry five years down the road.
The Minister asked me about our view of the industry and what we think should happen to it. Our view is quite clear. We believe that the stability that the Minister emphasised, which I agree is extremely important, would best be achieved by the present ownership of that industry. I shall be quite categorical. We believe that the onus is on the Minister and the Government to explain how the deal will improve the industry's prospects. I propose to give him some reasons for thinking that the deal will worsen those prospects. I have yet to begin to develop that argument, but I gladly give way.
Mr. Kenneth Clarke: If the hon. Gentleman acts on the reasonable expectation that the deal will go ahead and that the company will be transferred to British Aerospace, would it be the intention of a future Labour Government to renationalise the Rover Group?
Mr. Gould: The Chancellor of the Duchy of Lancaster has pointed to two major obstacles over which the deal has yet to climb—the EEC and British Aerospace shareholders. Therefore, we have yet to see whether the deal takes place. My purpose is to show that, far from the argument that the Chancellor advanced—that there is no alternative —there is indeed an alternative. That alternative is to maintain the status quo. Indeed, I would go further.
If we are really concerned about the future of the Rover Group and volume car manufacturing in this country under British ownership and control—this is in support of the point made by the Chancellor of the Duchy of Lancaster—we need the commitment of an owner who is willing to make the long-term investment that is required. We need an appreciation by the owner of the long-term importance of the industry to the British economy. We need pride of ownership. Those things have been missing in the hands of the Government, who have made it clear that all they are concerned about is getting shot of the industry as quickly as possible and on whatever terms they can scrabble together. That is an indictment of what the Government have done. We believe that the alternative that I have mentioned should have been opted for. The commitment of the present owner would guarantee the future of the industry.
What is missing from the Government's recent record as the owner of Rover and from the deal they now propose
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in order to get rid of Rover is a sense of strategy, a sense of the importance of the industry and a sense of determination to maintain the industry in at least its present form or, preferably, in an expanded form. That is missing from the analysis offered by the Chancellor. In the absence of a strategy, we are offered the dogma of privatisation. That simply will not do. It is not good enough.
Mr. Roger King: We have heard all this before. Here we go again. The last strategy the company had under a Labour Government was called the Ryder plan. That ended in the most appalling mess, from which it took years for the company to recover. Is the hon. Gentleman suggesting that we want a Ryder plan mark II, because that is what strategies mean?
Mr. Gould: I am glad that the hon. Gentleman thinks that he has heard our arguments before, because, with luck, the message may be getting through. I am suggesting that we need a strategy based on a commitment to make the necessary investment. For reasons which I shall elaborate, I do not believe that the present deal offers that commitment or a prospect of investment.
As I have said, we have the dogma of privatisation, which means that a buyer has to be found. There has to be a buyer on any terms. The Government have nailed their colours to the mast and made their intentions clear. Therefore, somewhere, a buyer has to be found. The Government know already that for political reasons that buyer has to be British, and along comes British Aerospace. It is certainly British and it is welcome on that account. We certainly do not cavil at the prospect of a British owner if we believe that the other criteria are met. However, the questions and doubts that arise must be settled. Nothing that has been said this evening has settled those doubts or gone any way towards doing so.
The first doubt that will occur to anybody can be summed up in what a trade unionist working at the Longbridge plants said to me yesterday. He said, "What does British Aerospace know about making cars?" That is a simple question, but it is at the heart of the argument. Put in a different way—
Mr. Roger King: What do the Government know about making cars?
Mr. Gould: The Government have installed the present management and provided, at least until now, the investment required. If the hon. Member for Birmingham, Northfield (Mr. King) will contain himself for a moment, he will discover that it is on that question that I believe British Aerospace will prove deficient.
The question, "What does British Aerospace know about making cars?", is the same question as that on which the Chancellor poured scorn a moment ago. It is the same as asking, "Where is the industrial logic?" That is the way the leader writers tend to put it, but it is the same question. How can it make sense to put those two companies together? It certainly looks good on a balance sheet. The assets mount encouragingly, employment looks rather better, and so on. But not a whit of strength has been added to Rover as a car manufacturer or to British Aerospace as a plane maker. All that has happened is that the two balance sheets have been put together. The truth is that building cars on a production line is different from

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the work patterns, production runs and scheduling required for manufacturing specialised products such as aircraft.
We have heard much talk about synergy. It is a wonderful word. It is likely to dazzle some of those who do not bother to look behind it. Synergy has been rejected as an argument in favour of the deal by all those whom the Chancellor failed to mention. All the experts, commentators, academics and those who know about the industry are agreed that there is virtually nothing in the synergy argument. Of course, at the margins, if one puts two engineering companies together, however disparate, one might find some slight benefits here and there.
However, I suspect that those who talk so glibly about synergy have been dazzled by the glossy television adverts by Saab. Those advertisements are very much in the tradition of the current Department of Trade and Industry, so it is no wonder that people are susceptible to them. Those advertisements have made great play of the idea of synergy. However, if one asks Saab what has been the reality of its experience, it will say that it has proved to be of little value. What little value it has experienced has been produced over 40 years or more. It has had remarkably little impact on its overall operation. Indeed, its connection with Scania, the truck maker, has been of much greater importance than its role as an aircraft manufacturer. When one looks at all the other supposed synergistic liaisons between car makers and plane makers, one discovers that in almost every case the object of the acquisition—usually made by the car maker, not the aircraft manufacturer—has been diversification, not synergy. Let us set aside synergy, which is just a nice word that is sometimes used to impress Chancellors of the Duchy of Lancaster.
It is sometimes said—indeed Professor Roland Smith has said this—that British Aerospace has expertise in marketing around the world which will be of great value to Rover. I wonder whether the dealers whom the Chancellor prayed in aid will be impressed by the odd foray that British Aerospace makes to far flung corners of the world where it enters into long drawn out negotiations for the sale of two or three specialised products, dealing with Governments and, often, military regimes. I do not believe that those dealers will think that that sort of experience and expertise will help to develop mass markets for standardised products or help to maintain effective dealer networks in Britain and around the world. That is a very different experience. I do not believe that any serious person, looking at the two operations, can truly expect that marketing will be one of the great strengths that British Aerospace will bring to the Rover Group.
It gives me no pleasure to say what I have to say, but I believe that we have to point it out in view of the glowing picture developed by the Chancellor. If British Aerospace is deficient in experience and expertise, what about the crucial commitment that it is likely to make to the long-term investment, without which Rover cannot develop the new model ranges that are required if it is to stay in business? Where is that commitment to come from? It cannot come from Rover itself.
Let me pay a tribute to Rover, not so much to Mr. Graham Day—he simply produced his figures by going for margins rather than market share—but to the work force. The work force deserves a great deal of credit for the improvement in the Rover Group's performance. The problem is that, even with its present performance—its
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brief surge into profitability—Rover, with 15 per cent. of a market that some believe may be close to its peak, cannot generate for itself the investment that it needs. It is too small. Almost all commentators accept that, if Rover is to stay in business as a volume car manufacturer, it needs the support of a larger, preferably car manufacturing, firm.
Mr. Roger King: A few moments ago the hon. Gentleman mentioned that he had been to Longbridge, or spoken to someone there. Had he visited and examined the plant, he would have seen the enormous amount of investment going into it, with new factories being converted to the latest high technology equipment and new engine plants. coming on stream in preparation for a new car. There is no shortage of investment. The company is generating investment from its present business.
Mr. Gould: For once I am delighted to have given way to the hon. Gentleman, as he made the point that I was about to develop. Of course, he is right. Great investment has taken place in Rover, but under whose auspices? Where has the money come from? It has been generated not by Rover sales and profits, but by the willingness of the present owners to invest. In other words, the taxpayer has made the investment, and it has been valuable and important.
How is this investment to be sustained? Not from the resources of Rover cast adrift by the taxpayer. Rover will not make the investment. Some other source must be found, not from the taxpayer but from somewhere else. That means that we must turn to British Aerospace. Unless the investment is made and products such as the Metro—the most outdated small car model on sale anywhere in the world—are moved out of the way and replaced by new models—I concede that some are in the pipeline—Rover's future is bleak.
Of course, it is true, as the hon. Member for Northfield pointed out—and this is the case for public ownership—that the investment has largely been made in the K series engine and the R8 and R6 models. However, it is also true that the launch costs for those models have yet to be found. New investment will be required if the R8 is not to be—as I fear it may well be—the last car produced in Britain that can properly be regarded as a British car. If we are to avoid that outcome—it is an evident danger staring us in the face—capital must be produced and invested.
We look in vain for such a commitment from British Aerospace. British Aerospace is not in a shape to generate the sort of investment resources that will be required. It is on record as saying that at an exchange rate of more than $1·70 it cannot remain profitable. We know what the Prime Minister thinks of that sort of special pleading from industrialists. How dismissive and contemptuous she is of those who must operate in the real economy. But British Aerospace is in difficulties with the present exchange rate. It is making a huge loss on Airbus. It cannot easily sell civil aircraft at a profit with the exchange rate above $1·70. So British Aerospace is not now or in the foreseeable future likely to generate the cash that it needs to make this investment.
It is worth remembering that British Aerospace was itself the prospective victim of a takeover bid not so long ago. There may well be clever men in the City on the board of British Aerospace who reckon that, to ward off another

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takeover bid, it might not be a bad idea to surround themselves with the protection of Rover Group, which might deter possible predators.
Far from British Aerospace being a source of investment capital, we believe there are real reasons for fearing that its attitude to Rover will be the reverse—that it intends to take money out. That is what the company did when it acquired the royal ordnance factories last year —profitable factories that helped to keep British Aerospace in profit. That was a good move. Perhaps for the time being, or even for five years—there may be real significance in that period—the calculation is that British Aerospace can do with Rover what it has been doing with the royal ordnance factories.
Far from being anxious to invest its non-existent hundreds of millions of pounds in British industry, British Aerospace has been cutting back. It has been reducing its work force, closing down its sites and plants and making it clear that it is likely to move substantial production abroad. Some reports say that £1 billion of Airbus production may well be moved to the United States because of the exchange rate. The Chancellor lauded the prospects of the British components industry. If British Aerospace carries through its plants to move production of Airbus to the United States, I fear that there is a grim message in that for the British components industry. The Rover Group and its predecessors have been faithful customers of the British components industry, on which the livelihoods of so many people who are represented by Conservative Members depend. The message is grim, inspired by the new ruthlessness that British Aerospace is likely to bring to the car industry, as it did to the aircraft manufacturing industry.
The danger is that British Aerospace will look on Rover, for the reasons that the hon. Member for Northfield gave, as a company that has already made a valuable investment. That investment is likely to pay off, at least in cash terms, over the next few years. Little will be required for a period. British Aerospace has orders but no cash, because no one will pay for those aircraft for several years to come, and it desperately needs things to sell. That is why it wanted the royal ordnance factories and why it wants Rover. At least Rover has cars in showrooms which can be sold to bring in some cash.
The danger is not only that British Aerospace might want to regard Rover as a sort of cash cow for a period; it might also intend to treat some of the Rover assets—particularly its sites—in the same way as it did its own. It is significant that British Aerospace tended to close sites in the south and concentrate its operations in the north. It has sold the sites with the greatest development value—
Mr. Hal Miller: That is regional policy.
Mr. Gould: If that is regional policy, we now understand more clearly that it is about destroying jobs and capacity.
If British Aerospace seriously tackles the task of making volume cars; the one site that looks at risk is the Cowley south site, which happens to be of great potential development value. It is perhaps not an accident that British Aerospace, like so much of the rest of British industry, has found property development rather more to its liking than manufacturing the basic industrial products
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that brought it into existence. It is no accident that British Aerospace has had a profitable series of joint ventures with Trafalgar House, the property developer, which will have an eye on some of these sites.
The Chancellor fairly conceded that the relationship with Honda was of great importance to the future of Rover. The need for that relationship is unaffected by the link with British Aerospace. The Chancellor's agreement to that suggests the very point that I am making—that the link with British Aerospace does nothing to strengthen Rover as a car manufacturer. It still depends on the link with Honda. If, for any reason, Honda withdrew, British Aerospace would not have the expertise to make good that loss. Honda's attitude is of great importance.
The Chancellor has from time to time given slightly differing accounts of when Honda was first told about this deal, how closely it was consulted and what its current attitude is. He has revealed that the Secretary of State has been to Japan and talked to Honda. He brought back some general encouraging noises, but we have had little by way of assurance or detail. I hope that the Parliamentary Under-Secretary will remedy those omissions later this evening. We want to know more about what Honda has said, what intentions it has expressed, what assurances it has given and what its attitude to the change is. As the Chancellor rightly said, the one thing that Honda will want is stability of ownership and management. That is another powerful argument for maintaining the status quo of public ownership.
So much for what the deal offers to Rover. I wish that I could say that it offers a rosy future, but that cannot be said. What about British Aerospace? It is not in the healthiest of conditions. It has been made extremely unprofitable for the time being by the rise in the exchange rate. Its proposed link with Rover has already been criticised in today's newspapers by one of its potential European partners, Aerospatiale. The French have warned—I take no responsibility for the statement but simply report it to the House—that this sort of distraction may prove an obstacle to British Aerospace in developing the sort of European co-operation as aeroplane makers that is so essential if we are to withstand competition.
Of course, the deal offers British Aerospace total assets which will put it ahead of Lockheed, so it looks the part it— looks like a major industrial company. As I have argued already, as neither Rover nor British Aerospace is strengthened by the deal—indeed, they are conceivably weakened—looking the part will not be good enough. There is a great danger, as surely everyone must concede, that British Aerospace will get into the age old practice of cross-subsidisation. That has bedevilled the British car industry, especially British Motor Holdings and British Leyland, over a long period. The problems of British Motor Holdings dragged down Leyland Motors. We have seen it all before. There must be a fear that it will happen once again.
Rover, too, although briefly in profit, will be affected by rising exchange rates. It is not immune from the market. It will find difficulty in maintaining its sales and holding on to its market share, or at least holding on to its market share and to margins, with an exchange rate which is soaring against European currencies. The prospects of Rover staying in profit for more than three, four or five years without the investment that is required are grim. That is why we come to the detail of the deal and the financial arrangements that have been made.

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The Chancellor of the Duchy of Lancaster can argue for as long as he wishes about what this or that sum represents, but the truth is that, to persuade British Aerospace—and if all other bidders were discouraged—to take Rover off their hands, the Government were prepared to pay £650 million. The sum of £800 million of taxpayers' money—a cash injection, as the Minister so charmingly put it—was handed over to British Aerospace. The reason was that, unless Professor Roland Smith could be guaranteed by that sum that he would not lose in the next three or four years, he would not be able to sell the deal to his shareholders. Even as things stand, he may have great difficulty in convincing them that this is a wise move.
If Professor Roland Smith has insisted on this £800 million cash injection as the price of his doing a deal and if it is calculated—as I understand the Minister has done— that that will see the deal through the first five years, the logic of that approach is extremely worrying to those who believe that the deal guarantees any sort of future to Rover. Clearly, after five years, when the cash has run out, without the investment having been made, it is all too obvious what will happen to the bits of Rover that British Aerospace no longer wants. The Government know that and simply could not care less.
That is why it is important we should know what the EEC is likely to say. If the Minister's view is right and the EEC can he persuaded that this £800 million is entirely to do with writing off debts and so on, however calculated, Professor Roland Smith has an outside chance, according to his calculations, of selling the deal to his shareholders. But the EEC may unpick the deal and not accept all that the Minister has said. The EEC may say, "Just a moment. Rover's known borrowings amount to about £560 million. Even if you wanted to cover them—current borrowings as opposed to writing off accumulated losses—what is that extra £240 million for?" If the EEC decides that that is not a cash injection but a cash handout to sweeten the deal to make it possible, the deal starts to look not only in jeopardy from the Commission's view but a good deal less attractive to British Aerospace shareholders.
That is why, without any wish to jeopardise the deal, we need to know what the Chancellor of the Duchy of Lancaster thinks the chances are. We know the arguments that he will advance, but there is some evidence that the Commission in Brussels is unlikely to accept them. If the arguments are not accepted and £240 million, or perhaps some smaller sum, is removed from the £800 million, the question arises as to whether the deal looks sufficiently attractive to be able to sell it to British Aerospace shareholders, given that the Government have already committed the shareholders and themselves to a five-year guarantee—as I understand it, a legally binding guarantee in contract—that no disposal of any substantial part of Rover will be made over that period. We need to know what is likely to happen, because it is crucial.
We have not approached the debate in the sense of trying to destroy what the Government think they have achieved. We should like to see—indeed, we are desperate to see—a viable and prosperous future for the industry. We have felt contrained to argue that the deal does not guarantee that future. There are reasons for fearing that the future as a consequence of the deal is extremely truncated. We do not believe that the Government have had adequate assurances or guarantees. We do not believe that the Government have thought for a moment about what they will do if the EEC, some other agency or British
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Aerospace shareholders at some point say that the deal is not to go through. What then is the Government's position? They have ruled out other bidders. Indeed, they say that there are no other bidders. They have committed themselves, for political and ideological reasons, to private ownership as opposed to maintaining public ownership. It is the Government who have decided to play politics with this industry and those who work in it. We are fearful for the industry's future and we hold the Government responsible for whatever happens.
Several Hon. Members rose—
Mr. Deputy Speaker (Sir Paul Dean): Order. I remind the House that time is limited and that many hon. Members wish to speak.
8.17 pm
Mr. Roger King: I listened with great interest to the hon. Member for Dagenham (Mr. Gould). I congratulate him on his guarded comments, and we shall study with great interest what he said. One thing which has come across loud and clear is that he is a gentleman of very little faith. Conservative Members have great faith in what this merger will bring to the last remnant of the British motor industry.
The hon. Member for Dagenham said that he would like to see a plan and strategy for the development of the Rover Group. We have had many plants and strategies over the years, going back to the white hot heat of technology during the 1960s. We have brought together all the last outposts of the British motor industry in one great unit in an attempt to take on the world competition and breathe more life into the industry. We have seen progressively over the past 15 or 20 years that that has counted for little. New leaders of the industry have come and gone and strategies and plants have been cast to the wind as they have all been seen to have failed. I do not think that we need a plan concocted by Whitehall or by any political party. We need good, sound, solid management with the resources capable of continuing the progress on which this country has already embarked.
We have been asked, what do British Aerospace know about making cars? It is not necessary for everyone to know the detailed work of making cars, any more than it is necessary for many companies to say that they know exactly what they are involved with. Vickers, which is a very successful company, manufactures Rolls-Royce cars. One would think that Vickers would not know much about making photographic plates, yet it makes them very successfully. One would think that Vickers would not know very much about pharmaceutical equipment, yet it manufactures pharmaceutical equipment of a high quality and is very successful in the market. It is possible for companies such as Vickers to run other companies successfully because they know about delegating management on the spot, not management in Whitehall being dictated by a political party. Management is left to get on with the job.
Sir Michael Edwardes, who was chairman of BL Cars, and Graham Day, who is chairman of the Rover Group, exercised responsibility and told the management to control and develop on their own as far as they could, and they were successful in so doing.
In some ways, I am sad that we are debating the future of the Rover Group. Once again, its employees see that

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their future is being debated in Parliament. Over the years we have had more debates about the future of this part of the motor industry than about any other part of British industry.
The last thing that we should be doing tonight is debating the future of the Rover Group because talks between the Rover Group, British Aerospace and the EEC are at a delicate stage. It would be better for the House to say nothing, to allow the negotiations to continue and then to debate the issues once we knew what decisions had been made.
Mr. Nellist: Is the hon. Gentleman aware that a merger between GEC and Plessey could this week result in the loss of 4,000 jobs in Coventry, South-East? Arnold Weinstock, who is the managing director of GEC, has not come to the House with a Bill to sack those workers. There has been no debate in the House about that matter. Should not the future of hundreds of thousands of car workers in the west midlands, who rely on the publicly owned Rover Group for their jobs, be debated in the House? What is this place for if it is not to debate the jobs and future of workers in the car industry?
Mr. King: I am glad that the hon. Gentleman recognises that there are hundreds of thousands of workers in the industry. He describes the car industry as though nobody works in it and it is an industrial desert. I cannot comment on the talks between GEC and Plessey.
We have debated the future of the Rover Group on many occasions. Negotiations about the Rover Group are at a delicate stage, and we should allow them to be completed before debating the matter in detail. We are talking about a merger that will not result in a loss of jobs or a cutback in production but will bring much benefit to the Rover Group and British Aerospace. A formidable industrial combine will be created that will be able to take on the rest of the world.
The Labour party's message is that it loathes privatisation, particularly this deal. Some people in the EEC may be encouraged by Labour Members' words. They may say, "If the British Parliament is not speaking with one voice, perhaps we should consider the deal closely." Obviously there are parts of the deal that those people can latch on to and criticise us about. If the Commission gets tough and demands substantial changes that are unacceptable to British Aerospace, where will that leave the Rover Group? We know that the Labour party would like it to remain a nationalised company, but that is clearly a non-starter. We have seen in Socialist France and almost every developed western country that Government's role is to get out of manufacturing and to get its sticky fingers out of matters that are best done in the private sector.
Mr. Austin Mitchell: Tell that to Renault.
Mr. King: The French Government intend to privatise Renault, and they should be congratulated on that. Why is it good for the Socialist Government of France to privatise Renault but wrong for our Government to privatise the Rover Group?
The consequence of a breakdown in negotiations for Rover dealers could be quite substantial. Every time that
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we debate the future of the Rover Group in the House there is a registered downturn in its market the following month. Confidence in the company must be built up, and it has developed strongly not only in this country but in Europe and the rest of the world. The fact that every month or so we debate the Rover Group deters customers from buying its products.
My constituents have worked hard to achieve success for the Rover Group. Its model range is good and is well received in export markets. The Government have patiently nursed the Rover Group through an enormous setback in the market place and back to considerable health.
The merger with British Aerospace represents an exciting way forward. The realistic terms that have been negotiated—I admit that large sums of taxpayers' money have been written off—merely confirm the reality of the company's position. There is no question of us ever seeing that money return, at least in the short term, although as the company's profits increase the taxpayer will receive his fair share. The large sums that were written off had been invested to ensure that the Rover Group remained a major car manufacturing company. The Rover Group has been essential to the west midlands economy and the plethora of component manufacturing industries that follow in its trail.
The debate is timely because it gives us an opportunity to remind the country just how far the company has come. The Rover Group has a future only because the Government have remained steadfast and resolute and dragged its affairs successfully into a demanding and challenging world. It is ably led by managers of a high quality and calibre.
The Labour party has much to answer for, given its track record in the motor industry. I mentioned what happened in the 1960s when the Government of Lord Wilson helped to create the British Motor Holdings group. In those days the company had 48 factories and employed 190,000 people. Each employee produced only 5·6 cars per year; its productivity record was not good. Harold Wilson knew the reality of the matter and when BMC shop stewards descended on the 1966 Labour party conference to protest about redundancies he was asked whether a deputation of six of them could address him at his Brighton hotel. He agreed and 12 of them entered the hotel. Harold Wilson said, "That is what is wrong with the British motor industry—it always needs 12 men to do what six could do."
The industry was faced with the challenge of dragging itself into the latter part of the 20th century and to match Japanese and European competition. The conflict between management and employees was never ending. In 1969–70, 5 million man hours were lost through disputes. In 1971–72, the figure was 10 million; the year after that it was 7·4 million; and in 1973–74 it was 9·6 million. That continued until the Conservative Government took office and brought some law and order to industrial relations, which was the catalyst necessary to maintain the viability of much of our industry, particularly the British motor industry. It heralded the end of Red Robbo and his sort, who used to call out the work force at the drop of a hat, thus disrupting production and sales throughout the world.
No Labour Government could tackle overmanning and poor productivity, preside over closures, rationalisation and redundancies because their paymasters would never

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allow it. The survival of British Leyland depended on unpalatable decisions being taken. If we were to maintain a British car industry, those choices had to be made. The Conservative Government, using the support and skills of Sir Michael Edwardes, ensured that a large portion of the British motor industry survived. The choices were painful and tragic for those who were affected. Labour relations were tackled and the troublemakers finally cast to the wind.
Despite these great changes, the company still had a long way to go, and losses were still being incurred. Rumours abounded that the Government were anxious to ensure a sell-off, but, despite the discussions taking place, the business remained substantially intact until Graham Day took over in 1986. His policy of business disposal has been absolutely right. Jaguar had shown the way in 1984 —and what an outstanding success that company has been. It is employing more people than ever before, for higher wages, and turning out more products, bringing wealth to Coventry, to the country and to the people who are employed in that business—an outstanding achievement.
Mr. Nellist: Is the hon. Gentleman aware that, towards the end of last year, in a six-week period, 17 shop floor workers at Jaguar died from stress-related diseases, including strokes, and since then the company has demanded an extra 92 cars per week off the track? is that the benchmark of the hon. Gentleman's productivity?
Mr. King: The facts speak for themselves. If they are to survive, the productivity and performance of companies must be of a high standard. The output of Jaguar is still nowhere near the level of some of the European factories, which seem to manage perfectly well. I cannot comment on the physical standards of shop stewards and employees. However, the regular hours that they have been putting in and the good money that they have been earning has been reflected by a substantial upturn in the economy of the west midlands.
The Rover Group has been successful in privatising Unipart, Leyland Bus, Leyland Trucks and Freight Rover, Istel and smaller component businesses, and all are doing well. That is why I welcome the British Aerospace-Rover proposals. Along with my hon. Friend the Member for Bromsgrove (Mr. Miller), I expressed reservations initially about the early proposals, and asked whether there were any alternatives. Along with my hon. Friend, I went to see Graham Day. After our private talks with him, we were optimistic about the outcome and sure about the future of the business.
Rover and British Aerospace will be a formidable partnership. The merger is popular with the work force, just as the merger between Freight Rover and DAF was. When that announcement was made, Freight Rover workers were pleasantly surprised about their future, going into the Leyland-DAF combine, and the evidence shows that they were right. The factory is engaged in substantial expansion and there is talk of the work force being doubled in size. We look forward to that successful expansion.
The Rover-British Aerospace deal takes away the immediate worry of who will own what, and leaves everyone to get on with what they do best—building good quality vehicles. Labour Members would not prattle on about investment and the future so much if they could see
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the enormous investment taking place in the company with new engines, gearboxes and cars produced to the highest technology and by a skilled work force, determined to give themselves and their families a secure future. These investments are taking place under the financial regime of the business. It has not used Government money for the past four years. It is financing its own investment from its own earnings. It is cautious about its investment programme—as it is about all that it is achieving—which was set out by the Rover Group board and approved by the Government as part of the corporate plan. It is sustainable and it means that the Rover Group can maintain its viability as a separate car company, although it will be better off under the wing of British Aerospace.
Throughout the region car workers can take out mortgages and other such commitments because their income will be on a regular day-to-day basis. Productivity and quality are setting new standards and are nearly equal to those of the best of our competitors. Much of that has been learnt by the company in its dealings with Honda. Honda has taught the business to produce cars of a high quality, and that is reflected in many of its products. In a recent back-to-back test conducted for the April edition of Company Car, which is available in the Library, four popular fleet cars were tested—the Montego, the Sierra Sapphire, the Cavalier and the Peugeot 405, which is made in Coventry and is an outstanding vehicle. This was the conclusion:
"in overall assessment there is no escaping the conclusion that the Montego offers more than its rivals. It is not quite as fast as the Peugeot 405 manages to be, but it is more economical, offers much better accommodation … and is generally better equipped. As to the Cavalier and Sierra, they are both excellent fleet cars, but I find no grounds for changing the conclusion reached last year, that they are both beaten by he Montego. The Peugeot seems to drop neatly into second place".
The company is making outstanding products and will go on doing so as new products come forward.
My hon. Friend the Member for Solihull (Mr. Taylor),who by convention cannot speak in this debate, has been a staunch supporter of Land Rover and has played a leading part in ensuring the continuing viability of that company. What an outstanding future it will have under British Aerospace, as British Aerospace's military contacts throughout the world open new opportunities for the sale of Land Rover's military derived vehicles. That is an exciting prospect, and I know that my hon. Friend looks forward to the benefits of this merger for his constituents.
There is no doubt that all those connected with Rover, especially in the component industry, owe a huge debt of gratitude to the Government. With its new products, its dedicated work force and its new partner of British Aerospace, the future looks bright. Let us send out a clear signal to the European Commission tonight. It should not stand in the way of this deal, but should let it go through intact, as we have proposed., and it will play a substantial part in the continuing revitalisation of our industrial capacity and the resuscitation of our car industry.
8.36 pm
Mr. Terry Davis: I want the Rover Group to succeed, not least because thousands of my constituents depend on the Rover Group for their jobs and wages, but the Government's sale, or gift, of the Rover Group to British Aerospace is a bad deal for the taxpayer, for the people who work for the Rover Group and for the

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thousands of people who work for dealers and components manufacturers in the west midlands and elsewhere, and who depend on the success of the Rover Group for their future livelihood.
The hon. Member for Birmingham, Northfield (Mr. King) missed the crucial point, which is not that British Aerospace knows nothing about making cars but that it knows nothing about selling cars. Indeed, the hon. Gentleman made hardly any reference to the sales and marketing problems of the Rover Group. He talked at length about the production of cars but he said nothing about selling cars. The biggest weakness of British Leyland, then Leyland Cars and now the Rover Group, has always been its sales and marketing department. Its biggest problem has always been its inability to design and sell cars.
That is the first criticism—that the deal will put the Rover Group under the control of a company that is in a different market. As my hon. Friend the Member for Dagenham (Mr. Gould) explained, people who sell planes are selling to a few customers with high-value orders with a great deal of Government involvement—the sales may even be made to Governments. People selling cars are selling them through dealers and retailers to individual customers and to the fleet market which is still a relatively large number of customers compared with the people buying planes. The markets are different, and that is why this is a bad arrangement.
The second problem is that of finance for investment in the future. A year ago, British Aerospace needed the Government to help it with money to finance its contribution to the Airbus project. To his shame, the Minister suggested that Labour critics of this deal were saying that the Government should not have helped British Aerospace with the Airbus project. He should know that that is not true. My hon. Friends and I were constantly pressing the Government to help British Aerospace by making available the money for our contribution to the Airbus project, as other Governments are doing for their companies. We did not criticise that. The Minister has deliberately missed the point, which is that if British Aerospace needed Government help for that contribution, how can it finance future model development at the Rover Group? Indeed, how can it finance the acquisition of the Rover Group? The answer is that it is not buying the Rover Group because the company is not being sold—it is being given to British Aerospace. That is the truth behind the arrangements that the Government have concluded with British Aerospace.
This is not a good deal for the taxpayer who has invested in the Rover Group over the years and is now beginning to see a return on that investment. The future profits of the Rover Group will go not to the taxpayer but to British Aerospace.
British Aerospace has an immediate cash flow problem over the next few years before the sales of planes generate the money that it needs. British Aerospace needs the Rover Group as it needed Royal Ordnance to provide the money for its day-to-day cash needs for the next few years. That is what the deal is about.
What will happen after those five years—after BAe has achieved that short-term cash flow—to the investment that needs to take place in new models at Longbridge and
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elsewhere? We fear that the answer is that British Aerospace will not be able to afford investment for future new models. The cash cow will dry up and then British Aerospace will want to close down plants and dispose of assets. In fact, British Aerospace may not even wait five years; it has a record of closing down factories—not only its own factory at Weybridge but the Royal Ordnance factory at Enfield. The policy of British Aerospace is to generate cash by capital receipts as a result of closing factories and selling prime sites.
Not only Cowley will be at risk. Cowley and Longbridge are not the only factories in the Rover Group. Many other smaller sites still operate in Birmingham and the west midlands. It is only a few years since the Solihull factory was closed down, and what happened once can happen again. Other smaller factories may well be closed and sold off to generate cash to tide British Aerospace over its short-term cash problems.
The Minister has not explained, and cannot explain, how the arrangement between British Aerospace and the Rover Group will strengthen Rover as a volume car producer. In the immediate future, Honda will be more important than British Aerospace to the Rover Group. The irony is that if the worst happens, we may find that not only have the Japanese acquired the Rover Group but they have acquired British Aerospace through the back door as well.
The real reason why the Government are so anxious to get rid of the Rover Group is that it is becoming profitable. The hon. Member for Northfield made our case for us when he told us about the investment that had taken place and how, thanks to the hard work of its employees, the Rover Group was beginning to make a profit. That is the point. The Government cannot stand profitable publicly owned industries. That is what it is all about. The Government want to get rid of profitable nationalised industries because they do not fit its dogmatic approach to industry.
The point is not that the companies that have already been privatised are doing well because they have been privatised. They are not doing well because they were sold; they were sold because they were going to do well. It is precisely because companies such as Jaguar and Istel and the others were becoming profitable that they were sold by the Government. Because the Government could not sell Rover Group, they are about to give it away.
The hon. Member for Northfield referred to the 1960s. It is important to emphasise that the Rover Group was not taken into public ownership as a result of a Labour Government's hankering to tinker with manufacturing industry but because the company had failed under private ownership and had become virtually bankrupt after four years of Conservative Government—a point carefully glossed over by Conservative Members. At the end of four years of Conservative Government, the privately owned British Leyland had to be rescued by the Labour Government because the country could not afford to allow it to be closed. Thousands of people depended on what was then British Leyland for their livelihood. Thousands more depended on it for their employment at component manufacturers and hundreds of privately owned dealerships depended on it for employment and profits. That is why we had to take British Leyland into public ownership.
We need a continuing long-term commitment. The Minister was right to say that uncertainty and instability damage our prospects of selling cars. But who created the

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uncertainty and the instability? The Government created them by their own 1983 manifesto commitment to sell or get rid of Rover Group. We need a continuing long-term commitment from the present owners—the Government, on behalf of the taxpayers—to the group and an equal commitment from the people who work there.
I thought it very significant that, while the Minister was lavish in his praise for Graham Day and made passing laudatory references to the present management, he could not find it in him to say a word of congratulation or appreciation to those who have worked for the Rover Group not for two years but for 22 years or longer. Virtually the only people left, as most of the newcomers have been sacked, are the hundreds of people who have worked at the Rover Group all their working lives. I should have thought that they deserved some congratulations on their hard work through the bad years as well as the good years to keep the Rover Group going.
The Minister said that the employees were delighted by his arrangement. He said that the majority of those who worked at the Rover Group were delighted by the takeover by British Aerospace. How can he say that? I do not know how he can have reached that conclusion. To the best of my knowledge, there has been no ballot on the proposals and no attempt to take soundings of employees. There was no discussion with the trade unions that represent the work force. The Government did not even adopt the latest Land Rover management technique of using an outside polling organisation to phone employees' ex-directory numbers, intrude on their privacy and seek their opinion. How can the Minister have reached that conclusion? He is making it up, just as he made up most of his comments about the Rover Group.
We need a commitment from the Government to keep the Rover Group in public ownership and an equal commitment, which has been forthcoming over 20 years or more, from the people who work at the Rover Group. If we have that, we shall continue to have success and the taxpayer will then enjoy the profits from the investment that has been made in the past.
8.46 pm
Mr. Hal Miller: My old and valued opponent, the hon. Member for Birmingham, Hodge Hill (Mr. Davis), has been going through the routine again. He gave exactly the same song and dance act on television the night that the Leyland-DAF deal was announced. There were the workers in his constituency being interviewed about what they thought of the deal. They were welcoming it while the hon. Gentleman forecast doom and gloom. He conveniently forgot to mention that while they were on strike the Land Rover workers welcomed the British Aerospace deal. Opposition Members never consult the workers. They blather on about them but they never bother to find out what they think. Instead, they pursue their own ends.
I am not surprised that the Opposition have recoiled from their initial reaction to the announcement of the deal. They had to ask for a debate because they knew they had made a botch of it. Now they have had time to reflect and are beginning to jabber for the first time about the need for stability in the company. Having made a ritual obeisance, they then go all out to destroy its fragility.
My hon. Friend the Member for Birmingham, Northfield (Mr. King) was right to say that every time we
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have a debate on the matter a new question mark appears. That is one very good reason for getting into privatisation —to get away from public discussion of the company's affairs, which can be so damaging.
Opposition Members put up a number of Aunt Sally s, which they then proceeded to destroy. They bore no relation to my right hon. and learned Friend's speech. They were imaginings designed to prove the Opposition's case that all would be well if the world could stand still and remained in public ownership. Of course, we have not had the form of that public ownership defined. We do not know whether it is social ownership or a new form of ownership. The revisionist hon. Member for Dagenham (Mr. Gould) was remarkably coy on the subject. No doubt the hon. Member for Great Grimsby (Mr. Mitchell) will give us the revealed truth—the tablets of the Old Testament. Perhaps a new testament is being hatched by Opposition Members.
Mr. Austin Mitchell: It will be the Book of Revelations when I speak, brother.
Mr. Miller: The hon. Gentleman's only connection with the car industry lies in his christian name.
Let me return to the background. It is important to bear in mind that, thanks to the Government's policies and the philosophy that underlies them, our motor industry is beginning to recover. It is important to recall that production in the United Kingdom is likely to rise this year to 1·25 million vehicles, of which approximately 350,000 will be exports.
Some Opposition Members questioned the increase in our car exports. That increase has been solid, and it has particularly contributed to the recovery of the Rover Group. Of the 1·25 million vehicles produced, the Rover Group accounts for 600,000. Of those 600,000, approximately a third are accounted for by the Metro— the only car produced by the Rover Group that is in the top-selling six or seven vehicles. Therefore, that car is crucial to the 1,000 dealers and many hundreds of suppliers. In that context it is important to mention that there are about 2,000 components suppliers in the United Kingdom motor industry, but only 60 of them have a turnover that exceeds more than £10 million a year. The motor industry is fragmented, but it is important to many hon. Gentlemen and their constituents.
I wish to explore the flexibility that my right hon. and learned Friend announced—I believe for the first time—in the operation of the condition on the disposal of a substantial part of the car-making asset. That flexibility is important, and I welcome what I detect as a forward move on the part of my right hon. and learned Friend. I have always argued, right back to the balmy days recalled so fondly by the hon. Member for Hodge Hill—the clays of the Ryder plan and nationalization—that the Rover Group needed to collaborate with other manufacturers. Indeed, that collaboration already takes place with Honda, Peugeot and Volkswagen. I believe that such co-operation should be extended if we are to manufacture a full model range. I hope that the condition of disposal will not prevent collaboration with another manufacturer, including a possible share particiption.
Once again, the Opposition talk about investment as if mere quantum investment is sufficient to produce the results that we are seeking. I believe that it is easy to place too much reliance on technology and consider it a

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short-cut to quality, productivity, output and, in some cases, a means of bypassing responsibility for labour problems.
I well recall sitting in front of Mr. Toyoda in Toyota city. He said, "Welcome. We are happy to show you around our factory. Let me give you a word of warning, however. You will not find any plants here as advanced as that in Longbridge." My goodness, that was true. Nevertheless, productivity and profitability were much higher in that company. Exactly the same was said to me, in slightly different terms, by the managing director of a Japanese shipyard that I visited. He said, "I believe that your yards have too many computers. You have become too inflexible. You have gone too far down that road when you should have been developing communications with the work force, proper preparation of the work and proper presentation of it to the workers so that they can accomplish their target." We should not be misled by the parrot cries of the Opposition who claim that it is just a question of more and more investment and that only the state can guarantee that investment. All Opposition Members say the same thing.
The Opposition believe that it would be lovely if the world stood still and we could all stay as we were. They are the original Conservatives. They are unable to contemplate change and unwilling to give effect to it.
Let us examine the record of public ownership. I believe that the hon. Member for Hodge Hill was rather selective because he overlooked the role that was played by his right hon. Friend the Member for Chesterfield (Mr. Benn) who, in 1968, put the plan together with Harold Wilson. Public ownership has been no protection against low wages. After nationalisation, the wages of car workers, in comparison with other occupations, dropped from the top of the league to near the bottom. The Opposition do not often think about the customer and nationalisation. It did not protect the customer from poor quality or rising prices. We sat up all night discussing the prices and incomes policy introduced by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). The car makers put up their prices every quarter, and a fat lot of good that was. Nationalisation offered no guarantee to suppliers, designers or dealers of a market of parentage or of supply. Nationalisation was no basis for exports or strategy. As my hon. Friend the Member for Northfield has said, there was no guarantee that the Ryder plan would be fulfilled.
It is for good reason that it has been the policy of the Rover hoard, as well as of the Government, to return the firm to private ownership. The Labour party always wants to keep its fingers on; it always wants some sort of control. It does not tell us what sort of ownership or what sort of management it has in mind. Would we see a return to the co-operative form of management? Would we go back to the Triumph Motor Cycle company, which was a co-operative venture? Would we see the resurrection of Kirby Engineering—another venture of the right hon. Member for Chesterfield? The Labour party is reluctant to yield control. In some ways it resembles civil servants. As I was a civil servant, I am reluctant to make that comparison. Certainly, the Labour party and civil servants share the same inability to distinguish, on occasion, between capital and revenue.
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What I object to most of all is the false distinction that the Opposition continually try to make between capital and labour—between workers and managers—as if everyone was not involved in the success of an enterprise or as if managers do not work. They are myths from Labour's past; they are bogy men paraded in front of us. They are an attempt to frighten the workers into the belief that their futures will be at stake if they are allowed, for once, to acquire a shareholding in their companies. That is what is at issue. The Labour party does not like the idea that workers should have real power of ownership which is not exercised by the Opposition.
The Opposition talk about worker representation on the board. Do we seriously imagine—as my hon. Friend the Member for Northfield has said—that we would have Red Robbo on the board? Would that be in the best interests of the workers, customers or suppliers?
We must conclude that, thanks to the policy followed by the Government, the timing of this deal is right. Our policies have made it possible; our underlying philosophy has made it inevitable. Commercial decisions must be made commercially because that is the only way in which we can match competition.
The Opposition have nothing to offer—neither the old nostrums nor the new panaceas that they carefully left unelaborated. With them, it is jam tomorrow. With the Conservative party, it is power and shares to the workers today.
Several Hon. Members rose—
Mr. Deputy Speaker (Mr. Harold Walker): Order. This is a very short debate and if every Member who wishes to take part is to have the chance of speaking speeches must be short.
8.59 pm
Mr. Matthew Taylor: I have listened with some disillusionment to the debate. I thought that sterile toing and froing between nationalisation and privatisation had been written into the history books.
The Minister had to start with a sterile description of the benefits of privatisation. I suppose that that would be what the hon. Member for Bromsgrove (Mr. Miller) would describe as one of the new panaceas. The examples that the Minister gave showed the turnround which has happened while the company has been publicly owned. That does not mean that privatisations are wrong. It means that the company need not be privatised for there to be a turnround.
Equally, we have heard the Labour party say that the company should remain nationalised. It does not follow that there is a benefit from that. Many of the workers and consumers who obtain their products from the nationalised sector would hardly see that as being the case. Equally, there is nothing intrinsically wrong with it. When it is appropriate, the state can help to turn round an industry. Indeed, the Government have been reaping the benefit of their ability to do that. They cannot deny that.
Let me nail my colours firmly to the mast. I believe that it is important to consider the long-term viability of the Rover Group, its engineering integrity, its ability in research and development and, in particular, its ability not just as an assembler—such as Peugeot and Nissan—but as an integrated designer and builder of motor cars from the bottom up throughout the range of cars. It is important,

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not only because of the nationalism associated with the motor industry, but because of the jobs and the engineering ability which could be lost. The records show that when we lose that ability and that integrity, they do not come back. We are not looking suddenly to plough back into mainstream motor cycle building. As has been said, we lose it for ever, if we lose it at all.
Any deal that involves the strengthening of the position of the Rover Group, and guarantees that it will remain at its current position or, preferably, move forward, would of course be welcomed by hon. Members on both sides of the House, although some hon. Members may be more up front than others. In our hearts, we know that we are debating how to ensure the integrity of the group. The essential question is addressed somewhat inadequately, judging by the way the debate has gone: will the British Aerospace link-up achieve what the Government say it will achieve and Opposition Members say it will not?
The question mark that is hanging over that matter was well stated by the Financial Times. That is hardly a Socialist rag, but nor is it just crawling to the Government. It is an independent voice in the business sector, writing largely for business men. It said:
"The basis on which the Government has chosen to negotiate appears more designed to save political face than to protect the taxpayer's interest."
That is what the Financial Times describes as the real objection. That is the basis on which the debate is taking place.
The more one learns about the deal, the more remarkable it appears. Consider Lord Bruce-Gardyne, who is hardly a critic of the Government's comments. When the announcement was originally made, Lord Bruce-Gardyne, in another place, called it "Golden giveaway terms." That is not echoed by Government Back-Bench Members on this occasion. That is a comment of a strong supporter of the Government, especially as regards his business and monetarist views of the economy. That rather contrasts with the view of the Secretary of State for Trade and Industry that it is the deal of the decade for the Government. It is difficult to see that that is the case.
When one looks at Rover's accounts and adds together the net asset value and the giveaway of £800 million—the write-off of large sums of taxpayers' money—it is clear that British Aerospace is getting a bargain. It is being paid to take the company off the Government's hands. That is the truth of the spectacular deal that it has made with the Government. It means that the Government have valued Rover's shares at only 2·7p a shot, whereas the market values the shares at 75p a shot. That is the truth of the Government's best deal of the century.
It may be a good, sensible, realistic bargain, as the Minister described it, to British Aerospace, but it does not look like a bargain to the taxpayers in my constituency. Nor does it appear that it will be much of a bargain to those who already own shares in the Rover Group. If the Government have already put that value on the shares, what value will they put on them when they offer them for sale to potential shareholders?
In The Times of 3 March, Professor Smith said:
"We shall strike a very hard bargain on the purchase."
He was clearly signalling that the Government were going to lie back and let him have it without any serious negotiations. There was no possibility of turning down the deal or of considering other offers.
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Nevertheless, we are told that the golden giveaway will be of benefit to the country and the Rover Group. There are no hard, economic grounds for the deal, but perhaps the Government took the view that an overall strategic viewpoint would be more beneficial. They do not appear to have put much thought into the matter or to have thought seriously about negotiation or turning down the deal. British Aerospace must have been aware of that and realised that the Government had put themselves into a corner on the very day of the announcement. They could not turn it down after that.
Mr. Hoyle: It was decided at a cocktail party.
Mr. Taylor: As the hon. Gentleman says, it was decided at a cocktail party. Clearly, Lord Young had no thoughts on the matter until it was presented to him. At the press conference where Rover announced its 1987 results, he said:
"I have literally an open mind on it…I will wait for Mr. Day to tell me even whether privatisation is feasible. I have no thoughts of my own on the subject at the moment."
That hardly suggests that the Government were considering in detail the advantages and disadvantages of the company moving into the private sector, or the deal that they wanted.
If that is how much the Government were putting into consideration of the strategic overview, it is just as well that they are giving the company away on golden giveaway terms. At least a group of people in the private sector might be prepared to consider the strategic implications for the company and to look ahead and to sell the company, rather than, as the Government have tended to do, undermine it on every possible occasion.
The Government have shown an ideological commitment to the private sector as poor as any that has been heard from the Labour party in favour of the nationalised sector. They have paid no attention to the fact that companies in both the private and state sectors go up and down. The basis of the Government's privatisation successes has been laid down in the public sector when those companies have been properly managed.
The Government must respond to a number of important questions. What do they believe will happen with the EC? What indications have they of the EC"s view on the matter? The EC is taking an increasingly tough line on such Government giveaways. Indeed, it forced a reduction in the terms of the Leyland-DAF deal. The EC has accepted an agreement between Renault and the French Government, but that involved no new money, only enough to restore the company to net worth zero. I cannot believe that the EC will take as lightly as Government Back Benchers the idea that £800 million is not a giveaway.
More important, what guarantees have the Government extracted in those detailed and difficult negotiations about British Aerospace's future investment plants for the Rover Group? We are told that BAe sells the deal to its shareholders on the basis that everything will be generated within Rover and that nothing will come out of BAe. That does not suggest that there will be any guarantees for the company if it is hit by hard times. What guarantees have the Government won for the future of an integrated business? Will the engineering status of the company be maintained in terms of engines and model

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range? Have the Government won guarantees on research and development ability and for the various major industrial sites and factories that the company runs?
Are there any plants for the future of the Rover Group? We have heard much about difficulties that can be caused by political debate, but what are the plants for the group if the EC should reject the current proposals? The Government seem to have written off any hopes for the company in the absence of BAe. Have the Government considered what will happen if the shareholders object? What guarantees have the Government extracted from the five-year rule? We have not heard much about that.
What would happen if BAe were taken over? There have been possible bidders in the past. There is a list of companies that might be interested in taking it over. For example, GEC has expressed an interest. Other possibilities are thought to be Hanson Trust plc, BTR plc and Thorn EMI plc. Given the recent profit failings of BAe, a takeover is hardly an impossibility. If that were to happen, what guarantees would remain with the Rover Group and what would be the strength of the Rover Group?
The Minister said that if there were a sale of any major part of the company it would lose any economic gain as a result. How do the Government define economic gain? Does that encompass a distress sale or unloading the Rover Group into another area for economic gain in the strategic interest of the company rather than for immediate cash gain? How will the Government judge the economic gain to the company? Will the Government put the matter before the House if a major disposal is planned? When the Government say that they will consider these matters, do they mean that they will do so at a Cabinet meeting or within a Department, with the result that we shall never have the chance to debate the issue on the Floor of the House?
The Government must acknowledge that, while the deal may be good for BAe at a time of losses on several aircraft orders and uncertainty over the Airbus, BAe has no expertise in the manufacture and selling of motor cars and no expertise in the overseas markets of the sort engaged in by the Rover Group. Its expertise lies in specialised international defence markets. I note that it has been suggested that BAe had no interest in the Rover Group as a whole. It was interested only in Land Rover as that division comes under the military wing and, to some extent, within the interest of the Government.
The future of the group will depend on the willingness of the owners of Rover, nationalised or privatised, to invest in its future and to see it through dark days as well as good. That is the history of the company. That is the history of car manufacturing throughout Europe and throughout the world. There is rise and fall followed by rise and fall. The winners are those who can invest during the falls and who are prepared to do so. The evidence is that BAe, willing or not, is in no position to give such guarantees.
Several Hon. Members rose—
Mr. Deputy Speaker: Order. I shall try again. This is a short debate and short speeches will be in order.
9.14 pm
Mr. Iain Mills: I guarantee briefness, Mr. Deputy Speaker. However, having heard what sounded like Gilbert and Sullivan without the songs and the humour from Opposition Members, I was at one stage tempted to speak at length.
I wish to pay tribute to my constituents' work in the Rover Group factories, in the component manufacturing industry and in the many dealerships throughout the midlands. I pay tribute to their improvements in productivity, their better designs, their better appreciation of their markets, their more professional management skill and their more dedicated work force. Surely these are guarantees of an excellent company that has put its house right and is now seeking a partner.
Opposition Members who use phrases such as "the deal of the century" and "to get rid of" denigrate a great British company that employs many of my constituents and constituents of many colleagues on both sides of the House. They do themselves and their parties great harm in not recognising that. It is sad to see such unbelievably negative attitudes and almost synthetic passions about the arrangement between a great British car company, which is now high-tech and enjoying high productivity, and a great British Aerospace company, again high-tech and enjoying high productivity. It would seem to be an excellent marriage and one in the national interest. It will benefit the future of the people working in the company —both managers and employees—and the future of the component manufacturers and dealers.
I condemn the synthetic disagreement expressed by Opposition Members with a Conservative Government giving money to someone and writing off debt. Opposition Members were not singing that tune last week. However, if that action enables the company to approach its new partner and match the strengths of the two companies, it must be beneficial. So many Opposition Members are interested only in looking for notional weaknesses in the partnership rather than the strengths.
The Rover Group includes Austin Rover. Land Rover is particularly important to my constituency. I know that my hon. Friend the Member for Solihull (Mr. Taylor), who has listened so assiduously to the debate, takes a passionate interest in this matter. He and I represent Land Rover employees in the borough of Solihull. We are aware that this merger is very important for the people working in Land Rover. Their plants for the future will be aided by the strength that British Aerospace can bring to the Rover Group. Indeed, the employees at the Rover Group will bring strength to British Aerospace.
I do not have many questions to ask my hon. Friend the Minister. Indeed, perhaps I should address my questions to Opposition Members. Perhaps the Opposition will tell us what they would do with the group. Will they renationalise it if they have the chance? They will not have that chance, but let us enter their thinking and learn what they intend to do. The hon. Member for Dagenham (Mr. Gould) was not clear about that.
Would public ownership be to the advantage of my constituents? It is inconceivable in a highly competitive world market that public ownership could continue to allow a company like the Rover Group to develop, to design, have access to the markets and to be successful. The Opposition are living so far in the past that their comments tonight will go unreported, largely unnoticed

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and unsupported by the majority of people in the midlands to whom I have talked about this natural partnership involving two great British companies. The company needs the resources to compete with European competitors in 1992 and also with international competitors. It must also compete with emergent nations like Korea and China. I hope that China will thank us when it gets its car manufacturing going.
I have many Jaguar workers in my constituency. I worked in the components industry for 18 years and I know the car industry and its dealers. I welcome this period of stability. I encourage the Government in their efforts to ensure that the European Commission approves the proposal as quickly as possible and I wish all the employees in the Rover Group success in future.
9.18 pm
Mr. Doug Hoyle: I will be as brief as I possibly can to allow other hon. Members to speak. However, I must declare an interest as I am the joint president of the Manufacturing, Science and Finance Union.
At the end of the day the workers must work in the industry under any management. The Government have a lot of cheek in pretending that this is a grand strategy which has been proposed as part of a long-term plan. That is absolutely wrong. The Government simply did not want a privatised company. Why could not the Government have written off the debt and let the company remain where it was? The profits would then have come in. However, that did not suit the Government's commitment.
There are 71,000 people employed in British Aerospace and 60,000 are employed directly in the Rover Group. That 60,000 does not include workers in the components industry. Rover Group and British Aerospace are two of the major exporters in this country.
In the short time available to me, I wish to pay tribute to the people responsible for that success—the workers in those industries. Some of them are members of my trade union, while others belong to different unions. None of them has been consulted by the company. Indeed, the company has kept them at arm's length and has failed to consult them about the future of the industries in which they work, despite the 22 per cent. sales increase at Austin Rover and a similar increase at Land Rover. There has also been a tremendous increase in export sales, and a 16 per cent. overall rise in production at both Rover and Land Rover. It is on the basis of that success story that the company has been sold to British Aerospace.
We heard from the Minister, when he opened the debate, the usual glib and shallow speech, but he has given no answers about the future. What guarantees about the future have been sought by the Government? When the Minister replies, I hope he will answer some of the questions that have been put. We know that the K-series engine is going ahead, and that it is a highly successful and versatile engine. We know also that the R8 is due to come on stream in 1989, and I am sure that it will be a very successful model. However, what about the replacement for the Metro? Was any guarantee sought by the Government in that connection?
It is true that neither of the companies has funds available for the new model programme. What guarantees have been given in that respect? We have heard that Honda are prepared to collaborate, but what terms have
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been agreed? What kind of collaboration will there be with Honda in the future? I am concerned about Longbridge and Cowley. Will one of them be sold off for property development—because we have heard about the situation in which British Aerospace has found itself?
The workers involved want answers to all those questions. Whatever may be the future, they are concerned about the success of the industry. They have made a success of British Aerospace and they want to continue in their jobs and build on that success. Have the Government sought any guarantees, and what replies has the Minister been given? Only when we know those facts—whether or not we shall be given them tonight, I am not sure—will we be able to judge whether the merger will be a success.
9.22 pm
Mr. David Gilroy Bevan: I am surprised at the paucity of the arguments that have been advanced from the Opposition Benches tonight. During the whole time that British Leyland was the plaything of the dead hand of Socialism, or was in the manipulative hands of the trade unionists who operated it in Birmingham, where my constituents were dependent upon it for their jobs, there was a shambles all round. There were losses and there was the failure of the industry. Well does my hon. Friend—yes, I say "Friend"—the Member for Birmingham, Hodge Hill (Mr. Davis) know that to be true, and well does he know the satisfaction of his own workers in that area of the city about the fresh Rover situation.
In the past we have seen the failure of the group being directly attributable to the manipulative scheming of the right hon. Member for Chesterfield (Mr. Benn), who put together the British Motor Corporation and made British Leyland a massive, overwhelming and complicated body of over-employment that was bound to make a loss. Now that that has been put to rights, no argument can be raised against it. Even Professor Bhattacharyya of Warwick university, who has worked on these matters and analysed them with the Austin-Rover Group, says that he expects that within three years or so the group under British Aerospace will be earning £250 million a year in profit.
It is probable that many of the new models will be produced—strangely enough—by an economic process engendered from profits, unknown in earlier times and unappreciated by Opposition Members: the installation of good management, the cultivation of excellent labour relations which did not exist before, and the development of factories able to produce goods that are wanted throughout the world. Exports have risen throughout Europe and in the far east, and the group is responsible for producing three quarters of the cars that we export.
Now, rightly, the business is being retained in British hands. That was demanded overwhelmingly by the Opposition in previous years, when they joined us in claiming that it was wrong for British Leyland or the Austin-Rover Group to be sold abroad. Now the situation has been saved: it is in British hands. However, the Opposition are still complaining about the position, as indeed are the French. The French say that the deal will prevent the organisation of a. pan-European international aeroplane business. I find that those arguments are strangely not shared by the Germans, who are attempting —unsuccessfully—to do precisely what the Government have been able to do with this formula.

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If the French are complaining, I am very happy that this is an excellent formula. A full part is being played by the British car manufacturing industry, in a new way and a new form which will succeed, and which the Opposition do not like.
9.26 pm
Mr. Andrew Smith: I do not think that the long-term interests of a successful Rover Group—or of the country's car industry—are helped by the ideological ranting about the dead hand of Socialism such as we have just heard, any more than they are helped by the unbelievable protestations from Conservative Members that we have debated the Rover Group a number of times recently. Whose responsibility is that? It is, of course, the Government's responsibility, as they brought forward the proposals to sell off the group, just as previously they were anxious to get rid of it at any price to Ford. That is why the company is continually in front of the public as a matter of general debate. It is a matter of the Government's own choosing, through their ideological commitment—there is no other industrial rationale—to remove the company from the public sector.
As has been said, a remarkably generous deal is being offered to British Aerospace. I emphasise that my concern is to ensure that the revenue and capital resources that are available are applied within Rover Group, and are applied to investment in the model range. No one with the interests of the industry at heart wants Rover Group to be saddled with a millstone of debt for the future. We are right to ask, however, what tangible benefit the Government have secured for the future of the company and the industry in the negotiations through which those generous terms were reached.
My particular concern is for the future of the Cowley plants in my constituency. As production of the Maestro comes to an end, and in the knowledge that production of the Montego will not continue for ever, it is abundantly clear that however successful is the excellent Rover 800 and its derivatives—in that respect, much turns on the value of the pound—we are fast approaching a point at which the prospects for employment at Cowley require the announcement of a new model, and confirmation that the Rover 800 reskinning will go ahead by 1992.
I have every confidence that, given the opportunity, Cowley will deliver the goods. Cowley has an extremely committed and skilled work force at all levels which has been responsible for dramatic improvements in productivity and quality. I join my hon. Friend the Member for Warrington, North (Mr. Hoyle) in saying how unbelievably disrespectful to the work force it was for the Minister to praise Graham Day and not to utter a word of praise for the commitment of the workers which has actually turned the company round. I trust that the Minister will rectify that omission.
Internal company studies show that the workers at Cowley are being expected to put in 20 per cent. more effort than workers in West German car plants. The commitment of the work force is not in doubt. Cowley is eminently suited to producing competitive and successful models for the future, which the country and our community want. At the same time, however, it is clear that expressions of confidence in the future must be based
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on more than that excellent potential and the Minister's vague aspirations. We need a clear indication of the model programme, and we need to know that resources will be available to build on Rover's undoubted strengths to put that programme into effect.
As my hon. Friend the Member for Dagenham (Mr. Gould) said, the Government have no industrial strategy whatsoever to ensure that that happens. The workers at Cowley, and those in Oxford and in other areas most immediately affected, want to know what the Government have done to represent their interests in the takeover. What have the Government done to secure a viable future for the plants? As the public custodian of the company, what have they done to make sure that there will be new models for the future? What have they done to make certain that the deal does not become an asset-stripping exercise in the long term?
The Minister's response to my earlier interventions about the conditions under which British Aerospace might divest itself of substantial holdings or parts of sites will have done nothing to reassure my constituents or others in the west midlands who are dependent upon the Rover Group for their livelihood. I shall listen very carefully to the reply from the Parliamentary Under-Secretary of State for Industry. If he says, as the Chancellor of the Duchy has said, that the Government in these negotiations sought to impose no such constraints and that it is up to the management and the market, I shall have to say that that answer simply is not good enough. It is further evidence that the Government set a higher stake on washing their hands of the Rover Group than securing a prosperous future for my constituents and for the country.
If the deal goes ahead, we must all hope that the amalgamated company is successful, and we must do what we can to ensure that it is successful. If the deal goes ahead, the Government should be left in no doubt whatsoever of their responsibility for the consequences. A responsible Government would not be embarking upon this course, as my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) and others have pointed out. The Government are pursuing their ideological commitment in such a cavalier and uncertain way, and without the assurances for the future that could and should have been obtained, that no one can be in any doubt where the responsibility will lie if things go wrong. That responsibility rests squarely on the Government. For ideological reasons, the Government may seek to wash their hands of the Rover Group, but they must and will not be allowed to escape the consequences of the decision that they have taken.
9.33 pm
Mr. Austin Mitchell: There have been two themes from the two sides of the House. From the Conservative Members we have heard forced praise for the arrangements, and from Opposition Members we have heard doubt, hesitation and pain. From nowhere has there been a "glad, confident morning", from nowhere has there been a real welcome.
We have heard forced praise from Conservative Back Benchers who have to say something nice and do not have the understanding to say the truth or the guts to ask for guarantees and therefore have clutched at straws—from which Central Office makes the bricks for them to drop —by claiming that there is some kind of synergy involved. There is as much synergy in this merger as there would be

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if Rover were to merge with the manufacturer of the fluffy dice that hang in the back of cars. The best test of synergy is the reviews in the quality newspapers. The Financial Times said:
"The industrial logic behind the proposal scarcely adds up to much."
The Guardian said:
"In terms of industrial logic the merger is madness."
The Economist said that so much industrial logic is
"PR fiannel. Aircraft and cars are utterly different to make, utterly different to sell. Rover needs car company skills, full stop."
That is true.
Hon. Members on both sides of the House are trying to make the best of a bad job. It is time that we looked at the basic truth, which is that the Government have betrayed, are now betraying and will continue to betray the British car industry. The car industry in this and any other country is central to a powerful manufacturing economy. We need a strong manufacturing industry and a strong car industry. Our industry has been allowed to shrink so that we are now well behind any other major industrial country in the share of home market that our car industry has and in the size and capacity of our domestic producer. Our car trade deficit with the EEC is nearly one third of our visible trade deficit.
The Government have betrayed the car industry because they have used a high exchange rate as a discipline on industry. They are dedicated to making the land fit for investors to live in. For investors to invest overseas they need a high pound. The Government have refused to let the market operate on the pound by propping it up with high interest rates, thus imposing a double burden on industry. That has caused the ruination of the car industry in the years during which they have been in office.
Imports make up a large share of our market. It is a far higher share than in any other industrial country. That has occurred simply because of the economic policies carried through by the Government. That is the first betrayal.
The second betrayal is the Government's failure to compensate the industry for the consequences of their folly. Let us look at the walking wounded that came out of their industrial folly. The problem is that Rover is not big enough for a volume car producer. It is not big enough to obtain the economies of scale that it needs and there is not enough investment to enable it to become the specialist up-market producer that it needs to be.
Between those two stools Rover is sinking. It needs help to overcome its problems. Every major car manufacturer in the world has had problems at some stage and in every other country the car industry has been helped and sustained by its Government. Volkswagen, Fiat, Peugeot, Renault and Chrysler in the United States have all received help. That help has built up and sustained the car industries, not whittled them down, which is what has happened in Britain. It would cost us to provide that help, but we must carry those costs if we are to maintain the car industry, which is vital to manufacturing. We cannot just close the industry down. We have to build it up and that is why the Government have to sustain their responsibility.
In every other country Governments work with industry. In this country the highest wisdom of the Government is to wash their hands of industry. They have a Lady Macbeth approach to industry. They want to wash their hands and divest themselves of it. We understand that the Minister is under a binding mandate from the
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Prime Minister to get rid of Rover. That is what this is all about. Let us look at how the Minister could approach that.
The only test of whether the industry could be privatised is whether it could be floated on the market. It fails that test because nobody will buy it. If it were floated, it would sink. Even if it were advertised as a slightly used car industry with one lady owner, it would not sell. The Government cannot float it; they will not build it up; they would rather give the money to tax cuts. They cannot close it—even Sir Keith Joseph was not crazy enough to do that. It would pull the heart out of the industrial midlands.
The Government cannot even adopt the Victor Kyam approach. He is the man who liked the Remington razor and bought the company. That is the approach the Government are taking with. British Shipbuilders—"You like the ships? Have the shipyard." They cannot take that approach with Rover because no one will have it given to them. So they must do what they have done. First, they put in Mr. Graham Day to give Rover the anorexia nervosa treatment—to sell it all off. What is the logic in selling off all those related businesses? The list of them is enormous and I shall not go through it all. He has sold off all those car businesses and divested the company of responsibility in the car industry for radiators and engineering design, and then merged with another company in a wholly unrelated business.
If Rover is to compete in the world it must be a specialist, strong car producer, not a limping part of another organisation in another activity. There is no logic in what Mr. Day has done. apart from prettying up the profits to get the company sold as quickly as possible. He has gone for profit, not market share. Market share has fallen consistently under his running of the company. That is the major test, and he has not solved the problems.
Now the Government are getting rid of the company. It would be better for the taxpayer to sell it to a foreign manufacturer who would pay more for it, but the Government's Back Benchers would not allow them to do that, and rightly so. They would get more money for the company in that way, but they must sell it to a British firm—but which one? That is the Government's problem. Who will take it off their hands?
Enter the well-known industrial Toby jug Professor Smith. He is not daft. He will not take Rover from the Government or have it given to him. He must be paid to take it. He will drive a hard bargain. However much he gets—one estimate is £650 million, another is £250 million—he will have been paid to take the company off the Government's hands. And that is a good deal for the Government. It uses the window of opportunity that arises as the company becomes profitable again and as the exchange rate fall of 1986 makes it profitable again. The deal allows the Government to get rid of the company, which is their highest ambition and wisdom.
The problem is that it is no ringing declaration of confidence in Rover, if the Government are so anxious to get rid of it that they will pay someone to take it. Conservative Members may criticise us for being critical of it, but this is a good deal for the Government because it gets rid of their obligation. It is our responsibility not to be taken in by ministerial speeches that are more sighs of relief than arguments.
What is to happen next? Now comes the Wendy hamburger question: where is the logic of this deal? Aerospace is an industry which needs heavy long

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investment runs. If British Aerospace wants a merger with other firms it would do best to take over an insurance company, a money cow that will provide the assistance to keep it going through early investment runs.
The merger with Rover will certainly put up BAe's earnings per share. Phillips and Drew say that they will be approximately doubled. The merger will give British Aerospace a stronger share price which will help it to avoid takeovers and give it better survivability.
For the rest, the merger only adds to the problems of British Aerospace. Both organisations have problems now that the dollar is falling and the pound rising. The pound has risen in real terms by 18 per cent. since the last quarter of 1986. That poses major problems for British exports and manufacturing. Tying these two firms together when there is an overvalued exchange rate is as logical as tying two one-legged men together and expecting them to compete in a three-legged race.
The merger will demand management time from British Aerospace which can scarcely be spared, given the company's severe problems with commercial aircraft. The merged Rover will need money of its own. It needs the new investment for new models that my hon. Friend the Member for Oxford, East (Mr. Smith) mentioned. It must have investment to keep going. If it is to be worth anything to Honda, it must have something to offer. That requires investment.
Once the survivability crisis has passed in two or three years, the company will need massive sums, which British Aerospace will not be able to provide and which Rover will not be big enough to generate from its own sales. According to the evidence of its previous managing director, it needs sales of more than 600,000 vehicles to generate the profit needed for new investment. The company is not making anything like that amount.
There is nothing much in it for British Aerospace, apart from in the immediate short-term period. There is nothing in it for Rover. It is not even a resting place for Rover. The basic dilemma remains: the company is not big enough to produce the volume and there is not enough investment for specialist production. There is no escape from that dilemma. That is why Rover must stay with the state. It is a matter not of the case for and against nationalisation but of who has the power, the muscle and the money to provide the investment to build up Rover. That is essential to our industrial base and economy. No one else is qualified to do it, and that is why the company should remain with the state. That is why the Minister is being irresponsible in getting rid of it in this fashion.
Labour would keep the company in the state and build it up as the kernel of the manufacturing expansion which will dominate the 1990s, with a Labour Government rebuilding our economy and using Rover as the powerhouse for that expansion. The job of the next Labour Government will be to rebuild from the wreckage generated by this Government.
Rover finds a reasonable home. New parents move into it, but they do not like Rover. They want to get rid of Rover so they do not feed or sustain it. In that case, Rover is probably better off with the People's Dispensary for Sick Animals. That is what is happening to the Rover Group, but it is not the best fate for it. Rover should be expanded and sustained through the difficulties. The Government
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have that responsibility. The responsibility for Rover, the future of the car industry, the workers in it and the dependent industries all over the west midlands is the Minister's. He is not getting rid of that responsibility by this manoeuvre. We will hold him to it.
9.47 pm
The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins): I have the good fortune to be a Member of Parliament for a constituency in which the Rover Group and British Aerospace have substantial interests, so I am well placed to speak with some knowledge about the activities of both companies. The Rover Group originally started as Leyland Motors in the town of Leyland, in my constituency, so I can speak with some personal knowledge and the knowledge of my constituents about what Leyland, now the Rover Group, has achieved, the problems which it has faced and the potential success offered by this deal.
British Aerospace operates near my constituency, with the military aircraft division centred in the Preston area. The aircraft activities of British Aerospace have been especially pertinent to the good fortune which has been achieved by many of my constituents who work for that company or for Royal Ordnance, which is partly based in my constituency.
The privatisations which have come to British Aerospace, to Royal Ordnance, to Leyland Trucks, now Leyland-DAF, and to Leyland Bus, now part of the Volvo group, have been a great success.
Mr. Nellist: Are job losses a success?
Mr. Atkins: The hon. Gentleman, who, as always, is concerned about matters relating to the motor industry and to Coventry, should not gainsay the fact that the difficulties faced by these companies have been overcome by privatisation. Many of the constituents of my hon. Friends who have been here and participated in the debate will confirm that. I visited Leyland-DAF the other day and drove the 50,000th truck off the line. Productivity has doubled since privatisation, and that is not the only example that I could give. I am sure that the same will be the case with regard to the deal between the Rover Group and British Aerospace. My constituents and those of my hon. Friends have achieved some remarkable results. They have had to do so because the pressure of world competition on the passenger car and commercial market has been substantial. It forced them to realise that productivity had to be improved.
We have heard that not only the constituents of my hon. Friends but dealers, component manufacturers and almost anyone who knows anything about the motor industry welcome this deal—except of course the Labour party. The speeches of Labour Members were well summed up by my hon. Friend the Member for Bromsgrove (Mr. Miller), who made a typically robust speech. He said that the Labour party is out of date and does not recognise the new interests that are being pursued by those who work in the motor industry. It does not recognise that this deal is important for the future of the two companies. It is ever ready to snipe, predict doom and gloom and disaster and devalue possible and actual success. It is now following the dictum that the Opposition's duty is to oppose. It goes to such lengths to score what it classes as a few points, but that flies in the

971
face of the industry's success story, which has been achieved as a result of its hard work at management and shop floor level in overcoming its difficulties.
My right hon. and learned Friend the Chancellor of the Duchy of Lancaster dealt with the substance of the debate, but a number of matters have been raised that I should try to deal with in the short time available to me. The hon. Member for Dagenham (Mr. Gould), in his usual, reasonable and amenable way, refused to answer the question that was asked by my right hon. and hon. Friends about whether the Labour party would renationalise the Rover Group if, as we confidently expect and hope, the deal goes through. We have noted that the hon. Gentleman avoided answering that question. I know that there are difficulties in the Labour party about its exact policy on social ownership, public ownership and nationalisation.
Mr. Austin Mitchell: The question is whether the deal will help tile Rover Group to survive. The question that should be put to the Government is, if the deal does not work and the Rover Group suffers as a consequence, will the Government take it hack and support it as they should?
Mr. Atkins: The hon. Gentleman must not wag his finger at me. I have asked the hon. Gentleman and his hon. Friend the Member for Dagenham a question, but I have received no answer. My hon. Friends and I want to hear an answer. Would the Labour party renationalise the Rover Group?
The hon. Member for Dagenham asked about Honda. My right hon. and learned Friend the Chancellor of the Duchy of Lancaster and my right hon. and noble Friend the Secretary of State have said on many occasions that Honda welcomed continuity of British—British Aerospace—management—[Interruption.] I shall say again, so that the hon. Member for Dagenham can hear, that Honda welcomed the continuity of British management, as represented by British Aerospace, which, in case the hon. Gentleman was not aware, is British management.
Mr. Andrew Smith: Did Honda welcome the deal?
Mr. Atkins: I have just said so. The hon. Gentleman should listen. Honda welcomed the continuity of British management and the deal that we are debating. It positively welcomed it—what more does the hon. Gentleman want?
Mr. Gould: I assume that the Minister chose his phrase with care and placed emphasis on the continuity of British management. He took care to correct what I take to be a slip of the tongue when he talked of British Aerospace management. The impression given is that Honda expressed strong support for the existing management. Is that what the Minister is saying?
Mr. Atkins: The hon. Gentleman has a capacity to split a phrase into different words and to make of them what he wants. Honda welcomed the deal. It welcomed continuity of British management and the future as represented by British Aerospace. Does the hon. Gentleman want it spelt out any more clearly than that? Honda welcomed the deal. There it is, and there it lies.
The hon. Gentleman asked what British Aerospace knows about making cars. What does Ford know about
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making aircraft? There is a company called Ford Aerospace within the group which knows a great deal about making aircraft.
My hon. Friend the Member for Birmingham, Northfield (Mr. King) made an excellent speech, which showed how much he knows about the motor industry. He said that management is what counts, and consultation with the work force. It almost does not matter what is being made as long as the management and the work force are properly looked after and properly understand what is required—the end product—in a variety of areas.
The hon. Gentleman also asked about British Aerospace commitment. The company has made it clear that it is delighted with the continuity that it sees in the management of Graham Day, and the plants and ideas that he has set out, both publicly and privately, about the future of the Rover Group. It wishes to abide by those ideas and plants.
The hon. Member for Dagenham called in aid Aerospatiale. I find that astonishing, because the French never miss a chance to undermine the British aerospace industry, particularly—as I have cause to know in my constituency—when they have considerable problems in their own industry, caused largely by the success of British Aerospace and other related companies. To pray in aid Aerospatiale is taking it a long way down the line, and the hon. Gentleman should be careful.
Mr. Nellist: Will the hon. Gentleman give way?
Mr. Atkins: If the hon. Gentleman will forgive me, I will not, as I have only a few moments and several questions to answer.
My hon. Friend the Member for Bromsgrove asked me a particular question. I assure him that nothing in the detailed arrangements that we have been discussing would prevent further collaboration or joint ventures with other manufacturers, provided that control of the principal businesses remained unchanged. Nor would the arrangements inhibit any shareholding in the principal businesses by the potential collaborative party. I hope that that goes some way to answering his problem.
A number of hon. Members have asked about so-called guarantees. Without constraining British Aerospace's day-to-day management of the business, we have agreed important conditions on the acquisition. British Aerospace has undertaken not to relinquish control of Austin Rover or Land Rover within five years. This undertaking is supported by legal arrangements that ensure that, even if there were to be a sale within five years, the net financial benefits of British Aerospace's holding of the business and the net proceeds of the sale would be repaid to the Government subject to a ceiling of £650 million. British Aerospace has made clear its intention to hold and develop the businesses, but these arrangements ensure that it would not be to its financial advantage to break its undertaking. I cannot be more clear than that.
Mr. Nellist: I represent more than one or two aerospace and car workers, and I am probably the only hon. Member in the Chamber who has had a job with the predecessors of both Rover and British Aerospace. There is not much connection between a Rapier and a Rover—between a ground-to-air missile and a family saloon car. What confidence can car or aerospace workers have in Graham Day, who sold 18 businesses in two years and reduced the number of shipbuilders by 55,000 in the previous three

973
years, or in Mr. Smith, who talked about reducing the number of aerospace workers by about a third by 1992, or in Lord Young? He said on the Channel 4 business programme of 6 March:
"We will not impose conditions about manufacture at Cowley and Longbridge."
What confidence can car workers and aerospace workers have in anything that the Government spokesmen have said tonight?
Mr. Atkins: The hon. Gentleman has made his point, which I dealt with in some detail earlier. I hope that he will allow me to proceed to ensure that the debate is concluded in a proper way.
In his opening speech, my right hon. and learned Friend made it clear why, when one takes account of all the components of this agreement, and not the simple arguments relating merely to the cash injection and consideration, this deal represents a fair balance of various interests. I stress that the Government believe that privatisation is in the interest of the business. On that matter, I can do no better than to quote Graham Day, who said, when explaining why putting the business back in the private sector had been one of his objectives:
"For me, it is not simply a matter of ideology, it is a matter of very good common business sense."
The Government for their part were determined that privatisation should take place in a way that recognised the contribution made to the economy by the Rover Group and gave the company the best available chance of developing its independent role in the vehicle industry.
This is an excellent deal for the Rover Group and an excellent deal for British Aerospace. It is an excellent deal for the taxpayer and also for many of our constituents whose interests have been so ably represented in the speeches made by my hon. Friends. We are exceedingly proud of the deal and more than content for it to be subjected to scrutiny when it is completed, as we hope it will be. I know that my hon. Friends will recognise that we believe that this deal could be very exciting for the future of this country.
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, the Lords Amendments to the Immigration Bill and the Lords Amendments to the Public Utility Transfers and Water Charges Bill may be proceeded with, though opposed, until any hour.—[Mr. Ryder]

Immigration Bill
Lords amendments considered
New Clause

  MEMBERS OF DIPLOMATIC MISSIONS
  Lords amendment: No. 1, after clause 3, insert new clause:
  ". At the beginning of subsection (3) of section 8 of the principal Act (exemption from immigration control for members of diplomatic missions etc) there shall be inserted the words "Subject to subsection (3A) below," and after that subsection there shall be inserted—
  "(3A) In the case of a member of a mission other than a diplomatic agent (within the meaning of the said Act of 1964) subsection (3) above shall apply only if he enters or has entered the United Kingdom—

  (a) as a member of that mission; or

  (b) in order to take up a post as such a member which was offered to him before his arrival;

  and references in that subsection to a member of a mission shall be construed accordingly."
  Read a Second time
  10 pm
  The Minister of State, Home Office (Mr. Tim Renton): I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Speaker: With this it will be convenient to take Lords amendment No. 3, in clause 11, page 5, line 31, after "3" insert "(Members of diplomatic missions)"
  Mr. Renton: The third amendment depends on the first, and both are proposed by the Government.
  The proposed amendment of section 8(3) of the 1971 Act seeks to improve the effectiveness of immigration control in relation to those who at present are granted exemption from the control by virtue of employment as a member of a mission. It has entered the lists at this late stage because the extent and nature of the problem have been identified only quite recently and the proposed solution has required careful consideration in consultation with the Foreign and Commonwealth Office.
  Section 8(3) of the Immigration Act 1971 confers exemption from immigration control on all members of a mission within the meaning of the Diplomatic Privileges Act 1964—together with members of the family forming part of the household. No distinction is drawn between the various categories of staff employed in foreign missions. Exemption is accorded to caretakers and drivers as well as to full diplomatic agents. More particularly, the exemption extends to all locally engaged staff—that is, someone who has come to this country for another purpose and then been taken into employment by a mission.
  That leads to the rather curious state of affairs whereby locally engaged staff with no entitlement to any form of diplomatic immunity or privilege are, none the less, automatically accorded exemption from immigration control by virtue of section 8(3) of the 1971 Act.
  The exemption places anyone employed as a member of a mission beyond the framework of control set out in the Immigration Act and the rules. This position is not satisfactory as it can be exploited by a number of people who would not otherwise qualify to remain in this country. That happens in a number of ways. At one end of the spectrum there are those who are here lawfully but whose conditions do not allow them to take employment—for

  975
  example, people admitted initially as visitors or students, who then switch to employment with a mission when they no longer have any basis for remaining.
  Then there are those who might be termed "prospective overstayers", who use missions as a safe haven. I have in mind those who are awaiting the outcome of an appeal against a refusal to extend their leave to remain. They may then seek to secure their position by taking employment with a mission in the knowledge that they cannot then be removed, even if the appeal is unsuccessful.
  Finally, there are those who clearly have no basis under the rules for remaining in the United Kingdom. They include illegal entrants, those on temporary admission or overstayers themselves.
  The numbers are not at all large. In 1986, 119 overstayers or illegal entrants took up employment that entitled them to exemption from immigration control, and a further 286 people, whose conditions of stay prohibited employment, had these conditions removed on the grounds of their exempt employment. The great majority of them were employed as members of missions. While the scale of the abuse is not great, so long as this method of evading removal remains, it is sadly inevitable that it will be exploited from time to time.
  We are not concerned with those who are appointed as full diplomatic agents. We do not wish to intervene in that area, and that is not where the problems arise. The evidence of abuse is restricted to those in what are known as categories C and D employment with a mission—administrative and technical staff and those employed in the domestic service of the mission, such as drivers and caretakers.
  The effect of the new clause will be that locally engaged staff in non-diplomatic posts and their families will no longer be exempt from immigration control. Missions will be able to continue to employ locally engaged staff in those categories if their immigration status enables them to take that employment. It may also be possible for others to be employed in those categories, but only if the mission notifies the Foreign and Commonwealth Office of their appointment in accordance with the Vienna convention on diplomatic relations.
  The Foreign and Commonwealth Office needs to be satisfied that the individual is in bona fide employment and thus entitled to immunities and privileges. Where those requirements are met, the mission may be allowed to take on locally engaged staff in those categories. However, if it does, those members of the mission will be subject to immigration control. Furthermore, in accordance with the Vienna convention, the mission will be required to notify the appointment of the individual and the termination of his appointment. Those changes will improve the effectiveness of our control procedures.
  Nothing in the proposed amendment resiles from the United Kingdom's commitment as a signatory to the Vienna convention. Our approach is not inconsistent with that adopted by other countries to the employment of locally engaged staff in our missions abroad. On the contrary, the proposed amendment simply puts into practice the advice already given to missions by the Vice Marshall of the Diplomatic Corps that they should not employ persons who would not otherwise be permitted to work in the United Kingdom. Equally, the proposed amendment will not apply retrospectively. Those already employed by a mission will retain their exemption from immigration control while they remain in that capacity.
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  The new arrangements will be fully explained to missions before the amendments come into effect. The proposed consequential amendment to clause 11 would simply provide the amendment to section 8(3) to be brought into effect by means of a commencement order.
  I commend the amendments to the House.
  Mr. Stuart Randall: It is interesting to note that, at this stage in the passage of the legislation through both Houses, we are now raking up this type of amendment. I find it interesting that the Minister says that the Government have only now identified this problem. I get the impression that this is a sledgehammer to crack a nut. Certainly the Minister has not impressed on me the need for the amendments. He has not explained the extent of the problem to which he has referred and which has resulted in the amendments being tabled in another place and accepted by the Government.
  If there is abuse we would have no truck with it. I notice that the Minister giggles. When we were in Committee the Minister used to become insulting, rude and—[HON. MEMBERS: "Shame."] Conservative Members know that every time the Minister was on the ropes in Committee he behaved in that way. It is interesting that, after all these weeks, we get such giggles from the Minister when we again debate immigration.
  The Minister should explain in more detail the scale of the problem. In which embassies and missions has this abuse been perceived to have taken place? Exactly how did he come across this problem? How was it perceived? What agencies were used to find out about this? Were the police involved or was it just the immigration service? The House must be clear that there is a need for this information. I have made it clear that I would not in any way support any abuse of diplomatic immunities or the breaking of the law. There is no dispute about that. We are trying to obtain from the Minister what was miserably lacking in his speech. We have no insight into the matter.
  I would welcome any Conservative Member standing up and explaining in detail the nature of the problem. I am willing to give way, but no hon. Member stands up because nobody understands the detail of the problem. The Minister must give us more information about which countries are involved and how the problems were identified. We need to know the nature of the abuse and who was doing the abusing. Was it the drivers, the cleaners or people who had failed on an appeal process or who had an appeal outstanding? We need to know more if we are not to divide the House on the amendments.
  Mr. Jeremy Hanley: Will the hon. Gentleman give way?
  Mr. Randall: I think that it would be valuable to the House if the Minister explained in more detail what is happening in other countries.
  Mr. Hanley: In the unreal world, when the hon. Gentleman might be responsible for immigration law in this country, what would he do, if he discovered that 119 people would have deliberately defrauded international law, if it were not for this clause? If he discovered that a further 280 people had abused or were about to abuse the privileges of international diplomatic immunity, would he have acted in the way that the Minister acted or would he ignore it, because 400 people are too few?
  Mr. Randall: The hon. Member has come up with some statistics—[HON. MEMBERS: "You asked for them".] Hon. Members are baying for an answer and I shall give them an answer, as I always do. The hon. Member has come up with those statistics, and I do not know whether they are just made up. The hon. Member knows much about these matters, because he is a member of the Sub-Committee on Race Relations and Immigration. [HON. MEMBERS: "He was".] He was. I do not know why he left. He was a member of the Select Committee and he has studied these matters. He has come up with figures which are revealing. Are they authentic or are they made up? If they are authentic, the hon. Gentleman seems to have given the House much more information about the matter than the Minister has. That is the sort of detail that we all want.
  Mr. Keith Vaz: My hon. Friend mentioned the figures given by the hon. Member for Richmond and Barnes (Mr. Hanley). Does he recall that, in Committee, when reference was made by the Government in clause 4 to the seven-year limit, the hon. Gentleman volunteered the information that that was the limit that had been adhered to in the Limitation Act 1963? That is another example to show that figures and statistics are being made up by the hon. Member for Richmond and Barnes, and are being misused in this way.
  Mr. Randall: I do not know whether the figures are authentic, but I will give way to the hon. Member for Richmond and Barnes.
  Mr. Hanley:The hon. Member may have done the same research as I have to find the figures, but that is irrelevant. I am certain that that would not have happened, as the hon. Gentleman's research is painfully shallow. I asked the hon. Gentleman questions. I asked how, if those figures were the truth, he would have acted when confronted with that information. Will the hon. Gentleman have the courage and decency to answer my questions and not prevaricate?
  10.15 pm
  Mr. Randall: The hon. Gentleman is obviously suggesting that his figures are untrue. When we all read Hansard avidly tomorrow, we shall realise that the hon. Gentleman is playing with words and that he does not believe that those figures are true.
  I shall answer the question. I have already said twice that, if there were abuse on a large scale, Labour Members would have no truck with the breaking of the law and the abuse of diplomatic missions. Perhaps the Minister will confirm the figures of 119 and 280. I am not walking into a trap. The hon. Member for Richmond and Barnes is grinning away. I know his tricks, but if there is large-scale abuse, we must take measures to prevent it. The Minister has failed to convince me that there is abuse on a large scale. He told the House clearly that he tumbled upon the fact. It is a new phenomenon for him. He said that the problem has only recently been identified.
  Mr. Renton: We have become accustomed to the hon. Gentleman assuming the dormouse position in Committee, but he appears to have been singularly sleepy a few moments ago when my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) quoted the figures that I gave in my opening remarks. I said that the hon. Gentleman was asleep and I repeat that, in 1986, 119
  978
  overstayers or illegal entrants took up employment which entitled them to exemption from immigration control and a further 286 people whose conditions of stay prohibited employment had those conditions been removed on the ground of their exempt employment. My hon. Friend, with his mastery of mathematics, added up those figures and came to the figure of 400. That is precisely the figure that I quoted, but, once again, the hon. Gentleman was thinking so hard about what he could say to oppose this sensible amendment that he just was not listening.
  Mr. Randall: The Minister and his hon. Friend have got the matter completely back to front. The Minister knows that to be so, because, on the one hand, he talks about figures for 1986 and, on the other hand, he talks about the new phenomenon. He cannot have it both ways. He either perceived the problem in 1986 or he has just perceived it. If I were in his position, I would explain when the problem was first perceived and mention the number of cases identified each year so that we could be clear about whether the problem was growing, diminishing or remaining stable. What kind of people were involved? The Minister has given us nothing tonight and, as usual, the hon. Member for Richmond and Barnes has put the cart before the horse and muddled both the House and himself.
  I shall not spend much time on this, but we want clarification. The Minister has not justified the need for legislation to deal with the problem. Certainly, the figures that he has given have not shown us the extent of the problem. Will he tell us what forms of abuse he found? If it is a new phenomenon, what other nasties did he find under the stone?
  Mr. Vaz: I take up my hon. Friend's comment about nasty things being hidden beneath the stones. It is refreshing to see the Minister of State in his place, and perhaps he will tell us something about the unopened letters at Lunar house. We hear his dulcet tones on "The World at One", but it would be more helpful if he made a statement on the current position at Lunar house.
  Mr. Randall rose—
  Mr. Deputy Speaker (Sir Paul Dean): Order. Before the hon. Member for Kingston upon Hull, West (Mr. Randall) is tempted to follow that road, I wish to make it clear that I find it difficult to associate Lunar house with the amendment.
  Mr. Randall: Though tempted, Mr. Deputy Speaker, I accept your ruling and shall not follow the path that has been put before me by my hon. Friend the Member for Leicester, East (Mr. Vaz). I merely say in passing that the new clause makes clear reference to the documentation that is necessary for those seeking admission who have the right of abode. I think that my hon. Friend is suggesting that some of the documents that might be needed for admission might be caught in the administrative mess that the Minister has created both at Lunar house and Petty France. I shall take the point no further than that.
  The Opposition are unhappy with the Minister's performance. He has failed to convince us of the need for change. He has failed to tell us about scale and he has failed to get the numbers right. I wish that he would give us a thorough and clear explanation that would give us the sense of conviction to vote for the amendment.
  Mr. Renton: If I permitted myself a smile during the opening remarks of the hon. Member for Kingston upon Hull, West (Mr. Randall) it was because I am normally a cheerful fellow, and because of the hon. Gentleman's remark that if there was abuse in the immigration procedures the Opposition would wish to put a stop to it.
  Anyone who served on the Committee which considered the Bill would know well that when we were discussing clause 5 and seeking to make overstaying a continuous criminal offence, as it was originally intended to be in the 1962 legislation, the Opposition were against us closing the door on this evident abuse of immigration control. Those who overstay their permission to be in this country are consciously or knowingly breaking the conditions under which they were permitted to enter. It is therefore only logical that overstaying should be a continuous offence, yet constantly the Opposition argued against that in Committee. Against that background the hon. Member for Kingston upon Hull, West had the gall to say that if there was abuse of immigration procedures the Opposition would be against it. That is a statement of such hypocrisy that it is not surprising that I broke into a slight smile.
  Ms. Diane Abbott: Does the Minister agree that it is rather unfair to accuse my right hon. and hon. Friends and me of being against any sanction for abuse of immigration legislation? Surely he is aware that there are good administrative sanctions against overstayers that operate every day of the week and every week of the year, as I have reason to know. We know that adminstrative sanctions exist and we have never argued against them. We have argued against double jeopardy.
  Mr. Renton: This issue arose many times in Committee. It was explained many times to the hon. Lady that there is a need for criminal procedures as well as administrative procedures and that the original intention was that overstaying should be a continuous offence. We explained also that it was our intention to bring it into that position again.
  The hon. Member for Kingston upon Hull, West has the beguiling characteristic of being able to turn a silk purse into a sow's ear. I presented an amendment to the House, which was approved in another place without a Division, to the effect that we should plug this minor gap in relation to those in non-diplomatic positions employed by embassies who find themselves outwith immigration controls as a result of taking up that employment. I should have thought that that was a fairly simple proposition on which hon. Members on both sides of the House could agree.
  However, the hon. Member for Kingston upon Hull, West got himself into a great tangle over the figures. Are they too big or two small? I made it abundantly clear that the figure that we were talking about from the 1986 statistics was about 400. We did not learn from the hon,. Member for Kingston upon Hull, West whether he would support a figure of 600 or whether he would not support a figure of 200. He owes the House an explanation about that.
  I quoted the figure and evidently the hon. Member for Kingston upon Hull, West did not listen. What is wrong with the figure? Is it not large enough? Would he like a bigger figure or would he like a smaller one? Will the hon.
  980
  Gentleman tell us? [Interruption.] Obviously, he will not. He is also permitting himself a little giggle, and perhaps that is not a bad thing.
  Mr. Paul Boateng rose—
  Ms. Abbott rose—
  Mr. Renton: I will give way to the hon. Member for Brent, South (Mr. Boateng) because I have already given way to the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott).
  Mr. Boateng: Over the months of discussion about this Bill, has it not sunk in that the Opposition's objection to this clause and to many others that the Government have presented is directed not simply to the clause but to the fact that the clause is an unpleasant little accretion on an already monstrous edifice of injustice? That is what we object to. That should surely have sunk in amidst all the suavity and charm.
  Ms. Abbott: Charm?
  Mr. Boateng: Yes, charm of a somewhat jaded and lethargic kind, but charm none the less. Has not our true objection to this nasty, sordid little measure sunk in?
  Mr. Renton: I am sorry that the hon. Member for Brent, South was not a member of the Committee. I am sure that his hon. Friends could have made use of his expertise and wisdom because those qualities were at times sadly lacking on the Opposition Benches in Committee. He might have added something to their deliberations.
  If the hon. Member for Brent, South is seriously suggesting that, having become conscious of the ability of those who came to this country as visitors subsequently to obtain employment when they were not permitted to do so —for example, as a driver or gardener in a diplomatic mission—and therefore be outwith immigration control, and, having perceived that gap in the rules, we should do nothing about it, he is making a very odd case. I should have thought that there was a general acceptance that we should do something about that omission once it had come to our attention. After detailed consultation with the Foreign and Commonwealth Office, that is precisely what we are doing tonight.
  The hon. Member for Kingston upon Hull, West asked which mission had been involved. The problem has arisen in several cases. It would not be helpful to identify any particular mission as a major offender, but if he wants to continue to pursue that point with my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs, he might like to do that in detailed and private conversations.
  I have already explained that exempt employment had been exploited by overstayers, illegal immigrants, and prospective overstayers, including students and visitors, whose immigration conditions preclude employment. Having detected that, it is only right to put an end to that practice, as we are doing tonight.
  As it stands, section 8(3) of the Immigration Act 1971 provides for all members of a mission to be exempt from immigration control in a way that is not demanded by the terms of the Vienna convention on diplomatic relations. There is evidence that that form of employment has been exploited by those who would otherwise have no basis for remaining in this country. So long as this potential abuse remains, it is likely to be exploited in future. For that

  981
  reason, we are taking this opportunity to improve the effectiveness of our immigration control arrangements in that regard.
  I commend the amendments to the House, and I find it hard to believe that the Opposition will vote against them.
  Question put and agreed to

Clause 5

  KNOWINGLY OVERSTAYING LIMITED LEAVE
  Lords amendment: No. 2, in page 3, line 37, at end insert
  "but a person shall not be prosecuted under that provision more than once in respect of the same limited leave."
  10.30 pm
  Mr. Renton: I beg to move, That this House doth agree with the Lords in the said amendment.
  I am happy to accept this amendment. As shown during the Committee stage, it is not, and never has been, the Government's intention that multiple prosecution should be brought for overstaying the same period of limited leave. This amendment, which has been agreed in another place, makes it entirely clear that only one prosecution may be brought in respect of overstaying the same period of limited leave. It removes any doubts there could be about the effect of clause 5, and I am happy to commend the amendment to the House.
  Mr. Randall: We welcome the idea of inserting into the legislation the notion that there should not be multiple prosecutions for overstaying. One can justify the argument for that provision from the legal viewpoint. Although I am not a lawyer, I am sure that there are lawyers in the House who understand such matters and who would be able clearly to explain that it is a provision that one would want to make.
  Overstaying is done by people intentionally, which is wrong, and sometimes—as we discussed to some considerable extent in Committee—for technical reasons and unintentionally. When one examines clauses 4 and 5 of the Bill, it is clear that the Government's line on overstaying has been harsh and wrong. The appeal procedures, which were perfectly adequate under the existing administrative arrangements, now mean that prosecutions will be brought far more often, because of the new option in the legislation—assuming that it receives Royal Assent.
  Overstaying need not necessarily be evil or very bad —although, as with many other things, it can be abused and intentional. For that reason, overstaying is to be condemned, but removing the possibility of multiple prosecutions is to be welcomed.
  Mr. Max Madden: This minor amendment does little to remove or lessen the objections to this squalid and nasty Bill. It is typical that the Minister should seek to steer this squalid and nasty Bill through the House at 10.30 pm at night, aided by nine officials from the Home Office and after a trawl of the Tea Room, from where the semi-intellectual wing of the Conservative party has been dragged into the Chamber to give the Bill some support.
  This Bill is friendless. Apart from the extreme Right wing of the Conservative party, the Bill has no friend at all. There is no one in favour of the Bill's provisions, no one
  982
  who has clamoured for the Bill to be put on to the statute book, and no one—apart from the Government—who relishes the prospect of the Bill becoming law. Just how friendless it was could clearly be seen on Second Reading, when the Government secured the lowest majority so far achieved for any Bill—beaten only by the poll tax vote of recent weeks, which was even lower.
  The amendment will do nothing to mitigate the fears and anxiety created by the Bill, especially clause 5. The Bill does nothing to help black and Asian communities, and the amendment will not remove the anger and resentment that it is creating throughout the country. It does nothing to help a constituent of mine who was widowed at the end of last year with five young children—the youngest two years old—and a small business to keep going. My constituent married recently, and he and his children are looking forward eagerly to his wife—their mother—joining them soon in Bradford.
  I am sorry that the Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs, who was with us until a few minutes ago, has now left the Chamber. He wrote to me recently, in answer to my request that that woman be given a priority interview. He told me that she would have to wait until the end of this year, or early next year. He said that it would be wrong to grant her a priority interview, as it would mean that many others suffering from similar "compassionate" circumstances would not be given their interviews in time. If that is the case, instead of wasting time discussing the amendment and the Bill, the House should be discussing how the family of my constituent—and the families of others who the Minister tells me are in similar "compassionate" difficulties—can be united and their fear and anxiety alleviated.
  Mr. Deputy Speaker: Order. The hon. Gentleman has just admitted that he is not really discussing the amendment. I am sure that, with his usual ingenuity, he can bring his remarks within the confines of the amendment.
  Mr. Madden: Yes, indeed, Mr. Deputy Speaker. But the difficulty is that we are dealing with a Minister who proceeds by means of media hype. The Select Committee on Home Affairs was widely known recently to be producing a severe criticism of the administration of the Home Office. Days before that report was published, the media—obviously acting on leaks from the Home Office—was warning the nation that thousands were seeking to enter the country illegally, thereby trying to pre-empt the Select Committee's criticism of the Minister.
  Ms. Abbott: Does my hon. Friend agree that—as with the previous amendment and the clause on polygamous wives—numbers are the essence here? The politics of the Bill has been to conjure up some huge threat to civilisation as we know it, and then call in aid the need of law. Just as there is no evidence of a steep rise in the number of overstayers, a whole clause has been devoted to the apparently world-menacing threat of polygamous wives trying to enter the country. When we inquired in Committee, we were told that an entire clause was devoted to a total of 26 polygamous wives a year. In this and the previous amendment the figures are not an irrelevance; they are central to the politics of the Bill.
  Mr. Madden: My hon. Friend is exactly right. We should be clear that there is absolutely no need for the Government to acquire, through the Bill, any additional powers to deal with overstayers.
  The Minister may not like it, but the blunt fact is that the administrative powers available to him to deal with overstayers are more than sufficient to deal with a very limited problem. Instead of discussing the Bill, we should be discussing the fact that last summer the Minister failed to heed the warnings of his senior staff and deal with the chaos that now grips Lunar house in dealing with registration applications for British citizens.
  Mr. Deputy Speaker: Order. I am getting the distinct impression that we have returned to the Committee stage. We are now dealing with a fairly narrow Lords amendment. The hon. Gentleman is an experienced parliamentarian and I am sure that he will not abuse the procedures of the House by trying to widen the debate.
  Mr. Madden: The difficulty is that, as each week has unfolded since the Committee stage, we have seen more evidence that the Bill is wholly irrelevant to the needs of black and Asian communities throughout the country that require positive action. For instance, we should be concerned with the appointment of more immigration officers so that interviews can be conducted—
  Mr. Deputy Speaker: Order. The hon. Gentleman must realise that he is trying to broaden this into a debate on immigration procedures. That would have been relevant at earlier stages of the Bill, but we are now dealing with a comparatively narrow Lords amendment and I must ask him to address himself to that.
  Mr. Madden: Indeed, Mr. Deputy Speaker. However, the amendment relates directly to the competence of the Home Office. Therefore, the sufficiency of immigration staff and the competence of the immigration and nationality department are related directly to the substance of the amendment. I would argue that it is germane to the debate for us to discuss the incompetence of the immigration and nationality department, the insufficiency of immigration officers and the general incompetence of the administration over which the Minister, in theory, presides.
  Ms. Abbott: Does my hon. Friend agree that the Minister has smiled throughout the discussion on the amendment about overstayers? Does my hon. Friend agree also that if the Minister had any personal experience of the misery that is caused, particularly by the prosecution of possible overstayers, the miserable lives that some of them lead and the tragedy around some of the casework, he would not sit there smirking?
  Mr. Madden: Indeed. Unfortunately, the Minister has not seen fit to resign, considering the chaos over which he now reigns. In years gone by, when Ministers recognised their responsibilities, the Minister of State would have resigned long ago.
  The amendment is wholly irrelevant to the anxieties of many black and Asian people who view the Bill with great anger and resentment. If the Bill, particularly clause 5, is implemented robustly by the police, it will create very great difficulties in black and Asian communities throughout the country.
  I am pleased that the chief constable in west Yorkshire clearly has not made any representations to the Home Office for the clause or the Bill to be introduced. Therefore, I am sure that it will not be implemented in west Yorkshire with the vigour that some of the extremists in the Conservative party would like. I hope that the police in the rest of the country, particularly in areas with black and Asian communities, will not use the legislation in the way that some Conservative Members would like them to implement it. I very much hope that powers in the Bill will not be taken up by the police. It should be quietly ignored. I fear that, if it is not, there will be a hot summer in many parts of the country. If that occurs, the responsibility will lie squarely with the Minister of State and the Home Office.
  10.45 pm
  Mr. Hugo Summerson: Looking at the amendment, which we are supposed to be discussing and which is narrowly drawn, does the hon. Gentleman agree that to some extent it limits the Government's powers for prosecuting overstayers?
  Mr. Madden: The unfortunate fact is not only that the amendment exists but that we also have the clause and the Bill.
  I regret the Government's political will and determination to push through this dangerous legislation. They have shown no willingness to listen to those from the Churches, the voluntary agencies or the community organisations who have told them time and again that the legislation does not address itself to the real problems of black and Asian people throughout the country. It is a recipe for disharmony. It is a recipe for division, anger and resentment at a time when we need to bring communities together and build confidence between those communities and the police. My view of this legislation is shared by the vast majority of my colleagues on the Opposition Benches.
  Question put and agreed.
  Lords amendment No. 3 agreed to.

  Public Utility Transfers and Water Charges Bill
  Lords amendments considered

  ROVISIONS REGULATING THE CHARGES OF ALL WATER UNDERTAKERS
  Lords amendment: No. 1, in page 3, line 47, at end insert—
  "(4A) Subsection (6) of section 12 of the 1973 Act (right of statutory water company to reasonable return) shall apply in relation to the giving by the Secretary of State of a direction under subsection (4) above to a statutory water company as it applies to the settlement or variation of arrangements under that section."
  10.47 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Colin Moynihan): I beg to move, That this House doth agree with the Lords in the said amendment.
  The amendment is designed to make it clear that the Secretary of State's power of direction under clause 3(4) does not prejudice the ability of statutory water companies to provide a reasonable return on capital, so long as they remain under their present financial framework. Clause 3(4), as drafted, requires water undertakers to comply with directions from the Secretary of State about the matters by reference to which their charges are fixed and the methods and principles to be adopted in calculating and imposing the charge.
  During their discussions with my Department about the need for this reserve provision, the Water Companies Association pointed out that similar protection is already available to statutory water companies in section 12(6) of the Water Act 1973. That provision was inserted in the 1973 Act at the WCA's request, because of similar fears that the Secretary of State might settle or vary arrangements between water authorities and water companies which would affect their ability to provide a reasonable return on capital to their stock holders. Section 12(6) was in turn derived from the proviso to section 40(1) of the Water Act 1945. It also pointed out that, because investors have got used to seeing references to section 12(6) in the prospectuses of water companies, they will be looking for similar protection, and to have similar wording in this case.
  I commend this technical but important amendment to the House.
  Mr. Roland Boyes: We agree with the amendment. It is a technical matter, but, as the Minister said, it is eminently sensible that the water companies should have the protection they are seeking. The Lords amendment clarified the position exactly.
  I should like to ask the Minister one question so that his answer is on the record. It is the only thing about which we are concerned. Will he define for us what is meant by a "reasonable" return on capital? I understand that discussions on that matter have been taking place between the Government and the Water Companies Association. I have a copy of a letter from the association, signed by the director, Michael Swallow, saying that the association
  986
  requested this amendment. We are happy that discussions have taken place, but would like to know what a reasonable return on capital means.
  Mr. Moynihan: There have been lengthy debates on the Floor of the House and in Committee about the precise definition of "reasonable". There is a statutory restriction on the dividends of water companies. So anything below a statutory restriction—if it is imposed—would be deemed reasonable. That point was debated extensively in Committee and in the context of the 1973 Act, which gave no definition of "reasonable" It was left to common sense. The advantage here is the statutory restriction on the dividends of water companies, and a reasonable return on capital would be anything beneath that ceiling.
  Question put and agreed to.

Clause 4

  METERING TRIALS SCHEMES
  Lords amendment: No. 2 in page 5, line 34, at end insert "and with any bodies representing the interests of those persons".
  Mr. Moynihan: I beg to move, That this House doth agree with the Lords in the said amendment.
  The Government gave an undertaking on Report that they would table a suitable amendment in another place in response to an amendment seeking to ensure that consumer bodies representing the interests of those affected by the trials were consulted. As a result of that undertaking, clause 4 was amended in the other place so that one of the matters to which the Secretary of State must have regard in considering whether to approve a metering trials scheme, in addition to consultation with those affected or likely to be affected by the scheme, which was the then position, should he consultation with any bodies representing their interests. Thus, consultation may be extended to include, for example, such bodies as the National Consumer Council, citizens advice bureaux and organisations such as local branches of the RNIB, Age Concern and Help the Aged. I stress that these are purely examples. It will be up to each undertaker to consider which bodies it would be appropriate to consult in each case, and for the Secretary of State to have regard to whether that consultation appears appropriate. This provides for a common-sense view, in all the circumstances, of which representative bodies it is reasonable to consult.
  The amendment, by referring simply to bodies, rather than consumer bodies representing the interests of those persons affected by the scheme, goes wider than the amendment originally proposed by Opposition Members in the other place. That is because we felt that the term "consumer bodies" was imprecise, or, to put it another way, a bit woolly. Some important bodies, which the Government would expect water undertakers to consult, might not always fit such a description. An obvious example would be a local authority representing the interests of its tenants, or a social services client, resident in a trials area. Clearly, local authorities are not consumer bodies, but they represent—at least I hope they do—the interests of their tenants and social services clients.
  The amendment is not complex, nor will it change the Bill in a radical way. However, it serves to emphasise the importance that the Government attach to full and proper consultation on the trials. I hope that it answers the

  987
  concerns that were expressed by Members of both Opposition parties represented in the House tonight and that we shall not disagree with the thrust of the amendment, which I recommend to the House.
  Mr. Matthew Taylor: I am sure that hon. Members on both sides will welcome the amendment, which was pressed on many occasions in Committee. It represents a substantial part of the case that we put forward. As such, we welcome it, and I am sure that the Labour party will do the same.
  We still have serious concerns about the impact that metering may have on individuals and about differentials. I am a little sad that there has not been a further amendment to cover the point made about protection for individuals who may be worse off under the metering trials than if they had not been imposed on them. The Minister said that he would consider that point. This measure is a second-best, but it is welcome. I hope that the Minister will take advantage of the opportunity presented by any schemes that are proposed.
  I represent one of the few boards that will not have metering trial schemes. People in my area are not entirely disinterested since, if the Government press ahead with the schemes, many will be directly affected. I hope that amendments along these lines will be viewed in similar terms when other proposals come before the House. The guarantees written into the Bill will apply to only a minority of the population—those involved in the schemes—but, if the schemes are extended, many more people will be worried about the possible effects of compulsory metering. I give a cautious welcome to the amendment. I am sure that there will not be opposition to it.
  Mrs. Virginia Bottomley: There is no caution or hesitancy about my welcome for the fact that my hon. Friend the Minister has agreed to the amendment. He has shown a willingness to listen and an awareness of consumer interests.
  As with Lords amendment No. 1, this amendment shows a willingness openly to review plans. I urge my hon. Friend to continue along this line and to listen to the advice of the statutory water companies, of one of which I am a director. Such companies offer a valuable service to the consumer and a valuable model. I ask my hon. Friend, before moving towards public limited companies, encircled by regulations in a monopoly supply situation, to consider the tried and tested model of the statutory water companies. Their dividend is limited by statute and all surpluses must be redirected towards the benefit of the consumer.
  Mr. Boyes: We agree with the amendment, but in one way the Minister, in defining it, seemed to be giving with one hand and taking with the other. He paraphrased what the Earl of Caithness said, which was:
  "It will he up to each undertaker to consider which bodies it would he appropriate to consult in each case, and for the Secretary of State to decide whether that consultation appeared appropriate."—[Official Report, House of Lords, 16 March 1988; Vol. 494, c. 1343.]
  Surely, if various bodies decide that there should be consultation, I cannot understand why the Secretary of State wants to be involved. I do not know what some of the nationally recognised consumer organisations would think of the Minister describing the definitions as "woolly" when they have a good record on a number of issues.
  988
  On Third Reading, I described the Bill as "shoddy" and "undesirable". Although I welcomed the amendments, neither changes my opinion about the Bill. Throughout its passage, Labour Members continually bombarded the Minister and his colleagues with calls for more representation of consumer interests.
  On 2 Febuary the Minister promised that he would table an amendment, but it is clear from reading the Committee proceedings that it was never in his mind to do so. We almost had to break off his arm and beat him with it to get him to move the amendment to give consumer associations a say in what is happening.
  11 pm
  To a casual observer, the amendment would appear to be a minor one, but its inclusion is a major concession by the Government to the arguments that we made on behalf of the nation's consumers. Consumer representation is not an insignificant issue to be tacked on to the Bill: it is the crux of the Bill.
  I read the Committee proceedings in Hansard this morning and found at least a dozen references that I had made to consumers and their interests. My hon. Friends made similar contributions over the many hours that we spent considering the Bill. I shall give an example of what I said:
  "We are anxious about the shabby way in which consumer councils have been treated … We cannot understand the Government's reluctance to accept our amendments".—[Official Report, Standing Committee B, 12 November 1987; c. 90.]
  It has taken time and further deliberation for the Government to accept our point, but we are grateful that, even at this late stage, the amendment has been accepted.
  Although the mechanism for consultation is welcome, there are vast injustices inherent in the terms of the Bill and its longer-term implications for the imminent privatisation of the whole water industry. For example, there is no balloting of consumers in trial areas, the trials are compulsory and the powers of right of entry have caused anxiety to many people.
  I have visited different areas and talked to people about the water privatisation proposals. The one thing that is sticking in their gullets is that power is being given for water authorities to be able to kick somebody's front door down and fix a meter. [Interruption.] The hon. Member for St. Ives (Mr. Harris) might laugh, but he has not read the schedules to the Bill. Powers of entry are part and parcel of the Bill. People are aware of the nature of the Bill and of the Government who have introduced it.
  We have consistently championed the cause of consumers during the passage of the Bill, and we made consumer interests the subject of our main new clause on Report. I am glad that the Government have taken to heart the need to consult consumers, but I fear that that is not because of a genuine concern for the well-being of those in the trial areas but a cynical desire to minimise the unpopularity of the trials and of water privatisation generally.
  I remind the Minister of my final remarks in Committee. I said:
  "I hope that we have persuaded some Conservative Members to reflect on our arguments. All constituents, whatever party they vote for, are consumers, and I hope that Conservative Members will consider supporting some of our amendments in the interests of the many consumers whom they represent."—[Official Report, Standing Committee B, 21 January 1988; c. 714.]

  989
  I am disappointed that only two amendments have come back from the other place. We moved a host of amendments that could have been considered by the other place that would have given the consumer and the people affected by the trials more rights than they have under the Bill.
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  If the Government cared what consumers thought they would have consulted them about whether a trial was wanted. That was the main issue throughout the Bill. Nevertheless, we accept the amendment because it will help to some degree. We regret that the other place was unable to help more, but we shall not divide the House on the amendment.
  Question put and agreed to.

  Statutory Instruments, &c.
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).
  Statutory Instruments, &c.

    WEIGHTS AND MEASURES
    That the draft Weights and Measures (Knitting Yarns) Order 1988, which was laid before this House on 12th April, be approved.—[Mr. Lennox-Boyd.]
    Question agreed to

  PUBLIC PETITIONS
  Motion made, and Question proposed,
  That Standing Order No. 133 (No debate on presentation of petition) be left out and the following be inserted:

  PUBLIC PETITIONS

    Time and manner of presenting petitions
    133 (1)—Every petition presented under Standing Order No. 132 (Presentation of petitions) not containing matter in breach of the privileges of this House, and which according to the rules or usual practice of this House can be received, shall be brought to the Table—

    (a) on Mondays, Tuesdays, Wednesdays and Thursdays, after a Minister of the Crown shall have signified his intention either to move 'That this House do now adjourn', for the purpose of bringing the sitting to a conclusion, or to move, pursuant to Standing Order No. 10 (Sittings of the House (suspended sittings)) 'That the proceedings of this day's sitting be suspended', and

    (b) on Fridays, at the commencement of public business; Provided that petitions remaining to be presented at ten o'clock on a Friday on which private Members' bills have precedence under paragraph (4) of Standing Order No. 13 (Arrangement of public business) shall stand over and may be brought to the Table after a Minister of the Crown shall have signified his intention to move 'That this House do now adjourn', for the purpose of bringing the sitting to a conclusion.

    (2) Proceedings under paragraph (1)(a) and (1)(b) of this order shall not be interrupted at ten o'clock or at half-past two o'clock, respectively.
    (3) Mr. Speaker shall not allow any debate, or any Member to speak upon, or in relation to, such petition; but it may be read by the Clerk if required.
    That this Order be a Standing Order of the House—[Mr. Lennox-Boyd.]
    Hon. Members: Object.

    Gaelic Language Broadcasting
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]
    11.6 pm
    Mrs. Ray Michie: I very much welcome the opportunity to discuss in the House the need for a Gaelic broadcasting service, and I am delighted that it is the hon. Member for Mid-Sussex (Mr. Renton) who is to reply. It is rather late, and I am sure that he would prefer to be on the beautiful island of Tiree, in my constituency, where he must surely by now have been adopted as a true Tirisdeach.
    In the next few months, the Government promise to publish a major White Paper on broadcasting policy. It is suggested that it will contain many changes in terms of franchises, subscriptions, new cable services and satellite broadcasting. At the same time, as we move towards 1992, discussions are taking place on European Commission directives on broadcasting.
    The purpose of this debate is to raise one vital issue, which must not be overlooked as we move towards what is likely to be a more deregulated and market-orientated broadcasting system. It is an issue which raises questions of consumer choice and the responsibilities of public service broadcasting. I am talking about broadcasting in the Gaelic language—an issue of great importance to more than 80,000 Gaels living in Scotland; an issue in which the Government must have an interest and one which I very much hope will not be ignored in the Government's White Paper.
    The main issues I wish to highlight relate to television, but it is worth recording that there has been some expansion of Gaelic on both radio and, to a lesser extent, television in recent years. We have seen the creation by the BBC of a structure for Gaelic radio service, Radio Nan Gaidheal, which broadcasts five to 27 hours a week, but only a quarter of that is heard in central and southern Scotland, so 26,000 Gaels in Strathclyde do not get a full service.
    However, the situation in television is different, and although there has been a slight increase in programming in the past few years on both BBC and the independent companies, to put it mildly, Gaels are less than happy about television, for it is crucial to the prospects of the language. We all know that television is the most significant means of communication for both information and entertainment. I do not pretend that access to television can alone guarantee the future of the Gaelic language, but exclusion from television would slow down its recovery. The advance of new technology means that more and more people are able to receive four colour channels, although some of the more remote parts of my constituency still have considerable problems.
    There is tremendous potential, but potential which is not yet being exploited fully by the production companies. The average weekly Gaelic television output from all channels is less than one and a half hours. That is almost entirely current affairs programmes—Crann Tara and Prosbaig—and children's programmes. There is no arts, no sport, no religion, no light entertainment, and precious few documentaries. Gaelic programming is ad hoc and unco-ordinated. It is that situation which has led to Gaels calling for a Gaelic broadcasting service. We live in an

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    English-centred culture with endless hours of broadcasting in English. Particularly for those Gaels whose mother tongue is Gaelic, there is no choice.
    What a difference it would make, for example, to have many more programmes on the Gaelic part of our literary heritage—to become familiar with the works of such great Gaelic poets as Alexander MacDonald and Duncan Ban Maclntyre, to say nothing of the contemporary poet, Sorley MacLean, known in Gaeldom for his scholarly essays and poetry that has won him wide recognition as a great poet meriting international fame. His poems have been translated into Chinese, as well as most of the European languages. They have also been translated into English but I do not think they know much about him down here. People like him give the lie to any suggestion that we in Scotland are parochial and inward looking.
    Previous Government reviews, in particular the Annan committee and the Peacock committee on the future financing of the BBC, have paid careful attention to the question of a Gaelic broadcasting service. The Peacock committee suggested:
    "because of the anomaly by which the Scottish TV companies contribute more to maintaining the Welsh Fourth Channel than they spend on Gaelic television programmes in Scotland, a partial adjustment of their contribution to Wales should be considered".
    In its recent evidence to the Home Affairs Select Committee, the Home Office recognised that the public service obligations of broadcasters included the notion that
    "a suitable proportion of material should be calculated to appeal specially to the tastes and outlook of the persons served by the station including in languages other than English".
    At a conference in 1985, the right hon. Member for Ayr (Mr. Younger), when Secretary of State for Scotland, said:
    "I quite accept that we want to keep on pressing for as much more of the air for those in the Gaelic speaking areas as we can".
    In this House, there has been all-party support for the promotion of broadcasting in Gaelic. Three Bills were introduced in 1981, which called for the creation of a Gaelic broadcasting committee, consisting of representatives of the BBC and IBA, to co-ordinate and develop Gaelic television and radio; to oversee the scheduling of programmes in Gaelic; to comment and give guidance on the amount and balance of Gaelic broadcasting; to monitor the audience for Gaelic programmes; and to report to and advise the Secretary of State for Scotland.
    I think that it is important to be clear what we are asking for. It is principally a framework for the development of Gaelic broadcasting, to allow better co-ordination of programme production and output, a commitment to a wider range of programmes, and more finance directed to the service provided. Currently Gaelic programmes appears to be ad hoc and seems to be seen in some quarters as an add-on extra.
    An adequate service should extend to a wide range of programmes with regular time slots for specific programmes; they should not be shown in the middle of the night after all sane people have gone to bed. That happens all too often at the moment. There must be some commitment to real investment in the programmes.
    Gaels look with some envy at the £3 million that annually leaves Scotland to fund the Welsh language channel S4C. I hasten to add that we do not object to that
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    channel and we congratulate them on it. I hope that an extension of the levy principle to fund Gaelic programmes is something that the Government will consider when reflecting upon the funding of Channel 4.
    Realistically, Gaels may not necessarily be looking for a separate channel like the Welsh. The proportion of Welsh speakers in Wales to Gaels in Scotland is significantly higher. The situations are different. But Gaels expect the Government to persuade the broadcasting companies of their public service obligations to Gaelic speakers. Tonight I hope that the Minister will be able to give me an assurance that this issue will be considered in the White Paper. I understand that that document is to be a broad-brush document, but the rights of minorities, the principle of consumer choice, and the concept of public service broadcasting are broad-brush issues that relate directly to the provision of a Gaelic broadcasting service.
    What we are asking for is a commitment to the creation of a structure that allows Gaels an input to the provision of a co-ordination service. Co-ordination between the broadcasting companies, the Home Office and the Scottish Office is the starting point. Up to now the Home Office position has been that, if Gaels are not pressing for a separate channel, they can be accommodated within existing broadcasting arrangements—the only issue being how successful they are in persuading the broadcasting companies of that point of view. Experience has shown that that has not been good enough.
    The broadcasters, on the whole, have been sympathetic in principle, but I suspect that, unless the Government act to create a structure which will make the broadcasters co-operate, there is little prospect of change in the immediate future.
    There are therefore two specific areas to which the Government should give some consideration in their White Paper: the concept of an overall framework, and the levy by Scottish TV companies to S4C and Channel 4.
    There is some concern that moves towards deregulation, and, in particular, auctioning independent franchises to the highest bidder, might mean that minority interests are squeezed out, because they are not generating sufficient advertising interest, and that there will be a subsequent decline in the quality of programmes. Will the Minister give an assurance that the White Paper will entail a commitment, on the grounds of public service obligations and consumer choice, that all parts of the community are served?
    The survival of the Gaelic language remains on a knife-edge. To lose it would be a tragedy not just for Scotland, but I believe for the United Kingdom and Europe. It has had a chequered career, surviving the infamous clearances, being downgraded and sneered at as the language of the ghillie. Children are forbidden to speak it in the school or the playground.
    However, the long-drawn-out struggle to preserve and strengthen the language, culture and heritage goes on. Gaels are now responding with enterprise. For example, Bocsa-Beo—Living Box—which is Scotland's first independent Gaelic television company, was recently launched. There is a Gaelic video workshop called "New Vision". That shows that the Gaels are prepared to be enterprising.
    Much work has been done by Comunn na Gaidhlig. It is at present drawing up a major policy document on a

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    Gaelic broadcasting service. I hope that the Minister will be able to meet Comunn na Gaidhlig later this summer when the document is published.
    I am glad to have had this opportunity to state again the need for keeping alive our language in Scotland and, in particular, the need for a Gaelic broadcasting service.
    11.18 pm
    Mr. Calum Macdonald: I thank the hon. Member for Argyll and Bute (Mrs. Michie) for allowing me a couple of minutes to support the sentiments that she has expressed.
    I have three interests in the debate: first, as a native Gaelic speaker; secondly, a constituency interest; and, thirdly, the fact that the private Member's Bill to which the hon. Lady referred was introduced by my predecessor as Member of Parliament for Western Isles, Donald Stewart. That Bill contained a reference to the need to establish a Gaelic broadcasting committee to create a coherent policy framework for Gaelic broadcasting. The need for such a policy is even greater now than it was in 1981 when that Bill was introduced.
    The hon. Lady said that Gaelic is on a knife-edge. But Gaelic is stronger than it was in 1981. Indeed, it is stronger than it has been for the past 100 years. Instead of a decline in interest, there seems to be an upsurge in interest and enthusiasm for the language, not just in my constituency but throughout Scotland. It is a fair reflection of that interest that the subject of Gaelic is no longer the sole preserve of the hon. Member for Western Isles, because Members representing other parts of Scotland are introducing such debates. That is a welcome and significant development.
    The hon. Lady said that the main problem with Gaelic broadcasting is that, despite great advances, it remains ad hoc and fragmented. Sometimes programmes duplicate each other. That tends to hinder the development of Gaelic broadcasting. We must acknowledge the excellent work of those who pioneered Gaelic broadcasting, but, as the hon. Lady said, the time is right, with all the changes that are taking place in the broadcasting world in general, for a new look at the provision for Gaelic.
    I urge the Minister to make a commitment and to say that the Government are considering a coherent policy framework for Gaelic. I hope that he will also give a commitment to meet representatives of the Gaelic language to discuss the need for a Gaelic broadcasting service.
    11.21 pm
    The Minister of State, Home Office (Mr. Tim Renton): I thank the hon. Member for Argyll and Bute (Mrs. Michie) for introducing this interesting and important debate on the provision for broadcasting in the Gaelic language, and I also noted with great interest the remarks of the hon. Member for Western Isles (Mr. Macdonald).
    I do not pretend to be an expert on Gaelic matters, and I would hesitate to say "Tirisdeach" with the flair and speed of the hon. Lady, but with a wife who comes from Ayrshire and having spent many holidays in Tiree in the hon. Lady's constituency, I have some small knowledge of the problems to which she referred. On Tiree, the older generations seem to prefer to speak Gaelic rather than English—at least among themselves—but there is not the same incentive or wish to speak Gaelic among the younger
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    generation. That is why I was especially pleased the other day to hear my hon. Friend the Minister responsible for education in Scotland announce that the specific grant for Gaelic education will be increased from "£300,000 this year to £500,000 in 1988–89.
    The hon. Lady was right to say that Gaelic is an important part of Scottish heritage and culture and that, in turn, broadcasting has an important role to play in the preservation of Gaelic as a living language and in sustaining the distinctive culture upon which it is based. But I must remind the hon. Lady that Parliament has placed statutory obligations on the broadcasters in relation to minority interests. Our role is to ensure that the broadcasters meet the needs of all parts of the community, but it is the responsibility of the BBC and the IBA to consider the emphasis that should be given to Gaelic broadcasting, or to any other programme service. Decisions on the allocation of resources to services are matters in which the Government do not intervene.
    The hon. Lady was more pessimistic about the Gaelic language than I am, and I was interested to hear that the hon. Member for Western Isles also thought that.
    Certainly, Gaelic broadcasting on BBC Scotland television and radio aims to sustain and encourage the use of the Gaelic language as a means of transacting everyday life, of understanding and debating the widest range of public affairs—nationally and internationally —and of promoting contemporary Gaelic culture in the various communities of Scotland.
    To achieve that, over 50 hours of television were broadcast in Gaelic last year by the BBC. Grampian Television plans to broadcast just over 40 hours of Gaelic programmes over the next 12 months and Scottish Television transmits about 26 hours of Gaelic programmes. Radio broadcasters already make real efforts to meet demand for Gaelic programmes. The BBC has been running Radio Nan Gaidheal for over three years as a distinctive radio service for the Gaelic-speaking population and, as the hon. Lady will know, it has steadily increased its hours of broadcasting and range of service.
    I am sure that the BBC will take note particularly of the comments by the hon. Lady that there are 26,000 Gaels in the south of Scotland who cannot hear some of the radio programmes broadcast in Gaelic by the BBC, as well as her comments about the ad hoc and unco-ordinated nature of programmes.
    I do not think that Gaelic as a language and culture is generally ignored by the broadcasting world, hut. if it is felt that not enough attention is paid to it. those concerned, led perhaps by the hon. Lady and the hon. Member for the Western Isles, should seek to persuade the broadcasting authorities that greater coverage is needed.
    The broadcasting authorities provide the service and, in fulfilling that function, they have to be sensitive to the various strands of public opinion. It must be recognised that, for any service to be provided, there must he a demand for that service. I am not persuaded, at this stage at least, that there is a demand for a Gaelic television service in the way that justified the creation of the Welsh fourth channel.
    I understand the hon. Lady's concern about the subscription of about £3 million each year provided by the Scottish independent television companies towards the cost of the Welsh fourth channel, but I pointed out that all the ITV companies throughout the United Kingdom contribute in that way as part of the total package for

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    establishing a Welsh language broadcast service and, indeed, of the fourth channel as a whole. Those contributions are taken into account in determining the ITV levy rates, and it is difficult to seek to change just one piece of the jigsaw in isolation.
    When the Welsh fourth channel was reviewed in 1985, the ITV Association told the Government that the ITV companies supported in principle the continuation of the existing arrangements, and we concluded that the arrangements should continue. I do not think that it would be right at this stage to contemplate unpicking the package
    I wish to turn to future arrangements and the question of future opportunities for broadcasting through the introduction of new technology. Some of those might be in the form of new television services. Studies have been carried out into the feasibility of providing new services in the UHF and VHF bands. We have also been examining a technology new to this country—the microwave video distribution systems. That technology uses microwave frequencies to transmit television and sound channels from terrestrial transmitters to aerials on individual buildings. We have to make our own decisions about the new services and what form they might take, but new local specialist services are clearly a possibility.
    We also envisage considerable scope for more Gaelic on radio in the future, if that is what listeners want. My right hon. Friend the Home Secretary, in his announcement of 19 January, confirmed that we propose to legislate on the basis of proposals put forward last year in our Green Paper. We shall invite Parliament to agree to establish a new radio authority which will be responsible for licensing a wide range of local services with the general aim of enhancing the range of choice for listeners. It will therefore
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    be open to those interested in providing a Gaelic service, or at least one with a strong Gaelic flavour, to apply to the authority.
    The stations that are then set up will not, as now, have to operate within all the constraints of the Broadcasting Act 1981. There will be no arbitrary limit on the number or range of stations that seek to address a Gaelic audience. The Radio Authority will take its licensing decisions on the basis of a number of considerations, and these will include the availability of frequencies, local demand for services and the extent to which they widen consumer choice.
    I must suggest to the hon. Lady and the hon. Member for Western Isles that advocates of Gaelic broadcasting may want now to make a start on getting their proposals worked out, thinking about business plans and establishing support within the community.
    I hope that my reply is not too disappointing to the hon. Lady. She said that she is a realist and that she is not seeking a new television channel devoted exclusively to Gaelic. I agree with her realism. Despite the importance of preserving the language as part of the cultural heritage of Scotland, we do not feel that the level of demand for Gaelic broadcasting would justify the creation of a new television station in Scotland at this stage. However, there are major new opportunities for broadcasting both in television and on radio immediately ahead. I strongly urge the various interested parties in Scotland to consider those opportunities and to take advantage of the exciting developments.
    At great risk, I say tapadh leibh to the hon. Lady. I thank her for raising this important subject and for the thoughtful and moderate way in which she has addressed the House this evening.
    Question put and agreed to.
    Adjourned accordingly at twenty-nine minutes to Twelve o'clock.